HON’BLE SRI JUSTICE B. PRAKASH RAO & HON’BLE SRI JUSTICE P. DURGA PRASAD A.S. No.492 of 2006 Date: 28.02.2011 Between: Gottumukkala Nageswara Rao ….Appellant. And: Sunkara Srinivasu …..Respondent. HON’BLE SRI JUSTICE B. PRAKASH RAO & HON’BLE SRI JUSTICE P. DURGA PRASAD A.S. No.492 of 2006 JUDGMENT: (per Hon’ble Sri Justice P. Durga Prasad) This is an appeal arising out of the judgment and decree passed in O.S.No.81 of 2003 by the VIII Additional District and Sessions Judge (Fast Track Court), Vijayawada on 05.06.2006. The appellant is the defendant in the above said suit and the respondent herein is the plaintiff and he has filed the above said suit for recovery of Rs.10,16,000/- basing on 7 promissory notes said to have been executed by the defendant on 09.09.2001. According to the plaintiff, the defendant has borrowed a sum of Rs.7,00,000/- from him on 9.9.2001 for his mango business and executed 7 promissory notes each for Rs.1,00,000/- promising to repay the same to the plaintiff on his demand or on his order whenever demanded with interest at 24% per annum. Subsequently inspite of several demands, the defendant did not pay the said amount. The plaintiff is residing in America and he has executed a General Power of Attorney in favour of his father Sunkara Koteswara Rao. Hence, he has filed the present suit for recovery of the said money. The defendant has opposed the said suit by filing the written statement stating that they never borrowed any amount much less Rs.7,00,000/- from the plaintiff on 9.9.2001 or at any point of time earlier thereto. The plaintiff has not issued any notice to the defendant prior to filing of the suit demanding the payment of the amount due under the said promissory notes. According to him, the person behind the present litigation is the father of the plaintiff who is G.P. Holder and the defendant and seven other mango growers including the plaintiff’s father Sunkara Koteswara Rao originally constituted themselves into an association in the name of Rama Sai Mango Growers Association in or about the year 1992 for the purpose of marketing their produce as well as marketing the produce of other farmers for their own mutual benefit and also for the benefit of farmers. The said association was continued till 1999. During the said period two of the members left in 1996. thereafter three more members left the association in 1999. One Uppu Venkateswara Rao joined in the Association. The above association was renamed as ‘Satya Saibaba Mango Growers Association’. He is also one of the members of the above association along with the father of the plaintiff. After some time, the father of the plaintiff became unbearable due to his short temperament. There was an amount of Rs.10,92,400/- to the credit of Koteswara Rao as on 7.9.2001 as per the books of accounts. However a calculation was prepared by Koteswara Rao showing that he is entitled for sum of Rs.16,08,035/- as on 9.9.2001. The out going member is also bound by the understanding. Some of the heavy amounts due to the association were considered to be bad. However, Koteswara Rao requested that though the amount to the credit of his account is liable to be written off since he is obliging the wish of the other members he be paid whatever the amount that may be realized in future. In view of the long association with Koteswara Rao he prevailed upon the rest of the members to agree for the same. Since there was complete trust and confidence among the members of the association all the members did not raise any objection. Then Koteswara Rao demanded him to give some promissory notes for that amount of Rs.15,00,000/- stating that the said pronotes were only to avail credit for himself and not meant to be acted upon. Under such circumstances he agreed to make the impugned pronotes. At the time of executing the pronotes the said Kotewswara Rao suddenly suggested that the pronotes be made in the name of his son of the plaintiff and also in the name of daughter insteqd of his own name. He did not suspect any malafides on the part of Kotesowara Rao and agreed for the same. During the last decade or even more since the inception of the association there was great mutual trust and confidence among the members of the association. On the strength of such great confidence, he was made to execute the suit pronotes. It is the practice that every year on the 9th day of September the members of the association used to settle their accounts. Thus he executed 7 pronotes on that day. At the time of execution of pronotes one Kavuri Subba Rao of Nidumanuru, Nalajala Lakshmi Narayana and one Uppu Venkateswara Rao of Sobhanapuram were present. In order to save the time since number of pronotes were to be executed. Uppu Venkateswara Rao who is a member of Mango Growers Association executed eight pronotes for Rs.8,00,000/- at the request of Koteswara Rao in the name of his daughter Smt Thotakura Aruna of Nidamanuru. No consideration was passed under the suit pronotes. Later on payments in all a sum of Rs.17,44,490/- was made in favour of the father of the plaintiff. The above payments will reflect in the account books of association. Thus whatever the amount due to the father of the plaintiff and which infact were virtually slated to be written off, were paid off. Hence, there is no need to pay any amount to the plaintiff. Hence, the suit is liable to be dismissed with costs. On the above pleadings, the lower court has framed the following issues: 1. Whether the suit pronote is devoid of consideration as contended by the defendant? 