IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH AT HYDERABAD FRIDAY, THE TWENTY FIFTH DAY OF MARCH, TWO THOUSAND AND ELEVEN PRESENT THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO APPEAL SUIT No. 1626 OF 2003 BETWEEN: Anneela Sanjeeva Reddy …APPELLANT AND Smt. Ch. Usha …RESPONDENT The Court made the following: THE HON’BLE SRI JUSTICE N.R.L. NAGESWARA RAO APPEAL SUIT No. 1626 OF 2003 JUDGMENT: The defendant in O.S.No. 82 of 2000 on the file of I Additional Senior Civil Judge, Ranga Reddy, at L.B.Nagar, Hyderabad, is the appellant herein. 2. The suit was filed for recovery of Rs.2,03,000/- being the principal and interest due on a promissory note, dated 11.02.1997. 3. The allegations in the plaint go to show that the defendant has borrowed a sum of Rs.1,00,000/- agreeing to pay the interest at 36% per annum and executed a promissory note on 11.02.1997 and subsequently, paid a sum of Rs.5,000/- and as he did not pay the amount in spite of demands and legal notice, the suit was filed. 4. The defendant filed a written statement denying the allegations in the plaint and submitted that he and the husband of the plaintiff viz., Ch.Chandrasekhar Reddy were the partners in a firm by name M/s. Flemming Antibiotics dealing in manufacturing pharmaceutical products on loan licence basis and both of them were operating account in the Bank. In this connection, the plaintiff’s husband needed cash towards his share for working capital purposes. Therefore, the plaintiff, who is wife of Chandrasekhar Reddy, took loan from a money lender known to them. The defendant signed on a paper as surety for her. Another document styled as promissory note was got executed towards security and no consideration was received by the defendant. The plaintiff herself is principal debtor, who actually intended that the document styled as promissory note to be used as collateral security for the loan taken by her from the money lender on endorsement to him. The plaintiff in collusion with the aforementioned money lender whose identity is not revealed to the defendant, sought to claim the amount from the defendant. Hence the claim as made by the plaintiff against the defendant is false. Except this transaction, there is no other dealing between the plaintiff and the defendant. The document by title ‘security’ confirms that the plaintiff is the principal debtor and the defendant is only a surety. After obtaining signature of the defendant as surety, who signed in good faith, the plaintiff made material changes in the alleged promissory note with ulterior motive by changing date, title of the document and also tampering it to create liability. Therefore, the document by title ‘RECEIPT CUM PROMISSORY NOTE’ is a sham and unenforceable document. The alleged document is not proper and the same cannot be construed as a promissory note. The suit based on such document is liable to be dismissed. The interest claimed is not tenable. It is also noteworthy that the true creditor who lent money to the plaintiff has not come forward to claim money for which he stood as surety nor did the plaintiff added him as party to this suit. As such, the suit also suffers from non- joinder and mis-joinder of parties. Therefore, the suit is liable to be dismissed. 5. On the basis of the above pleadings, the following issues have been framed by the trial Court, for trial: 1) Whether the signature of the defendant is obtained as security on behalf of the plaintiff? 2) Whether the suit document dated 11.02.1997 is materially altered? 3) Whether the suit is bad for non-joinder of necessary parties? 4) Whether the plaintiff is entitled to suit amount as claimed? 5) To what relief? 6. On behalf of the plaintiff, PWs.1 to 3 were examined and marked Exs.A-1 to A-5. On behalf of the defendant, DW.1 was examined and marked Ex.B-1. 7. After considering the evidence on record, the learned I Additional Senior Civil Judge, Rangareddy at L.B.Nagar, Hyderabad, decreed the suit of the plaintiff as prayed with subsequent interest at 12% per annum. Aggrieved by the said judgment and decree, the present appeal is filed. 8. The points that arise for consideration are: 1) Whether the defendant is not liable to pay the suit amount and whether there is any material alteration of the promissory note? 2) Whether the interest claimed by the plaintiff is excessive? 3) Whether the judgment and decreed passed by the the learned I Additional Senior Civil Judge, Rangareddy at L.B.Nagar, Hyderabad, is legal and sustainable? 9. POINTS: In this case, the learned counsel for the appellant strongly contends that the defendant has not borrowed any amount and in fact, the husband of the plaintiff was doing some business and for that purpose, the plaintiff has borrowed money from one money lender and towards the security of that amount, the signature of the defendant was taken and further contends that the promissory note is not properly stamped and it was materially altered. Therefore, from the above contention, it is to be considered as to whether the suit transaction is true. In fact, according to the case of the plaintiff and the evidence adduced by her, the amount is said to have been paid under a cheque on the even date on 11.02.1997 when the suit promissory note is said to have been executed. Exs.A-4 and A-5 clearly discloses the above transactions. In fact, the defendant also admitted in the cross- examination about the issuance of the cheque for Rs.1,00,000/- on 11.02.1997 