G.S.Venkat Rao vs Chappadi Swamy Nadha Rao
2023 Latest Caselaw 4766 AP

           THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

                    APPEAL SUIT NO.69 OF 2010

JUDGMENT:

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

filed by the appellants/defendants challenging the decree and Judgment

dated 02.09.2009 in O.S.No.40 of 2004 passed by the learned IV

Additional District Judge, Kakinada (for short, 'the trial court'). The

Respondent is the plaintiff, who filed the suit in O.S.No.40 of 2004 seeking

recovery of Rs.13,61,950/- with interest and costs from the defendants

based on the promissory note.

2. Referring to the parties hereinafter as arrayed in the suit is

expedient to mitigate potential confusion and better comprehend the case.

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

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

follows:

The 1st defendant is the 2nd defendant's father, and both

borrowed Rs.6,00,000/- from the plaintiff, agreeing to repay the

same with the compound interest rate at 24% p.a., and executed

a promissory note on the same day. Later, they made part

payments through cheques, pay orders and demand drafts from

03.02.1997 to 16.08.2001, totalling Rs.2,95,650/- and made an

endorsement on the backside of the promissory note. Despite

repeated demands, the defendants failed to pay the due amount

T.M.R., J A.S. No.69 of 2010

with interest. Hence, the plaintiff issued a legal notice on

03.03.2004 calling upon the defendants to pay the due amount

and having received it, the defendants neither complied with the

demand nor gave any reply.

4. The 2nd defendant adopted the 1st defendant's written statement,

wherein they refuted the plaint averments and asserted that they had

approached the plaintiff for financial assistance in 1996 to construct their

house. The plaintiff provided money on different occasions and, taking

advantage of their situation, persuaded them to sign unfilled documents

without any consideration; they had made payments exceeding what was

owed, and these payments were not accurately represented in the suit,

deliberately omitting certain amounts. The defendants insisted that they

didn't owe anything further to the plaintiff. Furthermore, the defendants

alleged the plaintiff of charging exorbitant interest rates ranging from 60%

to 120% per annum, which they considered usurious and unfair; the

plaintiff had manipulated documents containing false signatures and

might have fabricated the promissory note mentioned in the suit for his

own gain; plaintiff issued a legal notice, responding to which they provided

accurate facts. The defendants claimed that the plaintiff filed a false case

against the 2nd defendant, leading to his unjust harassment. They

asserted that the suit was also time-barred.

5. The plaintiff filed rejoinder denying most of the assertions in the

written statement. He admitted to issuing a notice, but he thought the

T.M.R., J A.S. No.69 of 2010

defendants hadn't replied since their response had been misplaced. The

plaintiff initiated Criminal Case No.552 of 2000 against the 2nd defendant

when a cheque dated 10.05.1999 (Cheque No.00837) was dishonoured

due to insufficient funds. While the criminal case was ongoing, the

defendants approached him and paid Rs.50,000/- as a partial settlement.

In return, they asked for the withdrawal of the criminal proceedings and

the pursuit of a civil suit instead. The plaintiff agreed to these terms,

received the amount through Demand Draft No.001467 dated 14.08.2001,

drawn on U.T.I Bank, Kakinada, as part payment, and subsequently

withdrew the criminal case. The plaintiff contested the defendants' lack of

specific information regarding the alleged payments and highlighted the

absence of details concerning whether the signatures on the promissory

note were genuine or if the document was fabricated on a blank

promissory note bearing their signatures. He accused the defendants of

causing him distress and inconvenience due to his rightful demand for the

outstanding amount specified in the suit promissory note.

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

(1) Whether the suit pronote is true, valid and binding on the defendants?

(2) Whether the defendants paid more amount than the amount shown in the endorsements?

(3) Whether the plaintiff is entitled for the suit claim? (4) To what relief?

T.M.R., J A.S. No.69 of 2010

7. During the trial, on behalf of the plaintiff, P.W.s 1 and 2 were

examined and marked Exs.A.1 to A.9. On behalf of the defendants, D.Ws.1

and 2 were examined and marked Exs.B.1 to B.5 documents.

8. After completing the trial and hearing the arguments of both sides,

the trial Court decreed the suit for Rs.13,61,950/- with costs and future

interest at 6% p.a., from the date of the suit till the date of realization on

the principal amount of Rs.6,00,000/-.

9. I have heard learned counsel appearing on behalf of the respective

parties at length and have gone through the Judgment and findings

recorded by the learned trial Court while dismissing the suit. I have also

re-appreciated the entire evidence on record, including the deposition of

relevant witnesses examined by both sides.

