SA/452/2011 of JAMILI TIRUMALESWARA RAO Vs CHIMAKURTHI LAKSHMI AND ANOTHER on 31 December 2021

JUDGMENT:

The first defendant in O.S.No.321 of 2007 on the file of the Court of learned Principal Senior Civil Judge, Guntur, is the appellant. Respondents 1 and 2 were the plaintiff and the second defendant in the suit.

2. The first respondent laid the suit against the appellant and the second respondent on the foot of a promissory note dated 01.02.2004 executed by the appellant and the second respondent, who allegedly executed it upon receiving consideration of Rs.2,00,000/- agreeing to repay the same with interest at 18% per annum. The claim of the first respondent at the trial was that inspite of demands, the appellant and the second respondent did not repay and therefore, she had to lay the suit.

3. The appellant and second respondent in their resistance to this claim pleaded in the written statement that the suit promissory note is an outcome of the mediation in respect of settlement of accounts between M/s.Uma Sankar Syndicate, a partnership firm represented by the second respondent as Managing Partner and the trading concerns of Sri Kota Srinivasa Rao, and his family members or associates. It is also their case that in that mediation, when the outstanding was found approximately at Rs.10.00 lakhs, at the instance of elders, viz. Sri Ch.Rama Krishna Rao, Chartered Accountant and Sri N.Lakshmana Rao, the appellant was made to execute five different promissory notes including the present suit promissory note. They further contended that other suits in O.S.No.193 of 2007, 195 of 2007 and 197 of 2007 apart from O.S.No.199 of 2007 were filed on the basis of these promissory notes.

4. Further contention of the appellant and second respondent is that all these trading concerns were carrying on business in purchasing cotton kappas from farmers, ginning them and selling seed and lint to others and on account of which there were transactions among all of them. They also contended that when the first respondent who is one of the partners of M/s.Vijaya Lakshmi Cotton Mills, represented by Sri Kota Srinivasa Rao, Managing Partner of this firm as well as M/s. Lakshmi Ganapathi Cotton Traders brought pressure on the appellant when he availed over draft facility from ING Vysya Bank Limited, Arundelpet, Guntur, to his M/s.Vijaya Lakshmi Cotton Mills, he stood as guarantor.

5. They further contended that subsequent to execution of these promissory notes in favour of the first respondent and other family members and associates of Sri Kota Srinivasa Rao, the appellant paid Rs.12,50,000/- on various dates on various occasions in cash to the first respondent or by means of cheques to M/s.Vijaya Lakshmi Cotton Mills. They further contended that these part payments are not reflected in the plaint. They also contended that the suit is bad for non-joinder of necessary parties and mis-joinder of parties.

6. Basing on the pleadings, the trial Court settled the following issues:

1. Whether the suit promissory note is not supported by consideration? consideration?

2. Whether the part payments pleaded by the 1[st] defendant in para No.9 of the written statement is true? No.9 of the written statement is true?

3. Whether the suit is bad for non-joinder of necessary parties?

4. Whether the plaintiff is entitled to recover the suit claim?

5. To what relief?

7.

7. At the trial, the first respondent examined herself as P.W.1 and relied on Ex.A1 to Ex.A3, while the appellant and the second respondent examined themselves as D.W.1 and D.W.2 respectively, apart from relying on Ex.B1 to Ex.B38 in support of their contention.

8. Basing on the material and evidence, the trial Court did not agree with the defence of the appellant and second respondent and predominantly relying on the evidence let in by the first respondent and considering the effect of Section 118 of Negotiable Instruments Act, decreed the suit as prayed.

9. A.S.No.297 of 2010 filed by the appellant on the file of the Court of learned Principal District Judge, Guntur, ended in dismissal confirming the decree and judgment of the trial Court.

10. In these circumstances, this second appeal is presented by the first appellant.

11. Sri N.Pramod, learned counsel for Sri Srinivasa Rao Putluri, learned counsel for the appellant and Sri Srinivasa Rao Kurapati, learned counsel for the first respondent addressed arguments in this second appeal.

