Sri T. Venu Gopala Rao

IN THE COURT OF THE PRINCIPAL SENIOR CIVIL JUDGE AT VISAKHAPATNAM

PRESENT: SRIT.VENU GOPAL RAO,

PRL.SENIOR CIVIL JUDGE

WEDNESDAY, 23rd DAY OF SEPTEMBER 2015.

Tax Appeal No.145/2011

Between:

Sri K.Bala Krishna, S/o.Late Sri Pullayyasetty, Hindu, Male, Aged 63 years, Practicing Advocate, Visakhapatnam, R/o.# No.45-50-20, Abidnagar, Akkayyapalem, Visakhapatnam-530016. ….Appellant

And

Greater Visakhapatnam Municipal Corporation, represented by its Commissioner, Tenneti Bhavan, Asilmetta, Visakhapatnam-530004. ….Respondent.

This appeal coming on 07.07.2015 for final hearing before me in the presence of Sri K.Bala Krishna, advocate for appellant, and of Smt.B.N.Sulochana,Standing Counsel for respondent and the same having stood over for consideration till this day, this court delivered the following:

J U D G M E N T

The Appeal is filed under Section 282 of the Hyderabad Municipal

Corporation Act adopted by the Municipal Corporation, Visakhapatnam under Act 19 of 1979 read with Section 7 of the Visakhapatnam Municipal Corporation Act against the orders passed by the Commissioner, Greater Visakhapatnam Municipal

Corporation, Visakhapatnam in Revision Petition No.14784/10 dated 30.03.2011 said to be received on 05.04.2011 for the House bearing D.No.45-50-20,

Municipal Assessment Tax No.57860, Abidnagar, Akkayyapalam Visakhapatnam.

2.For the sake of convenience the appellant hereinafter is referred to as ‘the Assessee’ and the respondent hereinafter is referred to as ‘The Municipal

Corporation’.

3.The assessee has received a Special Notice No.33/32/2491 dated 03.07.2010 enhancing the property tax to Rs.7,951/- from Rs.1,316/- per half year on which the assessee preferred a Complaint/Revision Petition under Section 220 of Hyderabad Municipal Corporation Act (hereinafter referred to as the Act) that the learned Commissioner allowed the complaint/revision petition partly by reducing the tax to Rs.5,595/- and hence, the appeal is preferred.

4.Aggrieved by the impugned order in Revision Petition No.14784/10 2

dated 30.03.2011 passed by the learned Municipal Commissioner, the assessee

preferred this appeal contending that the learned Municipal Commissioner has arrived at the rental annual value without disclosing the reasons arbitrarily and without following the procedure contemplated under Act and rules made from time to time that the learned Commissioner has also failed to appreciate that the building is a residential house and as such enhancement of tax, fixing up rental value is arbitrary and without any basis, measurement, without assigning any reason etc.,

5.Heard the counsel for appellant and the Standing Counsel for the

Municipal Corporation. The counsel for appellant filed written arguments in support of his oral argument.

6.Now the points for determination in this appeal are:

(1) Whether the Assessee has complied the mandatory provision as to payment of tax as provided under Section 282 of Hyderabad

Municipal Corporation Act?

(2) Whether the Respondent has not followed the procedure contemplated under the Act and Rules made there under from time to time?

(3) Whether there exists any illegalities or irregularities in the impugned order of Respondent in R.P.No. 14784/10 dated 30.07.2011 and is it liable to be set aside?

(4) To what relief?

7.POINT NO.1: The present appeal is preferred under Sec.282 of HMC

Act on dismissal (alleged part allowing) of the complaint/Revision petition of the assessee under Section 223 (3) of HMC Act,. For better appreciation, I am extracting the relevant portion of Section 282 (2) of H.M.C.Act.

Appeals when and to whom to lie: (1) …...

(2). But no such appeal shall be heard by the said judge, unless:-

(a).......

(b)......

(c).......

(d) in case of an appeal against tax, the amount claimed from the 3 appellant has been deposited by him with the Commissioner.

Therefore, where an appeal against enhancement of tax is filed the amount claimed by the Corporation from assessee has to be deposited with the

Commissioner. The provision makes it very clear that no appeal shall be heard by the Judge, unless the amount claimed by the corporation from the assesee towards tax is deposited by him with the commissioner. In the present case, the assessee has filed a memo on 25.02.2015 with photo copy of tax receipts that he complied Section 282(d) of H.M.C.Act. This Court directed the assessee to serve the copy of memo on Standing Counsel for Municipal Corporation and memo was filed on 15.04.2015 (GR 6882) serving copy of the memo to the Standing Counsel for Municipal Corporation. The learned Standing Counsel appearing for respondent did not dispute the compliance of Section 282(d) of H.M.C. Act and I hold that the assessee has complied the relevant provision and that the first point is answered accordingly.

8.POINT NO.2: It is an admitted fact that the building under appeal is a residential flat located in Abidnagar, Akkayyapalem, within the limits of Greater

Visakhapatnam Municipal Corporation. It is the case of the assessee that the building is under occupation of owner. It is not disputed by the Municipal

Corporation. It is also an admitted fact that the half year tax to the building was

Rs.1316/- and Special Notice dt:30.07.2010 was issued enhancing the tax to

Rs.7,951/- per half year. The assessee preferred a complaint before the learned

Municipal Commissioner, Visakhapatnam under section 220 of HMC Act as applicable to Municipal Corporation, Visakhapatnam stating that the building under revision of tax is a self occupied residential building that an increase of nearly 6 times is against all tenets of natural justice.

9.As could be seen from the impugned order, the learned Commissioner passed the order, “In view of the above circumstances the complaint made by you on Assessment No.57860 was disposed by REDUCING THE TAX TO

Rs..................for half year from Rs.7951/-for half year w.e.f. 01.04.2010”. But, the learned counsel for assessee pleaded in his Grounds of Appeal that the 4 learned Commissioner passed the order on 30.03.2011 reducing the tax to

Rs.5,595/- from Rs.7,951/-. I do not find this finding in the order under appeal.

The column in the last paragraph of the order 'REDUCING THE TAX TO

Rs............' Is left blank. When I perused the record before learned Commissioner filed in the appeal, there was recommendation by Assistant Commissioner to reduce the tax to Rs.5,595/- from Rs.7,951/-. When it is not in order, how can it be presumed that tax was reduced to Rs.5,595/-. Primafacie, the order is not a full and complete order and is liable to be set aside on this ground alone.

10.At this stage assesse contended that in the year 1988-89, when tax was enhanced to Rs.7,000/- per half year from Rs.2,632/-, he filed suit challenging the said revision of property tax in O.S. 786/1989 on the file of 7th

Addl District Munsiff, Visakhapatnam and after contest a Decree was passed on 23.03.1992 by the learned 4th Addl District Munsiff, Visakhapatnam declaring notice of the corporation dated 09.03.1989 as arbitrary, capricious, unilateral, and illegal, therefore, the corporation has no right to enhance it again. The learned counsel also filed decree in O.S.No.786/1989 dated 23.03.1992 to prove his contention. I do not find any reason in the said argument. The corporation has right to enhance the tax in general revisions or in special revisions following the procedure contemplated under the Act. In the present case the corporation issued a special notice dated 30.07.2010 and enhanced the tax. The assessee cannot take aid of the above and contend that the tax fixed by the court in earlier suit at a particular point of time is the tax throughout.

11.The other contention of learned counsel for assessee is that the

Municipal Commissioner has not followed the provisions of Chapter VIII of the

Hyderabad Municipal Corporation Act and as such the entire levy itself is bad under law. In appeals against taxation one of the preconditions is that the assessee or tax payer should have made a complaint in writing to the corporation within the time fixed in the notice giving the ground on which the claim of the corporation is disputed. It is an undisputed fact that the assessee made a complaint before the Municipal Corporation on 19.08.2010 which was received by 5 the Commissioner on 24.08.2010 against the receipt of special notice specifically stating several aspects as to arbitrarily fixing rental value, the mode of fixing it without physical inspection etc.,

12.Section 212 of HMC Act provides that “the Commissioner shall cause all complaints so received to be registered in a book to be kept for this purpose and shall give notice in writing, to each complaint, of the day, time and place when and where his complaint shall be investigated”.

Section 223 provides the manner of hearing of complaint it read as follows: - “(1) At the time and place so fixed the commissioner shall investigate and dispose off the complaint in the presence of the complainant, if he shall appear, and if not, in his absence.

(2) For reasonable cause to be recorded, the Commissioner may, from time to time, adjourn the investigation.

(3) when the complaint is disposed off the result thereon shall be noticed in the book of complaints kept under Section 222 and necessary amendments, if any shall be made in accordance with such result, in the assessment book”.

