IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE TWENTY FIRST DAY OF APRIL TWO THOUSAND AND TEN PRESENT: THE HON'BLE SRI JUSTICE P.S. NARAYANA SECOND APPEAL No.1458 of 2007 Between: Anne Venkata Subba Rao ..... APPELLANT AND Smt.Pidikidi Kanaka Ratnam ..... RESPONDENT JUDGMENT: Heard Sri O. Manohar Reddy, learned counsel representing the appellant and Sri V.S.R. Anajaneyulu, learned counsel representing the respondent. 2. This court on 07-12-2007 made the following order: “Having regard to the substantial question of law arising as to whether the presumption under Section 118 of the Negotiable Instruments Act can be extended even to cases of no evidence on behalf of the plaintiff, Admit.” 3. In SAMP No.3193 of 2007 interim stay and notice had been ordered. 4. Sri O. Manohar Reddy, learned counsel representing the appellant had taken this Court through the findings recorded by the Court of first instance and also the appellate Court and would maintain that the evidence available on record had not appreciated in proper perspective and hence, the Second Appeal to be allowed. 5. Per contra Sri V.S.R. Anjaneyulu, learned counsel representing the respondent – plaintiff would maintain that in the light of the concurrent findings recorded by both the Courts below it is not a fit matter to be interfered with. 6. The parties hereinafter would be referred to as plaintiff and defendant as shown in O.S.No.839 of 2001 on the file of the Principal Junior Civil Judge, Vijayawada. 7. The suit was filed by the plaintiff for recovery of Rs.34067/- which includes interest and principal on the strength of a promissory note, dated 01-04-1995 which was marked as Ex.A-1. The case of the plaintiff is that the defendant borrowed an amount of Rs.20,000/- on 01-04-1995 from P. Narasimha Rao for purchasing land promising to repay the same with interest at 12% per annum with yearly rest and executed a promissory note to that effect and delivered the said promissory note to the said P. Narasimha Rao. Further it is the case of the plaintiff that the defendant paid a sum of Rs.300/- on 26-03-1998 to the said P. Narasimha Rao as part payment and made an endorsement. It is also the case of the plaintiff that the said P. Narasimha Rao transferred the suit promissory note for consideration to the plaintiff on 20-03-1999 at Vijayawada and made a transfer endorsement. The plaintiff requested the defendant for payment of amount and the defendant had been postponing the payment. The plaintiff also issued a notice on 21-03-2001 to the defendant. The defendant had not chosen to discharge the debt and hence, the suit. The plaintiff had taken further stand that the defendant is not entitled to the benefits of Act 4/38 and 7/77. 8. The defendant filed a written statement stating that the plaintiff’s transferor, namely Punukulla Narasimharao had thought of this litigation. It is also stated that she never borrowed the amount on the suit promissory note either from the plaintiff’s transferor or anybody else and the suit promissory note is a fabricated one and there was no passing of consideration. However, it was pleaded that it is true that the plaintiff got issued notice to defendant on 21-03-2001 and on receiving the said notice the defendant approached the plaintiff and other persons and questioned them as to the issuance of the notice. The plaintiff and the other persons represented that it was only a formal notice and the plaintiff was not interested to file any suit whatsoever in view of the close relationship with the plaintiff he had with her being his sister. Thus, those persons prevented the defendant from issuing any reply whatsoever. Further it is stated that one Kakarla Sankara Rao did business under the name and style of Kumar Enterprises dealing in Iron and Hardware business at Patamata in the year 1993 and due to lack of huge capital, he sought the help of this defendant and his sister, who is the plaintiff herein. Thus, the said K. Sankara Rao induced this defendant and plaintiff to join as partners in the said firm and made representations that if the plaintiff and defendant invest about Rs.50,000/- each, there is likelihood of good profits, ranging from Rs.50000/- to one lakh p.a. and that after one year the said profits would be denied amongst the partners. Thus, he induced this defendant and the plaintiff to join as partners by investing Rs.50000/- by this defendant and also the plaintiff invested Rs.50000/- believing the sweet words of the said K. Sankararao and thus did business from 1993 till 1995 March. During the period of business this defendant and the plaintiff assisted in the business activities without any remuneration. As days rolled on, when the defendant and the plaintiff asked the said K. Sankararao to settle the account in the said partnership business, he pleaded that he is not in a position to settle the account and such settlement will be made soon after verifying the accounts of the firm with the help and aid of the mediators. While so during March, 1995 the plaintiff started harassing this defendant on the ground that she joined as the partner in the said firm with his active inducement that this defendant is mainly responsible for making good the repayment of the capital amount and the profit derived till then and thus she has been giving lot of pressure on this defendant for payment of the amount invested by her. Then the plaintiff approached the plaintiff’s transferor namely P. Narasimharao and M. Vishnuvardhana Rao who are the relatives of the plaintiff and this defendant for settlement in the same month. At the time of mediation before the said persons, the plaintiff transferor (mediator) and Vishnuvardhana Rao forcibly and