Unknown vs "The Plaintiff Has Been Able To ...
2023 Latest Caselaw 3714 AP

       THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

                    APPEAL SUIT No.184 OF 2016

JUDGMENT:

1. Aggrieved by the Decree and Judgment dated 03.11.2015 in O.S.

No.402 of 2014 passed by the learned VII Additional District Judge, Ongole

(for short "the trial Court"), the appellant/defendant preferred this appeal

questioning the correctness of the Decree and Judgment passed by the

trial Court.

2. For the sake of convenience, the parties will hereinafter be referred to

as arrayed in the Original Suit.

3. The plaintiff claims that the defendant borrowed an amount of

Rs.6,00,000/- on 10.03.2013 and another amount of Rs.4,00,000/- on

15.04.2013 from the plaintiff for his business purpose and executed two

promissory notes, agreeing to repay the same with interest at 24% per

annum. Despite repeated demands made by the plaintiff, the defendant

failed to repay the said amount, and he is making hectic efforts to leave the

jurisdiction of the Court by alienating the schedule property to third

parties with an evil intention to evade the debts due to him.

4. In his written statement the defendant contended that the plaintiff

could not lend such huge amounts; He had no necessity to borrow the

amounts under Ex.A1 and Ex.A2 promissory notes; the signatures on the

promissory notes do not belong to him. They are forged ones, and he is in

no way concerned with the alleged suit schedule property.

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5. Based on the above pleadings, the Trial Court framed the following

issues, which are as under:-

1) Whether the suit promissory notes dated 10.03.2013 and 15.04.2013 are true, valid and binding on the defendant?

2) To what relief?

6. On behalf of the plaintiff, P.Ws.1 to 3 were examined and marked

Exs.A1 and A2 and the defendant himself was examined as D.W.1 and no

documents were marked on his behalf.

7. After considering the evidence on record, the trial Court decreed the

suit with costs for Rs.14,11,333/- with interest @ 24% per annum from the

date of suit till the date of decree and thereafter @ 6% per annum till the

date of realization on principal amounts of Rs.6,00,000/- and

Rs.4,00,000/-.

8. I have heard the arguments of learned counsel for both parties.

9. Sri Mekala Rama Murthy, learned counsel for the

appellant/defendant, contends that the trial Court ought to have seen that

Exs.A1 and A2 are created and rank forged. The appellant is a Graduate,

and if he borrows the said amount from the respondent, he could scribe

Exs.A1 and A2 with his handwriting. The rate of interest at 24% per

annum is allowed by the trial Court on Exs.A1 and A2 promissory notes,

which is not sustainable during the pendency of the suit under Section 34

of the CPC.

10. Despite several adjournments given by this Court, no representation is

made on behalf of the respondent/plaintiff either in person or by a counsel

T.M.R.,J AS No.184 of 2016

representing on his behalf. Hence, the arguments of the

respondent/plaintiff are treated as heard.

11. Having regard to the pleadings in the suit, the findings recorded by

the trial Court and in the light of the rival contentions and submissions

made before this Court, the points that would arise for determination are:

(1) Whether the trial Court is justified in holding that the suit promissory notes are true, valid and supported by consideration?

(2) Whether the interest awarded by the trial Court @ 24% per annum pendente-lite is just and reasonable?

POINT No.1:

12. Though several grounds have been urged in the grounds of appeal, the

appellant's counsel focused his argument only on the pendente- lite interest

awarded by the trial Court at 24% per annum. However, this Court is

inclined to consider the evidence relating to the suit transactions, as in the

grounds of appeal, the appellant disputed the correctness of the judgment

about the suit transactions. To prove his case, the plaintiff himself was

examined as P.W.1 and also examined the scribe and one of the attestors

as P.Ws.2 and 3. The Plaintiff (P.W.1) deposed that the defendant, for his

business purpose, borrowed Rs.6,00,000/- on 10.03.2013 and

Rs.4,00,000/- on 15.04.2013 and executed Exs.A1 and A2 promissory

notes in the presence of attestors and scribe. P.W.2 and P.W.3 supported

the version of the plaintiff.

T.M.R.,J AS No.184 of 2016

13. On behalf of the defendant, the defendant himself was examined as

D.W.1. He testified that he had not borrowed the amount from the plaintiff.