It appears from the order under appeal, the learned Commissioner, issued notice to the complainant to appear before him on 07.02.2011. It appears that, the complainant after receiving the notice appeared before the Municipal

Commissioner that a statement of complainant was recorded wherein he has stated about the age of the building, the manner of fixation of tax without following the law and procedure and that the enhancement to Rs.7,951/- which is more than 6 times is exorbitant. It appears from the office note, the office suggested for reduction of tax to Rs.5,526/-. The order of the learned

Commissioner further discloses that he neither reduced the tax nor confirmed the tax determined under special notice. Further, either the office note or the impugned order does not disclose the details as to how he arrived such conclusion. Therefore, any order passed by the learned Commissioner without providing an opportunity to the assessee would prejudice his case. Further, it is 6 not only against the provision contemplated under Section 223 of the Act, but also against the principles of natural justice. Section 222 mandates the

Commissioner to issue notice in writing to secure his presence. Section 223 mandates the Commissioner to investigate and dispose of the complaint in the presence of complainant. The Legislature incorporated a particular Section to ventilate the grievance of assessee before the Commissioner and therefore it is specifically emphasized about the disposal of complaint in his presence. In other words, a reasonable opportunity must be given to appear and state his case. In the present case, the Municipal Commissioner without hearing the assessee made an order without answering the objections of the assessee behind his back and this is against the principles of natural justice. In Smt.T.Rukkavva Vs. The

Municipal Corporation of Hyderabad represented by the Special Officer-

cum-Commissioner, Hyderabad 1978 (1) ALT 224, His Lordship held that

Non-compliance of Section 223(1) is fatal. This is one aspect where the Court has to interfere.

13.The Municipal Corporation can enhance tax (a) at the time of general revision; and (b) by issuing a special notice. In the present case, tax was revised by issuing a special notice without stating any reason for enhancement and without following the procedure provided under Section 220 of the Act. In The

Tax Payers Association, Tirupathi Municipality, represented by its

President Sri T.V.Narasimhulu Naidu Vs. The Commissioner and Special

Officer, Tirupathi Municipality, Tirupathi, Chittoor District [1977(2)

A.P.L.J 167 (D.B)], Their Lordships held that practically, in all these notices, a laconic statement has been set out as reason for increase of tax viz., inadequate assessment. Why assessment was considered inadequate or why valuation of the rental property was increased suddenly......... and increase in other cases do not appear on the face of the notice. Each of rate payers in these cases would be therefore completely in the dark as to the grounds on which the increase in assessment has been ordered. The notices would merely go to show that the valuation has been amended by increasing the annual rental value from figure A 7 to figure B, but the reasons on the basis of which the authorities increased the rental value in the first instance and consequently increased the assessment to the property taxes do not appear on the face of these special notices. Since apart from these special notices the rate payers would not have any material before them at the time of presenting a revision petition or subsequently at the time of presenting an appeal against the decision of the Commissioner. These notices must be struck down. It is a mockery of all ordinary principles and rules of administration of law to allow these special notices to stand or to allow municipal authorities to issue special notices of this kind in this manner. All the necessary material which would enable the assessee concerned to present a proper case in revision against the increase in assessment or against the increase in the annual rental value must be furnished in the special notice. Since this is not done, the special notices in all these cases are quashed and set aside.

14. In the present case, the special notice issued by the municipal corporation just refers the rate of increase of rental value and consequently the tax in columns. Absolutely there is no reason why the tax was increased by issuing a special notice. Therefore, as observed by their Lordships the special notice in the present case is not valid under law and this is another lacuna in the case of the municipal corporation.

15.The other main contention of the assessee is that the tax was enhanced from Rs.1,316/- to Rs.7,951/- which is more than six times to the existing tax and it is is not permissible under the relevant rules. Even otherwise, if it is taken that the tax was reduced to Rs.5,526/-, still it is against the relevant rules. At this stage, it is brought to my notice Rules 9 to 11 of Hyderabad

Municipal Corporation (Assessment of Property Tax) rules 1990. It reads as follows:

Rule-9 :

“Enhancement on revision not to exceed seventy five per cent in respect of residential Buildings:- Not withstanding anything contained in these rules, where the increase on account of revision of Property Tax 8

Assessment exceeds 75% over the existing tax as on 31.03.2002 in respect of residential buildings, in the general revision of Property Tax assessments, which has been given effect to from the 1 st April, 2002, the increase shall be restricted to 75% of the existing Tax in respect of residential buildings.”

Rule-10:

“Enhancement on revision in respect of non-residential Buildings:-

Notwithstanding anything contained in these rules, where the increase on account of revision of property tax assessment exceeds 100% and 150% over the existing tax as on the 31 st March, 2002 in respect of non-residential buildings which are more than twenty five years old and less than twenty five years old respectively in the general revision of property tax assessments which has been given effect to from the 1 st April, 2002 and the increase shall be restricted to 100% and 150% of the existing tax in respect of non-residential buildings which are more than twenty five years old and less than twenty five years old respectively”.

Rule-11:

Enhancement on revision in respect of non-residential Buildings:-

“Not withstanding anything contained in these rules, where the increase on account of revision of Property Tax Assessment exceeds 50% over the existing tax as on 30.09.2007 in respect of non-residential buildings, in the general revision of Property Tax assessments, which has been given effect to from the 1 st October 2007, the increased shall be restricted to 50% of the existing Tax in respect of non-residential buildings.”

14.At this stage it was also brought to my notice that the Government of

Andhra Pradesh issued an order in G.O.Ms.No:88 Municipal administration and

Urban Development (TC1) department dated 05.03.2011 omitting rules 9 to 11 of

HMC (Assessment of Property Tax) rules 1990 and now there is no restriction as to enhancement. The said GO has no application to the present case. The reason is enhanced tax was determined even before issuance of the said G.O.Ms.No.88

MA & UD (TC1) department dt:05.03.2011. In the said circumstances, the enhancement of tax more than 100 times is not in accordance with rules and is a violation of the rules framed by the Legislature. This is another ground on which 9 this Court has to interfere. Since the Act of Commissioner is in derogation to the

Act and Rules framed thereunder, therefore, the impugned order passed by the

Municipal Commissioner is unsustainable and is liable to be set aside. The point is answered accordingly.

15.POINT NO.3: In view of my findings and observations to Point Nos.1 and 2 for determination, in particular to Point No.2, which was held in favour of appellant and for the reasons given, the impugned order of the respondent is not in accordance with law and the order is not only illegal but also irregular as such is liable to be set aside. However, in the interest of justice, the matter is to be remanded to the respondent to reassess the property tax of the appellant by following the procedure under the Act and the Rules made thereunder [Hyderabad

Municipal Corporation (Assessment of Property Tax) Rules, 1990] by giving opportunity to the appellant. The point is answered accordingly.

16.POINT No.4: In view of my findings on Points Nos.1 to 3 for determination,

(a) the appeal is allowed and thereby the impugned order of the Respondent in

Revision Petition No.14784/10 for the assessment No.57860 is hereby set aside and the matter is remanded to the respondent to reassess the property tax by following the procedure as contemplated under the Act and the rules made under

Hyderabad Municipal Corporation (Assessment of Property Tax) Rules, 1990 by giving opportunity to the appellant;

(b) The enhanced property tax already paid by appellant during Pendency of appeal as per directions of this court is hereby ordered to adjust to the tax to be determined as directed; and

(c) in the circumstances of the case parties do bear their own costs.

Typed to my dictation to the Stenographer Grade-III, corrected and pronounced by me in open court on this the 23 rd day of September 2015.

PRINCIPAL SENIOR CIVIL JUDGE

VISAKHAPATNAM

10

APPENDIX OF EVIDENCE

No oral or documentary evidence is adduced on either side.

PRINCIPAL SENIOR CIVIL JUDGE

VISAKHAPATNAM

IN THE COURT OF THE PRINCIPAL SENIOR CIVIL JUDGE AT VISAKHAPATNAM

PRESENT: SRIT.VENU GOPAL RAO,

PRL.SENIOR CIVIL JUDGE

WEDNESDAY, 23rd DAY OF SEPTEMBER 2015.

Tax Appeal No.130/2011

Between:

Smt KNVS Mahalakshmi, W/o.Narasimha Murthy, Hindu, aged 60 years, Household duty, residing at Door No.30-1-147, Puthivari Street, Assam Gardens, Visakhapatnam. ….Appellant

And

Greater Visakhapatnam Municipal Corporation, Visakhapatnam, represented by its Commissioner. ….Respondent.

This appeal coming on 06.07.2015 for final hearing before me in the presence of Sri A.Kameswara Rao, advocate for appellant, and of Sri.S.S.Sarma, Standing Counsel for respondent and the same having stood over for consideration till this day, this court delivered the following:

J U D G M E N T

The Appeal is filed under Section 282 of the Hyderabad Municipal

Corporation Act adopted by the Municipal Corporation, Visakhapatnam under Act 19 of 1979 read with Section 7 of the Visakhapatnam Municipal Corporation Act against the orders passed by the Commissioner, Greater Visakhapatnam Municipal

Corporation, Visakhapatnam in R.P.No.503 dated 16.11.2010 said to be received on 26.01.2011 for the House bearing D.No.30-1-147, Municipal Assessment Tax

No.23372, Zone-III, Puthivari Street, Assam Gardens, Visakhapatnam.

