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HC-KAR NC: 2026:KHC:10787 RFA No. 285 of 2011
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18TH DAY OF FEBRUARY, 2026 BEFORE THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM REGULAR FIRST APPEAL NO. 285 OF 2011 (MON)
BETWEEN:
SRI. KIRAN BHARTIYA AGED ABOUT 59 YEARS R/AT NO.92, MUNISWAMY LAYOUT 39TH CROSS, 4TH T BLOCK JAYANAGAR, BANGALORE-41
PRESENTLY R/AT NO. 5/1 A-203-204, ADARSH VIHAR BANNERGHATTA ROAD, BANGALORE-560 029. …APPELLANT
(BY SRI. S.R. PARAS JAIN, ADVOCATE)
AND:
M.D. OMER S/O LATE M.C. DHEER SINGH NO.74, 16TH MAIN ROAD B.T.M. LAYOUT, II STAGE I PHASE (MAHADESHWARA LAYOUT) BANGALORE-76. …RESPONDENT
(BY SRI. H.S. PRASHANTH, ADVOCATE)
THIS RFA IS FILED UNDER SEC. 96 OF CPC., AGAINST THE JUDGMENT AND DECREE DATED 7.1.2011 PASSED IN O.S.NO.10498/1993 ON THE FILE OF THE IV ADDL. CITY CIVIL & SESSIONS JUDGE, MAYO HALL UNIT, BANGALORE, (CCH 21), DECREEING THE SUIT FOR RECOVERY OF MONEY.
Digitally signed by AL BHAGYA Location: HIGH COURT OF KARNATAKA
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THIS APPEAL, COMING ON FOR DICTATING JUDGMENT, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM
ORAL JUDGMENT
The captioned appeal is directed against the judgment and decree dated 7.1.2011 passed in O.S.No.10498/1993 whereby the suit filed by the plaintiff for recovery of Rs.1,09,166/- with interest came to be decreed.
For the sake of convenience, the parties are referred to as per their rank before the trial Court.
The facts leading to the case are as under: The plaintiff instituted the suit asserting that on 03.03.1993, the defendant approached him seeking a hand loan of Rs.1,00,000/-. It is specifically pleaded that the plaintiff advanced the said sum on the very same day and that the defendant, in acknowledgment thereof, executed an on-demand promissory note along with a consideration receipt, undertaking to repay the principal
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with interest at 24% per annum. It is further averred that the defendant agreed to pay Rs.2,000/- per month towards interest until full discharge of the loan. According to the plaintiff, despite repeated oral demands, the defendant failed to repay the amount, compelling the plaintiff to issue a legal notice dated 17.04.1993 and thereafter institute the present suit for recovery. 4. On service of summons, the defendant entered appearance and filed a detailed written statement stoutly denying each and every allegation made in the plaint. The defendant categorically denied having borrowed any amount from the plaintiff or having executed the alleged promissory note and consideration receipt. He further contended that several suits had been engineered against him at the instance of one D.P. Gupta under benami names and that the present suit was also a part of such orchestrated litigation. Alleging collusion and abuse of the judicial process, the defendant sought dismissal of the suit.
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In order to substantiate their respective claims, both parties led oral and documentary evidence. The plaintiff examined his wife and General Power of Attorney holder as P.W.1, an alleged attesting/independent witness as P.W.2, and a handwriting expert as P.W.3, and marked documents at Exs.P1 to P25. The defendant examined himself as D.W.1 and another witness as D.W.2 and produced documents marked as Exs.D1 to D5. The documents secured through the Court Commissioner were marked as Exs.C1 to C6. 6. The trial Court, upon appreciation of the oral and documentary evidence, decreed the suit. The decree is primarily founded on the testimony of P.W.1, being the wife and GPA holder of the plaintiff, the supporting evidence of P.W.2, and the opinion evidence of the handwriting expert. The trial Court also placed reliance on the Commissioner’s report while recording its findings in favour of the plaintiff.
