- 1 - HC-KAR NC: 2025:KHC:18918 RSA No. 728 of 2020 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF JUNE, 2025 BEFORE THE HON'BLE MR JUSTICE ASHOK S.KINAGI REGULAR SECOND APPEAL NO. 728 OF 2020 (MON) BETWEEN: SMT. SATHYAVATHI V SHETTY AGED ABOUT 62 YEARS W/O B VENUGOPAL SHETTY R/AT FLAT NO.306, LAND LINKS TOWNSHIP, NAVANAGARA, 1ST CROSS, KONCHADY, DEREBAIL MANGALORE – 575 020. …APPELLANT (BY SRI. SACHIN B S., ADVOCATE) AND: KARUNAKARA BANGERA AGED ABOUT 49 YEARS, S/O LATE KUNHAPPA BELCHADA, R/AT D.NO.23/82, “YASHODA NILAYA”, KAPIKAD POST, ULLAL MANGALORE TALUK D.K – 575 017 …RESPONDENT (RESPONDENT SERVED) THIS RSA IS FILED UNDER SEC.100 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED 24.10.2019 PASSED IN RA NO.284/2015 ON THE FILE OF THE PRINCIPAL SENIOR CIVIL JUDGE CJM, MANGALURU, DK., DISMISSING THE APPEAL AND CONFIRMING THE JUDGMENT AND DECREE DATED 07.10.2015 PASSED IN OS NO. 498/2013 ON THE FILE OF THE IV ADIDTIONAL CIVIL JUDGE AND JMFC, MANGALURU, DK. Digitally signed by SUNITHA K S Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:18918 RSA No. 728 of 2020 THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE ASHOK S.KINAGI ORAL JUDGMENT This Regular Second appeal is filed by the appellant challenging the judgment and decree dated 24.10.2019 passed in R.A.No.284/2015 by the learned Principal Senior Civil Judge and CJM, Mangaluru, D.K., and the judgment and decree passed in O.S.No.498/2013 dated 07.10.2015 by the IV Additional Civil Judge and JMFC, Mangaluru, D.K. 2. For convenience, the parties are referred to based on their rankings before the trial Court. The appellant was the plaintiff, and the respondent was the defendant. 3. Brief facts, leading rise to the filing of this appeal are as follows: The plaintiff filed a suit against the defendant for recovery of money of Rs.3,08,000/- with future interest at the rate of 18% p.a. until the date of payment. It is the - 3 - HC-KAR NC: 2025:KHC:18918 RSA No. 728 of 2020 case of the plaintiff that the defendant is the close friend of the husband of the plaintiff, and he borrowed a sum of Rs.2,00,000/- on 12.07.2010 from the plaintiff, executed a demand promissory note and agreed to return the said amount by the end of December 2010 with interest. The defendant failed to repay the said amount. The plaintiff got issued a legal notice on 21.07.2011, calling upon the defendant to repay the loan amount with interest. The defendant replied to the legal notice on 01.08.2011 denying the transaction between the plaintiff and the defendant. Hence, a cause of action arose for the plaintiff to file a suit for recovery of money. Accordingly, prays to decree the suit. 3.1. The defendant filed a written statement contending that the suit filed by the plaintiff is barred under the provisions of the Karnataka Money Lenders Act and denied the averments made in the plaint. It is contended that the plaintiff and her husband are in the habit of filing frivolous litigations against the defendant. It - 4 - HC-KAR NC: 2025:KHC:18918 RSA No. 728 of 2020 is contended that the plaintiff has also filed another suit against the defendant in O.S.No.548/2013 for recovery of money, and the husband of the plaintiff has filed a complaint against the defendant in C.C.No.4789/2012 for the offence punishable under Section 138 of the Negotiable Instruments Act (for short ‘N.I.Act’). The husband of the plaintiff had filed Arbitration Application in A.A.No.2/2011 before the District Judge, Mangaluru. It is contended that the plaintiff is a stranger to the defendant and that the defendant at any point in time had any financial transaction with the plaintiff, and it is denied that the defendant had borrowed a sum of Rs.2 lakhs from the plaintiff. It is contended that the husband of the plaintiff was working as a Chief Manager at Canara Bank, Mangaluru. During the relevant point of time, the husband of the plaintiff was working as a Chief Manager; this defendant had availed of a loan from Canara Bank, and the husband of the plaintiff had secured a signature on the - 5 - HC-KAR NC: 2025:KHC:18918 RSA No. 728 of 2020 blank papers, and misused the blank papers. Hence, prays to dismiss the suit. 3.2. The trial Court, based on the pleadings of the parties, framed the relevant issues. 3.3. The plaintiff, to substantiate her case, examined herself as PW.1, and marked 6 documents. In rebuttal, the defendant examined himself as DW.1 and marked two documents as Exs.D1 and D2. The trial Court, after recording the evidence, hearing on both sides and on assessing the verbal and documentary evidence, dismissed the suit with costs, vide judgment dated 07.10.2015. 3.4. The plaintiff, aggrieved by the judgment and decree passed in O.S.No.498/2013, preferred an appeal in R.A.No.284/2015 on the file of learned Principal Senior Civil Judge, Mangaluru, D.K. The first Appellate Court, upon reassessing the verbal and documentary evidence, dismissed the appeal vide judgment dated 24.10.2019. - 6 - HC-KAR NC: 2025:KHC:18918 RSA No. 728 of 2020 3.5. The plaintiff, aggrieved by the impugned judgments, filed this Regular Second Appeal. 