N. Venkateswarlu, vs P. Raghavarao,
2023 Latest Caselaw 5079 AP

          THE HON'BLE SRI JUSTICE V.SRINIVAS

                 APPEAL SUIT No.149 of 2005

JUDGMENT:

This regular appeal under Section 96 Code of Civil

Procedure (hereinafter referred to as 'CPC') is directed against

the decree and judgment in O.S.No.195 of 2001 dated

08.12.2004 on the file of the Court of learned II Additional

Senior Civil Judge, Nellore.

2. The defendant, before the trial Court, is the appellant.

The respondent herein is the plaintiff.

3. The respondent instituted the suit against appellant for

recovery of an amount of Rs.2,90,100/- with interest basing

on the promissory notes, dated 01.04.1999.

4. Before adverting to the material and evidence on record

and nature of findings in the judgment of the trial Court, it is

necessary to scan through the case pleaded by the parties in

their respective pleadings.

5. The case of the respondent/plaintiff in brief in the

plaint was as follows:

On 01.04.1999, the appellant borrowed an amount of

Rs.2,00,000/- for the business needs from the

respondent and executed two promissory notes each

for Rs.1,00,000/- in favour of the respondent to

repay the same with interest @ 18% per annum.

Subsequently, respondent made several demands for

repayment, but they proved futile. Hence, the suit.

6. The appellant/defendant denying the allegations in the

plaint and contending in the written statement as follows:

(i) He is a goldsmith and having reputation in the gold

market for the last 22 years and popularly known as

"Enamil Venkateswarlu". He has business dealings with

respondent since 1980, who is running a gold shop in the

name and style of "Ananda Jewelry" situated in Chinna

Bazar, Nellore and it is a partnership firm.

(ii) The respondent whenever entrusted the work of

preparing ornaments to him, used to obtain promissory

notes for the value of gold as security and after

preparation of the gold ornaments and after receipt of the

same, used to return the said promissory notes executed

by him by paying labour charges.

(iii) On 01.04.1999, respondent entrusted about 523

grams of gold to him worth of Rs.2,00,000/- with an order

to prepare sixteen (16) gold chains of different weights, six

(6) hand bracelets and twenty (20) rings. As usual he

executed the suit promissory notes in favour of the

respondent as a measure of security for the gold

entrusted to him. Then he prepared the ornaments as per

the order and delivered the items to the respondent on

07.04.1999, 09.04.1999 and 10.04.1999 respectively in

the presence of one of his workers and received the labour

charges.

(iv) On 10.04.1999, appellant demanded the

respondent for return of the suit promissory notes, but he

represented that as his partner went to Hyderabad, it

would be returned after his arrival. Again on 14.04.1999,

he along with his neighbor by name G.Ravichandra went

to the shop of respondent and requested him for return of

the said promissory notes, but the respondent informed

that the said promissory notes were misplaced while his

partner was shifting the residence and promised to return

the same, whenever they were traced. Due to close

friendship, he believed the words of respondent and kept

quiet. But surprisingly he received suit notices.

(v) The suit promissory notes are not supported by

consideration and they were executed in the

circumstances stated above. A case was registered against

the respondent under Section 420 of IPC and he was

remanded to judicial custody. At that time respondent

insisted the appellant to stand as a surety for the purpose

of bail, but he refused. Then onwards respondent bore

grudge against him and severed the business dealings.

Takings advantage of the availability of suit promissory

notes, this suit is filed to make a wrongful gain. Hence,

prays to dismiss the suit.

7. On these pleadings, the trial Court settled the following

issues for trial:

"1.Whether the suit promissory notes are devoid of consideration? and

2.To what relief?"

8. At the trial, on behalf of the respondent/plaintiff,

P.Ws.1 to 3 were examined while relying on Exs.A.1 and A.2

in support of his contentions. On behalf of the

appellant/defendant, D.Ws.1 to 3 were examined and got

marked Exs.B.1 to B.3.

9. Basing on the material and evidence, trial Court came

to conclusion that the suit promissory notes are fully

supported by consideration and the appellant is liable to

discharge the suit debt with interest and costs and thus,

decreed the suit.

10. It is against this decree and judgment, the

appellant/defendant preferred this appeal.

11. Heard Sri V.Sudhakar Reddy, learned counsel for the

appellant and Sri P.Sridhar Reddy, learned counsel for the

respondent.

