Sathi Eswara Babu, vs Smt. Sathi Sridevi,
2023 Latest Caselaw 5165 AP

      THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO
                  APPEAL SUIT NO.897 OF 2015

JUDGMENT:

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

is filed by the appellant/D.5 challenging the decree and Judgment

dated 01.09.2015 in O.S.No.133 of 2010 passed by the learned III

Additional District Judge, Bhimavaram (for short, 'the trial Court').

The 1st respondent is the plaintiff, who filed the suit in O.S. No.133 of

2010 seeking recovery of Rs.5,25,439/- with interest and costs from

the defendants based on the promissory note.

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

trial Court.

3. (a) The facts leading to the present Appeal, in a nutshell, are

that one Sathi Venkateswara Reddy, who is the husband of D.1 and

father of D.2 to D.5, borrowed Rs.3,20,000/- from the plaintiff on

21.07.2007 to discharge his sundry debts and executed a demand

promissory note in her favour by agreeing to repay the sum with a

24% interest annual interest rate; later, the said Venkateswara Reddy

failed to repay the amount despite multiple demands made by the

plaintiff.

(b) Subsequently, on 19.03.2008, Sri Venkateswara Reddy

passed away intestate leaving behind him, his wife and four sons, i.e.,

defendants, as his Class-I legal heirs; the defendants have since been

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in possession and enjoying his estate. Despite repeated requests, the

defendants failed to repay the outstanding loan amount. The plaintiff

sent a legal notice dated 22.03.2010, but received no response from

the defendants.

4. Though defendants 1 to 4 received the notices, they did not

choose to contest the matter. Hence, they remained ex parte.

5. (a) The 5th defendant filed his written statement, denying the

allegations made in the plaint, contending that the plaintiff, who is the

wife of cousin brother of late Sathi Venkateswara Reddy. During Satti

Venkateswara Reddy's lifetime, he was employed as an Assistant

Director of Agriculture in Challapalli, Krishna District, earning a

monthly salary of Rs.30,000/-, therefore, he had no need to borrow

such substantial sum of money. D.5 also asserted that the plaintiff

had a house site adjacent to their home, and there had been pressure

on them to sell the property, but they did not agree. As a result, the

plaintiff had resorted to forging the promissory note to create a false

debt. D.5 further contended that he had already replied to the

plaintiff's notice.

(b) D.5 claimed that the plaintiff had acted as an agent to send

people to Singapore to Gulf countries and received Rs.1,00,000/- and

his Passport in March 2009; she had promised to arrange his

employment in Singapore, but failed to fulfill her promise, even

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retaining his passport. As a result, there was pressure for the return

of both the money and Passport to avoid criminal cases;

(c) The 5th defendant further alleged that the plaintiff had

forged the suit promissory note and subsequently initiated the suit; no

valid consideration had been exchanged for the forged promissory

note; the plaintiff was a permanent resident of Juthiga, within the

jurisdiction of Penumantra Mandal, Tanuku Civil Courts, and he had

never resided in Bhimavaram, the place mentioned in the promissory

note; his father, a Gazetted Officer, was not accustomed to signing in

Telugu, and if necessary, he could personally write and sign a

promissory note in English; the defendants had not inherited any

estate from Sathi Venkateswara Reddy, and therefore, they had no

obligation to honour the alleged promissory note.

6. Based on the above pleadings, the trial Court framed the

following issues:

(1) Whether the suit promissory note dated 21.07.2007 created with forgery of late Venkateswara Reddy's signature? (2) Whether the defendants have inherited any estate from late Sathi Venkateswara Reddy?

(3) To what relief?

7. During the trial, on behalf of the plaintiff, P.W.s 1 to 3 were

examined, and Exs.A1 to A3 were marked. On behalf of the

defendants, D.Ws.1 and 2 were examined, and Exs.B1 to B9 were

marked.

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

Court decreed the suit for Rs.5,25,439/- in favour of the plaintiff

against the assets of the late Sathi Venkateswara Reddy, which are in

the hands of the defendants.

