THE HON’BLE SRI JUSTICE K.C.BHANU APPEAL SUIT NO.81 OF 1993 DATED: 22-10- 2010. Between Kolluru Basava Punnamma … Appellant-Defendant And Veeramachaneni Radhakrishna Murthy …Respondent-Plaintiff THE HON'BLE SRI JUSTICE K.C. BHANU APPEAL SUIT NO.81 OF 1993 JUDGMENT: This appeal is directed against the judgment and decree, dated 20-08-1990, in O.S.No.76 of 1988 on the file of the Subordinate Judge, Tenali, whereunder and whereby the suit filed for recovery of money was decreed. 2. Appellant herein is the defendant and the respondent herein is the plaintiff in the suit. 3. The averments of the plaint in brief are as follows: The defendant borrowed a sum of Rs.20,000/- from one Veeramanchaneni Janakamma, wife of plaintiff for making repairs to her non-residential building on 02-04-1985 and executed the suit pronote in favour of the original payee agreeing to repay the same with interest at 24% per annum. The defendant has not paid any amount to the original payee towards the suit pronote debt. The original payee transferred the suit pronote in favour of the plaintiff on 02-03-1988 for collection at Tenali. After transfer of the suit pronote, the plaintiff also demanded the defendant to pay the amount due under the pronote, but the defendant failed to pay the same. As the defendant is not an agriculturist and her main source of living is business, Act IV of 1938 has no application. Hence the suit. 4. The defendant filed written statement denying the receipt of consideration under the suit pronote and she also does not admit the transfer of the pronote in favour of plaintiff. It is further stated that the plaintiff, his wife, one V.Subba Rao and L.Pitchi Reddy entered into partnership to run a hotel by name Durga A/c in the building belonging to the defendant situated in Market area of Tenali and L.Pitchi Reddy was the managing partner of the hotel. The said Pitchi Reddy and his partner agreed to take the said building belonging to the defendant for lease from 22-02-1985 to 30-06-1990 on an annual rent of Rs.10,000/- payable in advance in the first month and they agreed to pay to the defendant an amount of Rs.1,10,000/- as deposit refundable after expiry of lease period without interest. They paid Rs.50,000/- on 28-02-1985 and the balance of Rs.60,000/- on 26-03-1985 and further paid Rs.13,500/- towards rent of one year four months and on 26-03-1985, lease agreement was executed. The plaintiff stipulated that as they were paying Rs.1,10,000/- as deposit and as the amount payable as rent for the remaining lease period of four years was only Rs.40,000/-, they should have further security for the balance of amount of Rs.70,000/- and the defendant shall execute pronotes for the said amount. As per the advice of the elders and as per the demand of the plaintiff, the defendant was obliged to execute one pronote with past date for Rs.20,000/- in the name of sister of plaintiff and another pronote for Rs.20,000/- in the name of wife of plaintiff and third pronote for Rs.30,000/- in the name of his son Raja Rao. Subsequently the lessees did not pay the yearly advances payable. Having come to know that the lessees sublet the building, the defendant objected for the same and demanded them either to run the hotel for themselves by paying rents regularly or to vacate the building. The plaintiff did not agree for the same. He offered to purchase the said building for which the defendant did not agree. Therefore, the plaintiff bore grudge against the defendant. Ultimately on 14-12-1987 the lessees vacated the building. After settlement of accounts, they took back the amount due to them and at that time, plaintiff was not present. Due to inadvertence and forgetfulness, the defendant did not take steps for return of the said three promotes. Taking advantage of the custody of the pronote, the plaintiff got the suit filed with malicious intention to have wrongful gain. He also filed another suit O.S.No.34 of 1988 basing on the other pronote obtained in the name of his wife’s sister. The suit pronote and other pronotes are devoid of consideration and it is liable to be dismissed with costs. The defendant had no necessity to borrow Rs.20,000/- under the suit pronote. The construction and finishing work of her non-residential building was completed before 14-02-1985. The original payee is stranger to the defendant and she has no capacity to lend the suit amount. The defendant is an agriculturist and the debt is liable to be scaled down as per the provisions of Act IV of 1938 and hence, she prays to dismiss the suit. 5. Basing on the above pleadings, the following issues were settled by the trial Court: 1. Whether the plaintiff is entitled for recovery of the suit amount? 