Andhra HC (Pre-Telangana)
P. Venkatamma And Anr. vs Dontham Sulochana on 29 August, 2005
Equivalent citations: AIR2006AP92, 2005(6)ALD211, 2005(6)ALT789
Author: L. Narasimha Reddy
Bench: L. Narasimha Reddy
JUDGMENT L. Narasimha Reddy, J.
1. This second appeal is filed under Section 100 of C.P.C., by the defendants in O.S. No. 85 of 1993 on the file of the Subordinate Judge, Nalgonda. Respondent filed that suit for recovery of a sum of Rs. 95,175/-, with interest.
2. Respondent pleaded that she sold an extent of Ac.6.38 guntas of land in Sy. No. 357 of Nalgonda, to the 1st appellant for a consideration of Rs. 1,40,000/- in March 1991. It was her case that few months thereafter, the appellants approached her for a loan of Rs. 1,95,500/-, for developing a mango garden in the land purchased by them. Respondent is said to have lent that amount, after obtaining promissory notes, executed by the 1st appellant, with the 2nd appellant, figuring as surety.
3. It was stated that the 1st appellant did not repay the amount even after two years, and that the matter was taken to the elders, viz., Gutha Mohan Reddy, Azaz Ahmed Asgar, B. Saidulu and G. Raju. They are said to have brought about a settlement, according to which, the respondent should restrict her claim to Rs. 1,40,000/-; the appellants shall pay a sum of Rs. 50,000/- and execute promissory notes for the balance of Rs. 90,000/-. Respondent pleaded that on the date of settlement, the appellants paid a sum of Rs. 50,000/- and executed three separate promissory notes of Rs. 30,000/- each. The suit was filed on the strength of these promissory notes.
4. In their written statement, the appellants pleaded that they have not borrowed any amount, whatever, from the respondent. They also denied the payment of Rs. 50,000/-, and execution of three promissory notes on 13-4-1993, for a sum of Rs. 90,000/-. It was contended that the allegation, such as, the respondent had advanced Rs. 1,95,500/- to them, and that she had agreed to forego Rs. 55,500/- from the principal, not to speak of the interest, is totally unbelievable. They specifically denied the execution, attestation and handwriting on the promissory notes. They further alleged that the respondent is involved in money lending business and running chits. They urged that the relationship between themselves and the respondent after the purchase of the land were in fact, strained, so much so, they had to file O.S. No. 53 of 1993, against the respondent, for perpetual injunction. Reference was also made to certain complaints made by them to the police.
5. The trial Court dismissed the suit, through its judgment dated 9-3-1995. The respondent carried the matter in appeal by filing A.S. No. 17 of 1995, in the Court of Principal District Judge, Nalgonda. The appeal was allowed on 13-7-2000, and consequently, the suit was decreed as prayed for. Hence, this second appeal.
6. Sri M. Raja Malla Reddy, learned Counsel for the appellants submits that the three promissory notes, marked as Exs.A-1 to A-3, were forged and at any rate, not supported by consideration. He contends that, while the recital in the promissory notes is to the effect that the amount referred to therein, was paid contemporaneously, the pleadings and evidence of respondent was that the consideration is traceable to the previous transactions. He submits that no evidence, whatever, was adduced, to establish the prior transactions, and it is totally unbelievable that the respondent, who sold her land for Rs. 1,40,000/-, has chosen to lend a sum of Rs. 1,95,500/-, to them, that too without taking any security. He contends that the evidence adduced by the respondent, in relation to the alleged promissory notes for Rs. 1,95,500/- is so inconsistent and untrustworthy, that it cannot be given any weightage, whatever. He further submits that the presumption under Section 118 of the Negotiable Instruments Act (for short "the Act") cannot at all be drawn, in favour of the respondent, because she utterly failed to prove the execution of the promissory notes. Placing reliance upon a judgment rendered by a Full Bench of this Court in G. Vasu v. Syed Yaseen, (FB), he submits that the evidence on record had virtually discharged the burden of the appellants in disabling the Court from drawing a presumption under Section 118 of the Act, in favour of the respondent. He takes exception to the very approach of the lower appellate Court, in the matter.
