Unknown vs 7 Air 1999 Madras 49
2023 Latest Caselaw 1949 AP

    THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO


                 APPEAL SUIT No.697 OF 2007

JUDGMENT:

1. Under Section 96 of the Code of the Civil Procedure, the

appeal is filed by the defendant challenging the decree and

Judgment dated 09.10.2007 in O.S. No.311of 2005 passed

by the Principal Senior Civil Judge, Visakhapatnam (for

short, 'trial court').

2. The parties will hereinafter be referred to as arrayed before

the trial court in this Judgment for convenience.

3. The brief averments culled out from the plaint are that the

defendant borrowed Rs.3,50,000/- from the plaintiff to

construct his building, agreeing to repay the same with

interest at 36% per annum and executed a suit promissory

note. The defendant received consideration by en-cashing a

cheque bearing No.634093, dated 16.07.1999. The defendant

also executed a receipt for the said amount. In spite of

repeated demands, the defendant paid some amounts from

25.08.1999 to 22.02.2003 as shown in the plaint. The

payment made on 20.06.2002 was endorsed on the reverse of

the promissory note. The defendant also made a payment of //2// TMR,J AS.No.697 of 2007

Rs.20,000/- on 22.02.2003; after deducting all the payments

made, he became due an amount of Rs.8,51,610/- as of the

filing date of the suit.

4. The defendant filed his written statement, denying all the

allegations made in the plaint. He contended that he never

availed loan from the plaintiff nor executed a promissory note

in his favour. The alleged promissory note is in different

handwriting and ink. The defendant has not received any

legal notice from the plaintiff at any point of time.

5. Based on the above pleadings, the trial court framed the

following issues:

1) Whether the suit promissory note is true, valid and binding?

2) Whether the plaintiff is entitled to the suit amount?

3) Whether the suit claim is within time?

4) To what relief?

6. During the trial, the plaintiff examined P.Ws.1 and 2 and got

marked six documents as Exs.A.1 to A.6. The defendant

examined himself as DW.1 and got marked four documents

as Exs.B1 to B4 marked.

7. After completing the trial and hearing the arguments of both

sides, the Trial Court decreed the suit for Rs.8,51,610/- with

future interest at 6% per annum from the date of suit till the

date of realization, with costs.

//3// TMR,J AS.No.697 of 2007

8. Learned counsel for the appellant submits that the appellant

herein is a minor as on the date of execution of Ex.A1

promissory note and ought to have dismissed the suit on the

ground that the appellant is incompetent to execute the suit

promissory note; the appellant belongs to Schedule Tribe

Andhra Pradesh Schedule Tribes Debt Regulation, 1970

renders all loans granted to S.T.'s by unlicensed

moneylenders as null and void and unenforceable; As per

Regulation No.4 where any member of an S.T. has paid any

Creditor any amount in excess of or equal to the amount of

principal whether by way of principal or interest or both such

debt including the principal, shall be deemed to be wholly

discharged. Learned counsel for the appellant further

contends that the Trial Court is not supposed to have

compared the disputed signatures.

9. Learned counsel for the respondent supports the findings and

observations of the learned Trial Court.

10. I have heard the arguments on behalf of learned counsel for

the appellant and respondent. I have thoughtfully considered

rival submissions and perused the material on record.

//4// TMR,J AS.No.697 of 2007

11. The following points arise for determination :

1. Whether the plaintiff has established that the defendant borrowed an amount of Rs.3,50,000/- on the execution of the suit promissory note?

2. Whether the decree and Judgment passed by the Trial Court need any interference?

POINT Nos.1 & 2 :

12. The following facts are not in dispute. The plaintiff is a

partnership firm with three partners, namely PW.1 - Allu

Gowri Shankar Rao, Ruthala Viswasant and Pydi

Kamalavathi. It is doing finance business by lending money.

In support of the plaintiff's contention, Ex.A5 - Partnership

deed and Ex.A6 - Firm Registration deed are relied on. PW.1

is the Managing Partner of the Plaintiff firm.