2. To what relief? The plaintiff examined himself as P.W.1 and examined I. Venkateswara Rao attestor of the pronote as P.W.2 and got marked Exs.A.1 to A.7. Defendant examined himself as D.W.1 and examined D.Ws.2 to 5 on his behalf and got marked Exs.B.1 to B.25 and Exs.X.1 to X.6. The learned Additional Sessions Judge, Vijayawada by taking into consideration of both oral and documentary evidence held that the defendant has failed to establish that the said pronotes are not devoid of consideration and thereby held the issue No.1 in favour of the plaintiff and decreed the suit as prayed for. Aggrieved by the said decree and judgment, the present appeal is filed by the defendant therein. Now the point that arises for consideration is whether the said pronotes are not supported by consideration as pleaded by the appellant, if not whether the respondent/plaintiff is entitled for the decree as passed by the lower court. The learned counsel for the appellant Sri S. Ravindranath has pleaded that there is no relationship of debtor and creditor between him and the respondent and he has executed the suit promissory notes at the instance of the father of the plaintiff for the amounts due to him by the Satya Saibaba Mango Growers Association and at the same time one U. Venkateswara Rao also executed 8 promissory notes in favour of the sister of the plaintiff at the instance of his father and the said promotes were never intended to act upon and the plaintiff was not present as on the date of execution of the said promotes i.e., on 9.9.2001 in India and he failed to produce the passport inspite of giving sufficient opportunity by the lower court and as such an adverse inference can be drawn against him about his presence in India as on the date of execution of the said pronotes and it can be one of the circumstances that the said pronotes executed were not for consideration but as a security for payment of the amount by the Satya Saibaba Mango Growers Association to the plaintiff’s father. The learned counsel for the appellant has further pleaded that the amount due to the father of the plaintiff was subsequently paid as per the entries made in the ledger books of the said association. As such there is no amount due to the plaintiff’s father from the said association. As such the suit is liable to be dismissed. The learned counsel for the respondent Sri C.V.R. Rudra Prasad on the other hand, has pleaded that the suit pronote was executed by the appellant on receiving the consideration of Rs.7,00,000/- from the plaintiff and as the appellant is pleading that the promotes are not supported by any consideration, the burden rests heavily on him to establish the same and in the absence of the same, even if the plaintiff could not able to establish his case, the suit is not liable to be dismissed and the payment of the amounts by the association to the father of the plaintiff was not acknowledged by either of the plaintiff or his father in the said account books and they were prepared only to avoid the payment due under the said promissory notes Hence, the lower court has rightly decreed the suit in his favour. The appellant/defendant has pleaded in the written statement about the execution of the promissory notes by him in favour of the plaintiff for the amounts mentioned therein, but according to him he has not received any consideration under the said promotes and the said promotes were executed as a security for payment of the amount by the Satya Saibaba Mango Growers Association to the plaintiff’s father on his retirement from the said association. As the defendant has admitted about the execution of the promissory notes Ex.A.1 to A.7 and only pleaded non receipt of the consideration under the said promotes, the burden is on him to establish the same. The learned counsel for the appellant has pleaded that he has already discharged his burden and the presumption under Section 118A of the Negotiable Instruments Act (for short, the Act) is rebuttable presumption when once he has established the non receipt of the consideration, the burden shifts on the plaintiff to establish the payment of the consideration and in the present case as the plaintiff has failed to establish the payment of consideration under Exs.A.1 to A.7 and he has also failed to establish his presence in India as on the date of execution of the pronotes. In support of his contention he relied upon a decision rendered in Bharat Barrel and Drum Manufacturing Company V. Amin Chand Payrelal[1] the said judgment was referred to by both the plaintiff and the defendant before the lower court. In the above said judgment, the Apex Court was held: “Once execution of the promissory note is admitted, the presumption under Section 118(a) of the Act would arise that it is supported by consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of 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 dis-entitle 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 brining 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 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.” In view of the above said observations of the Apex Court, now it has to be examined in the present case whether the appellant could able to establish by producing any evidence either direct or by bringing on record the preponderance of probabilities with regard to non existence of