Vanga Surya Rao and others vs Guttula Gopalakrishna

These three appeals arise out of the claims under promissory notes executed by late Vanga Suramma and on the basis of which the suits filed by the respective respondents were decreed.

AS No.3169 of 1985 is filed by the defendant against the judgment and decree in OS No. 313 of 1984 dated 9-4-1985 on the file of the Subordinate Judge at Kakinada. The suit was filed by the respondent-G. Nageswara Rao on 21-11-1979 for recovery of Rs.29,708-33 basing on the pronote dated 25-4-1978 for the loan of Rs.25,000/- repayable with 12% interest per annum. Initially, the suit OS No.313 of 1984 was filed against Vanga Suramina and subsequent to her death. Vanga Surya Rao was impleadcd as the legal representative, who figured as the sole defendant in the latter two suits. Thus, the defendant-appellant is one and the same in all the three matters.

AS No.3013 of 1985 is filed by the defendant against the judgment and decree in OS No.315 of 1984 dated 9-4-1985 filed by the respondent-G. Gopal Krishna on 25-4-1981 for recovery of Rs.27,200/- on the pronote dated 25-4-1978 for the loan of Rs.20,000/- repayable with interest at 12% per annum.

AS No.3016 of 1985 is filed by the defendant against the judgment and decree in OS No.314 of 1984 dated 9-4-1985 on the file of the Subordinate Judge, Kakinada filed by Nagireddy Veeraswamy on 23-3-1981 for recovery of Rs.20,400 on the pronote dated 21st March, 1978 for the loan amount of Rs. 15,0007- repayable with interest at 12% per annum.

Pending the appeals, the appellant-defendant died and his legal representatives were brought on record. Subsequently, the second appellant died and on a memo dated 13-6-1999 filed by the Counsel of the appellants 3 and 4 who are already on record are treated as the legal representatives of the appellant No.2. The respondent-plaintiff in AS No.3069 of 1985 died pending the appeal and his legal representalives were brought on record.

The claims and defence in the plaints and the written statements run on the similar lines in all the three matters. Therefore for the sake of convenience these matters are being disposed of together even though the lower Court has passed three judgments and the parties are referred to as the plaintiffs and the defendant.

The suit claims mainly rest on the allegations that the defendant Vanga Surya Rao is the only son of one Vanga Bala Rcimaiah and his wife Vanga Suramina. Under a settlement deed of the year 1914 executed by late Vanga Bala Ramaiah. Suramina became entitled to the immovable properties of her husband absolutely. But that time the son was not bom and Suramma enjoyed the properties in her own right. However, later on in view of heavy liabilities incurred by her son, she had to borrow various amounts from different persons for the purpose of discharging the debts incurred by her son. Thus she borrowed Rs.25,000/- Rs.20,000/- and Rs.15,000/- under the pro-notes dated 25-4-1978, 25-4-1978 and 21-3-1978 respectively providing repayment with interest at 12% per annum. While Suramma was alive the demands were made by the plaintiffs but were not complied. However, the notice issued by the plaintiffs was replied with false allegations that the thumb mark of Vanga Suramma was obtained by Vanga Lakshmana Reddy on the pronotes by playing fraud on her and the same are not supported by consideration, but the said allegations are not correct. Suramma died subsequently and the defendant being the sole legal representative and enjoying her properties, is liable for payment of the debts. Hence the suits.

The defendant in his written statement contested the claims on the ground that the allegation as to settlement of property of the year 1914 with absolute rights on Suramma is not correct. In fact the said settlement only confers life interest Surama and the vested remainder to the issues that may be born subsequent to the date of the deed. The defendant being the only son the entire property vests in his rather than Suramma who had only a life enjoyment. Therefore, Suramina never enjoyed the properties in her own right. The borrowings by Suramma were denied. There is no concern to the discharge of the debts of the defendant which in fact were discharged by himself by sale of lands and gold jewellery of his wife. Therefore, there exist no necessity to borrow any money. The suit pronotes are rank forgery brought into existence by Vanga Lakshmana Reddy of Biccavole in collusion with the plaintiffs to defraud the defendant and his mother and to obtain wrongful gain. The said Lakshntana Reddy being the son of the brother of the defendant''s mother after spoiling himself losing all his properties has cast an evil eye on the defendant''s family as the properties held by the defendant were fetching substantial income. The daughter of Lakshmana Reddy used to visit the defendant''s mother and stayed now and then. Some time in the year 1974 when Suramma was about 90 years old having lost the faculties of hearing and sight and unable to recognise anybody, she executed a relinquishment deed in favour of the defendant. On this the said Lakshmana Reddy got angry. When Suramma was ill and was undergone treatment in the hospital the second daughter of Vanga Lakshmana Reddy was with Suramma and taking advantage of the situation, she took some thumb impressions of Suramma on several papers stating that some registered letters have to be acknowledged and the same were utilised for forging the suit pronotes in the names of the plaintiffs. The plaintiffs are no other than the friends of Vanga Lakshmana Reddy and the suits are filed only with a view to defrauding the defendant''s family to make illegal gain. Therefore, the suit pronotes are without any consideration. Since the defendant is the sole successor and enjoying the properties in his own right is not liable for the debts incurred by his mother nor under any obligation to discharge.

