Madras High Court
Sri Shanthi General Finance vs V.Arumugam on 22 November, 2023
S.A.Nos.603 and 604 of 2010
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 22.11.2023
CORAM :
THE HONOURABLE Mr. JUSTICE C.KUMARAPPAN
S.A.Nos.603 and 604 of 2010
and M.P.Nos.1,1 of 2010
Sri Shanthi General Finance,
rep. by its Managing Partner,
S.Swaminathan,
No.171, Lal Bahadur Shastri Street,
Pondicherry. .. Appellant in both
second appeals
Vs.
1.V.Arumugam, ..First and second respondent
in both second appeals respectively
2.V.Sandiny. ..Second and first respondent
in both second appeals respectively
Common Prayer: Second Appeals filed under Section 100 of the Code of
Civil Procedure, against the judgment and decree dated 17.11.2009
passed in A.S.Nos.268 and 292 of 2006, respectively on the file of the
Pricipal District Judge, Puducherry, reversing the judgment and decree
dated 31.12.2003 in O.S.No.4 of 2000 on the file of the Additional Sub
Judge, Puducherry.
For Appellant in
both second appeals : Mr.Sai Srujan Jayi
1/20
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S.A.Nos.603 and 604 of 2010
For Respondents
For R1/R2 : M/s.R.Ramya
for Mr.T.V.Krishnamachari.
For R2/R1 : Mr.T.M.Naveen
for Mr.T.P.Manoharan.
****
COMMON JUDGMENT
Both these Second Appeals have been filed at the instance of the
plaintiff.
2. The parties will be referred to according to their litigative
status as before the Trial Court.
3. Originally, the suit was filed by the plaintiff/finance against
two defendants viz., V.Arumugam and V.Sandiny. Wherein, the Trial
Court decreed the suit. Against which, both the defendants filed two
separate appeals. The first defendant/V.Arumugam has filed appeal in
A.S.No.268 of 2006, and the second defendant/V.Sandiny has filed
another appeal in A.S.No.292 of 2006. Both the appeals were heard
together and a common judgment was passed. Against the common
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S.A.Nos.603 and 604 of 2010
judgment, the plaintiff has filed two separate second appeals in
S.A.Nos.603 & 604 of 2010. In S.A.No.603 of 2010, the first defendant
was arrayed as first respondent and in S.A.No.604 of 2010, the first
defendant was arrayed as second respondent. Since both the second
appeals are arising out of the same suit and common judgment of the
Lower Appellate Court, both the second appeals taken together for
disposal.
The brief facts which give rise to the instant Second Appeals are
that:
4. The defendants borrowed a sum of Rs.1,50,000/- for their
business purpose from the plaintiff. In evidence thereof, they had
executed a promissory note on 25.04.1996, and agreed to pay the
principal amount with interest at the rate of 24% p.a. Since the
defendants have not chosen to pay either the interest or the principal, the
plaintiff issued a legal notice to the defendants on 13.10.1997. The
defendants, though received the notice, did not choose to repay the
amount. However, the second defendant issued a reply on 24.11.1997. In
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S.A.Nos.603 and 604 of 2010
the reply, though she admitted the joint liability, denied the quantum. The
plaintiff further submits that subsequently, on 27.01.1998, the defendants
approached the plaintiff in person and requested to waive the interest
component. Further, the defendants acknowledged their debt and
promised in writing to pay the borrowed amount within six months.
Since the defendants have acknowledged their debt on 27.01.1998, the
suit is within the period of limitation. Hence, the plaintiff prayed to
decree the suit.
5. Resisting the above contention, the first defendant has filed
a written statement contending that he did not borrow any amount and he
has also disputed the execution of the promissory note. The first
defendant also disputed the reply issued by the second defendant.
Similarly, this defendant disputed the alleged acknowledgment of the
debt, dated 27.01.1998. Hence, he prayed to dismiss the suit.
6. The second defendant filed a separate written statement by
disputing the letter of acknowledgment dated 27.01.1998 and contented
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S.A.Nos.603 and 604 of 2010
that the same is a fabricated one. This defendant further submits that the
suit is hopelessly barred by limitation. This defendant further submits
that there is no borrowal of Rs.1,50,000/- from the plaintiff/finance and
has disputed the execution of promissory note in favour of the plaintiff
for Rs.1,50,000/-. However, it is the contention of the second defendant
that the first defendant is her brother-in-law viz., elder sister’s husband
and the first defendant approached the second defendant to stand as
surety for the borrowal of the loan of Rs.10,000/- from the
plaintiff/finance and this defendant consented for the same and
accordingly, the first defendant borrowed a sum of Rs.10,000/- from the
plaintiff/finance on 25.04.1996. At that time, the plaintiff/finance
obtained signature of both the defendants in a blank printed revenue
stamp affixed promissory note, apart from that, obtained the signature of
this defendant alone in a blank non-judicial stamp paper and in a blank
paper by saying that it was their routine practice. This defendant further
submits that the first defendant again asked to stand as surety for a
similar second loan of Rs.10,000/- from the plaintiff/finance and this
defendant has also consented for the same and accordingly, the first
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S.A.Nos.603 and 604 of 2010
defendant borrowed the second loan of Rs.10,000/-. At the time of the
second borrowal, the plaintiff/finance obtained similar signature from the
defendants in a similar set of documents. Thus, according to the
defendants, they have totally borrowed only Rs.20,000/-.
