Kanajam Dhana Lakshmi vs Perni Manikumar
2022 Latest Caselaw 8057 AP

      THE HON'BLE JUSTICE Dr. V.R.K.KRUPA SAGAR

               SECOND APPEAL No.227 of 2012

JUDGMENT:

The plaintiff before the learned trial Court filed this

second appeal under Section 100 C.P.C. The respondent herein

was the 1st defendant before the learned trial Court. O.S.No.85

of 2003 was a suit on promissory note seeking for recovery of

money. That was filed by the plaintiff as against three

defendants arraying them as defendant Nos.1 to 3. After due

trial, the learned Senior Civil Judge at Avanigadda decreed the

suit in favour of the plaintiff directing defendant No.1 to pay the

suit debt along with interest and costs. The suit against

defendant Nos.2 and 3 was dismissed. Defendant No.1

thereafter filed A.S.No.180 of 2006 showing the plaintiff as

respondent No.1 and learned I Additional District and Sessions

Judge, Machilipatnam, Krishna District allowed the appeal

upsetting the trial Court's judgment and as a consequence, it

dismissed the suit as against defendant No.1 also. Aggrieved

against that, the plaintiff in the suit has come up with this

appeal. Before adverting to the substantial questions of law

involved in this appeal, it is necessary to see how the legal

proceedings took place before both the Courts below.

Dr. VRKS, J S.A.No.227 of 2012

2. In her plaint, the plaintiff alleged that defendant No.3 is

father and defendant Nos.1 and 2 are his sons. They constitute

a Hindu joint family. To meet the family expenses, agricultural

expenses and business development, defendant No.1

approached the plaintiff and borrowed an amount of

Rs.75,000/- from her on 05.12.2000 and executed the

promissory note agreeing to repay with 18% interest per annum

as and when demanded. Despite demands, there was no

repayment. A legal notice dated 11.08.2003 was got issued and

a reply notice dated 16.08.2003 was received by the plaintiff.

Since the defendants did not repay and since the debt was

meant for joint family, the suit was laid as against all the three

defendants for recovery of Rs.1,07,662-50 ps. and interest and

costs.

3. Defendant No.1 filed a written statement and defendant

No.3 filed a written statement and defendant No.2 filed a memo

adopting the written statement of defendant No.3. In his

written statement, defendant No.1 denied the plaint mentioned

averments and denied borrowal of money from the plaintiff and

denied execution of the suit pronote. Impleading of defendant

Nos.2 and 3 is misjoinder and suit is liable to be dismissed on

that ground. It is stated that this defendant never saw the

Dr. VRKS, J S.A.No.227 of 2012

plaintiff at all and did not have even fair chances of any

acquaintance with her. It was only on receiving notices from

the plaintiff, this defendant had made enquiries and it was

found that she was mother-in-law of Sri Pothula Siva Sankar

Babu. It is that Pothula Siva Sankar Babu, who is the master

mind behind this litigation, and he got fabricated the pronote

and got the suit filed through the plaintiff with a view to cause

wrongful loss to this defendant. It is then stated that this

answering defendant and his family members had no need of

having financial assistance from anybody and on enquiries it

was found that the plaintiff had no financial capacity to lend

money. It is ridiculous to allege that a junior member of the

family would have contracted debts for the benefit of joint family

while kartha of the family is at the helm of affairs. The suit

pronote is not supported by consideration. It is stated that

above referred Pothula Siva Sankar Babu and this answering

defendant have been at logger-heads in the last three years and

in the year 2003 during July he threatened the mother of this

defendant with dire consequences and accosted that he would

drag on to the Court. The scribe and attestors of the pronote

were henchmen of the plaintiff. For those reasons he sought for

dismissal of the suit with exemplary costs.

Dr. VRKS, J S.A.No.227 of 2012

4. With all similar allegations and averments there is the

written statement of defendant No.3, which was adopted by

defendant No.2.

5. On those pleadings, the learned trial Court framed the

following issues:

"1. Whether the suit pronote is true, valid and binding on the defendants and suit debt is borrowed for joint family business?

2. To what relief?"

6. At the trial, PWs.1 to 3 were examined and Exs.A.1 to A.6

were marked for plaintiff. Defendant Nos.1 and 3 gave evidence

as DWs.1 and 2 and Exs.B.1 to B.3 were marked.

