Andhra Pradesh High Court - Amravati
T.R.Muniratnam Naidu vs S.Zaheeruddin Saheb on 11 November, 2024
APHC010032232008
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI [3369]
(Special Original Jurisdiction)
MONDAY ,THE ELEVENTH DAY OF NOVEMBER
TWO THOUSAND AND TWENTY FOUR
PRESENT
THE HONOURABLE SRI JUSTICE T. MALLIKARJUNA RAO
SECOND APPEAL NO: 368/2008
Between:
T.R.Muniratnam Naidu ...APPELLANT
AND
S Zaheeruddin Saheb ...RESPONDENT
Counsel for the Appellant:
1. M VENKATA RAMANA REDDY
Counsel for the Respondent:
1. T C KRISHNAN
The Court made the followingJUDGMENT:
1. This Second Appeal has been filed by the Appellant/Defendant against
the Decree and Judgment dated 06.04.2006, in A.S. No.182 of 1997 on the
file of VIII Additional District Judge, (Fast Track Court), Chittoor(for short, 'the
1st Appellate Court') confirming the decree and Judgment dated 04.07.1997,
in O.S. No.70 of 1991 on the file of Additional Subordinate Judge, Chittoor(for
short, 'the trial Court').
2. The Respondent herein is the Plaintiff, who filed the suit in O.S.No.70 of
1991 seeking recovery of Rs.53,900/- being the principal and interest from the
Defendant based on the promissory note, dt.01.06.1988.
3. Referring to the parties as they are initially arrayed in the suit is
expedient to mitigate any potential confusion and better comprehend the case.
4. The factual matrix, necessary and germane for adjudicating the
contentious issues between the parties inter se, may be delineated as follows:
The defendant, as the manager of a joint family, borrowed
Rs.35,000/- from the Plaintiff on 01.06.1988 and executed a
promissory note agreeing to repay the amount with interest at 18%
per annum. Despite repeated demands for repayment, the
defendant has failed to honor the terms of the promissory note. In
an apparent attempt to defraud the Plaintiff, the defendant abruptly
closed the business at Palamaner and relocated to Tirupati, where
he continues to operate a meat food business. It is also important to
note that the defendant is not an agriculturist, and the Plaintiff is
entitled to claim interest at the contractually agreed rate.
5. The Defendant contested the suit, claiming the promissory note was
forged for unlawful gain. He stated that as of 01.06.1988, he was not
conducting any business in Palmaner and that the Plaintiff lacked the capacity
to lend Rs. 35,000, being in debt himself. The Defendant highlighted personal
animosity between him and the Plaintiff, stemming from a political rivalry in the
1989 Grampanchayat elections. He alleged that the Plaintiff and K.
Chandrasekhar conspired to fabricate two forged promissory notes, both
dated 01.06.1988 for Rs. 35,000/-. He asserts that the suit has no cause of
action and should be dismissed with exemplary costs.
6. 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 consideration was paid and whether the defendant as
manager of the joint family?
7. While the suit was pending trial, the Defendant filed I.A. No. 1062/1996
under Order 8, Rule 9 of the CPC, seeking permission to file an additional
written statement to raise the plea of being a small farmer. This petition was
dismissed on 28.06.1996. The Defendant then filed a revision petition, C.R.P.
No.3437/1996, which was allowed, granting permission for the Defendant to
include the additional plea of being a small farmer.
8. The Defendant filed an additional written statement, asserting that he is
an agriculturist and a landless poor person, owning 3 acres of dry land. He
denied engaging in any business, including the sale of meat foods, and
clarified that he has been visiting Tirupati occasionally over the past five
years, as his son resides there. The Defendant further claimed that as a small
farmer, he is entitled to the benefits under Act 2/1991.
9. Based on the additional written statement the trial Court framed the
following additional issues:
(1) Whether the plaintiff has capacity to lend the suit promissory note
amount to the defendant in 1988?
(2) Whether the defendant is a debtor within the meaning of Section 3(3)
of Act 2 of 1990?
10. During the trial, on behalf of the Plaintiff, PWs.1 and 2 was examined
and marked Ex.A.1. On behalf of the Defendant, DW.1 was examined, and
marked Exs.B1 to B3.
