Lankapothu Narasa Reddy Died vs Lankapothu Prabhakara Reddy
2023 Latest Caselaw 4445 AP

        THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

                    APPEAL SUIT No.297 OF 2013

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 05.12.2012 in O.S.No.96 of 2004 passed by the

learned Senior Civil Judge, Bapatla (for short, 'the trial court'). The

respondent herein is the plaintiff, who filed the suit in O.S. No.96 of

2004 for recovery of Rs.3,76,573/- from the defendants with costs

and interest based on the two promissory notes.

2. For the sake of convenience, hereinafter, the parties are arrayed

as per their respective litigative status before the trial Court.

3. The plaintiff's case is that the 1st defendant borrowed

Rs.67,000/- from him on 24.02.2003 for his business purpose and

executed a promissory note in favour of the plaintiff, agreeing to repay

the same with interest at 24% per annum. Again, on 28.03.2003, the

1st defendant borrowed Rs.2,14,000/- from the plaintiff and executed

another promissory note in favour of the plaintiff, agreeing to repay

the same with interest at 24% per annum. It is stated in the plaint

that the defendant is an Income Tax Assessee; as such, the interest

on the debts need not be scaled down under Act IV of 1938. Despite

repeated demands by the plaintiff, the 1st defendant did not repay the

amount and postpone the same on one pretext or the other. It is

further stated that during the pendency of the suit, the 1st defendant

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died intestate, leaving behind the defendants 2 to 4 as his legal heirs,

and they are in possession and enjoyment of the deceased's estate.

Hence, he was constrained to file the suit.

4. The 1st defendant filed a written statement denying the

averments made in the plaint and contending that he did not borrow

either Rs.67,000/- or Rs.2,14,000/- from the plaintiff. Instead, he

acknowledged borrowing Rs.10,000/- on 18.12.1996, and a

promissory note was executed for this amount. Subsequently, when

the outstanding amount under this promissory note reached

Rs.23,733/- by 18.02.2000, the plaintiff obtained a promissory note

for an increased amount of Rs.35,172/- in the name of his sister,

Kambala Venkata Padmavathi. The renewed promissory note dated

18.02.2000 amounted to Rs.67,336/- by 24.02.2003, and the plaintiff

waived his claim for Rs.336/-, ultimately obtaining the 1st suit

promissory note for Rs.67,000/-. The 1st defendant asserted that he,

the plaintiff and Lankapothu Padmanabha Reddy, are close relatives.

Therefore, the plaintiff did not insist on the defendant executing the

promissory note in the renewal of the earlier one dated 03.04.1993

until 03.04.2000. During this period, the plaintiff obtained a

promissory note for Rs.1,12,688 from the defendant, as if he had

borrowed this amount in the name of his brother, Lankapothu

Padmanabha Reddy. On 28.03.2003, the amount claimed to be due

under the earlier promissory note dated 03.04.2000 was

Rs.2,14,000/-. The plaintiff obtained a promissory note in his name

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as if the defendant borrowed Rs.2,14,000/- from him on that date.

The 1st defendant, being an agriculturist and not an Income Tax

Assessee, argued that he is entitled to the benefits of the provisions of

the A.P.Agriculturist Relief Act, 1938. He contended that the suit debt

should be scaled down accordingly. The defendant also claimed that

the plaintiff is entitled only to simple interest at the rate of 12% per

annum on the amounts of Rs.10,000/- and Rs.25,000/-, which he

borrowed from the plaintiff on 18.02.1996 and 03.04.1993,

respectively, until the date of the suit. Finally, the defendant asserted

that the suit is barred by limitation since there is no written

acknowledgment for the payment of the time-barred debt.

5. The defendants 2 and 3 adopted the written statement of the

1st defendant.

6. A perusal of the orders in I.A. No.261/2010, dated 13.07.2010,

the defendants 2 to 4 were added as legal heirs of the deceased 1st

defendant, and the suit against the 4th defendant is dismissed as

batta not paid.

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

1) Whether the suit promissory notes dated 24.02.2003 and 28.03.2003 are true?

2) Whether those two pronotes are not supported by consideration?

3) Whether the plaintiff is entitled to the benefits and provisions of the Andhra Pradesh Agriculturists Relief Act, 1938?

4) Whether the plaintiff is entitled to a decree for the suit amount?

5) To what relief?

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

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

defendants, D.Ws 1 and 2 were examined. Though the 2nd and 3rd

defendants were added as legal heirs of the 1st defendant, they were

not examined; Exs.B1 to B4 and Exs.X1 to X4 were marked on their

behalf.

