IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
B SYAMSUNDER, J.
Koduri Sitarama Rao and Others - Appellants
Versus
Matangi Victoria and Others - Respondents
Second Appeal No: 977/2011
Decided On : 20-08-2024
Promissory Note - Recovery of Debt - Negotiable Instruments Act, Indian Succession Act - The court interpreted the provisions of the Negotiable Instruments Act regarding the execution and validity of promissory notes, and the necessity of a Succession Certificate under the Indian Succession Act for recovery of debts from deceased's estate.
Fact of the Case:
The plaintiffs sued the defendants for recovery of a promissory note debt of Rs.85,000, claiming that the defendants, as legal heirs of the deceased borrower, were liable for the debt. The defendants contended that the promissory note was invalid and that they had discharged the original debt.
Finding of the Court:
The court found that the promissory note was valid and binding on the defendants, and that the plaintiffs had the right to recover the debt from the estate of the deceased borrower, despite the absence of a Succession Certificate at the time of the suit.
Issues: Whether the suit promissory note is valid and binding on the defendants, and whether the plaintiffs are entitled to recover the debt without a Succession Certificate.
Ratio Decidendi: The court held that the execution of the promissory note was valid as the defendants admitted their signatures, and the absence of a Succession Certificate did not invalidate the decree, as it could be produced later for execution.
Result: The Second Appeal is dismissed, allowing the plaintiffs to execute the decree after producing the Succession Certificate.
JUDGMENT :
Bandaru Syamsunder, J.
The defendants in OS.No.628 of 2005 on the file of Principal Junior Civil Judge’s Court, Tadepalligudem are the appellants. The respondents are the plaintiffs in the suit.
2. The appellants and the respondents hereinafter referred to as defendants and plaintiffs as arrayed before the trial Court.
3. The plaintiffs instituted the suit against the defendants for recovery of promissory note debt with interest, amounting to Rs.85,000/- and costs.
4. The case of the plaintiffs in brief is that one late Mr.K.Gopala Krishna, and his son Mr.Sita Rama Rao (1st defendant) jointly borrowed a sum of Rs.50,000/- from late Mr.M.Arjuna, who is the husband of the 1st plaintiff and father of the plaintiff Nos.2 to 4 for their business purpose, agreeing to repay the same with interest at 24% per annum and executed a demand promissory note in favour of late Mr.M.Arjuna on 01.12.2002. The plaintiffs submit that the 2nd defendant is the scribe of promissory note, who is no other than one of sons of 1st executants late Mr.K.Gopala Krishna. It is also the contention of the plaintiffs that on 09.06.2005 Mr.M.Arjuna died intestate, leaving behind them as legal heirs, due to that they are entitled to recover suit debt. They also stated that one of the executants Mr.K.Gopala Krishna also died in December, 2004, leaving behind the defendants as legal heirs, due to that both the defendants are liable to pay the suit debt, out of the estate of the deceased-Mr.K.Gopala Krishna and the 1st defendant is personally liable for the suit amount. They submit that they demanded the defendants for repayment of promissory note debt and also issued registered notice dated 01.10.2005, which failed to receive by the defendants and they avoided to receive the same. Hence, the suit.
5. The defendants have filed written statement, resisting the claim of the plaintiffs. It is the contention of the defendants that their father Mr.K.Gopala Krishna originally borrowed a sum of Rs.35,000/- from the deceased-Mr.M.Arjuna and executed promissory note in the presence of attestors, scribed by the 2nd defendant. They have stated that when Mr.M.Arjuna raised dispute before the elders and obtained another promissory note, i.e. suit promissory note for an amount of Rs.50,000/-, which also scribed by the 2nd defendant, but after one month of execution of suit promissory note, said Mr.M.Arjuna obtained the signature of the 1st defendant on the suit promissory note, but their father Mr.K.Gopala Krishna discharged the original debt of Rs.45,000/- with interest to Mr.M.Arjuna, who also returned the said promissory note, and not returned the suit promissory note, on the ground that it was misplaced. It is also the contention of the defendants that their father Mr.K.Gopala Krishna died on 03.05.2004, whereas Mr.M.Arjuna died on 09.06.2005, but after the death of Mr.M.Arjuna, the 1st plaintiff by colluding with other plaintiffs brought into existence suit promissory note and filed false suit against them, which is not supported by consideration. They also stated that the attestors were not present at the time of execution of suit promissory note and they are the relatives of the plaintiffs who signed afterwards. They have stated that their father Mr.K.Gopala Krishna also got one daughter by name K.Syamala Kumari, and the plaintiffs are not entitled to obtain a decree without obtaining any Succession Certificate from the Court. They pray to dismiss the suit.
6. The trial Court basing on the above pleadings, settled the following issues and additional issue:
2. Whether the suit promissory note is true, valid and binding on the defendants?
3. Whether the plaintiff is entitled for suit claim against the estate of the deceased-K.Gopala Krishna?
4. To what relief”?
ADDITIONAL ISSUE:
“Whether the suit is bad for non-joinder of necessary and proper parties”?
7. The parties went
Duggineni Seshagiri Rao vs. Kothapalli Venkateswara Rao. 2001 (6) ALT 95
A promissory note is enforceable even if a Succession Certificate is not produced at the time of filing the suit, provided it can be produced later for execution.
A promissory note can be enforced without a succession certificate if its validity is established, and the absence of such a certificate does not render the decree a nullity.
The legal representatives of a deceased creditor can continue a recovery suit without a succession certificate, provided they establish the promissory note's execution and consideration.
The burden lies on the defendants to rebut the presumption under Sec. 118 of the Negotiable Instruments Act by adducing convincing evidence to prove the non-existence of consideration.
The presumption of execution in promissory notes under the Negotiable Instruments Act outweighs claims of fabrication by the defendant without substantial evidence.
The court reaffirmed that the burden of proof regarding the authenticity of a promissory note lies with the party alleging forgery, and the evidence must be evaluated on the preponderance of probabil....
(1) Once signature in promissory note is admitted, presumption would go to support execution of Pronote.(2) Stamp paper purchased by or for use of a person, can be used by that person or his legal re....
The execution of a promissory note must be proven for the legal presumption of consideration to apply; failure to establish execution results in dismissal of the claim.
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