THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

APPEAL SUIT NO.263 OF 2015

JUDGMENT:

1. The Appeal, under Section 96 of the Code of the Civil Procedure, is filed by the appellant/plaintiff challenging the decree and Judgment dated 19.01.2012 in O.S.No.204 of 2012 passed by the learned I Additional Senior Civil Judge, Rajahmundry (for short, 'trial court').

2. The appellant is the plaintiff, who filed the suit in O.S.No.204 of 2012 seeking recovery of Rs.5,57,523/- with subsequent interest and costs from the defendants based on the promissory note.

3. The parties will hereinafter be referred to as arrayed before the trial Court.

4. The facts leading to the present Appeal, in a nutshell, are as under:

The defendants, who are husband and wife respectively, jointly borrowed Rs.4,00,000/- from the plaintiff on 11.08.2010 for the family expenses and discharging sundry debts, agreeing to repay the same with subsequent interest @ 24% p.a., jointly executed the promissory note in favour of the plaintiff. As the defendants did not choose to pay the due amount under the above promissory note, despite repeated demands and even after the issuance of legal notice dated 02.04.2012, the plaintiff was constrained to file the suit.

5. In the written statement, the defendants contended that they never borrowed amounts from the plaintiff at any point of time; the plaintiff could not lend such a huge amount to them; the suit promissory note is a rank forgery which was brought into existence with the help of scribe and attestors, who are the plaintiff's henchmen; there is no creditor and debtor relationship between them and the plaintiff; they had no necessity to borrow any amount from the plaintiff or anybody; the question of filing

of Insolvency Petition by them does not arise and prays to dismiss the suit with costs.

6. Based on the above pleadings, the trial Court framed the following issues:

• (1) Whether the suit promissory note is true, valid and supported by consideration?
• (2) Whether the plaintiff is entitled to the suit amount with interest thereon?
• (3) To what relief?

7. During the trial, on behalf of the plaintiff, P.Ws.1 to 3 were examined and marked Exs.A1 and A.2. On behalf of the defendants, D.W.1 was examined, and no documents were marked.

8. After the trial completion and hearing the arguments of both sides, the trial Court dismissed the suit.

9. Sri P.Rajesh Babu, learned counsel representing the appellant/ plaintiff, contends that the trial Court overlooked a fundamental legal presumption outlined in the Negotiable Instruments Act, 1881, particularly under section 118, which envisages that unless the contrary is proved, a suit promissory note is assumed to be executed for a valid consideration. The trial Court apparently considered the appellant's evidence but it failed to address the implausible and inaccurate testimony of DW.1's evidence. The counsel contends that the trial Court ought to have closely examined the DW.1's cross-examination, where she refuted her signatures on several documents including the vakalat, written statement, and the suit summons and the promissory note itself. The 1st respondent, who is the husband of the 2nd respondent (DW.1), did not enter into the witness box to put forth their case; as such, the trial Court ought to have drawn an adverse inference against the 1st respondent for evading the witness box deliberately.

10. Despite granting adjournments, no representation is made on the respondents/defendants' behalf, and so, treated as heard.

11. Having regard to the pleadings in the suit and the findings recorded by the Trial Court, the following points would arise for determination:

• 1. Is the Trial Court justified in holding that the Ex.A.1 promissory note is not true, valid, and supported by consideration?
• 2. Whether the Judgment passed by the trial Court needs any interference?

POINT NOs.1 & 2:

12. The plaintiff is examined as PW.1. The 2nd defendant is examined as DW.1. Their evidence reiterated their stand taken in their respective pleadings. Before filing the suit, the plaintiff sent a legal notice (Ex.A.2) to the defendants, but the evidence on record does not disclose whether the defendant received it.

13. On behalf of the plaintiff, PW.2 (Barla Prasad) and PW.3 (Mutyala Lakshmi) were examined. PWs.2 and 3 attested the Ex.A.1 promissory note. PWs.1 to 3 testified that the defendants i.e., the husband and wife, executed the Ex.A.1 suit promissory note on receiving the consideration. As per PW.1's evidence, Ex.A.1 promissory note transaction was held at about 09.30 AM. Whereas, PW.2 stated that it occurred between 10.00 AM and 11.00 AM. The evidence of PWs.1 to 3 shows that they have consistently stated in their evidence concerning the execution of the suit promissory note by the defendants on receipt of the consideration amount in their presence. But the trial Court highlighted the discrepancy concerning the time of the transaction, as pointed out above. According to the evidence of PWs.1 and 2, the suit transaction occurred at the PW.1's house. Whereas, PW.3 stated in her cross-examination that the suit transaction occurred at the 1st defendant's residence. Based on said variations regarding the time and place of the transaction, the trial Court disbelieved the evidence of PWs.1 to 3 and dismissed the suit.