13. It is the evidence of PW.1 that on 16.07.1999, the defendant

availed a loan amount of Rs.3,50,000/- and executed Ex.A1

promissory note in the presence of his father, who worked as

Assistant Engineer in the Sales Department. Defendant's

father is the scribe of the promissory note. PW.2 - G.Ramesh

and Y.Apparao attested Ex.A1. In his evidence, PW.1 testified

that the defendant approached the plaintiff through his

father, his close friend. PW.2 also supported the evidence of

PW.1 by depositing that in his presence; the defendant

executed the suit promissory note. It is the evidence of PWs.1 //5// TMR,J AS.No.697 of 2007

and 2 that the defendant received the consideration amount

through cheque No.634093, dated 16.07.1999. The

defendant, who was examined as DW.1, has not stated in his

evidence that he has not received the amount covered under

the cheque. If so, he would have placed a bank record

establishing that he has not en-cashed the same. He has not

taken steps to summon the bank officials to prove the non-

encashment of the cheque. The evidence of DW.1 in cross-

examination shows that his father, who worked as Assistant

Commissioner in the Commercial Tax Office, died in October

2003; DW.1 was employed in the Commercial Tax Department

on Compassionate grounds after the demise of his father. The

defendant's contest is that the Suit promissory note and

Ex.A3 endorsement are forged. Though he stated in cross-

examination that he could take steps for comparison of

disputed signatures, for the reasons best known to him, he

has not taken such steps. As such, it appears that the Trial

Court had compared the signatures. Ex.A3 part-payment

endorsement shows that the defendant is the scribe of the

said endorsement. The defendant has not seriously disputed

the case of the plaintiff that the Ex.A1 promissory note is

scribed by the defendant's father. He also has not taken steps //6// TMR,J AS.No.697 of 2007

to contend that Ex.A3 is not in his handwriting. The plaintiff

has no reason to fabricate the suit promissory note and part-

payment endorsement by forging the handwritings of the

defendant's father and defendant respectively as the Law does

not contemplate scribing the document by executant's father.

The plaintiff can conveniently engage third parties services for

a scribing promissory note and part-payment endorsement.

The said part-payment was made towards DD.No.984264. If

he does not cause payment, he could have taken steps to

prove that he has not made such payment through D.D.

14. The evidence of PWs.1 and 2 manifestly establish execution of

the suit promissory note Ex.A1 by the defendant. The

defendant has not taken steps to show that Exs.A1 & A3 do

not contain his signatures.

15. In a decision Duggineni Seshagirirao V. K.Venkatarao1 in

the facts and circumstances of the case, the High Court held

that:

"the plaintiff has been able to prove the execution of the document. If the document was disputed or doubted the onus was on the defendant to show that the document was

1 2001(6) A.L.T. 95 //7// TMR,J AS.No.697 of 2007

forgery because the presumption in favour of the plaintiff under Section 118 of Negotiable Instrument Act".

16. In a decision Bonalaraju V. S. Sarupula Srinivas 2, wherein it is held that :

"once execution is proved the presumption under Section 118 of N.I. Act that it is supported by consideration automatically applies and the contention that the plaintiff is not only to establish the execution but also establish passing on the consideration is rejected".

17. In a decision G. Vasu Appellant V. Syed Yaseen Sifuddin Quadri3, Respondents.

"Once the defendant shows either by direct evidence or circumstantial evidence or by use of other presumptions of Law or the fact that the promissory note is not supported by consideration in the manner stated in the promissory note or the manner stated in the suit notice or the pleading, the evidential burden shifts to the plaintiff and the legal burden of the plaintiff is revived, i.e., to prove that the promissory note is supported by consideration and at that stage, the presumption of Law covered by S.118" disappears and no longer subsists".

"It is further held that once both parties have adduced evidence the Court has to consider the same and the burden of proof loses all its importance".

18. In a decision Abbisetti Krishnamoorthy V. Singasani Raghuramaiah (died) per L.R.s4, wherein it is held that "Section 118 of the N.I Act shows that the presumption attached to passage of consideration (as is the subject matter of this appeal) just like other presumption also is clearly rebuttable and it is for the defendant to satisfy the Court that in a given case, the presumption cannot be drawn".

In light of the principles laid down in the above decisions, I now consider the facts of the case.

2 2006(2)    ALD 202
3 AIR 1987 A.P. 139 Full Bench

4 2011(5) ALT 143
                                     //8//
                                                                  TMR,J
                                                       AS.No.697 of 2007

19. Such being the position of Law, the burden lies on the defendant to prove the non-existence of consideration by bringing on record such facts and circumstances, which would lead the Court to believe the non-existence of the consideration. If the defendant discharges the onus of proof showing that the existence of consideration was improbable or doubtful and also the execution of the promissory note, the onus would be shifted to the plaintiff. Then the plaintiff will be obliged to prove the existence of the consideration.