7. In proof of the facts alleged about defendant No.1

borrowing money and plaintiff lending money and defendant

No.1 executing the promissory note, which was marked as

Ex.A.1, the plaintiff as PW.1 gave evidence and one of the

attestors by name Sri B.Krishna Murthy supported the version

when he deposed as PW.2 and the scribe of the promissory note

Sri Talupula Aswani Kumar deposed as PW.3 and supported the

version. Thus, all the three witnesses consistently spoke about

defendant No.1 borrowing money from the plaintiff and signing

the suit pronote. The scribe deposed that it was at the

Dr. VRKS, J S.A.No.227 of 2012

instructions of defendant No.1 only he scribed the promissory

note. He got acquaintance with him since a long time. According

to the witnesses, the suit mentioned transaction occurred at the

house of the plaintiff/PW.1. On that evidence, the learned trial

Court believed the suit mentioned transaction and found

defendant No.1 liable to repay the suit debt. As against

defendant Nos.2 and 3, it accepted the contentions of the

defendants and stated that defendant No.1 was a junior

member of the family and defendant No.3 was the kartha of the

joint family and defendant Nos.2 and 3 having not signed the

pronote were not liable to pay the suit debt. So saying it

dismissed the suit against defendant Nos.2 and 3. At the trial,

the contentions were raised in consonance with the pleadings in

the written statement about wealthiness of defendants and

impecuniousness of plaintiff. In support of their plea,

defendants also adduced Exs.B.1 and B.2-title deeds showing

their wealth in the form of lands. During the course of

recording of evidence, it was found that the plaintiff/PW.1 could

not even identify defendant No.3 and was able to identify only

defendant No.2. DWs.1 and 2 deposed about enmity for Pothula

Siva Sankar Babu against them and the relationship of that

enemy with plaintiff. Learned trial Court discarded the plea of

Dr. VRKS, J S.A.No.227 of 2012

enmity stating that, that was not mentioned in reply notices of

defendants contained in Ex.A.6. That they also did not explain

the cause of disputes etc. It was for those reasons, the enmity

angle was discarded. It then stated that defendant No.1/DW.1

admitted his signatures on his own written statement and

further admitted that Ex.A.3-postal acknowledgment under

which notice was received was also admitted as containing his

signature. It then went on to say that in terms of Section 73 of

the Indian Evidence Act, the Court compared these signatures

and they were found to be same. It then stated that DW.1

during his cross-examination admitted variances in his

signatures between vakalat and postal acknowledgement and he

failed to explain that. It was for these reasons, it concluded that

Ex.A.1-promissory note was signed by defendant No.1. Since

defendant No.1 failed to have his signature compared by a

handwriting expert, he failed to discharge his burden. It did not

make any clear finding as to the financial capacity of the

plaintiff to assess her ability to lend amount and finally, it

decreed the suit as against defendant No.1. It answered all the

issues in favour of the plaintiff and decreed the suit.

Dr. VRKS, J S.A.No.227 of 2012

8. On considering the material on record and the grounds

raised in the memorandum of grounds of appeal, the first

appellate Court framed the following point for consideration:

"Whether the suit promissory note is true, valid and binding on the 1st defendant?"

9. It very elaborately considered the oral evidence that was

brought on record by both sides. Relative financial capacity on

both sides was the main focus before the learned first appellate

Court. After a detailed discussion of each witness in chief and

in cross, it found that as per the admissions made by PW.1 and

as per the evidence of DWs.1 and 2 and as per Exs.B.1 and B.2,

the family of defendants has been owning large extent of

properties and they have been progressively purchasing new

properties and that they have been having business, they were

having houses and they were having a sawmill. From the

evidence on record, it observed that other than this disputed

transaction, defendants were found not having incurred any

debt either from the plaintiff or from anybody else. On the other

hand, it observed that the plaintiff is only a home maker and

she does not have even a bank account and she admitted that

she does not have any immovable properties in her name and

from her evidence, it was found that her husband was only a

Dr. VRKS, J S.A.No.227 of 2012

small scale employee and she herself was educated only up to

7th standard. It was on that evidence, it found that the

contention of defendant No.1 was found to be correct and as a

consequence, it observed that the disputed promissory note was

not supported by consideration. It discussed various

circumstances and the discrepancies in the evidence of scribe

and attestor and it recorded a finding that though PW.1 stated

that the attestor and scribe were fetched by defendant No.1, the

evidence on record established that such contention was

incorrect and the contention of defendant No.1 that they were

brought by plaintiff and they are her henchmen was found to be

correct. It also observed the failure of plaintiff in identifying

defendant No.3 as one of the circumstances to disbelieve her

case. It was with those findings, learned first appellate Court

allowed the appeal and dismissed the suit as against defendant

No.1.

10. In this second appeal, the substantial questions of law on

which this appeal was admitted are:

"1. Whether the Courts below were right in discarding the admissions made by defendant No.1?

2. Whether the Courts below failed in noticing the presumptions that were available in Negotiable

Dr. VRKS, J S.A.No.227 of 2012

Instruments Act and erroneously exercised power under Section 73 of Evidence Act?"