12. This second appeal was admitted on the following substantial questions of law:

“a. Whether the judgment and decree of the courts below is sustainable under law in decreeing the suit by drawing presumption Under Section 118 of Negotiable Instruments Act, not withstanding that the appellants have successfully rebutted the presumption by discharging his initial burden with cogent and unimpeachable evidence? sustainable under law in decreeing the suit by drawing presumption Under Section 118 of Negotiable Instruments Act, not withstanding that the appellants have successfully rebutted the presumption by discharging his initial burden with cogent and unimpeachable evidence?

b. Whether the judgment and decree of the courts below are not contrary to law in decreeing the suit merely on the basis of alleged admissions and execution of the promissory note Ex.A1 notwithstanding of proving non existence of consideration by bringing on record the facts and circumstances showing that existence of consideration was improbable? not contrary to law in decreeing the suit merely on the basis of alleged admissions and execution of the promissory note Ex.A1 notwithstanding of proving non existence of consideration by bringing on record the facts and circumstances showing that existence of consideration was improbable?

c. Whether the courts below have not committed an error in law in decreeing the suit being oblivious of the onus of proof being heavily placed on the respondent in the light of the initial burden of proof in support of non-consideration having been discharged successfully by the appellant, the respondents in the absence of proving the promissory note being supported by the consideration? law in decreeing the suit being oblivious of the onus of proof being heavily placed on the respondent in the light of the initial burden of proof in support of non-consideration having been discharged successfully by the appellant, the respondents in the absence of proving the promissory note being supported by the consideration?

d. Whether the judgment and decree of the courts below is not contrary to law in not considering the primary evidence of documentary proof, Ex.A1 on behalf of the appellants to discharge the burden for improbablising the execution of the promissory note under Ex.A1 being not supported by consideration in the light of admissions in respect of business related transactions existed between the respective parties? contrary to law in not considering the primary evidence of documentary proof, Ex.A1 on behalf of the appellants to discharge the burden for improbablising the execution of the promissory note under Ex.A1 being not supported by consideration in the light of admissions in respect of business related transactions existed between the respective parties?

e. Whether the courts below committed grave error in decreeing the suit, when the discharge of promissory note debt is proved on the ground that the payment was not to the account of the promissory note such cases the burden on the person taking plea of burden under Section 102 of the Evidence Act? decreeing the suit, when the discharge of promissory note debt is proved on the ground that the payment was not to the account of the promissory note such cases the burden on the person taking plea of burden under Section 102 of the Evidence Act?

f. Whether the transaction between the parties is to be enforced in the court of law in the absence of Registration of defendant Firm in view of Section 69 of the Indian Partnership Act? enforced in the court of law in the absence of Registration of defendant Firm in view of Section 69 of the Indian Partnership Act?

g. Whether the audited accounts mentioned in the course of business exhibited before the court has rebuttable presumption? business exhibited before the court has rebuttable presumption?

h. Whether the suit transaction is for commercial purpose or not?” not?”

13. All these substantial questions of law revolve around the transaction covered by Ex.A1 having regard to nature of defence set up by the appellant and the second respondent. They further refer to nature of appreciation of evidence by both the Courts below with particular reference to burden of proof and application of Section 118 of Negotiable Instruments Act.

14. The first respondent is one of the partners of M/s.Vijaya Lakshmi Cotton Mills, rep.by its Managing partner Sri Kota Srinivasa Rao, who is the plaintiff in O.S.No.195 of 2007 (concerned to S.A.No.450 of 2011).

15. O.S.No.195 of 2007 filed by Sri Kota Srinivasa Rao, who is the proprietor of M/s.Vijaya Krishna Cotton Traders (concerned to S.A.No.450 of 2011).

16. O.S.No.193 of 2007 (relating to S.A.No.454 of 2011) was filed by Sri Kota Ramachandra Rao, father of the first respondent herein against the appellant and the second respondent herein for recovery of money.

17. O.S.No.321 of 2007 was filed by Smt.Cheemakurthi Lakshmi, W/o.Sri Rama Krishna Rao against the appellant and the second respondent herein for recovery of money (concerned to S.A.No.452 of 2011).

18. O.S.No.199 of 2007 was filed by Ms.Rajupalepu Krishna Padma (concerned to S.A.No.361 of 2011) against the appellant and the first respondent for recovery of money. She is stated to be an associate of the first respondent herein being his employee, according to the appellant and the second respondent. Sri Rama Krishna Rao, who is a practising chartered accountant at Guntur, attending to needs of all these trading concerns, professionally. Sri Rama Krishna Rao, is also one of the mediators, who allegedly took part in the mediation and settlement, as per the defence of the appellant and second respondent.