20. Regarding the evidence, which is adverted to supra, this

Court views that the defendant did not show satisfactory and

reliable evidence or circumstance to disbelieve the evidence of

PWs.1 and 2 regarding the execution of the promissory note

by the defendant and passing of consideration. The evidence

of PWs.1 and 2 is consistent regarding the execution of the

promissory note by the defendant on receipt of the

consideration amount. Though PWs.1 and 2 were subjected

to lengthy cross-examination, nothing was elicited to

discredit their evidence. The plaintiff and his witness have no

reason to fabricate the suit promissory note. PW.2 has no

reason to depose falsehood against the defendant's interest,

and he would gain nothing by supporting the plaintiff's case

unless there is a truth in it. No evidence is placed by the

defendant to show that he has enmity with PW.2 to depose //9// TMR,J AS.No.697 of 2007

falsehood against his case. However, even the rebuttal could

be given by direct evidence or by proving the preponderance

of probabilities on record.

21. The plaintiff has relied on Ex.A4 -registered sale deed dated

16.09.1997 executed by Ch. Kameswara Rao in favour of K.

Praveen Kumar (defendant). The material on record shows

that the defendant, having executed Ex.A1, kept Ex.A4 title

deed with the plaintiff firm as a security for the loan amount.

The defendant has not explained how his title deed, i.e.,

Ex.A4 came into the custody of the plaintiff firm when he had

no transaction with the firm. It can be taken as one of the

strong circumstances to accept the plaintiff's case.

22. In the present case, the presumption has not been rebutted

by the defendant, even by the preponderance of probabilities.

23. On studied scrutiny, it is seen that the defendant has not produced any evidence to discharge the onus on them. The defence taken by the defendant is not substantiated. The presumption under section 118 of the Negotiable Instruments Act 1881 is a statutory one, and unless it is rebutted, it has to be presumed that consideration has passed.

24. The upshot of the discussion mentioned above is that the plaintiff is able to establish the execution of the suit //10// TMR,J AS.No.697 of 2007

promissory note in her favour by the defendant after receipt of the consideration amount as referred in Ex.A1 promissory note.

25. The defendant contends that he was a minor as on the date of the suit promissory note transaction. He relied on Ex.B1 - Secondary School Certificate, which shows the date of birth, Ex.B2 - Driving license, Ex.B3 Community, nativity and date of birth certificate of the defendant. As per Ex.B1 and B3, the defendant's date of birth was shown as 06.10.1981. Ex.A1 Suit transaction took place on 16.07.1999. Ex.A4 transaction is said to have taken place on 16.09.1997. The sale deed was executed in favour of the defendant without referring to him as a minor. It implies that he was not a minor even by the date of Ex.A4. Otherwise, it could have certainly been reflected in the sale deed. In this regard, the Trial Court observed that "the recitals of Ex.A4 sale deed clearly show that the defendant has purchased the flat thereunder, in the first premises of Ex.A4 the age of the defendant was not referred and he was shown as major not being represented by his father or mother being minor on the date of Ex.A4 transaction dated 16.09.1997; it means the DW.1 being a major had purchased the property covered thereunder". The Trial Court has given said reasoning based on the facts.

//11// TMR,J AS.No.697 of 2007

26. In Birad Mal Singhvi v. Anand Purohit5 the Hon'ble Supreme Court held that

"the date of birth mentioned in the scholars' register has no evidentiary value unless the person who made the entry or who gave the date of birth is examined. The entry contained in the admission form or in the scholar register must be shown to be made on the basis of information given by the parents or a person having special knowledge about the date of birth of the person concerned. If the entry in the scholar's register regarding date of birth is made on the basis of information given by parents, the entry would have evidentiary value but if it is given by a stranger or by someone else who had no special means of knowledge of the date of birth, such an entry will have no evidentiary value. Merely because the documents relating to the date of birth were proved, it does not mean that the contents of document were also proved. Mere proof of the documents would not tantamount to proof of all the contents or the correctness of date of birth stated in the documents".

27. In Babloo Pasi v. State of Jharkhand and Anr.6 the Hon'ble Supreme Court, referring to the Judgment of Birad Mal Singhvi, held that

"Section 35 of the Indian Evidence Act, 1872 lays down that an entry in any public or other official book, register, record, stating a fact in issue or relevant fact made by a public servant in the discharge of his official duty especially enjoined by the Law of the country is itself a relevant fact. It is trite that to render a document admissible under Section 35, three conditions have to be satisfied, namely: (i) entry that is relied on must be one in a public or other official book, register or record; (ii) it must be an entry stating a fact in issue or a relevant fact, and (iii) it must be made by a public servant in discharge of his official duties, or in performance of his duty especially enjoined by Law. An entry relating to date of birth made in the school register is relevant and admissible under Section 35 of the Evidence Act but the entry regarding the age of a person in a school register is of not

5 1988 AIR(SC) 1796

6 2009 AIR(SC) 314 //12// TMR,J AS.No.697 of 2007

much evidentiary value to prove the age of the person in the absence of the material on which the age was recorded".

