Allowed

Bhusarapu Pullamma(died) per Lr A-2 v. Edupalli Pydamma(died) per Lr RR-2 to 5

Telangana HC29 Apr 2014AS/1624/1994

Case brief

AI extract

What is this about?

Recovery under a promissory note was contested on grounds of fabrication, lack of consideration and the lender's financial incapacity. The court held the note proved and enforceable and the presumption of consideration unrebutted. It allowed the appeal, set aside the dismissal and granted recovery with interest and costs throughout.

What did the court decide?

Recovery of the suit debt with interest at 18% p.a. from the date of petition until decree and 6% p.a. thereafter, with costs throughout.

Bhusarapu Pullamma(died) per Lr A-2 Vs Edupalli… — Banking and Recovery | Telangana HC (2014)

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HON’BLE SRI JUSTICE M. SATYANARAYANA MURTHY

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APPEAL SUIT No. 1624 OF 1994

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JUDGMENT:

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The unsuccessful plaintiff in Original Suit No.141 of 1988 on the file of Subordinate Judge (Now Senior Civil Judge), Tadepalliguden, West Godavari District, preferred appeal against the impugned decree and judgment dated 17.01.1992, wherein the Suit filed for recovery of an amount of Rs.38,250/-, being the principal and interest due on a promissory note dated 01.12.1985, executed by the defendants in favour of the plaintiff, for Rs.25,000/-, together with interest at the rate of 18% p.a. was dismissed.

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2. The appellant herein was the plaintiff and the respondents herein were the defendants before the trial Court, in O.S. No.141 of 1988. For the sake of convenience, the parties hereinafter will be referred to as arrayed before the trial Court.

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3. During the pendency of the Appeal, appellant herein died and her legal representative i.e., 2^nd appellant is brought on record as per the Court order in A.S.M.P. No.101 of 2011 on 02.08.2011. Edupalli Pydamma, 1^st respondent herein died and her legal heirs, who are already on record as Respondents 2 to 5, are recorded as legal heirs of deceased 1^st respondent, vide Court order dated 02.08.2011.

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4. The plaintiff filed suit for recovery of Rs.38,250/- alleging that the defendants borrowed an amount of Rs.25,000/- from the plaintiff for their family benefit and necessity on 0212.1985, agreeing to repay the same together with interest at 18% per annum either to the plaintiff or to her order as and when demanded, and executed pronote on the even date in favour of the plaintiff. Despite the oral demands, the defendants did not discharge the debt due under the pronote. Hence the suit.

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5. 4^th defendant filed written statement denying the material allegations inter alia contending that 2^nd defendant and plaintiff colluded

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together and at the instance of 2^nd defendant, the suit is filed by the plaintiff, who is no other than his son-in-law’s mother (viyyapuralu). The defendants denied borrowing of Rs.25,000/- from the plaintiff and execution of the pronote in her favour by the defendants jointly or by any one of them.

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6. The plaintiff brought into existence another pronote in collusion with the 2^nd defendant in the name of Busarapu Appa Rao, son of the plaintiff herein and got filed the suit O.S. No.139 of 1988. In both the suits, pronotes were not executed by the defendants borrowing any amount there under, and thereby the suit pronotes are not enforceable as they are not supported by consideration.

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7. The 2^nd defendant and his brothers own and possessed joint family property and business. However, they are having separate mess. The younger brothers of the 2^nd defendant reposing confidence on 2^nd defendant used to believe his words blindly and obliged to sign on the blank papers without questioning the purpose. The 2^nd defendant, who used to maintain the joint family business, used to obtain signatures of other defendants on printed revenue labels affixed, blank pronote forms and sometimes on white papers containing revenue labels, saying their signatures are required in the business. The 2^nd defendant performed his daughter’s marriage on 06.02.1981, with the son of plaintiff and presented dowry of Rs.30,000/- and spent nearly Rs.70,000/- towards marriage expenses and other incidental expenses. At that time, the 2^nd defendant obtained signatures of the defendants 1, 3, 4 and 5 on three or four blank papers containing revenue labels. Misunderstandings arose between 2^nd defendant and his brothers; thereupon, the defendants executed muchelaka (agreement) in favour of Karri Krishna Murthy and six others for settlement of disputes and the decision of K. Krishna Murthy was pending by then, before the Court. While the matter is pending before the arbitrator, by virtue of muchelaka, executed by the defendants, 2^nd defendant got filed the present suit and other suit and thus, the

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defendants are not liable to pay any amount to the plaintiff. It is further contended that the pronote is materially altered and finally prayed to dismiss the suit.

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8. The 2^nd defendant remained ex parte. Defendants 1, 3 and 5 filed a memo adopting the written statement of 4^th defendant.

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9. Basing on the above pleadings, the trial Court framed the following issues :

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1. Whether the plaintiff has got capacity to lend the suit amount?

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2. Whether the suit promissory note is true?

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4. Whether the suit pronote is void due to material alterations?

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5. To what relief ?