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Hence, the present appeal is preferred by the defendant calling in question the correctness and legality of the said judgment and decree. 7. In view of the rival submissions and the material available on record, the following points arise for consideration in this appeal: "(i) Whether the finding of the trial Court that the plaintiff has proved the alleged loan transaction and the execution of the promissory note and consideration receipt suffers from perversity and is unsupported by cogent and reliable evidence? (ii) Whether the trial Court erred in not drawing an adverse inference against the plaintiff for his non-examination, particularly when the evidence of P.W.2 does not inspire confidence? (iii) Whether the trial Court was justified in decreeing the suit? (iv) What Order?"
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Findings on point Nos. (i) to (iii):
The very substratum of the plaintiff’s case rests upon the alleged advancement of a hand loan of Rs.1,00,000/- said to have been made on 03.03.1993. The existence of this transaction constitutes the sole foundation for the claim based on the on-demand promissory note and consideration receipt. However, significantly, the plaintiff has chosen not to enter the witness box to depose with regard to the alleged loan transaction. Instead, he has examined his wife, who claims to be his General Power of Attorney holder, as P.W.1. 9. In a suit founded on a personal monetary transaction, particularly one allegedly arising out of a direct financial dealing between the plaintiff and the defendant, the best evidence would ordinarily be the testimony of the plaintiff himself. The plaintiff alone would be in a position to depose as to the circumstances under which the defendant approached him, the source of funds,
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the manner of payment, the presence of witnesses, and the execution of the promissory note and consideration receipt. The decision to withhold himself from the witness box, without assigning any satisfactory explanation, assumes considerable significance and casts a serious shadow on the veracity of the claim. 10. Further, on a careful reading of the plaint averments, this Court finds that the pleadings are conspicuously bereft of material particulars relating to the alleged transaction. The plaint does not disclose the source from which such a substantial amount was mobilised, whether the payment was made in cash or otherwise, the exact place of transaction, or the presence of attesting witnesses at the time of execution. The pleadings, in essence, contain only bald assertions that the defendant borrowed the amount and executed the documents in question.
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It cannot be lost sight of that the transaction is of the year 1993, and the sum of Rs.1,00,000/- at that point of time was undeniably a substantial amount. When a claim is founded on an alleged cash transaction involving such a significant sum, the Court is required to scrutinize the pleadings and evidence with greater circumspection. In the absence of specific and detailed pleadings, the claim cannot rest merely on general and omnibus statements. 12. In this backdrop, this Court deems it necessary to advert to paragraphs 3 and 4 of the plaint to ascertain whether the foundational facts necessary to establish the alleged loan transaction have at all been pleaded. The said paragraphs are extracted hereunder for ready reference: "3. The Plaintiff submits that the Defendant approached him for an accomadation of Rs. 1,00,000/- (Rs: One Lakh Only) as an Hand loan on 3-3-93, and he collected the same and also executed an On-Demand-Pro- Note and a consideration-Receipt, with a promise to repay the said sum together with interest at the rate of 24% p.a., ON-DEMAND. The same is produced as ANNEXURE 'A'.
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The Plaintiff submits that the Defendant had assured that the interest of Rs. 2,000/- (Rs: Two Thousand Only) P.M., will be paid every month regularly, but the Defendant failed to do so and did not pay a single paise till date."
On a meaningful reading of the extracted paragraphs of the plaint, what unmistakably emerges is that the present suit is founded purely on an alleged personal loan transaction, stated to have been advanced in cash, coupled with the execution of a negotiable instrument, namely, an on-demand promissory note and consideration receipt. In such a case, the entire edifice of the claim rests upon proof of the loan transaction, the passing of consideration, and the due execution of the instrument. The best and most natural witness to speak to these foundational facts would undoubtedly be the lender himself. It is the plaintiff alone who could have deposed about the source of funds, the manner and mode of payment, the circumstances under which the defendant allegedly approached him, the negotiations preceding
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execution of the promissory note, the presence of witnesses, and the subsequent conduct including demands for repayment. 14. The plaintiff’s deliberate abstention from entering the witness box, therefore, assumes considerable significance. This omission becomes even more telling in light of the specific defence raised by the defendant that multiple suits were fabricated and instituted against him in collusion with P.W.2. The law is well settled that where a party to the proceedings fails to step into the witness box to substantiate his pleadings and subjects his version to cross-examination, the Court is entitled to draw an adverse inference under Section 114(g) of the Evidence Act, 1872. In the present case, by withholding himself from cross-examination, the plaintiff has deprived the defendant of a valuable opportunity to test the veracity of the alleged transaction. Consequently, this Court is compelled to scrutinize with greater caution the
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evidentiary value of the testimony tendered by his wife, who has deposed as P.W.1 in the capacity of a GPA holder. 15. This Court has carefully and anxiously examined the cross-examination of P.W.1. Though certain questions may not directly relate to the alleged loan transaction, the tenor of her answers provides meaningful insight into her credibility and reliability as a witness. She claimed that prior to her marriage she was the sole proprietor of a concern styled “Madhu Steel Corporation” and that she later handed over the said firm to Ravi and Vijay. However, when confronted with specific queries, she pleaded ignorance as to the manner in which she transferred the proprietary concern to them. She was unable to state who the landlord of the premises was at the time she allegedly took it on lease, nor could she recollect the quantum of rent paid. She also admitted that she did not receive any advance amount from the landlord.