The trial Court on the basis of the respective pleading framed the issues as to whether the suit pronotes are forged and if not whether they are not supported by any consideration?

On behalf of the plaintiffs the scribe and the attestors and Vanga Lakshmana Reddy were examined and marked documentary evidence. The defendant examined himself on DW1 and marked documents. The Court below on appreciation of the evidence and the material on record, has decreed the suits for recovery of the said amounts out of the estate of late Suramma in the hands of the defendant.

Sri M. Lakshmana Sarma, learned Counsel appearing for the appellant in all these appeals sought to attack the correctness of the findings of the Court below on the ground that the suit pronotes are rank forgery and there was no necessity to borrow and Vanga Suramma was sufficiently aged and is not in a position to execute any such document or in requirement of the amounts. The pronotes were brought into existence when she was living in the house of Lakshmana Reddy her cousin brother and especially when she was in the hospital and not well her thumb impressions were taken representing that they are required for the purpose of acknowledging some registered correspondence. It was contended that the evidence on the plaintiffs side does not prove the execution of the suit pronotes and there are various circumstances casting doubts on the due execution and passing of consideration. The said Lakshmana Reddy who is alleged to have a hand in all these pronotes has already filed insolvency petition and the same was dismissed which was confirmed in appeal. It was pointed out by relying on Ex.Bl to B33 that no such amounts were entered in the bank extracts. None from Biccavob evidenced the suit pronotes.

Sri Suresh, appearing for the respondents has countered the entire arguments as pointed out and he tried to sustain the decrees on the ground that the evidence on the plaintiffs side has remained unshaken and is more than sufficient to hold the execution of the suit pronotes. Once the execution is proved it was submitted, u/s 118 of the Negotiable Instruments Act (for short "the Act"), the presumptions contemplated thereunder would automatically follow and there is no necessity as such to enquire into or find out the story or the theory as set up by the defendant. Further he also attacked the correctness of the entire story as sought to be explained by involving Lakshnanana Reddy.

Both the Counsel have taken me through the entire evidence and the documents and on a perusal thereof and after hearing the Counsel the points which arise for consideration in these appeals are:

(i) Whether the suit pronotes are valid and the defendant is liable thereunder?

and

(ii) How far the explanation given by the defendant is permissible u/s 118 of the Act?

Before going into the merits of the case-either way -- it is necessary to consider the effect and scope of Section 118 of the Act, which is extracted below:

"US. Presumptions as to Negotiable Instruments :--Until the contrary is proved the following presumptions shall be made:

(a) of consideration: that every negotiable instrument was made or drawn for consideration and that every such instrument when it has been accepted indorsed negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration;

(b) as to date: that every negotiable instrument bearing a date was made or drawn on such date;

(c) as to time of acceptance: that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;

(d) as to time of transfer: that every transfer of negotiable instrument was made before its maturity;

(e) as to order of endorsement: that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;

(f) as to stamp: that a lost promissory note, bill of exchange or cheque was duly stamped;

(g) that holder is a holder in due course: that the holder of a negotiable instrument is a holder in due course :

Provided that where the instrument has been obtained from its lawful owner or from any person in lawful custody thereof by means of an offence or fraud or has been obtained from the maker or acceptor thereof by means of an offence or fraud or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him."

The said provision contemplates a rebuttable presumption. Two types of cases may arise - one where there is a denial as to the execution and pleading forgery and two while admitting the instrument explain the circumstances. Therefore, subject to proving otherwise the presumptions follow in both the matters with variation. Normally, one comes across with both the plea of total denial and then with some explanation by way of defence, which run totally contradictory. Though a defendant is entitled to raise contradictory pleadings in defence, however, the same vary from case to case. Especially, in the case of negotiable instruments such pleas have to strictly scrutinised in a proper perspective within the limitations prescribed under the law and should not allow the defendant to go scot free with unsustained pleas. Therefore, to restrict the enquiry, the law contemplates such presumption and once the instrument is proved all presumptions follow. Shifting the burden apart, it certainly casts doubts on the bona fides respect of pleas like denying the very note on the plea of forgery and then coming out with some explanation. In such cases, if due execution of the instrument once proved the presumption operates with more vigour and it should shut out the explanation sought to be given. The enquiry into a plea of forgery is a comprehensive one, calling for detailed evidence and material on either side and such plea of forgery even constitutes a serious offence under the provisions of the Indian Penal Code. Therefore, the conduct of the parties prior to the suit and their silence goes a long way in considering the said plea.

This Court in KM Prasad v. Sanathnagar Wire Products, 1987 (2) ALT 947, while considering the said provision has expressed certain changes in the law providing some safeguards with a caution. However, the easier ways and modus in the execution of instruments cannot be ruled out and no proper safeguard to check such incidence is provided. Thus, claims based on forged promissory notes cannot be ruled out. However, either way the instrument and the evidence thereon requires to be considered in its proper perspective and in the circumstances of each case. Thus looking from the principles as laid down, the presumption automatically follows that once the execution is proved and especially in the case where the plea of total denial of execution and forgery has been negatived, the necessity to go into the circumstances or the theories or the story as sought to be explained by the defendant becomes very circumspective and narrow.