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10. During the course of trial, on behalf of the plaintiff, P.Ws.1 and 2 were examined and Ex.A-1 was marked; on behalf of the defendants, DWs.1 to 5 were examined and Exs.B-1 to B-6 marked.

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11. Upon hearing the argument of both the counsel and considering the oral and documentary evidence, the trial Court held the issues in favour of the defendants and against the plaintiff holding that the plaintiff has no financial capacity to lend Rs.25,000/- under the pronote. Consequently, the suit was dismissed.

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12. Aggrieved by the impugned decree and judgment, plaintiff - appellant preferred this appeal on various grounds. The main contentions of the plaintiff - appellant are :

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a) The trial Court did not consider oral and documentary evidence in proper perspective and that too when the defendants themselves admitted about signing on Ex.A-1 document, the trial Court ought not have disbelieved the genuineness of the pronote ;

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b) The trial Court when believed execution of Ex.A-1, the defendants are estopped to contend that the plaintiff has no capacity to lend huge amount of Rs.25,000/- during those days and apart from that, there is sufficient evidence on record to show that the plaintiff own and possessed substantial amount of Rs.25,000/- and gave the amount to the defendants on the date of execution of Ex.A-1, thereby the trial Court committed a grave error in dismissing the suit ;

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c) It is further contended that the trial Court did not appreciate the legal decisions relied upon by the counsel for the plaintiff, before the trial Court, in G. Vasu Vs. Syed Yaseen Sifuddin Quadri {1987 (1) ALT page 1}, Gopal Krishnaji Kottar Vs. Mohamad Haji Latif {AIR 1968 S.C. 1413} and Kundan Lal Railaram Vs. Custodian, Evacuee Property, Bombay {AIR 1961 S.C. 1316} and thus committed an error in dismissing the suit and prayed to allow the Appeal setting aside the impugned decree and judgment.

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13. During course of argument, learned counsel for the plaintiff - appellant mainly contended that when the defendants subscribed their signatures on the blank white papers affixing revenue stamps or printed pronote forms affixing revenue stamps etc., it amounts to admission of execution. Even otherwise, the document is inchoate document. Under Section 20 of Negotiable Instruments Act, 1881, handing over of such document amounts to authorizing to fill or complete the document. Therefore, the pronote is genuine and no further proof is required to prove the execution of Ex.A-1 pronote.

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14. It is further contended that when once the execution is admitted, the burden is on the defendants to disprove that Ex.A-1 is not supported by consideration, in view of legal presumption under Section 118 of Negotiable Instruments Act; though it is rebuttable presumption, the onus

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of proof will shift to the plaintiff only when defendants succeeded in establishing that Ex.A-1 pronote is not supported by consideration by eliciting something in the cross-examination of plaintiff or by producing independent evidence basing on the preponderance of probabilities. But, the defendants failed to discharge the initial onus of proof which rests on them to dispel or rebut the presumption under Section 118 of Negotiable Instruments Act; thereby, the trial Court ought to have drawn the presumption that Ex.A-1 is supported by consideration.

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15. When once defendants authorized the plaintiff to complete the document Ex.A-1, they are not entitled to question the capacity of the plaintiff to lend Rs.25,000/- under Ex.A-1, but the trial Court did not consider the specific pleas of the defendants in proper perspective, committed an error in dismissing the Suit and finally prayed to allow the Appeal setting aside the impugned decree and judgment, and pass a decree in favour of the plaintiff for recovery of the suit amount together with subsequent interest and costs.

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16. Sri S.C. Rangappa, learned counsel for the respondents filed a memo reporting no instructions on behalf of respondents 3 to 5 and requested to issue notice to respondents 1 to 5 by this Court. Accordingly, this Court sent notices to respondents 3 to 5, but they were returned un-served, though the notices were sent to the addresses given in the memorandum of appeal as well in the plaint. Therefore, this Court has no option except to proceed to decide the Appeal.

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17. Considering the contentions of the learned counsel for the plaintiff -appellant, perusing oral and documentary evidence available on record including the impugned decree and judgment of the trial Court, the points that arise for consideration in this Appeal are as follows :-

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1. Whether Ex.A-1 pronote dated 02.12.1985 is true, valid and binding and enforceable under law ?

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2. Whether the plaintiff possessed means to advance Rs.25,000/- under Ex.A-1?

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3. Whether the plaintiff - appellant is entitled to recover the suit amount together with subsequent interest and costs?

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18. POINT No.1: The plaintiff - appellant filed the suit on the foot of pronote for recovery of the suit amount of Rs.38,250/- together with subsequent interest and costs alleging that the defendants borrowed Rs.25,000/- from the plaintiff for their joint family necessity and executed pronote on 02.12.1985 agreeing to repay the same together with interest at 18% p.a. but did not discharge the debt due to the plaintiff despite oral demands. Whereas the specific defence set up by the defendants is that they never borrowed any amount from the plaintiff and never executed Ex.A-1 pronote agreeing to repay the same together with interest at 18% per annum to the plaintiff. While contending that the plaintiff, who is no other than the viyyapuralu (defendants’ mother-in-law) of 2^nd defendant, the 2^nd defendant got filed this Suit suit by fabricating Ex.A-1 pronote taking advantage of signed white papers affixing revenue stamps, due to differences between the defendants. The 2^nd defendant remained ex parte before the trial Court and also did not contest the Appeal before this Court. The specific plea raised in the written statement filed by the 4^th defendant is extracted hereunder for better appreciation :

