- 1 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD DAY OF JANUARY, 2026 BEFORE THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM REGULAR FIRST APPEAL NO. 2502 OF 2025 (MON) BETWEEN: N.R. MANJUNATHA S/O LATE R. RAJANNA AGED ABOUT 54 YEARS R/O NO. 80, 1ST FLOOR 11TH CROSS, 5TH MAIN, INDIANAGARA 1ST STAGE, BENGALURU - 560 038. …APPELLANT (BY SRI. PAVAN KUMAR G, ADVOCATE) AND: MANJUNATHA R.V. S/O B.R. VISHWANATH AGED ABOUT 42 YEARS R/O NO. 231, 7TH A CROSS SASTRINAGAR, BSK II STAGE BENGALURU - 560 070. …RESPONDENT (BY SRI. ANANTHA NARAYANA B.N, ADVOCATE) THIS RFA IS FILED UNDER SEC.96 OF CPC., AGAINST THE JUDGMENT AND DECREE DATED 26.09.2025 PASSED IN OS NO.8099/2023 ON THE FILE OF XXII ADDITIONAL CITY Digitally signed by SHARADAVANI B Location: High Court of Karnataka - 2 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 CIVIL AND SESSIONS JUDGE, AT BENGALURU CITY (CCH-7)., DECREEING THE SUIT FOR RECOVERY OF MONEY. THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM ORAL JUDGMENT The captioned appeal is by the defendant assailing the money decree rendered in O.S.No.8099/2023. 2. For the sake of brevity, the ranks of the parties are referred as per their ranking before the Trial Court. 3. Facts leading to the case are as under: The plaintiff instituted O.S. No.8099/2023 seeking recovery of a sum of Rs.5,69,287/- together with interest at the rate of 18% per annum from the date of suit till realisation. The case of the plaintiff is that he was acquainted with the defendant, who, citing personal financial exigencies, approached the plaintiff and received a hand loan of Rs.5,00,000/- in cash. It is the specific - 3 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 assertion of the plaintiff that the defendant agreed to repay the said amount on demand along with interest at 18% per annum. The plaintiff further pleaded that the said amount was arranged by prematurely closing his fixed deposits and by availing hand loans from his sister. According to the plaintiff, after receipt of the amount, the defendant began to evade repayment, compelling the plaintiff to repeatedly demand return of the money. 4. It is further the case of the plaintiff that, upon persistent demands, the defendant ultimately issued a cheque bearing No.000179 dated 22.02.2023 for a sum of Rs.5,00,000/- drawn on Karur Vysya Bank, Kothanur Branch, Bengaluru. When the said cheque was presented for encashment, it was returned unpaid with the endorsement “payment stopped by drawer”. Consequently, the plaintiff caused a legal notice dated 25.10.2023 calling upon the defendant to repay the amount. Despite service of notice, the defendant failed to - 4 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 comply, thereby constraining the plaintiff to institute the present suit. 5. The defendant, upon service of summons, entered appearance and filed a written statement, stoutly denying the entire claim of the plaintiff. The defendant set up a specific defence contending that the plaintiff had approached him with an intention to purchase a residential site within a budget of Rs.20,00,000/- and requested assistance in identifying a suitable property. It is the defendant’s case that, in August 2022, he showed a site bearing No.5B to the plaintiff and, after negotiations with the vendor, the sale consideration was fixed at Rs.18,00,000/- with a stipulated period of 90 days for completion of the transaction. 6. The defendant further contended that since the vendor demanded an advance amount of Rs.5,00,000/-, the plaintiff requested the defendant to arrange Rs.50,000/- towards the shortfall and to jointly enter into - 5 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 an agreement of sale. Accordingly, it is alleged that the plaintiff transferred Rs.1,00,000/- through NEFT and Rs.3,50,000/- by cheque, and the amount covered under cheque No.000179 dated 22.02.2023 was issued in favour of the vendor, Venugopala K.M., towards the advance sale consideration under the Agreement of Sale dated 24.08.2022. The defendant specifically pleaded that the plaintiff and defendant were co-purchasers under the said agreement and, therefore, the amount transferred cannot be construed as a hand loan. On these premises, the defendant denied having issued the cheque towards any legally recoverable debt. 7. On the basis of the rival pleadings, the Trial Court framed appropriate issues. Both parties adduced oral and documentary evidence in support of their respective cases. 