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Andhra Pradesh High Court
Duvvuru Jayarami Reddy - Appellant
Versus
Revathi Mica Company, registered Firm carrying on business in Mica at Gudur - RESPONDENT
Decided On: 11-13-70
The execution of a promissory note creates a presumption of consideration, and the burden of proving that there was no consideration lies on the party who alleges it.
Headnote:
NEGOTIABLE INSTRUMENTS ACT - PROMISSORY NOTE - CONSIDERATION - EXECUTION OF PROMISSORY NOTE - MAINTAINABILITY OF SUIT - INTERPRETATION OF INSTRUMENT - PROMISSOR AND PROMISEE - SECTION 8 AND 78 OF THE NEGOTIABLE INSTRUMENTS ACT.
Fact of the Case:
The defendant executed two promissory notes, one in favor of the plaintiff Venkata Subba Reddy and the other in favor of the plaintiff's firm, Revathi Mica Company. The defendant claimed that the promissory notes were executed as an accommodation and were not supported by consideration. The plaintiffs filed suits to recover the amounts due under the promissory notes.
Finding of the Court:
The court found that the defendant failed to establish that the promissory notes were executed as an accommodation and that they were supported by consideration. The court also held that the suit filed by Revathi Mica Company was maintainable as the promissory note was drawn in a form sufficient to show that the company was the promissee.
Issues: 1. Whether the promissory notes were executed as an accommodation and were not supported by consideration. 2. Whether the suit filed by Revathi Mica Company was maintainable.
Ratio Decidendi: 1. The court held that the defendant failed to establish that the promissory notes were executed as an accommodation and that they were supported by consideration. The court relied on the evidence of the plaintiffs' witnesses and the entries in the plaintiffs' account books to conclude that the promissory notes were executed for valid consideration. 2. The court held that the suit filed by Revathi Mica Company was maintainable as the promissory note was drawn in a form sufficient to show that the company was the promissee. The court relied on the fact that the name of Revathi Mica Company was mentioned in the preamble of the promissory note and that the debt was referred to as the debt owing to the company.
Final Decision: The court dismissed both the appeals filed by the defendant.
( 1 ) THESE two appeals arise out of two suits which were disposed of by a common judgment. The sole defendant in the suits is common and so is the appellant in these two appeals. The plaintiff s are different in the suits. The plaintiff in O. S. No. 59 of 1966 out of which A. S. No. 201 of 1968 has arisen is one Gangapatnam Venkata. Subba Reddy, hereinafter referred to as Venkata Subba reddy only for the sake of brevity. The plaintiff in O. S. No. 87 of 1966 out of of which A. S. No. 385 of 1967 has arisen is a firm called Revathi Mica Company represented by two of its partners, one of them being the plaintiff in O. S. No. 59 of 1966 mentioned above and the other being his son. O. S. No. 59 of 1966 was filed to recover a sum of Rs. 8,298-50 as due under a promissory note (Exhibit a-1) dated 11 th May, 1963, executed by the defendant in favour of Venkata subba Reddy for Rs. 7,000. O. S. No. 87 of 1966 was filed to recover a sum of rs. 27,836-59 as due under a promissory note Exhibit A-2 dated 27th July, 1963, executed by the defendant in favour of the partner of Revathi Mica Company, venkata Subba Reddy, for Rs. 23,590-39. Both the suits were decreed as prayed for by the Court of the Subordinate Judge, nellore. Hence, these two appeals by the defendant who is common in both the suits.
( 2 ) THE execution of the promissory notes was not denied by the defendant. It is common defence in both the suits that the promissory notes were nominally executed and they were not supported by consideration. The additional defence with regard to O. S. No. 87 of 1966 relating to Exhibit A-2 promissory note is that the suit filed by Revathi Mica company is not maintainable, it being neither the payee nor endorsee or transferee of the promissory note, it having been executed in favour of Venkata subba Reddy personally. The lower court negatived the case of the defendant on both the contentions and accordingly decreed the suits. The same two contentions were pressed before us. Another contention raised on behalf of the defendant in the suits and found in his favour is that he is an agriculturist and he is entitled to the benefits of the Madras agriculturists Relief Act. That benefit was allowed to the defendant by the lower Court allowing interest to the plaintiffs only at the rate of 5 per cent. as provided under section 13 of that Act. That point is not before us, no separate appeals or cross-objections having been filed by the plaintiffs, questioning the correctness of the decision of the lower court on that question.
( 3 ) TAKING the first point first, having gone through the evidence and heard the learned Counsel of the respective parties we have no hesitation whatsoever in agreeing with the conclusion arrived at by the lower Court on the question of consideration for the two promissory notes. It was recited in Exhibit A-1 promissory note that on the date of the promissory note the defendant borrowed a sum of Rs. 7,000 in cash from the plaintiff and executed the promissory note. In Exhibit A-2 promissory note it was recited that on taking accounts on nth July, 1961, between Subbarayudu mica Mine and Revathi Mica Company, the former became indebted to the latter in a sum of Rs. 21,012-82. In that manner the defendant became indebted and therefore the defendant executed the promissory note for a sum of rs. 23,590-39 with subsequent interest up to the date of the promissory note from the recitals in Exhibit A-2 it is clear that the defendant undertook the liability for the debt due by Subbarayudu mica Mine to Revathi Mica Company and executed the promissory note. The facts which are not in dispute are: yasodamma, wife of the defendant was the sole proprietor of Subbarayudu Mica mine. There were business dealings between Revathi Mica Company and subbarayudu Mica Mine from the year 1959 onwards and by the year 1961 the subbarayudu Mica Mine became indebted to the Revathi Mica Company in a sum of Rs. 21,012-82 Ps. Thereafter f