11. After completion of the trial and hearing the arguments of both sides,
the trial Court decreed the suit with costs for Rs.53,900/- with future interest
@ 18% per annum on the principal amount of Rs.35,000/- from the date of
suit till the date of decree and at 6% per annum on Rs.35,000/- from the date
of decree till the date of realization.
12. Aggrieved the same, the Defendant preferred an appeal in A.S.No.182
of 1997 on the file of the 1st Appellate Court. The 1st Appellate Court, being
the final fact-finding Court, framed the following points for consideration:
1) Whether the suit pronote is duly executed by the defendant in
favour of the plaintiff?
2) Whether the defendant is a small farmer within the meaning of Act
7 of 1977? If so, the suit is liable to be dismissed?
13. The 1st Appellate Court, on scrutiny of oral and documentary evidence
adduced on behalf of both sides, had dismissed the Appeal by its Judgment
and Decree dated 06.04.2006. Assailing the same, the Defendant preferred
the present Second Appeal.
14. Heard Sri M. Venkata Ramana Reddy, learned counsel representing
the Appellant/Defendant and Sri T.C. Krishnan, learned counsel representing
the Respondent/Plaintiff.
15. Sri M. Venkata Ramana Reddy, learned counsel for the
appellant/defendant, contended that both courts failed to recognize that the
Plaintiff had not proven the execution of the promissory note by the
Defendant, particularly in relation to the evidence of the promissory note dated
01.06.1988. He argued that P.W.2 did not support the Plaintiff's case
regarding the payment of money in the presence of the attestors and scribe.
The counsel further pointed out that the Trial Court overlooked the fact that
the Defendant is a small farmer, while the Plaintiff is not. As such, the
Defendant should have been entitled to the benefits under the Act of 1977 and
Act 2 of 1990, which the Trial Court failed to consider. Additionally, the Trial
Court did not take into account the testimony of D.W.1, who specifically
deposed that Item No. 2 in the Rythu Passbook pertains to his DKT land, over
which he holds title and possession.
16. Based on the Appellant's contentions, the following substantial
questions of law are involved in this Second Appeal:
a) Whether the courts below were justified in holding that
defendant/appellant is not a small farmer and he is not entitled
the benefit of Act 7 of 1977 and Act 2 of 1990
b) Whether the judgments of the courts below are not vitiated by
non-consideration of evidence adduced by the appellant i.e.
Exs.B1 to B3 and evidence of D.1 which clearly demonstrate
that he is a small farmer.
c) Whether the judgments of the courts below in not considering
the Clause 3(a)(v) which relates to breading of lives stocks and
beas and contended that running piggery farm comes within
the meaning of breading of lives stocks. Act 7 of 1977 and Act
2 of 1990 which is a beneficiary legislation of small farmers.
d) Both the courts failed to consider the fact that he is entitled to
protection under the Act 7 of 1977 and Act 2 of 1990 that the
defendants falls under the category of either on agriculture,
labourer or a small farmer and the defendant/appellant is
entitled to get the benefit under the Act.
17. Before delving into the matter, since the Appeal is filed under
Sec.100 of C.P.C., this Court must see the scope of Section 100 of C.P.C.
18. Considerations in Section 100 of C.P.C. arise only when there is a
substantial question of law and not mere such questions of law or one based
on facts. However, it has to be borne in mind that in case of misapplication of
law and improper appreciation of evidence on record, particularly the
documentary evidence, it is the bounden duty of the High Court sitting in 2nd
Appeal to consider such questions which are substantial in nature in terms of
law.
19. In Mallanaguoda v. Ninganagouda1, the Hon'ble Supreme Court held
that:
10. The first appellate Court is the final Court on facts. It has been
repeatedly held by this Court that the Judgment of the first appellate Court
should not be interfered with by the High Court in the exercise of its
jurisdiction under Section 100CPC unless there is a substantial question of
law. The High Court committed an error in setting aside the Judgment of the
(2021) 16 SCC 367
first appellate Court and finding fault with the final decree by taking a
different view on factual findings recorded by the first appellate Court.......
20. In K.N. Nagarajappa v. H. Narasimha Reddy2, the Hon'ble Supreme
Court held that:
14. Undoubtedly, the jurisdiction which a High Court derives under Section
100 is based upon its framing of a substantial question of law. As a matter of
law, it is axiomatic that the findings of the first appellate Court are final.
