Andhra Pradesh High Court - Amravati

M. Sudhakar vs Noorabasha Nagoor Saheb, on 6 October, 2023

       THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

                     APPEAL SUIT NO.27 OF 2016

JUDGMENT:

1. The Appeal, under Section 96 of the Code of the Civil Procedure, is

filed by the appellant/defendant challenging the decree and Judgment,

dated 06.03.2015 in O.S.No.20 of 2009 passed by the learned Senior

Civil Judge, Parchur (for short, 'trial court'). The respondent is the

plaintiff, who filed the suit in O.S.No.20 of 2009 seeking recovery of

Rs.6,80,000/- with subsequent interest and costs from the defendant

based on the promissory note.

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

Court.

3. The factual matrix, necessary and germane for adjudicating the

contentious issues between the parties inter se, may be delineated as

follows:

The defendant borrowed Rs.5,00,000/- from the plaintiff on

15.01.2006 for business purposes and executed a promissory

note in favour of the plaintiff, agreeing to repay the same with

subsequent interest @ 24% p.a. On repeated demands, the

defendant issued a cheque, which was dishonoured, for which

the plaintiff filed a criminal case under section 138 of the

Negotiable Instruments Act, 1881 (for short, 'N.I. Act'). As the

defendant failed to repay the debt due, the plaintiff initiated the

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present suit to recover the debt owing under the promissory

note.

4. In the written statement, the defendant refuted the plaint

averments and contended that he borrowed only Rs.1,00,000/- from the

plaintiff on 15.01.2006 at Anantapur town and District; the said amount

was borrowed through the plaintiff's son; the plaintiff is a money lender

and used to lend money at a higher rate of interest; due to urgent need

of money, the defendant forced to agree to the plaintiff's terms and

executed a promissory note for Rs.5,00,000/-; at the time of execution of

the promissory note, the plaintiff and his son and the defendant alone

were present at Anantapur town; there was no presence of attestor viz.,

Brahma Reddy at the time of execution; the said Brahma Reddy's

signature was obtained before filing of the suit and as such, there is a

material alteration; the plaintiff's son worked for some time as clerk in

the defendant's office; due to bad character, the defendant removed him;

the plaintiff has no capacity to lend such a huge amount; the plaintiff is

a poor man; as the promissory note was executed at Anantapur, the trial

Court has no jurisdiction to trial the case.

5. Based on the above pleadings, the trial Court framed the following issues:

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

(2) Whether the suit promissory note was supported by full consideration?

(3) Whether this Court has got jurisdiction to entertain the suit? (4) To what relief?

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6. During the trial, on behalf of the plaintiff, P.Ws.1 and 2 were

examined and marked Exs.A1. On behalf of the defendant, D.W.1 was

examined, and the Ex.B.1 document was marked.

7. After the trial completion and hearing the arguments of both sides,

the trial Court decreed the suit with costs for Rs.6,80,000/- with

subsequent interest at 12% p.a., from the date of suit till the date of

decree and after that at 6% p.a., from the date of decree, till the date of

realization on the principal amount of Rs.5,00,000/-.

8. Sri V.V.N.Narasimham, learned counsel representing the appellant/

defendant, put forth an argument that the burden of proof lies with the

plaintiff and the plaintiff cannot rely on the latches of the defendant; the

trial Court ought to have dismissed the plaintiff's claim as the plaintiff

failed to provide sufficient evidence to support his claim; according to the

defendant, the transaction took place in Anantapur and the plaintiff's

presence there is undisputed; in the absence of any contradictory

evidence, the trial Court erroneously concluded that it had jurisdiction to

entertain the suit.

9. Per contra, Sri Madhava Rao Nalluri, learned counsel representing

the respondent/plaintiff, contends that the trial Court correctly

appreciated the case facts and reached a correct conclusion. The reasons

given by the trial Court do not require any interference.

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10. Having regard to the pleadings in the suit and the findings

recorded by the Trial Court, the following points would arise for

determination:

1) Whether the defendant established that he received only Rs.1,00,000/ on execution of the suit promissory note-?

2) Whether the Court at Parchur have jurisdiction to try the suit?

3) Whether the Judgment passed by the trial Court needs any interference?

POINT NO.1:

11. The plaintiff himself is examined as PW.1 and also examined

Poluri Bramha Reddy, the attestor, as PW.2. PWs.1 and 2 affirmed that

the defendant borrowed Rs.5,00,000/- from the plaintiff and executed

Ex.A.1 promissory note, which outlined the agreed upon terms and

conditions. Notably, the defendant himself was the scribe of the Ex.A.1

promissory note. In his testimony, the defendant as DW.1, he did not

contest the fact that he had signed Ex.A.1 promissory note for

Rs.5,00,000/-. In fact, he admitted the contents in Ex.A.1 are true and

correct. However, the defendant asserted that he had borrowed only

Rs.1,00,000/- from the plaintiff's son on 15.01.2006 in Anantapur town.

Consequently, he contends that Ex.A.1 promissory note was not

supported by entire consideration amount. The defendant did not provide

any reasonable explanation for why he had executed a promissory note

for Rs.5,00,000/- instead of the alleged Rs.1,00,000/-. Furthermore, he

did not assert that he had initially signed a blank promissory note that

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the plaintiff later filled in for higher amount. Consequently, the burden

lay with the defendant to prove that he had indeed received only

Rs.1,00,000/- under the Ex.A.1 promissory note. Apart from, DW.1's

self-serving testimony, the defendant failed to provide any substantial or

credible evidence to support his assertion.

12. In Bonalaraju Vs. S.Sarupula Srinivas1, the composite High Court

of Andhra Pradesh 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".

