JUDGMENT :

Assailing the judgment and decree, dated 23.01.2006 passed in O.S.No.233 of 2004 on the file of Principal Junior Civil Judge, Kurnool, the defendant filed the above appeal.

2. For the sake of convenience and brevity, the parties shall be referred to as they are arrayed in O.S.No.233 of 2004.

3. The suit O.S.No.233 of 2004 was filed by the plaintiff for recovery of an amount of Rs.5,12,049/-, the principal being Rs.3,00,000/-.

4. The averments in plaint, in brief, are that the defendant borrowed an amount of Rs.3,00,000/-from the plaintiff on different dates, as hand loan and issued post-dated cheques bearing Nos.113704, 113705 and 113706 dated 19.05.2001, 21.05.2001 and 21.05.2001 for Rs.1,00,000/-each; that in view of cordial and long standing relations between them, plaintiff did not insist for execution of promissory note for the amounts borrowed; that plaintiff presented cheques on due dates and to his surprise and dismay cheques were dishonoured; that the bank returned the cheques with remarks, ‘payment stopped by drawer’; that as per the plaintiff’s information, defendant’s account did not have sufficient funds to honour the cheques; that it is clear that defendant deliberately issued cheques without arranging for funds; that plaintiff initiated criminal action under Section 138 of the Negotiable Instruments Act, 1881 (for short ‘N.I. Act’) against the defendant vide C.C.No.335 of 2001, however the same was dismissed for default; that plaintiff issued legal notice on 07.06.2001 demanding payment of amount with interest at 24% for which the defendant got issued reply notice, dated 28.06.2001 denying borrowing of Rs.3,00,000/-, issuance of cheques, presentation of the cheques etc., and hence filed the suit for recovery of amount basing on three cheques.

5. The defendant filed written statement and contended inter alia that he did not borrow of Rs.3,00,000/- on different dates as hand loan and issued cheques in that connection; that complaint under Section 138 of N.I. Act, being C.C.335 of 2001 on the file of learned Judicial Magistrate of First Class, Kurnool was dismissed; that on number of occasions plaintiff borrowed money from the defendant and executed promissory notes; that defendant had no necessity to borrow the amount from the plaintiff as he is NRI Doctor; that the plaintiff has no capacity to lend the amount; that in the month of May, 2001, plaintiff approached the defendant, offered him to join as partner in cine business; that since the plaintiff has acquaintance with the defendant for more than seven years and as the plaintiff’s brother N.Sreepathi Rao was a friend of the defendant, he accepted the proposal of the plaintiff; that the defendant gave Rs.3,00,000/-by way of three cheques, dated 19.05.2001, 21.05.2001 and 21.05.2001 respectively, each for Rs.1,00,000/-towards his share; that on 22.05.2001 when the defendant asked the plaintiff to execute partnership deed, plaintiff postponed execution of partnership deed; that thereafter when the defendant demanded the plaintiff to return the cheques, plaintiff refused to handover the abovementioned cheques; that misunderstanding arose between the defendant and the plaintiff and immediately defendant informed bank authorities to stop payment of the above mentioned cheques; that the defendant intended to issue legal notice to the plaintiff regarding return of the above mentioned cheques; that defendant’s friends requested him not issue any legal notice and that they would settle the matter amicably and thus prayed the Court to dismiss the suit.

6. Basing on the pleadings on both sides, the trial Court framed the following issues:

1. Whether there is cause of action for the suit?

2. Whether hand loans alleged to have been obtained by the defendant on different dates as pleaded by the plaintiff is true and correct?

3. Whether the three post dated cheques 19.05.2001, 21.05.2001 and 21.05.2001 respectively were not issued by the defendant for repayment any amount bo