7. Sri M.V. Durga Prasad, learned Counsel for the respondent, on the other hand, submits that the evidence on record had proved the execution of Exs.A-1 to A-3, and the presumption under Section 118 of the Act naturally follows. He contends that the trial Court proceeded mostly on assumptions, whereas the lower appellate Court applied the settled principles of law, applicable to negotiable instruments and decreed the suit. He points out that the small doubt, if any, that existed as to the proof of the promissory notes, stood clarified with the summoning of record from a Co-operative Society, at the stage of appeal, in an application filed under Rule 27 of Order 41 C.P.C., and that the appellants did not choose to rebut that evidence. He urges that the inconsistencies in the depositions of the witnesses, examined on behalf of the respondent, were trivial, and they do not have the effect of disabling the Court from drawing the presumption. In support of his contention, he has placed reliance upon several judgments of the Supreme Court and this Court. He finally urges that no substantial question of law arises for consideration in this second appeal.
8. The respondent filed the suit for recovery of certain amount against the appellants. She pleaded that initially, she lent a sum of Rs. 1,95,500/- to the appellants, and when the same was not repaid, she moved the matter before the elders. A settlement is said to have been arrived at, whereunder she gave up Rs. 55,500/- from the principal amount, as well as the interest, and agreed to receive Rs. 1,40,000/-. She pleaded that the appellants paid a sum of Rs. 50,000/-, on that day, and executed three promissory notes for a sum of Rs. 30,000/-, each. The appellants denied the allegation as to their borrowing of Rs. 1,95,500/-, in the initial stage, as well as the subsequent transaction of payment of Rs. 50,000/- and execution of promissory notes, for Rs. 90,000/-. The trial Court framed the following issues:
1. Whether the suit pronote is not executed by the defendants as alleged in the written statement?
2. Whether the plaintiff is entitled for recovery of suit amount from the defendants as prayed for?
3. To what relief ?
9. The respondent deposed as PW-1, and she examined PWs.2 and 3, the attestors of promissory notes, marked as Exs.A-1 to A-3. The 1st appellant deposed as DW-1. On their behalf Exs.B-1 to B-11 were marked. These are the copies of the complaint, said to have been submitted by the 1st appellant to various Police authorities, and the postal receipts etc. The trial Court took the view that the respondent failed to prove the execution of Exs.A-1 to A-3. Consequently it dismissed the suit.
10. Before the lower appellate Court, the respondent filed an application under Order 41 Rule 27 C.P.C., and got summoned the mortgage-bond register, of Primary Agricultural Co-operative Society, Gollagudem. The Register was marked as Ex.X-1. Certain signatures, said to be of the appellants, were also marked. It did not frame any points, as such, for consideration. However, various headings were employed in the judgment, viz.,
(a) Discussion regarding to circumstances,
(b) Is there any reason for the plaintiff to fabricate Exs.A-1 to A-3, in the promissory notes,
(c) Do the promissory notes bear the signatures of the defendants, and
(d) Signatures of the defendants in the Bank etc.
11. Extensive discussion was undertaken, with reference to the decided cases, and ultimately, the appeal was allowed.
12. Before proceeding to discuss the matter on merits, it is necessary to take note of the approach adopted by the lower appellate Court on certain aspects. In a suit for recovery of money, based on promissory note, the burden squarely rests upon the plaintiff to prove the promissory note, in all respects, as required under law. Evaluation of possibilities for the defendant to borrow the amount, or his necessities, do not have any role to play in this regard. The lower appellate Court, however, proceeded exactly in those lines. The following observations make that clear :
"From her own admission, it is very much clear that the first defendant was very much pressed for money some time during end months of 1991. In the absence of any documentary material, or oral evidence let in, with regard to the manner in which she raised money, the plaintiffs case gets strengthened in the sense that the defendants would have been pestering the plaintiff to lend money, as the sale consideration amount would have been with plaintiff, and to accommodate them, the plaintiff would have lent money to the defendants."
13. To buttress their point, that, the relationship between them and the respondent was not so congenial as to enable them to borrow any money from the respondent, the appellants referred to O.S. No. 53 of 1993, filed by them in the Court of Senior Civil Judge, Nalgonda, against the respondent for injunction, in respect of the property purchased by them from the respondent. The suit was said to have been decreed.
