Promissory notes require evidence to challenge validity; mere allegations are insufficient to avoid liability for repayment under a loan agreement.

JUDGMENT :

RENUKA YARA, J.

Heard Sri G. Sushanth Kumar, learned counsel for the appellant/appellant/defendant, on the question of admission. Perused the record.

2. This Second Appeal is preferred by the appellant/ appellant/defendant aggrieved by the judgment and decree dated 13.06.2025 in A.S.No.14 of 2024 passed by the learned VI Additional District Judge at Sathupalli (for short ‘the First Appellate Court’) confirming the Judgment and Decree dated 06.02.2024 in O.S.No.115 of 2016 passed by the learned Senior Civil Judge at Sathupalli (for short ‘the Trial Court’), wherein, a suit filed for recovery of money has been decreed and the same has been confirmed by the First Appellate Court in appeal.

3. The background facts of the case are that the respondent/plaintiff filed suit for recovery of money on the basis of a promissory note and the office copy of legal notice issued to the appellant herein. The case of the respondent was that the appellant borrowed Rs.4,00,000/- to be repaid with interest at 24% per annum, but failed to repay the borrowed amount. Thereafter, the appellant issued a cheque for Rs.5,00,000/- drawn on SBH, Madhira Branch and then the same was submitted for realisation. The cheque was returned with endorsement ‘insufficient funds’. Therefore, a legal notice was issued for repayment of the money followed by filing of a complaint under Section 138 of Negotiable Instruments Act, which resulted in filing of charge sheet under C.C.No.272 of 2014. There was no hope of recovering the promissory note amount with interest and therefore, suit for recovery of money has been filed.

4. The appellant /defendant opposed the suit claim by denying the cause of action for filing the suit. The appellant claimed never to have borrowed the amount of Rs.4,00,000/- to be repaid with interest, never executed the promissory note, and that the suit promissory note is not supported by consideration. Further, it is alleged that the respondent is doing money lending business without any license to do so. In the process of doing money lending business, the respondent is collecting empty signed promissory notes and blank signed cheques from the borrowers who have obtained loan from him. The respondent had borrowed Rs.50,000/- from the respondent in the year 2010, but the same has been repaid. Though the loan amount was repaid, the respondent did not return the cheque and the same has been fabricated to file the suit. Further, a list of cases wherein the respondent filed for recovery of money are mentioned in the plaint. More particularly, complaint in C.C.Nos.270 of 2014, 271 of 2014 and 269 of 2014 have been listed to allege that the respondent is engaged in money lending business without registering under Money Lender Act. It is alleged that there are no bona fides or prima facie case and therefore, the suit is liable to be dismissed.

5. Upon examining the case of both the respondent and the appellant, the Trial Court decreed the suit. The Trial Court observed that the appellant did not choose to examine any witness and did not lead evidence to show that Ex.A1 promissory note is a forged and fabricated document. There was no enmity between the parties in order to have any motive for forging the suit promissory note. The oral evidence of PW1 and PW2 coupled with the documentary evidence in Ex.A1 promissory note, Ex.A2 legal notice and Ex.A3 acknowledgment card were found to be sufficient to discharge the burden of proof of the respondent whereas there was no evidence on behalf of the appellant to discharge his onus of proof. The witness PW2 depos