consideration for the said promotes. The defendant examined himself as D.W.1 and he has pleaded about the non receipt of consideration under Exs.A.1 to A.7 and reiterated the facts as mentioned in the written statement in his chief-affidavit and in the cross-examination he has stated that all the promotes are in Telugu and they bear his signature and he also admitted that none of the documents Exs.B.1 to B.25 contain the signature of the plaintiff or the father of the plaintiff. Ex.B-1 does not contain the signature of anybody including the author of it. He also admitted that he has filled up the blanks in Exs.A.1 to A.7 pronotes. He did not issue any legal notice calling upon the plaintiff to return Exs.A.1 to A.7 pronotes nor he has lodged any complaint with the police. In support of his contention of non receipt of the consideration, he examined U. Venkateswara Rao as D.W.2 and also to establish the factum of payment of the amounts to the plaintiff’s father as per the account books. D.W.2 has stated that he is author of Exs.B.7, 10, 14, 18 to 21, 23 to 25 and the entries 10 and 11 in Ex.B.1 and the entries 5 to 18 in ex.B.17. In the cross-examination, he admitted that the defendant is known to him and he is his neighbour. He did not borrow any amount either from the plaintiff or any of his family members. He has no personal knowledge in this case. He is not attestor of Exs.A.1 to A.7. According to him cash was paid to Sunkara Koteswara Rao and no receipt was obtained from him. At about Rs.17.00 lakhs amount was paid by the association and the same was paid in different occasions. The defendant also examined Thota Prasad said to be the scribe of Exs.B.5, 6,8, 9 and 22 and entries 1 to 9 in Ex.B.4 and 1 to 4 in Ex.B.17 and he admitted that the defendant is his brother-in-law and he assisted the affairs of the association and he wrote the account books of the said association along with D.W.2. But in the cross- examination, he has stated that he is nothing to do with the affairs of the said association. He is used to sit along with his brother-in-law and there is no documentary evidence to show that he used to assist his brother-in-law except the entries in the concerned ledgers. He also admitted except the entries mentioned in his chief-examination he has no knowledge about other entries made in the ledger. The entries made regarding purchase and sale of the mango produce and payment thereon in respect of the said business. Neither the plaintiff not his father have scribed the signature on the entries made by him which are referred in his chief-examination. The defendant also examined N. Lakshminarayana as D.W.4. K.V.V. Subrahmanyeswara Rao as D.W.5 to speak about the fact that they were present at the time of execution of Ex.A.1 by the defendant in favour of the plaintiff and according to them no consideration was paid under the said promotes and both of them admitted that they have not signed on the promotes Exs.A.1 to A.7 as attestors. Therefore, except the evidence of D.W.1 with regard to non receipt of the consideration, there is no other evidence to show that he has executed the promissory note for the amount payable by the Satya Saibaba Mango Growers Association to the plaintiff on his retirement. Even if the contention of the appellant/defendant is accepted that the said promotes wee executed for the amount due by the Satya Saibaba Mango Growers Association, the said pronotes ought to have been executed on behalf of the said association but not by defendant in his individual capacity and no reasons were stated by the defendant for execution of the said promotes in his individual capacity. Even though D.Ws.2,4,5 were present at the time of execution of Exs.A.1 to A.7 none of them attested the said promotes as attestors. According to the plaintiff, one I. Venkateswara Rao was the attestor of the Exs.A.1 to A.7 and the plaintiff examined himself as P.W.1 and stated about the defendant borrowing Rs.7,00,000/- and executing the promissory note Exs.A.1 to A.7 and the defendant has not paid the said amount in spite of several demands made by him. In the cross-examination. Defendant counsel tried to establish that the plaintiff was not present in India as on the date of execution of the said promotes on 9.9.2001. P.W.1 admitted in the cross-examination that I. Venkateswara Rao is the attestor of Exs.A.1 to A.7. He admitted that he knows Kavuri Subba Rao of Nidamanuru and N. Lakshiminarayana of Sobhanapuram who are friends of his father but he denied that the above said persons were present at the time of execution of Exs.A.1 to A.7. The attestor of the pronotes Exs. A.1 to Ex.A.7, I. Venkateswara Rao was examined as P.W.2 and he has categorically stated in his chief- examination on 9.9.2001 the defendant borrowed the amount of Rs.7.00 lakhs from the plaintiff and executed promissory notes each for Rs.1.00 lakh after receiving the consideration and the said transaction took place in his presence and he attested the said promotes. In the cross-examination he denied that P.W.1 was not in India as on 9.9.2001. He expressed his ignorance about U. Venkateswara Rao, Kavuri Subba Rao and N. Lakshminarayana. He also denied that the said persons were present at the time of execution of the promotes. He denied that he was not present at the time of such transaction and he signed on the promotes as an attestor just before filing of the suit. Therefore, from the above evidence, the defendant