10. Sri O.Manoher Reddy, learned counsel representing the

appellants/defendants, put forth an argument contending that the

appellants denied the execution of the promissory note, placing the

burden of proof on the plaintiff, was not met satisfactorily; the interest

rate mentioned in the promissory note (24% per annum) was usurious

and excessive, asserting that it should have been scaled down; the suit

was time-barred, indicating that the trial Court should have given

credence to the appellants' version supported by Exs.B.1 and B.2, which

demonstrated that the entire amount had been paid; the trial Court has

not considered DW.1's testimony concerning the signature on the blank

promissory note, questioning the reasoning behind doubting the literacy of

T.M.R., J A.S. No.69 of 2010

the 1st appellant; the withdrawal of C.C.No.552 of 2000 by the plaintiff

indicated that no amount was due from the appellants.

11. Per contra, Sri P.Raj Kumar, learned counsel representing the

respondent/plaintiff, argued that the trial Court appreciated the case facts

and reached a correct conclusion. The reasons given by the trial Court do

not require any interference.

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

the Trial Court and in light of the rival contentions and submissions made

on either side before this Court, the following points would arise for

determination:

1) Is the Trial Court justified in holding that Ex.A.1 suit promissory note was executed by the defendants by receiving the consideration and the defendants made part payment covered under Ex.A.2?

2) Is the trial Court judgment needs any interference?

POINT NOs.1 & 2:

13. The plaintiff himself is examined as PW.1. He also examined one of

the attestors of the promissory note as PW.2 (Rednam Venkata Krishna

Rao). PWs.1 and 2 consistently affirmed in their evidence that on

05.01.1997, the defendants borrowed Rs.6,00,000/- from the plaintiff,

agreeing to repay the same with compound interest @ 24% per annum; on

receipt of consideration amount, the defendants executed the Ex.A.1

promissory note; later, the defendants made part payment from

T.M.R., J A.S. No.69 of 2010

03.02.1997 to 16.08.2001 and they paid total amount by way of cheques,

pay orders and demand drafts was Rs.2,95,650/-; to that effect, they

made Ex.A.2 endorsements on the back of Ex.A.1 promissory note.

14. It is not in dispute that the 1st defendant is the father of the 2nd

defendant; the 1st defendant is working as a Deputy Executive Engineer in

the R & B department; the 2nd defendant is working as a private Engineer.

Before filing the suit, the plaintiff issued legal notices to the defendants,

demanding them to repay the amount. Ex.A.5 shows the service of notice

of the 1st defendant. Ex.A.7 shows the notice returned un-served. The 1st

defendant issued Ex.A.4 reply notice in response to the Ex.A.3 notice

given by the plaintiff.

15. From the available evidence, the 1st defendant's stand is that he

borrowed a total of Rs.3,50,170/- from the plaintiff in 1996 on twenty-two

different occasions. Subsequently, he repaid this amount on various dates

through cash, cheques and demand drafts, totaling Rs.7,22,605/-. The

plaintiff provided details in the suit of the payments. It indicate that

payments were made via., cheques, demand drafts and pay orders. The

defendants failed to present any evidence to support payments beyond

those outlined in the plaintiff's claim.

16. The 1st defendant asserts that he meticulously recorded the

amounts received from and repaid to the plaintiff, referencing documents

Exs.B.1 and B.2 to support his claim. However, the defendants' stance

T.M.R., J A.S. No.69 of 2010

regarding the execution of the promissory note (Ex.A.1) is unclear. During

cross-examination, the 1st defendant, DW.1, stated that he never executed

any promissory note from the plaintiff. He also mentioned that the plaintiff

obtained two blank promissory notes from him and two from the 2 nd

defendant, without explaining why they signed blank promissory notes

without understanding the implications of delivering them to a person

engaged in finance and money lending. Although the defendants did not

explicitly acknowledge their signatures on the promissory note in their

pleadings or initial testimony, DW.1, in cross-examination, admitted that

the signatures on Ex.A.2 relating to the payments made were his and his

son's. However, he could not specify the amount paid against each of the

22 debts. According to the defendants, they requested receipts for their

payments, which the plaintiff did not provide. Despite this, bank

transactions clearly evidenced some payments made by cheque, demand

drafts, or pay orders, which negate the necessity of receipts and do not

affect the legal rights of the parties.

17. DW.1 stated that no interest was agreed upon for the amounts

borrowed from the plaintiff. However, it seems improbable that financial

transactions between the plaintiff and defendants occurred without

specifying any interest. Upon careful examination of the testimonies of

DWs.1 and 2, the trial Court rightly concluded that their statements

lacked credibility. The contention that the plaintiff obtained signatures

and cheques on blank documents from the 1st defendant, a Deputy

T.M.R., J A.S. No.69 of 2010

Engineer in the R & B department, and the 2nd defendant, a private

engineer, without issuing receipts, is dubious. In cross-examination, DW.2

admitted that the signature on Ex.A.2 belonged to him and his father. Yet,

he claimed that the signatures on the vakalath filed on their behalf were

not genuine. This indicates an attempt to deny their signatures on crucial

documents. It is hard to believe that two engineers, in their professional

capacity, couldn't recognize their own signatures on legal documents. The

trial Court correctly observed that DW.2's testimony lacked truthfulness,

and the statements of someone who denied his own signature on a

vakalath filed in his name could not be trusted.

