Dr. B. Kumara Swamy vs N. Gururaj Rao
2022 Latest Caselaw 2024 AP

        HON'BLE SRI JUSTICE SUBBA REDDY SATTI

                 APPEAL SUIT No.297 of 2006

JUDGMENT:-

     Assailing the judgment and decree, dated 23.01.2006

passed in O.S.No.233 of 2004 on the file of Principal Junior Civil

Judge, Kurnool, the defendant filed the above appeal.


2.   For the sake of convenience and brevity, the parties shall

be referred to as they are arrayed in O.S.No.233 of 2004.


3.   The suit O.S.No.233 of 2004 was filed by the plaintiff for

recovery of an amount of Rs.5,12,049/-, the principal being

Rs.3,00,000/-.


4.   The averments in plaint, in brief, are that the defendant

borrowed an amount of Rs.3,00,000/- from the plaintiff on

different dates, as hand loan and issued post-dated cheques

bearing Nos.113704, 113705 and 113706 dated 19.05.2001,

21.05.2001 and 21.05.2001 for Rs.1,00,000/- each; that in view

of cordial and long standing relations between them, plaintiff did

not insist for execution of promissory note for the amounts

borrowed; that plaintiff presented cheques on due dates and to

his surprise and dismay cheques were dishonoured; that the

bank returned the cheques with remarks, 'payment stopped by

drawer'; that as per the plaintiff's information, defendant's

account did not have sufficient funds to honour the cheques;

that it is clear that defendant deliberately issued cheques

without arranging for funds; that plaintiff initiated criminal

action under Section 138 of the Negotiable Instruments Act,
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1881 (for short 'N.I. Act') against the defendant vide C.C.No.335

of 2001, however the same was dismissed for default; that

plaintiff issued legal notice on 07.06.2001 demanding payment

of amount with interest at 24% for which the defendant got

issued reply notice, dated 28.06.2001 denying borrowing of

Rs.3,00,000/-, issuance of cheques, presentation of the cheques

etc., and hence filed the suit for recovery of amount basing on

three cheques.


5.    The defendant filed written statement and contended inter

alia that he did not borrow of Rs.3,00,000/- on different dates

as hand loan and issued cheques in that connection; that

complaint under Section 138 of N.I. Act, being C.C.335 of 2001

on the file of learned Judicial Magistrate of First Class, Kurnool

was dismissed; that on number of occasions plaintiff borrowed

money from the defendant and executed promissory notes; that

defendant had no necessity to borrow the amount from the

plaintiff as he is NRI Doctor; that the plaintiff has no capacity to

lend the amount; that in the month of May, 2001, plaintiff

approached the defendant, offered him to join as partner in cine

business; that since the plaintiff has acquaintance with the

defendant for more than seven years and as the plaintiff's

brother N.Sreepathi Rao was a friend of the defendant, he

accepted the proposal of the plaintiff; that the defendant gave

Rs.3,00,000/- by way of three cheques, dated 19.05.2001,

21.05.2001 and 21.05.2001 respectively, each for Rs.1,00,000/-

towards his share; that on 22.05.2001 when the defendant

asked the plaintiff to execute partnership deed, plaintiff
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postponed execution of partnership deed; that thereafter when

the defendant demanded the plaintiff to return the cheques,

plaintiff refused to handover the abovementioned cheques; that

misunderstanding arose between the defendant and the plaintiff

and immediately defendant informed bank authorities to stop

payment of the above mentioned cheques; that the defendant

intended to issue legal notice to the plaintiff regarding return of

the    above    mentioned     cheques;   that   defendant's   friends

requested him not issue any legal notice and that they would

settle the matter amicably and thus prayed the Court to dismiss

the suit.


6.      Basing on the pleadings on both sides, the trial Court

framed the following issues:


     1. Whether there is cause of action for the suit?

     2. Whether hand loans alleged to have been obtained by the
        defendant on different dates as pleaded by the plaintiff is
        true and correct?

     3. Whether the three post dated cheques 19.05.2001,
        21.05.2001 and 21.05.2001 respectively were not issued
        by the defendant for repayment any amount borrowed
        from the plaintiff?

     4. To what relief?

7.      During the trial, plaintiff examined himself as PW1 and

got examined PW2. Exs.A1 to A9 are marked on his behalf. On

behalf of the defendant, he himself is examined as DW1 and got

marked Exs.B1 and B2.
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8.    The trial Court on consideration of oral and documentary

evidence decreed the suit with costs. Aggrieved by the said

judgment and decree, the above appeal is filed.