In the cross-examination, he deposed that he did not inquire about the

attestors and scribe of Exs.A1 and A2. Though P.Ws.1 to 3 were subjected

to cross-examination, nothing is brought on record to disbelieve their

evidence. The evidence of PWs.1 and 3 manifestly establishes the execution

of the suit promissory notes Exs.A1 and A2 by the defendant.

14. In a decision reported in Duggineni Seshagirirao vs. 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 forgery because the presumption in favour of the plaintiff under Section 118 of the Negotiable Instruments Act".

15. In a decision reported in Bonalaraju vs. S. Sarupula Srinivas2,

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 of the consideration, is rejected".

16. In a decision reported in Abbisetti Krishnamoorthy vs. Singasani

Raghuramaiah (died) per LRs3, wherein it is held that:

12001 (6) ALT 95 22006 (2) ALD 202 32011(5) ALT 143

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"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".

17. In light of the principles laid down in the above decisions, 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 the execution of the promissory notes, the

onus would be shifted to the plaintiff. Then he will be obliged to prove the

existence of the consideration.

18. Having regard to the evidence, which is adverted supra, this Court

views that the defendant did not show satisfactory and reliable evidence or

circumstance to disbelieve the evidence of PWs.1 to 3 regarding the

execution of the promissory notes by the defendant and passing of

consideration. The evidence of PWs.1 to 3 is consistent regarding the

execution of the promissory notes by the defendant on receipt of the

consideration amount. Though PWs.1 to 3 were subjected to lengthy cross-

examination, nothing was elicited to discredit their evidence. The plaintiff

and his witnesses have no reason to fabricate the suit promissory notes.

PWs.2 and 3 have no reason to depose falsehood against the defendant's

interest, and they would gain nothing by supporting the plaintiff's case

unless there is a truth in it. The defendant places no evidence to show his

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hostility with PWs.2 and 3 to depose falsehood against his case. However,

even the rebuttal could be given by direct evidence or by proving the

preponderance of probabilities. In the present case, the defendant has not

rebutted the presumption even by the preponderance of probabilities.

19. On studied scrutiny, it is seen that the defendant has not produced

any evidence to discharge the onus on him. 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.

20. The upshot of the discussion above is that the plaintiff is able to

establish the execution of the suit promissory notes in his favour by the

defendant after receipt of the consideration amount there-under.

Accordingly, this point is answered in favour of the plaintiff by holding that

the trial Court is justified in holding that the defendant executed the suit

promissory notes and received the consideration amounts.

POINT NO.2

21. As seen from the written statement, the defendant has not disputed

the interest rate claimed by the plaintiff. Since the defendant has not

disputed the interest rate, this Court is not inclined to consider the

submissions made by the appellant counsel regarding granting interest at

24% per annum as pre-lite interest. It is settled law that the use of the word

"may" in Section 34 of CPC confers a discretion of the Court to 'award' or

'not to award' interest or to award interest at such rate as it deems fit.

T.M.R.,J AS No.184 of 2016

22. In a decision reported in DDA vs Joginer S. Monga4, the Hon'ble

Apex Court has reduced the post-lite interest rate from 18% to 9% per

annum. In ascertaining the rate of interest, the Courts of Law can take

judicial notice of both inflation and also fall in bank lending rate of interest.

The steep fall in the bank lending interest can be considered grounds for

reducing the post-lite interest from 24% per annum. This Court views that if

the interest rate is unconscionable and usurious, the appellate Court has

the power to reduce the interest rate from what was granted by the trial

Court. By following the case law cited above, this Court is inclined to

reduce the post-lite interest from 24% per annum to 12% per annum from

the date of suit till the date of passing of the decree.

23. For the reasons stated above, the appeal is allowed in part by

modifying the post-lite interest from 24% to 12% per annum from the suit

date to the decree date. The rest of the judgment holds good. Both parties

shall bear their costs.

Consequently, miscellaneous petitions pending, if any, shall also

stand closed.

_________________________________ JUSTICE T.MALLIKARJUNA RAO

Dt.26.07.2023 MS

(2004) 2 SCC 297

T.M.R.,J AS No.184 of 2016

THE HON'BLE SRI JUSTICE T. MALLIKARJUNA RAO

APPEAL SUIT NO.184 OF 2016

DATE: 26.07.2023

MS