The High Court · 2025

5. Smt Bhupathi Raju Devi Sunitha, Wo. B Srikanth, Aged about 49 years, R/o.H.No.2 1901214, FlatNo.131, Green Park Avenue. NearSurabhi Hotel, Jeedimetla Village, Quthbullapur, Ranga Reddy District. RESPOI'i DENTS/PLAINTIFFS l.A. NO: 2 OF 2012(CCCAMP. NO: 311 OF 2012) Petition under Section 15'l CPC praying that in the circumstances stated in the affidavil filed in support of the petition, the High Court may be pleased to pass orders staying the operation of order dt. 2310312011 in O.S.No. 333 of 2006 on the file of the Chief Judge, CCC., at Hyderabad pending disposal of the appeal Counsel for the Appellants : SRI. CH PUSHYAM KIRAN Counsel for the Respondents : SRI P VINAYAKA SWA,MY The Court delivered the following: JUDGMENT q- ,) THE HONOURABLE SMT. JUSTICE K. SUJANA CITY CML COURT APPEAL No.83 of 2O12 JUDGMENT The present City Civil Court Appeal is filed challenging the judgment dated 23.03.2O I I passed in O.S.No.333 of 2006 by the learned Chief Judge, Ciry Civil Courts, Hyderabad, wherein the plaintiff filed the suit for recovery of Rs.14,74,929/ together with interest @) l8o/o per annum from the date ol filing of the suit, till the date of realisation.

2. The brief facts of the case are that the plaintiff was an Engineer and Contractor. The hrst defendant was a registered partnership Iirm, with defendant Nos.2 and 3 as managing partners, and defendant Nos.4 to 6 as partners. Due to a long-standing relationship, the second defendant invited the plaintilf to join the firm as an cxecutive partner and invest in security works, with an agreemcnl to share profits. A written agreement was signed on 20- I l-1996, under which the hrm would hold 757o share and the plaintiff 25%o share in works awarded by the Maharashtra Krishna Valley Development Corporation. The plaintiff initially SKS.J CC(l ,\.No.8l of 1012 ? invested Rs.9,O2,462 I - between 1 5- 1 1 - 1 996 and 27 -O3 - 1997, and lal.er invested another Rs.9,OO,OOO/-, making a total of Rs.18,02,462/ , rvhich u.as acknowledged by the dcfendants.

3. Later, disputes arose during the execution of the work. These were settled through an understanding dated

20.10.200(), under which the defendants agrecd to pay Rs.22,50,OOO/ in four monthly installments. Four promissorl' notes and post-dated cheques for Rs..5,62,500/ each wt:re issued by the second defendant with 2yo interest. However, the first two cheques were dishonoured- After mediation, the second defendant paid Rs. 1,O0,00O/- and l?s.4,62,OOO/ through demand drafts. The plainlifl returned the first promissory note and cheque.

4. Tl-re second defendant later requested the plaintiff not to present the remaining cheques and promised to clear dues with' 24Vo interest. On 04.10.2001, Rs.8,5O,OO0/ was paid and a<ljusted towards pending dues. Despite this, Rs.10,8:1,875/ remained unpaid. The plaintiff issued a legal notice on 26.12.2OO2 demanding Rs. 13,55,445l-. In response, the defendants denied liability. Howevt'r, a token I I SKS.J CCC.A.No.lt3 o l.20 ll 3 payment of Rs. 1,37,5O0/- was made on 06.03.2003, adjusted torvards interest. Still, Rs. 12,59,661 / remained unpaid.

5. Further notices \{'ere sent on 26.07.2OO3 and 1O.01.2004. The defendants only paid Rs.5,OOO/- on 1O. 11.2003. On 26.08.2004, the second defendant acknowledged the debt and offered Rs.7,0O,O00/- in full settlement, but failed to pay. The plaintiff rejccted the olfer and sent another notice on 2O.O9.2OO4 for Rs. 16,0 1,825.85. On 16.O7.2OO5, the defendants paid Rs.5,0O,O00/- through sk demand drafts, which was adjusted against interest. A protest letter, with updated dues of Rs. 1 3,48,285/ - as on

31.1O.2OO5 was sent, but the defendants did not respond. The plaintiff then hled the present suit seeking recovery of Rs.14,74,929 /- with 18% interest.