2.For the sake of convenience the appellant hereinafter is referred to as ‘the Assessee’ and the respondent hereinafter is referred to as ‘The Municipal

Corporation’.

3.The assessee has received a Special Notice No.16/27/5380 dated 29.07.2010 enhancing the property tax to Rs.1120/- from Rs.400/- per half year on which the assessee preferred a Complaint/Revision Petition under Section 220 of Hyderabad Municipal Corporation Act (hereinafter referred to as the Act) that the learned Commissioner dismissed the complaint/revision petition by confirming the tax to Rs.1,120/- and hence, the appeal is preferred.

4.Aggrieved by the impugned order in Revision Petition No.503/2010 2 passed by the learned Municipal Commissioner, the assessee preferred this appeal contending that the learned Municipal Commissioner has arrived at the rental annual value without disclosing the reasons arbitrarily and without following the procedure contemplated under Act and rules made from time to time that the learned Commissioner has also failed to appreciate that the building is a residential tiled house and as such enhancement of tax, fixing up rental value is arbitrary and without any basis and without assigning any reason etc.,

5.Heard the counsel for appellant and the Standing Counsel for the

Municipal Corporation. The appellant filed written arguments in support of his arguments.

6.Now the points for determination in this appeal are:

(1) Whether the Assessee has complied the mandatory provision as to payment of tax as provided under Section 282 of Hyderabad

Municipal Corporation Act?

(2) Whether the Respondent has not followed the procedure contemplated under the Act and Rules made there under from time to time?

(3) Whether there exists any illegalities or irregularities in the impugned order of Respondent in R.P.No.503/2010 dated 16.11.2010 and is it liable to be set aside?

(4) To what relief?

7.POINT NO.1: The present appeal is preferred under Sec.282 of HMC

Act on dismissal of the complaint/Revision petition of the assessee and confirming the order of assessment by respondent under Section 223 (3) of HMC Act. For better appreciation I am extracting the relevant portion of Section 282 (2) of

H.M.C.Act.

Appeals when and to whom to lie: (1) …...

(2). But no such appeal shall be heard by the said judge, unless:-

(a).......

(b)......

(c).......

(d) in case of an appeal against tax, the amount claimed from the 3 appellant has been deposited by him with the Commissioner.

Therefore, where an appeal against enhancement of tax is filed the amount claimed by the Corporation from assessee has to be deposited with the

Commissioner. The provision makes it very clear that no appeal shall be heard by the Judge, unless the amount claimed by the corporation from the assesee towards tax is deposited with the commissioner. In the present case, the assessee has filed a memo with photo copy of tax passbook on 04.06.2015 that he complied Section 282(d) of H.M.C.Act. This Court directed the assessee to serve the copy of memo on Standing Counsel for Municipal Corporation and memo was filed on 18.06.2015 serving copy of the memo to the Standing Counsel for

Municipal Corporation. The learned Standing Counsel appearing for respondent did not dispute the compliance of Section 282(d) of H.M.C.Act and I hold that the assessee has complied the relevant provision and that the first point is answered accordingly.

8.POINT NO.2: It is an admitted fact that the building under appeal is a residential house in Puthivari Street, Assam Gardens, within the limits of

Greater Visakhapatnam Municipal Corporation. It is an admitted fact that the building is under occupation of the assessee. It is also an admitted fact that the half year tax to the building was Rs.400/- and Special Notice dt:29.07.2010 was issued enhancing the tax to Rs.1,120/- per half year. The assessee preferred a complaint before the learned Municipal Commissioner, Visakhapatnam under section 220 of HMC Act as applicable to Municipal Corporation, Visakhapatnam stating that the building under revision of tax is a self occupied residential building that an increase of nearly 3 times is against all tenets of natural justice.

The learned Commissioner passed the impugned order confirming the tax to

Rs.1,120/- per half year with effect from 01.04.2010.

9.The first contention of learned counsel for assessee is that, in the year 2001 when tax was enhanced to Rs.671/- per half year from Rs.400/- he filed appeal in T.A.No.108/2001 and after contest the tax was reduced to Rs.400/- therefore the corporation has no right to enhance it again. the learned counsel 4 also filed decree in T.A.No.108/2001 dated 15.04.2003 to prove his contention. I do not find any reason in the said argument. The corporation has right to enhance the tax following the procedure contemplated under the Act. In the present the corporation issued a special notice dated 29.07.2010 and enhanced the tax. The assessee cannot say that the tax fixed by the court in an appeal at a particular point of time is the tax throughout.

10.The first contention of learned counsel for assessee is that the

Municipal Commissioner has not followed the provisions of Chapter VIII of the

Hyderabad Municipal Corporation Act and as such the entire levy itself is bad under law. In appeals against taxation one of the preconditions is that the assessee or tax payer should have made a complaint in writing to the corporation within the time fixed in the notice giving the ground on which the claim of the corporation is disputed. It is an undisputed fact that the assessee made a complaint before the Municipal Corporation which was received by the

Commissioner on 19.08.2010 against the receipt of special notice specifically stating as to arbitrarily fixing rental value, without physical verification of the building and measurement.

11.Section 212 of HMC Act provides that “the Commissioner shall cause all complaints so received to be registered in a book to be kept for this purpose and shall give notice in writing, to each complaint, of the day, time and place when and where his complaint shall be investigated”.

Section 223 provides the manner of hearing of complaint it read as follows: - “(1) At the time and place so fixed the commissioner shall investigate and dispose off the complaint in the presence of the complainant, if he shall appear, and if not, in his absence.

(2) For reasonable cause to be recorded, the Commissioner may, from time to time, adjourn the investigation.

(3) when the complaint is disposed off the result thereon shall be noticed in the book of complaints kept under Section 222 and necessary amendments, if 5 any shall be made in accordance with such result, in the assessment book”.

The order of the learned Commissioner discloses that the complainant was directed to appear before him on 03.09.2010 by issuing a notice. It appears the complainant after receiving the notice appeared before the Municipal

Commissioner that a statement of complainant's husband was recorded wherein he has stated about fixing of tax to Rs.1,120/- i.e., more than 2 times is exorbitant. It appears from the office note, the assistant commissioner did not recommend for reduction of tax on the ground that a portion of it was leased out.

It was not put to the husband of the complainant that whether they leased out any portion to a tenant. The order of the learned Commissioner further discloses that he accepted the office note and passed the impugned order without stating the details as to how he arrived such conclusion. Therefore, any order passed by the learned Commissioner without providing an opportunity to the assessee would prejudice his case. Further, it is not only against the provision contemplated under Section 223 of the Act, but also against the principles of natural justice.

Section 222 mandates the Commissioner to issue notice in writing to secure his presence. Section 223 mandates the Commissioner to investigate and dispose of the complaint in the presence of complainant. The Legislature incorporated a particular Section to ventilate the grievance of assessee before the Commissioner and therefore it is specifically emphasized about the disposal of complaint in his presence. In other words, a reasonable opportunity must be given to appear and state his case. In the present case, the Municipal Commissioner without hearing the assessee and without confirming about lease of part of the building, made an order without answering the objections of the assessee behind his back and this is against the principles of natural justice. In Smt.T.Rukkavva Vs. The Municipal

Corporation of Hyderabad represented by the Special Officer-cum-

Commissioner, Hyderabad 1978 (1) ALT 224, His Lordship held that Non- compliance of Section 223(1) is fatal. This is one aspect where the Court has to interfere.

12.The Municipal Corporation can enhance tax (a) at the time of general 6 revision; and (b) by issuing a special notice. In the present case, tax was revised by issuing a special notice without stating any reason for enhancement and without following the procedure provided under Section 220 of the Act. In The

Tax Payers Association, Tirupathi Municipality, represented by its

President Sri T.V.Narasimhulu Naidu Vs. The Commissioner and Special

Officer, Tirupathi Municipality, Tirupathi, Chittoor District [1977(2)

A.P.L.J 167 (D.B)], Their Lordships held that practically, in all these notices, a laconic statement has been set out as reason for increase of tax viz., inadequate assessment. Why assessment was considered inadequate or why valuation of the rental property was increased suddenly......... and increase in other cases do not appear on the face of the notice. Each of rate payers in these cases would be therefore completely in the dark as to the grounds on which the increase in assessment has been ordered. The notices would merely go to show that the valuation has been amended by increasing the annual rental value from figure A to figure B, but the reasons on the basis of which the authorities increased the rental value in the first instance and consequently increased the assessment to the property taxes do not appear on the face of these special notices. Since apart from these special notices the rate payers would not have any material before them at the time of presenting a revision petition or subsequently at the time of presenting an appeal against the decision of the Commissioner. These notices must be struck down. It is a mockery of all ordinary principles and rules of administration of law to allow these special notices to stand or to allow municipal authorities to issue special notices of this kind in this manner. All the necessary material which would enable the assessee concerned to present a proper case in revision against the increase in assessment or against the increase in the annual rental value must be furnished in the special notice. Since this is not done, the special notices in all these cases are quashed and set aside.