12. Sri V.Sudhakar Reddy, learned counsel for the

appellant submits that the evidence adduced by the

respondent is contrary to the pleadings because the

respondent stated that on 01.04.1999 appellant borrowed

two lakhs under two transactions, whereas the evidence

adduced by the respondent shows, as if, there is a single

transaction; that the observations of the trial Court is

baseless; the trial Court ought to have considered the

previous character of the respondent, who involved in a

criminal case for the offence under Sections 406, 420 and

477-A IPC; that the respondent used to obtain the promissory

notes as a security to the gold entrusted by him without

attestation by any witness and signatures of D.Ws.2 and 3

are obtained on the suit promissory notes just before filing

the suit; that no consideration was passed to the appellant

under the suit promissory notes; that respondent is an

income tax assesse and he did not show the amount lent to

the appellant on his returns for the year, 1999-2000; that the

suit is liable to be dismissed for want of consideration under

the suit promissory notes; that the findings of the trial Court

are bad in law and thereby prays to allow the appeal.

13. Per contra, Sri P.Sridhar Reddy, learned counsel for

the respondent/plaintiff submits that the trial Court on

considering the facts and circumstances and material on record

rightly decreed the suit; that there are no grounds to interfere

with the judgment of the trial Court and that the appeal is liable

to be dismissed.

14. For the sake of convenience, the parties hereinafter

referred to as they arrayed before the trial Court.

15. It is against this backdrop, the following points, which

arise for determination need consideration now:

1. Whether the suit promissory notes were passed for consideration?

2. Whether the plaintiff is established that he is entitled for suit amount as prayed for? and

3. To what relief?

16. POINT NOs.1 & 2 :

It is an admitted fact that defendant is a goldsmith by

profession and worked for Andhra Jewellery situated in

Chinna Bazaar, Nellore, which is a partnership firm run by

the plaintiff herein since 1980.

17. It is the specific case of the defendant that whenever

the plaintiff entrusted the work of preparing ornaments to

him, as a security, he used to obtain promissory notes for the

value of gold and after preparation of the gold ornaments and

after receipt of the same used to return the promissory notes

by paying labour charges.

18. The suit promissory notes in question covered under

Exs.A.1 and A.2. According to the defendant, on 01.04.1999

plaintiff entrusted about 523 grams of gold to him worth of

Rs.2,00,000/- with an order to prepare sixteen (16) gold

chains of different weights, six (6) hand bracelets and twenty

(20) rings. It is his further case that he executed promissory

notes in favour of plaintiff as a measure of security for the

gold entrusted to him. Then he prepared the ornaments as

per the order and delivered the items to the plaintiff on

07.04.1999, 09.04.1999 and 10.04.1999 respectively and

received labour charges. But the plaintiff did not return the

said promissory notes by stating that his partner went out of

station and he would return the same after his arrival.

19. It is also one of the defence that on 14.04.1999, he

along with one G.Ravichandra, who is his neighbor, went to

the plaintiff and demanded him for return of promissory

notes. On that plaintiff informed to him that they were

misplaced by his partner while shifting his residence and

promised to return the same. Due to the close relationship,

he believed the words and kept quiet.

20. It is another defence put forth by the defendant that a

criminal case was registered against the plaintiff, his brother

and four others by one Dr.B.Ramarao and when the plaintiff

was remanded to judicial custody, he filed a bail application

and requested the defendant to stand as surety in getting the

bail and as the defendant refused to stand as surety for the

plaintiff, on vengeance filed this false suit by creating

documents in particularly Exs.A.1 and A.2.

21. On the other hand, it is the specific case of the plaintiff

that defendant borrowed an amount of Rs.2,00,000/- from

him on 01.04.1999 for his business purpose. In token of

receipt of consideration, defendant executed two promissory

notes covered under Exs.A.1 and A.2 before K.Venkaiah and

B.Raghava Rao. Subsequently, defendant did not repay the

same and he was constrained to file the suit against the

defendant for recovery of the amount.

22. It is the well settled legal proposition that initial burden

of proof of document must be discharged by the plaintiff.

Then the onus of proof of the document or otherwise shifted

to the defendant. For which, this Court fortified by a

judgment in between B.Mallamma v. V.T.V.Rangachary1.

23. In this connection, it is also relevant to mention a

judgment of this Court in between A.Ramireddy v.

A.Rajareddy2, in which it was held that:

1 1997 (3) APLJ 39/ 1997 (6) ALT 36 2 1997 (1) APLJ 65

"The fundamental principle that when the suit transaction is denied, the burden necessarily be shifted to the plaintiff to prove the genuineness of the said document........."