However, the rule that sans a substantial question of law, the High Courts
cannot interfere with the findings of the lower Court or concurrent findings of
fact is subject to two important caveats. The first is that if the findings of fact
are palpably perverse or outrage the conscience of the Court, in other words,
it flies in the face of logic that given the facts on the record, interference
would be justified. The other is where the findings of fact may call for
examination and be upset, in the limited circumstances spelt out in Section
103 CPC.
15. Section 103 CPC reads as follows:
"103. Power of High Court to determine issues of fact.--In any second
appeal, the High Court may, if the evidence on the record is sufficient,
determine any issue necessary for the disposal of the Appeal--
(a) which has not been determined by the lower appellate Court or both by
the Court of first instance and the lower appellate Court or
(b) which has been wrongly determined by such Court or courts by reason of
a decision on such question of law as is referred to in Section 100."
16. In the Judgment in Municipal Committee, Hoshiarpur v. Punjab S.E.B.
[Municipal Committee, Hoshiarpur v. Punjab S.E.B., (2010) 13 SCC 216 :
(2010) 4 S.C.C. (Civ) 861], this Court held as follows : (S.C.C. pp. 228-29,
paras 26-28)
"26. Thus, it is evident that Section 103CPC is not an exception to Section
100CPC, nor is it meant to supplant it; rather, it is to serve the same
purpose. Even while pressing Section 103CPC in service, the High Court
has to record a finding that it had to exercise such power because it found
that finding(s) of fact recorded by the Court (s) below stood vitiated because
of perversity. More so, such power can be exercised only in exceptional
circumstances and with circumspection, where the core question involved in
the case has not been decided by the Court (s) below.
27. There is no prohibition on entertaining a second appeal, even on a
question of fact, provided the Court is satisfied that the findings of fact
recorded by the courts below stood vitiated by non-consideration of relevant
evidence or by showing an erroneous approach to the matter, i.e. that the
(2021) 18 SCC 263
findings of fact are found to be perverse. However, the High Court cannot
interfere with the concurrent findings of fact in a routine and casual manner
by substituting its subjective satisfaction in place of that of the lower courts.
(Vide Jagdish Singh v. Natthu Singh [Jagdish Singh v. Natthu Singh, (1992)
1 SCC 647]; Karnataka Board of Wakf v. Anjuman-E-Ismail Madris-Un-
Niswan [Karnataka Board of Wakf v. Anjuman-E-Ismail Madris-Un-Niswan,
(1999) 6 SCC 343] and Dinesh Kumar v. Yusuf Ali [Dinesh Kumar v. Yusuf
Ali, (2010) 12 SCC 740 : (2010) 4 S.C.C. (Civ) 738] .)
28. If a finding of fact is arrived at by ignoring or excluding relevant material
or by taking into consideration irrelevant material or if the finding so
outrageously defies logic as to suffer from the vice of irrationality incurring
the blame of being perverse, then the finding is rendered infirm in the eye of
the law. If the findings of the Court are based on no evidence or evidence
which is thoroughly unreliable or evidence that suffers from the vice of
procedural irregularity or the findings are such that no reasonable person
would have arrived at those findings, then the findings may be said to be
perverse. Further, if the findings are either ipse dixit of the Court or based on
conjecture and surmises, the Judgment suffers from the additional infirmity
of non-application of mind and, thus, stands vitiated. (Vide BharathaMatha v.
R. VijayaRenganathan [BharathaMatha v. R. VijayaRenganathan, (2010) 11
SCC 483 : (2010) 4 SCC (Civ) 498] .)"
(emphasis supplied)
17. In a recent judgment of this Court, Narayan SitaramjiBadwaik v. Bisaram
[Narayan SitaramjiBadwaik v. Bisaram, (2021) 15 SCC 234], this Court
observed as follows, in the context of the High Courts' jurisdiction to
appreciate factual issues under Section 103IPC : (S.C.C. p. 238, para 11)
"11. A bare perusal of Section 103CPC clearly indicates that it provides for
the High Court to decide an issue of fact, provided there is sufficient
evidence on record before it, in two circumstances. First, when an issue
necessary for the disposal of the Appeal has not been determined by the
lower appellate Court or by both the courts below. And second, when an
issue of fact has been wrongly determined by the Court (s) below by virtue of
the decision on the question of law under Section 100 of the Code of Civil
Procedure."
