K. Rameshwar Reddy vs M/S. Annapurna Finances

This appeal suit is filed against the Judgment and decree dated 24.06.2013 in O.S.No.1325 of 2010, passed by the learned VII – Additional Senior Civil Judge, L.B.Nagar, Ranga Reddy District.

The suit vide O.S.No.1325 of 2010, was filed by M/s.Annapurna Finance represented by its Proprietor E.Vivekananda for recovery of amount against the appellant/defendant basing on a promissory note dated 16.04.2008. The trial Court examined P.Ws.1 and 2 and marked Exs.A1 to A17 on behalf of the respondent/plaintiff and also examined D.Ws.1 and 2 on behalf of the appellant/defendant and marked Exs.B1 to B42. The trial Court after considering the arguments of both sides and evidence on record, decreed the suit for an amount of Rs.8,29,300/- with interest @ 12% per annum from the date of the suit till the date of decree and thereafter at 6% per annum from the date of decree till realization. Aggrieved by the said Judgment and decree, defendant therein preferred the present appeal.

The learned Counsel for the appellant/defendant mainly contended that the trial Court has not considered Ex.B18. The evidence of P.Ws.1 and 2 is contrary with each other regarding the payment of consideration under Ex.A1. There are glaring inconsistencies in the evidence of P.Ws.1 and 2, as such respondent/plaintiff is not entitled for the relief sought for in the suit. Therefore, requested the Court to set aside the Judgment of the trial Court.

The parties herein are referred as plaintiff and defendant as arrayed before the trial Court for the sake of convenience.

Plaintiff in the suit stated that he was carrying money lending business and during the course of business, defendant approached him on 16.04.2008, and requested him to lend an amount Rs.5,00,000/- and assured to repay the loan amount as and when demanded by him. Accordingly, he advanced a loan of Rs.5,00,000/- to the defendant and the defendant in turn executed promissory note in favour of the plaintiff on the same day and promised to repay the same @ 2% per month and also issued receipt for the said amount, but he had not paid any interest as agreed by the defendant in the promissory note, as such plaintiff requested him to repay the amount, but defendant had not repaid the said loan amount. After lot of persuasion, defendant issued three cheques dated 02.03.2009, bearing Nos.341234, 748110 and 531894 for Rs.80,000/-, Rs.40,000/-and Rs.31,500/- respectively. When he presented the same with M/s.Vijaya Bank, S.D. Road Branch, Secunderabad, they were returned with an endorsement ‘In Sufficient Funds’. The total outstanding amount along with interest from the defendant is Rs.8,29,300/-. Plaintiff got issued legal notice dated 12.07.2010, but the defendant failed to repay the same even after receiving the said legal notice. As he failed to repay the said amount, plaintiff filed the suit for recovery of amount.

In the written statement filed by the defendant, he denied all the material allegations and stated that he received the legal notice dated 12.07.2010 and got it replied through his Counsel denying the liability and allegations made by the plaintiff. Defendant knows the plaintiff through a common friend for the last 9 years. With the said acquaintance, he used to borrow amounts from the plaintiff as and when required. Whenever, plaintiff lends money, he used to insist him to sign on blank promissory notes and cheques. Accordingly, he used give signed promissory notes and cheques in good faith. After repayment of loans, plaintiff used to return the signed blank promissory notes and cheques. While so, during the year 2008, after repayment of all loans, when he requested the plaintiff to return all the signed blank promissory notes and cheques given to him, he returned some of the signed blank promissory notes and cheques, but some of them were not returned, as they were misplaced and promised to return them whenever they were traced out. In spite of repeated requests, plaintiff failed to return the signed blank promissory notes and cheques and now with a malafide intention got signed blank promissory notes and cheques filled and filed a false suit only to extort money illegally. Therefore, requested the Court to dismiss the suit.