6. On the other hand, the defendants filed u'ritten statemcnt stating that the plaintiff was only a salaried Site Engineer from January 1997 to December 1999, and never invested any amount. They alleged that he misused signed blank documents to create falsc records and obtained cheques and promissory notes under coercion. They claimed SKS.J CC(1.A.No.83 ol2() l2 -1 he wrongfully received Rs.14,l2,5OO/- and failed to return i[, dcspite their demands. A police report \r'as filed on

12.02.2003. They denied all claims and requested dismissal of the su il .

7. In his rejoinder, the plaintiff denied all allegations. He claimed Lhe documents and payments were genuine ancl denied misuse, fraud, or coercion. He also stated that any arbitration applicd only among partners and not to him, and insisted he was entitled to the suit amount.

8. Basing on the above pleadings, the trial Court framed firur issues. The plair-rtiff examincd three u,itnesses and rnarked cloctrmcnts Exs.Al to A4.1. The defendants cxamined one rvitnt'ss and markcd Exs. B 1 to 84

9. Alter considering the evidence, the trial Court decreecl the suit for Rs- 14,74,929 l- with interest on Rs.9, 19,625l- at 1'2o/o per annum from the date of filing to the date of dccree, and at 67o per annum from the date of decree till realisation. Aggrieved by the judgment, the defendants frled this appeal. SKS,] CCC.A.No.8i ol20 l2 5 Aggrieved therebv, the appellant Iiled the prescnt city civil I court appezrl lO. Heard Sri Ch. Pushyam Kiran, learned counsel lor the appellants and Sri Vinayaka Swamy, learned counsel for the rcspondents. L 1. I-earned counsel for the appellants submitted that the trial Court had erred in its appreciation of thc rolc of the respondent stating that he was merely an employee who had offered to r.r'ork as a Site Engineer on thc construction projcct undertaken by appellant/defendant No.1 and that overlooked vital aspects including alleged manipulation, forgery, and fabrication of documents by the respondent/ plaintiff, which wcre purportcdly obtained under coercion and that lailed to take into consideration the police complaint filed by the appellant at S.R. Nagar Police Station dated 12.O2.2003, u,hich concerned the illegal demands made by the respondent. He further submitted that the trial Court did not appreciate that, under the terms of the partnership deed, appellant No. 1 was not empowered to induct outsiders as partners or seek external investment in the hrm. Further, SKS,J CCC.A.No.83 oll0l2 6 Clausc 9 of t Ix' partnership deed, rvhicl-r mandates thzrt c apital conl ribution be macle solclv by the appellants, \\'tts rrllegecliv ignorcd b], t1," a,,r.,.

12. Lezrrned counsel for the appellants contended [hat there u'as no er,,idencc to substantiate the clajms of the respondent, and the trial Court had erroneously held the plaintiff er-rtitlcd to rccover the suit amount. In the alternative, it u'as argued that no agreed rate of intcrest had been recordcd in any memo between the parties. Despite this, the trial Court had awardcd interest at the rate of 24o/" per annum, rvhich was described as legaily untenable and also referred to a calculation memo that allegedly showed that the appr:[ants had already paid Rs.2O,60,O0O/- prior to the filing of the suit, leaving a balance, if ant., of only Rs. 1,90,000/ Thc total payments made, amounting to Rs.29,1O,O0O/ -, were claimed to cover the entire settlement amount of Rs-22,5O,000/- dated 20.10.2OOO and further contended that the respondent had obtained the decree from the Civil C<>urt by misrepresentation and by including an interest componcnt that lacked any contractual or statutory basis. Such a demand, according to the appeltants, was i t I I t I I I I I SKS.J CCC.A.No.8l of 2012 7 unsustainable. Therefore, prayed the Court to allow the appeal by setting aside the judgment and decree of the trial Court. 13- On the other hand, learned counsel for the respondents submitted that there was no illegalig in the judgmcnt of the trial Court. He stated that the promissory not.es and cheques had been executed, although the appellant had allegcd that they were obtained under coercion. He contended that, having admitted the documents, the appellant bore the burden of proving coercion, which he failed to do, as no evidence had been produccd to support this claim. He further asserted that the plaintiff had been examined as PW. 1 irnd had also presented PWs.2 and 3 to validate the settlcment- He explained that notices had been repeatedly issued by the plaintilf to the defendants whenever a portion of the amount was paid. According to him, the defendants had respondcd to thosc notices, acknowledging appropriation of interest and the remaining amount towards the principal, r.r,ithout raising objections. He noted that the plaintiff had not received any communication from the defendants specifying S KS..I ('C( . \. No.8j of20l2 8 the manne:' of appropriation of funds, whether for intcrest or principal