24. As way back in the year 1987, the Division Bench of

this Court in G.Vasu v. Sayed Yaseen Sifuddin Quadri3,

held that:

"Even with reference to Section 101 to 103 of Evidence Act and Section 118 of Negotiable Instruments Act, the burden of proof undisputedly lies on the plaintiff. It has to be seen that the plaintiff has to fully discharge his burden. The settled law is that when the plaintiff proved due execution of the promissory note by the defendant in his favour, the statutory presumption contemplates under Section 118(a) of Negotiable Instruments Act, that is to say every negotiable instrument was made or drawn for consideration arrived in favour of the plaintiff."

25. In this connection, keep in mind another judgment

reported between Bharat Barrel And Drum Manufacturing

3 AIR 1987 AP (139)

Company v. Amin Chand Payrelal4, in which the Hon'ble

Supreme Court held that:

"Once execution of the promissory note is admitted, the presumption under Section 118(a) of Negotiable Instruments Act would arise that it is supported by consideration. Such a presumption is rebuttable. The defendant can prove non-existence of consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge

4 AIR 1999 SC 1008

the initial onus of proof by showing the none existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) of Negotiable Instruments Act in his favour. The Court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as existence of negative evidence is neither possible nor contemplated and even if led is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption the defendant has to bring on record such facts and circumstances, upon consideration of which the Court may either believe that the consideration did not exist or its none existence was probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist."

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26. In the backdrop of this legal proposition, now it has to

be seen that to what extent the plaintiff adduced evidence

and discharged his burden and what extent the defendant is

able to rebut the presumption raised in favour of plaintiff.

27. Plaintiff was examined as P.W.1 and consistently stated

about the circumstances in lending the amount of

Rs.2,00,000/- on 01.04.1999 to the defendant and

categorically stated that he lends an amount of Rs.2,00,000/-

on 01.04.1999 and obtained Exs.A.1 and A.2 promissory

notes from the defendant. More so, the plaintiff consistently

stated that two promissory notes were scribed by the

defendant himself in the presence of attestors. The plaintiff

stood for cross examination and consistently stated his case

that he is running a gold show room and used to get

Rs.10,000/- per day from his business and he know the

defendant since twenty five (25) years from the date of his

examination. Defendant used to take gold from the plaintiff

for making gold ornaments by receiving labour charges. He

categorically and consistently denied the suggestions that the

promissory notes were obtained by him was only as security

for the gold said to have been given to the defendant for

making the ornaments and that there was no consideration

under Exs.A.1 and A.2. He also denied that when the

defendant did not accept to stand as surety, he filed a false

case.

28. Firstly, the promissory notes are in the handwriting of

the defendant and the same was admitted by the defendant

that the promissory notes were executed by him and the

plaintiff also stated the same in his evidence both in the chief

examination as well cross examination. Not only the plaintiff,

but also examined one K.Venkaiah said to be present at the

time of lending the amount of Rs.2,00,000/- to the

defendant. He also stated in his evidence that defendant with

his own handwriting executed the promissory notes in his

presence after receipt of consideration and also agreed to

repay the same with interest @ 18% per annum. Nothing was

elicited from the testimony of P.W.2 to disbelieve his evidence

and he specifically stated in the cross examination that the

suit transaction took place at 11.00 A.M. at the shop of the

plaintiff and he attested the suit promissory notes at the

instance of defendant alone.

29. Besides him, the plaintiff also examined one B.Raghava

said to be another attestor of Exs.A.1 and A.2 promissory

notes. He also consistently stated as that of P.W.2, who is one

of the attestor by name K.Venkaiah. Thus, from the evidence

of P.Ws.1 to 3, plaintiff discharged the initial burden of proof

that the documents said to be executed by the defendant are

supported for consideration and as such automatically the

presumption under Section 118(a) of Negotiable Instruments

Act raised in favour of the plaintiff.

30. Now it has to be seen that whether the defendant

rebutted the presumption by adducing evidence. For which

the defendant himself entered into the witness box as D.W.1

and in support of his evidence he got exhibited Exs.B.1 to

B.3, which are weighment slips in respect of sixteen (16) gold

chains, six (6) bracelets and twenty (20) gold rings. But, in

the cross examination, D.W.1 categorically admitted that in

Exs.B.1 to B.3 plaintiff neither signed nor his name is

mentioned. So the defendant could not able to establish that

Exs.B.1 to B.3 are related to the suit transaction, except his

own contention that at the time of handing over of 523 grams

of gold to prepare ornaments, the plaintiff obtained Exs.A.1

and A.2 as security and the said gold was returned by

making sixteen (16) gold chains, six (6) hand bracelets and

twenty (20) rings.