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“All the businesses are carried out according to his dictations. In the process of carrying out the business, the 2^nd defendant saying that monies are required, used to obtain signatures sometime on printed revenue labels affixed, blank pronote forms and also on some white papers containing revenue labels. The 2^nd defendant performed his daughter’s marriage on 06.02.1981 with the son of plaintiff. The plaintiff in O.S. No.139 of 1988 was given a cash dowry of Rs.30,000/- by the 2^nd defendant and the 2^nd defendant spent nearly another Rs.70,000/- for the marriage expenses and marriage gifts to Viyyepuralu and sare etc. At that time also the 2^nd defendant obtained signatures of defendants 1, 3, 4 and 5 on three or four blank papers containing revenue labels. This defendant denies the execution and passing of consideration under the suit pronote.”

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In Para 4 of the written statement, it is specifically contended that

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the 2^nd defendant got filed the suit taking advantage of the blank signed papers inclusive of white papers and printed pronote forms affixing revenue stamps during pendency of arbitration dispute before Karri Krishna Murthy.

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19. It is clear from the specific plea extracted in the earlier paragraphs that the defendants 1, 3, 4 and 5 affixed their thumb impression or subscribed their signatures on the revenue stamps affixed on white papers or on the revenue stamps affixed on the blank pronotes believing the words of the 2^nd defendant, whose daughter was given in marriage to the son of the plaintiff. Therefore, they admitted that the signatures and thumb impression appearing on Ex.A-1 are the signatures and thumb impressions of defendants 1, 3, 4 and 5, but denied borrowing of Rs.25,000/- under Ex.A-1.

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20. As seen from Ex.A-1, it is a pronote written on white paper affixing two revenue stamps worth Rs.0.25 ps. each, the 1^st defendant affixed her thumb impression, the other defendants signed in Telugu and it is attested by two attestors Siraparapu Ramarao and Nirjogi Ramarao and scribed by Edupalli Krishna. The recitals of Ex.A-1 shows that all the defendants jointly borrowed Rs.25,000/- from the plaintiff and executed pronote agreeing to repay the same together with interest at 18% per annum. In view of the specific plea raised by the 4^th defendant in Para 3 of the written statement, I must necessarily advert to the oral evidence of the witnesses on record to find out the truth and genuineness of Ex.A-1 pronote.

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21. When the defendants denied very execution of pronote, it is for the plaintiff to prove that Ex.A-1 is executed by the defendants in favour of the plaintiff by borrowing an amount of Rs.25,000/-.

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22. To discharge the initial burden of the plaintiff, the plaintiff herself examined as PW.1 and specifically testified that the defendants borrowed Rs.25,000/- from her and executed pronote Ex.A-1 in her favour agreeing

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to repay the same together with interest at 18% per annum and Edupalli Krishnarao is the scribe, Sirapurapu Ramarao and Nirjogi Ramarao are the attestors of the pronote, Ex.A-1 and also testified about failure of defendants to discharge the debt. In the cross-examination, PW.1 admitted the relationship between herself and 2^nd defendant (Viyyapuralu) and also admitted that her son was given in marriage to the daughter of 2^nd defendant. However, they are living separately. In the cross-examination, the counsel for the defendants elicited that the plaintiff owns Ac.3.00 cents of land and as the defendants are in need of Rs.25,000/-, she sold her Ac.2.00 cents of land at the rate of Rs.23,000/per acre and out of the sale proceeds of the said land, she lent Rs.25,000/- to the defendants under Ex.A-1, on the date of its execution. The reason for selling her Ac.2.00 cents of land is that the tenant who obtained lease was not paying the rent regularly. But, she refrained to reveal the name of the person who purchased the land. Later, the pronote was executed six or seven months after the sale. Thus, the facts elicited in the cross-examination, go to show that the plaintiff possessed Rs.25,000/- as She sold Ac.2.00 cents of land and with said sale proceeds she paid Rs.25,000/- on the date of Ex.A-1 to the defendants. In the last two sentences of his cross-examination, a suggestion was put to PW.1 that the defendants and Edupalli Krishna never visited the village of the plaintiff, borrowed any amount and executed Ex.A-1, got denial of it and that the signatures of the attestors were obtained subsequently and denied by PW.1. A bare look at the tenor of cross-examination of PW.1, it is not the specific case of the defendants 1, 3, 4 and 5 that Ex.A-1 was created with the help of the blank signed white papers affixing revenue labels obtained by 2^nd defendant in connection with the business transactions and even not denied the signatures appearing on Ex.A-1 by the defendants putting any suggestion to PW.1. Therefore, nothing has been elicited in the cross-examination to disprove execution of Ex.A-1 except suggesting that the defendants never visited the village of PW.1 and never borrowed any amount and executed any pronote.