14. The trial Court Judgment appears to lack a thorough examination of the testimony provided by PW.3. PW.3 in her crossexamination mentioned that the suit transaction occurred at the 1st defendant's house between 10.00 AM to 10.30 AM. Additionally, she clarified that the 1st defendant had provided the proforma for the promissory note, and he personally verified and counted the cash involved. PW.3 further testified that she and plaintiff stayed at the plaintiff's residence and the defendants left the place after the suit transaction and PW.3 specified that the suit transaction took place within the central room of the plaintiff's house. Had the trial Court carefully read the entirety of PW.3's evidence, it might not have questioned or disbelieved the testimony of PWs.1 to 3 regarding the place of execution. Notably, PW.3 explicitly and categorically testified that the transaction unfolded within the central room of the plaintiff's home. While PW.3 initially testified that the transaction occurred at 1st defendant's residence, her later account established the place of execution as the plaintiff's house. Critically, the second version provided by PW.3 remains unchallenged in further cross-examination.

15. It is evident from the trial Court Judgment, it has assigned undue significance to certain discrepancies, thereby, reaching an erroneous conclusion. Additionally, the trial Court entirely disregarded significant variations apparent in the cross-examination of DW.1 (2nd defendant). In her cross-examination, DW.1 asserted that there are six houses between their residence and plaintiff. Furthermore, she acknowledged that her brother is looking after the present suit transaction. She admitted to being arrested and held in custody for about three months in the case relating to III Town Police, Rajahmundry on charges of orchestrating a fraudulent scheme amounting to Rs.3,00,00,000/- through Chits. She admitted that all their street mates and neighbours filed criminal cases against her. The trial Court noticed on the witnesses hesitatancy to respond to the questions posed by the plaintiff's counsel concerning the identification of her signatures and other signatures on Ex.A.1. She even claimed that the signatures shown to her on the vakalath and written

statement were not hers. In this context, it is profitable to refer the Judgment in the case of K.S.Satyanarayana V. V.R. Narayana Rao.¹, where the Hon'ble Apex Court held that:

A piquant situation had developed before the trial court when the 1st defendant denied his signatures on the written statement and the vakalatnama in favour of his counsel. The trial court should have immediately probed into the matter. It should have recorded the counsel's statement for the 1st defendant to find out if the vakalatnama in his favour and the written statement were not signed by the 1st defendant whom he represented. It was apparent that the 1st defendant was trying to get out of the situation when confronted with his signatures on the vakalatnama and the written statement and his having earlier denied his signatures on Exh. P-1 and Exh. P-2 to defeat the claim of the plaintiff. The falsehood of the claim of the 1st defendant was writ large on the face of it.

The trial Court overlooked DW.1's testimony, wherein, she denied $$ signing the summons, vakalath and written statement. Her evidence suggests that when she was confronted with her signatures on the summons, vakalath and written statement, she gave incorrect version in order to defeat the plaintiff's claim, or otherwise, she might have apprehended that she was going to admit to her signature on Ex.A.1. Otherwise, there is no reason for her to deny her signatures. Thus, a falsehood of the defendants' defence was writ large on the face of it. It is perplexing why she would deny her signatures without a valid reason, unless she aimed at manipulate the situation. On the contrary, DW.1 testified that the signatures on the suit summons were not hers either. In the context, it raises questions about how she could know about the adjournment date for the court proceedings and contest the suit, if she hadn't been aware of summons. She further stated that she does not know her chief affidavit contents. These inconsistencies in DW.1's testimony were not given the due consideration they deserved by the trial Court, which instead magnify minor discrepancies in the evidence of PWs.2 and 3. This Court views that the evidence has to be tested for its inherent consistency and the inherent probability of the version. It is not the defendants' case that they had disputes with the plaintiff and her

A.S.No.263 of 2015

witnesses. The trial Court instead of picking out one sentence from one stray corner is needed to deduce what the witness is trying to convey. The trial Court should have comprehensively reviewed the DW.1's entire testimony, rather than focusing on isolated statement. The trial Court should have aimed to grasp the overall context and intention behind what the witness was conveyed. The trial Court should have thoroughly analyzed the PW.3's complete deposition before drawing conclusions about her testimony regarding the location of the execution.

17. This Court views that normal discrepancies in the evidence are those which are due to normal errors of observation, normal errors of memory due to lapse of time. It must also be borne in mind that a parrotlike deposition after a long lapse of time smacks of tutoring, and some differences infact advance the credibility of the witnesses. The witnesses are not expected to remember every tiny detail of the transaction, and it is relevant to note that PWs.1 to 3 had given evidence three years after the transaction under Ex.A.1.The witnesses cannot be expected to have an exact sense of time.The Court must cull out the nuggets of the truth from the evidence unless there is a reason to believe that the discrepancies or inconsistencies are so glaring as utterly to destroy the confidence in the witnesses.

