Sri Aruna Agencies, Rayavaram Vs Sathi Veerraghava Reddy

This regular appeal under Section 96 Code of Civil Procedure (hereinafter referred to as ‘CPC’) is directed against the decree and judgment in O.S.No.74 of 2008 dated 09.02.2011 on the file of the Court of learned Senior Civil Judge at Ramachandrapuram.

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The defendant, before the trial Court, is the appellant herein. The respondent herein is the plaintiff.

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The respondent instituted the suit against appellant for recovery of an amount of Rs.9,33,934/- with interest basing on the promissory note, dated 17.02.2006.

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Before adverting to the material and evidence on record and nature of findings in the judgment of the trial Court, it is necessary to scan through the case pleaded by the parties in their respective pleadings.

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For the sake of convenience, the parties hereinafter referred to as they arrayed before the trial Court.

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The case of the plaintiff in brief in the plaint was as follows:

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On 17.02.2006, the defendant borrowed an amount of Rs.6,77,500/for the business investment from the plaintiff and executed Ex.A.1 promissory note in favour of the plaintiff to repay the same with interest @ 18% per annum. Subsequently, on the demand for repayment, the defendant issued a cheque for Rs.9,48,000/dated 16.10.2007, but the same was dishonoured due to insufficient funds. Then the plaintiff got issued a legal notice dated 14.03.2008 for payment, but there was no reply from the defendant. Hence, the suit.

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The defendant denying the allegations in the plaint and contending in the written statement as follows:

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The defendant borrowed an amount of Rs.1,00,000/from one Dwara Trimurthulu of Mandapeta for his business and he issued two signed blank cheques and promissory notes on 28.05.2004 towards security. In the month of February 2007, he

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discharged the said debt, but the said cheques and promissory notes were not returned by stating that they are misplaced. Then the suit promissory note is fabricated and filed the present suit by the plaintiff. Hence, prays to dismiss the suit.

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On these pleadings, the trial Court settled the following issues for trial:

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“1.Whether the suit pronote dt.17.02.2006 is true, genuine and is supported by consideration?

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2.Whether there is no privity of contract between the plaintiff and defendant?

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3.Whether the plaintiff is entitled to recover the entire suit amount? and

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4.To what relief?”

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At the trial, on behalf of the plaintiff, P.Ws.1 to 3 were examined while relying on Exs.A.1 and A.2 in support of his contentions. On behalf of the defendant, himself was examined as D.W.1 and got marked Ex.B.1.

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Basing on the material and evidence, trial Court came to conclusion that the suit promissory note is fully supported

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by consideration and the appellant is liable to discharge the suit debt with interest and costs and thus, decreed the suit.

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It is against this decree and judgment, the appellant/defendant preferred this appeal.

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Heard Sri Srinivas Basava, learned counsel representing Sri S.Srinivasa Reddy, learned counsel for the appellant/defendant and Sri S.Bhanu Sathvik Reddy, learned counsel representing Sri S.Siva Bhami Reddy, learned counsel for the respondent/plaintiff.

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Sri Srinivas Basava, learned counsel representing Sri S.Srinivasa Reddy, learned counsel for the

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appellant/defendant submits that Ex.A.1 promissory note is forged and fabricated one; that the plaintiff has no capacity to lend such huge amount; that the trial Court ought to have considered the case of the defendant, but did not do so; that no consideration was passed to the defendant under the suit promissory note; that the suit is liable to be dismissed for want of consideration under the suit promissory note; that

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the findings of the trial Court are bad in law and thereby prays to consider the present appeal.

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Per contra, Sri S.Bhanu Sathvik Reddy, learned counsel representing Sri S.Siva Bhami Reddy, learned counsel for the respondent/plaintiff submits that in the absence of any pleading regarding capacity of the plaintiff to lend such amount to the defendant under Ex.A.1, such contention has no legs to stand; that the defendant did not deny his signature on Ex.A.1 promissory note; that plaintiff categorically proved his case before Trial Court; that the trial Court on considering the facts and circumstances, material on record rightly decreed the suit; that there are no valid grounds to interfere with the judgment of the trial Court and that the appeal is liable to be dismissed.

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Against this backdrop, the following points now require consideration and determination:

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Whether the suit promissory note was passed for consideration?

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Whether the plaintiff has successfully established his entitlement to the suit amount as claimed in the plaint?, and

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To what relief?

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16. POINT NOs.1 & 2 :

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Before deciding the points, it is relevant to mention the observations made by the Hon’ble Supreme Court in a recent judgment in Rama KT.Barman v. MD.Mahim Ali¹ , which are as follows:

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“It is well-settled principle of law that the Court cannot create any new case at the appellate stage for either of the parties, and the appellate court is supposed to decide the issues involved in the suit based on the pleadings of the parties.”

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Admittedly the defendant did not deny his signature on

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Ex.A.1 promissory note. But, it is the foremost contention of the defendant that he never borrowed any amount from the plaintiff under Ex.A.1 promissory note.