28. It is common knowledge that based on the entries made in the

school register, the date of birth will be noted in the

corresponding certificates issued by the concerned

authorities. The defendant has not examined any witnesses in

proof of his age. He has failed to explain why in Ex.A4 sale

deed, he was not being referred to as a minor, and Ex.A4 sale

deed came to be executed in his favour. In the case facts, the

Trial Court has come to the correct conclusion in not

accepting the defendant's contention.

29. The other contention raised by the defendant is that he

belongs to Schedule Tribe, and as per the A.P. Schedule Tribe

Debt Regulation, 1970, all loans granted to Schedule Tribe

People as null and void. The reading of 2 of said Regulation

shows that it extends to all Schedule Areas in Andhra

Pradesh.

30. The Fifth Schedule under Article 244 (1) of the Constitution

defines "Schedule Areas", as such areas as the President may

by order declare to be Scheduled Areas after consultation with

the Governor of that State.

31. As per the plaint, the defendant resides in Flat No.1, D.No.1-

2-215/E, Gagan Mahal, Dumalguda, Hyderabad. As per the //13// TMR,J AS.No.697 of 2007

contents of the Ex.A1 promissory note, the defendant is a

resident of Plot No.29, Saudamini Apartments, Laevsons Baby

Colony, Visakhapatnam. The burden is on the defendant to

establish that he is a resident of the Scheduled Area to claim

benefit. The defendant's address particulars as shown in the

plaint and in Ex.A1 shows he is a resident of Hyderabad and

Visakhapatnam. Thus, the defendant has not placed any

material to show that he was a resident of the Scheduled Area

as referred to in Fifth Schedule on the Suit transaction date.

As such, this Court is not inclined to accept the said

contention.

32. As seen from the plaint, interest is calculated at 36% per

annum. Admittedly, the plaintiff firm is a Financial Company

which deals with finance business by lending money.

33. The learned counsel for the plaintiff relied on a decision

M/s.Bangalore Water Supply and Sewerage Board Vs.

M/s.Sugesan and Co.(P) Ltd., Madras7, wherein interest is

awarded at 24% per annum up to the date of the suit in a

7 AIR 1999 MADRAS 49 //14// TMR,J AS.No.697 of 2007

commercial transaction. Though the defendant had agreed to

pay interest at 36% per annum, this Court views the interest

claimed by the plaintiff as usurious. Considering the facts of

the case, this Court views that the interest rate shall be

calculated up to the date of the suit at 24% per annum. This

Court views that Section 34 of the CPC leaves it to the

discretion of the Court as to what interest is to be decreed by

way of pendenti lite interest. The Trial Court, at its discretion,

awarded interest at the rate of 6% per annum from the date of

suit till the date of realization. The plaintiff has not challenged

such a rate of interest. As such, this Court is not inclined to

interfere with the interest rate as awarded by the Trial Court

from the date of the suit.

34. Given the preceding discussion, this Court views that the

Trial Court finding regarding the execution of the promissory

note by the defendant on receipt of the consideration amount

is to be confirmed. However, the Trial Court finding with

regard to allowing the claim of the plaintiff to grant interest at

36% per annum instead of awarding 24% per annum is liable

to be set aside.

35. As a result, the appeal is partly allowed with proportionate

costs. The Decree and Judgment of the Trial Court are //15// TMR,J AS.No.697 of 2007

modified by holding that the respondent/plaintiff is entitled to

the decree for a sum of Rs.3,50,000/- from the defendant

with interest at 24% per annum from the date of the suit

transaction till the date of filing of such suit and thereafter at

the rate of interest as awarded by the Trial Court with

proportionate costs in the suit.

36. In the plaint, the payments made by the defendant were

deducted by calculating the interest rate at 36% per annum;

such calculations shall be made as per the interest rate

awarded by this Court. On the amounts deposited by the

defendant, if any, before the Trial Court, the appellant-

defendant shall be liable to pay interest only up to the date of

deposit. In case the amount in the deposit is invested in any

nationalized bank, the interest earned on that amount, to the

extent the plaintiff was entitled, shall be paid to it. Payment, if

any, made already shall be adjusted towards the decree that

may be drawn pursuant to this Judgment.

37. Miscellaneous petitions, if any, pending in this appeal shall

stand closed.

___________________________ T.MALLIKARJUNA RAO, J Dt.17.04.2023.

KGM //16// TMR,J AS.No.697 of 2007

THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

APPEAL SUIT No.697 OF 2007 Dated 17.04.2023

KGM