8. Upon appreciation of the material on record, the Trial Court decreed the suit, holding that the plaintiff had established the transaction of hand loan and that the - 6 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 cheque was issued towards discharge of the said liability. The defendant was directed to pay the suit claim along with interest at the rate of 18% per annum from the date of suit till realisation, within thirty days from the date of decree. 9. Assailing the said judgment and decree, learned counsel appearing for the defendant vehemently contended that the Trial Court has erroneously applied the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 in a purely civil proceeding. It is argued that the plaintiff, having instituted a money recovery suit, failed to discharge the initial burden of proving the alleged hand loan transaction. Referring to the defence set up in the written statement and the admissions elicited in the plaintiff’s cross-examination, learned counsel submitted that the defendant had successfully rebutted the plaintiff’s case by establishing that the amount in question was paid pursuant to a joint property transaction and not towards any loan. It is - 7 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 therefore contended that the findings recorded on Issue Nos.1 and 2 are perverse and call for interference. 10. Per contra, learned counsel appearing for the plaintiff supported the impugned judgment and contended that the defendant’s defence stands completely demolished in the light of crucial admissions elicited during his cross-examination. It is submitted that once the defendant admitted issuance of the cheque and further justified stopping payment on the ground that the amount had already been paid, the onus squarely shifted on the defendant to establish such repayment. In the absence of any cogent rebuttal evidence demonstrating discharge of liability, the Trial Court was justified in decreeing the suit and awarding interest as prayed for. 11. In the light of the rival submissions, the following points arise for consideration: i. Whether the finding of the Trial Court that the plaintiff proved borrowing of Rs. 5,00,000/- and - 8 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 agreement to repay the same with interest at 18% per annum suffers from perversity? ii. Whether the finding that the cheque issued by the defendant was towards repayment of the hand loan warrants interference? iii. Whether the Trial Court was justified in awarding future interest at the rate of 18% per annum? iv. What order? Finding on points No. i and ii. 12. The plaintiff, having instituted a money suit to discharge his burden, has produced the cheque issued by the defendant, which is marked at Ex.P.1 and the signature of the defendant is marked at Ex.P.1(a). The defendant, while contesting the suit, has stoutly denied the very issuance of the cheque. Paragraph No.8 of the written statement would be relevant and the same is extracted as under: "8. The averments in para 5 of the plaint that Plaintiffs all meetings, discussion did not yield any result and the - 9 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 Defendant failed to return Plaintiffs money is hereby denied as false. Further averments that on one such demand cheque bearing No. 000179, dated 22-02-2023 for Rs. 5,00,000/- drawn on Karur Vysya Bank, Kothanur, Bangalore Branch with a promise to keep sufficient fund in the Bank and honor the same is hereby denied as false. The defendant has not issued any cheque to the plaintiff. Further averments that the said cheque was presented to the Bank for collection with oral intimation to the Defendant, same returned as payment stopped by drawer on 18-05-2023 is true and correct. Further averments that the Defendant deliberately did not keep sufficient funds in the Bank and caused mental agony to the Plaintiff and also issued stop payment to Banker is hereby denied as false. Further averments that On further negotiation the Defendant