19. Having regard to the nature of defence of the appellant and the second respondent, the burden is on them to establish that Ex.A1 suit promissory note is not supported by consideration and that it came to be executed by them in favour of the first respondent in the circumstances pleaded in the written statement.

20. P.W.1 the first respondent deposed in terms of the suit transaction. P.W.2 Sri Kota Srinivasa Rao corroborated testimony of P.W.1.

21. There is evidence on record from the first respondent as P.W.1 in proof of Ex.A1. She is entitled to rely on the admissions of the appellant as well as the second respondent as D.W.1 and D.W.2 not only of execution of Ex.A1 promissory note but also their contents. They clearly admitted the contents of this promissory note that reflected that both of them borrowed Rs.2.00 lakhs in cash on 01.02.2004 from the first respondent. Ex.A1 was also scribed by the appellant while attested by one Sri N.Lakshmana Rao and K.Srinivasa Rao (P.W.2).

22. Sri Pramod, learned counsel for the appellant contended that in the light of the defence of the appellant and the second respondent that Ex.A1 is not supported by consideration, that it was nominally executed and as an outcome of the mediation set up in the defence, initially the first respondent has to establish that Ex.A1 promissory note is supported by consideration. In that process, Sri Pramod, learned counsel contended that there need not be any direct evidence, in establishing the defence in probability, when the appellant and the second respondent could rely on the evidence available from the first respondent and the circumstances surrounding this transaction.

23. In support of his contention, Sri Pramod, learned counsel relied on M/s.KUMAR EXPORTS v. M/s.SHARMA CARPETS[1] contending that the effect of presumption under Section 118 of Negotiable Instruments Act can be considered in the light of Section 4 of Indian Evidence Act, which defines ‘shall presume’ and that this presumption is rebuttable. Thus, learned counsel for the appellant contended that if evidence let in by the appellant is tending to show that the real fact is not presumed and thus affecting the contents of Ex.A1 it is sufficient. In the sense, the contention of Sri Pramod is that once evidence is let in making out such factors and circumstances surrounding execution of Ex.A1, whereby the presumption under Section 118 of Negotiable Instruments Act disappears, it is sufficient. In those circumstances, learned counsel contended that having regard to the evidence let in by the first respondent, the suit should necessarily be dismissed.

24. In the above ruling, in paras 15 and 16 it is stated:

15. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) “may presume” (rebuttable), (2) “shall presume” (rebuttable), and (3) “conclusive presumptions” (irrebuttable). The term “presumption” is used to designate an inference, affirmative or disaffirmative of the existence of a fact, conveniently called the “presumed fact” drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means “taking as true without examination or proof”.

16. Section 4 of the Evidence Act inter alia defines the words “may presume” and “shall presume” as follows:

“4. ‘May presume’.—Whenever it is provided by this Act that the court may presume a fact, it may either regard such fact as proved, unless and until it is disproved, or may call for proof of it:

‘Shall presume’.—Whenever it is directed by this Act that the court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved:

***”

In the former case, the court has an option to raise the presumption or not, but in the latter case, the court must necessarily raise the presumption. If in a case the court has an option to raise the presumption and raises the presumption, the distinction between the two categories of presumptions ceases and the fact is presumed, unless and until it is disproved.

25. Further, in para-13 of this ruling, it is stated:

13. In a significant departure from the general rule applicable to contracts, Section 118 of the Act provides certain presumptions to be raised. This section lays down some special rules of evidence relating to presumptions. The reason for these presumptions is that, negotiable instrument passes from hand to hand on endorsement and it would make trading very difficult and negotiability of the instrument impossible, unless certain presumptions are made. The presumption, therefore, is a matter of principle to facilitate negotiability as well as trade. Section 118 of the Act provides presumptions to be raised until the contrary is proved (i) as to consideration, (ii) as to date of instrument, (iii) as to time of acceptance, (iv) as to time of transfer, (v) as to order of endorsements, (vi) as to appropriate stamp, and (vii) as to holder being a holder in due course.