9.    Heard Sri Prakash Reddy, learned counsel representing

Sri   T.   Nagarjuna      Reddy,       learned   counsel   for     the

appellant/defendant and Sri K. Rathanga Pani Reddy, learned

counsel for the respondent/plaintiff.

10. Learned counsel for the appellant/defendant would

contend that after dismissal of the complaint under Section 138

of the N.I. Act, the suit was filed for recovery of amount and

hence suit ought to have been dismissed. Cheques were issued

as share capital and since no partnership deed was executed,

the defendant issued instructions to the bank to stop payment.

He would further contend that no consideration was passed

under Exs.A1 to A3. He would also contend that the defendant

being NRI Doctor had no necessity to borrow the amount.

Further contended that the plaintiff did not state either in the

plaint or in the notice as to the date of lending of the amounts.

11. Learned counsel for the respondent supported the

judgment of the trial Court and prays the Court to dismiss the

appeal.

12. In the light of the arguments and pleadings of both sides,

the following issues arise for consideration in this appeal:

1. Whether three post-dated cheques dated 19.05.2001,

21.05.2001 and 21.05.2001 were issued by the defendant

after borrowing of hand loan from the plaintiff?

2. Whether the plaintiff had capacity to pay the amount?

3. To what relief?

Since these points are connected to each other, they are

dealt with together.

13. It is pleaded case of the plaintiff that the defendant

borrowed Rs.1,00,000/- each on different dates as hand loan

and issued Exs.A1 to A3, post dated cheques. However, the

defendant pleaded that in the month of May, 2001, plaintiff

himself has approached him and offered him to join in his

partnership business and in that connection, he gave three

cheques each for Rs.1,00,000/- towards his share in the

proposed business.

14. With regard to borrowing of amount of Rs.3,00,000/- by

the defendant, neither the plaint nor the legal notice discloses

the dates of borrowing except stating, on different dates.

However, during cross-examination, it was elicited from P.W.1

(plaintiff) that the defendant borrowed Rs.1,00,000/- on

12.05.2001 and Rs.2,00,000/- on 14.05.2001 and issued one

cheque on 12.05.2001 and two cheques on 14.05.2001 with

post-dates as 19.05.2001, 21.05.2001 and 21.05.2001.

15. The evidence of PW2 supports the case of the plaintiff with

regard to borrowing of the amount by the defendant. According

to PW2, in the second week of May, 2001, plaintiff instructed

him to pool up Rs.3,00,000/- and keep cash ready as one of his

close friends needs to be helped in the shape of hand loan. He

also deposed that the defendant collected Rs.3,00,000/- in three

instalments at Rs.1,00,000/- each and issued three post dated

cheques for Rs.1,00,000/- each. During his cross-examination it

was elicited from him that he paid Rs.1,00,000/- each, three

times to the defendant at Venkatesh Theatre, Kurnool and that

plaintiff was also present on those three occasions. It was

further elicited from PW2 that there is a gap of one day for first

and second payments and there was no gap between second

and third payments. Thus, the evidence of P.W.2 is

corroborating the evidence of P.W.1.

16. The evidence of PWs1 and 2 is consistent on lending of

amount to the defendant. Though it was not stated in the plaint

or in the legal notice with regard to the dates, during the cross

examination of P.W.1, defendant elicited dates of lending the

amount and in fact, the said version was supported by PW2.

17. When the cheques were bounced, notice, dated

07.06.2001 was issued to the defendant calling upon him to pay

the amount for which defendant issued Ex.A6, reply notice and

denied issuance of post-dated cheques. However, in the written

statement, the defendant sets up new plea about the plaintiff

approaching him, offering him to join as partner in a business

and issuance of cheques, dated 19.05.2001, 21.05.2001 and

21.05.2001, each for Rs.1,00,000/- towards his share in the

business. In view of the statement made by the defendant in his

written statement, about issuance of cheques, the presumption

available under Section 118 of the N.I. Act comes into operation

and such presumption is rebuttable. The evidence of the

plaintiff is consistent with regard to lending of the amount and

also with regard to his capacity to lend the amount. It was

elicited during the cross-examination of PW1 that he is

Managing Partner of Venkatesh Cine Complex. Plaintiff was also

Managing Partner of Vijaya Surya Chemicals. Hence, the

contention of the defendant that plaintiff had no capacity to lend

Rs.3,00,000/- is not acceptable.