In order to prove the suit pronotes, the plaintiffs in all the three cases examined themselves and examined the scribe and attestors of the pronotes. The purport of the evidence in all the three cases is on the same lines except the individual plaintiffs. The plaintiffs slated that since Vanga Sitrya Rao was in heavy debts, it necessitated Suramma to borrow various funds: and she borrowed the amounts and discharged the debts of Surya Rao. There is clear admission in the written statement as to the defendant Surya Rao having been indebted heavily in respect of the rich mill business run him. However, the defendant stated that the entire debts have been discharged by his own efforts unconnected with any amounts borrowed by Suramma and that there was no necessity for her to borrow on his behalf. The fact that debts were existing is crucial and goes in support of the plaintiffs. Whether the amounts so borrowed mere used for the purpose of discharging the said debts or not is immaterial. It is enough if the existence of the debts and such requirement is shown. The scribe of the pronotes is a resident of Anaparthy village and knows both the parties. Merely because the plaintiffs came to Biccavole in a taxi on the request of Suramma would not dispel the necessity or faclum of borrowing. He asserted that he scribed the pronotes and in his presence Suramma affixed her thumb mark on the pronotes. He further stated that the amounts were paid to Suramma and the pronotes were executed at Biccavole. He denied the suggestion that the suit pronotes are forged. In his cross-examination, it was elicited that at the instance of Suramma only he was summoned and he scribed the suit pronotes. The attestor of the pronotes has stated that Suramma put her thumb impression and she received the consideration and he attested. Even though the witnesses were subjected to lengthy cross examination nothing was elicited to discredit their evidence. None of the attestors are from Biccavole of which serious attack was sought to be made. Merely because they are outsiders, it would not oust their credibility. On the face of the consistent evidence in support of execution, the plaintiffs burden initially stands discharged. However, on the plea of forgery the defendant invites upon himself the shifting of the burden. However, no serious attempts were made on his behalf nor any cogent evidence is let in to prove the forgery. Mere suggestions to the witnesses would not suffice. But in the absence of strong evidence, it becomes difficult to accept that the documents are forged.

An argument was sought to be put-forth on the ground that the attestor requested the plaintiffs to come to Bisccavole to lend money to Suramma and accordingly they went and Lakshmana Reddy brought the title deeds of the defendant and on the satisfaction of which the plaintiffs agreed to lend which appears to be strange, in my view nothing appears unusual especially in view of the fact that Suramma being an old lady and unable to go over to the village of the plaintiffs would have accepted her request. Further, nothing much was attributed against the witnesses to cast any doubt on their statements. The documents sought to be relied upon by the appellant in Ex.BI to B3 would not lend any support to his case as the same do not throw any light. In Ex.B2 there is an entry dated 29-4-1978 showing an amount of Rs.39,000/- which is admittedly subsequent to the borrowing under pronotes and therefore nothing contra can be deduced from such an entry. The defendant did not lead any evidence to substantiate the plea that the debts were independently discharged. Having taken such plea, of which heavy burden lies on him it cannot be allowed to stray away. In the absence of positive evidence, it has to be necessarily concluded that the suit debts were meant only for discharging those debts in the business. The evidence of the attesting witnesses and the scribe are sufficient enough to hold that the suit pronotes were executed by late Suramma by putting her thumb impressions and the money was paid thereunder.

Another attempt was made on behalf of the appellant herein to show that late Suramma could not have executed the suit pronotes since her title under the settlement deed only lasts till her death and thus having a life interest only the defendant being the ultimate beneficiary and becoming the absolute owner after her death the question of execution of the suit pronotes by her makes more improbable. Either way the nature and incidence of title which accrue under the settlement may not have relevance for the purpose of these cases. Even accepting the settlement on the fact of it DW1 is the beneficiary and the properties ultimately vested in him. Further, he also cannot absolve his liability having benefited on both the aspects viz., acquisition of properties under the settlement after the death of Suramma and having benefited by availing the loans obtained by her in discharge of debts incurred by him in the rice mill business. Thus, once the suit pronotes are proved, the defendant cannot escape the liability thereunder.

In view of the said finding further enquiry into the absence of consideration or the explanation as sought to be given by the appellant merit no consideration in view of the specific bar u/s 118 of the Act which casts a heavy rebuttable onus on the defendant which remained undischarged.

Further, in these cases the defendant specially came up with a plea of denial and forgery and having thus failed therein, he is not entitled to raise any such further explanations or theories in respect of a negotiable instrument. Therefore, the object u/s 118 of the Act is absolute and nothing remains in his mouth to press further pleas which remained unsubstantiated. Further, the Court below on an elaborate consideration of the entire evidence decreed the suits. The findings arrived at with all the reasons behind do not call for any interference.

Under these circumstances, there are no merits in the appeals and are accordingly dismissed with costs.