LAW PAPER - II JUESTION PEPER - 2001 IN THE COURT OF THE CIVIL JUDGE AND JMFC., AT BANGALORE Present: SRI/SMT. Civil Judge and J.M.F.C, Bangaore Dated: This .........8 day of w......0005 2018 [Link].*#****/2017 Plaintiff/s : [Link] Setty, Major, S/o Ramachandra Setty Prop. Tirumala Textiles, | No.115, Chickpet, Bangalore. | (Reptd. by S: | Advocate) Vs. ie Defendant/s: Sri Govinda Setty Major, S/o Narayana Setty, [Link] Traders, No.235, Chickpet, | Bangalore. (Reptd. by Sri. Date of Institution of the SuitNature of the suit (suit on Recovery or money pronote, suit partition declaration and possession, suit for injunction etc., Date of the commencement of recording of the evidence Date on which the judgment was Pronounced Total Duration Year/s Month/s Day/s (Sd/-) Civil Judge & JMFC., Bangalore. JUDGMENT This suit is filed by the Plaintiff bank against the Defendant for recovery of money of Rs.33,537/- along with future interest at the rate of 15% p.a. and such consequential reliefs. 2. The averments of the plaint in brief are as follow: The Defendant being the friend of Plaintiff approached for loan of Rs.25,000/- in the month of June 1998. The Plaintiff by considering the relationship of Defendant withhim agreed to advance the said loan of Rs.25,000/- to improve the business of the Defendant. Accordingly the Plaintiff on 20-6-1998 advanced Rs.25,000/- to Defendant and on the said date, Defendant executed on demand promissory note and also consideration receipt agreeing to repay the said Rs.25,000/- along with interest at the rate of 15% p.a. Thereafter the Defendant failed to repay the principal amount along with interest as agreed by him even after the repeated requests of the Plaintiff. Hence the Plaintiff got issued the legal notice to the Defendant on 25-6-2000 calling upon him to pay entire outstanding due amount under the promissory note including interest. Though the Defendant has received the said legal notice but he neither paid the said amount nor replied the same. Hence the Plaintiff has filed this suit for recovery for Rs.33,537/- along with future interest at the rate of 15% p.a. from the date of suit till the date of realization. 3. The Defendant has appeared through his Counsel and filed the written statement, wherein he has denied the averments of the plaint as false, frivolous and vexatious one. It is the specific contention of the Defendant that the Plaintiff is carrying on money lending business without obtaining therequisite licence as required U/Sec.5 of the Karnataka Money Lenders Act and as such, this Court has no jurisdiction to entertain and try this suit and accordingly this suit has to be dismissed as per Sec.11 of the said Act. He has contended that he had not obtained any loan from the Plaintiff and also executed on demand promissory note and consideration receipt in favour of the Plaintiff. It is the contention of the Defendant that the said documents are fabricated, concocted and forged by the Plaintiff. He has stated that he had issued suitable reply to the notice issued by the Plaintiff. It is further contended that if this Court comes to the conclusion that the Defendant is liable to pay any amount to the Plaintiff, then he may be permitted to pay such amount in monthly installments. With these contentions, the Defendant has sought for dismissal of the suit. 4. On the basis of above said pleadings; this Court has framed the following Issues. ISSUE No.1 Whether the provisions of Karnataka Money Lenders Act, are applicable to the suit loan transaction, if so, whether the Court has no jurisdiction to pass a decree in respect of suit claim as provided by Section 11 of the said Act?ISSUE No.2 : Whether the Plaintiff proves that the Defendant borrowed a sum of Rs.25,000/- from him on 20-6-1998 on executing suit on demand promissory note? ISSUE No.3 : Whether the Plaintiff is entitled for the decree against the Defendant as sought in the plaint? ISSUE No.4: Whether the Defendant is entitled for installments? ISSUE No.5: What Order and Decree to which the parties are entitled to? 5. The Plaintiff was examined before the Court as PW1 and got marked Ex.P1 to Ex.P4 and [Link](a), Ex.P1(b), Ex.P1(c), Ex.P2(a). One Srinivasa Setty was examined before the Court as PW2 who has identified his signature as Ex,P1(b). The Defendant was examined before the Court as DW1, who has not got marked any documents. 