THE HON’BLE SRI JUSTICE N.RAVI SHANKAR CIVIL REVISION PETITION No.5379 of 2006 Dated 4th February, 2011 Between: Mattaparthi Lokeswara Rao …PETITIONER(S) And Gunisetty Suryanarayana …RESPONDENT(S) The Court made the following: THE HON’BLE SRI JUSTICE N.RAVI SHANKAR CIVIL REVISION PETITION No.5379 of 2006 ORDER: The petitioner in this revision is the plaintiff in the Small Cause Suit S.C.No.12 of 2005 on the file of the Court of the Principal Senior Civil Judge, Rajahmundry (trial Court). The said suit is a promissory note suit. The trial Court after a contest has by its judgment and decree dated 26.07.2006 dismissed the said suit. Questioning that dismissal the plaintiff has come up with this CRP. 2. To state and decide the points that arise for determination in this CRP, though the suit is small cause suit, the respective cases of the parties should be noted in some detail and hereafterwards they will be referred to for convenience as they are arrayed in the suit. 3. The suit was brought for recovery of a sum of Rs.3,000/-, as already mentioned supra, on the foot of a promissory note dated 24.04.2003 marked as Ex.A.1 and said to have been executed by the defendant in favour of the plaintiff. The case of the plaintiff is that on the date of Ex.A.1 the defendant approached him and borrowed the amount of Rs.3,000/-, which was paid by a cheque, for the purpose of his business and that thereafter he did not repay it despite a registered notice dated 13.10.2004 the office copy of which has been marked as Ex.A.2. The plaintiff’s version is that since the defendant did not repay the said amount he brought the suit in question. The plaintiff also claimed interest at 36% per annum. 4. The defence of the defendant is that he never borrowed any amount from the plaintiff and that he never borrowed even the amount under Ex.A.1 promissory note. His version is that the plaintiff is running an automobile spare parts shop also and that he has been purchasing spare parts for his auto rickshaw on credit basis since about 4 years prior to the suit. His further plea is that whenever he used to purchase spare parts on credit basis, the plaintiff used to take his signatures on empty printed blank promissory notes affixed with revenue stamps as a collateral security so as to secure the price of the automobile spare parts purchased by him on credit. The further version of the defendant is that after paying the amount due for the spare parts he used to call upon the plaintiff to return the promissory notes but the plaintiff used to reply that they were misplaced and he did not return them. The stand of the defendant is that taking advantage of the blank promissory notes obtained by him he fabricated the present suit promissory note and filed the present suit. He also alleged that in the plaint a mention is made about a cheque to show that the pronote amount has been paid to him by cheque and the said plea has been invented only to support the plaintiff’s case. The defendant further pleaded that the rate of interest at 36% per annum is very high and exorbitant and it should be scaled down to 6% per annum. The defendant also explained his defence for not giving reply to the plaintiff’s Ex.A.3 notice and this aspect will be dealt with infra. 5. The trial Court framed only one point regarding the entitlement of the plaintiff to the suit claim. Both the parties let in their evidence in the trial and the details of the evidence let in by them are given at the foot of the trial Court judgment. The trial Court considered the evidence and held that since Ex.A.1 promissory note contains a mention about cash consideration but as the plaint averments and the evidence let in by plaintiff show that it was paid by cheque that will raise a doubt about the plaintiff’s case regarding payment of consideration under Ex.A.1 promissory note. It also gave other reasons even on the question of registration of the plaintiff which is described as a firm and ultimately found that the plaintiff’s claim cannot be accepted and in that view of the matter it dismissed the suit by the impugned judgment. 6. Arguments of the learned counsel for the plaintiff were heard but nobody appeared for the defendant and as the CRP is of 2006 it has been taken up for judgment. 7. The following points arise for determination in this CRP. (i) Whether Ex.A.1 pronote was executed by the defendant and if so whether it is not supported by consideration? (ii) Whether plaintiff is a registered firm and entitled to sue for Ex.A.1 amount? (iii) Whether the interest claimed by the plaintiff is excessive and if so what would be the reasonable interest? (iv) To what relief? Point No.1: 8. The respective cases of the parties have already been set out supra. P.W.1 Lokeswara Rao described himself as the Managing Partner of the plaintiff firm and he spoke about the lending of money under Ex.A.1 pronote to the defendant and execution of Ex.A.1 by him. P.Ws.2 and 3 Seerapu Venkateswara Rao and Dhanalakoti Chidambaram who gave evidence as attestors of Ex.A.1 pronote spoke about the said pronote transaction and supported the plaintiff’s case. P.W.4 S.Mohan Rao another person who is also said to have signed the pronote supported the case of plaintiff regarding Ex.A.1 pronote transaction. D.W.1 is the defendant and he spoke about his case which is already set out supra. 