The respondent did not deny the same, either by filing a rejoinder, or, in her evidence. At any rate, it was a matter of record. However, the lower appellate Court dealt with this aspect, in the following manner :
"But, neither the decrefe nor the judgment of the said suit have been filed before this Court. Therefore, we are not aware as to what is the reason for the first defendant to file the said suit and obtain a decree. When there was sale transaction of land between the defendants and plaintiff, and when the possession of the land was delivered to the first defendant having been the purchaser, there is no reason as to why the plaintiff should pick up any dispute with the defendants. Therefore, it is another circumstance which shows that the defendant is not speaking the whole truth, and the only conclusion we can arrive at is that when the plaintiff was demanding for return of amount of loan taken by the first defendant, the defendants were not able to repay the amount, and therefore, the disputes would have cropped up."
14. The approach of the lower appellate Court does not at all accord with the settled principle's of law. Instead of concentrating on, whether the promissory notes were proved by the respondent herein, it started picking holes in the conduct and character of the appellants, towards the defendants in the suit, that too, in a manner opposed to law.
15. The respondent specifically pleaded that she advanced a sum of Rs. 1,95,500/- within few months from the date of sale of land by her, in favour of the 1st appellant in March 1991. The plaint is silent as to the manner of payment of that amount. A plain reading of the same discloses that the appellants were not sure as to whether the amount was paid in lump-sum, or in a staggered manner, or as to the number of promissory notes, executed therefore. The dates of the promissory notes said to have been executed were not indicated. The respondent did not issue any notice for repayment of that amount.
16. It was stated that when the respondent insisted on payment of the amount, appellants approached one Mr. Gutha Mohan Reddy, and three other persons, referred to in the previous paragraphs. They are said to have settled the matter in such a way that the respondent should restrict her claim to Rs. 1,40,000/-, in total and full satisfaction of her claim. A sum of Rs. 5 0,000/- is said to have been paid on that day, and Exs.A-1 to A-3 were stated to have been executed. It was pleaded that the 1st appellant took away the earlier promissory notes from her and tore them away. If these facts are taken on their face value, the consideration for Exs.A-1 to A-3 would be a past debt, and not a contemporaneous payment. However, Exs.A-1 to A-3 disclose that the amount covered by them was paid at the time of their execution. Even if a margin is given to the respondent as to the vagueness on this aspect, her claim can be accepted, if only she proved the past transaction, whereunder she lent certain amount to the appellants.
17. In the plaint as well as in her evidence, she stated that the 1st respondent had tore away the promissory notes of the year 1991. however, PW-2, who is said to be an attestor of Exs.A-1 to A-3, and a participant in the settlement of the disputes, stated in his evidence as under :
"The earlier promissory notes, which were 5 or 6 in number, for the amount of Rs. 1,95,500/- were taken away by Gutha Mohan Reddy. He has torn them of, as fresh promissory notes were executed by the defendant."
18. The respondent was not sure as to the nature and number of promissory notes, said to have been executed in 1991, or the manner in which she advanced the amount. The inconsistencies can be better appreciated, if only the relevant portion is extracted :
"I do not remember for how much amount the earlier five or six promissory notes was executed by the Defendant No. l. Witness volunteers the defendant No. l took the amount under promissory note as and when necessity arises for the amount. I cannot say the exact amount under the note. I do not remember the date and month of the above said 5 or 6 promissory notes but it was taken in 1991. The total amount of Rs. 1,95,000/- under five or six pronote accrued on the date in March 1993. Witness again says it accrued on the date of settlement by the elders. I cannot say the month. It was in 1993. It was 13-4-1993. 13th day fourth month nineteen ninety three. Witness again says that it was 13th March, 1993".
19. At a subsequent stage, she stated that one Laxmamma was the witness for all the 5 or 6 promissory notes. She resiled from that and said Laxmamma figured as witness in 2 or 3 promissory notes. She did not examine the said Laxmamma. Gutha Mohan Reddy, who is said to have settled the matter and tore away the promissory notes, was not examined. PW-3 is admittedly a close relation of the respondent. He is said to be the one of the elders for the settlement. He also figured as a witness to Exs.A-1 to A-3. While PW-1 was not able to state as to the denomination of the notes in which a sum of Rs. 50,000/- was said to have been paid to her, PW-3 stated that it comprised of notes of Rs. 100 and 50. PW-1 did not state as to whether any calculation sheet was prepared during the settlement, whereas PW-3 stated that such a calculation was prepared, but torn of. It was suggested to him that he was the person, who threatened the defendants, and that certain cases are pending against him in the Court of Judicial First Class Magistrate, Nalgonda.