9. Sri Suresh Kumar Reddy Kalava, the learned counsel for the

appellant (D.5), contended that the trial Court should have considered

that the plaintiff, who is the wife of the cousin brother of late

S.Venkateswara Reddy, had no legitimate reason to lend such a

substantial sum; S. Venkateswara Reddy was working as an Assistant

Director for Agriculture, earning a monthly salary of Rs.30,000, which

should have made borrowing unnecessary; the trial Court overlooked

the fact that the father of the appellant never signed documents in

Telugu; the plaintiff had pressurized them to sell their house, which

they had declined, and that she subsequently created the alleged

forged promissory note; the Bhimavaram Court lacked territorial

jurisdiction to entertain the suit since the plaintiff had never resided

in Bhimavaram and was a resident of Juthiga in the Penumantra

Mandal; the appellant's father had executed a Gift Settlement Deed

dated 21.11.2002 in favor of his sister, D. Suryakumari, and in the

said deed, he signed in English; the trial Court had rejected the

appellant's plea without sending the documents for expert

examination.

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10. Despite opportunities given, no representation is made on

behalf of the respondents. Hence, the arguments of respondents were

treated as heard.

11. Concerning the pleadings in the suit and the findings

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

determination:

1) Is the Trial Court justified in holding the execution of Ex.A.1-promissory note on receipt of consideration amount by one Sathi Venkateswara Reddy in favour of the plaintiff?

2) Is the Judgment passed by the trial Court need any interference?

POINT NOs.1 & 2:

12. The following facts are either admitted or undisputed. The

plaintiff is the cousin's wife of the late Sathi Venkateswara Reddy.

Venkateswara Reddy held the position of Assistant Director of

Agriculture in Challapalli, Krishna District, during his lifetime. While

the death of Venkateswara Reddy is not a subject of dispute, but the

defendant submitted the death certificate, marked as Ex.B6. The 1st

defendant is the wife, and the defendants 2 to 5 are the sons of

Venkateswara Reddy. The plaintiff sent a legal notice, Ex.A2, to the

defendants, demanding payment of the amount covered by the

promissory note (Ex.A1). The postal acknowledgments, Ex.A3, confirm

the service of the notice on the defendants. Nevertheless, it is asserted

in the plaint that the defendants did not respond to the notice (Ex.B8).

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The 5th defendant did issue a reply notice after the initiation of the

suit.

13. The plaintiff herself is examined as P.W.1. One of the attestors,

Geddada Yesuratnam, is examined as PW.2. The scribe of the

promissory note, Konduri Rama Prasad, is examined as P.W.3. PWs.1

to 3 testified in their evidence that Sathi Venkateswara Reddy

borrowed Rs.3,20,000/- from the plaintiff on 21.07.2007 for his family

expenses and to discharge sundry debts, executed a demand

promissory note (Ex.A.1) in the presence of P.W.2 and another attestor

and PW.3 scribed the promissory note.

14. The 5th defendant himself, appearing as DW.1, reaffirmed

during his testimony all the contents in his written statement. He

deposed that his father, Venkateswara Reddy, was employed as an

Assistant Director in the Agriculture Department, Challapalli, and was

earning a monthly salary of Rs.30,000/-. He further deposed that

given his father's substantial income, there was no reason for him to

borrow such a significant amount from the plaintiff. It is important to

note that the fact of Venkateswara Reddy's employment is not in

dispute. The defendant supported their case by providing various

documents, including (Ex.B1) the original certificate transfer of charge

issued by the A.P. Agriculture Department, (Ex.B2) income tax

calculations for the year 1999-2000, (Ex.B3) a joining report

submitted to the Commissioner and Director of A.P. Agriculture in

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Hyderabad, (Ex.B5) original income tax calculation for the year 2002-

03, and (Ex.B7) an attested copy of the pension annual verification

certificate. These documents were primarily relied upon to

demonstrate the deceased's employment status and salary

particulars.

15. According to the plaintiff's case, the suit transaction took place

on 21.07.2007. Though D.W.1 is able to show the income tax and

pension particulars, it cannot be concluded that Sathi Venkateswara

Reddy has no necessity to borrow the amount as the plaintiff, being a

relative of the deceased, had no reason to create the promissory note

16. According to DW.1's testimony, the plaintiff was working as an

agent who arranged for individuals to go to Singapore and Gulf

countries. He claimed that in March 2009, he provided the plaintiff

with Rs. 1,00,000/- and his passport with the understanding that she

would secure employment for him in Singapore. However, despite

these arrangements, the plaintiff did not fulfill her promise of sending

him abroad, nor did she return his passport and money. In response

to this, she claimed to have fabricated the promissory note under

pressure to prevent potential legal consequences, and subsequently

initiated this suit. It's important to note that the defendant did not

provide any supporting documents or evidence to demonstrate that he

had reported to the police about the plaintiff's alleged fraudulent

activities or cheating. If his accusations were indeed true, it would be

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reasonable to expect that he would have taken some form of legal

action or reported the matter to the police authorities after initiating

this suit.