9. The trial Court discussed the above evidence and found that the defence of the defendant would show that he admitted his signature in Ex.A.1 pronote. Concluding so the trial Court in para- 10 of its judgment (certified Photostat copy of the judgment filed by the plaintiff) observed that the defendant no doubt admitted the genuineness of his signature in Ex.A.1 pronote and that therefore the burden lies upon him to prove his case that Ex.A.1 pronote is not supported by consideration and that it was obtained in the circumstances pleaded by him and therefore it is not enforceable. To this extent, the trial Court’s finding is correct. 10. The trial Court then proceeded to consider whether the defendant was successful in proving his case. It may be noted that in Ex.A.1 pronote which is a printed proforma pronote it is stated regarding consideration that cash was paid. However in the plaint and in the evidence of P.Ws.1 to 4 it is found that the amount of Rs.3,000/- was paid to the defendant by means of a cheque bearing No.457343 of even date drawn on Vysya Bank Limited, Rajahmundry. It then held from the admissions made by P.W.1 in his cross-examination that the plaintiff was also doing business in auto spare parts. Judging the matter from that angle and also the discrepancy about the consideration i.e. cash consideration mentioned in Ex.A.1 pronote and the plea of the plaintiff that cash was paid to the defendant, it held that the plaintiff’s case becomes doubtful regarding passing of consideration under Ex.A.1 and consequently the defendant’s case should be accepted. 11. The above findings of the trial Court are the main findings relating to this point. It may be noted that normally in a revision this Court will not interfere with the findings of fact of the trial Court that too recorded in a small cause suit unless the appreciation of evidence by the trial Court shows that it totally erred in applying the settled principles of law to the fact situation before it. In my opinion the trial Court can be said to have committed a serious error in applying the legal position to the facts of this case and it went wrong in appreciating the evidence and this will be evident from the following reasons. 12. It may be noted that once it is held that a pronote is executed the presumption under Section 118(a) of the Negotiable Instruments Act, 1881 (NI Act), begins to operate and the burden lies upon the defendant to rebut that presumption. It is true that in Ex.A.1 pronote cash consideration is mentioned but in the plaint and in the evidence the plaintiff and his witnesses have come up with a case that the amount was paid by cheque which is also a negotiable instrument. Thus as already mentioned supra the burden lies upon the defendant to prove his case. 13. The stand of the defendant is that the plaintiff used to take pronotes or it took the present pronote as a security for the price due from him for the automobile spare parts purchased by him on credit basis from the plaintiff. The defendant did not come out in his evidence as to what was the price of spare parts purchased by him till the date of Ex.A.1 pronote i.e. 24.04.2003 or on that date itself. He did not examine anybody from his side to support his case that he used to buy automobile spare parts for his auto rickshaw which he admittedly owned on credit basis from the plaintiff though it was found that it was doing the business in automobile spare parts also. The defendant admittedly owned an auto rickshaw and if he was buying spare parts on credit basis from the plaintiff he himself would have remembered approximately at least the value of the spare parts purchased by him up to the date of Ex.A.1 or on the date of Ex.A.1 and also the nature of the spare parts purchased by him. 14. The defendant even according to his own admission in the cross-examination retired as a Turner from railways in the year 1994. It cannot therefore be said that he was a lay man running an auto rickshaw. Thus the defendant’s failure to speak about the above aspect works as a minus point for him. In the above circumstances the defendant cannot be said to have proved his case and in any event it must be rejected as not proved. In view of this the mere discrepancy in the consideration found in Ex.A.1 when compared with the pleadings cannot by itself be held as a ground to disbelieve the plaintiff’s case by holding that the presumption under Section 118(a) of the NI Act stands rebutted. 15. At this stage it would be relevant to note the proposition of law laid down by our Supreme Court in Bharat Barrel and Drum Manufacturing Company vs. Amin Chand Payrelal[1]. This was also a pronote case where the defendant admitted the execution of the pronote but pleaded that it was not supported by consideration. The plaintiff’s plea that the said pronote was supported by consideration was disbelieved. Equally the defendant’s case that it was not supported by consideration was also disbelieved. Laying down the proposition of law in such a situation, it was held that since the defendant has failed to prove his case of rebutting the presumption under Section 118(a) of the NI Act the burden cannot be shifted to plaintiff to prove its case and that the presumption under Section 118(a) still operates in favour of the plaintiff. Holding so, our Honourable Supreme Court decreed the suit. 16. In the present case, the defendant did not lead any convincing evidence at all either of his own or of others on his behalf to prove his case that Ex.A.1 was executed by him as a security or was taken from him as a security for the price of auto spare parts purchased by him. In such circumstances the mere discrepancy about consideration in Ex.A.1 pronote and the pleading of the plaintiff does not make any difference to its case. Perhaps the above legal position was not taken to the notice of the trial Court and therefore it committed an error in dismissing the suit on that ground. 