6. Heard the arguments of the Learned Counsel appearing for both the parties and Perused the materials on record.7. The findings of this Court on the above said Issues are as under ISSUE No.1: In the Negative ISSUE No.2: __ In the Affirmative ISSUE No.3 : In the Affirmative ISSUE No.4: _In the Negative ISSUE No.5: _ As per the final order for the following : REASONS 8. ISSUE No.1 : It is the specific contention of the Defendant that the Plaintiff is carrying on money lending business without obtaining requisite licence as required U/Sec.5 of Karnataka Money Lenders Act, hence this Court has no jurisdiction to entertain and try the suit as per Sec.11 of the said Act. 9. As per Section 101 to 103 of the Indian Evidence Act, the burden of proof lies on the Defendant to prove that the Plaintiff is doing money lending business without obtaining the licence, hence this suit is not maintainable. Though the Defendant was examined as DW1 before the Court but he has not produced the materials before the Court to show that the Plaintiff is doing money lending business without obtaining the licence. Even theDefendant has not examined the persons who have obtained Joan from the Plaintiff to show that the Plaintiff is doing money lending business. PW1 in his cross examination has stated that except lending money to the Defendant, he had advanced any loan to any other person at any point of time PW1 further stated that he had not carried money lending business at any point of time. Though Learned Counsel for Defendant cross examined PW1 but nothing was elicited from his mouth to substantiate that the Plaintiff is doing money lending business. After considering all these aspects this Court is of the opinion that the Defendant has failed to prove that the plaintiff is doing money lending business without obtaining requisite licence in accordance with law. With these observations, this Court has answered Issue No.1 in the Negative. 10. ISSUE NO.2: It is the case of the Plaintiff that the Defendant borrowed a sum of Rs.25,000/- from him on 20-6-1998 on executing on demand promissory note and consideration receipt. But the Defendant has denied the fact that he had obtained loan of Rs.25,000/- from the Plaintiff on 20-6-1998 and executed the said on demand promissory note andconsideration receipt. Per contra, it is the contention of the Defendant that the said documents were fabricated, concocted and forged by the Plaintiff, hence the suit is liable to be dismissed. 11. As per Section 101 to 103 of the Indian Bvidence Act, the burden of proof lies on the Plaintiff to establish that the Defendant borrowed the said amount of Rs.25,000/- on 20-6-1998 and executed on demand promissory note and consideration receipt. The Plaintiff in order to establish the said aspects was examined as PW1 and filed affidavit evidence in lieu of his examination in chief, wherein he has deposed inconsonance with the plaint averments. PW1 further deposed that he advanced the said loan of Rs.25,000/- to the Defendant on 20-6-1998 in presence of one Srinivasa Setty and Prakash. He has got marked the on demand promissory note as [Link] and consideration receipt as Ex.P2. He has identified the signatures of the Defendant as [Link]{a) and Ex.P2(a) respectively. He has identified the signatures of one Srinivasa Setty and Prakash as Ex.P1(b) and Ex.P1(c) respectively. He has got marked the legal notice issued to the Defendant as Ex.P3 and Postal acknowledgment as Ex.P4.12. One Srinivasa Setty was examined as PW2 and in his examination in chief he has deposed that the Plaintiff in the month of June 1998 obtained loan of Rs.25,000/- from the Plaintiff to improve his business and executed on demand promissory note and consideration receipt in his presence and also in presence of one Prakash. He further deposed that the Plaintiff paid the said amount by way of cash and the Defendant put his signature to the said Ex.P1 and Ex.P2 by filling the contents of the same. He has further deposed that the contents of Ex.P1 and Ex.P2 are in the hand writing of Defendant. He has identified the signatures of the Defendant as Ex,Pl(a) and Ex.P2(a). He has identified his signature as. Ex.P1(b). He further deposed that the Defendant agreed to repay the said principal amount along with interest at the rate of 15% p. 13. The Defendant was examined as DW1 and in his examination in chief he has deposed inconsonance with the written statement averments. He has not got marked any documents in support of his oral evidence 14, The important aspect to be noted is that the Plaintiff has got marked the on demand promissory note and consideration receipt executed by Defendant as Ex.P1 and10 Ex.P2 respectively. The signatures of the Defendant were marked as Ex.P1(a) and Ex.P2(a) respectively. PW2 being one of the attesting witness to the said Ex.P1 on demand promissory note has clearly deposed that the contents of Ex.P1 and Ex.P2 are in the hand writing of the Defendant and he has identified the signatures of the Defendant as [Link](a) and Ex.P2(a). PW2 has also identified his signature as Ex.P1(b). Though the Learned Counsel for the Defendant cross examined PW2 nothing was elicited from his mouth to substantiate that the said Ex.P1 and Ex.P2 were not executed by Defendant and the same were created by the Plaintiff in collusion with PW2 and the said Prakash. After considering the evidence of PW2, this Court is of the considered opinion that the Defendant executed Ex.P1 and Ex.P2 in favour of the Plaintiff and obtained loan of Rs.25,000/- from the Plaintiff agreeing to repay the same with interest at the rate of 15% p.a. 15. Another important aspect to be noted is that though the Defendant in his written statement has denied the fact of