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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
T Mallikarjuna Rao, J.
Shaik Khadar Vali - Appellant
Versus
Shaik Maqbul and Others - Respondents
Second Appeal No: 532/2009
Decided On : 02-01-2025
(A) Code of Civil Procedure, 1908 - Section 100 - Negotiable Instruments Act, 1881 - Section 118 - Second Appeal against the reversal of a decree for recovery based on a promissory note - The trial Court found the promissory note valid and binding, while the 1st Appellate Court reversed this finding, leading to the present appeal. The Appellant contended that the Defendants failed to prove their claims of fabrication and incapacity to lend. The Court emphasized the presumption in favor of the holder of a promissory note under Section 118 of the N.I. Act and found the evidence sufficient to uphold the trial Court's decree. (Paras 1, 4, 30, 32)
(B) Jurisdiction - The Court clarified that a suit based on a promissory note can be filed where the cause of action arose or where the Defendants reside, rejecting the 1st Appellate Court's conclusion regarding jurisdiction. (Paras 22, 23)
(C) Burden of Proof - The Defendants failed to discharge their burden of proving the non-existence of consideration for the promissory note, which is presumed valid under the N.I. Act. (Paras 29, 30)
Facts of the case:
The Plaintiff sought recovery of Rs.3,98,800/- from the Defendants, the legal heirs of the deceased who executed a promissory note for Rs.3,00,000/- at 24% interest. The trial Court ruled in favor of the Plaintiff, which was reversed by the 1st Appellate Court.
Findings of Court:
The trial Court's findings were restored, confirming the validity of the promissory note and the Defendants' liability.
Issues: The main issues included the validity of the promissory note, the jurisdiction of the trial Court, and the burden of proof regarding consideration.
Ratio Decidendi: The Court held that the presumption under Section 118 of the N.I. Act favors the holder of the note, and the Defendants did not provide sufficient evidence to rebut this presumption.
Result: Second Appeal allowed, restoring the trial Court's decree.
JUDGMENT:
T Mallikarjuna Rao, J.
1. This Second Appeal, under section 100 of Code of Civil Procedure, 1908 (for short, 'C.P.C'), has been filed by the Appellant/Respondent/Plaintiff against the Decree and Judgment dated 07.04.2009, in A.S.No.302 of 2008 on the file of IV Additional District Judge, Guntur (for short, ‘the 1st Appellate Court’) reversing the decree and Judgment dated 22.09.2008, in O.S.No.735 of 2005 on the file of II Additional Senior Civil Judge, Guntur (for short, ‘the trial Court’).
2. The Appellant/Respondent is the Plaintiff, who filed the suit in O.S.No.735 of 2005 seeking recovery of Rs.3,98,800/- being the principal and interest from the Defendant based on the promissory note.
3. Referring to the parties as they are initially arrayed in the suit is practical to mitigate confusion and better comprehend the case.
4. The factual matrix, necessary and germane for adjudicating the contentious issues between the parties inter se, may be delineated as follows:
The 1st Defendant is the wife, and Defendants 2 and 3 are the sons of Shaik Abdul Rahiman, who borrowed a sum of Rs.3,00,000/- from the Plaintiff under a promissory note dated 08.08.2004, executed for his family's necessities. Shaik Abdul Rahiman agreed to repay the borrowed amount with interest at 24% per annum to the Plaintiff or his order upon demand. Shaik Abdul Rahiman passed away on 19.11.2005 without settling the debt under the promissory note. The Defendants 1 to 3, as legal heirs, inherited the estate of the deceased. Despite repeated demands, they have failed to repay the debt from the deceased's estate, which is in their possession. As such, the Defendants are liable to pay the principal amount, along with accrued interest and costs, from the estate of the deceased towards the discharge of the debt under the suit promissory note.
5. In the written statement, the Defendants refuted all the plaint averments and contended that Plaintiff could not lend Rs.3,00,000/- to Shaik Abdul Rahiman, the husband of the 1st Defendant and father of Defendants 2 and 3, or anyone else. They asserted that Shaik Abdul Rahiman did not need to borrow such a large sum for family necessities during his lifetime. He worked in the railways, earning a monthly salary of Rs.5,300/-. The Defendants further claimed that Mahaboob Basha, the father of the Plaintiff, had a history of lending money to others. Specifically, V. Venkateswarlu, who worked alongside Shaik Abdul Rahiman at the Railways in Guntur, was introduced to Mahaboob Basha by Shaik Abdul Rahiman. Venkateswarlu borrowed Rs.70,000/- from Mahaboob Basha but failed to repay the debt. It led to disputes between Mahaboob Basha and Shaik Abdul Rahiman, with the Defendants alleging that Plaintiff fabricated the suit promissory note to gain wrongful benefits. The Defendants maintain that the deceased Shaik Abdul Rahiman did not execute any promissory note in favour of Plaintiff during his lifetime, and as such, Plaintiff is not entitled to the claimed amount. Consequently, they argue that the suit should be dismissed.
6. Based on the above pleadings, the trial Court has framed the following issues:
i. Whether the Plaintiff is entitled to recover of suit amount as prayed for?
ii. Whether the suit promote dated 08.08.2004 is true, valid and binding upon the estate of the deceased Shaik Abdul Rahiman, which is in the hands of the Defendants? iii. Whether this Court has jurisdiction to try the suit?
iv. To what relief?
7. During the trial, P.Ws.1, 2 & 4 were examined (the chief affidavit of PW.3 was eschewed) and marked Ex.A.1 on behalf of the Plaintiff. Conversely, on behalf of the Defendants, DW.1 was examined, and no documents were marked.
8. After completing the trial and hearing the arguments of both sides, the trial Court decreed the suit with costs against the estate of the deceased Shaik Abdul Rahiman, which is in the hands of Defendants 1 to 3 being his legal heirs for Rs.3,98,800/- with interest on Rs.3,00,000/- at 12% per annu
The presumption under Section 118 of the Negotiable Instruments Act favors the holder of a promissory note, and the burden of proof lies on the Defendants to demonstrate the non-existence of consider....
The court reaffirmed that findings of fact by lower courts must not be interfered with unless shown to be perverse, and upheld the presumption of consideration under the Negotiable Instruments Act.
The presumption of consideration under Section 118 of the Negotiable Instruments Act applies once execution of the promissory note is established, placing the burden on the Defendant to rebut this pr....
The burden of proof lies with the Defendant to establish discharge of debt, and the absence of clear evidence leads to dismissal of the appeal.
The courts affirmed the validity of a promissory note based on direct evidence, emphasizing that expert testimony is weak and should not override substantive evidence.
The burden of proof lies with the Plaintiff to establish the execution and validity of the promissory note, and the Court can compare signatures to determine authenticity.
The validity of a promissory note is upheld when supported by evidence of execution and consideration, and a second appeal requires substantial questions of law to be present.
The execution of a Promissory Note is sufficiently proved by witness testimony, and non-production of accounts is not fatal to the plaintiff's case.
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