Plaintiff examined himself as P.W.1 and reiterated the contents of the chief affidavit. In the Cross-examination, he stated that he has no prior acquaintance with the defendant. He knows defendant from the date of borrowing the loan amount and he was doing business since 1993. He processes licence for doing money lending business. He added that he obtained license prior to 2007 and he has to renew it every year. He also stated that he was also doing advertisement business and he never worked at Janamitra publicities. He further stated that one week prior to 16.04.2008, defendant approached him and after verifying the bonafides of the defendant, he lent the amount. His car driver by name Khadeer and office boy Raju were also present when he lent the amount to defendant. He stated that at present Raju was not working in his office and he paid the amount to the defendant in cash. He is the income tax assessee from the year 1998, but he has not filed a copy of the returns. It was suggested to him that defendant did not receive any amount, but he got filled the blank cheques and promissory notes of the defendant, but he denied it. He had also filed a criminal case against the defendant under Section 138 of Negotiable Instruments Act along with condone delay petition, but it was dismissed. Ex.A1 was scribed by the defendant and it contains his two signatures. One is on the revenue stamp and the other is to the left side of the promissory note. He further stated that the first attestor to Ex.A1 was his driver and second attestor was his office boy, but he could not examine the second attestor, as he was not working with him. It was further admitted that defendant paid Rs.8,000/- subsequent to receipt of Rs.5,00,000/- under Ex.A1 and he had also got mentioned the said payment in his account copy. He was maintaining accounts and payments of Rs.5,00,000/- on 16.04.2008 and it reflects in his account. He did not file his day book along with plaint and he had also not filed I.T returns for the relevant period. As the defendant has no knowledge of his firm name, he issued cheques under Exs.A4, A5 and A.6 and asked him to put his firm stamps on those cheques. It was suggested to him that he preferred revision against the order in delay condonation petition and the same was also dismissed, but he denied it. He did not know about the suit filed in O.S.No.389 of 2012 and he filed a criminal case for dishonor of cheque against D.W.2 and he deposed in C.C.No.81 of 2011. He did not remember whether D.W.1 was introduced by D.W.2. He further adds that D.W.2 might have introduced D.W.1 to him in the year 2000.

P.W.2 is the driver of the plaintiff. He supported the version of P.W.1. In the Cross-examination he stated that he was working as driver for the last 10 years continuously. Except driving he was not attending any other work of P.W.1. One Kumar was working as office boy with P.W.1. He stated that learned Counsel for the plaintiff prepared his evidence affidavit on his instructions. P.W.1 gave amount to Rami Reddy. He did not remember the name exactly, as it happened long back. He could not identify the defendant in the Court hall. He admitted his signature on the affidavit and is different from that of the signature on Ex.A.1. He further stated that both plaintiff and defendant were present in the room when plaintiff gave amount to defendant and he was outside the room. He signed on the Ex.A1 as one of the attestor.

Defendant examined himself as D.W.1 and stated that he came to know about P.W.1 through a common friend by name Chandrasekhar Rao for about 10 years. He also stated that he was taking amount from P.W.1 as and when required for the purpose of development of a school being run by Ram Sai Krupa Educational Society. P.W.1 lends money by taking signed promissory notes and cheques in blank. He used to issue handwritten slips containing loan account details, whenever payments were made he used to return the signed blank promissory notes and cheques. In the first week of April, 2008 after repayment of all loans, P.W.1 returned some of the signed blank promissory notes and cheques, but some of them were not returned as they were reported to be misplaced and P.W.1 promised to return them whenever they are traced out. Meanwhile, P.W.1 with a malafide intention got signed blank promissory notes and cheques filled and filed a false suit. He further stated that he received a notice dated 12.07.2010 under Ex.A11 and got it replied on 19.07.2010 denying the liability and allegations made by the plaintiff. Plaintiff lodged a complaint in C.C.SR.No.9631 of 2009, under Section 138 of N.I.Act with a delay of 75 days. The said complaint was filed alleging that he issued three cheques in discharge of the liability under Ex.A.1, but they were dishonored and the said complaint was dismissed vide order dated 21.12.2009 in M.P.No.3414 of 2009, against which plaintiff preferred C.R.P.No.18 of 2010 and the same was also dismissed by order dated 30.06.2010, and the said order remained unchallenged and attained finality. He filed as many as 43 documents along with the additional chief affidavit and Exs.B1 to B13 were marked on his behalf. D.W.1 in his Cross-examination stated that Ex.B14 was the receipt for Rs.25,000/- and it was towards loan repayment. So also, Ex.B15, B16 and B17 were also the loan repayment receipts. He also stated that on some occasions plaintiff issued acknowledgement of receipt of unfilled stamp paper and on some occasions he failed to issue such acknowledgments. Ex.B18 was the acknowledgment of receipt of unfilled stamp paper. He further stated that in the month of November, 2007, he mortgaged the property and he repaid the loan amount by paying Rs.2,10,000/-. He further admitted that he approached the plaintiff and borrowed Rs.5,00,000/- and executed Ex.A1 promissory note and issued Ex.A6 cheques towards part satisfaction of promissory note.