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23. PW.2 is one of the attestors of Ex.A-1. He also testified in the same lines of PW.1 about execution of Ex.A-1 and passing of consideration in his presence and attestation of Ex.A-1. In his examination-in-chief, he admitted that 2^nd and 3^rd defendants called him to attest the document and the plaintiff possessed Ac.5.00 cents of land. Finally, a suggestion was put to PW.2 that the defendants never executed any pronote and borrowed the amount contained there under, the same was denied by PW.2, flatly. On appreciation of entire evidence elicited in the cross-examination of PW.2, there is no improbability in the evidence of PW.2 regarding his presence at the time of execution of Ex.A-1.

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24. The 1^st defendant was examined as DW.1. As usual she denied borrowing of amount and execution of Ex.A-1 and denied even affixing her thumb impression on the pronote and about the scribe, Edupalli Krishna. In the cross-examination, she admitted that there is no enmity between herself and her sons defendants 2 to 5. She also admitted that they are carrying on business in plastic articles in Tadepalligudem. When a suggestion was put to her that she along with her sons borrowed Rs.25,000/- and executed pronote, denied by her.

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25. The 4^th defendant was examined as DW.2. In his examination-inchief denied execution of Ex.A-1 pronote and borrowing of Rs.25,000/from the plaintiff but reiterated the specific plea raised in the written statement. In the second page of his examination-in-chief, DW.2 denied putting thumb impression on the pronote by DW.1 in his presence and also denied signing on Ex.A-1 by his other brothers. In the last four lines of his examination-in-chief, he specifically testified that Nirjogi Ramarao was never present when his signature was obtained on the blank white paper containing the revenue labels. 2^nd defendant is instrumental in getting the pronote brought into existence. Since 2^nd defendant was aggrieved by the decision of the elders, he bore grudge against the other defendants and got filed this suit. In the cross-examination, DW.2

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admitted that there were no disputes among the defendants till 1987 and the defendants never issued any notice to 2^nd defendant demanding for return of the blank signed papers etc., and finally a suggestion was put to him that the defendants borrowed Rs.25,000/- from the plaintiff and executed Ex.A-1 pronote, denied by him.

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26. DW.3 is Edupalli Atchutaramayya. His evidence is almost in the similar lines of the evidence of DW.2, more particularly, under what circumstances Ex.A-1 was brought into existence by 2^nd defendant. In the examination-in-chief, DW.3 specifically testified that in his presence his mother or his other brothers did not affix the thumb impression or put their signatures on the papers. Thus, he denied signatures on the white papers affixing labels by all the defendants and putting thumb impression by DW.1. In the cross-examination, he admitted till 1987 all the defendants constituted as members of the joint family along with their mother and 2^nd defendant was acting as member of joint family and denied the suggestion regarding borrowing and execution of Ex.A-1.

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27. On close analysis of oral evidence with reference to pleadings on record, there is lot of variation, more particularly, regarding subscribing signatures and thumb impression. In fact, in Para 3 of the written statement, the 4^th defendant specifically admitted that defendants 1, 3, 4 and 5 subscribed their signatures on three or four blank papers containing revenue labels. When it comes to the evidence, everyone denied putting thumb impression by 1^st defendant and subscribing signatures by the other defendants, obviously for different reasons. The specific pleading in the written statement is a judicial admission and it is binding on the parties, who made such admission. According to Section 58 of the Evidence Act, 1872, admitted facts need not be proved if it is in writing. Here the written statement is in writing and the judicial admission is binding on all the defendants. Changing their version from stage to stage creates any amount of suspicion on a specific plea regarding denial of execution of Ex.A-1 pronote. Even otherwise, the material on

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record including Ex.A-1 shows that DW.1 affixed her thumb impression, the other defendants singed on Ex.A-1 affixing revenue stamps. If really these signatures and thumb impression were obtained by 2^nd defendant, they would not have stated that 1^st defendant affixed her thumb impression on blank papers, affixing revenue labels. But, their plea is being changed from time to time depending upon the circumstances. Therefore, the plea of the defendants is not believable for the reason that they handed over the signed blank papers to the 2^nd defendant.

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28. There are different modes of proof of document, more particularly, when the very execution of the document itself is disputed by the defendants, as held by the Hon’ble Apex Court in State (Delhi Admn.)

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Vs. Pali Ra m^[1] , wherein the Hon’ble Apex Court in Para 23 made the following observations :

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“Just as in English Law, the Indian Evidence Act recognizes two direct methods of proving the handwriting of a person:

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1) By an admission of the person who wrote it; and

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2) By the evidence of some witness who saw it written.

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These are the best methods of proof. These apart, there are three other modes of proof by opinion. They are:

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i) By the evidence of a handwriting expert (Sec.45);

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ii) By the evidence of a witness acquainted with the handwriting of the person who is said to have written the writing in question (Sec.47); and

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iii) Opinion formed by the Court on comparison made by itself (Sec.73).