13. In Abbisetti Krishnamoorthy V. Singasani Raghuramaiah (died) per

L.R.s2, the composite High Court of Andhra Pradesh 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 presumptions, is clearly rebuttable, and it is for the defendant to satisfy the Court that in a given case, the presumption cannot be drawn".

14. In light of the settled legal position and present facts of the case,

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.

Suppose the defendant discharges the onus of proof showing that the

existence of consideration was improbable or doubtful and the execution

1 2006 (2) ALD 202

2 2011 (5) ALT 143

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of the promissory note, the onus would be shifted to the plaintiff. Then,

he will be obliged to prove the existence of the consideration.

15. The defendant failed to show any reason or circumstance to

disbelieve the evidence of P.Ws.1 and 2 regarding the execution of the

promissory note; it is to be borne in mind that the evidence of P.Ws.1

and 2 is consistent regarding the execution of the promissory note by the

defendant on receipt of the consideration amount. Though P.W.s 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 a suit promissory note. P.W.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. It is not the

defendant's case that he has enmity with him to depose falsehood

against his case. However, even the rebuttal could be given by direct

evidence or by proving the preponderance of probabilities on record. In

the present case, the defendant has not rebutted the presumption, even

by the majority of probabilities.

16. Accordingly, the point is answered in favour of the plaintiff by

holding that the defendant failed to prove that he received only

Rs.1,00,000/- from the plaintiff under the Ex.A.1 promissory note.

POINT NO.2:

17. The defendant contends that Ex.A.1 promissory note was

executed at Anantapur. Whereas, his residence is in Visakhapatnam and

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the plaintiff resides in Parchur and so, the Court at Parchur has no

jurisdiction to entertain the suit. It is pertinent to note that DW.1

admitted in his cross-examination that Ex.A.1's contents are true and

correct. Furthermore, Ex.A.1 contained a specific provision stating that

the defendant agreed to pay the outstanding amount along with interest

upon the plaintiff's demand and that this payment would occur in

Nuthalapadu village. This explicit clause within the promissory note

established a clear jurisdiction for the case. The trial Court rightly noted

that despite the defendant's claim that Ex.A.1 was executed in

Anantapur, the promissory note itself specified Nuthalapadu village as

the location for payment the amount due. Therefore, the Court in

Parchur had proper jurisdiction to adjudicate the matter.

18. The appellant's counsel argues that the suit should be filed within

the jurisdiction where the defendant resides or where the suit

transaction occurred, implying that Parchur Court lacks jurisdiction.

Conversely, the respondent's counsel contends that due to the clear

recital in Ex.A.1 and the defendant's admission of its accuracy,

establishing an agreement between the parties, the Parchur Court holds

jurisdiction. At this stage, it is relevant to refer to the case of

S.S.V.Prasad V. Y.Suresh Kumar and another 3, wherein the

Composite High Court of Andhra Pradesh held that:

28. Another important aspect which needs to be taken note of is that the N.I. Act itself provides for the presentation of negotiable

3 A.I.R. 2005 A.P. 37

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instruments for payment. It is beneficial to extract Sections 68, 69, and 70, which deal with these aspects:

"Section 68. Presentment for payment of instrument payable of specified place and not elsewhere.-- A promissory note, bill of exchange or cheque made, drawn or accepted payable at a specified place and not elsewhere must, to charge any party thereto, be presented for payment at that place.

Section 69: Instrument payable at a specified place.-- A promissory note or bill of exchange made, drawn or accepted payable at a specified place must, in order to charge the maker or drawer thereof, be presented for payment at that place.

Section 70: Presentment where no exclusive place specified.-- A promissory note or bill of exchange, not made payable as mentioned in Sections 68 and 69, must be presented for payment at the place of business (if any) or at the usual residence of the maker, drawee, or acceptor thereof, as the case may be."

30. X In the context of the N.I. Act, a cause of action can be said to have accrued to a person when he presents a negotiable instrument in accordance with Sections 68 to 70 of the N.I. Act and the maker of it refuse to honour it. The place where the negotiable instrument is actually presented or is required to be presented under the said provisions becomes significant from the point of view of Section 20(c) C.P.C.

31. Further, the N.I. Act is a self-contained and exhaustive code in relation to the making, transfer, presentation and enforcement of negotiable instruments. When the N.I. Act in clear terms provides for the presentation of the negotiable instruments at a particular place; such a mandate cannot be watered down through a process of treating the indorsement or transfer of a Negotiable Instruments Act as part of the cause of action. Xx

32. X Even assuming that there is conflict, it has to be noted that the N.I. Act is specially enacted to define and amend the law relating to promissory notes, bills of exchange and cheques, whereas the Code of Civil Procedure is a general enactment dealing with procedural aspects. The settled principle of law is that the special law shall always prevail over the general. Further, procedural law cannot be permitted to shatter the scheme framed under the substantive law governing the matter.

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35. Therefore, it is held that the holder, in due course, of a negotiable instrument can present a suit to recover the amount covered by it only in a Court within whose territorial jurisdiction the defendants therein reside or carry on business or in a Court within whose territorial jurisdiction, the place at which such negotiable instrument, can be presented, under Sections 68 to 70 of the N.I. Act is situated.

19. By relying on the decision cited supra ,as both parties stipulated a

condition to pay the suit amount at Nuthalapadu village, this Court

views that the Court at Parchur has jurisdiction to try the suit.

Accordingly, the point is answered.

POINT NO.3:

20. After careful consideration, I am of the view that the trial Court

has correctly appreciated the evidence. There is no reason for this Court

to arrive at a different conclusion than the one arrived at by the trial

Court. I am of the opinion that the findings arrived at by the trial Court

are correct, and no justifiable reasons have been shown by the

appellant/defendant for arriving at different conclusions. I agree with the

conclusion reached by the trial Court.