execution of Ex.P1 and Ex.P2, but in his cross examination he has clearly admitted that the signature appearing in the vakalath and also written statement belongsto him. He has also identified the signatures appearing at Ex.P1(a) and Ex.P2(a) belongs to him. When the Defendant has clearly admitted the said signatures appearing on Ex.P1 and Ex,P2 belongs to him, then this Court is of the opinion that the Defendant had executed Ex.P1 and Ex.P2 in favour of the Plaintiff and obtained loan of Rs.25,000/- from the Plaintiff. As per Sec.17 of the Indian Evidence Act, the said admission on the part of Defendant has got relevancy to infer that the Defendant had executed Ex.P1 and Ex.P2 in favour of the Plaintiff and obtained loan of Rs.25,000/- from the Plaintiff on 20-6-1998. 16. DW1 in his cross examination has clearly admitted that he is B.A. graduate. When the Defendant is B.A. graduate then if the Plaintiff could have created the said Ex.P1 and Ex.P2, then he could have taken action against the Plaintiff before the appropriate forum regarding creation of Ex.P1 and Ex.P2 by the Plaintiff in collusion with PW2 and the said Prakash. But the Defendant has not made any such efforts to take action against the Plaintiff. This conduct on the part of the Defendant reveals that though he had executed Ex.P1 and Ex.P2 in favour of the Plaintiff and12 obtained loan of Rs.25,000/- but he is deposing falsely before the Court in order to avoid his liability. 17. DW1 in his cross examination has clearly admitted that he has maintained accounts of his business and in the said books of account, there is a reference regarding his liabilities. He further stated that he has not produced the said books of account before the Court. When the Defendant has maintained the said books of account regarding his liabilities, then what prevented the Defendant not to produce the said documents before the Court create suspicion about the conduct of the Defendant. As per Sec.34 of Indian Evidence Act, the books of account has got relevancy to ascertain the liability. But Defendant has not produced the said books of account, hence an adverse inference has to be drawn against him as per Sec.114 of Indian Evidence Act. 18. PW2 has clearly stated that he introduced the Defendant to the Plaintiff and even DW1 in his cross examination has clearly admitted that PW2 introduced him to the Plaintiff. After considering the said answers of PW2 and DW1, it appears to this Court that there is an acquaintance of Defendant with Plaintiff, hence the Plaintiff by considering1B the said friendship had advanced the said loan of Rs.25,000/- to the Defendant. 19. PW1 in his cross examination has stated that he is the income tax assesse and the fact of advancing loan to the Defendant is reflected in 1.7. returns and he can produce the same before the Court. Though the Plaintiff has not produced the said income tax returns but when the Defendant has admitted his signatures at [Link](a) and Ex.P2(a) belongs to him, then non-production of the said IT. returns by the Plaintiff in no way affect the case of the Plaintiff. 20. Another important aspect to be noted is that the Plaintiff has got issued the legal notice to the Defendant as per Ex.P3 on 25-6-2000. Ex.P4 is the postal acknowledgment which clearly reveals that the said legal notice was duly served on the Defendant. The Defendant in his written statement has contended that he had got issued reply to the said legal notice but he has not produced any document to show that he had issued reply to the said legal notice. DW1 in his cross examination has stated that he has not preserved the copy of the reply issued to the said legal notice. He further stated that he got issued the said reply through hisAdvocate but he cannot remember his Counsel name. If the Defendant really issued the said reply to the said notice of the Plaintiff, then he could have produced the copy of the same before the Court and also he could have able to state the name of the said Advocate. But the DW1 has failed to produce the said reply and also failed to state the name of the said Advocate, hence by considering the said conduct of the Defendant, this Court is of the opinion that the Defendant is deposing falsely in order to avoid his liability. 21. Another important aspect to be noted is that DW1 in his cross examination has clearly admitted that there is no ill-will between himself and PW2 and also between himself and Plaintiff. When there is no ill-will between Plaintiff and PW2 with him, then what was the necessity for the Plaintiff to file false suit against the Defendant? By considering this aspect also this Court is of the opinion that the Defendant owed liability of discharging the said loan of Rs.25,000/- to the Plaintiff along with interest. 