G. JAYALAXAMMA v. H. M. LINGEGOWDA — 1984 DIGILAW 99 (KAR)

S. R. RAJASEKHARA MURTHY, J. ( 1 ) THIS is a Second Appeal by the plaintiff. Plaintiff-appellant filed O. S. No. 197 of 1972 on the file of the Munsiff, Srirangapatna, for recovery of money due under a promissory note executed by the defendant-respondent in favour of one Venkatalakshamma, in evidence of borrowal of a loan of Rs. 3,000/- on 2. 5. 1969. The plaintiff is the assignee of the said pronote for consideration as per the endorsement dated 18. 5. 1969. Defendant paid- Rs. 1,000/- towards the debt on 22. 2. 1971 through one h. R. Visveswaraiah and the suit was filed for the balance. ( 2 ) THE suit was resisted by the defendant on several grounds. The defendant did not admit the endorsement on the said pronote as true and the plaintiff was called upon to prove the same. The learned Munsiff, besides other issues, framed an additional issue as follows:"whether the endorsement made by Ven- katalakshmma in favour of the plaintiff is true?"the suit was decreed as prayed for with costs, after contest. In the defendant's appeal against the said decree before the Court of the Prl. Civil Judge, mandya, the decree was set aside and the suit was dismissed. It is this judgement and decree that is challenged in this appeal by the appellant-plaintiff. ( 3 ) THE learned Civil Judge formulated two points for consideration in the appeal, (I) Whether it is proved that the defendant executed the suit promissory note in favour of venkatalaxamma? (ii) Whether it is proved that Venkatalaxamma endorsed the suit promissory note in favour of the plaintiff? so far as the first point is concerned, the Civil judge agreed with the conclusion of the trial court that the defendant did execute the suit promissory note in favour of Venkatalaxamma. So far as point No. 2 is concerned, the learned Civil Judge held that the plaintiff failed to prove that the suit promissory note was endorsed in her favour by the payee. ( 4 ) SRI Tarakaram, learned Counsel for the appellant criticised the findings of the learned civil Judge and submitted that the view of the learned Civil Judge that the endorsement was not duly proved by the plaintiff and that the suit must therefore fail, is not sustainable in law. ( 4 ) SRI Tarakaram, learned Counsel for the appellant criticised the findings of the learned civil Judge and submitted that the view of the learned Civil Judge that the endorsement was not duly proved by the plaintiff and that the suit must therefore fail, is not sustainable in law. ( 5 ) THE trial Court held that the plaintiff had proved the endorsement in his favour and examined P. W. 1-Visveswaraiah, the scribe of the promissory note and the consideration receipt Exts. P-1 and P1 (a) respectively and p. W. 2-Krishnappa, one of the attestors. They stated in their depositions before the Court that they knew Venkatalaxamma and identified the signature on the promissory note as well as on the consideration receipt. The learned Civil Judge also did not believe the testimony of the plaintiffs witnesses and dismissed the suit. Venkatalakshamma, the original promisee died after the endorsement and the suit was filed on 22. 5. 1972 by the Assignee. The question that arises in this appeal is, whether the learned Civil Judge's view in regard to the validity of the endorsement, is correct in law. The learned Civil Judge observed that the plaintiff cannot be a holder of the suit pronote only by her possession of the document and that the plaintiff did not prove the endorsement of the suit pronote in her favour. Sri Tarakaram Submitted that this view of the learned Civil Judge is wholly unsustainable having regard to the provisions of Section 118 of the NEGOTIABLE INSTRUMENTS ACT, 1881. ('the Act' ). He submitted that the plaintiff is entitled to the benefit of presumption available to her, in Jaw, under the aforesaid provisions of he Act. There is considerable force in the submissions made by Sri Tarakaram. ( 6 ) SECTION 8 of the Negotiable Instruments act defines a 'holder' as follows:-"8. Holder.- The "holder" of a promissory note, bill of exchange or cheque means any person entitled, in his own name, to the possession thereof and to receive or recover the amount due thereon from the parties thereto. Where the note, bill or cheque is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction". Section 9 of the Act defines a "holder in due course". "sec. 9. Where the note, bill or cheque is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction". Section 9 of the Act defines a "holder in due course". "sec. 9. Holder in due course.- "holder in due course" means any person who, for consideration, became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if (payable to order) before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title". Chapter XIII of the Act provides for Special rules of Evidence. The presumptions as to a negotiable instrument are provided under Sec, 118 of the Act. The said section reads:- "section. 118. presumptions as to negotiable instruments.- Until the contrary is proved, the following presumptions shall be made:- of consideration.