14. Learned t:ounsel frrr thc respondents further referred to Section 6O of the [ndian Contracts Act, stating that since the defendant tra<l not indicatcd the appropriation oi payments, the plaintifl rvas entitled to applv th<: amounts flrst towards interest and then towards the principal. Regr.rrtling the appellants' objection to thc absencc o[ an agreed ratc of interest, he maintained that the instrument itself contained a mention of interest, and that since the defendant had signed the document, both the principal and interest werc vaiid and enforceatrle :rnd praved the Court to dismiss the appeal.

15. Upon corrsidcration of thc submissions madc by both the learned r:ounsel and on perusal of the material :rvailable on record, it is it is evider-rt that Exs.AS to A7 (promissory notes) and Exs.A8 to A l0 (chequcs) lr,ere issue d by the second defendant in the capacity of Managir-rg [)irector. Although the plaintiff contended that the said documents were obtainr:d under coercion, thcre is no sutlstantive evidence on rr:cord to support that claim. Once the dr:fendant SKS.J CCC.A.No.8l of 2012 9 admitted the execution of the documents, the burden was on thc defendant appellant to establish that they were obtained under coercion. During cross-examination, DW.l unequivocally admitted the issuance of the cheques and thc advancemcnt of funds to the plaintiff. i6. Furthermore, the account ledger produced by defendant No. 1 and the plaintiff reflects the amount advanced by the plaintiff to the defendants. Thus, there is clear and cogent evidence of the advancement of funds by the plaintiff, and the contention that thc documents were obtained under coercion is not sustainable. The next issue for consideration l t \ is whethcr the plaintilf is entitled to interest @ 24o/o per annum on the promissory notes. As evident from thc record, thc promissory notes explicitly stipulate an interest rate of 24"/o per irnnum. Once the defendant signed the instrument, it is dcemed that the agreed rate of interest stands afhrmed, and the defendant is liable to pay the same. Therefore, there is no illegality in calculating interest @ 24% per annum from the date of filing of the suit until the date of decree, and @, 60/o per annum from the date of decree till realisation. sKs..l CCC.A.No.8i of 20ll t0

17. Considering the prolonged pendency of the proceedings, the submissions of the learncd counsel, and th€' payments made, the interest au.arded by thc trial Court on the principal amount ol 11s.9,19,625/- is herebv reduccd frorr. l'2ok to 6ul, per annum. The rcst of the order re rnains undisturbed.

18. Accorrlingly, the City Civil Court Appeal is clisposerl of with thr: aforesaid modification confincd to Lh(f inti:rcst component zrlonc As a sequel, miscellaneous petitions pending, if any, shall stand closed. //TRUE COPY// SDi -K. SRINIVASA RAO JOINT REGISTRAR e 3ECTION OFFICER I

1. The Chief Judge, City Civil Court, Hyderabad. 2. One CC to SRl. CH PUSHYAM KIRAN Advocate [OPUC] 3. One CC to SRl. P VINAYAKA SWAMY Advocate IOPUC] 4. Two CD Copies To, uI I I I HIGH COUP.T DATED:1711012025 P,E SiA 1 ,J 2 i "'i0I 2m I * /)rlc D,\TCts! JUDGMENT CCCA.No.83 of 2012 DISPOSING OF THE APPEAL t J