2. Whether the suit pronote is not supported by consideration? 3. Whether the defendant is an agriculturist, if so, the suit debt is liable to be scaled down in view of Act IV of 1938? 4. To what relief? 6. On behalf of the plaintiff, P.Ws. 1 and 2 were examined and got marked Exs.A1 to A4. On behalf of the defendants, D.Ws.1 and 2 were examined and no documents were marked. 7. The trial Court after consideration of oral and documentary evidence on record, decreed the suit. Aggrieved thereby, the defendant filed this appeal. 8. The learned counsel appearing for the appellant- defendant contended that there is no evidence to show that the suit pronote is supported by consideration, that in view of the fact that the defendant is an agriculturist, the interest has to be scaled down and hence, he prays to set aside the judgment of the trial Court. 9. None appears for the respondent. Perused the evidence. 10. Now the point for consideration is whether the findings of the trial Court are correct and whether the suit pronote is supported by consideration? 11. The suit is based upon the promissory note. The plaintiff himself was examined as P.W.1. P.W.2 is no other than the wife of P.W.1 and the original payee. The case of the plaintiff is that the defendant borrowed a sum of Rs.20,000/- from P.W.2. on 02-04-1985 and executed Ex.A1-suit promissory note in favour of P.W.2 agreeing to repay the same with interest at 24% p.a. In spite of demands, the defendant failed to pay the amount. Thereafter, P.W.2 transferred the promissory note in favour of the plaintiff under Ex.A2-transfer endorsement. There cannot be any dispute that when the suit is based upon promissory note, the initial burden is on the plaintiff to establish that it is supported by consideration. The evidence of P.Ws. 1 and 2 would go to show that the defendant after receipt of consideration, executed Ex.A1 promissory note. Therefore, the initial burden placed on the plaintiff has been discharged. Nothing has been elicited in the cross-examination of P.Ws. 1 and 2 to discredit their testimony. Once it is established that the suit promissory note is prima facie supported by consideration, the presumption under Section 118 of the Negotiable Instruments Act, 1881 would attract, which reads thus: “118. Presumption as to negotiable instruments:- Unless 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 a negotiable instrument was made before its maturity; (e) as to order of indorsements- that an indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon; (f) as to stamps- 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 mean f an offence or fraud or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him. So, from the above provision, it is clear that when there is a admission with regard to execution of promissory note, the presumption is that it is supported by consideration. The burden placed on the defendant has not been discharged to show that the suit promissory note was not supported by consideration. Therefore, the trial Court rightly found that Ex.A1 was executed by the defendant and she received the consideration under the same. 12. Further, it is contended that as the defendant is an agriculturist, she is entitled for scaling down of interest. For that, it must be shown that she is an agriculturist and entitled for scaling down of interest under Act IV of 1938. Though D.W.1 stated that she is owning Ac.1.50 cents of land, but she is owning a big building near Market area at Tenali and she is getting more than Rs.10,000/- per annum towards rent. From the other four shops, she is getting Rs.17,300/- per annum. The agriculturist is defined under the Act, which says that the principal livelihood of a person is from agriculture only. The defendant is getting income more than Rs.20,000/- per annum by way of rents from the buildings. Therefore, the contention of the defendant that she is an agriculturist and the interest has to be scaled down cannot be accepted. The trial Court after elaborate consideration of evidence on record, rightly decreed the suit and absolutely, there are no grounds to interfere with the same. 13. Accordingly, the Appeal suit is dismissed. No order as to costs. ________________ K.C. BHANU, J DATED:22.10.2010 Hsd