18. No true witness can possibly escape from making some discrepant details. Perhaps, an untrue witness who is well tutored can successfully make his testimony totally non-discrepant. But Courts should bear in mind that it is only when discrepancies in the evidence of a witness are so incompatible with the credibility of his version that the Court is justified in jettisoning his evidence. Though the defendants claim that PWs.2 and 3 are the henchmen of the plaintiff, no foundation is laid for such criticism. A witness is usually considered independent unless he or she springs from sources likely to be tainted which generally means unless the witness has cause, such as enmity against the other party. Nothing is elicited in the cross-examination of PWs.2 and 3 to establish the existence of such enmity or grudge against the defendants.

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19. The evidence of PW.1 to PW.3 clearly shows that the defendants have subscribed their signature on the Ex.A.1-promissory note and received the consideration. Once those materials were available. Naturally, the presumption under section 118 of the Negotiable Instruments Act would come into play.

20. In G. Venkata Rama Subbaiah Vs. D. Rasool Naik2, the composite

High Court of Andhra Pradesh held thus :

"Once the execution of the promissory note is admitted or proved, then it is presumed to be supported by consideration unless contrary is proved. The burden is on the defendant to rebut the same by adducing convincing evidence. Unless the defendant rebuts the presumption by adducing convincing rebuttal evidence, the evidential burden would not shift back to the plaintiff who has legal burden only after adducing such convincing rebuttal evidence, it can be held that thereafter the presumption under Section 118 does not come to the rescue of the plaintiff."

21. In a decision Bonalaraju V. S. Sarupula Srinivas3, the composite

High Court of Andhra Pradesh held that:

"once execution is proved the presumption under Section 118 of N.I. Act that it is supported by consideration automatically applies and the contention that the plaintiff is not only to establish the execution but also establish passing on the consideration is rejected".

22. In a decision Abbisetti Krishnamoorthy V. Singasani Raghuramaiah (died) per L.R.s4, the composite High Court of Andhra Pradesh held that:

"Section 118 of the N.I Act shows that the presumption attached to passage of consideration (as is the subject matter of this Appeal) just like other presumption also is clearly rebuttable and it is for the defendant to satisfy the Court that in a given case, the presumption cannot be drawn".

23. In light of well-settled legal principles, the burden lies on the defendants to prove the non-existence of consideration by bringing on record such facts and circumstances, which would lead the Court to believe the non-existence of the consideration. Suppose the defendants discharge the onus of proof showing that the existence of consideration was improbable or doubtful and the execution of the promissory note,

² 2003 (4) ALT 414

³ 2006(2) ALD 202

⁴ 2011(5) ALT 143

the onus would be shifted to the plaintiff. Then she will be obliged to prove the existence of the consideration.

24. The defendants failed to take steps for comparison of the disputed signatures by the expert. Because of the denial of signatures by the DW.1 on the summons, vakalath and written statement, the Court is not expected to compare with the available signatures by invoking the provisions of Section 73 of the Evidence Act.

25. The defendants have failed to show any valid reason or circumstance to cast doubt on the testimonies of PWs.1 to 3 regarding the execution of the promissory note by the defendants and the passing of consideration. The evidence of PWs.1 to 3 is consistent regarding the execution of the promissory note by the defendants. Though PWs.1 to 3 were subjected to lengthy cross-examination, nothing was elicited to discredit their evidence regarding the execution of the promissory note by the defendants and passing of consideration. The plaintiff and his witness have no reason to fabricate the suit promissory note. PWs.2 and 3 have no conceivable incentive to falsely testify against the defendants' interest, and it is implausible that they would support the plaintiff's case without a basis in truth. The defendants' have not asserted any enmity between themselves and PWs.2 and 3 that would prompt the witnesses to provide false testimony against them. However, even the rebuttal could be given by direct evidence or by proving the preponderance of probabilities on record. In the present case, the defendants have not rebutted the presumption, even by the preponderance of probabilities.

26. For the reasons stated above, this Court is of the opinion that the plaintiff is able to establish the execution of the suit promissory note in her favour by the defendants after receipt of the consideration amount there under.

27. The findings and conclusions recorded by the trial court are based on something other than a proper appreciation of the evidence on record. The Trial Court Judgment is erroneous and cannot be sustained,

and is liable to be set aside, and the Appeal deserves to be allowed with costs.

28. As a result,

• (a) The Appeal is allowed, with costs.
• (b) The Judgment and Decree passed by the Trial Court in O.S.No.204 of 2012, dt.19.01.2015, is set aside.
• (c) The suit in O.S.No.204 of 2012 is decreed with costs for a sum of Rs.5,57,523/- with interest @ 12% p.a., from the date of suit till this the date of decree and thereafter @ 6% p.a.,on Rs.4,00,000/- till the date of realization.

29. Miscellaneous petitions pending, if any, in this Appeal shall stand closed.

_________________________________ JUSTICE T. MALLIKARJUNA RAO

Date: 10.08.2023 SAK

THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO

APPEAL SUIT NO. 263 OF 2015

Date:10.08.2023