9. Having considered the materials placed before him, the learned

Senior Civil Judge, Bapatla, decreed the suit with costs against the

defendants 2 and 3 out of the estate of the deceased 1st defendant,

which is lying in the hands of D.2 to D.4, for Rs.3,76,573/-with

subsequent interest @ 12% per annum from the date of filing of the

suit, till the date of decree and future interest at 6% per annum from

the date of decree, till the date of realization on the principal amount

of Rs.2,81,000/-.

10. Sri Raja Reddy Koneti, learned counsel for the

appellants/defendants, contends that the trial Court did not

adequately consider the discrepancy in the plaintiff's claim that he

had withdrawn the money from the bank on the dates of the

promissory notes and paid it to the defendants. The bank transaction

records do not support this claim, and this inconsistency should have

been taken into account. The 1st defendant contends that the suit

promissory notes are merely renewals of earlier promissory notes and

that no new consideration was exchanged under the suit promissory

notes. To support this claim, he has presented evidence by marking

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the returned or earlier promissory notes. Therefore, the suit should

not be decreed. The counsel further argues that the trial Court failed

to recognize that the 1st defendant has established that no

consideration was passed under the suit promissory notes, and they

are simply renewals of previous promissory notes. Consequently, the

presumption under Section 118 of the Evidence Act, which assumes

that negotiable instruments are supported by consideration, should

be rebutted. He asserts that the plaintiff failed to prove that

consideration was indeed passed under the promissory notes, while

the appellants have provided evidence indicating that no

consideration was exchanged under the suit promissory notes. As a

result, the plaintiff's claim should have been dismissed.

11. Per contra, Sri Sreekanth Reddy Ambati, learned counsel for the

respondent/plaintiff, contends that the trial Court correctly

appreciated the case facts and came to a correct conclusion. The

reasons given by the trial Court do not require any interference.

12. Considering the pleadings in the suit, the findings recorded by

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

made, the following points would arise for determination:

1) Is the trial Court justified in holding that the suit promissory notes are supported by consideration and the part payment is true?

2) Is the trial Court justified in holding that the interest is not liable to be scaled down from the date of the suit transaction till the date of filing?

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

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POINT NO.1:

13. The plaintiff is examined as P.W.1; the 1st defendant is

examined as D.W.1. P.W.1 and D.W.1 reiterated their stand in their

respective pleadings. The plaintiff examined the attestor of the Exs.A1

and A2 promissory notes as P.W.2-L.Padmanabha Reddy, who is the

plaintiff's brother. PWs.1 and 2 testified that the 1st defendant

borrowed Rs.67,000/- from the plaintiff on 24.02.2003 and executed

a suit promissory note (Ex.A.1). It is also their evidence that the 1st

defendant borrowed Rs.2,14,000/- from the plaintiff on 28.03.2003

and executed Ex.A2 promissory note, agreeing to the terms and

conditions therein. The P.W.2's evidence coupled with Exs.A1 and A2

promissory notes show that he attested both promissory notes.

14. The D.W.1's evidence shows that one Smt. Kambala Venkata

Padmavati, who is the sister of P.Ws 1 and 2, and they are closely

related to him. It is the DW.1's evidence that he borrowed Rs.25,000/-

on 03.04.1993 under a promissory note, but the promissory note

related to this transaction needs to be located. Whereas, in the

written statement, the DW.1 has contended that he borrowed

Rs.25,000/- on 03.04.1993 from the plaintiff due to their relationship

and confidence, the DW.1 did not insist on executing a promissory

note in the renewal of an earlier promissory note dated 03.04.1993 till

03.04.2000, on which date the plaintiff obtained promissory note for

Rs.1,12,688/- from the 1st defendant, as if the 1st defendant borrowed

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the said amount in the plaintiff's brother' s name Padmanabha Reddy

(P.W.2). When the 1st defendant was asked to execute two promissory

notes, it is somewhat strange to contend that the plaintiff did not

insist the 1st defendant to execute the promissory note in renewal of

earlier promissory note dated 03.04.1993 till 03.04.2000.

15. It is also the DW.1's evidence that he borrowed Rs.10,000/- on

18.02.1996 from the plaintiff under a promissory note. By

18.02.2000, when the amount due under the aforementioned

promissory notes was Rs.23,733/-, the plaintiff obtained a promissory

note for Rs.35,172/- in the name of his sister/K. Venkata Padmavati.