26. It is also relevant to consider para – 19 of this ruling relied on by Sri Pramod, learned counsel for the appellant and it is as under:

19. The use of the phrase “until the contrary is proved” in Section 118 of the Act and use of the words “unless the contrary is proved” in Section 139 of the Act read with definitions of “may presume” and “shall presume” as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over.

27. Sri Pramod, learned counsel for the appellant further contended that appreciation of the Courts below of the defence set up is not proper and in the light of the law laid down by Hon’ble Supreme Court referred to above, this Court requires to revisit the facts based on evidence.

28. Learned counsel further contended that this course is permissible in terms of Section 100 CPC in the second appeal when such requirement is seen. In support of such contention, Sri Pramod, learned counsel for the appellant relied on STATE OF RAJASTAN AND ANOTHER v. SHIV DAYAL AND ANOTHER[2]. Explaining the scope of Section 100 CPC, when concurrent findings of facts are sought to be assailed, in paras 16 and 17 of this ruling, it is stated thus:

“16. When any concurrent finding of fact is assailed in second appeal, the appellant is entitled to point out that it is bad in law because it was recorded dehors the pleadings or it was based on no evidence or it was based on misreading of material documentary evidence or it was recorded against any provision of law and lastly, the decision is one which no Judge acting judicially could reasonably have reached. (See observation made by learned Judge, Vivian Bose, J., as his Lordship then was a Judge of the Nagpur High Court in Rajeshwar Vishwanath Mamidwar v. Dashrath Narayan Chilwelkar [Rajeshwar Vishwanath Mamidwar v. Dashrath Narayan Chilwelkar, 1942 SCC OnLine MP 26 : AIR 1943 Nag 117] para 43.)

17. In our opinion, if any one or more grounds, as mentioned above, is made out in an appropriate case on the basis of the pleading and evidence, such ground will constitute substantial question of law within the meaning of Section 100 of the Code.”

29. Another decision of Hon’ble Supreme Court relied on for the same purpose by Sri Pramod, learned counsel is HAFAZAT HUSSAIN v. ABDUL MAJEED @ SHEKH BALLAN & OTHERS[3]. In para – 8 of this ruling, the relevant observations are:

8. ……………….

No doubt, it has been repeatedly pointed out by this Court that concurrent findings recorded by the trial Judge as well as the Ist Appellate Judge on proper appreciation of the materials on record should not be disturbed by the High Court, while exercising second appellate jurisdiction, but at the same time, it is not an absolute rule to be applied universally and invariably since the exceptions to the same also were often indicated with equal importance by this Court, and instances are innumerable where despite such need and necessity warranting such interference, if the second appellate court mechanically declined to interfere, the matter has been even 2 (2019) 8 SCC 637

3 (2001) 7 SCC 189

relegated by this Court to the second appellate court to properly deal with the claims of parties in the second appeal objectively keeping in view the parameters of consideration for interference under Section 100 of the Civil Procedure Code…………………”

30. On behalf of the first respondent, Sri Srinivasa Rao Kurapati, learned counsel sought to repel these contentions on the premise that both the Courts below consistently held that the defence of the appellant is not correct and when findings were recorded on fact, this Court should necessarily be slow by invoking Section 100 CPC.

31. Sri Srinivasa Rao Kurapati, learned counsel further contended that the proposition of law in application of Section 118 of Negotiable Instruments Act, and burden of proof in terms of Sections 101 and 102 CPC, is well settled. Learned counsel further contended that if the appellant is able to establish that the circumstances projected by him, are diluting the effect of Section 118 of Negotiable Instruments Act and the presumption to apply thereby, the burden shifts to the first respondent in establishing the suit claim. In these circumstances, the nature of evidence and facts to be proved by the appellant shall be of such an extent in preponderance of probability.

32. In support of such contention, Sri Srinivasa Rao Kurapati, learned counsel for the first respondent relied on well known decision of Hon’ble Supreme Court in KUNDAN LAL RALLARAM v. CUSTODIAN, EVACUEE PROPERTY, BOMBAY[4] . In this ruling, in paras 4 and 5, the law is explained as under:

“4. To appreciate this argument it would be necessary to notice at the outset the scope of the presumption under Section 118 of the Negotiable Instruments Act and also the different methods available to a person against whom such a presumption is drawn to rebut the same.