21. In Balasubramanian v. M. Arockiasamy 3, the Hon'ble Supreme Court
held that:
14. In the background of the legal position and on reasserting the position
that there is very limited scope for reappreciating the evidence or interfering
with the finding of fact rendered by the trial court and the first appellate
Court in a second appeal under Section 100 of the Civil Procedure Code, it
(2021) 12 SCC 529
is necessary for us to take note as to whether in the instant facts, the High
Court has breached the said settled position........................
15.................... When such divergent findings on fact were available
before the High Court in an appeal under Section 100 of the Civil Procedure
Code, though reappreciation of the evidence was not permissible, except
when it is perverse, but it was certainly open for the High Court to take note
of the case pleaded, evidence tendered, as also the findings rendered by
the two courts which were at variance with each other and one of the views
taken by the courts below was required to be approved.
22. The Defendant contested the suit by asserting that he had not borrowed
the amount covered by the promissory note, claiming it was a forged
document, and argued that the Plaintiff lacked the capacity to lend the amount
stated in the note. The Trial Court framed appropriate issues to address the
Defendant's defences. Both parties presented evidence to support their
respective claims.
23. The Plaintiff, Zaheeruddin Basha, was examined as P.W.1, and the
scribe of the promissory note, Prabhakar Sastry, was examined as P.W.2.
Both witnesses consistently testified to the execution of the suit promissory
note. No material contradictions were elicited during cross-examination to
discredit their testimony. After considering the evidence, both the Trial Court
and the First Appellate Court concurrently concluded that the Defendant had
executed the suit promissory note in favor of the Plaintiff.
24. The appellant/defendant has argued that both the Trial Court and the
First Appellate Court erred in ruling that he is not a small farmer and is not
entitled to the benefits under Act 7 of 1977 and Act 2 of 1990. The appellant
further contended that both Courts failed to consider Clause 3(a)(v), which
pertains to the breeding of livestock and beasts, and argued that operating a
piggery farm falls within the scope of livestock breeding. These contentions
were raised by the appellant before both the Trial Court and the First
Appellate Court. In its judgment, the First Appellate Court observed in
paragraph 28 that:
"As per Section 3 of Act 7 of 1977, the definition of agriculture is to the following
effect:
(i) Horticulture;
(ii) The raising of crops (including plantation crops), grass or garden
produce;
(iii) Dairy farming;
(iv) Poultry farming;
(v) Breeding of livestock and bees;
(vi) Grazing;
29. Agricultural labourer means:
"A person who does not have hold over any agricultural land and
therefore principal means of livelihood is by manual labour and the agricultural
land in the capacity of a labourer on hire or on exchange, whether paid in cash
or in kind or partly in cash and partly in kind.
The annual house hold income means the aggregate of annual income
from all sources of all the members of the family."
25. The First Appellate Court carefully examined the recitals of Ex.A1 in
paragraph 31 of its judgment. It noted that the loan was intended for
purchasing the share of one G.K. Arul Kumar in the Royal Piggery Farm. The
Court also referenced the testimony of D.W.1, who, during cross-examination,
admitted to operating a business under the name "Royal Piggery Business" in
Palamaner. Based on this evidence, the First Appellate Court concluded that
D.W.1 had established that his principal source of livelihood was from
business activities. Although D.W.1 claimed to have closed the business, the
Court found that no documentary evidence was presented to support this
claim of closure as of the date of the transaction under Ex.A1.
26. After reviewing the evidence, the Trial Court concluded that the
Defendant had secured the loan to fund a business venture, specifically to
purchase a share in the Royal Piggery business, which he admitted to
operating under that name. The Trial Court determined that the Defendant
was not entitled to the benefits of Act 7/1977 and Act 2/1990. The same
arguments were presented before the First Appellate Court, which also
concluded that if the Defendant had been engaged in business and earned
more than Rs.1,200/- in any two years within the three years immediately
preceding the commencement of the Act, he would not be eligible for the
benefits of Act 2/1990. The First Appellate Court further observed that the
Defendant had failed to provide any evidence regarding his income from the
business. Additionally, the Court noted that the Defendant mentioned
employing five or six coolies but failed to explain the nature of the business
that required such a workforce, leaving the matter unexplained.