13. In the present case, the special notice issued by the municipal corporation just refers the rate of increase of rental value and consequently the tax in columns. Absolutely there is no reason why the tax was increased by 7 issuing a special notice. Therefore, as observed by their Lordships the special notice in the present case is not valid under law and this is another lacuna in the case of the municipal corporation.

14.The other main contention of the assessee is that the tax was enhanced from Rs.400/- to Rs.1,120/- i.e., nearly three times to the existing tax, which is not permissible under the relevant rules. At this stage, Rules 9 to 11 of

Hyderabad Municipal Corporation (Assessment of Property Tax) rules 1990 were brought to my notice. It reads as follows:

Rule-9 :

“Enhancement on revision not to exceed seventy five per cent in respect of residential Buildings:- Not withstanding anything contained in these rules, where the increase on account of revision of Property Tax

Assessment exceeds 75% over the existing tax as on 31.03.2002 in respect of residential buildings, in the general revision of Property Tax assessments, which has been given effect to from the 1 st April, 2002, the increase shall be restricted to 75% of the existing Tax in respect of residential buildings.”

Rule-10:

“Enhancement on revision in respect of non-residential Buildings:-

Notwithstanding anything contained in these rules, where the increase on account of revision of property tax assessment exceeds 100% and 150% over the existing tax as on the 31 st March, 2002 in respect of non-residential buildings which are more than twenty five years old and less than twenty five years old respectively in the general revision of property tax assessments which has been given effect to from the 1 st April, 2002 and the increase shall be restricted to 100% and 150% of the existing tax in respect of non-residential buildings which are more than twenty five years old and less than twenty five years old respectively”.

Rule-11:

Enhancement on revision in respect of non-residential Buildings:-

“Not withstanding anything contained in these rules, where the increase on account of revision of Property Tax Assessment exceeds 50% over the existing tax as on 8 30.09.2007 in respect of non-residential buildings, in the general revision of Property Tax assessments, which has been given effect to from the 1 st October 2007, the increased shall be restricted to 50% of the existing Tax in respect of non-residential buildings.”

15.At this stage it was also brought to my notice that the Government of

Andhra Pradesh issued an order in G.O.Ms.No:88 Municipal administration and

Urban Development (TC1) department dated 05.03.2011 omitting rules 9 to 11 of

HMC (Assessment of Property Tax) rules 1990 and now there is no restriction as to enhancement. The said GO has no application to the present case. The reason is enhanced tax was determined even before issuance of the said G.O.Ms.No.88

MA & UD (TC1) department dt:05.03.2011. In the said circumstances, the enhancement of tax more than 100 times is not in accordance with rules and is a violation of the rules framed by the Legislature. This is another ground on which this Court has to interfere.

16.Anyhow, in view of my observations above and as the Act of

Commissioner is in derogation to the Act and Rules framed thereunder, therefore, the impugned order passed by the Municipal Commissioner is unsustainable and is liable to be set aside. The point is answered accordingly.

17.POINT NO.3: In view of my findings and observations to Point Nos.1 and 2 for determination, in particular to Point No.2, which was held in favour of appellant and for the reasons' given, the impugned order of the respondent is not in accordance with law and the order is not only illegal but also irregular as such is liable to be set aside. However, in the interest of justice, the matter is to be remanded to the respondent to reassess the property tax of the appellant by following the procedure under the Act and the Rules made thereunder [Hyderabad

Municipal Corporation (Assessment of Property Tax) Rules, 1990] by giving opportunity to the appellant. The point is answered accordingly.

18.POINT No.4: In view of my findings on Points Nos.1 to 3 for determination,

(a) the appeal is allowed and thereby the impugned order of the Respondent in

Revision Petition No.503 dated 16.11.2010 for the assesment No.23372 is hereby 9 set aside and the matter is remanded to the respondent to reassess the property tax by following the procedure as contemplated under the Act and the rules made under Hyderabad Municipal Corporation (Assessment of Property Tax) Rules, 1990 by giving opportunity to the appellant;

(b) The enhanced property tax already paid by appellant during Pendency of appeal as per directions of this court is hereby ordered to adjust to the tax to be determined as directed; and

(c) in the circumstances of the case parties do bear their own costs.

Typed to my dictation to the Stenographer Grade-III, corrected and pronounced by me in open court on this the 23 rd day of September 2015.

PRINCIPAL SENIOR CIVIL JUDGE

VISAKHAPATNAM

APPENDIX OF EVIDENCE

No oral or documentary evidence is adduced on either side.

PRINCIPAL SENIOR CIVIL JUDGE

VISAKHAPATNAM

IN THE COURT OF II ADDITIONAL SENIOR CIVIL JUDGE,

VISAKHAPATNAM

PRESENT: SRI T.VENUGOPAL RAO, B.COM., LL.M.,

II ADDL. SENIOR CIVIL JUDGE

Tuesday, the 30th day of April, 2013

O.S.1427/2010

Between:-

Smt. B.Varalakshmi, W/o Late kondala Rao, Hindu, aged 41 years, r/of D.No.14-26-52, Angati Dibba, Maharanipeta, Visakhapatnam.

….. Plaintiff

And:-

Sri Behara Simhachalam, s/o late Appalaswamy, Hindu, aged about 52 years, Employee in All India Radio, residing in All India Radio Quarters, Siripuram, Visakhapatnam.

….. Defendant

This suit coming on 22.4.2013 for final hearing before me in the presence of Sri D N Murthy, Advocate for plaintiff and of Sri P. Rama Rao, advocate for defendant and having stood over for consideration till this day, the court delivered the following:

JUDGMENT

The suit is filed for recovery of Rs.3,10,666/- due on promissory note dt.08.02.2008 executed by defendant in favour of plaintiff for Rs.2,00,000/- with subsequent interest and costs.

2.The brief case of the plaintiff: The defendant borrowed an amount of Rs.2,00,000/- from the plaintiff on 08.02.2008 for discharge of his sundry debts and family expenses and executed a demand promissory note agreeing to repay the said amount with interest at 24% per annum either to the plaintiff or her order on demand that as the defendant failed to repay the debt in spite of demand therefore, suit is filed for recovery of the amount due under the promissory note.

2

3. The defendant filed his written statement denying the material averments made in the plaint.

The brief case of the defendant: The defendant borrowed

Rs.25,000/- from one Kanaka Raju the son-in-law of plaintiff who is the 1st attestor of the alleged promissory note on 08-02-2008 that at that time the said Kanakaraju also received a blank signed promissory note and cheque that while so, when he could not discharge the debt, the said

Kanakaraju in the month of August 2010 settled the matter for

Rs.40,000/- that he paid Rs.10,000/- in the said month and the balance of Rs.30,000/- is to be paid to the said Kanakaraju that in the meanwhile the said Kanakaraju got filed the suit through his aunt i.e., the plaintiff after filling the columns of the said blank promissory note as if he borrowed Rs.2,00,000/- and that prayed the court to dismiss the suit with costs.

4. On the basis of pleadings of both parties my learned predecessor-in-office has framed the following issues for trial;

1. Whether the suit promissory note is not supported by consideration ?

2. Whether discharge pleaded by defendant is true?

3. Whether plaintiff is entitled to recover the suit claim as prayed?

4. To what relief?

5. On behalf of the plaintiff P.Ws.1 and 2 were examined, Ex.A1 was marked.

The plaintiff herself was examined as PW.1 to prove that the defendant borrowed Rs.2,00,000/- from her and execution of Ex.A1 promissory note by him on 08-02-2008 and failing to discharge the debt 3 subsequently. Ex.A1 was marked through her. The plaintiff also examined the attestor of Ex.A1 as PW.2 not only to prove the execution of Ex.A1 promissory note but also that it is supported by consideration.

6. On behalf of the defendant DW.1 was examined. No documents were marked on his behalf.

The defendant himself was examined as DW.1 to disprove the case of the plaintiff and to prove that Kanakaraju (PW.2) taking advantage of having the blank promissory note and cheque got filed the suit through plaintiff as if he borrowed Rs.2,00,000/- etc. No documents were marked on his behalf.