The relevant part of Section 118 of the Negotiable Instruments Act reads:

“Until the contrary is proved, the following presumptions shall be made:

(a) 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.”

5. This section lays down a special rule of evidence applicable to negotiable instruments. The presumption is one of law and thereunder a court shall presume, inter alia, that the negotiable instrument or the endorsement was made or endorsed for consideration. In effect it throws the burden of proof of failure of consideration on the maker of the note or the endorser, as the case may be. The question is, how the burden can be discharged? The rules of evidence pertaining to burden of proof are embodied in Chapter 7 of the Evidence Act. The phrase “burden of proof” has two meanings — one the burden of proof as a matter of law and pleading and the other the burden of establishing a case; the former is fixed as a question of law on the basis of the pleadings and is unchanged during the entire trial, whereas the latter is not constant but shifts as soon as a party adduces sufficient evidence to raise a presumption in his favour. The evidence required to shift the burden need not necessarily be direct evidence i.e., oral or documentary evidence or admissions made by opposite party; it may comprise circumstantial evidence or presumptions of law or fact. To illustrate how this doctrine works in practice, we may take a suit on a promissory note. Under Section 101 of the Evidence Act, “Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist”. Therefore, the burden initially rests on the plaintiff who has to prove that the promissory note was executed by the defendant. As soon as the execution of the promissory note is proved, the rule of presumption laid down in Section 118 of the Negotiable Instruments Act helps him to shift the burden to the other side. The burden of proof as a question of law rests, therefore, on the plaintiff; but as soon as the execution is proved, Section 118 of the Negotiable Instruments Act imposes a duty on the court to raise a presumption in his favour that the said instrument was made for consideration. This presumption shifts the burden of proof in the second sense, that is, the burden of establishing a case shifts to the defendant. The defendant may adduce direct evidence to prove that the promissory note was not supported by consideration, and, if he adduced acceptable evidence, the burden again shifts to the plaintiff, and so on. The defendant may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling, the burden may likewise shift again to the plaintiff. He may also rely upon presumptions of fact, for instance those mentioned in Section 114 and other sections of the Evidence Act. ………………”

33. Further reliance is placed by learned counsel for the first respondent in M.S.NARAYANA MENON ALIAS MANI v. STATE OF KERALA AND ANOTHER[5]. In paras 32 and 33 of this ruling, the observations are:

“32. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies.

33. Presumption drawn under a statute has only an evidentiary value. Presumptions are raised in terms of the Evidence Act. Presumption drawn in respect of one fact may be an evidence even for the purpose of drawing presumption under another.”

34. In para – 30 of this ruling, it is further stated thus:

“30. Applying the said definitions of “proved” or “disproved” to the principle behind Section 118(a) of the Act, the court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.”

35. BHARAT BARREL & DRUM MANUFACTURING COMPANY v. AMIN

CHAND PAYRELAL[6]is also relied on by the learned counsel for the first respondent, which the learned appellate Judge also considered in this respect. The relevant observations in this ruling are in para – 12:

5 (2006) 6 SCC 39

6 (1999) 3 SCC 35

“12. …………the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist. We find ourselves in the close proximity of the view expressed by the Full Benches of the Rajasthan High Court and the Andhra Pradesh High Court in this regard.”

36. Further reliance is placed by learned counsel for the first respondent on the judgment of Madras High Court in C.VICTORIA v. SUBRAMANI @

PERIYATHAMBI[7]and another ruling of Punjab and Haryana High Court inGOPI RAM v. KARNAIL SINGH[8].

37. The nature of defence of the appellant and second respondent coupled with the evidence adduced on behalf of the first respondent established the execution of Ex.A1 suit promissory note on 10.02.2004 with such recitals therein. D.W.1 and D.W.3 gave out their version at the trial in consonance with the contents of Ex.A1. Further, the testimony of P.W.1, P.W.2 and intrinsic worth of Ex.A1 are that the appellant and second respondent had received Rs.2.00 lakhs in cash from the first respondent on 01.02.2004 and executed the same.