By 24.02.2003, when the amount under the renewed promissory note,

dated 18.02.2000 was Rs.67,336/-, the plaintiff obtained an Ex.A1

suit promissory note for Rs.67,000/- in his name. The defendant

relied on Ex.B1 - a returned renewal promissory note, dated

18.02.2000, which stands in favour of L.Padmanabha Reddy for

Rs.35,172/- and Ex.B2 - a promissory note dated 18.02.2000

executed by the 1st defendant in favour of Kambala Venkata

Padmavathi. Exs.B1 and B2 lack endorsements or signatures to

indicate that the 1st defendant retrieved these promissory notes from

the respective individuals, to whom they were initially made out. They

do not bear the signatures of the attesors and are said to have been

self scribed by the (DW.1) 1st defendant. D.W.1's contentions

regarding the execution of Exs.B.1 and B.2 are unsupported by oral

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or documentary evidence. It becomes difficult to accept DW.1's

testimony without corroborating evidence.

16. The 1st defendant's stand as articulated in both his written

statement and his testimony is that he executed Exs.A1 and A2

promissory notes in his own handwriting in favour of PW.1. These

promissory notes state that he borrowed the amounts for his

agriculture cultivation expenses. Importantly, Ex.A1 and Ex.A2 do not

mention that they were executed in renewal of any prior promissory

notes. However, the 1st defendant's assertion that he did not actually

receive the consideration amount for these promissory notes is based

solely on his own testimony. There is no supporting evidence, such

as, receipts from Kambala Venkata Padmavathi or discharge

endorsements on Ex.B.2 to corroborate his stand. D.W.1's evidence

also reveals that he practiced as an advocate for a brief period,

approximately six months, in 1976, and subsequently, engaged in a

pesticides business in Guntur from 1978 to 1986, during which time,

he was an Income Tax Assessee. However, he ceased his business

operations in 1986. Notably, there were no disputes between his

family and P.W.1's family. Crucially, D.W.1's testimony regarding

these matters was not significantly challenged during cross-

examination. His evidence confirms that he was not engaged in any

business at the time of the suit transactions, which occurred in 2003.

Moreover, his brief legal practice experience in 1976 was also

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uncontested. Finally, Exs.A1 and A2 indicate that the 1st defendant

borrowed the amounts for agricultural purposes.

17. Since the appellants/defendants admitted the execution of

Ex.A1 and Ex.A2 promissory notes, the burden is upon them to

establish that the 1st defendant had executed without consideration.

18. The evidence of P.W.s 1 and 2 manifestly establishes the

execution of suit promissory notes Ex.A1 and Ex.A2 by the 1st

defendant. It is not the defendants' case that they had enmity with the

plaintiff, but the evidence shows that they are close relatives. Though

the 1st defendant took a plea that Ex.A1 and Ex.A2 suit promissory

notes were executed in renewal of earlier promissory notes, he failed

to establish the same by placing cogent evidence.

19. In Duggineni Seshagirirao V. K.Venkatarao1, in the facts and

circumstances of the case, the composite High Court of Andhra

Pradesh held that:

"....the plaintiff had 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 Negotiable Instrument Act".

20. In 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".

2001(6) ALT 95

2006(2) ALD202

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21. In a decision G. Vasu V. Syed Yaseen Sifuddin Quadri3, the

Composite High Court of Andhra Pradesh held that:

"Once the defendant shows either by direct evidence or circumstantial evidence or by use of other presumptions of Law or the fact that the promissory note is not supported by consideration in the manner stated in the promissory note or the manner stated in the suit notice or the pleading, the evidential burden shifts to the plaintiff and the legal burden of the plaintiff is revived, i.e., to prove that the promissory note is supported by consideration and at that stage. The presumption of Law covered by S.118" disappears and no longer subsists".

"It is further held that once both parties have adduced evidence the Court has to consider the same and the burden of proof loses all its importance".

22. In Abbisetti Krishnamoorthy V. Singasani Raghuramaiah (died)

per L.R.s4, 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 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".

In light of the principles laid down in the above decisions, I now consider the facts of the case.

