THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO APPEAL SUIT No. 1769 of 1989 and CROSS OBJECTIONS (SR) No. 72633 of 1989 COMMON JUDGMENT: The plaintiff in O.S.No.24 of 1987 on the file of the Subordinate Judge, Bobbili, is the appellant herein. The suit was one filed for recovery of Rs.3,29,136-27 ps. The substance of the allegations in the plaint, which was amended from time to time and also the additional written statement filed by the parties, go to show that the plaintiff has got financing for production of the motion pictures and defendant No.1 is a registered firm for which the defendants 2 and 3 are the partners. A sum of Rs.2,50,000/- was agreed to be provided as finance and an agreement was entered into on 06.01.1979 at Bobbili for production of a picture by name Bhuvaneswari. The amount has to be paid with interest at 36% per annum and on 06.01.1979 the defendant No.4 executed a guarantee bond at Bobbili for the loan advanced to defendant No.1. Subsequently, the film was released by Sri Films and defendant No.1 authorised them to pay overflow collections to the plaintiff and 10% of royalty from the net realization for a period of five years. Subsequently on 18.09.1979 a revised agreement was entered into at Bobbili about the payment of the moneys. The plaintiff by itself or through its agencies have paid a total sum of Rs.2,80,000/- from time to time and the defendants 2 and 3 executed promissory notes on behalf of defendant No.1. Eastern Finance and Investment Corporation has advanced Rs.50,000/- and Vijaya Finances has advanced Rs.30,000/- and the suit sum was due. The defendants are not agriculturists and, therefore, the debt is not liable to be scaled down. The 2nd defendant filed written statement contending that the Court at Bobbili has no territorial jurisdiction. The plaintiff has taken the title deeds of the defendants 2 and 3 and obtained the signatures on blank papers and having accepted to receive the overflow amounts from Sri Films under the agreement dated 18.09.1979, the suit is not maintainable by virtue of the novation of the contract. Sri Films is a necessary and proper party. The interest claimed is excessive. Whenever payments were made advance interest was deducted. The accounts maintained by the plaintiff are not proper. The defendants are agriculturists and the amount has to be scaled down. The defendants disputed about going over to Bobbili and executing the documents. The defendant No.4 has also specifically stated that she did not execute the guarantee deed. On the basis of the above pleadings, several issues have been framed for trial. On behalf of the plaintiff, P.W.1 was examined and marked Exs.A- 1 to A-42 and on behalf of the defendants, D.Ws.1 and 2 were examined and marked Exs.B-1 to B-16. After considering the evidence on record, the lower Court found that the Court at Bobbili has got territorial jurisdiction, the interest claimed is excessive and the defendants are agriculturists. There is no proof that defendant No.1-firm is a registered one. The defendant No.4 is not a signatory to the second agreement and consequently it held that though a mortgage was created the suit for recovery of the money by itself is valid and decreed the suit for a sum of Rs.1,49,697.27 paise, which was the actual amount paid under the promissory note against defendants 2 and 3, and dismissed the suit against defendants 1 and 4. Challenging the above decree and refusal to grant the suit amount and also the liability of the defendants 1 and 4, the plaintiff has preferred the appeal. Cross objections have been preferred by the defendants 2 and 3 on the finding of the Court below about the validity of the transaction and also the jurisdiction of the Court at Bobbili to decide the matter. The points, that arise for consideration, are 1) Whether the plaintiff is entitled for the total suit amount against all the defendants? 2) Whether the suit is not maintainable at Bobbili for the reasons claimed by the defendants? POINT Nos.1 and 2: In this case, evidently the execution of the agreement Ex.A-2 on 06.01.1979 and also the subsequent agreement Ex.A-17 on 18.09.1979 are not in dispute. It is also not in dispute that the agreement Ex.A-17 was signed by the defendants 2 and 3 alone, whereas Ex.A-2 was signed on behalf of defendants 1 to 3. It is also not in dispute that under Ex.A-17, defendant No.4 has not signed though she was a guarantor for the first agreement Ex.A-2 and she signed Ex.A-3. The lower Court has taken the view that Ex.A-17 has created new obligation and, therefore, whatever undertaking given by defendant No.4 under Ex.A-2 cannot be taken into consideration and exonerated the liability of Ex.A-2. Therefore, in view of the above view taken by the Court below, the question is whether Ex.A-17 is a new contract or whether it is only a continuation for the rights of the parties as originally created under the agreement Ex.A-2. For this Ex.A-17 itself answers and which shows that it is a revised agreement entered into between the parties and as per the agreement Ex.A-2 dated 06.01.1979 the producers were unable to repay the amounts advanced by the financiers and as the film has to be released the conditions were set out and fresh agreement has been entered into. It is not in dispute that it does not show that this agreement is a continuation of Ex.A-2. The terms and conditions accepted under Ex.A-2 are quite different from the terms and conditions mentioned in Ex.A-17. Evidently, as the agreement Ex.A-2 has become unworkable, necessary arrangements have to be made for discharge of the obligations and repayment of the money. When