7. Heard the counsel for plaintiff and defendant.

8. ISSUE NO.1: It is the case of the plaintiff that the defendant borrowed Rs.2,00,000/- from her on 08-02-2008 and executed Ex.A1 promissory note in her favour in the presence of the attestors (PW.2 and

S.Prasad) and the scribe, M.V.Ramana Murthy. On the other hand, the case of the defendant is that he borrowed Rs.25,000/- from Kanakaraju, the brother-in-law of plaintiff on 08-02-2008 that at that time the said

Kanakaraju had obtained blank signed promissory note and cheque towards collateral security that he discharged part of the debt subsequently while agreeing to discharge the balance in a short time, that the said Kanakaraju got filled the blank promissory note and filed the present suit through plaintiff as if he borrowed Rs.2,00,000/-. When the defendant denied Ex.A1 transaction though admitted his signature, the primary burden is on plaintiff to prove the execution of Ex.A1 promissory note.

4

9. The case of plaintiff is that the defendant borrowed Rs.2,00,000/- from her after execution of Ex.A.1. It is also the evidence of plaintiff that she got acquaintance with the defendant through her son-in-law when he was coming to his house. There is no dispute about the factum of having acquaintance between the defendant and son-in-law of plaintiff(PW.2). It is not the case of the defendant that he has not seen the plaintiff at any point of time. On the other hand, it is the case of the defendant that he borrowed Rs.25,000/- from Kanakaraju, the son-in-law of plaintiff and that she had obtained a blank promissory note and cheque from him. In other words, the defendant pleads that there is no relationship of debtor and creditor between them. When coming to cross examination of PWs.1 and 2, the defendant did not elicit or suggest that he borrowed

Rs.25,000/- from Kanakaraju(PW.2). On the other hand, it is elicited and suggested that he borrowed money from plaintiff. Further the defendant also suggested the said settlement in August 2010 was between him and plaintiff and not between him and PW.2. Therefore, the tenor of cross- examination itself establishes the relationship between the plaintiff and defendant as creditor and debtor.

10. The case of the plaintiff is that she lent Rs.2,00,000/- to the defendant on 08-02-2008 and that the defendant executed Ex.A-1 promissory note in the presence of PW.2, Prasad and Ramana Murthy. On the other hand, the case of he defendant is that he borrowed Rs.25,000/- from Kanaka Raju but the evidence on record establishes the fact that the defendant borrowed money from plaintiff. The defendant is admitting his signature on Ex.A-1 promissory note. No doubt he states that his signature was obtained on blank promissory note. The evidence of Pws.1 5 and 2 is that the defendant came to her son-in-law's house and requested to lend money about 4 or 5 months prior to execution of

Ex.A.1, that she promised to lend money after Sankranthi that the defendant came to the house of her son-in-law and after receiving consideration executed Ex.A.1 promissory note. It is the evidence of

PW.1 that she is doing cloth business. It is not denied by the defendant.

There is no pleading or evidence before the court that the plaintiff has no capacity to lend money. Therefore, the evidence on record probablises the fact that the plaintiff is having capacity to lend money. The evidence of PW.2 is very clear as to signing of the defendant on Ex.A.1 after scribing of promissory note and passing of consideration. The evidence of

PW.2 supports the evidence of PW.1 in all respects. No doubt, PW.2 is no other than the son-in-law of plaintiff but mere relationship cannot be a ground to disbelieve his evidence unless the defendant places strong evidence before the court showing that the evidence of PW.2 cannot be believed. Further, the court also has to see the circumstances whether the evidence of the plaintiff probablises the factum of transaction. The defendant did not elicit any favourable evidence in his favour from the evidence of PW.1 and 2. Once the plaintiff examines an independent person said to be attestor and when the defendant fails to establish her case through them, the burden shifts on to the defendant to prove that he did not borrow and execute Ex.A-1 in the manner spoken by PWs.1

And 2. Except suggesting that he borrowed Rs.25,000/-, there is no other evidence before the court to prove the said fact. In Penumatcha

Achyutharamaraju V. Padmanabhuni Venkata Subbaiah (2005

(3) ALD 792). His lordship held that “once the plaintiff examined himself 6 and states about the lending of money to the defendant and also examining the attestors to support his evidence the court can draw legal presumption under Section 118 of Negotiable Instrument Act that such promissory note was made or drawn for consideration and the burden lies on the defendant to prove that the said promissory note was executed without consideration namely the plaintiff has no capacity to lend such amount”. Thus the plaintiff by examining PW.2 has placed sufficient evidence to prove the execution of Ex.A1 promissory note by the defendant.

11. Now it is for the defendant to prove that Ex.A1 promissory note was not executed by him on the day in the manner pleaded and spoken by plaintiff and her witness. The evidence on record shows that the defendant borrowed money from plaintiff on 08.02.2008. Except stating that he borrowed Rs.25,000/-, nothing was placed on the record to disprove the fact that he borrowed Rs.2,00,000/-. No doubt, the defendant examined DW.2 to prove the said fact. It is no the pleading of the defendant that DW.2 was present on the day when he was borrowing money from Kanakaraju. Further, the evidence on record probablises that he was not present on the day, when defendant admits the transaction between him and plaintiff, any amount of evidence of witness that the transaction was between the defendant and Kanakaraju cannot be believed. It is also the case of the defendant that there was settlement between him and Kanaka Raju for Rs.40,000/- in the month of

August, 2010 and that he paid Rs.10,000/- on the day and agreed to pay balance at a later date. There is no evidence that the said settlement was between the defendant and Kanaka Raju but it is between the 7 plaintiff and defendant. Further, the pleading is very bald as to the date of either settlement or payment of Rs.10,000/- and payment of remaining amount of Rs.30,000/-. There is no pleading or evidence when, to whom, and in whose presence the said amount was paid.

Unless the defendant placed this evidence his evidence cannot be believed as to the factum of receipt of consideration of Rs.25,000/- only.

12. At this stage, the learned counsel for plaintiff argued that once the plaintiff examines the attestor on her behalf and shows circumstance to the court that the defendant executed Ex.A1 and in the said circumstances even if the defendant adduced evidence that the defendant has given blank promissory note etc., it is saved by virtue of

Section 20 of the Negotiable Instrument Act. In Kuppa vs. Selvaraj

S.A.No.1023/2010 dt.10.3.2011 (Madras High Court). His lordship held that “once the signature in a promissory note is accepted, then

Section 20 of the Negotiable Instrument Act also would be attracted and correspondingly Section 118 of the Negotiable Instruments Act would come into play”. In the present case, the defendant had failed to prove that he borrowed only Rs.25,000/- from Kanakaraju and gave a blank promissory note to him. On the other hand, the evidence of plaintiff probablies the fact that she lent Rs.2,00,000/- to the defendant. The defendant is not an illiterate. He is an employee in Union of India. The defendant did not take steps to report the matter either to police or others that Kanaka Raju manipulated Ex.A.1. In the said circumstances,

I hold that the suit promissory note is true, genuine and executed by defendant.

8

13. Once the court comes to conclusion that the defendant executed Ex.A1 promissory note in favour of the plaintiff, the presumption is that the defendant received the consideration. In other words, the burden is on the defendant to prove non existence of consideration till then the presumption is in favour of the plaintiff. In

Bharat Barel and Drum Manufacturing Company Vs. Aminchand

Pyrelal (AIR 1999 SC 1008) their lordships of Supreme Court held that “To disprove the presumption the defendant has to prove on record such facts and circumstances, upon consideration of which the court may either believe that the consideration did not exist or 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 exists.” In the present case the evidence on record shows that the plaintiff is having capacity to lend money. On the other hand except mere pleading that the suit promissory note is not supported by consideration, the defendant did not place any reliable evidence to prove the said fact. The evidence on record shows that the suit promissory note was executed by the defendant and the consideration was also passed on the day. Therefore I hold that the suit promissory note was not only executed by the defendant but also that it was supported by consideration. The issues are answered accordingly in favour of the plaintiff.

14.ISSUE NO.2: The defendant failed to prove that he borrowed any money from Kanaka Raju. On the other hand, the evidence on record is that he borrowed money from plaintiff. It is the pleading of the defendant that in August 2010, there was settlement between him and

Kanakaraju and also that the part payment of Rs.10,000/- to Kanakaraju.

9

The evidence is otherwise. When there is a variance between evidence and pleading, the version of the defendant cannot be believed. When evidence on record is that he made part payment to plaintiff but consequently the said part payment or discharge was not proved by the defendant. The issue is answered accordingly and against the defendant.

15. ISSUE NO.3: In view of my findings on issues above, the plaintiff is entitled to recover the suit amount.

16. ISSUE NO.4: In view of my findings above and in the result,

a)the suit is decreed with costs in favour of the plaintiff and against the defendant for Rs.3,10,666/- (Rupees three lakhs ten thousand and six hundred and sixty six only),

b)the defendant shall pay subsequent interest at the rate of 12% per annum simple from the date of suit till the date of decree and at 6% per annum simple from the date of decree till realization on Rs.2,00,000/-.