38. It is also elicited in the cross-examination of P.W.2, viz. the husband of the first respondent that this transaction and other transactions relating to the suits referred to above took place on the same day at about same time at his house. The statement so elicited from P.W.2, strengthen the contention of the first respondent than supporting the defence. Presence of Sri N. Lakshmana Rao during this transaction is also established by these statements of P.W.2. Significant to note his presence, who in fact is the one of the attestor to Ex.A1. Being an attestor, his presence during that time is justified.

39. Admittedly, the wife of the appellant and the second respondent are partners in M/s. Uma Shankar Syndicate. This firm of which the second respondent is the managing partner and all the concerns, referred to above, which are either belonged to the Sri Kota Srinivasa Rao or his family members and alleged associates are in the business purchasing cotton kappas from the farmers, ginning activity of the same, separating lint and seed and selling away the product to others. The material on record is also establishing that the appellant has been attending to all the trade 7 2013(8) Madras L J 220

8 2015 Law Suit (P & H) 811

transactions of his wife. It is also undisputed that there were several trade transactions between the appellant and the business concerns of the first respondent and that are associated with him. Exchange of money in such course of activities cannot be deemed unusual. The very defence of the appellant and the second respondent vouches this fact.

40. Specific defence of the appellant is that in the mediation relating to these transactions between M/s.Uma Shankar Syndicate and the concerns associated with the appellant was in the presence of Sri Ch.Ramakrishna Rao and Sri N.Lakshmana Rao, where the liability of M/s.Uma Shankar Syndicate was arrived at Rs.10.00 lakhs payable to the above concerns. Further, the defence refers to execution of the promissory notes concerned not only to this matter, but also other suits.

41. The first respondent is specifically denying that Ex.A1 is outcome of such transaction.

42. In order to prove such defence, though the appellant examined himself as D.W.1 and the second respondent as D.W.2, they are all highly interested witnesses. D.W.2 an accountant in M/s.Uma Shankar Syndicate, neither did anything better. He is also an interested witness in D.W.1. The best witnesses in this context to establish such fact are Sri Lakshmana Rao and Sri Ch.Ramakrishna Rao, chartered accountant. No reason is forthcoming in not examining Sri Lakshmana Rao and Sri Ch.Ramakrishna Rao, Chartered Accountant to prove this fact. It is a significant and fatal omission in leading evidence by the appellant.

43. This type of defence can also be established by circumstantial evidence.

44. As observed by learned trial Judge, if the transaction was an outcome of the settlement of the accounts between M/s.Uma Shankar Syndicate and the concerns of P.W.2, the account books should reflect the same. Ex.B4 ledger extract of M/s.Vijaya Krishna Cotton Traders, Ex.B24

ledger extract of M/s.Suseela Cotton Traders, and Ex.B28 ledger extract of M/s.Lakshmi Ganapathi Cotton Corporation did not mention this mediatory efforts settling the claim of the concerns of the first respondent in the manner projected by the appellant and the second respondent.

45. The first appellate Court elaborately discussed the evidence placed by the appellant and the second respondent in this context with reference to testimony of D.W.1 and D.W.2.

46. Observations of both the Courts below are also to the effect that this alleged settlement is not evidenced by any document and that it was not reduced to writing. It is a right approach. If at all there were such transactions leading to the settlement, arriving at the liability of M/s.Uma Shankar Syndicate, it would have been reduced into writing, by all the parties concerned. Therefore, the question of securing different promissory notes either by P.W.1 or in the name of others cannot arise in such circumstances.

47. Learned appellate Judge also considered the effect of entries in Ex.B4, Ex.B24 and Ex.B28 in this context.

48. Therefore, basing on such material, disbelieving the version of the appellant and second respondent, both the Courts below rightly had drawn conclusions against the appellant and the second respondent. Thus, the effect of Section 118 of Negotiable Instruments Act that raises a presumption that a negotiable instrument is made or drawn for consideration is not diluted nor vanished. The transactions relied on by the appellant and the second respondent in this context are distinct and separate among the trading concerns of these parties. They do not in any manner indicate that Ex.A1 promissory note and the promissory notes concerned to other suits admittedly executed by the appellant and the second respondent had the genesis from such mediation on 01.02.2004.

The identify of these transactions is distinct, different and quite discernable.

49. The first appellant and the second respondent thus had borrowed from the first respondent under Ex.A1 promissory note Rs.2.00 lakhs in cash agreeing to repay the same with interest at 18% per annum on 01.02.2004. It is an established fact in this case.