11. Learned counsel for appellant submits that the first

appellate Court in terms of Section 96 and Order XLI Rule 31

C.P.C. had to decide all the facts and law, but the learned first

appellate Court failed in that regard. It is contended that only

the point the first appellate Court considered was whether the

suit pronote is true, valid and binding on defendant No.1, but

its findings were contrary to that and it went on to discuss the

financial capacity of plaintiff and defendants, which is not even

made an issue in the trial Court as well as in the first appellate

Court. Therefore, the first appellate Court's judgment cannot be

sustained.

12. Learned counsel for respondent submits that the point

that was considered by the first appellate Court includes validity

and binding nature of suit promissory note and that part of the

point encompasses within itself the contentions concerning

financial capacity of the parties and that averments in the

written statement and evidence of DWs.1 and 2 and the cross-

examination of PWs.1 to 3 would all go to show that both

parties went to trial with full knowledge of the contentions

concerning relative financial capacities of parties and the error

Dr. VRKS, J S.A.No.227 of 2012

committed by the trial Court in failing to answer that aspect of

the matter was rectified by the first appellate Court and

therefore, there is no interference that is required in this second

appeal.

13. To sustain the contentions concerning incorrect disposal

of first appeal, learned counsel for the appellant cited Malluru

Mallappa (Dead) through Legal Representatives v.

Kuruvathappa1. That was a case for specific performance of an

agreement for sale. The trial Court found that the plaintiff was

found not ready and not willing to perform his part of contract

and that the suit was barred by limitation. It finally dismissed

the suit. The first appellate Court was the High Court of

Karnataka. The Hon'ble Supreme Court of India having verified

the judgment of the High Court observed that the first appellate

Court failed to examine any evidence and law concerning

limitation as well as readiness and willingness and simply

concurred with the trial Court's judgment and that was against

the principles contained in Order XLI Rule 31 C.P.C. Therefore,

the first appellate Court's judgment was set aside and the

matter was remanded leaving it open to both parties to raise

(2020) 4 SCC 313

Dr. VRKS, J S.A.No.227 of 2012

their contentions before the first appellate Court. In the context

of above facts, the Hon'ble Supreme Court of India was pleased

to reiterate the manner in which the first appellate Court had to

dispose of the first appeal. It stated that the first appeal being

continuation of suit, it has to advert to points for determination

and then render its decision on it and then record its reasons

for reaching to such decision. The first appeal was to rectify all

the errors that are found in the judgment of the trial Court. It is

on these principles, learned counsel for appellant urges this

Court that the approach of the first appellate Court stands

against this ruling and therefore, it has to be set aside.

14. This Court has gone through the entire judgment of the

first appellate Court. It finds that the first appellate Court has

recorded the contentions raised in the plaint and the

contentions raised in the written statement and the issues that

were settled by the trial Court and it also recorded all the

contentions raised in the memorandum of grounds of appeal

and it noted the precedent and then recorded that it had heard

the arguments on both sides and on consideration of all that

material it chose to frame the question for consideration as

whether the suit promissory note is true, valid and binding on

the first defendant. It then extensively recorded the findings of

Dr. VRKS, J S.A.No.227 of 2012

the trial Court and as to how it believed the execution of pronote

and failed to give due regard to the evidence on such aspect of

the matter and then after referring to the entire evidence

concluded that the defendants' case was more probable and

recorded its reasons about the failure of trial Court in adverting

to relevant material and only then it reached to its conclusions.

Thus, the judgment impugned before this Court is certainly in

accordance with the mandate in Order XLI Rule 31 C.P.C. and

the ruling of the Hon'ble Supreme Court of India. The material

on record indicates that the defendants have been questioning

the financial capacity of the plaintiff and have also been

claiming that they themselves were wealthy enough and there

was no need for them to borrow from anyone. The trial Court's

judgment shows that these pleadings were adverted to by the

trial Court, but it did not pay required attention on that part of

the case and it went on decreeing the suit only on the basis that

it found execution of pronote by defendant No.1 as correct. The

first appellate Court's judgment shows that the defendants have

been able to establish through record the improbability of

passing of consideration. Therefore, the first appellate Court

reversed the judgment and decree of the trial Court. When the

point for consideration before the first appellate Court consists

Dr. VRKS, J S.A.No.227 of 2012

of truth and validity of the pronote, as rightly contended by the

learned counsel for respondent, that covers the aspect of

financial capacity of both parties. There were required

pleadings, there was required evidence and attention of the

appellate Court on that aspect is reflected in the point it framed

for consideration. Therefore, no separate issue was framed is of

no consequence. Therefore, on this procedural aspect, this

Court finds no merit in the contentions raised by the appellant

in this second appeal.