It is for the defendant to establish that he had repaid the amount, but could not receive the blank promissory notes and cheques. When all the cheques were presented, they were returned with an endorsement ‘insufficient funds’, as such complaint was given against the defendant. D.W.2 stated that he knows P.W.1 from 1988-89 and further stated that D.W.1 is his classmate in graduation. He introduced D.W.1 to P.W.1 in the year 2000. In the Cross-examination he stated that D.W.1 informed him about the transactions between himself and plaintiff. D.W.1 also informed that he closed all financial transactions with P.W.1 in the year 2007 or 2008. He clearly stated that D.W.1 had not stated about the transaction regarding this case to him. Previously, D.W.1 borrowed only small amounts like Rs.25,000/- and Rs.30,000/-.

Plaintiff filed the suit for recovery of amount basing on the promissory note. He filed the promissory note dated 16.04.2008, and also the receipt issued on the same day under Ex.A2 for receiving an amount of Rs.5,00,000/- by the defendant. The main contention of the defendant is that he was receiving amount as and when required from the plaintiff and repaying the same. Before issuance of the amount, plaintiff was in the habit of taking blank promissory notes and cheques and after payment he was returning the same. However, after repayment of Rs.5,00,000/-, plaintiff had returned some of the promissory notes and cheques and stated that he could not trace out the other documents and will handover as and when they were traced out, but later filed the suit basing on the said unfilled promissory notes and cheques. The defendant admitted the execution of the promissory note and also the passing of consideration of Rs.5,00,000/-. However, he stated that he repaid the said amount, but he had not filed any document to show that he repaid the loan amount to the plaintiff and he had also not stated when he repaid the said amount. Why he has not issued any legal notice or given any complaint when plaintiff has not returned the blank promissory notes and cheques is not explained anywhere by the defendant. Promissory note bears his signature. Plaintiff got examined P.W.2, who is one of the attestor of the promissory note and he proved the document under Ex.A1 and also receipt under Ex.A2.

The learned Counsel for the plaintiff relied upon the decision of the Hon’ble Apex Court in the case of K.P.O.Moideenkutty Hajee Vs. Pappu Manjooran (1996) 8 SCC 586  and other, in which it was held as follows:

“11. It would thus be clear that when the suit is based on pronote, and promissory note is proved to have been executed, Section 118(a) raises the presumption, until the contrary is proved, that the promissory note was made for consideration. That initial presumption raised under Section 118(a) becomes unavailable when the plaintiff himself pleads in the plaint different considerations. If he pleads that the promissory note is supported by a consideration as recited in the negotiable instrument and the evidence adduced in support thereof, the burden is on the defendant to disprove that the promissory note is not supported by consideration or different consideration other than one recited in the promissory note did pass. If that consideration is not valid in law nor enforceable in law, the court would consider whether the suit pronote is supported by valid consideration or legally enforceable consideration.

The learned Counsel for the plaintiff has also relied upon the decision of the Hon’ble Apex Court in the case of M.S.Narayana Menon Vs. State of Kerala (2006) 6 SCC 39, in which Section 118(a) and 139 of the N.I. Act reads as follows:

“118.Presumption as to negotiable instruments:-Until the contrary is proved, the following presumptions shall be made:

(a) of consideration – that every negotiable instrument was made or drawn for consideration, and that every such instrument when it has been accepted, indorsed, negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration;

Presumption in favour of holder – It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.

Presumptions both under Sections 118(a) and 139 of the Negotiable Instrument Act are rebuttable in nature.”

In this case, plaintiff has established his case by filing promissory note and Ex.A2 and also got examined one of the attestor of the promissory note. Now, the onus shifts on to the defendant, but he has not given any complaint or issued legal notice when blank promissory notes or cheques were not returned by the plaintiff in the year 2007 or 2008. He kept quiet till the filing of the suit in the year 2010. Therefore, the defence of the defendant is not believable. The trial court considering the entire evidence on record, rightly decreed the suit in favour of the plaintiff. This court finds no reason to interfere with the Judgment of the trial Court.

In the result, the appeal suit is dismissed, confirming the Judgment and decree dated 24.06.2013 in O.S.No.1325 of 2010 passed by the trial Court. There shall be no order as to costs.

Miscellaneous petitions pending, if any, shall stand closed.