requested the Plaintiff not to initiate criminal proceedings against him and requested for time is hereby denied as false. There was no negotiations between the plaintiff and the defendant. Further averments that the Defendant failed to keep sufficient funds in the Bank Account and issued stop payment to his Banker to cheat the Plaintiff. Later the Plaintiff tried to contact the Defendant about returning of the cheque but the Defendant evaded on one or the other pretext is hereby denied as false. Further averments that now it is confirmed that the Defendant intentionally to cheat the Plaintiff has stopped payment of the cheques issued is hereby denied as false and the plaintiff is put to strict proof of the same." 13. The plaintiff having produced the cheque, which is a suit document, the next crucial evidence that needs to be adverted is the cross-examination of the defendant. Paragraph No.5 of the cross-examination of the defendant - 10 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 who was examined as D.W.1 would be relevant, which reads as under: "5. ಾೆಯ ಸ ರುವ .1ರ ೆ ನನ ಾೆೆ ಸಂಬಂ ದು ಇರುತೆ. . 1 ರ ೆ ನ ಇರುವ ಸ ನನೇ ಇರುತೆ. . 1 ರ ೆ ನಯ ಬರವ!ೆ ನನೇ ಇರುತೆ. "ಾ# ಮುಂದುವ%ದು &'ಾಂಕವನು )ೊರತುಪ, ಉ.ದ ಬರವ!ೆ ನನೇ ಇರುತೆ ಎಂದು ನು,ಯುಾ0ೆ. . 1 ರರುವ ೆ ನ ಸಂೆ1 ಮತು ನನೆ ಈಗ ೋ%ಸು4ರುವ 5ಾ1ಂ ಂಬರಹದರುವ ೆ ನ ಸಂೆ1 ಒಂೇ ಇರುತೆ. ಸದ% ಾಖ9ೆಯನು "ಾ# ಒ: ;ೊಂಡ ;ಾರಣ ಮತು ಾ& ಪರ ವ>ೕಲರ ;ೋ%;ೆಯ @ೕ0ೆೆ .7 ಎಂದು ಗುರು4ಸ9ಾAತು. .7 ರ ಂಬರಹದ ಾೆಯ "ಾಕಷುC ಹಣ ಇರುವD&ಲ ಎಂದು ೋ%ಸ9ಾEರುತೆ ಎಂದ0ೆ "ಾ#ಯು ಅದು "ಾCG HೇI @ಂJ ಇರುತೆ ಎಂದು ನು,ಯುಾ0ೆ. ಸದ% ೆ &'ಾಂಕ ನು,ಯುಾ0ೆ. 25.08.2023 ರಂದು ಅKಾನ1ೊಂ,ರುತೆ ಎಂದ0ೆ ಜ. ಸದ% ಾಖ9ೆಯನು "ಾ# ಒ: ;ೊಂಡ ;ಾರಣ ಮತು ಾ& ಪರ ವ>ೕಲರ ;ೋ%;ೆಯ @ೕ0ೆೆ .8 ಎಂದು ಗುರು4ಸ9ಾAತು. .2 ರಂೆ ಸದ% ೆ &:18.05.2023 ರಂದು "ಾMG HೇI @ಂJ ಎಂದು ಅKಾನ1ೊಂ,ರುತೆ ಎಂದ0ೆ ಜ. ನನೆ "ಾCG HೇI @ಂJ ಎಂದ0ೆ ಏನು ಮತು Insufficient funds ಎಂದ0ೆ ಏನು ಎಂದು ೊ4ರುತೆ. ಸದ% ೆ ನು ಸ ದ &'ಾಂಕ:18.05.2023 ರಂದು ನನ ಾೆಯ "ಾಕಷುC ಹಣ ಇರಲ." 14. On a careful reading of the extracted portion of the cross-examination of D.W.1, it clearly emerges that the plaintiff has not merely rested his case on production of the cheque but has also succeeded in eliciting material - 11 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 admissions from the defendant during cross-examination. D.W.1 has unequivocally admitted that the cheque in question was issued by him and has further acknowledged that the signature appearing on the cheque is his own. Significantly, the defendant has also taken a categorical stand in the course of cross-examination that the amount covered under the cheque was already returned by him. 15. These admissions assume considerable evidentiary significance, inasmuch as they conclusively establish that the issuance of the cheque is not in dispute. Once the defendant admits execution of the cheque and ownership of the signature, the burden shifts squarely on him to substantiate his plea of repayment. In such circumstances, the controversy between the parties narrows down to a singular and decisive question, namely, whether the defendant has succeeded in proving that the amount covered under the cheque had already been repaid, as asserted by him. - 12 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 16. It is in this backdrop that the latter portion of the cross-examination of D.W.1 assumes crucial importance and goes to the very root of the matter. This part of the evidence has a direct bearing on the truthfulness of the defence set up by the defendant and is determinative of whether the plea of repayment is supported by any credible or tangible material. Therefore, this Court deems it appropriate to extract the relevant portion of the cross- examination of D.W.1, as elicited in paragraph No.5 of his cross-examination, which reads thus: "'ಾನು ಾ&ೆ ಹಣವನು ಾHಾಸು PಾQRS ಫU Kಾ,ದ ;ಾರಣ ೆ ನು ಾ& 5ಾ1ಂ>ೆ ಸ ದ ;ಾರಣ ಅದನು "ಾMG HೇI @ಂJ Kಾ, ಎಂದು 4. ರುೇ'ೆ." 17. On a careful reading of the aforesaid crucial admission, this Court is of the considered view that the core controversy as to whether the defendant had availed a hand loan from the plaintiff stands conclusively answered. The defendant has, in clear and unequivocal terms, admitted that he did receive money from the - 13 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 plaintiff. The defence subsequently projected by the defendant is not one of denial of the transaction, but a plea of discharge, namely, that the entire amount availed by him was repaid and that, on that premise, he was justified in issuing instructions to the bank to stop payment of the cheque. 