50. Sri Pramod, learned counsel for the appellants sought to raise the claim made by ING Vysya Bank in O.A.No.84 of 2008 before the Debt Recovery Tribunal, Visakhapatnam, to which the first respondent and the appellant are parties. It is the contention of the appellant and the second respondent that the appellant was made a guarantor to the OD facility availed from ING Vysya Bank Limited, Arundelpet Branch, Guntur to which the father of the first respondent is also a party and in such context, he was also made to pay huge amount, to settle the claim of ING Vysya Bank Limited. The reasons assigned above in relation to distinct identity of these transactions are equally applicable to this incidence.

51. The appellant and the second respondent have also claimed that Rs.12,50,000/- was paid on various dates in cash to the first respondent and by means of cheques to M/s.Vijaya Lakshmi Cotton Mills of the first respondent. Both the Courts below have considered this defence of partial discharge. However, Sri Pramod, learned counsel for the appellant contended that it is not an instance of partial discharge relating to Ex.A1 and other promissory notes and both the Courts misdirected themselves in construing likewise.

52. This contention has to be rejected for the reason that in the written statement a specific plea is raised in that context in relation to the amounts payable to P.W.1 and his associates concerned. Learned appellate

Judge specifically considered this aspect referring to the payment made by the appellant for Rs.12,50,000/- to M/s.Vijaya Krishna Cotton Traders in cash and through Demand drafts. Finding very nature of evidence brought out through the account extracts, learned appellate Judge also held that this plea of partial discharge of the appellant and the second respondent is totally inconsistent with the evidence adduced by them. Learned trial Judge also recorded appropriate reasons referring to Ex.A3, which is the account extract of M/s.Vijaya Lakshmi Cotton Mills, which disclosed that the appellant had borrowed Rs.25.00 lakhs from the said firm and that part payments to a tune of Rs.12,50,000/- were made to this firm.

53. One of the contentions of Sri Pramod, learned counsel for the appellant in this respect is that there is no pleading in the plaint explaining this transaction nor any rejoinder was filed by the first respondent. When it is a part of evidence adduced by the first respondent when it is considered along with other statements of accounts produced by the appellant and the second respondent, as rightly discussed by learned appellate Judge, no credence be attached to this plea of partial discharge.

54. Learned appellate Judge specifically discussed this plea of partial discharge in point No.2 and held that there is no direct or indirect connection between payments covered by Ex.B33 to Ex.B36 and towards discharge of the debt due under Ex.A1.

55. These findings recorded by learned appellate Judge confirming the decree and judgment of the trial Court are unassailable. Meticulous care was taken in considering all the facts based on the oral and documentary proof adduced by both the parties, in right perspective.

56. Therefore, in this backdrop, when the evidence expected to be let in by the appellant and the second respondent is not meeting the standards set by the rulings of Hon’ble Supreme Court referred to above, in the presence of the admitted situation relating to Ex.A1, the conclusion to draw is that the presumption under Section 118 of Negotiable Instruments Act is all pervasive in its effect, in this case. The testimony of P.W.1 is thus supported by this presumption. Thus, sufficient proof is offered at the trial that under Ex.A1 the appellant and the second respondent have borrowed from the first respondent agreeing to such terms stated therein and made themselves liable.

57. Thus, both the Courts below rightly rejected such defence and are justified in decreeing the suit.

58. In the backdrop of consideration of this fact situation, the contentions advanced on behalf of the appellant, invoking jurisdiction of this Court under Section 100 CPC cannot stand. This Court is satisfied that this is not an instance where application of Section 100 CPC is invited. There are no such questions, much less substantial questions of law sought to be raised by the appellant in this second appeal to consider and determine. Consequently, the second appeal has to be dismissed.

59. In the result, the second appeal is dismissed with costs confirming the decree and judgment of the appellate Court, which in turn confirmed the decree and judgment of the trial Court. All pending petitions stand closed. Interim orders if any stand vacated.

Dt: 31.12.2021 Rns

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M. VENKATA RAMANA, J

Rns

HON’BLE SRI JUSTICE M. VENKATA RAMANA

SECOND APPEAL No.452 OF 2011

Date:31.12.2021