- (a) that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred, for consideration; (b) xxxx (g) that the holder is a holder in due course"that the holder of a negotiable instrument is a holder in due course: provided that, where the instrument has been- obtained from its lawful owner, or from any person of lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him". ( 7 ) THE learned Civil Judge's view that the "plaintiff's claim as an endorsee to the money due under the promissory note cannot be sustained, except upon proof that she has derived the right to recover the money under a valid endorsement", is erroneous. The Special Rules of Evidence provided by the act and the presumption that are availadle to a holder of a promote or a transferee or an endorsee thereof, are laid down in Section 118 of the act. These presumptions are intended to apply not only between the parties to the instrument but also to those claiming through them. The Special Rules of Evidence provided by the act and the presumption that are availadle to a holder of a promote or a transferee or an endorsee thereof, are laid down in Section 118 of the act. These presumptions are intended to apply not only between the parties to the instrument but also to those claiming through them. Under Sec. 9 of the Act, the plaintiff being the endorsee for consideration, becomes a holder in due course. The defendant, in this case has merely stated in the written statement that he does not admit the endorsement of the said pronote in favour of the plaintiff and the learned civil Judge also failed to notice that under the provisions of the Act the burden is on the person who disputes the genuineness of the endorsement to prove that he is not a holder in due course. The defendant, apart from his mere statement in the written statement, has not alleged that the suit instrument was obtained from its lawful owner by means of an offence or fraud or for unlawful consideration. The learned Civil Judge's view that the non-examination of the plaintiff is fatal to her suit, is also erroneous. ( 8 ) IN this case, even though the plaintiff has not examined herself, the suit document in question has been marked through P. W. 1-Visveswaraiah, the scribe of the said document and the consideration receipt. He and one of the attestors P. W. 2, have identified the signature of the defendant on the promossory note. P. W. I has identified the signature of Venkatalaxamma, the transferor in the endorsement marked as Ext. Pl (H) and her signature p1 (J ). Though the learned Civil Judge is satisfied about the execution of the promissory note, he has taken a curious view of the matter that the endorsement has not been proved. The decree granted by the trial court, was therefore, set aside by the Civil Judge in appeal on this ground. ( 9 ) ONE of the reasons weighed with the learned Judge to set aside the decree is that the plaintiff did not examine herself to prove the consideration for the assignment of the debt in her favour. This view of the learned Civil Judge is opposed to the provisions of the Act and the presumption that are available to a plaintiff. This view of the learned Civil Judge is opposed to the provisions of the Act and the presumption that are available to a plaintiff. Under the provisions of Sec. 9 of the Act, a holder is a holder in due course. This presumption is over looked by the learned Civil Judge and he has based his finding that the plaintiff was not a holder in due course, solely on the ground that she did not examine herself or prove the consideration for the endorsement. While giving this reason the learned Civil Judge has over looked the Special Rules of Evidence contained in Sec. 118 of the Act that are available to a holder and any person claiming under him and the presumptions available to a holder and holder in due course under Sec. 118 of the Act, this finding is, therefore, vitiated. This view of mine receives support from a decision of the Madras high Court in VENKATARATNAM Vs. KANAKASUNDARA (A. I. R. 1936 Madras 87 ). ( 10 ) IT was alleged in the plaint in the Madras case that the plaintiff had obtained the transfer of the promissory note by an endorsement for good consideration. It was, inter alia, contended that the plaintiff was not a holder in due course. The learned Munsiff held that the plaintiff was not a holder in due course. The main argument against the Munsiff s judgement was that he had ignored the presumption contained in CIs. (a), (c) and (g) of sec. 118 of the Act and that on that account the finding was vitiated by an error of law. This finding was based mainly on the ground that the plaintiff did not examine herself and did not prove the consideration for the endorsement in her favour. Reversing the dismissal by the Munsiff, the High Court held that the defendant did not prove that the plaintiff was not a holder in due course and decreed the suit. ( 11 ) THE observations of Shah, J. , in OFFICIAL RECEIVER Vs. ABDUL SHUKOOR (AIR 1965 S. C. 920) that presumptions under sec. 118 of the Act is a presumption of consideration and that Sec. 118 enacts a Special Rule of Evidence which operates between the parties to the instrument or person claiming under them and does not affect the rule contained in sec. ABDUL SHUKOOR (AIR 1965 S. C. 920) that presumptions under sec. 118 of the Act is a presumption of consideration and that Sec. 118 enacts a Special Rule of Evidence which operates between the parties to the instrument or person claiming under them and does not affect the rule contained in sec. 114 of the Evidence Act, in cases not falling within Sec. 118of the Act, are very relevant and are in favour of the plaintiff's case. ( 12 ) IN this view of the matter, the judgement and decree of the learned Civil Judge dismissing the suit, should be set aside and the decree granted by the Munsiff restored. It is ordered accordingly. The appellant is entitled to her costs both in this court as well as before the Civil Judge. --- *** --- .