20. The respondent was not clear as to the date of lending; manner of payment, and number of promissory notes executed.
If really there existed any promissory notes, any prudent person would have preserved them, till they are discharged. It is rather difficult to imagine that a person, who sold away her property, lent a higher amount than the consideration to the purchasers and some time thereafter, writes off a substantial portion of the amount. Even assuming that the respondent was generous enough to write off Rs. 55,500/-, of principal, and the entire interest, which accrued upto that date, one would except that necessary endorsements are made on the promissory notes, evidencing the transaction, or would have referred to them, in the subsequent promissory notes. The settlement, which brings about such drastic changes, as to the obligations of the parties, would certainly have been the subject-matter of a written agreement. Assuming that the respondent depended on the honesty of the appellants in this regard, and did not insist on execution of agreement, she could have proved the settlement by examining Gutha Mohan Reddy, who is said to have brought about the settlement. Non-examination of such an important witness would, certainly attract the inference under clause (g) of Section 114 of the Evidence Act. Hence, the respondent failed to prove past transaction of lending between herself and the appellants.
21. Learned Counsel for the respondent strenuously contended that in the facts and circumstances of the case, the presumption provided for under Section 118 of the Act deserves to be drawn. A mere reading of that provision discloses that such presumption would follow, only when the concerned negotiable instrument is proved or admitted. From the discussion undertaken above, it is rather difficult to conclude that the respondent proved Exs.A-1 to A-3. However, to give a benefit of doubt to her, let it be proceeded on the assumption that there is no controversy as to the proof of Exs.A-1 to A-3, and that the dispute is only as to whether they are supported by consideration.
22. In G. Vasu v. Syed Yaseen, (supra), a Full Bench of this Court had undertaken an extensive and scholarly discussion on the subject, particularly from the point of view of the nature of presumption, referred to under Section 118 of the Act, and the circumstances under which, it can be drawn. Copious reference was made to the relevant provisions of the Evidence Act, decided cases on the subject. The fundamentals of the principles were also discussed. It was ultimately held that the expression "until the contrary is proved", occurring in Section 118 of the Act, in the context of absence of consideration for a negotiable instrument, would not only taken in its fold, the proof by a defendant, but also the fact, whether the non-existence of consideration is so probable, that a reasonable man would subscribe to that view, under the facts and circumstances of the case. The difficulty for a defendant to prove such a negative fact was also taken note of. The discussion was summed up as under :
"Para-32: For the aforesaid reasons, we are of the view that where, in a suit on a promissory note, the case of the defendant as to the circumstances under which the promissory note was executed is not accepted, it is open to the defendant to prove that the case set up by the plaintiff on the basis of the recitals in the promissory note, or the case set up in suit notice or in the plaint is not true and rebut the presumption under Section 118 by showing a preponderance of probabilities in his favour and against the plaintiff. He need not lead evidence on all conceivable modes of consideration for establishing that the promissory note is not supported by any consideration whatsoever. The words 'until the contrary is proved' in Section 118 do not mean that the defendant must necessarily show that the document is not supported by any form of consideration but the defendant has the option to ask the Court to consider the non-existence of consideration so probable mat a prudent man ought, under the circumstances of the case, to act upon the supposition that consideration did not exist. Though the evidential burden is initially placed on the defendant by virtue of Section 118 it can be rebutted by the defendant by showing a preponderance of probabilities that such consideration as stated in the pronote, or in the suit notice or in the plaint does not exist and once the presumption is so rebutted, the said presumption 'disappears'. For the purpose of rebutting the initial evidential burden, the defendant can rely on direct evidence or circumstantial evidence or on presumptions of law or fact. Once such convincing rebuttal evidence is adduced and accepted by the Court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the plaintiff who has also the legal burden. Thereafter, the presumption under Section 118 does not again come to the plaintiffs rescue. Once both parties have adduced evidence, the Court has to consider the same and the burden of proof loses all its importance."
23. The prominence of this judgment was recognized by the Supreme Court in Bharat Barrel and Drum Manufacturing Company v. Amin Chand Payrelal, 1999 (2) ALD (SCSN) 12 : 1999 (2) Supreme 187, so much so, that substantial portion thereof was extracted in it.