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All these three cognate modes of proof involve a process of comparison. In mode (i), the comparison is made by the expert of the disputed writing with the admitted or proved writing of the person who is said to have written the questioned document. In (ii), the comparison takes the form of a belief which the witness entertains upon comparing the writing in question, with an exemplar formed in his mind from some previous knowledge of repetitive observance of the handwriting of the person concerned. In the case of (iii), the comparison is made by the Court with the sample writing or exemplar obtained by it from the person concerned”.

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29. In view of the principles laid down in the judgment referred supra,

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the burden is upon the plaintiff to prove the execution of Ex.A-1 promissory note by the defendants in her favour. Here, the plaintiff examined one Ramarao, PW.2, besides examining herself, whose evidence is worthy of credence in whose presence the 1^st defendant affixed her thumb impression and other defendants signed. Therefore, the plaintiff adopted second mode of proof (by the evidence of some witness who saw it written). In the entire cross-examination of P.W.1 noting was elicited to disbelieve execution of Ex.A-1.

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30. When once a document was duly signed and delivered to the plaintiff - transferor, it is nothing but an inchoate instrument, under Section 20 of Negotiable Instruments Act, which reads as under :

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“20. Inchoate stamped instruments : Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount. “

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31. So, a bare reading of Section 20 of Negotiable Instruments Act, the holder is competent to make or complete the instrument, when the negotiable instrument is handed over duly signing on it, it also impliedly granting permission or authorizing the holder to fill the document.

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32. In this regard, I am persuaded by an unreported judgment of High Court of Karnataka in C.R.P. Nos.1574, 1590 and 1591 of 1995, dated 01-10-1999 [H. Maregowda and etc., Vs. Thippamma and others], wherein the High Court of Karnataka held as follows:

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“A reading of Section 20 of the Negotiable Instruments Act which is extracted above will reveal that the words used are either wholly blank or having written thereon an incomplete negotiable instrument. Thus, even if a blank promissory note is given, it cannot be taken as a defence to avoid a decree based on such

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instrument, once it is found that the document produced before the Court satisfies the requirements of a promissory note within the meaning of the Negotiable Instruments Act. The instrument may be wholly blank or incomplete in particular; in either case, the holder has the authority to make or complete the instrument as a negotiable one.”

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33. Wherein the Karnataka High Court relying on the judgment of this Court in Alapati Sivaramakrishnayya Vs. Kasiwiswanadha m^[2] , held as follows:

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“In the case of a letter where there can be no possible question of execution in the sense that, no formalities are insisted upon by law, proof of a man’s signature under it is prima facie proof that the contents of the letter are attributable to his authorship. If a person denies that he was written a letter which contains his signature, then surely he must prove what he alleges, i.e. the letter was got up on a blank piece of paper containing his signature, as also the circumstances in which he happened to put his signature on such a piece of paper. There is no question of proving the ‘execution’ of a letter by the signatory.

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Even where formal execution as such has got to be proved, cases have held that where a man’ signature appears in a document at the place where the executant of such a document would normally sign, then the signature may prima facie be taken as having been put in token of execution and that therefore the proof or admission of a signature in a document requiring the execution in a particular form is prima facie proof that the document was executed by the signatory because normally it has to be presumed under Section 114, Evidence Act that a person only puts a signature in a document in token of his execution thereof. But the case of letter is an fortiori case because in such a case, there is no question of any execution.”

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34. Similarly, a Division Bench of this Court in Duggineni Seshagiri

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Rao Vs. Kothapalli Venkateswara Rao^[3] , held as follows in Para 6:

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“Four things are necessary for an instrument to be a promissory note: 1) It should be in writing; 2) It should have an unconditional undertaking; 3) It should be signed by the maker; and 4) it should be in favour of certain person or to a bearer.

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Section 20 makes inchoate stamped instruments legal instruments. The dictionary meaning of ‘inchoate’ is ‘incomplete’. So, incomplete stamped instruments are as good as the instruments mentioned in Section 4 of the Act. Even if

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one looks to the definition of the ‘promissory note’ under Section 4, one would find that the requirements for making an instrument a promissory note do not contain the requirement of naming a person, it can be given in favour of a certain person or to bearer of the instrument. That makes it clear that, one who is holding the document is the person who derives rights out of that instrument. In other words, it would mean that the document with first three requirements as stated above, should be delivered to the payee, once it is delivered it becomes a promissory note. Name and other particulars can be filled up even at a later stage. When one reads Section 4 in conjunction with Sections 20 and 42 that is the only interpretation that can be placed on the meaning of ‘promissory note’ under Section 4 of the Act. Section 20 lays down that when a person signs and delivers to another person a paper stamped in accordance with law relating to negotiable instrument it becomes a negotiable instrument even if it is wholly blank or written with incomplete particulars. Similarly, Section 42 even recognizes instrument issued in the name of fictitious person to be a valid instrument. Although Section 42 relates to bills but it also accepts that an acceptor of a bill of exchange even if it was in drawn in a fictitious name it would create a genuine claim in favour of the holder. Therefore, even if a negotiable instrument is incomplete it would be a legal instrument provided it satisfies the first three conditions.

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Holder of the instrument becomes a bearer of the instrument.”