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P.W.1, who is the wife of the original plaintiff, has deposed in the capacity of a General Power of Attorney holder. It is no doubt true that a party is legally entitled to prosecute a suit through a GPA holder. However, the competence of such GPA holder to depose on behalf of the principal is not absolute and is subject to well-settled limitations. The Hon’ble Supreme Court in Janki Vashdeo Bhojwani v. Indusind Bank Ltd. and others1 has categorically held that while a power of attorney holder can appear, plead and act on behalf of the principal, he or she cannot depose in respect of matters which are exclusively within the personal knowledge of the principal. It was further clarified that the GPA holder can testify only to those facts which are within his or her own knowledge and not in respect of the principal’s state of mind or personal transactions. This principle has been reiterated in Man Kartar v. Hartar Singh Sangha2, wherein the Hon’ble Apex Court observed that where the
1 2005(2) SCC 217 2 2010 SUPREME (SC) 946
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entire case hinges upon a personal transaction between the plaintiff and the defendant, the plaintiff must ordinarily enter the witness box and subject himself to cross- examination. 17. Tested on the anvil of the above principles, the evidence of P.W.1 in the present case does not inspire confidence. The alleged loan transaction is stated to be a personal cash transaction between the plaintiff and the defendant. The source of funds, the negotiations preceding the execution of the promissory note, the passing of consideration, and the subsequent demands are all matters which were exclusively within the personal knowledge of the plaintiff. P.W.1, during the course of her cross-examination, has pleaded ignorance on several material aspects including the financial capacity of her husband, his income, his business particulars, and other surrounding circumstances. Such answers unmistakably indicate that she had no direct and independent knowledge of the alleged transaction. When a GPA holder
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exhibits lack of awareness even on foundational facts, her competence to depose on behalf of the principal becomes seriously doubtful. 18. Therefore, though the plaintiff was legally entitled to prosecute the suit through a GPA holder, the evidentiary value of such testimony must be assessed on the touchstone of credibility and personal knowledge. In the present case, the manner in which P.W.1 has tendered evasive and uncertain answers to crucial questions clearly demonstrates that she lacked the requisite competence to depose about the alleged loan transaction. Consequently, her evidence cannot be treated as satisfactory proof of the execution of the promissory note or the passing of consideration. 19. If P.W.1, who claims to have been a sole proprietor of a business concern, is unable to recollect fundamental details such as the identity of the landlord of the premises from which she allegedly conducted
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business, the quantum of rent paid, or the basic terms of such occupation, such lapses cannot be lightly brushed aside as minor inconsistencies. These are not peripheral or trivial matters; they relate to the ordinary course of business and personal affairs which a person of reasonable prudence would ordinarily remember, particularly when asserting past proprietorship of a commercial establishment. 20. Such inability to furnish even rudimentary particulars inevitably casts doubt on her grasp over financial and transactional matters. When she demonstrates lack of clarity and memory regarding her own business affairs, it becomes difficult for this Court to repose confidence in her capacity to depose with authority and precision about a substantial monetary transaction allegedly entered into by her husband. The plaintiff, who alone had direct and personal knowledge of the alleged loan, has consciously chosen not to step into the witness
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box. In such circumstances, the competence and credibility of the GPA holder assumes critical importance. 21. The cumulative effect of her evasive and uncertain responses is that her testimony does not inspire confidence. Rather, it reinforces the necessity of the plaintiff himself entering the witness box to prove the foundational facts of the alleged loan transaction. The absence of such primary evidence, coupled with the doubtful competence of P.W.1, further weakens the plaintiff’s case and renders the claim susceptible to serious doubt. 22. More significantly, she candidly admitted that she had a close relationship with P.W.2 and that her father had introduced her to him when she was about 16 years of age. She further admitted that Ravi and Vijay, to whom she allegedly transferred the proprietary concern, are the sons of P.W.2. These admissions assume importance in light of the defendant’s allegation of collusion.