24. On the touchstone of the principles laid down in G. Vasu's case (supra), it needs to be seen as to whether the appellants have discharged their burden, vis-a-vis the presumption under Section 118 of the Act. In this regard, the consideration need not be restricted to the evidence, adduced by the appellants. The information, elicited by them, in the cross-examination of the witnesses, examined on behalf of the respondent can also be taken into account. The Full Bench itself recognized the handicap of a party to prove a negative.
25. For instance, a party to a suit can certainly prove either through oral or documentary evidence, that he paid certain amount to the other. The question as to whether a party did not receive any consideration, cannot be proved with the same amount of ease and convenience. The task before the Court, on such aspects, becomes equally difficult. It is for this reason, that the evidence adduced on behalf of the party, who asserted that he paid the amount, becomes relevant and important, even while deciding whether the other party had discharged the burden as to non-receipt of that amount.
26. From the plaint itself, it is clear that on the date of Exs.A-1 to A-3, no amount was paid by the appellants. On the other hand, it was pleaded that they paid a sum of Rs. 50,000/- to the respondent on that day. The consideration under Exs.A-1 to A-3 said to be the past dues from the appellants. In her evidence, as PW-1, the respondent was not able to state as to when she gave Rs. 1,95,500/- to the appellants; whether it was in lump-sum or staggered payments, and as to the number of promissory notes that were said to have been executed, in respect of the said amount. She was so wavering that at one breath she said one Laxamamma was the witness for all the 5 or 6 promissory notes, and in the next, she said that it was only in respect of 2 or 3 promissory notes, that the said lady figures as a witness. The so-called witness was not examined. Not a single person associated, in any manner, with the lending of the said amount of Rs. 1,95,000/-; was examined, much less any material was placed before the trial Court.
27. In the context of examining the existence of consideration for promissory notes in the form of previous dues, the person claiming such amount must be able to prove the lending of such amount in such a way and to such a degree, that it was capable of being recovered and the subsequent promissory note did nothing more than facilitating the borrower to pay the amount at a later date. In other words, except in respect of limitation, the claim must be proved, in all other respects, and the subsequent promissory note can be taken only as a device, to extend the limitation. Viewed from this angle, it emerges that the respondent miserably failed to prove her lending of the sum of Rs. 1,95,500/-.
28. It may appear that the discussion is undertaken from the point of view of the respondent, whereas the burden was upon the appellants, to prove the non-existence of consideration. Here, it is to be noted that the appellants categorically denied the borrowing of any amount from the respondent. Apart from this, they pleaded that the relationship between them and the respondent, at the relevant point of time, was so strained, that they were constrained to file a suit for perpetual injunction against the respondent being O.S. No. 53 of 1993, and that the same came to be decreed. These facts would be sufficient to render the lending of amount by the respondent, improbable, and the onus shifts to the respondent, to prove the otherwise. The discussion undertaken in the preceding paragraphs becomes relevant from this context. The net result is that the appellants can be said to have proved the '"contrary", under Section 118 of the Act, and thereby the Court would be disabled from drawing the presumption provided for therein.
29. Learned Counsel for the respondent relied upon the Division Bench judgments of this Court in Atluri Usha Swamy v. Vijay Prestessed Products (P) Limited, 2002 (2) ALD 843 (DB), Vanga Surya Rao v. Guttula Gopalakrishna, 1999 (6) ALD 611 and Bharat Barrel's case (supra). In all the judgments referred to above, there did not exist any dispute as to the proof of the negotiable instrument, and the defendants therein were found to have failed in discharging their burden, in the context of presumption under Section 118 of the Act. Therefore, the principle laid down therein does not apply to the facts of this case.
30. Another area of controversy was the summoning of the register, Ex.X-1, and marking of certain signatures therein, at the appellate stage. On behalf of the respondent it is pointed out that the lower appellate Court had undertaken comparison of the signatures of the 1st appellant on Exs.A-1 to A-3, on the one hand, and those marked under Ex.A-1, on the other hand, and that it was permissible for the Court to do so, under Section 73(b) of the Indian Evidence Act. There is no quarrel with the proposition contained in Section 73 of the Evidence Act or the principle laid down in the judgment referred to above. However, in view the findings recorded by this Court, proceeding on the assumption that Exs.A-1 to A-3 can be said to have been proved, this aspect becomes virtually superfluous.
31. For the foregoing reasons, the second appeal is allowed, and the judgment and decree passed by the lower appellate Court are set aside. There shall be no order as to costs.