Andhra Pradesh High Court - Amravati

Senior Civil Judge vs Seshammal1 on 11 August, 2022

     THE HON'BLE SRI JUSTICE SUBBA REDDY SATTI

              SECOND APPEAL No.334 of 2022

JUDGMENT:

Defendants in O.S.No.293 of 2012 filed the present second

appeal, against the judgment and decree dated 30.11.2021 in

A.S.No.8 of 2017 on the file of Principal District Judge, West

Godavari at Eluru, confirming the judgment and decree dated

08.07.2016 in O.S.No.293 of 2012 on the file of Additional

Senior Civil Judge, Eluru.

2. For the sake of convenience and brevity, the parties to this

judgement are referred to as they are arrayed in the O.S.No.293

of 2012.

3. Respondent, being the plaintiff filed the suit O.S.No.293 of

2012 on the file of Additional Senior Civil Judge, Eluru for

recovery of amount basing on promissory note.

4. The case of the plaintiff, in brief, is that defendants

approached the plaintiff in the year 2009 for financial help for

higher studies of 3rd defendant and borrowed an amount of

Rs.7,00,000/- on 11.08.2009 and executed the suit promissory

note. They also agreed to repay the amount with interest @ 24%

p.a. Since the defendants failed to repay the amount, plaintiff

got issued a legal notice dated 23.07.2012 and filed the suit for

recovery of amount.

5. Defendants filed written statement and denied the

averments in the plaint. Defendants contended interalia that

the suit promissory note is fabricated and is not supported by

consideration. They further contended that they obtained

educational loan from the Andhra Bank, R.R.Peta Branch, Eluru

in 2009 for higher studies of 3rd defendant at U.S.A and the

plaintiff stood as a guarantor for the said loan. At that point of

time, he obtained signature of defendants on blank concurrent

papers and stamp papers and filed the above suit.

6. Basing on the above pleadings, the trial Court framed the

following issues:

(1) Whether the suit promissory note is true, valid and duly executed by the defendants?

(2) To what relief?

7. During the course of trial, plaintiff examined himself as

P.W.1 and got examined P.Ws.2 to 4. Exs.A-1 to A-4 were

marked. On behalf of defendants, 1st defendant examined

herself as D.W.1 and Exs.B-1 to B-3 were marked.

8. Trial Court on consideration of both oral and documentary

evidence, decreed the suit against defendants 1 to 3 for an

amount of Rs.9,47,800/- with costs and subsequent interest on

principal amount @ 12% p.a. from the date of suit till the date of

decree and thereafter @ 6% p.a. till realization.

9. Aggrieved by the same, defendants filed appeal A.S.No.8 of

2017 on the file of Principal District Judge, Eluru. The first

appellate Court being the final factfinding Court, on

consideration of oral and documentary evidence, dismissed the

appeal vide judgment dated 30.11.2021. Assailing the same, the

present second appeal is filed.

10. Heard Mrs.Nimmagadda Revathi, learned counsel for the

appellants/defendants.

11. Learned counsel for appellants would submit that the

Courts below failed to consider that respondent/plaintiff has no

capacity to lend the loan amount. She also would submit that

Ex.A-1 is a fabricated document and the respondent/plaintiff

failed to prove the execution of Ex.A-1. She also would submit

that the plaintiff stood as a guarantor for the educational loan

availed by defendants and at that point of time, he obtained

their signatures on blank stamp papers as security and with

those papers, he concocted Ex.A-1. She would submit that the

first appellate Court ought to have allowed I.A.No.339 of 2021

filed under Order 41 Rule 27 of CPC and she thus, prayed to

allow the second appeal by setting aside the judgments of

Courts below.

12. Going by the pleadings and evidence, the case of the

plaintiff is that defendants approached him in 2009 for financial

help for the purpose of higher studies of 3rd defendant and

obtained loan of Rs.7,00,000/- agreeing to repay the same with

interest @ 24% p.a. and executed the promissory note on the

same day, however, defendants failed to discharge the amount

and hence, he issued Ex.A-2 legal notice dated 23.07.2012

demanding and eventually filed the suit.

13. On the other hand, defendants contended that they

obtained educational loan from the Andhra Bank, R.R.Peta

Branch, Eluru for higher studies of 3rd defendant at U.S.A and

plaintiff stood as a guarantor and at the time of borrowing

amount, as the plaintiff demanded, the defendants subscribed

their signatures on blank stamp papers. Taking advantage of

the papers containing the signatures of defendant, plaintiff filed

the suit.

14. Basing on the pleadings, the following substantial questions

of law arise for consideration:

(1) Whether the judgments of Courts below are vitiated

in not considering that plaintiff has no capacity to

lend the amount?

(2) Whether the findings recorded by the Courts are

perverse warranting interference under Section 100

of CPC?

15. Scope of Sec 100 CPC, the Hon'ble Apex Court in Hero

Vinoth Vs. Seshammal1, held that:

"19. It is not within the domain of the High Court to investigate the grounds on which the findings were arrived at, by the last court of fact, being the first appellate court. It is true that the lower appellate court should not ordinarily reject witnesses accepted by the trial court in respect of credibility but even where it has rejected the witnesses accepted by the trial court, the same is no ground for interference in second appeal when it is found that the appellate court has given satisfactory reasons for doing so. In a case where from a

AIR 2009 SC 1481

given set of circumstances two inferences of fact are possible, one drawn by the lower appellate court will not be interfered by the High Court in second appeal. Adopting any other approach is not permissible. The High Court will, however, interfere where it is found that the conclusions drawn by the lower appellate court were erroneous being contrary to the mandatory provisions of law applicable or its settled position on the basis of pronouncements made by the Apex Court, or was based upon inadmissible evidence or arrived at by ignoring material evidence.