and also admits to have encashed the same. If there was no legal transaction between the plaintiff and the defendant, there is no reason as to why the cheque should be issued in the name of the defendant on 11.02.1997. Therefore, it is quite clear that the promissory note was executed after receipt of the consideration. The contention of the defendant is developed on the fact that the promissory note was a printed form with a security undertaking generally given by third party. In fact, the first part of the promissory note, which was executed by the defendant, clearly goes to show it was signed by the defendant and the consideration was also said to have been received under a cheque. The writing in the words is only because of the fact that mention was made about the payment under a cheque. Therefore, it cannot be taken as a material alteration. It is no doubt true under the second printed proforma, which is generally given as a guarantee by third parties, it was so mentioned that it was a security for the money borrowed by the plaintiff from a third party. This inconsistency will not be of any advantage to the defendant when the passing of the consideration is proved by issuance of a cheque and encashment of the same by the defendant. In fact, the evidence of PWs. 2 and 3 also establishes the truthfulness of the loan transaction. The contention that the husband of the plaintiff and the defendant wanted to do business and for that business the plaintiff borrowed money from a money lender and for that amount the defendant gave security appears to be hollowed. If such is the case, the promissory note should have been executed in the name of the said money lender but not in favour of the plaintiff. Therefore, the contention raised by the learned counsel for the appellant that the promissory note is not a valid document cannot be accepted. In fact, when the said document is marked, there was no objection and for purpose of this suit, the first portion of the printed proforma, which is the promissory note, is relevant and I have no hesitation in holding that the plea set up by the defendant is not correct and the theory of security pleaded by him is beyond acceptance. 10. The learned counsel for the appellant contends that there was an alteration in the date of the promissory note. Evidently, the evidence of the defendant does not show that he has executed on a particular date and that date was changed. It is true that when there is material alteration, which is visible to a naked eye, then the Court can consider that and the burden is on the plaintiff to prove that it was done with the consent of the executant. It is useful to refer to para 4 of the written statement, wherein, the defendant has specifically pleaded that the promissory note dated 11.02.1997 is sham and unenforceable document. He has not stated that the promissory note was executed on any earlier date and that it was altered. On the other hand, it is the specific contention of the defendant that the promissory note dated 11.02.1997 is sham and nominal. Therefore, in view of the above circumstances and also taking into consideration the fact that the cheque was given on 11.02.1997, the scope for material alteration does not arise at all. Ex.B-1, which is an agreement between the husband of the plaintiff and the defendant, has nothing to do with the present transaction. The learned counsel for the appellant relied on the following decisions. 1) Allampati Subba Reddy Vs. Neelapareddi Ramanareddi[1] 2) Jayantilal Goel, Vs. Smt. Zubeda Khanum[2] The above decisions have not application to the facts of the case since there was no material alteration and on the other hand, there is admission and proof that the document was executed on 11.02.1997. 11. The learned counsel for the appellant contends that the interest charged was 36% per annum, which is usurious and excessive. The lower Court has granted the same interest as claimed by the plaintiff. Evidently, there are no special reasons mentioned for claiming of the interest at 36% per annum. There is no proof that there was any insecurity in the debt and the market rate of interest during that period is so much. In fact, the interest claimed in the suit has become more than the principal amount. Therefore, from the very nature of the transaction, the interest claim appears to be excessive and unconscionable, there are no specific grounds pleaded for claim of such huge rate of interest. Therefore, taking into consideration the above fact, I feel the ends of justice would meet if interest at the rate of 18% per annum is granted from the date of suit promissory note i.e., 11.02.1997 till the date of suit and with subsequent interest at 12% per annum from the date of suit till the date of decree and at 6% per annum till the date of realisation. Accordingly, the decree of the lower Court is modified and the points are answered. 12. In the result, the appeal is allowed in part and the suit of the plaintiff is decreed for a sum of Rs.1,00,000/- with interest at the rate of 18% per annum from the date of suit promissory note i.e., 11.02.1997 till the date of suit and with subsequent interest at 12% per annum from the date of suit till the date of decree and at 6% per annum till the date of realisation. Each party shall bear their own costs. ________________________ N.R.L.NAGESWARA RAO, J Date: 25-03-2011. INL [1] AIR 1966 ANDHRA PRADESH 267 (Vol.53, C.87) [2] AIR 1986 ANDHRA PRADESH 120