Dictated to the Personal Assistant, transcribed by her, corrected

and pronounced by me in the open court, this the 30th day of April, 2013.

II ADDL. SENIOR CIVIL JUDGE

VISAKHAPATNAM.

APPENDIX OF EVIDENCE

WITNESSES EXAMINED

FOR PLAINTIFF:- FOR DEFENDANT:-

P.W.1: Bandari Varalakshmi DW.1: Behara Simhachalam

P.W.2: V.Kanaka Raju DW.2: A. Suribabu

DOCUMENTS MARKED

FOR PLAINTIFF:-

Ex.A.1 is the demand promissory note dt.08.02.2008 executed by the defendant in favour of the plaintiff.

For Defendant:- …Nil…

II ASCJ/VSP

IN THE COURT OF II ADDITIONAL SENIOR CIVIL JUDGE,

VISAKHAPATNAM

PRESENT: SRI T.VENUGOPAL RAO, B.COM., LL.M.,

II ADDL. SENIOR CIVIL JUDGE

Tuesday, the 30th day of April, 2013

O.S.1427/2010

Between:-

Smt. B.Varalakshmi, W/o Late kondala Rao, Hindu, aged 41 years, r/of D.No.14-26-52, Angati Dibba, Maharanipeta, Visakhapatnam.

….. Plaintiff

And:-

Sri Behara Simhachalam, s/o late Appalaswamy, Hindu, aged about 52 years, Employee in All India Radio, residing in All India Radio Quarters, Siripuram, Visakhapatnam.

….. Defendant

This suit coming on 22.4.2013 for final hearing before me in the presence of Sri D N Murthy, Advocate for plaintiff and of Sri P. Rama Rao, advocate for defendant and having stood over for consideration till this day, the court delivered the following:

JUDGMENT

The suit is filed for recovery of Rs.3,10,666/- due on promissory note dt.08.02.2008 executed by defendant in favour of plaintiff for Rs.2,00,000/- with subsequent interest and costs.

2.The brief case of the plaintiff: The defendant borrowed an amount of Rs.2,00,000/- from the plaintiff on 08.02.2008 for discharge of his sundry debts and family expenses and executed a demand promissory note agreeing to repay the said amount with interest at 24% per annum either to the plaintiff or her order on demand that as the defendant failed to repay the debt in spite of demand therefore, suit is filed for recovery of the amount due under the promissory note.

2

3. The defendant filed his written statement denying the material averments made in the plaint.

The brief case of the defendant: The defendant borrowed

Rs.25,000/- from one Kanaka Raju the son-in-law of plaintiff who is the 1st attestor of the alleged promissory note on 08-02-2008 that at that time the said Kanakaraju also received a blank signed promissory note and cheque that while so, when he could not discharge the debt, the said

Kanakaraju in the month of August 2010 settled the matter for

Rs.40,000/- that he paid Rs.10,000/- in the said month and the balance of Rs.30,000/- is to be paid to the said Kanakaraju that in the meanwhile the said Kanakaraju got filed the suit through his aunt i.e., the plaintiff after filling the columns of the said blank promissory note as if he borrowed Rs.2,00,000/- and that prayed the court to dismiss the suit with costs.

4. On the basis of pleadings of both parties my learned predecessor-in-office has framed the following issues for trial;

1. Whether the suit promissory note is not supported by consideration ?

2. Whether discharge pleaded by defendant is true?

3. Whether plaintiff is entitled to recover the suit claim as prayed?

4. To what relief?

5. On behalf of the plaintiff P.Ws.1 and 2 were examined, Ex.A1 was marked.

The plaintiff herself was examined as PW.1 to prove that the defendant borrowed Rs.2,00,000/- from her and execution of Ex.A1 promissory note by him on 08-02-2008 and failing to discharge the debt 3 subsequently. Ex.A1 was marked through her. The plaintiff also examined the attestor of Ex.A1 as PW.2 not only to prove the execution of Ex.A1 promissory note but also that it is supported by consideration.

6. On behalf of the defendant DW.1 was examined. No documents were marked on his behalf.

The defendant himself was examined as DW.1 to disprove the case of the plaintiff and to prove that Kanakaraju (PW.2) taking advantage of having the blank promissory note and cheque got filed the suit through plaintiff as if he borrowed Rs.2,00,000/- etc. No documents were marked on his behalf.

7. Heard the counsel for plaintiff and defendant.

8. ISSUE NO.1: It is the case of the plaintiff that the defendant borrowed Rs.2,00,000/- from her on 08-02-2008 and executed Ex.A1 promissory note in her favour in the presence of the attestors (PW.2 and

S.Prasad) and the scribe, M.V.Ramana Murthy. On the other hand, the case of the defendant is that he borrowed Rs.25,000/- from Kanakaraju, the brother-in-law of plaintiff on 08-02-2008 that at that time the said

Kanakaraju had obtained blank signed promissory note and cheque towards collateral security that he discharged part of the debt subsequently while agreeing to discharge the balance in a short time, that the said Kanakaraju got filled the blank promissory note and filed the present suit through plaintiff as if he borrowed Rs.2,00,000/-. When the defendant denied Ex.A1 transaction though admitted his signature, the primary burden is on plaintiff to prove the execution of Ex.A1 promissory note.

4

9. The case of plaintiff is that the defendant borrowed Rs.2,00,000/- from her after execution of Ex.A.1. It is also the evidence of plaintiff that she got acquaintance with the defendant through her son-in-law when he was coming to his house. There is no dispute about the factum of having acquaintance between the defendant and son-in-law of plaintiff(PW.2). It is not the case of the defendant that he has not seen the plaintiff at any point of time. On the other hand, it is the case of the defendant that he borrowed Rs.25,000/- from Kanakaraju, the son-in-law of plaintiff and that she had obtained a blank promissory note and cheque from him. In other words, the defendant pleads that there is no relationship of debtor and creditor between them. When coming to cross examination of PWs.1 and 2, the defendant did not elicit or suggest that he borrowed

Rs.25,000/- from Kanakaraju(PW.2). On the other hand, it is elicited and suggested that he borrowed money from plaintiff. Further the defendant also suggested the said settlement in August 2010 was between him and plaintiff and not between him and PW.2. Therefore, the tenor of cross- examination itself establishes the relationship between the plaintiff and defendant as creditor and debtor.

10. The case of the plaintiff is that she lent Rs.2,00,000/- to the defendant on 08-02-2008 and that the defendant executed Ex.A-1 promissory note in the presence of PW.2, Prasad and Ramana Murthy. On the other hand, the case of he defendant is that he borrowed Rs.25,000/- from Kanaka Raju but the evidence on record establishes the fact that the defendant borrowed money from plaintiff. The defendant is admitting his signature on Ex.A-1 promissory note. No doubt he states that his signature was obtained on blank promissory note. The evidence of Pws.1 5 and 2 is that the defendant came to her son-in-law's house and requested to lend money about 4 or 5 months prior to execution of

Ex.A.1, that she promised to lend money after Sankranthi that the defendant came to the house of her son-in-law and after receiving consideration executed Ex.A.1 promissory note. It is the evidence of

PW.1 that she is doing cloth business. It is not denied by the defendant.

There is no pleading or evidence before the court that the plaintiff has no capacity to lend money. Therefore, the evidence on record probablises the fact that the plaintiff is having capacity to lend money. The evidence of PW.2 is very clear as to signing of the defendant on Ex.A.1 after scribing of promissory note and passing of consideration. The evidence of

PW.2 supports the evidence of PW.1 in all respects. No doubt, PW.2 is no other than the son-in-law of plaintiff but mere relationship cannot be a ground to disbelieve his evidence unless the defendant places strong evidence before the court showing that the evidence of PW.2 cannot be believed. Further, the court also has to see the circumstances whether the evidence of the plaintiff probablises the factum of transaction. The defendant did not elicit any favourable evidence in his favour from the evidence of PW.1 and 2. Once the plaintiff examines an independent person said to be attestor and when the defendant fails to establish her case through them, the burden shifts on to the defendant to prove that he did not borrow and execute Ex.A-1 in the manner spoken by PWs.1

And 2. Except suggesting that he borrowed Rs.25,000/-, there is no other evidence before the court to prove the said fact. In Penumatcha

Achyutharamaraju V. Padmanabhuni Venkata Subbaiah (2005

(3) ALD 792). His lordship held that “once the plaintiff examined himself 6 and states about the lending of money to the defendant and also examining the attestors to support his evidence the court can draw legal presumption under Section 118 of Negotiable Instrument Act that such promissory note was made or drawn for consideration and the burden lies on the defendant to prove that the said promissory note was executed without consideration namely the plaintiff has no capacity to lend such amount”. Thus the plaintiff by examining PW.2 has placed sufficient evidence to prove the execution of Ex.A1 promissory note by the defendant.

