P.Sudhakar Reddy vs V.Srinivasulu
2021 Latest Caselaw 937 AP

         THE HON'BLE SRI JUSTICE M.VENKATA RAMANA

                 APPEAL SUIT No.1529 of 2001


JUDGMENT:

This appeal is directed against the decree and judgment in

O.S.No.10 of 1998 on the file of the Court of learned Senior Civil

Judge, Srikalahasti, dated 03.04.2001.

2. The defendant is the appellant. The respondent is the

plaintiff.

3. The respondent laid the suit against the appellant on the

foot of a promissory note dated 01.04.1995 stating that the

appellant had borrowed Rs.75,000/- in cash from him agreeing to

repay the same with interest @24% p.a. and executed the suit

promissory note on the same day. The respondent further stated

that in spite of his repeated demands, the appellant failed to

repay the amount due and hence the suit.

4. As seen from the material on record, the appellant initially

filed a written statement admitting the execution of the suit

promissory note and later on amending the written statement,

he denied not only the execution of the suit promissory note but

also the entire transaction thereunder. The principal objection

raised by the appellant in his written statement is in respect of

territorial jurisdiction of the Court at Srikalahasti, to entertain

the suit on the ground that he is ordinarily a resident of Chennai.

5. Another defence raised by the appellant is that he owned

Ac.4.43 cents at Eguva Veedhi Village at Thondamanadu, which

was leased out to the respondent, who also happened to be their

farm servant and that the respondent failed to pay the lease

amounts. The appellant also contended that when he had

requested a sum of Rs.75000/- from the respondent in March,

1995 through Sri K.Bhaktavatsala Reddy, who is his father-in-law,

then the respondent and Sri K.Bhaktavatsala Reddy, came to

Madras along with Sri P.Sudhakar Reddy, who is his

co-brother, paid aforestated amount. The appellant further

contended that the respondent had agreed to pay him the lease

amount of Rs.30,000/- p.a regularly and that the respondent

failed to pay the aforesaid lease amount from the date of

execution of the suit promissory note, who ultimately stopped

cultivating the land alleging that Smt.G.Ramanamma, who is the

elder sister of the appellant caused obstruction.

6. Further contention of the appellant in the written statement

is that in order to avoid unpleasantness, he did not issue any

reply to the demand notice issued by the respondent on

20.09.1997, addressing a letter to him to come to Madras, which

was not complied with. Thus, he alleged that instead of meeting

his demand for paying the lease amount, the respondent filed a

false suit.

7. Another contention of the appellant in the written statement

is that the rate of interest claimed is excessive and it should be

scaled down to 12.5% p.a. while pleading set off against the

lease amount payable to him for the suit claim.

8. Basing on the pleadings, learned trial Judge settled the

following issues and additional issue.

1. Whether the plaintiff is entitled for recovery of amount of Rs.1,28,380/- as prayed for?

2. To what relief:

Additional issue dated 23.09.1999:

1. Whether the court has the territorial jurisdiction to try this suit?

9. At the trial, the respondent examined himself as PW.1 and

an attestor to the suit promissory note as PW.2, while relying on

Exs.A1 to A3. The appellant examined himself as DW.1, DW.2 is

his father-in-law and whereas DW.3 is his co-brother, who also

scribed the suit promissory note. The appellant relied on Exs.B1

to B6, in support of his contention.

10. On such material and the evidence, learned trial Judge

rejected the defence that the trial Court did not have territorial

jurisdiction to try the suit and held the additional issue

accordingly. Further, in respect of execution of Ex.A1 and

liability of the appellant under the suit promissory note to the

respondent, accepting the suit claim, the suit was ultimately

decreed with costs as prayed for, against the appellant.

11. It is against the decree and judgment, the present appeal is

preferred.

12. Sri V.Eswaraiah Chowdary, learned counsel for Sri

M.P.Chandramouli, learned counsel for the appellant and Sri

A.Chandraiah Naidu, learned counsel for the respondent

addressed arguments.

13. Now, the following points arise for determination:

1. Whether Ex.A1, suit promissory note is true, valid and binding on the appellant?

2. Whether the trial Court has territorial jurisdiction to try the suit?

3. Whether the respondent is entitled for recovery of the suit amount from the appellant basing on the suit promissory note?

4. Whether interest claimed is excessive and if so, it has to be scaled down?

5. To what relief?

14. Point No.1:

"Whether Ex.A1, suit promissory note is true, valid and binding on the appellant?"

It is pertinent to note that the initial defence of the

appellant in his written statement is not denial of the execution

of the suit promissory note, it is only after he entered the

witness box as DW.1, he came out with such plea claiming as if,

he saw Ex.A1-suit promissory note for the first time at the trial,

when he was confronted in his examination-in-chief. Thus, he

resiled from his earlier statement admitting Ex.A1-suit

promissory note. This belated plea of denial of execution of

Ex.A1-suit promissory note has no basis nor can be accepted.

15. Apart from it, there is categorical evidence from the

respondent, who examined himself as PW.1 and attestor to

Ex.A1-suit promissory note namely PW.2, as to due execution of

the same at Eguva Veedi of Srikalahasti Mandal, borrowing

Rs.75000/- thereunder agreeing to the terms set out therein.

Thus, it is clearly established from the evidence let in by the

respondent. The intrinsic worth of Ex.A1-suit promissory note

also lends credence to the version of the respondent.

16. Ex.A2-Demand notice was issued to the appellant on

20.09.1997 to repay the amount due under Ex.A1-suit promissory

note. Admittedly, it was served on the appellant, who did not

choose to issue any reply. Ex.B1 letter dated 27.11.1997

addressed by the appellant to the respondent is with reference

to alleged lease amount due. There is no reference in this letter

as to the transaction covered by Ex.A1-suit promissory note.