the terms in Ex.A-17 shows that the payment shall be made by the distributor and these terms were not there in Ex.A-2, it is difficult to accept the contention of the plaintiff that the agreement Ex.A-17 is continuation of the agreement Ex.A-2. Ex.A-2 agreement has been superseded and defendant No.4 has not subscribed her signature as a guarantor and there being no other undertaking given by defendant No.4, the lower Court has rightly found that there is no liability for defendant No.4. So far as the amounts due to the plaintiff are concerned, though the agreements Exs.A-2 and A-17 stipulate the payment of the loan and Ex.A-2 refers to advancement of a loan of Rs.2,50,000/- and Ex.A-17 refers to the amount being due as Rs.3,23,213/-. It is necessary for the plaintiff to show as to how this amount has been arrived at. Evidently, except the payment admittedly paid under Exs.A-19 to A-23 to a tune of Rs.50,000/- each and a sum of Rs.30,000/- under Ex.A-25, there are no other payments. The lower Court has taken into consideration the fact that when these payments were made and pronotes were obtained under the above documents, the interest was deducted in the beginning itself and the total sum of these documents Exs.A-19 to A-23 and A-25 comes to Rs.2,80,000/- and from this interest was already deducted. Therefore, taking this amount as a principal amount that was advanced to the defendant, the lower Court has granted the decree and the interest, which was evidently, calculated for arriving at the figure under Ex.A-17 seems to be higher and as the lower Court has scaled down the same, the plaintiffs will be entitled to the decree for the principal amount that was actually advanced. It is not in dispute that the amounts were received by the defendants, as can be seen from the evidence of D.W.1, under these documents though not directly from the defendant but from the nominees of the defendant. In fact, even the evidence of D.W.1, who is the 2nd defendant clearly goes to show the receipt of these amounts and the chief-examination shows that the plaintiff was sending the drafts for a sum of Rs.45,000/- on each occasion. He also admits the documents in Exs.A-3, A-23 and A-25. Therefore, from the above evidence on record what are established are only the amounts paid under Exs.A-19 to A-23 and A-25. The admission of P.W.1 clearly goes to show that the moneys worth paid by the plaintiff. In fact, the evidence on record clearly goes to show that the amounts were paid either by the plaintiff or through its agents. Therefore, it cannot be said that the agreements are not supported by consideration. Evidently, the suit claim for Rs.3,23,213/- was made by calculating the interest at 36%, which the lower Court found is not payable and consequently the decree of the lower Court for the amounts due under the promissory note with interest thereunder cannot be valid and the plaintiff cannot claim the amount as claimed in the suit. It was also pleaded by the plaintiff that it is in the nature of a commercial transaction and subsequent interest at 6% per annum from the date of the suit to the date of realization is not proper and the contractual rate of interest should have been paid. When once the provisions of Act No.4 of 1938 are applied the interest of commercial transaction has no application. So far as the cross objections of the defendants in the appeal are concerned, merely because the agreement was entered into that the amount should be paid by Sri Films, the liability of the defendant is not excluded. It is only an arrangement and the principal liability is with the defendants. So far as the jurisdiction of the Court at Bobbili is concerned, it is to be noted that the agreements were entered into between the parties giving the description of the plaintiff at Bobbili and the promissory notes Exs.A-19 to A-22 clearly go to show that they were executed in favour of the plaintiff, which has got its office at Bobbili. In fact, the evidence of D.W.1 does not improbablise the transaction or part of the transactions being entered into at Bobbili. Merely because an agent of the plaintiff was said to have been involved at a later stage, the original jurisdiction of the plaintiff, where the office is situated and where part of the transactions have taken place, cannot be ignored. In fact, the lower Court has considered this aspect and P.W.1, who is manager of the plaintiff company, has specifically stated that except Exs.A-23 and A-25, other documents were executed at Bobbili. The claim of defendant No.4 that she never came to Bobbili to execute Ex.A-3 has no relevance since her liability was exonerated and she did not sign on Ex.A-17. The defendants have no evidence on record to show that the documents were executed at Madras or Chilakalooripet as contended. It is only the interested evidence of D.Ws.1 and 2. It is difficult to believe that when the office of the plaintiff is at Bobbili, they would have gone and found the debtors and entered into the agreement. The probability is that the debtor has come to the place of the creditor and borrowed the money and entered into the agreement, which is a natural circumstance to be taken into consideration. Therefore, taking any view of the matter, there are no merits either in the appeal or in the cross objections. Therefore, both the Appeal Suit and the Cross Objections (SR) are dismissed. Each party to bear their own costs. ________________________ N.R.L.NAGESWARA RAO, J DATE: 14-10-2011 MR THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO APPEAL SUIT No. 1769 of 1989 and CROSS OBJECTIONS (SR) No. 72633 of 1989 DATE: 14-10-2011 MR