18. Once such a plea is taken by the defendant, the legal burden unmistakably shifts upon him to establish repayment of the hand loan reflected in the cheque marked as Ex.P.1, by producing cogent and acceptable evidence in a manner known to law. Except for a bald and self-serving assertion made during the course of trial, the defendant has not placed on record any documentary or independent evidence to demonstrate repayment of the amount allegedly returned by him. Significantly, the original defence set up in the written statement, wherein the defendant had categorically denied the very existence of a hand loan transaction, stands materially diluted during the course of evidence. The defendant, who initially - 14 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 disputed issuance of the cheque itself, has ultimately admitted not only the issuance of the cheque but also the receipt of money, while setting up a new defence of repayment during trial. 19. Though learned counsel appearing for the defendant attempted to explain that the admission elicited in cross-examination does not relate to the amount covered under the cheque in question, this Court is unable to accept such a submission. At this stage, the defence cannot be permitted to travel beyond the pleadings or seek to introduce a collateral transaction to dilute the evidentiary value of a clear and unambiguous admission. Having tendered a candid admission in cross-examination, the defendant had ample opportunity to seek re- examination and clarify or qualify the said admission, which course was admittedly not adopted. Though certain answers in the later part of the cross-examination indicate an attempt to wriggle out of the admission, such retraction - 15 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 cannot efface the evidentiary value of the earlier statement. 20. The admission has to be read holistically and in conjunction with the prior admission elicited in cross- examination, wherein the defendant has acknowledged issuance of the cheque marked as Ex.P.1, admitted his signature thereon, and asserted that the amount of Rs.5,00,000/- covered under the cheque was returned by him. On an overall appreciation of the oral and documentary evidence, this Court is satisfied that the plaintiff has successfully discharged the burden cast upon him and has established that the defendant had indeed availed a hand loan of Rs.5,00,000/-. This Court, being the final fact-finding authority in the appeal, has independently and meticulously re-appreciated the entire evidence on record and finds no perversity or infirmity in the conclusions drawn by the Trial Court while decreeing the suit. Accordingly, Point Nos. i and ii are answered in the ‘Negative’ and against the defendant. - 16 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 Findings on Point No.iii: 21. Insofar as the award of future interest at the rate of 18% per annum is concerned, this Court finds some merit in the submissions advanced by the learned counsel for the defendant. Though the plaintiff is undoubtedly entitled to interest on the decreed amount, the rate of 18% per annum appears to be excessive and not in consonance with the principles governing award of interest under Section 34 of the Code of Civil Procedure. Having regard to the nature of the transaction and the overall facts and circumstances of the case, this Court is of the view that the ends of justice would be met by modifying the rate of future interest. Accordingly, the rate of future interest is reduced to 8% per annum from the date of suit till realisation. To this limited extent, Point No. iii is answered ‘partly in the affirmative’. 22. For the foregoing reasons, this Court passes the following: - 17 - HC-KAR NC: 2026:KHC:3953 RFA No. 2502 of 2025 ORDER i. The appeal is allowed in part; ii. The defendant is hereby directed to pay a sum of Rs.5,69,287/- with interest at the rate of 8% per annum from the date of suit till its realisation; iii. Draw decree accordingly. Sd/- (SACHIN SHANKAR MAGADUM) JUDGE HDK List No.: 1 Sl No.: 3