Ex.B3 dated 11.12.1997 styled as reply to the notice, did not

serve the purpose.

17. The claim of the respondent stood proved by the testimony

of DW.3 particularly, with reference to due execution of Ex.A1-

suit promissory note. He categorically deposed in respect

thereof. He is no other than the co-brother of the appellant. He

deposed that Ex.A1-suit promissory note was scribed at Eguva

Veedhi and admittedly, the presence of PW.2 and one Sri Bathi

Reddy during this transaction, who attested Ex.A1. He further

proved passing of consideration of Rs.75,000/- during that

transaction deposed that the respondent paid it to the appellant

at Eguvaveedhi.

18. Thus, the witness of the appellant himself supported the

version of the respondent clearly establishing Ex.A1 transaction.

19. For these reasons, the belated stand of the appellant

denying execution of Ex.A1-promissory note cannot be believed.

Even otherwise, the appellant deposed as DW.1 initially

admitting the due execution of Ex.A1-promissory note and also

the signature appearing therein.

20. In these circumstances, the inference to draw basing on

the material is that this suit promissory note is proved being

true, valid and binding on the appellant.

21. Thus, this point is answered in favour of the respondent

and against the appellant.

22. Point No.2:

"Whether the trial Court has territorial jurisdiction to try the suit?"

As rightly observed in the judgment of the trial Court,

when DW.3 himself clearly stated that Ex.A1-suit promissory note

was executed at Eguvaveedhi, there cannot be any better

evidence for the respondent to rely on.

23. In view of the findings recorded on Point No.1 as due

execution of Ex.A1 in favour of the respondent and particularly,

relying on testimony of DW.3, the inference to draw is that the

suit promissory note was executed at Eguvaveedhi within the

territorial jurisdiction of the trial Court. Therefore, the

contention of the appellant that it was executed at Madras in the

circumstances stated by him in the written statement cannot

stand, as rightly observed in the judgment of the trial Court.

Rather there is an artificiality in the contention of the appellant

in as such as no creditor would go in search of a borrower to lend

the money.

24. Therefore, this point is answered in favour of the

respondent and against the appellant.

25. Point No.3:

"Whether the respondent is entitled for recovery of the suit amount from the appellant basing on the suit promissory note?"

In view of the findings on Point Nos.1 and 2, the suit claim

based on Ex.A1-suit promissory note is proved. Therefore, the

appellant is liable to discharge the amount due thereunder.

Thus, this point is answered in favour of the respondent and

against the appellant.

26. Point No.4:

"Whether interest claimed is excessive and if so, it has to be scaled down?"

One of the contentions of the appellant is that he is

entitled for the benefit of Act 4 of 1938, since he is owning

agricultural lands. He produced Ex.B5-Book of title deed showing

his land holding. Admittedly, he was a railway servant on the

date of Ex.A1 and also when the suit was pending in the trial

Court. Though, he denied that he was then an income tax

assessee, since the principal source of his income was on account

of his service in Railways, he cannot claim any benefit in terms

of Act 4 of 1938, as an agriculturist.

27. Nonetheless, the rate of interest claimed by the appellant in

terms of Ex.A1 at 24% p.a., on the face of it appears excessive

and usurious. In terms of Section 3 of the Usurious Loans Act,

the Court can take judicial notice of such fact and can direct

scaling down of interest to permissible levels. Interest at 24%

p.a. as such, is unconscionable. Therefore, on this score, the

rate of interest has to be reduced.

28. In the course of hearing this appeal, both the learned

counsel for the parties requested to arrive at a reasonable rate

of interest.

29. The suit promissory note is dated 01.04.1995, on which date

the appellant had borrowed Rs.75,000/- from the respondent. It

is an undeniable fact that the appellant did not pay any amount

towards this transaction. Though, it is contended for the

appellant that the respondent had taken his agricultural land on

lease, who had failed to pay lease amount, it is not a question to

consider now, in given facts and circumstances of the case.

Set-off, so pleaded by the appellant, cannot stand in these

circumstances nor there is any proof offered by the appellant in

that respect. Nor such contention is in any manner satisfactorily

established.

30. However, having regard to the nature of the claim of the

respondent against the appellant, if rate of interest is scaled

down to 18% from the date of transaction namely 01.04.1995, till

date of filing of the suit(suit was filed on 18.03.1998) and

thereafter at 12% p.a. during pendency of the suit till date of

decree, it shall be the interest of justice. The interest post

decree, shall be in terms of Section 34 C.P.C and it is at 6% p.a.

Therefore, the rate of interest has to be scaled down in terms

stated above. Thus, this point is answered.

Point No.5:

"To what relief?"

31. In view of the findings on the above points, the appeal has to

be allowed-in-part with reference to rate of interest granted in

favour of the respondent and against the appellant and in

remaining respects, the decree and judgment of the trial Court

should be confirmed. Thus, the decree and judgments shall be

modified to such extent.

32. In the result, the Appeal Suit is allowed in part modifying

the decree and judgment of the trial Court as follows:

The suit is decreed in favour of the respondent and against

the appellant for Rs.75,000/-(principal amount) with interest at

18% p.a. from 01.04.1995 to 18.03.1998 + notice charges of

Rs.30/- and thereafter, from the date of suit till 02.04.2001 with

interest at 18% p.a. on Rs.75,000/-. Thereafter, interest is

granted at 6% p.a on Rs.75,000/- from 03.04.2001 till realisation.

The appellant shall pay costs proportionately to the respondent

through out and bear his own costs. Remaining claim of the suit,

is dismissed and without costs.

33. Interim orders granted earlier if any, stand vacated.

34. Miscellaneous applications pending if any, shall stand closed.

_____________________ M.VENKATA RAMANA, J Date: 18.02.2021 Pab