31. One more statement made by the defendant during the

cross examination is that dharmakata receipts will be handed

over to the parties. Now it is the case of the defendant that

two copies of dharmakata receipts will be issued, one copy

will be given to the parties and another will be retained by

him. If that is so, how the defendant procure Exs.B.1 to B.3

and filed into the Court is not explained.

32. Defendant also got examined one V.Malayadri, said to

be goldsmith, who is previously worked along with the

defendant, as D.W.2 and he stated in his chief examination

that on one day in the evening he along with defendant went

to the shop of the plaintiff, where the plaintiff entrusted gold

to the defendant to make ornaments of his choice. In that

connection, as a security, the plaintiff took two promissory

notes of Rs.1,00,000/- each, which is the above value of the

gold given to the defendant and no consideration was passed

under the said promissory notes. Nothing found on record

that he was also present at the time of obtaining promissory

notes by the plaintiff from the defendant except his self

serving statement. Thereby, no weight can be given to the

testimony of D.W.2.

33. One more witness examined by the defendant by name

Gandikota Ravichandra as D.W.3. He also spoken in the

same lines as that of D.W.2. He is also unable to speak about

the details of the gold entrusted by the plaintiff to the

defendant. But the fact remains that, in the cross

examination of D.W.3 it is elicited that, he does not know the

contents of Exs.A.1 and A.2 nor stated about the cases or

suits filed in between the defendant and his brother. So the

evidence of D.Ws.1 to 3 did not convince the Court that their

evidence is established that there was no consideration

passed under Exs.A.1 and A.2 as pleaded by them.

34. The defendant must be established that there was no

consideration under Exs.A.1 and A.2 and their evidence must

be proved with all preponderance of probabilities that there

was no consideration passed as contended by the defendant.

Except denying the case of the plaintiff as well supporting

version of the defendant nothing culled out from the

testimony of D.Ws.1 to 3 to make believe that the defendant

did not receive any consideration under Exs.A.1 and A.2 and

he is also unable to establish that Exs.B.1 to B.3 are relating

to the gold entrusted by the plaintiff and Exs.A.1 and A.2 are

executed only as security as pleaded by him.

35. More so, no evidence is forthcoming to accept that as

plaintiff requested the defendant to stand as surety in a

criminal case filed against him and defendant refused for the

same, plaintiff filed the false suit by using the said

promissory notes. Moreover, the defendant has not taken any

steps for getting back the said promissory notes from the

plaintiff. Culminating the entire evidence placed before the

trial Court, defendant did not discharge his burden rather

rebut the evidence of plaintiff. Even the rebuttal evidence

placed by the defendant should be cogent, reliable and

trustworthy, but such of evidence is not forthcoming from the

defendant to make believe that Exs.A.1 and A.2 are not

supported by consideration. In these circumstances, this

Court is of the opinion that defendant could not able to prove

his defence.

36. On the other hand, plaintiff is able to establish that the

suit promissory notes covered under Exs.A.1 and A.2 passed

by consideration. Moreover, none of the grounds urged by the

appellant/defendant to say that his defense is acceptable

than the case of the plaintiff. Thereby, the plaintiff is entitled

for the suit claim. These points are answered accordingly.

37. POINT No.3:

In view of the findings on point Nos.1 and 2, this Court

does not find any grounds to interfere with the well-articulated

judgment passed by the trial Court, as such this Court is

unable to found any merits in the appeal and the same is liable

to be dismissed.

38. In the result, the appeal is dismissed by confirming the

decree and judgment in O.S.No.195 of 2001 dated 08.12.2004

on the file of the Court of learned II Additional Senior Civil

Judge, Nellore. There shall be no order as to costs.

39. Interim orders granted earlier if any, stand vacated.

40. Miscellaneous petitions pending if any, stand closed.

____________________ JUSTICE V.SRINIVAS

Date: 18.10.2023 Krs

THE HON'BLE SRI JUSTICE V.SRINIVAS

APPEAL SUIT No.149 of 2005

DATE: 18.10.2023

Krs