7. This defendant further submits that at the time of the second
borrowal, the first defendant specifically promised to the plaintiff to pay
and discharge the said loan amount of Rs.20,000/- within the first week
of March 1997. This defendant further submits that the third borrowal
which was made by the first defendant is not known to this defendant.
Thus, this defendant submits that the very promissory note is not
supported by consideration and the suit is barred by limitation. Hence,
she prayed to dismiss the suit.
Evidence and documents:
8. Before the Trial Court, on behalf of the plaintiff/finance, its
Managing Partner Swaminathan was examined as P.W.1. Apart from him,
three more witnesses viz., Prabhakaran, K.Siva and Kalyanasundaram
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S.A.Nos.603 and 604 of 2010
were examined as P.W.2 to P.W.4, respectively. Ten documents were
marked as Exs.A1 to A10. On behalf of the defendants, the first and
second defendants examined themselves as D.W.1 and D.W.2 and one
Kathiravan was examined as D.W3. Six documents were marked as
Exs.B1 to B6.
Findings of the both the Courts below:
9. After having considered the submissions made by both sides
and on perusal of the oral and documentary evidence, the Trial Court, by
invoking the provisions under Sections 20 and 118 of the Negotiable
Instruments Act, 1881, decreed the suit as the defendants have admitted
their signature in the promissory note. However, the Lower Appellate
Court, being last Court of fact, has re-appreciated the evidence and gave
a finding that even in spite of exercising the presumption under Sections
20 and 118 of the Negotiable Instruments Act, 1881, by way of rebuttal
presumption the defendants, by letting in relevant documents, have
discharged their burden that they did not borrow Rs.1,50,000/- from the
plaintiff/finance. The Lower Appellate Court also found that the
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S.A.Nos.603 and 604 of 2010
acknowledgment of debt has not been proved in a manner known to law
and ultimately, the Lower Appellate Court reversed the finding of the fact
of the Trial Court and dismissed the suit. Aggrieved by the same, the
plaintiff is now before this Court by filing these second appeals.
Substantial questions of law:
10. At the time of admitting these second appeals, the following
common substantial questions of law have been formulated:
“(i) Whether the judgment of the First Appellate
Court which has failed to raise a presumption in favour of
the plaintiff that the pro-note under Ex.A3 was issued for
consideration mentioned therein is sustainable, in view of
the mandate under Section 118 of the Negotiable
Instruments Act, 1881?
(ii)Whether the judgment of the First Appellate
Court shifting the burden of proof in entirety on the
plaintiff is sustainable in view of the presumption
available to the plaintiff under Section 118 of the
Negotiable Instruments Act, 1881 and more particularly
when the plaintiff has discharged the initial burden by
positive evidence?
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S.A.Nos.603 and 604 of 2010
(iii)Whether the judgment of the First Appellate
Court setting aside the well-considered judgment of the
Trial Court is sustainable in view of Section 20 of
Negotiable Instruments Act, 1881, which confers authority
to the plaintiff as a holder of the pro-note to make or
complete contents of the said pro-note for the amount
specified therein not exceeding the amount covered by the
stamp affixed and which further provides that the person
so signing shall be liable to such instrument in the
capacity, in which, he signed the same?”
Submissions on both sides:
11. The learned counsel for the plaintiff would vehemently
submit that since both the defendants have admitted their signature found
in Ex.A3/promissory note, the finding rendered by the Trial Court by
invoking Sections 20 and 118 of the Negotiable Instrument Act, 1881,
has to be upheld. It is the further submission of the learned counsel for
the plaintiff that the payment of Rs.1,50,000/- has further been proved by
way of acknowledgment of debt viz., Exs.A8 and A9/letters executed by
the first and second defendant respectively, and also would submit that
the Income Tax Returns submitted by the plaintiff would further
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S.A.Nos.603 and 604 of 2010
vindicate the payment made by these defendants. It is the submission of
the learned counsel for the plaintiff that they have proved the due
execution of the promissory note and passing of consideration. Hence, he
prayed to interfere with the judgment of the Lower Appellate Court and
prayed to confirm the judgment of the Trial Court.