17. The 5th defendant's claims is that the plaintiff had a house site

adjacent to their property, and there was pressure by her to sell the

house. However, he and his brothers disagreed with the sale, and as a

result, the defendant alleges that the plaintiff resorted to forging the

promissory note. It's worth noting that defendants 1 to 4, who are the

mother and brothers of defendant 5, did not contest the suit and

remained ex parte. It indicates that they did not participate or present

a defense. If the plaintiff had indeed resorted to forging the promissory

note, it seems unlikely that these family members would have

remained silent and not contested the suit. This lack of support for

the defendant's claims is significant, as it suggests that there may be

inconsistencies or lack of evidence supporting his allegations.

18. The appellant's counsel has argued that the trial court lacked

territorial jurisdiction. However, the evidence presented in court

supports that the transaction took place in Bhimavaram. P.W.1, the

plaintiff, stated that Sathi Venkateswara Reddy, the borrower, was a

resident of Ramanagaram Village but had come to Bhimavaram at the

time of executing the promissory note, as his parents resided in

Bhimavaram. Additionally, P.Ws.2 and 3 also testified that the

borrowing transaction occurred in Bhimavaram when the promissory

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note was executed. Given this evidence that the transaction took place

in Bhimavaram, it is reasonable to conclude that the trial court did

indeed have territorial jurisdiction to hear and decide this case.

19. The defendant has raised the argument that the promissory

note (Ex.A1) is questionable because it contains his father's signature

in Telugu, and his father, being a Gazetted Officer, was not

accustomed to signing in Telugu. The defendant claims that his father

typically signed documents in English when necessary. In support of

this argument, the defendant presented Ex.B9, a Registered Gift

Settlement Deed, executed by his father. This document indicates that

his father signed in English. To further support this claim, D.W.2,

D.Krishnam Raju, testified that he was present as the 2nd attestor

during the execution of the settlement deed and affirmed that

Venkateswara Reddy, the defendant's father, indeed signed

documents in English.

20. In the cross-examination, D.W.2 stated that he does not know

whether Venkateswara Reddy used to sign in Telugu or English. Still,

on that particular day, he subscribed his signature in English. The

said Venkateswara Reddy studied his school education in Telugu

medium.

21. In the cross-examination, D.W.1 admitted that he does not have

knowledge of whether his father studied in English or Telugu medium.

He further stated that he cannot confirm whether there were English

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medium schools or colleges available about 40 years ago and that, in

those days, most schools conducted education in Telugu. This

testimony does not support the defendant's claim that his father was

unfamiliar with the Telugu language. In fact, the evidence provided by

D.W.2 indicates that D.W.1's father did study in a Telugu medium

school.

22. The evidence provided by P.Ws. 1 to 3 clearly indicates that

Sathi Venkateswara Reddy did indeed execute the promissory note

and received the consideration amount. The document Ex.B9 does not

conclusively prove that D.W.1's father solely signed in English and

never in Telugu. If D.W.1's claim were accurate, it is unlikely that his

family members (D.1 to D.4) would have remained ex parte, and they

would have likely defended their interests in the properties. The

evidence available suggests that following the death of Sathi

Venkateswara Reddy, his estate was inherited by his family members.

The defendants have not disputed inheriting any assets or estate from

the deceased. In court, the standard of proof is based on the

principles of preponderance of probability. This means that a

conclusion of preponderance of probability can be reached not only

based on the material evidence presented but also by considering the

circumstances in question. Regarding the contention of the appellant

that the plaintiff did not take steps to get the signature compared by

the expert, this Court views that when both parties to the proceedings

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have not placed the deceased's signatures in Telugu language, how

the appellant expects comparison of the signatures. So, this court

finds that the said contention is unsustainable.

23. In G. Venkata Rama Subbaiah Vs. D. Rasool Naik1, the

composite High Court of Andhra Pradesh held thus :

"Once the execution of the promissory note is admitted or proved, then it is presumed to be supported by consideration unless contrary is proved. The burden is on the defendant to rebut the same by adducing convincing evidence. Unless the defendant rebuts the presumption by adducing convincing rebuttal evidence, the evidential burden would not shift back to the plaintiff who has legal burden only after adducing such convincing rebuttal evidence, it can be held that thereafter the presumption under Section 118 does not come to the rescue of the plaintiff."