22, As per Sec. 118 of Negotiable Instrument, there is a presumption with respect to consideration, date, time of acceptance, time of transfer etc., mentioned in15 the promissory note until the contrary is proved. The presumption available U/Sec. 118 of the said Act is rebuttable presumption but the Defendant has failed to rebut the Presumption attached to Ex.P1 as per Sec.118 of the said Act. Hence by applying Sec.118 of the said Act to the case on hand, this Court is of the opinion that the Plaintiff has proved the liability of Defendant under Ex.P1, 23. It is relevant to refer the ratio laid down by Hon’ble High Court of Karnataka which is reported 2006 (3) [Link]. 141 between Saftarsab Vs B. Allaiah @ Allappa wherein the Hon’ble High Court held that “presumptions available under Sec, 118 of Negotiable Instruments Act 1881 is rebutable presumption and the burden shifts on the Defendant to prove that the promissory note was not supported by consideration”. 24. It is relevant to refer the ratio laid down by Hon'ble High Court of Karnataka which is Teported 2003 (6) Kar.L.J. 409 between C. Seshareddy Vs P. Basavanagoud, wherein the Hon'ble High Court held as under: (B) NEGOTIABLE INSTRUMENTS ACT, 1881, Sections 4, 58 and 118 - Indian Evidence Act, 1872, Sections 101 to 104 —16 Promissory note - Burden to prove execution of passing of consideration under - Burden is on holder ~ Presumption that promissory note was made for consideration mentioned therein can be invoked only when its execution has been admitted - Where execution of Promissory note and passing of consideration there under has been denied, and it is proved by examination of scribe that promissory note was obtained by unlawful means, claim made by holder on basis of such promissory note is not sustainable in law. 25. This Court has carefully perused the ratios laid down in the above said cases and applied to the facts on hand. In the case on hand the Plaintiff has proved the execution of Ex.P1 and Ex.P2 by the Defendant. By applying the ratios laid down in the above said case, this Court is of the opinion that the Plaintiff has proved the liability of the Defendant under Ex.P1 and Ex.P2. With these observations, this Court has answered Issue No.2 in the Affirmative. 26. ISSUE NO.3: The Plaintiff has established that he advanced loan of Rs.25,000/- to the Defendant and Defendant agreed to repay the same with interest at the rate of 15% p.a. Per contra, the7 Defendant failed to substantiate his defence as taken in his written statement, Hence the Plaintiff is entitled for the suit claim of Rs.33,537/-. The Plaintiff has sought for the interest at the rate of 15% p.a. on the principal amount of Rs.25,000/- from the date of suit till the date of realization. When the Defendant has clearly admitted in his cross examination about his signatures on Ex.P1 and Ex.P2, then this Court is of the opinion that the Defendant agreed to pay the said principal amount of Rs.25,000/- along with interest at 15% p.a. Hence as per Sec.34 of Code of Civil Procedure, the Defendant is liable to pay the contractual rate of interest to the Plaintiff at the rate of 15% p.a. on the principal amount of Rs.25,000/- from the date of suit till the date of realization. With these observations this Court has answered Issue No.3 in the Affirmative. 27. ISSUE No.4: It is the contention of the Defendant that if this Court comes to the conclusion that he is liable to pay any amount to the Plaintiff, then he may be granted easy installments to pay the said amount. DW1 in his cross examination has clearly admitted that his present yearly turn over is Rs.1,50,000/- to Rs.2,00,000/- and his monthly income is of18 Rs.25,000/- to Rs.30,000/-. When the Defendant is having financial capacity to pay the said meager amount of Rs.33,537/-, then no monthly installments can be granted to the Defendant. Further Defendant in his written statement has denied the fact of execution of said Ex.P1 and Ex,P2 in favour of Plaintiff and now he is seeking the monthly installments. Hence by considering the said conduct of the Defendant, this Court is of the opinion that the Defendant is not entitled for monthly installments as sought for. With these observations, this Court has answered Issue No.4 in the Negative. 28. ISSUE NO.5: For the aforesaid discussion on Issue No.1 to 4, this court proceeds to pass the following; ORDER The suit of the Plaintiff is hereby decreed with cost. The Defendant is liable to pay Rs.33,537/. to the plaintiff together with interest at the rate of 18% p.a. from the date of suit till the date of realization on the principal amount of Rs.25,000/. Draw decree accordingly. (Sd/-) Civil Judge & JMFC., Bangalore.ANNEXURE I. LIST OF WITNESSES EXAMINED FOR PLAINTIFF/S: PW 1: SriLaxminarayana Setty Dt PW2_: Sri,Srinivasa Setty Dt... ILLIST OF DOCUMENTS EXHIBITTED FOR PLAITNIFF/S : SLNo.|[Link]. [Nature of Documents /Ex.P1 |On Demand promissory note Ex.P1 (a) [Signature of the Defendant Ex.P1(b) | Signature of the Defendant [Link](c) _|Signature of Prakash Ex.P2 __|Consideration Receipt Ex.P2(a) | Signature of the Defendant Ex.P3__|Legal notice @)NJala}alalole |Ex.P4 Postal acknowledgment Hl. LIST OF WITNESSES EXAMINED FOR DEFENDANT/S: DW 1: [Link] Setty_ Dt: [Link] OF DOCUMENTS EXHIBITTED FOR DEFENDANT/S : -NIL- ADDL. SENIOR CIVIL JUDGE & J.M.F.C.,KGF.ay