4. Heard the arguments of Sri. Sachin B.S., learned counsel, for the plaintiff. 5. Learned counsel for the plaintiff submits that the plaintiff had advanced a hand loan to the defendant, and executed the demand promissory note. He submits that there is a presumption under Section 118 of the N.I Act. Both the Courts below have committed an error in not drawing a presumption under Section 118 of the N.I. Act. Hence, on these grounds, he prays to allow the appeal. 6. Perused the records, and considered the submissions of the learned counsel for the plaintiff. 7. The plaintiff, to substantiate her case, examined herself as PW.1. She has deposed that she had advanced a hand loan of Rs.2 lakhs to the defendant on 12.07.2010, and the defendant agreed to repay the loan - 7 - HC-KAR NC: 2025:KHC:18918 RSA No. 728 of 2020 amount, but the defendant failed to repay the loan amount. The plaintiff got issued a legal notice to the defendant calling upon him to repay the loan amount. The defendant replied to the legal notice, denying the allegations made in it. The plaintiff, to substantiate her case, produced the documents Ex.P1 is the Demand Promissory Note. Exs.P2 and P3 are the copies of the legal notice, Ex.P4 is the reply notice, Ex.P5 is the RTC extract and, Ex.P6 is the certified copy of the Arbitration Application in A.A.No.2/2011. 8. During the course of cross-examination of PW.1, it was elicited that the amount of Rs.1,85,000/- was paid from the account of her husband, and she has not paid the amount from her account. The said admission of PW.1 is sufficient to hold that there is no privity of contract between the plaintiff and the defendant regarding the alleged loan transaction. Furthermore, it is also elicited that the plaintiff has filed another suit in O.S.No.548/2013 for the recovery of money, the husband - 8 - HC-KAR NC: 2025:KHC:18918 RSA No. 728 of 2020 of the plaintiff has filed a complaint against the defendant in C.C.No.4789/2012 for an offence punishable under Section 138 of the N.I Act, and the husband of the plaintiff has also filed an Arbitration Application in A.A.No.2/2011. 9. Conversely, the defendant examined himself as DW.1; he reiterated the written statement averments in the examination-in-chief, and he also denied the alleged transaction between the plaintiff and defendant. He also deposed that the plaintiff and her husband are in the habit of filing the suit after suit, and a complaint against the defendant. He also deposed that the husband of the plaintiff was working as a Chief Manager in Canara Bank, Mangaluru, and the defendant had obtained the loan from the Canara Bank and had affixed his signature on the blank papers, and the husband of the plaintiff has misused those blank signatures on the blank papers, and is filing the suit after suit and a complaint. Furthermore, the defendant also produced the document at Ex.D1 to establish that the husband of the plaintiff had filed - 9 - HC-KAR NC: 2025:KHC:18918 RSA No. 728 of 2020 A.A.No.2/2011, and produced a copy of the complaint in O.S.No.548/2013, marked as Ex.D2, which discloses that the plaintiff had filed a suit for recovery of money against the defendant. 10. From the perusal of the entire evidence on record, the plaintiff has failed to establish that the plaintiff had advanced a hand loan of Rs.2 lakhs to the defendant. 11. Further, the learned counsel for the plaintiff submits that the Courts below have committed an error in not drawing a presumption under Section 118 of the N.I. Act. The plaintiff has produced the document at Ex.P1 – Demand Promissory Note. In support of the said document, the plaintiff has not produced any records to establish that the amount of Rs.1,85,000/- was paid by the plaintiff to the defendant. It is well settled that the presumption is a rebuttal. The defendant, by producing the documents, i.e., Ex.D1 and Ex.D2, has rebutted the - 10 - HC-KAR NC: 2025:KHC:18918 RSA No. 728 of 2020 presumption that the plaintiff has not paid the alleged amount as mentioned in the plaint. 12. From the perusal of the records, it is clear that the plaintiff and her husband are filing the suit after suit, complaint and arbitration proceedings. The plaintiff has abused the process of law, and filed a false case against the defendant. The trial Court was justified in dismissing the suit of the plaintiff with costs. The first Appellate Court was justified in affirming the judgment and decree passed by the trial Court. As the plaintiff abused the process of law, the plaintiff is liable to compensate the defendant. 13. In view of the above discussion, I do not find any error in the impugned judgments or any substantial question of law that arises for consideration in this appeal. 14. Accordingly, I proceed to pass the following: - 11 - HC-KAR NC: 2025:KHC:18918 RSA No. 728 of 2020 ORDER i. The Regular Second Appeal is dismissed with compensatory costs. ii. The plaintiff is directed to pay the compensatory cost of Rs.30,000/- to the defendant within two months; failing which, the defendant is at liberty to recover the same by due process of law. Sd/- (ASHOK S.KINAGI) JUDGE SKS