even though pleaded that the said promotes were executed for the amounts payable to plaintiff’s father Satya Saibaba Mango Growers Association he could not establish the same by producing any evidence to show that they are the members of the association and the amount as mentioned in Exs.A.1 to A.7 is due to the plaintiff’s father. Even though the defendant marked Ex.B.1 showing the accounts got prepared by the plaintiff’s father, it does not bear any signature of the scribe of the said document. More over the said document shows an amount of Rs.16,08,035/- was due as on 11.8.2001. On the other hand, the plaintiff could able to establish the passing of consideration under Exs.A.1 to A.7 by examining the attestor as P.W.2. Therefore, in view of the above decision referred by the learned counsel for the appellant as the appellant/defendant has failed to establish the non existence of consideration in the circumstances of the case, the onus will not shift on the plaintiff to establish the passing of consideration. Since the defendant has admitted about the execution of the promissory notes and denied consideration and failed to establish the same, the plaintiff is entitled for presumption under Section 118A of the Act. In the above said decision (referred supra), it was also held: “In instant case, the defendant alleged that the promissory note had not been executed for the value received as mentioned therein but was executed by way of collateral security. A perusal of the written statement of the defendant would clearly and unambiguously show that to disprove the consideration of the promissory note, he had brought certain circumstances to the notice of the court which he wanted to probablising by leading evidence. The evidence led by the defendant in that regard was not acceptable. In the absence of disproving the existence of the consideration, the onus of proof of the legal presumption in favour of the plaintiff could not be shifted. It is true that the plaintiff had produced evidence in the case and that evidence was in fact the evidence in rebuttal, of the evidence produced by the defendant in the case. Even though it is true that the plaintiffs evidence was not believed yet the same could not be made basis for rejecting the claim because obligation upon the plaintiff to lead evidence for the purposes of to prove his case, could not have been insisted upon because the defendant has prima facie or initially not discharged his onus of proof by showing directly or probalbising the non- existence of consideration.” Therefore, in view of the above observations made by the Apex Court in the said decision, in the present case also, the evidence produced by the defendant was not accepted by this Court as he could not establish the non receipt of the consideration under Exs.A.1 to A.7 and simply because the plaintiff could not able to establish about his presence in India as on the date of execution of the promissory notes i.e., on 9.9.2001, the case of the plaintiff cannot be thrown out. Therefore, the contention of the learned counsel for the appellant that in the absence of the presence of the plaintiff as on the date of execute of the suit promissory notes in India he is not entitled for the reliefs as claimed in the suit cannot be accepted. Moreover the plea of the appellant’s counsel that the burden shifts on the plaintiff also cannot be accepted. With regard to discharge pleaded by the defendant, the D.W.1 has got marked Exs.B.1 to B.25 the ledger extracts but as admitted by D.Ws.2 and 3, the said ledgers do not contain the signature of the plaintiff or signature of the plaintiff’s father. Admittedly as on the date of the said entries made in the ledger of the said association, the plaintiff’s father was not a member of the association as he has already left the association. Therefore, the question of maintaining account in the account books of the said association in the name of the plaintiff’s father does not arise. D.W.2 in his cross-examination has stated that the cash was paid to Sunkara Koteswara Rao but no receipt was obtained from him and according to him about Rs.17.00 lakhs and odd was paid by the association on different occasions and he admitted that there are signatures of some of the persons to whom the amount was paid by the association. But the plaintiff’s signature did not find place in ‘B’ series exhibits. Therefore, even if signatures of the persons were obtained in the ledger for payment of the amount, no signature of the plaintiff or father of the plaintiff was obtained in Exs.B.2 to 25 that itself shows that the defendant has failed to establish the payment of the amount due to the plaintiff’s father or the amount due under the said ponotes. Therefore, the lower court has rightly come to the conclusion that the defendant has failed to discharge the burden which is on him and the plaintiff is entitled for presumption under Section 118(a) of the Act with regard to passing of consideration under Exs.A.1 to A.7 and the defendant has failed to establish the discharge of the amount due under the said promotes. Hence, the suit pronotes are supported by consideration and the plaintiff is entitled for the decree as passed by the lower court. In the result, the appeal is dismissed and the judgment and decree passed by the VIII Additional District and Sessions Judge (Fast Track Court), Vijayawada dated 05.06.2006 in O.S.No.81 of 2003 is hereby confirmed. In the circumstances