12. Per contra, the learned counsel for the respondents in both
the appeals would contend that the suit is barred by limitation, and that
the plaintiff did not challenge or propose any substantial question of law
in respect of the limitation aspect. Therefore, it is the submission of the
learned counsel for the respondents that the finding rendered by the First
Appellate Court in respect of the limitation aspect has to be considered as
final, and thus, the reversal finding rendered by the First Appellate Court
is liable to be confirmed. It is the further submission of the learned
counsel for the respondents that the judgment of the First Appellate
Court has discussed various factual aspects in depth and has arrived at a
right conclusion. Therefore, they prayed to dismiss these Second
Appeals.
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S.A.Nos.603 and 604 of 2010
13. I have given my anxious consideration to the submissions
made by either side.
Analysis of the submissions:
14. The main submission made by the learned counsel for the
plaintiff is, that by virtue of Section 20 of the Negotiable Instruments
Act, 1881, the holder of the Negotiable Instrument is competent to fill up
the negotiable instrument, and that when the execution of the negotiable
instrument was admitted by the borrower, there will be presumption
under Section 118 of the Negotiable Instruments Act, 1881, for passing
of consideration. Absolutely, this Court has no quarrel over the said
proposition. However, the presumption under Section 118 of the
Negotiable Instruments Act, 1881, is rebuttal presumption and would
fade away if the contrary is proved.
15. Here, it is the specific contention of the defendants that they
have borrowed only Rs.10,000/- each on two different occasions, and
while doing so, there were asked to sign the blank stamped promissory
notes. In order to prove the said aspect, the defendants rely upon Exs.B1
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S.A.Nos.603 and 604 of 2010
to B3, which are the letters sent by the plaintiff to the defendants on
02.02.1997, 02.02.1997 and 22.04.1997, respectively, requesting the
defendants to pay a sum of Rs.20,000/-.
16. It is pertinent to mention here that the promissory note is
dated 25.04.1996. If really the plaintiff had advanced a sum of
Rs.1,50,000/- to the defendants, there would not have been any occasion
for the plaintiff to send such letter demanding only a sum of Rs.20,000/-.
Though it was contended by the plaintiff that the demand in the above
letter only represents interest. But, the Lower Appellate Court, recorded a
finding that when P.W.1/Swaminathan was cross-examined, in respect of
Ex.B2/letter sent to the first defendant by the plaintiff, he has not given
any explanation as to why the payment of Rs.20,000/- has been
mentioned in Ex.B2/letter. Even if Ex.B2/letter was issued for
demanding the interest for a period from 25.04.1996 till 25.01.1997, if
we work out the same, the same would come at Rs.27,000/-. Therefore, it
was found by the Lower Appellate Court that Exs.B1 to B3 would only
probabilize the case of the defendants. This Court could not find any
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S.A.Nos.603 and 604 of 2010
perversity over the said finding and that the finding of fact recorded by
the Lower Appellate Court is based on materials.
17. Further, the Lower Appellate Court has also drawn inference
against the plaintiff for non-production of the account books. However,
the learned counsel for the plaintiff would submit that, they have
submitted Income Tax Returns of the relevant year under Ex.A10. But,
while considering the said Ex.A10/Income Tax Returns, it was submitted
before the Income Tax Authority on 04.03.2003, well after the institution
of the suit. Therefore, this Court could not give any reliance to
Ex.A10/Income Tax Return as it is subsequent to the filing of the suit.
18. Therefore, as rightly found by the Lower Appellate Court,
though a presumption can be drawn under Sections 20 and 118 of the
Negotiable Instruments Act, 1881, such a presumption can be a rebutted
and in this case, the defendants, by filing Exs.B1 and B2, have rebutted
the presumption. Further, the finding of fact recorded by the Lower
Appellate Court that the plaintiff miserably failed to prove the quantum
of loan amount of Rs.1,50,000/- to the defendants, is liable to be
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S.A.Nos.603 and 604 of 2010
confirmed.