24. In a decision Bonalaraju V. S. Sarupula Srinivas2, 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".

25. In a decision Abbisetti Krishnamoorthy V. Singasani

Raghuramaiah (died) per L.R.s3, the composite High Court of

Andhra Pradesh held that:

2003 (4) ALT 414

2006(2) ALD 202

2011(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".

26. Based on the evidence presented in this case, it is clear that

the defendant has failed to provide satisfactory and reliable evidence

or circumstances to discredit the testimony of P.Ws. 1 to 3 regarding

the execution of the promissory note (Ex.A.1) by Sathi Venkateswara

Reddy and the passing of consideration. The consistency in the

evidence of P.Ws. 1 to 3 regarding the execution of the promissory

note by SathiVenkateswara Reddy upon receiving the consideration

amount is significant. Despite extensive cross-examination, no

evidence has emerged to undermine their testimony. The plaintiff and

her witnesses have no apparent motive to fabricate the promissory

note. Moreover, as noted by the trial court, D.W.1 himself admitted

that the plaintiff has been suffering from paralysis since 1995, and

even at the time of his testimony, she remained in a debilitated state

and could not walk properly. It is implausible to accept D.W.1's

assertion that, given the plaintiff's health condition, she could have

forged the signature of Sathi Venkateswara Reddy, deceived D.W.1,

and pressurized the defendant's family to sell their property. The

evidence of P.Ws. 2 and 3 is consistent and free from bias, and they

have no apparent reason to provide false testimony against the

interests of the defendants. While the defense could provide a

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rebuttal, it would need to be backed by direct evidence or a

preponderance of probabilities, which has not been demonstrated in

this case.

27. In the present case, the defendant has not rebutted the

presumption, even by the preponderance of probabilities. This Court

is of the view that the evidence of PWs.1 to 3 establishes the execution

of Ex.A.1 promissory note.

28. A cumulative reading of the cited precedent of the Honourable

Apex Court and the provisions above of the N. I Act would

unambiguously and unequivocally highlight and spotlight the fact that

in the event of the plaintiff capable of ushering in Section 118 of the

N. I Act, the initial burden is on the defendant to establish at least by

a preponderance of probabilities, and there was no passing of

consideration under the promissory note; after that, only the burden

would get shifted to the plaintiff to prove that the negotiable

instrument was supported by consideration.

29. 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 has discharged the onus of proof

showing that the existence of consideration was improbable or

doubtful and the execution of the promissory note, the onus would be

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shifted to the plaintiff. Then, she will be obliged to prove the existence

of the consideration.

30. On studied scrutiny, it is seen that the defendants have not

produced any evidence to discharge the onus on them. The defence

taken by the defendant is not substantiated. The defendant has failed

to prove the contention by leading cogent evidence. 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.

31. For the reasons stated above, this Court is of the opinion that

the plaintiff is able to establish the execution of the suit promissory

note in her favour by Sathi Venkateswara Reddy after receipt of the

consideration amount thereunder.

32. It does not appear that the finding of the fact recorded by the

trial Court by ignoring or excluding relevant material or by taking into

consideration irrelevant/inadmissible evidence and it is against the

weight of the evidence, or the said finding so outrageously defied logic

as to suffer from the vice of irrationality. It cannot be said that the

decision of the trial Court arrived based on no evidence or thoroughly

unreliable evidence.

33. After careful consideration, the trial Court 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. The findings

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arrived at by the trial Court are correct, and no justifiable reasons

have been shown by the appellant/D.5 for arriving at different

conclusions. I agree with the conclusion reached by the trial Court.

34. Accordingly, the Points are answered in favour of the plaintiff by

holding that the Trial Court is justified in holding that one Sathi

Venkateswara Reddy executed the suit promissory note and received

the consideration amount. Given the preceding discussion, the view

taken by the trial court does not call for any interference, and this

Appeal fails and is hereby dismissed. The impugned Decree and

Judgment passed by the trial court is upheld.

35. As a result, the Appeal is hereby dismissed without costs by

confirming the Decree and Judgment dated 01.09.2015 in O.S.

No.133 of 2010, passed by the learned III Additional District Judge,

Bhimavaram.

Miscellaneous petitions pending, if any, in this Appeal shall

stand closed.

___________________________________ JUSTICE T. MALLIKARJUNA RAO

Date:20.10.2023 MS

TMR, J A.S. No.897 of 2015

THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

APPEAL SUIT NO.897 OF 2015 Date:20.10.2023

MS