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It is further held therein as follows:

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“The plaintiff had been able to prove the execution of the document. On the other had, if the document was disputed or doubted the onus was on the defendant to show that the document was a forgery because a presumption is in favour of plaintiff under Section 118 of the Negotiable Instruments Act.”

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35. In a recent judgment reported in Sukhminder Singh Vs. Nirbhai Singh^[4] , the Punjab and Haryana Court reiterated the same principle. 36. In view of the principles laid down in the above decisions and the inconsistency in the defence set up by the defendants, it is difficult for me to conclude that the defendants did not execute the promissory note, Ex.A-1 and borrowed Rs.25,000/-. On the other hand, the oral evidence of P.Ws.1 and 2 and the admissions of the defendants in their crossexamination, clearly established that the defendants borrowed an

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amount of Rs.25,000/- and executed the promissory note under Ex.A-1.

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37. By applying the principles laid down in the above decisions, more particularly, the Division Bench decision of this Court in Duggineni Seshagiri (3^rd supra), it can safely be held that the defendants executed Ex.A-1, which is an inchoate document, permitting the plaintiff to complete the document. If the evidence and defence setup by the defendants is correct, that the thumb impression and signatures of different defendants were obtained on the blank signed papers, they are liable to repay the debt due under the promissory note, in view of the principle laid down in Duggineni Seshagiri (3^rd supra). Therefore, the suit promissory note Ex.A-1 is true, valid and genuine document and it is enforceable under law, but the trial Court did not apply the settled principles of law laid down in Duggineni Seshagiri (3^rd supra), but simply swayed away with the defence set up by the defendants without considering the affect of affixing thumb impression signing on the blank papers affixing revenue stamps. Consequences of such handing over of papers amount to permitting the plaintiff to complete the document, but these aspects were totally ignored by the trial Court. Perhaps the advocates before the trial Court did not make any attempt to bring to the notice of the trial Court about the settled legal position with reference to Section 20 of Negotiable Instruments Act. Thus, the trial Court committed an error in disbelieving Ex.A-1 promissory note. Therefore, this point is decided in favour of the plaintiff – appellant and against the defendants – respondents.

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38. POINT No.2: One of the grounds for disbelieving Ex.A-1 pronote is that the capacity of the plaintiff to advance amount covered by Ex.A-1 and that Ex.A-1 promissory note is not supported by consideration. In fact, the plaintiff as PW.1 testified in his examination-in-chief that she has got capacity to lend the amount, as she sold away the land and advanced the amount but did not disclose the details of purchaser to whom the property was sold and secured amount for advancing the same to the defendants under the promissory note. Normal practice is that the person

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who bargains the property may not always be a purchaser on whose name the document was obtained. Therefore, mere non disclosure of the name of the purchaser itself is not a ground to disbelieve the capacity of the plaintiff to advance Rs.25,000/- under Ex.A-1. Therefore, mere failure to disclose the details of the purchaser of property by itself is insufficient to disbelieve the capacity of the plaintiff to advance the amount. In the entire cross-examination of PWs.1 and 2, nothing was elicited to disprove that the plaintiff did not possess sufficient money to advance amount under Ex.A-1. However, bald suggestions were put to PWs.1 and 2, plaintiff and attestor that the plaintiff did not possess any amount to advance the amount under Ex.A-1 and got denial of it. However, in the 1^st page of cross-examination of PW.1 last sentence, PW.1 admitted that her Viyyanka told that she sold away the land 6 or 7 months after the sale, defendants 2 to 5 approached her for loan. Taking advantage of this sentence it is contended that if really her property was sold to a third party the question of giving information by her viyyanka about sale does not arise. This piece of evidence creates any amount of doubt but the cross-examination at 2^nd page of PW.1 disclosed that the defendants approached PW.1 and she also enquired about the necessity of borrowing the amount. If really they did not approach her for advancing any amount, the question of her enquiring the defendants directly and obtaining promissory note does not arise. In any view of the matter, it is clear that the unrebutted testimony of PWs.1 and 2 is sufficient to establish execution of Ex.A-1 promissory note and in fact, I have recorded my finding in the earlier paragraphs that the defendants have executed Ex.A-1 promissory note.

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39. When I advert to the evidence of defence witnesses, Edupalli Pydamma was examined as DW.1, she denied very borrowing of amount from the plaintiff herein and affixing her thumb impressions on the promissory note also. In the cross-examination she admitted that she had no enmity with her sons. A suggestion was put to her that she along with other defendants borrowed Rs.25,000/- agreeing to repay the same together with interest at 18% p.a. and denied by her. So the evidence of

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DW.1 clearly discloses that she never affixed her thumb impression, but in the written statement the defendants themselves admitted that DW.1 affixed her thumb impression and other defendants signed on the white papers affixing revenue stamps. Therefore, in view of the judicial admission in the written statement, the oral evidence of DW.1 cannot be believed, consequently the oral evidence of DW.1 is not believable.