11. Now it is for the defendant to prove that Ex.A1 promissory note was not executed by him on the day in the manner pleaded and spoken by plaintiff and her witness. The evidence on record shows that the defendant borrowed money from plaintiff on 08.02.2008. Except stating that he borrowed Rs.25,000/-, nothing was placed on the record to disprove the fact that he borrowed Rs.2,00,000/-. No doubt, the defendant examined DW.2 to prove the said fact. It is no the pleading of the defendant that DW.2 was present on the day when he was borrowing money from Kanakaraju. Further, the evidence on record probablises that he was not present on the day, when defendant admits the transaction between him and plaintiff, any amount of evidence of witness that the transaction was between the defendant and Kanakaraju cannot be believed. It is also the case of the defendant that there was settlement between him and Kanaka Raju for Rs.40,000/- in the month of

August, 2010 and that he paid Rs.10,000/- on the day and agreed to pay balance at a later date. There is no evidence that the said settlement was between the defendant and Kanaka Raju but it is between the 7 plaintiff and defendant. Further, the pleading is very bald as to the date of either settlement or payment of Rs.10,000/- and payment of remaining amount of Rs.30,000/-. There is no pleading or evidence when, to whom, and in whose presence the said amount was paid.

Unless the defendant placed this evidence his evidence cannot be believed as to the factum of receipt of consideration of Rs.25,000/- only.

12. At this stage, the learned counsel for plaintiff argued that once the plaintiff examines the attestor on her behalf and shows circumstance to the court that the defendant executed Ex.A1 and in the said circumstances even if the defendant adduced evidence that the defendant has given blank promissory note etc., it is saved by virtue of

Section 20 of the Negotiable Instrument Act. In Kuppa vs. Selvaraj

S.A.No.1023/2010 dt.10.3.2011 (Madras High Court). His lordship held that “once the signature in a promissory note is accepted, then

Section 20 of the Negotiable Instrument Act also would be attracted and correspondingly Section 118 of the Negotiable Instruments Act would come into play”. In the present case, the defendant had failed to prove that he borrowed only Rs.25,000/- from Kanakaraju and gave a blank promissory note to him. On the other hand, the evidence of plaintiff probablies the fact that she lent Rs.2,00,000/- to the defendant. The defendant is not an illiterate. He is an employee in Union of India. The defendant did not take steps to report the matter either to police or others that Kanaka Raju manipulated Ex.A.1. In the said circumstances,

I hold that the suit promissory note is true, genuine and executed by defendant.

8

13. Once the court comes to conclusion that the defendant executed Ex.A1 promissory note in favour of the plaintiff, the presumption is that the defendant received the consideration. In other words, the burden is on the defendant to prove non existence of consideration till then the presumption is in favour of the plaintiff. In

Bharat Barel and Drum Manufacturing Company Vs. Aminchand

Pyrelal (AIR 1999 SC 1008) their lordships of Supreme Court held that “To disprove the presumption the defendant has to prove on record such facts and circumstances, upon consideration of which the court may either believe that the consideration did not exist or 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 exists.” In the present case the evidence on record shows that the plaintiff is having capacity to lend money. On the other hand except mere pleading that the suit promissory note is not supported by consideration, the defendant did not place any reliable evidence to prove the said fact. The evidence on record shows that the suit promissory note was executed by the defendant and the consideration was also passed on the day. Therefore I hold that the suit promissory note was not only executed by the defendant but also that it was supported by consideration. The issues are answered accordingly in favour of the plaintiff.

14.ISSUE NO.2: The defendant failed to prove that he borrowed any money from Kanaka Raju. On the other hand, the evidence on record is that he borrowed money from plaintiff. It is the pleading of the defendant that in August 2010, there was settlement between him and

Kanakaraju and also that the part payment of Rs.10,000/- to Kanakaraju.

9

The evidence is otherwise. When there is a variance between evidence and pleading, the version of the defendant cannot be believed. When evidence on record is that he made part payment to plaintiff but consequently the said part payment or discharge was not proved by the defendant. The issue is answered accordingly and against the defendant.

15. ISSUE NO.3: In view of my findings on issues above, the plaintiff is entitled to recover the suit amount.

16. ISSUE NO.4: In view of my findings above and in the result,

a)the suit is decreed with costs in favour of the plaintiff and against the defendant for Rs.3,10,666/- (Rupees three lakhs ten thousand and six hundred and sixty six only),

b)the defendant shall pay subsequent interest at the rate of 12% per annum simple from the date of suit till the date of decree and at 6% per annum simple from the date of decree till realization on Rs.2,00,000/-.

Dictated to the Personal Assistant, transcribed by her, corrected

and pronounced by me in the open court, this the 30th day of April, 2013.

II ADDL. SENIOR CIVIL JUDGE

VISAKHAPATNAM.

APPENDIX OF EVIDENCE

WITNESSES EXAMINED

FOR PLAINTIFF:- FOR DEFENDANT:-

P.W.1: Bandari Varalakshmi DW.1: Behara Simhachalam

P.W.2: V.Kanaka Raju DW.2: A. Suribabu

DOCUMENTS MARKED

FOR PLAINTIFF:-

Ex.A.1 is the demand promissory note dt.08.02.2008 executed by the defendant in favour of the plaintiff.

For Defendant:- …Nil…

II ASCJ/VSP

IN THE COURT OF PRINCIPAL SENIOR CIVIL JUDGE AT VISAKHAPATNAM

PRESENT: SRI T.VENUGOPAL RAO,

PRINCIPAL SENIOR CIVIL JUDGE

Wednesday, the 23rd day of September 2015

O.S.108/2013

Between:-

Penmathsa Satti Raju, S/o.Late Rammohan Raju, Hindu, aged about 40 years, residing at D.No.5-48, Karakavanipalem village, Pendurthy Mandalam & Post, Visakhapatnam District.

….. Plaintiff

And:-

Chinta Subramanyam, S/o.Late Seetarama Murthy, Hindu, aged about 48 years, Employee, Postman, presently residing at Bodivalasa, Sabbavaram-So, Visakhapatnam District and presently residing at D.No.1-143, Mogaliopuram Village, Sabbavaram Mandal, Visakhapatnam District.

….. Defendant

This suit coming on 22.09.2015 for final hearing before me in the presence of Sarvasri R.Suryanarayana & K.Satyanarayana, Advocates for plaintiff and of Sri Pilla Bhaskar, advocate for defendant, and having stood over for consideration till this day, the court delivered the following:

JUDGMENT

The suit is filed for recovery of Rs.7,90,000/- due on promissory note

dated 30.05.2010 executed by the defendant in favour of plaintiff for Rs.6,00,000/-

with subsequent interest and costs.

2. The brief case of the plaintiff: The defendant borrowed an amount of

Rs.6,00,000/- from the plaintiff for the purpose of his family expenses and discharging his sundry debts and executed a demand promissory note in his favour agreeing to repay the said amount with interest at 12% per annum simple either to the plaintiff or to his order on demand that the defendant failed to discharge the debt in spite of demand, therefore, the suit is filed for recovery of amount due under the promissory note.

3.On the other hand, the defendant filed his written statement denying the material averments made in the plaint.

The brief case of the defendant: The defendant did not borrow any money from plaintiff and did not execute promissory note for Rs.6,00,000/- in favour of plaintiff that the plaintiff must have forged his signature on promissory note and might have filed the suit to have unlawful gain that the plaintiff has no capacity to lend such huge amount and that the suit promissory note is not supported by consideration that finally he does not know the attestors and scribe and that there is no necessity for 2 him to borrow amount from the plaintiff and prayed the Court to dismiss the suit with costs.

4.On the basis of pleadings of both parties, the following issues are framed for trial: - 1). Whether the suit promissory note is true, genuine and executed by defendant? 2). Whether the suit promissory note is not supported by consideration? 3). Whether the plaintiff is entitled to recover the suit claim? 4). To what relief?

5. On behalf of the plaintiff, P.Ws.1 to 3 were examined. Ex.A-1 was marked on his behalf.

The plaintiff was examined as P.W.1 to prove that he lent Rs.6,00,000/- to defendant on 30.05.2010 and execution of Ex.A-1 promissory note by him in his favour and failing to discharge the said amount in spite of her demand etc., Ex.A-1 was marked through him. The plaintiff also examined the attestor and scribe of Ex.A-1 promissory note to support his evidence and also to prove that the suit promissory note (Ex.A-1) is not only executed by defendant but also that it is supported by consideration.

6.On behalf of the defendant, D.W.1 was examined. No documents were marked on his behalf.

The defendant was examined as D.W.1 to disprove the case of the plaintiff and to prove that he did not borrow any money from plaintiff and that his signature on Ex.A-1 promissory note was forged.

7.Heard the counsel for plaintiff. The defendant did not address arguments.