coercively obtained the signatures of this defendant on several blank unfilled pro-note forms under the guise of settlement, till the accounts are finalized by the said firm, to serve as security for the settlement. Thus, being helpless at that point of time the defendant signed those pro-note forms and also on the reverse of the suit pro-notes without any consideration and in collusion with plaintiff transferor (the mediator) and Vishnuvardhanarao played fraud and transferred the above suit pro-note and other blank pro-notes in favour of the plaintiff. Thus, the plaintiff the said Vishnuvardhanarao and P. Narasimharao played fraud and ultimately succeeded in their attempts and enforced the alleged suit pro-note and other pro-notes as if this defendant borrowed the amounts covered under the suit pro-note and other pro-notes which were also enforced in other suit proceedings and are pending before this Court. Thus, the suit pro-note is not legally enforceable and the same is fabricated with the active collusion by the plaintiff and her active supporters mentioned above. 9. Further it is stated that the alleged transfer endorsement was made by the scribe namely Pidikiti Haran Mukharjee who is no other than the husband of plaintiff. The endorsement clearly go to show that such endorsement was made only for collecting the suit amount but not against payment of the alleged pro-note debt. This itself speaks volumes on the part of the plaintiff and her supporters in getting the suit pronote and other promotes fabricated and pressed them into service under the present suit and also other suits pending before this Court. Thus, this defendant is not liable to pay any amount much less the amount claimed in the suit or any part thereof. This defendant never made any payment endorsement at any point of time. Thus, the suit pro- note is barred by limitation also. 10. It is also stated that the plaintiff’s transferor has no capacity to lend any amount whatsoever and further it is stated that the suit is bad for non-joinder of necessary parties and there is no cause of action. 11. On the strength of the pleadings before the Court of first instance the following issues were settled: 1. Whether the suit pro-note is supported by consideration ? 2. Whether the plaintiff is holder of suit pro-note in due course ? 3. Whether the plaintiff is entitled to recover suit sum ? and 4. To what relief ? 12. Before the trial Court the evidence of PWs-1 and 2 and the evidence of DWs.1 to 3 had been recorded. Ex.A-1 promissory note, dated 01-04-1995, Ex.A-2 part payment endorsement dated 26-03-1998, Ex.A-3 transfer endorsement dated 20-03-1999, Ex.A- 4 office copy of legal notice dated 21-03-2001 and Ex.A-5 postal receipt had been marked. The trial Court on appreciation of evidence available on record ultimately came to the conclusion that the plaintiff is entitled to the decree as prayed for with costs and interest at 12% per annum on the principal amount of Rs.20000/- from the date of suit till the date of decree with future interest at 6% per annum from the date of decree till the date of realization. 13. Aggrieved by the same, the matter was carried by way of appeal No.393 of 2005 on the file of the VIII Additional District and Sessions Judge (Fast Track Court), Vijayawada. The appellate Court having referred to the respective pleadings of the parties and the issues settled by the trial Court and further having referred to the grounds of appeal specifically raised in the said first appeal formulated the following point for consideration: Whether the pro-note is supported by consideration and whether plaintiff is holder of suit pro-note in due course and whether the plaintiff is entitled to recover the suit sum and whether is there any error in the judgment and decree of the trial court and if so to what relief ? 14. The appellate Court recorded reasons at paragraph Nos.10 to 12 and ultimately came to the conclusion that the appeal is devoid of merits and accordingly, dismissed the same with costs. 15. Aggrieved by the same, the Second Appeal had been preferred. Section 118 of the Negotiable Instruments Act reads as hereunder: “118.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 a negotiable instrument was made before its maturity; (e) as to order of indorsements – that the 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 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.” 16. The substantial questions of law, on the strength of which the Second Appeal had been admitted, also had been referred to above. It is not a case where the plaintiff had not let in any evidence at all. The evidence of PW-1 well supported by the evidence of PW-2 is available on record. Concurrent findings had been recorded that Exs.A-1 and A-2 had been duly proved. Further transfer endorsement-Ex.A-3, dated 20-03-1999 also had been proved. It is also pertinent to note that no reply notice had been given. No doubt, DW-1 came up with a version that because of certain circumstances he had not chosen to give reply. It is needles to say that predominantly it is a fact. Inasmuch as both the Courts below appreciated the evidence available on record, recorded concurrent findings especially in the light of the defence taken by the defendant, in the light of the evidence available on record and even after the scope and ambit of Section 118 of the Negotiable Instruments Act to be carefully examined, since the findings do not suffer from any illegality whatsoever, the appeal shall stand dismissed. 17. Accordingly, the Second Appeal is dismissed with costs. ___________________ P.S. NARAYANA, J April 21, 2010. Pn THE HON'BLE SRI JUSTICE P.S. NARAYANA SECOND APPEAL No.1458 of 2007 April 21, 2010