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40. The 4^th defendant was examined as 2^nd witness for defendants. He also denied borrowing of amount while admitting that 2^nd defendant who is no other than his brother and son of DW.1 while carrying on iron, fancy and plastic business. 2^nd defendant is an employee in Municipal Office obtained thumb impression of DW.1, signatures of other defendants and created Ex.A-1 in the name of plaintiff. He further testified that his brother, 2^nd defendant obtained their signatures on 4 or 5 printed promissory note forms at the time of performing his daughter’s marriage, but Ex.A-1 is not a printed promissory note, it was written on white paper. DW.2 further gone to the extent to testify that there were disputes between DW.2 and his brothers during 1987 and the dispute was referred to K. Krishna Murthy, B. Appa Rao, P. Narasimhulu, K. Appa Rao, B. Venkata Rao and M. Suryanarayana for settling the matter, the elders obtained muchelaka (agreement) to refer the matter to the elders and that 2^nd defendant alone conducted all the suits filed on behalf of his brothers. DW.2 denied the thumb impression affixed by DW.1 and signing of other defendants in his presence on the promissory note Ex.A1, but this evidence is totally contrary to the plea in the written statement on minute analysis of pleading and evidence. If really there were disputes between 2^nd defendant as one party and the other defendants as another party, who are inimical to each another in 1987, the question of issuing any blank papers putting their signatures affixing thumb impression by defendants 1, 3, 4 and 5 does not arise. At the same time, DW.1 admitted that there was no enmity between herself and her sons, 2^nd defendant is one of her sons; when she herself admitted that there

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were no disputes or enmity between them, the question of 2^nd defendant creating any promissory note in the name of the plaintiff does not arise and it is a bare lie invented for the purpose of developing defence in the suit. Even if the defendants came to know about the alleged creation or fabrication of the promissory note, Ex.A-1, taking advantage of the blank signed papers affixing thumb impression by 1^st defendant, they just maintained silence without issuing notice to the 2^nd defendant, calling upon him to return the signed papers as admitted by the defendants. That apart, DW.2 admitted that he had no enmity with the plaintiff in this suit and other suits and that he has no knowledge about the capacity and property of PW.1, Pullamma and his son Appa Rao. If really, there were disputes between 2^nd defendant with other defendants, naturally they will develop enmity with the plaintiff in the suit, because the promissory note is allegedly created by 2^nd defendant in the name of plaintiff in the suit and normally they will not cooperate for fabricating the document and filing the suit. Thus, the categorical admission regarding ignorance of DW.2 about the capacity of the plaintiff is a strong circumstance to disbelieve the pleas set up by the defendants and apart from that the execution of promissory note was already proved by examining PWs.1 and 2.

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41. The defendants also examined other witnesses; 3^rd defendant herein was examined as DW.3, his testimony is almost similar to the evidence of DWs.1 and 2 but in the cross-examination he invented a different story of division of business in 1987 among his brothers and admitted that they continued as members of the joint family till the business is divided and 2^nd defendant acted as Manager of the family being elder brother. He also admitted that he used to sign on blank papers as directed by 2^nd defendant as the papers were required for management of the business, but denied borrowing of amount and execution of promissory note by all the defendants.

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42. DWs.4 and 5 are the scribe of promissory note and mediator to whom the dispute was referred respectively. DW.4 is the scribe of

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document, he admitted about his working with 2^nd defendant for the last 10 years and that 2^nd defendant got him scribed the promissory note in the year 1987 at his residence and that 1^st defendant never put her thumb impression on Ex.A-1. Thus, DW.4 denied execution of promissory note by the defendants and even affixing thumb impression by 1^st defendant and denied passing of consideration, it appears that DW.4, who is working under 2^nd defendant testified in favour of the other defendants, allegedly inimical to the 2^nd defendant. It appears from the testimony of DW.4 the 2^nd defendant himself is behind the litigation and supporting the document to avoid payment of debt due to the plaintiff. While working under 2^nd defendant DW.4 is not supposed to speak anything totally against him. This itself creates any amount of doubt. Therefore, the evidence of DW.4 is not worthy of credence as he is not wholly reliable witness.

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43. DW.5 is the person to whom the dispute was referred. Even his testimony is helpful only to prove filing of suit by defendants 3 to 5 against 2^nd defendant in O.S. No.22 of 1989 etc., His testimony is helpful only to prove reference of dispute between the 2^nd defendant and other defendants to him along with 6 other elders of the village. This evidence is not helpful to prove the case of plaintiff or defendants.

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44. On overall consideration of the entire evidence, it discloses that there are disputes between the defendants inter-se not by the date of execution of Ex.A-1 and the defendants 1, 3 to 5 admitted about their signatures and affixing thumb impression of 1^st defendant on blank papers and handing over same to the 2^nd defendant, in such a case, it is for the defendants to establish that the plaintiff has no capacity to lend the amount covered by Ex.A-1.

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45. On close analysis of the material available on record, it is clear that there are disputes between the defendants inter-se, but there were no disputes between the plaintiff and defendants and the question of fabricating the document by the defendants taking advantage of signed

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papers, and the defendants also failed to discharge the burden that lies on them to disprove the capacity of the plaintiff.