27. After a thorough analysis of the evidence, the First Appellate Court
upheld the findings of the Trial Court. The Appellate Court noted that although
the Plaintiff did not fully prove that the Defendant was operating the Sayee
Meat Foods business in Tirupati, the circumstances clearly indicated that, by
the time Act 2/1990 came into effect, the Defendant's primary source of
livelihood was not agriculture, but rather business. Both Courts addressed and
effectively dismissed the Defendant's contentions raised during the appeal,
providing reasons for rejecting those arguments. Consequently, the First
Appellate Court concluded that it was not open to the Defendant to raise these
factual pleas as substantial questions of law in the Second Appeal. Once it
was established that the Defendant was not entitled to the benefits of Act
7/1977 and Act 2/1990, the Defendant could not reframe these factual issues
as questions of law in the Second Appeal.
28. So far as the rate of interest is concerned, the trial Court has awarded
interest at 18% per annum from the date of suit till the date of decree. In
ascertaining the rate of interest, the Courts of Law can take judicial notice of
both inflation and also fall in bank lending rate of interest. The steep fall in the
Bank Lending interest rate is the main reason for reducing the pre-lite interest.
29. In a decision reported in Vinjarapu Nookaraju and another vs.
Palaparthi Yedukondalu 4 , 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
4 1984 S.C.C. OnLine A.P. 86
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."
30. 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:
Rate of interest payable by agriculturists on new loans: In any proceeding for
the 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".
31. 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.
32. In a decision reported in M. Rajeswar Rao & Others vs Chitluri
Satyam (died) & others 5 and another decision reported in Ms Surisetty
Nookaratnam vs Saragadam Gowri Ramalakshmi and another 6 , 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, respectively,
by relying on the judgments of Hon'ble apex Court in Mahesh Chandra
Bansal vs Krishna Swaroop [(1997) 10 SCC 681] and in DDA vs Joginer
S. Monga [(2004) 2 SCC 297]. In ascertaining the rate of interest, the Courts
of Law can take judicial notice of both inflation and also fall in bank lending
rate of interest. A reading of the precedents suggests that the steep fall in the
5 2013 SCC OnLine AP 809
6 2013 SCC OnLine AP 369
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 unconscionable and
usurious, the Court has got the power to interfere.
33. By following the case laws cited, this Court is inclined to reduce the
interest rate from 18% to 12% per annum from the date of the suit till the date
of decree is just and reasonable.
34. The findings of the trial Court and the 1st Appellate Court affirming that
the Plaintiff successfully proved the execution of the suit promissory note by
the Defendant after receiving the consideration amount, are neither
unreasonable nor a result of misinterpretation of documents or misreading of
evidence, with the sole exception being the rate of interest awarded from the
date of the suit till the date of decree. Upon evaluating the material on record,
this Court concludes that the 1st Appellate Court adjudicated the Plaintiff's suit
by affirming all factual findings against the Defendant as enumerated above.
These findings were consistent with the pleadings, evidence, and applicable
legal provisions. This Court determines that the conclusions reached by the 1st
Appellate Court do not warrant interference, except awarding the rate of
interest as indicated above. The 1st Appellate Court's judgment has to be
modified concerning the rate of interest and the rest of the Judgment stands
affirmed. Consequently, the substantial question of law raised is partly
adjudicated in favour of the Appellant/Defendant and against the
Respondent/Plaintiff.
35. As a result, the Second Appeal is partly allowed. The judgment and
decree, dated 06.04.2006 passed in A.S.No.182 of 1997 on the file of VIII
Additional District Judge (Fast Track Court), Chittoor, are modified by reducing
the rate of interest on principal amount from 18% per annum to 12% per
annum from the date of suit till the date of decree and thereafter interest at 6%
per annum from the date of decree till the date of realization. The remainder
of the decree and judgment rendered by the trial Court shall remain intact.
Each party shall bear their costs in the Appeal.
Miscellaneous petitions pending, if any, in this Appeal, shall stand
closed.
_____________________________
JUSTICE T. MALLIKARJUNA RAO
Date: 11.11.2024
MS
THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO
SECOND APPEAL NO. 368 of 2008
Date: 11.11.2024
MS