19. Another defence put forth by the defendants is that the suit is
barred by limitation. By getting over such defence, the plaintiff is relying
Exs.A8 and A9, viz., the letter given to the first and second defendants by
acknowledging the debt. It is the submission of the learned counsel for
the defendants that the plaintiff has not raised any ground against the
finding of fact recorded by the Lower Appellate Court in respect of the
limitation. Hence, contended that the finding recorded regarding
limitation becomes final. In support of his contention, he relied on the
following precedents:
1. Rajni Tandon V. Dulal Ranjan Ghosh Dastidar and another
reported in (2009) 14 SCC 782,
2. Narinderjit Singh V. North Star Estate Promoters Ltd., reported
in (2012) 5 SCC 712,
3. Nanjegowda @ Gowda and another V. Ramegowda reported in
(2018) 1 SCC 574,
4. State of Jharkhand V. Surendra Kumar Arivastava & others
reported in (2019) 4 SCC 214,
5. Manicka Poosali & others V. Anjalai Ammal & another reported
in (2005) 10 SCC 38,
6. Mehaboob-Ur-Rehman V. Ahsanul Ghani reported in (2019) 19
SCC 415,
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S.A.Nos.603 and 604 of 2010
7. Raman Vs. R.Natarajan reported in (2022) 10 SCC 143,
8. H.Siddiqui Vs. A.RAmalingam reported in (2011) 4 SCC 240,
9. Shasidhar & others V. Ashwini Uma Mathad & others reported in
(2015) 11 SCC 269,
10.Malluru Mallappa V. Kuruvathappa & others reported in (2020)
4 SCC 313,
11.Basalingappa V. Mudibasappa reported in (2020) 4 SCC 418,
12.Bharat Barrel & Drum Manufacturing Company V. Amin
Chand Payrelal reported in (1999) 3 SCC 35,
13.Tatipamula Naga Raju V. Pattem Padmavathi reported in (2011)
4 SCC 726,
14.Gopal Krishnaji Ketkar V. Mohamed Haji Latif & Ors reported in
AIR 1968 SC 1413,
15.Ajay Kumar D.Amin V. Air France reported in (2016) 12 SCC
566,
16.A.S.Duraisami Chettiar Sons Vs. S.Rathnaswami Gounder
reported in AIR 1992 Madras 132,
17.Soma Nachiappa Chettiyar V. S.M. Muthuraman reported in
2008 (5) CTC 802,
18.S.P.Chengalvaraya Naidu V. Jagannath & Others reported in
(1994) 1 SCC 1,
19.Dalip Singh V. State of Uttar Pradesh & others reported in (2010)
2 SCC 114.
20. It is true that the plaintiff has not raised any ground
challenging the finding of fact recorded by the Lower Appellate Court
and in respect of limitation. Therefore, as rightly contended by the
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S.A.Nos.603 and 604 of 2010
learned counsel for the defendants, the finding of fact recorded by the
Lower Appellate Court in respect of the limitation is liable to be
confirmed.
21. However, while looking at the discussions of the Lower
Appellate Court in respect of the acknowledgment of debt, the Lower
Appellate Court disbelieved both the documents on the ground that the
alleged acknowledgment of debt executed by the first defendant, was on
the stamp paper on 10.02.1996 and that too, in the stamp paper purchased
in some other name viz., Chithra. The case of the plaintiff is that the
defendant approached the plaintiff/finance, after the receipt of the legal
notice which was issued on 13.10.1997. Therefore, if really the defendant
had approached subsequent to the legal notice, the stamp paper would
have been purchased subsequent to such legal notice. Here again, the
case pleaded by the defendants is that the plaintiff misused the signed
blank stamped paper. Therefore, the Lower Appellate Court has rightly
disbelieved the alleged acknowledgment of the debt, allegedly executed
by the first defendant.
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22. Apart from the above ground, while dismissing the suit, the
Lower Appellate Court has disbelieved the said acknowledgment of debt
based upon the evidence of P.W.3/Siva who was the attestor to both the
documents. It was the finding of fact recorded by the Lower Appellate
Court that he was a chance witness and during cross-examination, he has
admitted that he borrowed loan on 25.04.1996, and that he went to the
plaintiff firm to pay the interest for a period of three months. Based upon
the said admission, the Lower Appellate Court found that if really
P.W.3/Siva had borrowed the loan on 25.04.1996, as per the evidence of
other witness P.W.2/Prabhakaran, the loan borrowed by P.W.3/Siva, was
discharged after three months from the date of borrowal viz., August
1996, whereas the alleged acknowledgment of debt was in the year 1998.
Therefore, the Lower Appellate Court has given a categorical finding that
Exs.A8 and A9 cannot be believed. Here again, in respect of the
limitation, the Lower Appellate Court has arrived at a right conclusion.
Thus, the plaintiff could not substantiate any ground before this Court
warranting any interference in the well merited findings of the Lower
Appellate Court. Thus, all the substantial questions of law are answered
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S.A.Nos.603 and 604 of 2010
in favour of the defendant/respondent.
23. In the result, both these Second Appeals are dismissed by
confirming the Judgment and Decree, dated 17.11.2009 passed by the
Principal District Judge, Puducherry, in A.S.Nos.268 and 292 of 2006.
Consequently, connected miscellaneous petitions are closed. There shall
be no order as to costs.
22.11.2023
Internet : Yes/No
Index: Yes/No
apd
To
1. The Pricipal District Judge, Puducherry,
2. The Additional Sub Judge, Puducherry,
3. The Section Officer, V.R.Section, High Court, Madras.
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S.A.Nos.603 and 604 of 2010
C.KUMARAPPAN,J.
apd
S.A.Nos.603 and 604 of 2010
and M.P.Nos.1,1 of 2010
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S.A.Nos.603 and 604 of 2010
22.11.2023
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