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1 2024 INSC 644

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It is the specific case of the defendant in the written statement that he borrowed an amount of Rs.1,00,000/- from one Dwara Trimurthulu, S/o.Mallayya of Mandapeta for his business needs. Contrary to the said pleading, he suggested to P.W.1 during cross examination that one Dara Prabhu obtained his two blank promissory notes when he borrowed an amount of Rs.1,00,000/- from him. It is also not the case of the defendant that he issued legal notice either to the said Trimurhtulu or Prabhu for return of said promissory notes or any steps taken by him for return of the same. Thereby, the stand taken by the defendant is very much inconsistent to prove his contention before the Trial Court.

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Upon perusal of the cross-examination of P.W.2, the attestor, and P.W.3, the scribe of Ex.A.1, it is evident that nothing incriminating was elicited by the defendant to support his case. Furthermore, a review of Ex.A.1 reveals that the defendant not only signed the document but also affixed his thumb impression and company rubber stamp, all of which have been admitted by him during his testimony as

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D.W.1. Additionally, D.W.1 admitted to having received the

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pre-suit notice issued by the plaintiff, yet failed to issue any reply. Therefore, the plaintiff has successfully proved his case by examining P.Ws.2 and 3, along with documentary evidence Exs.A.1 and A.2, which clearly establish that the promissory note marked as Ex.A.1 was executed for a consideration of ₹6,77,500.

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Another key contention raised by the defendant is that the plaintiff lacked the financial capacity to lend the amount in question. However, this plea was admittedly not included in the defendant’s written statement, nor was any substantial evidence produced before the Trial Court to support this claim. It is a well-settled principle of law that, in the absence of proper pleadings, such bare assertions cannot be sustained.

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It is the well settled legal proposition that initial burden of proof of document must be discharged by the plaintiff. Then the onus of proof of the document or otherwise shifted

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to the defendant. For which, this Court fortified by a

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judgment in B . Mallamma v . V . T.V . Rangachary² .

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In this connection, it is also relevant to mention a

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judgment of this Court in A.Ramireddy v. A.Rajareddy³ , in which it was held that:

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“The fundamental principle that when the suit transaction is denied, the burden necessarily be shifted to the plaintiff to prove the genuineness of the said document………”

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As way back in the year 1987, the Division Bench of this Court in G.Vasu v. Sayed Yaseen Sifuddin Quadri⁴ ,

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held that:

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“Even with reference to Section 101 to 103 of Evidence Act and Section 118 of Negotiable Instruments Act, the burden of proof undisputedly lies on the plaintiff. It has to be seen that the plaintiff has to fully discharge his burden. The settled law is that when the plaintiff proved due execution of the promissory note by the defendant in his favour, the statutory presumption contemplates under Section

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2 1997 (3) APLJ 39/ 1997 (6) ALT 36

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3 1997 (1) APLJ 65

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4 AIR 1987 AP (139)

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118(a) of Negotiable Instruments Act, that is to say every negotiable instrument was made or drawn for consideration arrived in favour of the plaintiff.”

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In this connection, keep in mind another judgment in Bharat Barrel And Drum Manufacturing Company v.

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Amin Chand Payrelal⁵ , in which the Hon’ble Supreme Court held that:

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“Once execution of the promissory note is admitted, the presumption under Section 118(a) of Negotiable Instruments Act would arise that it is supported by consideration. Such a presumption is rebuttable. The defendant can prove non-existence of consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on

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5 AIR 1999 SC 1008

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record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the none existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) of Negotiable Instruments Act in his favour. The Court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as existence of negative evidence is neither possible nor contemplated and even if led is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption the defendant has to bring on record such facts and circumstances, upon consideration of which the Court may either believe that the consideration did not exist or its none existence was probable that a prudent man would, under the

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circumstances of the case, shall act upon the plea that it did not exist.”

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[ 25. In the backdrop of this legal proposition, as stated supra, the plaintiff well established before the Trial Court by the testimony of P.Ws.1 to 3 coupled with Ex.A.1 that the defendant borrowed an amount of Rs.6,77,5000/- from him on execution of Ex.A.1 promissory note.

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Now it has to be seen that whether the defendant rebutted the presumption by adducing evidence. For which the defendant himself entered into the witness box as D.W.1 and in support of his evidence got exhibited Ex.B.1.

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The defendant must be established that there was no consideration under Ex.A.1 and his evidence must be proved with all preponderance of probabilities that there was no consideration passed as contended by the defendant. Except denying the case of the plaintiff as well supporting his version in written statement nothing culled out from the testimony of D.W.1 to make believe that the defendant did not receive any consideration under Ex.A.1.

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On the other hand, plaintiff is able to establish that the

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suit promissory note covered under Ex.A.1 passed by consideration. Moreover, none of the grounds urged by the appellant/defendant to say that his defense is acceptable than the case of the plaintiff. Thereby, the plaintiff is entitled for the suit claim. These points are answered accordingly.

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29. POINT No.3 :

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In view of the findings on point Nos.1 and 2, this Court does not find any valid grounds to interfere with the wellarticulated judgment passed by the trial Court, as such this Court is unable to found any merits in the appeal and the same is liable to be dismissed.

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In the result, the appeal is dismissed by confirming the decree and judgment in O.S.No.74 of 2008 dated 09.02.2011 on the file of the Court of learned Senior Civil Judge at Ramachandrapuram. There shall be no order as to costs.

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Interim orders granted earlier if any, stand vacated. Miscellaneous petitions pending if any, stand closed.

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JUSTICE V.SRINIVAS

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Date: 16.09.2025 Krs

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