15. Learned counsel for appellant urges that since the trial

Court found Ex.A.1-pronote bears the signature of defendant

No.1 and since that finding was not disturbed by the first

appellate Court, the presumption under Section 118 of the

Negotiable Instruments Act (for short, 'the N.I. Act') applies and

borrowal of money, in other words passing of consideration,

should have been presumed and on such presumption, the first

appellate Court should have upheld the trial Court's judgment.

16. Having given consideration to this contention, the record

is seen and it is to be stated that both the Courts below stated

that Ex.A.1-promissory note bears the signature of defendant

No.1. Thus, the primary burden of plaintiff was discharged.

Dr. VRKS, J S.A.No.227 of 2012

Section 118 of the N.I. Act permits the Court to draw

presumption of passing of consideration. If no other evidence

was available, a Court of law was entitled to decree the suit,

which was based on such a pronote. However, one should

notice that the presumption of consideration raised under

Section 118 of the N.I. Act is made available for rebuttal by the

defendants. If the defendants are successful in rebutting that

presumption of consideration, then the evidential of burden

goes back to the plaintiff. Then the plaintiff has to prove actual

passing of consideration. If the plaintiff fails to prove, the

matter rests there and the suit shall be dismissed. This has

been the law in G.Vasu v. Syed Yaseen Sifuddin Quadri2. The

first appellate Court having judiciously scrutinized the oral and

documentary evidence, found that defendant No.1 and his

family are having movables and immovables and have their own

house, agricultural lands and business concerns and were

found not indebted to anyone and therefore, recorded an

observation that it was improbable on their part to seek

financial assistance from the plaintiff. It also analyzed the

entire evidence led by the plaintiff and observed that the

plaintiff was not engaged in any gainful employment and was a

1986 Lawsuit (AP) 99 (FB)

Dr. VRKS, J S.A.No.227 of 2012

mere home maker without earnings and studied 7th class and

had no assets in her name and her husband was a small

employee and nothing was there to see her financial capacity. It

then observed that she did not even have a bank account and

that holding Rs.75,000/-, which was a huge cash with her was

to be explained by her and she failed to show any possibility of

accumulation of so much money with her. It was in that

context of facts it observed that the plaintiff was not having this

amount and was not in a position to lend money. It observed

that Rs.75,000/- was a huge amount. It was then recorded that

it was improbable for the plaintiff to have handed over cash of

Rs.75,000/- to the defendants. Though the first appellate Court

did not say in so many words, the theme underlined the

impugned judgment indicates that the learned judge had in his

mind the law laid down by the Full Bench of this Court referred

earlier. The finding of the first appellate Court that the 1st

defendant was successful in showing the improbability of

consideration is an indication that it went in accordance with

the law. The approach of the first appellate Court is fully in

accordance with law. There was no material before the first

appellate Court showing that the plaintiff was able to prove her

contention of passing of consideration after the burden was

Dr. VRKS, J S.A.No.227 of 2012

shifted to her shoulders. Therefore, there is no merit in the

second appeal on the question of legal presumptions contained

in N.I. Act raised by the appellant.

17. Another contention raised is about admissions of

defendant No.1 and the first appellate Court ignoring that.

Having considered the entire material on record, one could not

see any admission of defendant No.1 about receiving

Rs.75,000/- from the plaintiff. The admissions were only with

reference to his signatures on vakalat, written statement and

postal acknowledgement etc. The other admissions are about

inadequate evidence brought on record about the disputes

between defendant No.1 and the son-in-law of plaintiff etc.

None of them have got any bearing on the principal contention

raised before the Courts below. Therefore, there is no merit in

the contentions raised in this second appeal. Learned trial

Court in the context of evidence that was placed before it

adverted to an exercise of comparison of signatures on pronote

as against written statement etc. in terms of Section 73 of the

Indian Evidence Act. All that has no relevance in this appeal

since the signature of defendant No.1 on Ex.A.1-pronote was

recorded as proved by both the Courts below. On a total

consideration of the material before this Court, it has to be

Dr. VRKS, J S.A.No.227 of 2012

stated that the judgment impugned here, which is that of the

first appellate Court, indicates full consideration of facts and

reaching to appropriate findings on fact. No perversity is

noticed except the numerous typographical errors, which

remained uncorrected. There is nothing in this second appeal

to interfere with that well reasoned judgment of the first

appellate Court. Therefore, the points are answered against the

appellant.

18. In the result, the Second Appeal is dismissed confirming

the first appellate Court's judgment. There shall be no order as

to costs.

As a sequel, miscellaneous applications pending, if any,

shall stand closed.

_____________________________ Dr. V.R.K.KRUPA SAGAR, J Date: 28.10.2022 Ivd

Dr. VRKS, J S.A.No.227 of 2012

THE HON'BLE JUSTICE Dr. V.R.K.KRUPA SAGAR

SECOND APPEAL No.227 of 2012

Date: 28.10.2022

Ivd