Smt. Vijayalakshmi, T.K. Venkatesh vs Mrs. Elizabeth Asul and Sri P. Soliappan

Ashok B. Hinchigeri, J.—This appeal is directed against the judgment and decree, dated 27.8.2007 passed by the Court of the XXV; Additional City Civil and Sessions Judge, Mayo Hall, Bangalore (CCh-20) in O.S. No. 15585/01.

The facts of the case in brief are that the Respondent No. 1 claims to have given a hand loan of Rs. 1 lakh to the Appellant on 15.5.1998. The Appellant is said to have given an on demand promissory note in favour of the Respondent No. 1. The Respondent No. 2 is said to have prepared the on demand promissory note. The Respondent No. 1 claims to have given the hand loan for the business of the Appellant and the Respondent No. 2 jointly. When the first Respondent''s endeavours to recover the said sum of Rs. 1 lakh on the issuance of the legal notice did net lead her anywhere, she filed the suit for recovery against the Appellant and the Respondent No. 2 (the Defendant Nos. 1 and 2 respectively). The Appellant and the Respondent No. 2 filed a common written statement denying the allegations that they have received the hand loan of Rs. 1 lakh and denying the execution of the on demand promissory note. It is their defence that they were the subscribers of the chit being run by the Respondent No. 1. It is their further defence that the on demand promissory note was given only as a security for the chit amount, which they took in a particular month. The Respondent No. 1 had assured that the said promissory note would be returned to them as soon as the chit amount was paid. The Appellant and the Respondent No. 2 were very emphatic that the issuance of the on demand promissory note was only in connection with chit transaction Based on the rival pleadings, the Trial Court framed the following issues:

Whether the Plaintiff proves that the Defendants being the partners have borrowed a hand loan of Rs. 1 Lakh from heron 15.05.1998 as alleged?

Whether the Defendants prove that their signatures were obtained on the blank D.P. Note and the same was given as a collateral security as alleged in Para No. 8 of the Written Statement?

Whether the Plaintiff proves that the Defendants are due to a sum of Rs. 1 Lakh as alleged?

What Decreed or Order?

On behalf of the Respondent No. 1, she herself and her neighbour were examined as PW1 and PW2 respectively marking 4 documents in Exhibit ''P'' series. The Appellant and the Respondent No. 2 were examined as DW1 and DW2 respectively marking 5 documents at Ex.D1 to Ex.D5. Based on the pleadings, oral and documentary evidence placed on the record of the Trial Court, the Trial Court decreed the suit as against the Appellant for a sum of Rs. 1 lakh with interest at the rate of 10% per annum. It dismissed the suit as against the Respondent No. 2 (the Defendant No. 2) imposing a cost of Rs. 5,000/- on the Respondent No. 1 for unnecessarily arraigning him as a Defendant to the suit proceedings.

Sri Vishnu Hegde, the learned Counsel for the Appellant submits that no material whatsoever is placed in support of the first Respondent''s claim that the Appellant and the Respondent No. 2 jointly borrowed the amounts. He submits that the on demand promissory note (Ex.P1) does not bear the signature of the Appellant. He submits that the Appellant signs only in Tamil and not in English. He brings to my notice that some columns in the on demand promissory note are left blank. On the consideration receipt at Ex.P2 it is Sri Vishnu Hegde''s submission that it does not even bear the signature of the witnesses As Ex.P1 and Ex.P2 are incomplete in many respects and even when the Respondent No. 1 Plaintiff has not proven that he has ever lent the money of Rs. 1 lakh, the Trial Court has decreed the suit. He submits that the variation in the signature of the Appellant and the signature as found on Ex.P1 and Ex.P2 is visible even to the naked eye. He submits that the execution of the promissory note, unless witnessed by two persons, cannot be proved.

Section 118 of the Negotiable Instruments Act, 1881 lays down some special rules of evidence relating to presumptions. Where the Defendant fails to discharge the initial onus of proof by showing the non-existence of consideration, the Plaintiff would invariably be held to be entitled to the benefit of presumption operating u/s 118(a) in his favour.

I have browsed through the L.C. Rs. Both the on demand promissory note (Ex.P1) and the consideration receipt (Ex.P2) state that they are written by Sri P. Soliappan (the Respondent No. 2 herein). The same is denied by the Respondent No. 2 in the written statement as follows : "The second Defendant has not written the on demand promissory note in the presence of neither parties." However, there is no denial in the affidavit filed by the Respondent No. 2 by way of examination-in-chief. The Respondent No. 2 does not confirm or deny that he has written Ex.P1 and Ex.P2. He is content stating that he has not put his signature on the instrument.

The Appellant has not made any application before the Trial Court seeking the reference of the matter to the expert invoking Order XXVI Rule 10A of Code of Civil Procedure. The Appellant is noncommittal about her receiving the legal notice (Ex.P3) issued on behalf of the Respondent No. 1-Plaintiff. She states "I do not know whether I have returned the RPAD notice without accepting." On the possibilities of her making the demand on the Respondent No 1 to return the on demand promissory note, the Appellant has this to say : "It may be true that after receiving the notice of the Plaintiff, I have issued Ex.D3."

Thus, even when the entire material is dissected and re-examined, then also it is difficult to arrive at a conclusion different from the one arrived at by the Trial Court. As no material was placed before the Trial Court to show that the sum of Rs. 1 lakh was lent jointly to the Appellant and the Respondent No. 2, it has rightly dismissed the suit as against the Respondent No. 2, that too by imposing a cost of Rs. 5,000/- on the Respondent No. 1-Plaintiff. The Trial Court''s judgment is sound and balanced, as far as the decreeing of the suit for Rs. 1 lakh is concerned.

However, the Trial Court''s awarding the interest at the rate of 10% per annum is not supportable. There is no contractual or agreed rate of interest in this case. Ex.P1 (on demand promissory note) does not even mention the rate of interest. Coupled with this document is the admission made by the Respondent No. 1. In the course of her cross-examination, she deposes : "There were no talks regarding the payment of interest on the said amount by the Defendants."

This being the position, the Trial Court is not justified in awarding the interest at the rate of 10% per annum. This Court finds it reasonable, safe and just to award the pendentelite and future interest at the rate of 6% per annum.

In the result, this appeal is allowed in part. That part of the judgment and decree, which directs the Appellant to pay the sum of Rs. 1 lakh to the Respondent No. 1, is confirmed. The rate of interest on the said sum is slashed from 10% to 6% per annum from the date of the institution of the suit till the date of realisation or payment.

This appeal is accordingly disposed of.