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When questioned about her husband’s occupation, she stated that he was a medical representative but also added that he was not working under any particular firm and was independently carrying on such activity from home. This explanation appears inherently improbable, as a medical representative ordinarily functions under appointment and on the payroll of a pharmaceutical company. Strikingly, she pleaded ignorance as to since when her husband was engaged in such business. She further admitted that she is a homemaker with no independent income and that she was unaware of her husband’s monthly earnings. She also admitted that her husband was not an income tax assessee and did not own any immovable properties. These admissions seriously undermine the plaintiff’s alleged financial capacity to advance a substantial sum of Rs.1,00,000/- in the year 1993, which, by any standard, was a considerable amount.
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The defendant, who has consistently disputed the very existence of the transaction, confronted P.W.1 with an affidavit purportedly filed by the original plaintiff seeking withdrawal of the suit on the ground that no amount was due. Though P.W.1 initially disputed the document, she ultimately admitted that the signature appearing on the affidavit was that of her husband. The said document was marked as Ex.P5. She also admitted, in the context of attachment proceedings, that the goods in question were not in the custody of the plaintiff. These admissions further erode the credibility of the plaintiff’s case. 25. The order sheet dated 24.07.1993 records that a person claiming to be the plaintiff appeared before the Court and sought dismissal of the suit. An enquiry was conducted regarding Ex.P5 — the memo dated 23.07.1993 seeking withdrawal of the suit. While the plaintiff denied his signature therein, his wife admitted that the signature on Ex.P5 was that of her husband. This glaring
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inconsistency creates a serious cloud over the bona fides of the plaintiff’s conduct. If indeed the memo was forged or fabricated, it was incumbent upon the plaintiff to initiate appropriate legal action. Conversely, if the memo was genuine, the very institution and continuation of the suit becomes suspect. Either way, the circumstances give rise to grave doubt. 26. The defendant has taken a specific plea that the present suit is orchestrated at the instance of P.W.2, who is a practicing advocate. In this context, the credibility of P.W.2 assumes central importance. P.W.1 has admitted that it was P.W.2 who brought the defendant to their house and introduced him to the plaintiff. She has also stated that it was P.W.2 who brought one Narasimhan to their residence and that the defendant had visited their house along with P.W.2 shortly before the alleged loan transaction. These statements cast doubt on the independence of P.W.2.
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The cross-examination of P.W.2 reveals several disturbing features. He admitted that a criminal case alleging forgery is pending against him. He further admitted that he was the GPA holder in three out of eight similar suits filed against the defendant. Most significantly, he unequivocally admitted that all eight suits were conducted by the same advocate, who happened to be his colleague in the same law firm. The cumulative effect of these admissions casts a long shadow on his impartiality and credibility. His deep involvement in multiple litigations against the defendant, coupled with his professional association with the common advocate conducting the cases, lends credence to the defence plea that the litigations were orchestrated. Therefore, this Court cannot treat the testimony of P.W.2 as that of a disinterested or independent witness. 28. On a comprehensive re-appreciation of the evidence of P.Ws.1 and 2, this Court is of the considered view that the plaintiff has failed to establish his financial
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capacity to advance such a substantial sum in 1993. No documentary evidence, such as bank statements, income tax returns, accounts, or other financial records have been produced to demonstrate the availability of funds. The reliance placed on the Commissioner’s report and the alleged similarity of signatures cannot, by itself, salvage the plaintiff’s case. Opinion evidence, even if accepted, is merely corroborative in nature. It cannot substitute for proof of due execution and passing of consideration, which form the heart of a suit based on a promissory note. 29. Viewed cumulatively, the non-examination of the plaintiff, the doubtful credibility of P.Ws.1 and 2, the contradictions surrounding Ex.P5, the absence of proof of financial capacity, and the surrounding suspicious circumstances render the very foundation of the plaintiff’s claim highly doubtful. The claim does not inspire confidence and falls short of the standard of proof required in a suit founded on a cash loan transaction supported by a negotiable instrument.