23. Such being the position of Law, the burden lies on the

defendants 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 defendants

discharge the onus of proof showing that the existence of

consideration was improbable or doubtful and also the execution of

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

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

AIR 1987 A.P. 139 Full Bench

2011(5) ALT 143

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24. Regarding the evidence, which is adverted to supra, this Court

views that the defendants did not show satisfactory and reliable

evidence or circumstance to disbelieve the evidence of P.W.s 1 and 2

regarding the execution of the promissory note by the 1st defendant

and passing of consideration. The evidence of P.W.s 1 and 2 is

consistent regarding the execution of the promissory notes by the 1st

defendant on receipt of the consideration amount and part payment

endorsement. 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 the suit

promissory note. PW.2 has no reason to depose falsehood against the

1st defendant's interest, and he would gain nothing by supporting the

plaintiff's case unless there is a truth in it. However, even the rebuttal

could be given by direct evidence or by proving the preponderance of

probabilities on record. In the present case, the defendants have not

rebutted the presumption, even by the preponderance of probabilities.

25. 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 defendants 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.

26. 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

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the 1st 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 1st

defendant executed the suit promissory notes, received the

consideration amount and made part payment. Accordingly, this point

is answered.

POINT NOs.2& 3:

27. As seen from the plaint, the plaintiff claimed interest at 24% per

annum from the date of suit transactions till the date of filing of the

suit. The evidence on record shows that the 1st defendant borrowed

the amount for agricultural purposes under Ex.A1 and Ex.A2

transactions, and he was eking out his livelihood by agriculture as of

the date of suit transactions.

28. In a decision reported in Vinjarapu Nookaraju and another vs.

Palaparthi Yedukondalu5, the Composite High Court of Andhra

Pradesh observed that:

"4.xxx In this case it is necessary to notice that Section 13 of the Andhra Pradesh (Andhra Area) Agriculturists Relief Act 4 of 1938 which empowers the Government to notify altering the rate of interest payable from time to time. The said notification under Sec.13 was issued on 06.10.77 as per A.P. Gazettee, R.S. to Part-II dated 06.10.77."

29. In a decision reported in Kota Venkaiah Choudary vs Ramineni Venkata Subba Rao, the Composite High Court of Andhra Pradesh held that:

"5. xxx Section 13 of Act 4 of 1938 reads as under:

51984 SCC OnLine A.P. 86

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Rate of interest payable by agriculturists on new loans: In any proceeding for recovery of a debt, the Court shall scale down all interest due on any debt incurred by an agriculturist after the commencement of this Act so as not to exceed a sum calculated at 6¼ per cent per annum, simple interest, that is to say, one pie per rupee per mensem simple interest or one anna per rupee per annum simple interest;

It provided that the State Government may, by notification in the Official Gazette, alter and fix any other interest rate from time to time.

6. A plain reading of the above provision would show that though the legislature prohibited the levy of interest above 6¼ per annum on any amount borrowed by an agriculturist, power was reserved to the Government to modify such interest rate. In the exercise of such power, the Government issued G.O.Ms.No.693, dated 22.09.1977. It issued a notification in A.P. Gazette Part-II dated 06.10.1977 increasing the interest rate to 12.5% per annum with effect from 06.10.1977".

30. Section 13-A of Act 4 of 1938, which reads as under:

13-A. Rate of interest payable by certain persons on debts: Where

a debt is incurred by a person who would be an agriculturist as

defined in section 3(ii) but for the operation of proviso (B) or proviso

(C) to that section, the rate of interest applicable to the debt shall be

the rate applicable to it under the law custom, contract or decree of

Court under which the debt arises or the rate applicable to an

agriculturist under section 13 whichever rate is less.

31. By following the above case law and provisions, this Court

finds that the trial Court should have awarded the interest at the rate

of 12.5% per annum from the date of suit transactions till the date of

filing of the suit on respective amounts borrowed under Exs.A1 and

A2 promissory notes.

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32. Accordingly, these points are answered in favour of the plaintiff.

Given the preceding discussion, the view taken by the trial court does

not call for any interference except the rate of interest.

33. As a result,

(a) The Appeal is partly allowed without costs;

(b) The suit in O.S. No.96 of 2004 on the file of learned Senior Civil Judge Bapatla is partly decreed with costs;

(c) Defendants 2 and 3 shall pay a sum of Rs.67,000/- and Rs.2,14,000/- with interest at 12.5% per annum from the date of suit promissory notes dated 24.02.2003 and 28.03.2003, respectively, till the date of filing of the suit and thereafter interest at 12% per annum till the date of decree and further at 6% per annum from the date of decree till realisation with proportionate costs.

Miscellaneous petitions pending, if any, in this Appeal, shall

stand closed.

________________________________ JUSTICE T. MALLIKARJUNA RAO Date: 22.09.2023 MS

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THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

APPEAL SUIT NO.297 OF 2013

Date:22.09.2023

MS