18. Admittedly, Ex.A.9 is a receipt provided by the plaintiff for

Rs.50,000/- received from the 2nd defendant (DW.2) to withdraw the

criminal case, a fact acknowledged by DW.2. This receipt is a crucial piece

of evidence indicating a transaction between the parties. The receipt

clearly establishes that the plaintiff received the payment of Rs.50,000/-

from DW.2, implying some form of financial arrangement between them.

The receipt was given as part of a compromise in C.C.No.552 of 2000,

signifying that both parties recognized the existence of a financial

transaction related to the promissory note dated 05.01.1997. Additionally,

Ex.A.2, an endorsement on the back of Ex.A.1 promissory note dated

16.08.2001, demonstrates that the defendants paid Rs.2,95,650/- to the

plaintiff. Such payments, if not related to the suit promissory note, would

have had no basis. If the defendants had not executed the promissory

T.M.R., J A.S. No.69 of 2010

note, there would be no reason for them to make payments and endorse

them on the back of the promissory note. While the defendants presented

Exs.B.1 and B.2 as account book transactions, they failed to establish the

regularity and legitimacy of these documents. According to Section 34 of

the Evidence Act, a document to be relied upon as a book of account must

be regularly maintained in the course of business. In this case, the loose

sheets provided by the defendants lack the necessary foolproof character

and do not fulfill the criteria for admissible evidence. Additionally, a ledger

alone cannot be considered a relevant document without the

corresponding day-book or cash book, rendering the presented evidence

insufficient to support the defendants' claims.

19. In Chandradhar Goswami and others, V. Gauhati Bank Ltd., 1,

the Hon'ble Apex Court held that:

No person can be charged with liability merely based on entries in books of account, even where such books of account are kept in the regular course of business. There has to be further evidence to prove payment of the money which may appear in the books of account so that a person may be charged with liability thereunder, except where the person to be charged accepts the correctness of the books of account and does not challenge them.

The original entries alone under s.34 of the Evidence Act would not be sufficient to charge any person with liability. As such, copies produced under s.4 of the Bankers' Books Evidence Act obviously cannot charge any person with liability.

20. Exs.B.1 and B.2 documents do not contain the plaintiff's

signatures. The defendants failed to explain how the said documents

would be helpful in support of their case. They have not explicitly pointed

AIR 1967 SC 1058

T.M.R., J A.S. No.69 of 2010

out that the payments, which were shown in the Exs.B.1 and B.2 loose

sheets, were not deducted from the suit claim.

21. The 1st defendant has taken a plea that he attended the election

duty on 16.08.2001, and there was no possibility of signing of Ex.A.2

endorsement. He also relied on Ex.A.4 fortnightly progress report from

16.07.2001 to 30.03.2002. As rightly pointed out by the trial Court, no

such a plea is taken in the pleadings. Without the pleadings, much

credence cannot be attached to the said submission. It is to be shown that

it is impossible to make such an endorsement in Ex.A.2 when DW.1

attended the election duty. When the payment made under Ex.A.2 is not

disputed by the defendants, this Court views that the said submission

made by the defendants cannot be considered.

22. In Binay Kumar Singh v. State of Bihar2, the Hon'ble Supreme

Court held that:

"We must bear in mind that an alibi is not an exception (special or general) envisaged in the Indian Penal Code or any other law. It is only a rule of evidence recognized in Section 11 of the Evidence Act that facts which are inconsistent with the fact in issue are relevant." "Alibi" is the Latin word, means that "elsewhere" and it is used to convey to the Court that when an accused takes the option to a defence that he was so far away from the place of offence and it is clearly stated that it's uncertain that the accused has involved in the crime".

23. Explaining the essence of a plea of alibi, the Hon'ble Supreme Court

observed in the case of Dudh Nath Pandey v. State of U. P 3, that:

(1997) 1 SCC 283

(1981) 2 SCC 166

T.M.R., J A.S. No.69 of 2010

"The plea of alibi comes under the physical impossibility of the accused that accused was present at the place of crime by the reason to believe that his presence at another place. The plea of alibi can only be entitled that it is clearly shown that the accused was a presence so far the place of crime at the relevant time and he was not present at the place where the offence was committed."

24. In Sk.Sattar v. State of Maharashtra4, the Hon'ble Apex Court

held that "plea of alibi has to be proved with the absolute certainty of facts

to show that the complete possibility of the accused was not present at the

place of crime at the relevant time when such crime happened".