18. Though the defendant denied issuance of cheques in

Ex.A6, reply notice, in the written statement he admitted

issuance of cheques in favour of the plaintiff in connection with

alleged partnership business, which was not entered into. He

further stated in his written statement that three cheques, dated

19.05.2001, 21.05.2001 and 21.05.2001 respectively were

issued towards his share. He also stated that on 22.05.2001

when the defendant asked the plaintiff to execute partnership

deed, plaintiff postponed execution of partnership deed and

when he asked the plaintiff to return his post-dated cheques,

plaintiff refused to handover the same and that

misunderstandings arose between them. It was further averred

in the written statement that when he intended to issue legal

notice to the plaintiff, their common friends requested the

defendant not to issue legal notice and that they would settle

the issue amicably. The defendant having pleaded that at the

behest of their common friends, he did not issue notice, for the

reasons best known, he failed to examine any of said friends as

witness on his behalf.

19. In view of the averments in written statement by

defendant qua issuance of cheques in favour of plaintiffs, the

presumption under Sec 118 of N.I. Act comes into operation that

Negotiable Instruments are supported by consideration. Of

course, presumption under Section 118 of the N.I. Act is

rebuttable one. In Bharat Barrel and Drum Manufacturing

Company vs. Amin Chand Payrelal1, the Hon'ble Apex Court

held as under:

"Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would dis- entitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event the plaintiff is entitled under

AIR 1999 SC 1008

law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as existence of negative evidence is neither possible nor contemplated and even if led is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption the defendant has to bring on record such facts and circumstances, upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist."

20. The plaintiff discharged his initial burden by examining

himself and also by examining PW2. When the onus of proof

shifted to the defendant, he failed to discharge the same. The

defendant can prove the non-existence of consideration by

raising a probable defence. The burden upon the defendant of

proving the non-existence of the consideration can be either

direct or by bringing on record the preponderance of

probabilities by reference to the circumstances upon which he

relies. Had the defendant discharged the onus either by leading

evidence or by disproving the case of the plaintiff, the burden

shifts to plaintiff and plaintiff had to prove passing of

consideration etc., However, in this case, as seen from the

evidence on record, the defendant miserably failed to discharge

the legal burden lying on him. No prudent man keeps quiet for

such a long time after issuance of cheques without issuing

notice calling upon the holder of cheque to return the same.

The other circumstance of the case is that according to

defendant disputes arose between him and plaintiff and hence

he issued instructions to his bank to stop payment. Having

issued instructions to the bank, the appellant/defendant is

expected to issue notice to the plaintiff to return the cheques.

These circumstances coupled with the evidence let in by plaintiff

the amply proved borrowing of amount by appellant/defendant

and his issuance of post dated cheques in favour plaintiff. The

judgement relied upon by the learned counsel for appellant in

Yogendra Kumar Jaiswal v. State of Bihar2 is no way helpful

to the appellant. Accused need not disclose his defence is not

relevant to the present facts of the case.

21. It was contended by learned counsel for the defendant

that cheques are dated 19.05.2001, 21.05.2001 and

21.05.2001, but they were presented in the bank on

29.04.2001. In fact, this Court verified Exs.A1 to A4. Exs.A1 to

A3 are cheques, dated 19.05.2001, 21.05.2001 and 21.05.2001

respectively each for Rs.1,00,000/- and they were presented in

the plaintiff's bank i.e. in Karur Vysya Bank, Kurnool on

28.05.2001 and they were returned on the ground that

'payments stopped' by the drawer. However, the seal of Vijaya

Bank, Kurnool shows the date as 29.04.2001 on Ex.A4.

Obviously it is only a mistake in affixing the stamp on Ex.A4.

2016 (3) SCC 183

When cheques were forwarded from Karur Vysya Bank on

28.05.2001, the stamp affixed on Ex.A4 i.e. 29.04.2001 is only a

mistake committed at the end of Vijaya Bank and it may not

come to the aid of the defendant. Thus, the plaintiff established

that three post dated cheques were issued pursuant to

borrowing of amount. Plaintiff also proved his means and

capacity to lend amount.

Point No.3:

22. In view of the above discussion, the defendant failed to

make out valid grounds and hence, this appeal is liable to be

dismissed.

23. Accordingly the appeal is dismissed. However, no costs.

As a sequel, pending miscellaneous petitions, if any, shall

stand closed.

_______________________________ JUSTICE SUBBA REDDY SATTI Date : 26.04.2022

IKN

HON'BLE SRI JUSTICE SUBBA REDDY SATTI

APPEAL SUIT No.297 of 2006

Date : 26.04.2022

IKN