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Conclusions and reasons for reversal of decree; 30. On a comprehensive re-appreciation of the entire oral and documentary evidence, this Court is of the considered view that the plaintiff has failed to discharge the burden cast upon him in a suit founded on an alleged cash loan transaction supported by a promissory note. The very foundation of the claim rests upon the assertion that a sum of Rs.1,00,000/- was advanced in cash in the year 1993. The plaintiff, who alone had personal knowledge of the alleged transaction, has consciously chosen not to enter the witness box. In a matter involving a personal financial dealing and execution of a negotiable instrument, the lender himself constitutes the best and most competent witness to prove the passing of consideration and execution. The absence of his testimony, without satisfactory explanation, assumes considerable significance.
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The trial Court has failed to draw the necessary adverse inference under Section 114(g) of the Evidence Act, 1872 against the plaintiff for withholding the best evidence. By abstaining from the witness box, the plaintiff deprived the defendant of the valuable right of cross- examination on material particulars such as source of funds, mode of payment, surrounding circumstances of execution, and subsequent conduct. The evidence of P.W.1, who deposed as a GPA holder, cannot substitute the testimony of the plaintiff in respect of matters exclusively within his personal knowledge. Her cross- examination clearly reveals lack of awareness regarding the plaintiff’s financial capacity, income particulars, and other essential aspects. The manner in which she tendered evasive answers on crucial matters casts serious doubt on her competence to depose about the alleged transaction. 32. Equally, the testimony of P.W.2 does not inspire confidence. His admitted involvement in multiple litigations against the defendant, pendency of criminal proceedings
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alleging forgery, and professional association with the advocate conducting similar suits materially affect his credibility. The cumulative effect of these admissions renders him an interested witness rather than an independent corroborator. The trial Court erred in placing undue reliance on his testimony without adequately scrutinizing these surrounding circumstances. 33. Further, the plaintiff has utterly failed to establish his financial capacity to advance a substantial sum of Rs.1,00,000/- in the year 1993. No bank records, income tax returns, accounts, or independent documentary evidence have been produced to demonstrate availability of such funds. The admissions of P.W.1 that the plaintiff was not an income tax assessee and owned no immovable property further weaken the claim. Though reliance was placed on the Commissioner’s report and opinion evidence relating to signatures, such evidence is merely corroborative and cannot, in law, substitute proof of execution and passing of consideration.
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The contradictions surrounding Ex.P5 and the proceedings relating to the alleged memo seeking withdrawal of the suit further cast a serious cloud on the bona fides of the plaintiff’s conduct. These suspicious circumstances, when viewed cumulatively with the non- examination of the plaintiff, doubtful competence of P.W.1, lack of financial proof, and questionable credibility of P.W.2, render the entire claim highly doubtful. 35. The trial Court, in decreeing the suit, has misdirected itself in appreciating the evidence and has overlooked material infirmities and inconsistencies. The findings recorded are therefore unsustainable in law and on facts. Consequently, the judgment and decree passed by the trial Court are liable to be set aside, and the suit filed by the plaintiff deserves to be dismissed. For the foregoing reasons, Points No.(i) and (ii) are answered in the ‘Affirmative’ and Point No.(iii) is answered in the ‘Negative’.
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Finding on Point No.(iv): 36. Accordingly, this Court proceeds to pass the following: ORDER (i) Appeal is allowed. (ii) Judgment and decree of trial Court in O.S.No.10498/1993 is hereby set aside. (iii) Suit filed by the plaintiff is dismissed. Draw the decree accordingly.
Sd/- (SACHIN SHANKAR MAGADUM) JUDGE
ALB List No.: 1 Sl No.: 10