8.ISSUE No.1: It is the case of the plaintiff that the plaintiff and defendant are known to each other and that the defendant requested him to lend money that taking into consideration of their intimacy, he lent Rs.6,00,000/- to the defendant on 30.05.2010 that he executed Ex.A-1 promissory note in his favour in the presence of attestors and scribe. On the other hand, the specific case of the defendant is that he did not borrow Rs.6,00,000/- from plaintiff on 30.05.2010 and did not execute Ex.A-1 in his favour and that his signature on Ex.A-1 must be forged. In other words, it is a case of total denial by defendant. Once the defendant denies the execution of Ex.A-1 promissory note, the burden is on plaintiff to prove that the defendant executed Ex.A- 1 promissory note in his favour.

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9.The evidence of P.W.1 is that the defendant approached him and borrowed Rs.6,00,000/- from him at Karakavanipalemand that he lent the said amount in the presence of attestors and scribe. The evidence of P.W.1 is that the defendant is a Postmaster and that he knows him for the last 15 years. There is no denial as to the acquaintance between the plaintiff and defendant. The defendant pleads that he has no acquaintance with attestors and scribe but he did not specifically deny his acquaintance with plaintiff. D.W.1 admits in his cross-examination that he knows the plaintiff. Therefore, the evidence on record probablises the fact that the plaintiff and defendant are known to each other.

10.P.W.1 states in his evidence that he secured the said amount from his business. He also states that he received some money on reaping of Casurina crop.

P.W.1 further states that the defendant requested him to lend money about one or two months prior to 30.05.2010. The main cross-examination is on the aspect, how could plaintiff lent Rs.6,00,000/- to defendant, who is a temporary employee in Postal

Department by the date of Ex.A-1. The sum and substance of evidence of P.W.1 is that, he got acquaintance with the defendant that his intention was not to get interest from the said transaction but to help him, who is in need of money. Further, the defendant may be a temporary employee that does not mean that he cannot own any property at all. The pleading of the plaintiff is that the defendant owned a RCC slabbed house in Sabbavaram Mandal (outskirts of Visakhapatnam). The plaintiff also sought for attachment of the said property. Possessing a house is a better security for the money he lent, therefore, this part of cross-examination of defendant has no much value and it will not have any adverse effect to the case of the plaintiff.

11.The further evidence of plaintiff is that he lent money in between 10.00 and 11.00 A.M on 30.05.2010 that Killi Venkata Ramana (P.W.2), Rayavarapu

Satyanarayana Murthy (attestors) and Korupolu Ramakrishna, P.W.3 and scribewere present and that they attested and scribed the promissory note in their presence. The defendant did not suggest any animosity or ill feelings between him and plaintiff at any point of time. The case of the defendant is that he was on duty on 30.05.2010 and that there was no chance for him to execute Ex.A-1 promissory note. In the cross- examination, D.W.1 states that Sunday is holiday to them that he will not work on that day. He also stated that he cannot say whether 30.05.2010 falls on Sunday or not.

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This Court verified the calendar of the year 2010 and 30.05.2010 is Sunday.

Therefore, the evidence of defendant that there was no chance for him to execute

Ex.A-1 on 30.05.2010 is unsustainable and it falsifies his case.

12.The evidence of P.W.2 is that the plaintiff did not call him to his house on the day that, he went to his house along with P.W.3 on his personal work at about 10.00 to 11.00 A.M that by the time, the plaintiff, defendant, Rayavarapu

Satyanarayana Murthy (one of the attestor) were there that, the plaintiff paid consideration to defendant that Rama Krishna after scribing Ex.A-1, the defendant signed on it and later they have attested Ex.A-1. Except suggesting that he is deposing false being friend of plaintiff, nothing was elicited from him.

13.Coming to the evidence of P.W.3, he states that he also went to the house of plaintiff on his work that at his request he scribed Ex.A-1 promissory note that after enquiring the particulars of parties he filled the blank promissory note that the defendant signed in his presence and later it was attested by Rayavarapu

Satyanarayana Murthy and P.W.2. The defendant elicited several aspects as to the lacking of particulars with respect to Door Number, Certificate Number etc., and the said cross-examination will not clinch the issue. The sum and substance of evidence of

P.W.3 is that he was present along with the parties to Ex.A-1 and the attestors, therefore, the evidence of P.Ws.1 to 3 establishes the fact that the defendant signed on promissory note on a particular date.

14.Once the plaintiff places evidence as to the execution of Ex.A-1 promissory note by examining the persons connected to it, the burden shifts on to the defendant to prove that he did not execute promissory note in the manner spoken by plaintiff and his witnesses. The main contention of the defendant is that he did not borrow money from plaintiff on the day and he did not execute Ex.A-1 that it does not contain his signature. The defendant did not plead why the plaintiff manipulated a promissory note against him. He did not plead any circumstances for manipulation of such promissory note by plaintiff. A person will not manipulate a promissory note against stranger or a person known to him without any other extraneous reasons.

Such manipulation may be either due to disputes or in relation to certain transactions.

Nothing was elicited from the evidence of P.Ws.1 to 3. This is one circumstance that goes against the case of the defendant.

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15.The defendant specifically pleads that the signature on Ex.A-1 promissory note is not his signature. The defendant is an employee of Postal Department. His signature during the contemporaneous period will be before the department. He can request the Court to summon those signatures from the department and can request the Court to compare his signatures of the contemporaneous period with the signatures on Ex.A-1. He did not make such attempt. The other option for the defendant is to request the Court to send Ex.A-1 to the expert for examination. The defendant even did not file an application before the Court to send his signatures of the contemporaneous period and the disputed signature to the expert for comparison.

Except pleading and denying the fact that his signature on Ex.A-1 is not his signature, nothing was placed on record to disprove the case of the plaintiff. Therefore, the combined reading of evidence of P.Ws.1 to 3 probablises the fact that the defendant executed Ex.A-1 promissory note in favour of the plaintiff. Thus, the plaintiff proved execution of Ex.A-1 by defendant in his favour on 30.05.2010. The issue is answered accordingly in favour of the plaintiff.

16.ISSUE No.2:- Once the court comes to conclusion as to the execution of

Ex.A-1 promissory note by defendant in favour of plaintiff, the presumption is that the suit promissory note is supported by consideration, unless, the said presumption is rebutted by defendant. The defendant states that the plaintiff had no capacity to lend such huge money. There is ample evidence from plaintiff's side that he was having business and also that he reaped casurina crop by the time and that he is having money. The defendant did not dispute them. The bald pleading that, plaintiff has no capacity to lend money can not be disbelieved. On the other hand, the contention of the defendant is that there is no need for him to borrow such huge money. This aspect cannot be judged. It is for the defendant to show his position by the date and must show the circumstance to the Court that there was no necessity for him to borrow money. A mere pleading has no value. In the said circumstances, their Lordships of

Supreme Court in Bharat Barel and Drum Manufacturing Company Vs.

Aminchand Pyrelal (AIR 1999 SC 1008) held that, “To disprove the presumption the defendant has to prove on record such facts and circumstances, upon consideration of which the court may either believe that the consideration did not exist or non-existence was so probable that a prudent man would, under the circumstances 6 of the case, shall act upon the plea that it did not exist.” From the evidence on record and legal position, I hold that the defendant had failed to rebut the presumption under

Section 118 of the Negotiable Instrument Act, therefore, I hold that the suit promissory note is supported by consideration. The issue is answered accordingly.

17.ISSUE NO.3: In view of my findings on issues 1 and 2 above, that the defendant executed Ex.A-1 promissory note in favour of plaintiff and as it is supported by consideration, the plaintiff is entitled to recover the suit amount. The issue is answered accordingly in favour of the plaintiff.

18. ISSUE NO.4: In view of my findings on issues above and in the result,

a) the suit is decreed with costs in favour of the plaintiff and against the defendant for Rs.7,90,000/- (Rupees seven lakhs ninety thousand only),

b) Likewise, the defendant shall also pay subsequent interest at the rate of 12% per annum simple from the date of suit till the date of decree and at 6% per annum simple from the date of decree till realization on Rs.6,00,000/-.

Dictated to the Stenographer Grade-III, transcribed by him, corrected and

pronounced by me in the open court, this the 23rd day of September 2015.

PRINCIPAL SENIOR CIVIL JUDGE

VISAKHAPATNAM.

APPENDIX OF EVIDENCE

WITNESSES EXAMINED

FOR PLAINTIFF:- FOR DEFENDANT:- P.W.1: Penmathsa Satti Raju. DW.1: Ch.Subrahmanyam P.W.2: Killi Venkata Ramana. P.W.3: Korupolu Ramakrishna.

DOCUMENTS MARKED

FOR PLAINTIFF:-

Ex.A.1 is the demand promissory note dt.30.05.2010 executed by the defendant in favour of the plaintiff.

For Defendant:- …Nil…

PRINCIPAL SENIOR CIVIL JUDGE

VISAKHAPATNAM