HON’BLE SRI JUSTICE R.KANTHA RAO A.S.NO.595 of 1992 DATED: 02.02.2010 BETWEEN; Nuthi Venkateswarlu .. Appellant And Sriram Raghavarao and others .. Respondents HON’BLE SRI JUSTICE R.KANTHA RAO A.S.NO.595 of 1992 JUDGMENT:- Heard the learned counsel appearing for the appellant. None appears for the respondents, though the matter was posted under the caption “for dismissal”. 2. This appeal is filed challenging the decree and judgment dated 05.03.1987 passed in O.S.No.79 of 1982 on the file of the Subordinate Judge, Bapatla. 3. The third defendant in the suit is the appellant herein. The respondent No.1/plaintiff instituted a suit against the defendants for a sum of Rs.14,600/- basing on the promissory note and the suit was decreed with costs. Aggrieved by the same, the third defendant filed this appeal. 4. For the sake of convenience, the parties will be referred as ‘the plaintiff and the defendants’. 5. The suit was instituted by the plaintiff alleging that the first defendant-firm became liable to pay a sum of Rs..20,000/- to the plaintiff by 11.09.1976 and thereafter, the defendants paid an amount of Rs.5,400/- to the plaintiff on 01.08.1979 and executed suit promissory note agreeing to pay the balance amount of Rs.14,600/- with interest at the rate of 24% per annum on demand to the plaintiff. 6. The defendants 1, 2 and 4 have not denied the execution of the promissory note. They admitted their signatures on the promissory note and the second defendant in his written statement as well as in his evidence admitted the suit promissory note – Ex.A.1 and that the first defendant-firm was carrying on business by the date of execution of Ex.A.1. He also further stated that the firm carried out the business till 1980. The defendants 2 and 4 only contended that the amount due was not Rs.14,600/-, but a lesser amount. However, they failed to substantiate the said aspect regarding which the learned trial Court gave a categorical finding that the third defendant in particular having admitted signing Ex.A.1-promissory note and it’s execution thereof and also contended that at the instance of the other defendants, he signed the promissory note believing their version that they borrowed an amount of Rs.14,600/- from the plaintiff for the purpose of the firm, but no amount was paid at the time of execution of the promissory note. It is his version that the defendants 2 and 4 stated to him that they will receive the amount from the plaintiff at his house. However, according to the first defendant, subsequently, they demanded the defendants 2 and 4 informing that they did not receive the amount from the plaintiff and the promissory note was taken back and it was torn away. The third defendant submitted that on believing the version of the defendants 2 and 4, he kept quiet and subsequently to his astonishment, the plaintiff filed the suit basing on the promissory note. 7. The third defendant therefore, contended that though the promissory note was executed by the defendants, it is not supported by consideration and no decree can be passed basing on the said promissory note. He also further contended that he is a small farmer, having only Ac.4.00 of dry land and as such, the debt due under Ex.A.1 promissory note is deemed to have been discharged by virtue of the provisions of Act 7 of 1977. 8. Basing on the pleadings, the trial Court settled the following issues and additional issue: 1. Whether the promissory note is fully supported by consideration as pleaded by the defendants? 2. Whether the suit debt has to be scaled down according to the provisions of Act IV of 1938? 3. To what relief? Additional issue: Whether the defendants are entitled to the benefits of A.P. Act 7 of 1977? 9. During the course of trial before the learned Court below, the plaintiff himself was examined as PW.1 and got marked Exs.A.1 to A10. DW1 to DW4 were examined and Exs.B.1 to B.4 were marked on behalf of the defendants. On consideration of the entire oral and documentary evidence on record, the Court below decreed the suit with costs. 10. Now the point for determination in this appeal is whether there are any valid grounds to interfere with the findings arrived at by the learned Court below. 11. The main contention of the third defendant is that the suit promissory note is not supported by consideration and no amount was paid to the defendants on the date of execution of Ex.A.1- promissory note. It is specifically stated in Ex.A.1 that the defendants previously borrowed an amount of Rs.20,000/- from the plaintiff and on 11.09.1976 an amount of Rs.20,000/- became due by the defendants 1 to 4 to the plaintiff and on the date of execution of the promissory note a sum of R.5,400/- was paid to the plaintiff and for the remaining amount of Rs.14,600/- Ex.A.1- promissory note was executed. Since the third defendant did not dispute the execution of Ex.A.1-promissory note, a presumption under Section 118 of the Negotiable Instruments Act to the effect that Ex.A.1 promissory note is supported by consideration can be raised in favour of the plaintiff unless and until contrary is proved by the third defendant. But the third defendant failed to discharge his burden and further the learned trial Court recorded a positive finding basing on the entries in Ex.A.2- ledger and Ex.A.3-day book and the contents of Ex.A.10 counterfoils of the cheques that the amount was paid by the plaintiff under Ex.A.1 promissory note. The fourth defendant in his evidence admitted that he and the other defendants borrowed money from the plaintiff on behalf of the first defendant-firm and executed the promissory note. The second defendant also stated in his evidence that he scribed the promissory note Ex.A.1 and that the first defendant-firm was doing business by the date of Ex.A.1 promissory note. According to him, the firm carried on business till 1980. Therefore, in this case, the third defendant did not discharge his burden and failed to establish that the suit promissory note is not supported by consideration. 12. On the other hand, the plaintiff could be able to establish by positive evidence that the defendants having borrowed the amount under the suit promissory executed the same in his favour. Therefore, the finding arrived at by the trial Court on this aspect viz. that the suit promissory note is supported by consideration does not require any interference in this appeal. 13. The other contention raised by the third defendant is that he is a small farmer having Ac.4.00 of dry land and he is entitled for the benefit under the Act 7 of 1977. It is admitted by the second defendant in his evidence that the defendants invested about Rs.1,00,000/- and the annual turnover of the defendant firm is about Rs.4 lakhs. Admittedly the amount was borrowed on behalf of the defendant No.1 firm, which was carrying on business in fertilizers and pesticides. To claim the benefit under the Act 7 of 1977 the defendant has to establish that he is a small farmer and that his income other than from agriculture is less than Rs.1200/- per annum. The defendants in this case failed to produce the accounts, which reflected the transactions of the defendant No.1 firm on behalf of which the amount was borrowed under suit promissory note. By non-production of accounts, an adverse inference against all the defendants including the third defendant can be drawn. Further, DW2- Village Karanam of Pedanandipadu stated in his evidence that the first defendant firm is a leading firm in the village and it stopped business only in the year 1985. If that is so, the amount being borrowed for the purpose of the business in the firm, the third defendant who is one of the partners to the firm cannot claim the benefit under the provisions of the Act 7 of 1977 and his version that the suit debt said to have been discharged, has no basis at all. Therefore, this point is also answered against the third defendant. 14. As regards the interest, though according to Ex.A.1, the defendants undertook to pay interest at the rate of 24% per annum, the learned trial Court decreed the suit granting interest at 12% per annum from the date of suit till the date of realization and the principal amount of Rs.14,600/- which is strictly in accordance with law and therefore, the interest is not liable to be scaled down any further. Thus, this point is also answered against the third defendant. 15. In the result, the decree and judgment passed by the trial Court is confirmed and the appeal filed by the third defendant/appellant is dismissed with costs. __________________ R. KANTHA RAO,J Date: 02.02.2010 kvrm