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46. Thus, I find no satisfactory evidence on record to disprove the capacity of the plaintiff to lend amount under the cover of Ex.A-1, but the trial Court mostly relying on the stray admissions with regard to capacity of the plaintiff, disbelieved the total case believing the defence set up by the defendants and committed an error. Accordingly, the point is held in favour of the plaintiff – appellant and against the defendants – respondents.

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47. POINT No.3: One of the contentions raised by the defendants is that no consideration was passed since Ex.A-1 itself is a fabricated one. Even according to my findings on Points 1 and 2 the plaintiff established execution of Ex.A-1 by the defendants and his capacity to advance the amount to the defendants. When execution of negotiable instrument is proved or admitted by the defendants a legal presumption under Section 118 of Negotiable Instruments Act will come into operation and according to it, negotiable instrument is presumed to be supported by consideration, until contrary is proved. Therefore, the initial burden is upon the defendants to rebut the legal presumption under Section 118 of the Negotiable Instruments Act either by adducing direct evidence or by eliciting in the cross-examination of plaintiff witnesses. To rebut the presumption the law is well settled on this point

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48. In G. Vasu Vs. Syed Yaseen Sifuddin Quadar i^[5] , this Court discussed the scope of Section 118 of Negotiable Instruments Act and the same view was approved by the Apex Court in Bharat Barrel and Drum Manufacturing Company Vs. Amin Chand Payrela l^[6] , wherein the Apex Court held as follows :

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“Once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence

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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 the negotiable instrument. The burden upon the defendant of proving the nonexistence of the consideration can be either direct or by bringing on 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 non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118 (a) 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 nonexistence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist.”

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49. From the reading of the judgment of the Hon’ble Apex Court, the following are the principles deduced from Para extracted above:

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“Negative evidence is always in some sort of indirect, and the difficulty of proving negative lies in discovering a fact or series of facts inconsistent with the fact which who seek to disprove and 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 the suit notice or in the plaint is not true and rebut the presumption under Section 118 of Negotiable Instruments Act by showing 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. Though the evidential burden is initially placed on the defendant by virtue of Section 118 of the Act, it can be rebutted by the defendant by showing preponderance of probabilities that such consideration

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as stated in the promissory note, or in the suit notice or in the plaint does not exist and once the presumption is so rebutted, the said presumption ‘disappears’.”

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50. The same principle is reiterated in the decisions reported in 2008(1) SCC page 258 [K.Prakashnan Vs. Surenderan]; AIR 2009 SC page 1518 [Kumar Exports Vs. Sharma Carpets]; AIR 2008 S.C. page 1325 [Krishna Janardhan Bhat Vs. Dattatraya G.Hedge]; 1999 (4) ALT page 480 [V.Surya Rao and others Vs. Guttula Gopala Krishna and others], and 2008(7) Supreme Court Cases page 655 [Mallavarapu Kasivisweswara Rao Vs. Thadikonda Ramulu Firm and others].

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51. So, from the consistent principles laid down by the Apex Court in the above decisions, non-passing of consideration and non-existence of consideration as stated in the plaint or in the document can be proved by producing any positive evidence or by eliciting certain facts in the evidence of plaintiff basing on preponderance of probabilities.

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52. The trial Court only disbelieving the capacity to lend the amount dismissed the suit without touching the other aspects including validity and genuineness of Ex.A-1 and legal presumption under Section 118 of Negotiable Instruments Act and committed an error in dismissing the Suit. When the defendants failed to rebut the legal presumption under Section 118 of Negotiable Instruments Act, I find that Ex.A-1 suit promissory note is supported by consideration, drawing presumption under Section 118 of the Negotiable Instruments Act and this presumption is supported by the evidence of PWs.1 and 2. Accordingly, the plaintiff is entitled to recover the suit amount together with interest at the rate of 18% p.a. from the date of petition till the date of decree, and thereafter at 6% p.a. Accordingly, the point is decided.

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53. As the plaintiff proved execution of Ex.A-1 and passing of consideration under the promissory note remained unrebutted, she is entitled to recover the amount due under the promissory note, unless it is proved that the defendants discharged the debt due, in any of the modes

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of payment as contained in Chapter VI of Section 78 of Negotiable Instruments Act. But, here the defendants did not repay the debt due under Ex.A-1, promissory note; thereby the plaintiff is entitled to recover debt due under the promissory note. Accordingly, I find that the trial Court committed an error in dismissing the suit and the finding of the trial Court is liable to set-aside.

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In the result, the Appeal Suit is allowed, setting-aside the impugned decreed and judgment dated 17.01.1992, passed in Original Suit No.141 of 1988 by the learned Senior Civil Judge, Tadepalliguden, West Godavari District. The appellant – plaintiff is entitled to the costs throughout.

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In consequence, the Miscellaneous Petitions, if any, pending in this Appeal shall stand closed.

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JUSTICE M. SATYANARAYANA MURTHY

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Date: 29.04.2014 Dsh/Ssp

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HON’BLE SRI JUSTICE M. SATYANARAYANA MURTHY

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APPEAL SUIT No. 1624 OF 1994

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Date. 29-04-2014