17. The plaintiff filed a Photostat copy of the cheque which contains the bank’s endorsements and it shows that it was issued by the plaintiff firm in favour of the defendant and it was encashed on 24.05.2003 vide bank stamp i.e. the stamp of Vysya Bank, Rajahmundry. This encashment was made a month later. It may however be noted that this cheque does not contain any endorsement or a certificate of the bank to show that the said Xerox copy was issued by it. This circumstance does not assume any importance in view of above legal position. Accordingly, for the aforesaid reasons this point is decided in favour of the plaintiff. Point No.2: 18. Coming to this point, though the plaint averments create a doubt as to whether the suit is brought by P.W.1 Lokeswara Rao in his individual capacity describing his occupation as Managing Partner of M/s. M.C. Munuswamy Finance Firm or in the name of the said finance firm itself, the evidence and Ex.A.1 pronote show that both parties understood and participated in the trial as if the suit has been filed in the name of the above firm itself. Hence it is treated that the suit is filed by the above firm itself. In view of this it follows that the plaintiff firm has to be a registered one to bring a suit for the money claimed or otherwise arising out of a contract against third parties in view of Section 69 of the Partnership Act. 19. P.W.1 in order to show that the plaintiff is a registered firm has filed Ex.A.4 photostat copy of the acknowledgement of registration of the plaintiff firm and it purports to have been given by the Registrar of Firms, Rajahmundry, and it is dated 28.11.1998. The trial Court did not make any comment on this Ex.A.4 photostat copy. It may be noted that a perusal of the deposition of P.W.1 would show that Ex.A.4 was allowed to be marked without any objection whereas an objection was raised when Ex.A.5 photostat copy of the cheque was marked. Thus it can be said that the defendant accepted that the plaintiff firm is a registered one and it was not cancelled even by the date of the suit or subsequently. In fact the defendant did not raise any serious dispute regarding the registration of plaintiff firm based on Ex.A.4. 20. The trial Court after considering Ex.A.4 made several comments about the failure of P.W.1 in not filing the list of partners of the plaintiff firm and its account books and made that also a ground to disbelieve the plaintiff’s case on merits regarding Ex.A.1 transaction. It should be noted here that the record does not show that the defendant made any application to the Court for a direction to the P.W.1 to disclose the names of the other partners and in view of the same the non-furnishing of the list of partners by P.W.1 does not make any difference to the case of the plaintiff. In view of the finding under point No.1 and the fact that the defendant failed to rebut the presumption under Section 118(a) of the NI Act, the failure of P.W.1 to file the list of partners of the plaintiff firm and its account books are not material and do not operate as any minus point for the plaintiff. Accordingly in view of Ex.A.4 and for the reasons aforesaid this point is also decided in favour of the plaintiff. Point No.3: 21. This point relates to the interest to be granted. The trial Court did not consider the question of interest as it rejected the plaintiff’s claim in toto. As that conclusion of the trial Court is now held to be not correct it follows that the plaintiff is in principle entitled to interest. Regarding the interest the plaintiff claimed it at 36% per annum. This is on high side. It may however be noted that according to Section 80 of the NI Act where even in a case no rate of interest is stipulated in a pronote or other negotiable instrument, the plaintiff would be entitled to 18% simple interest per annum from the date of the pronote. Accordingly the plaintiff is held entitled to interest at 18% per annum on Ex.A.1 pronote amount from the date of Ex.A.1 to the date of the suit. With regard to subsequent interest it is considered that 12% per annum would be reasonable from the date of the suit till payment as the transaction is a business transaction on Ex.A.1 amount of Rs.3,000/-. Point No.4: 22. In the result, the CRP is allowed and the judgment of the trial Court is reversed and there shall be a decree in the suit for Rs.3,000/- i.e. Ex.A.1 amount with interest at 18% per annum from the date of Ex.A.1 to the date of the suit and 12% per annum from the date of the suit to the date of payment. The plaintiff shall be entitled to costs throughout on the amount decreed. ______________________ N.RAVI SHANKAR, J 4th February, 2011 CVRK [1] AIR 1999 SC 1008