It was furthermore held:

23. To be "substantial" a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned. To be a question of law "involving in the case" there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstance of each case whether a question of law is a substantial one and involved in the case, or not; the paramount overall consideration being the need for striking a judicious balance between the indispensable obligation to do justice at all stages and impelling necessity of avoiding prolongation in the life of any lis. (See Santosh Hazari v. Purushottam Tiwari MANU/SC/0091/2001).

24. The principles relating to Section 100 CPC, relevant for this case, may be summerized thus:-

(i) ...

(ii) The High Court should be satisfied that the case involves a substantial question of law, and not a mere question of law. A question of law having a material bearing on the decision of the case (that is, a question, answer to which affects the rights of parties to the suit) will be a substantial question of law, if it is not covered by any specific provisions of law or settled legal principle emerging from binding precedents, and, involves a debatable legal issue. A substantial question of law will also arise in a contrary situation, where the legal position is clear, either on account of express provisions of law or binding precedents, but the court below has decided the matter, either ignoring or acting contrary to such legal principle. In the second type of cases, the substantial question of law arises not because the law is still debatable, but because the decision rendered on a material question, violates the settled position of law."

16. The defendants in the written statement admitted

execution of Ex.A-1. Hence, burden lies on the defendants to

prove that Ex.A-1 promissory note was executed under the

circumstances pleaded by them in the written statement.

Defendants must lead evidence rebutting presumption under

Sec 118(a) of N.I. Act available in favour of the plaintiff.

17. In Bharat Barrel and Drum Manufacturing Company

Vs. Amin Chand Payrelal2, the Hon'ble Apex Court was held

thus:

"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

(1999) 3 SCC 35

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 disentitle 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 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."

18. In G.Venkata Rama Subbaiah Vs. D.Rasool Naik3, the

composite High Court of Andhra Pradesh held thus:

"Once the execution of the promissory note is admitted or proved, then it is presumed to be supported by consideration unless contrary is proved. The burden is

2003 (4) ALT 414

on the defendant to rebut the same by adducing convincing evidence. Unless the defendant rebuts the presumption by adducing convincing rebuttal evidence, the evidential burden would not shift back to the plaintiff who has legal burden only after adducing such convincing rebuttal evidence, it can be held that thereafter the presumption under Section 118 does not come to the rescue of the plaintiff."

19. Going by the pleadings in the case and evidence, there is

no dispute that plaintiff's mother and 1st defendant are sisters

and defendants 2 and 3 are sons of 1st defendant. It is also

admitted fact that defendants obtained educational loan from

Andhra Bank, R.R.Peta Branch, Eluru, for which plaintiff stood

as a surety being the Government employee. The contention of

defendants is that at the time when the plaintiff stood as a

surety, he obtained their signatures on blank stamp papers,

however, the plaintiff denied the said allegation. Since the

defendants admitted execution of promissory note, the burden

lies on them to disprove the same.

20. The initial burden lies on the plaintiff to establish the

execution of suit promissory note. Plaintiff examined himself as

P.W.1 and examined the attestors and scribe as P.Ws.2 to 4.

P.Ws.1 to 4 categorically deposed about borrowal of amount by

defendants on 11.08.2009 and execution of Ex.A-1 promissory

note. The evidence of P.Ws.1 to 4 is consistent. In the absence

of any evidence by defendants rebutting the evidence with

regard to execution of Ex.A-1 or passing of consideration, in the

light of evidence let in by the plaintiff, the presumption under

Section 118A of the N.I.Act comes into operation and thus,

plaintiff, infact, proved the execution of Ex.A-1 by defendants

and passing of consideration.

21. D.W.1 filed her account statement of Andhra Bank from

01.01.2008 to 08.12.2008, however, the suit transaction took

place on 11.08.2009. As per Ex.B-2, balance in the account of

D.W.1 as on 03.12.2008 is Rs.4,000/-. The bank statement of

ICICI Bank, which was marked as Ex.B-4 also does not support

the case of defendants. Thus the evidence let by the defendants

belies the plea of defendants regarding their having sufficient

money. The other plea of the defendants is that scribe and

attestors are close relation and friends of plaintiff and hence

their evidence is to be disbelieved.

22. In Kurakula Apparao Vs. Varrey Vijaya Lakshmi4, the

Composite High Court of Andhra Pradesh held thus:

"There is no law that evidence of a close relative has to be disbelieved on the ground that he is closely related to the plaintiff. At best, their evidence has to be appreciated carefully and cautiously. After appreciation of the evidence, if their evidence stands in the category of wholly reliable, then there is no reason to discard their evidence."

23. In the case on hand, merely because P.Ws.2 and 3 are

related to P.W.1, their evidence cannot be totally discarded. In

fact, going by the relationship, plaintiff and defendants are

closely related to each other. In fact evidence of P.W.2 and

Appeal Suit No.47 of 2006 dated 29.03.2011

P.W.3 is consistent and nothing contra was elicited during their

cross examination.

24. Pending the appeal suit, defendants filed I.A.No.339 of

2021 under Order 41 Rule 27 of CPC and the same was

considered by the first appellate Court along with appeal. The

first appellate Court came to the conclusion that appellants

failed to satisfy the ingredients of Order 41 Rule 27 of CPC and