25. The 1st defendant has not let in evidence before the Court to show

that while attending the election duty, it was impossible for him to execute

the promissory note. The 1st defendant has not examined any witnesses to

connect the Exs.B.3 to B.5 documents, and the said documents are not

proved. He has not placed any material before the Court concerning the

proceedings relied on by him; he actually attended the election duty. Had

he participated in the election duty, he couldn't have failed to take such a

plea in the written statement. The trial Court has rightly discarded the

evidence adduced in this regard.

26. The defendants have taken a specific plea in the written statement

that the interest payable to the plaintiff is usurious, excessive and penal.

However, the trial Court has not framed the said defendant's contention.

27. The position of law is well settled that where parties adduce d

evidence in respect of a matter for which an issue has not been struck,

(2010) 8 SCC 430

T.M.R., J A.S. No.69 of 2010

and both sides are well aware of the dispute which relates to the issue, the

defect of non-framing of the issue is cured, and there will be no inherent

lack of jurisdiction in the Court to go into that question and decide that

aspect of the matter. It was observed by the Hon'ble Supreme Court

in Kali Prasad v. M/s. Bharat Coking Coal Ltd. 5, in para 18 that:

"It was, however, urged for the appellant that there is no proper pleading or issue for determination of the aforesaid question and the evidence let in should not be looked into. It is too late to raise this contention. The parties went to trial knowing fully well what they were required to prove. They have adduced evidence of their choice in support of the respective claims. That evidence has been considered by both Courts below. They cannot now turn round and say that the evidence should not be looked into. This is a well accepted principle."

28. In light of the well-settled legal position, this Court views that the

trial Court ought to have considered whether the interest claimed by the

plaintiff is usurious in the facts and circumstances of the case. The

plaintiff has not placed any evidence justifying claiming interest @ 24%

per annum. The trial Court has not given any specific finding about the

interest entitlement @ 24% per annum.

29. In a decision reported in M. Rajeswar Rao & Others, V. Chitluri

Satyam (died) & others6 and another decision reported in Ms Surisetty

Nookaratnam V. Saragadam Gowri Ramalakshmi and another 7, the

composite High Court of Andhra Pradesh has reduced the pre-lite interest

from 24% to 12% per annum and from 18% to 12% per annum,

AIR 1989 SC 1530 6 2013 SCC OnLine AP 809 7 2013 SCC OnLine AP 369

T.M.R., J A.S. No.69 of 2010

respectively, by relying on the judgments of Hon'ble Apex Court in

Mahesh Chandra Bansal V. Krishna Swaroop8 and in DDA V. Joginer

S.Monga9. In ascertaining the interest rate, the Courts of Law can take

judicial notice of inflation and the fall in bank lending rate of interest. A

reading of the precedents suggests that the steep fall in the Bank Lending

interest rate is the main reason for reducing the pre-lite interest from

24%. This Court views that if the interest rate is excessive and usurious,

the Court has the power to interfere. By following the case law referred,

this Court is inclined to reduce the interest rate from 24% to 18% per

annum from the date of the suit transaction till the date of filing the suit.

30. As seen from the record, the defendants borrowed the amount for

family expenses. Thus, it is not the case that the amount borrowed is

utilized for any business purpose. Admittedly, the defendants are

employees. Given the above facts and circumstances, this Court views

that the plaintiff is not entitled to a rate of interest at 24% per annum.

However, he is entitled to a simple rate of interest at 18% per annum from

the date of the suit transaction till the date of filing of the suit. The

findings arrived at by the trial Court on the appreciation of evidence in

this case regarding the execution of the promissory note are correct and

do not call for interference, except the rate of interest as indicated above.

Accordingly, the points are answered.

8 (1997) 10 SCC 681 9 (2004) 2 SCC 297

T.M.R., J A.S. No.69 of 2010

31. For the reasons stated above, the Appeal is allowed in part

without costs by decreeing the suit for Rs.6,00,000/- with costs and

modified the rate of interest @ 18% per annum on the principal amount

from the date of the suit transaction till the date of filing the suit. Out of

the decree amount awarded, the payments made by the defendants, as

shown in the plaint, shall be deducted. The plaintiff is entitled to interest

@ 6% per annum from the date of suit till the date of realization on the

principal amount of Rs.6,00,000/-. The rest of the Judgment holds good.

Miscellaneous petitions pending, if any, in this Appeal, shall stand closed.

___________________________________ JUSTICE T. MALLIKARJUNA RAO

Date: 07.10.2023 SAK

T.M.R., J A.S. No.69 of 2010

THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

APPEAL SUIT NO.69 OF 2010

Date: 07.10.2023

SAK