Kunapareddi Nancharayya and Another vs Seethala Ramachandra Rao

C.Y. Somayajulu, J.—Defendants 1 and2 in O.S. No. 39 of 1981 on the file of the Court of the Subordinate Judge, Gudivada are the appellants.

Respondent filed the suit against the appellants for recovery of the principal and interest due on the promissory note dated 24.3.1978 executed by the appellants in favour of J. Venkata Krishna Rao for Rs. 10,400/- as transferee for consideration. Appellants filed their written statement admitting that 1st appellant executed the suit promissory note dated 24.3.1978 in favour of J. Venkata Krishna Rao or Rs. 10,400/- and contending that 2nd appellant did not execute the suit promissory note and that the promissory note was executed by 1st appellant in renewal of a promissory note dated 25.3.1975 for Rs. 8,000/-. It is their contention that 1st appellant actually borrowed an amount of Rs. 4,000/- and since the interest stipulated was 37 1/2 % with yearly rests and since the provisions of A.P. Act of 4 of 1938 apply to that borrowings, with a view to get over the provisions of the said Act, the promissory note was taken for a sum of Rs. 8,0007- by showing the interest as 12% and that, the suit promissory note was taken in the name of J. Venkata Krishna Rao with a view to make it appear as a different transaction in order to avoid scaling down of the interest as per the provisions of A.P. Act of 1938. The Trial Court framed four issues and three additional issues for trial. In support of his case, the respondent examined himself as P.W. 1 and marked Exs. A-1 to A-7. The appellants examined themselves as D.Ws. 1 and 2 respectively and marked Exs. B1 to B2. The Trial Court disbelieving the evidence of the appellants decreed the suit.

The point for consideration is whether the respondent is entitled to recover the amount covered by the suit promissory note?

The main contention of the learned Counsel for the appellants is that since 2nd appellant denied execution of the Ex. A1 (the suit promissory note) and since respondent except examining himself did not adduce evidence to establish execution of Ex. A1 by 2nd appellant, respondent is not entitled to any relief more so because there is no evidence on record to establish that the respondent is a holder in due course, as he was aware that there was demand for payment by the promisee. His next contention is that since Ex. A1 was obtained in renewal of Ex. B1, respondent in any event is not entitled to the entire suit amount.

I am not able to agree with the contention of the learned Counsel for the appellants that Ex. A1 is not proved because in Ex. A6 reply notice, got issued by the appellants to Ex. A5 notice got issued by the respondent demanding payment of the amount covered by Ex. A1, subsequent to his obtaining transfer from the original promisee, they clearly admitted the execution of Ex. A1 in favour of J. Jagmohan Rao for Rs. 10,00/-. The only contention raised by the appellants in Ex. A6 is that Ex. A1 is not fully supported by consideration, and that only Rs. 5,000/- was paid thereunder, and that there was an oral agreement between them and J. Jagan Mohan Rao for payment of interests at 36% with annual rests, and not at 12% as mentioned in Ex. A1 and, therefore, is to cover the different in the rate of interest. Rs. 5,400/ - was put in excess to the amount of Rs. 5,000/- borrowed thereunder and the promissory note was obtained for Rs. 10,400/-. Thus appellants in Ex. A6 clearly admitted execution of Ex. A1 as per Section 68 of Evidence Act admitted facts need not be proved. So, merely because appellants, contrary to the earlier stand taken Ex. A6 took a plea that 2nd appellants did not execute Ex. A1 it cannot be said that the earlier admission was wiped out more so when appellants failed to state that the admission in Ex. A6 was a mistake.

The question as to whether the plaintiff is a holder in due course or not of Ex. A1, need not be decided for disposal of this appeal. The advantage of a holder in due course would have is that irrespective of the fact whether the negotiable instrument, which was negotiated in his favour, is supported by consider or not, he would be entitled to a decree against the promisor for the amount due under that instrument. In this case, since execution of Ex. A1 is admitted the presumption that Ex. A1 is supported by consideration would arise, and so it is for the appellants to establish that E.x. A1 is not fully supported by consideration, and was taken in renewal of an earlier promissory note Ex. B1. If they fail to establish that fact, even if the respondent is not a holder in due course, he would still be entitled to a decree in his favour for the suit amount.

Except the interested testimony of the appellants, as D.Ws. 1 and 2, there is no other evidence on record to show that plaintiff lent money under Ex. B1. The fact that plaintiff as P.Ws. 1 admitted during cross examination that he lent some amounts to the defendants and stated that he does not remember if defendants took loan from him on 25.3.1975, and if that promissory note was scribed by Sunkara Venkata Purna Ram Kutumba Sastry and if any payment was made thereunder, cannot be construed to mean that plaintiff admitted Ex. B1, more so because the amount lent was not elicited from him and since Ex. B1 was not put to him and since the scribe and attestors of Ex. B1 are not examined by the appellants.

Ex. B1 stands falsified by Ex. A6 reply notice got issued by the appellants, where they alleged that they borrowed Rs. 5,000/- at 36% interest and executed a pronote for Rs. 10,400/- i.e. by putting Rs. 5,400/- in excess of the amount borrowed by mentioning interest at 12% in the promissory note. There is no reference to Ex. B1 in Ex. A6. Appellants got incorporated paras 2(a) and 2(b) in the written statement taking a plea that they borrowed Rs. 1000/- on 25.3.1975 from the plaintiff and executed a promissory note for Rs. 8,000/- in his favour showing the rate of interest at 12% per annum though the agreed rate of interest is 37 1/2% per annum with yearly rests and that promissory note was in fact taken in the name of the plaintiff by his father-in-law, K. Nagabhushanam, and in renewal of that promissory note Ex. A1 was taken in the name of J. Jagan Mohan Rao. Thus by way of amendment to written statement only for the first time appellants took the plea that Ex. A1 was obtained in renewal of Ex. B1. Since, this plea is contrary to the plea in Ex. A6, and since Ex. B1 was not put to P. W.2 when he was in the witness box and since plea that interest mentioned in Ex. B1 is not the agreed interest, and that the interest stipulated in Ex. B1 is much higher than the interest shown in Ex.B1 cannot be countenanced, in view of Section 91 and 92 of Evidence Act, Ex. B1 is of no help to the appellants to establish that Ex. A1 was taken in renewal of Ex. B1. Thus the evidence adduced by the appellants does not rebut in presumption u/s 118 of Negotiable Instruments Act and so it cannot bet be held that Ex. A1 is supported by consideration. Therefore, irrespective of the question whether the plaintiff is a holder in due course of Ex. A1 or not he is entitled to a decree for the amount claimed in the suit. The point is answered accordingly.

Therefore, I find no merits in this appeal and hence the appeal is dismissed. No costs.