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1986 DIGILAW 65 (KER)

N. Venkiteswara Iyer v. Appukutty Moothan

1986-02-11

M.M.PAREED PILLAY, T.K.THOMMEN

body1986
JUDGMENT Pareed Pillay, J. 1. The appeal is filed by the plaintiff in O.S. 175/77 of the Sub Court, Palghat. Plaintiff filed the suit on the strength of Ext. A-1 promissory note. The learned Sub Judge partly decreed the suit for a sum of Rs. 5,000. Plaintiff has filed the appeal challenging the finding of the court below refusing to grant decree for the full amount. 1st defendant filed Cross Objections against the very granting of the decree. 2. It is the case of the plaintiff that on 23rd September 1973 the defendants borrowed Rs. 5,000 from him, that on 28th June 1974 a further sum Rs. 10,000 was borrowed and a promissory note was executed for Rs. 15,000 and that thereafter they did not pay the amount despite repeated demands. 3. Defendants filed joint written statement denying the execution of the promissory notes. It is contended by them that there was an agreement under which the plaintiff was to join as a partner in the trade in vegetables conducted by the 1st defendant on investment of Rs. 10,000, that though plaintiff began to attend the trade in the shop of the 1st defendant he did not contribute any amount as agreed to by him, that plaintiff on misrepresentation obtained their signatures in plain papers. According to the defendants, they are not liable for the plaint claim. 4. On a consideration of the evidence the court below negatived the contention of the defendants that they did not execute Ext. A-1 promissory note. Counsel for the defendants could not point out any circumstance to dislodge the said finding. On going through the evidence we find that the plaintiff has proved the execution of the promissory note. 5. In a case where the execution of the promissory note is denied the burden is on the plaintiff to prove its execution and also passing of the consideration. In a case where execution of the note is admitted the burden is on the defendant to prove lack of consideration. So also in a case where denial of the execution of the note has been found to be false necessary presumption regarding consideration can be drawn under section 118(a) of the Negotiable Instruments Act. In a case where execution of the note is admitted the burden is on the defendant to prove lack of consideration. So also in a case where denial of the execution of the note has been found to be false necessary presumption regarding consideration can be drawn under section 118(a) of the Negotiable Instruments Act. But, even in a case where the execution of the note though denied by the defendant is proved by the plaintiff the defendant can still contend that the note is not supported by consideration. Section 118 is imperative and the court is bound to draw the initial presumption that the note is supported by consideration. The burden is always on the defendant to prove lack of consideration when he admits execution of the note or when the denial has been found false. But, if the evidence discloses lack of consideration plaintiff's suit cannot be decreed merely on the basis of the presumption arising from the fact that the execution of the note has been duly proved. In a case where lack of consideration has been brought out from the testimony of the plaintiff or from the totality of evidence court cannot brush aside that evidence on the ground that the note which has been proved to have been duly executed is presumed to be supported by consideration. Where execution of the note has been denied and when it has been found that the denial is false the plaintiff can rely on section 118(a) of the Negotiable Instruments Act and contend that consideration has to be presumed. But, in a case where evidence adduced is found highly inconsistent or unreliable such a presumption cannot be availed of by the plaintiff to obtain a decree. 6. The recitals in a negotiable instrument as to the passing of the consideration is no doubt prima facie evidence of such consideration and the parties to the instrument are bound by the recitals until the contrary is proved. But during the course of trial many factors and circumstances may emerge to destroy the presumption and to place the plaintiff in a position where he cannot succeed without establishing affirmatively by cogent and positive evidence that the promissory note is supported by consideration and that he is entitled to recover the amount sued for. But during the course of trial many factors and circumstances may emerge to destroy the presumption and to place the plaintiff in a position where he cannot succeed without establishing affirmatively by cogent and positive evidence that the promissory note is supported by consideration and that he is entitled to recover the amount sued for. To counter-act the initial prima facie rebuttable presumption in favour of the plaintiff regarding the consideration in the note the defendant can rely upon circumstances and probabilities in the case militating against the plaint claim. If the maker of the note satisfies the conscience of the court that at no time the consideration has passed under the negotiable instrument and that he executed it under compelling circumstances plaintiff cannot succeed in his claim merely on the basis of the presumptions. It is useful to refer to the decision in Chandan Lal v. M/s Amin Chand Mohan Lal A.I.R. 1950 Punjab 500 wherein it is held as follows: "A defendant may discharge the burden of proof placed upon him under section 118(a) either by producing definite evidence, showing that consideration had not passed, or, by relying upon facts and circumstances of the case, and also by referring to the flaws in the evidence of the plaintiff and may then contend that the presumption has been rebutted. If the plaintiff goes into the witness box and the result of his evidence is, that he fails to establish the passing of consideration, and the court is thus satisfied, that the plaintiff did not give the consideration which he alleges the defendant can certainly avail himself of the contrariety and the provisions of section 118(a) are not thereby entrenched upon." 7. Bearing in mind the above legal principles we have to consider the evidence in the case. Ext. A-2 promissory note, dated 28th June 1974 is for Rs. 15,000. Contention of the plaintiff is that Ext. A-1promissory note takes in the amount covered by Ext. A-2 promissory note and Rs. 10,000 paid in cash. Ext. B-1 is an agreement entered into between 1st defendant and the plaintiff. Ext. B-2 is the endorsement in Ext. B-1. 8. It has to be considered as to whether the promissory note Ext A-2 is supported by the consideration mentioned in it. Ext. B-2 does not at all make any mention of any document due to the plaintiff when the partnership was terminated. Ext. B-2 is the endorsement in Ext. B-1. 8. It has to be considered as to whether the promissory note Ext A-2 is supported by the consideration mentioned in it. Ext. B-2 does not at all make any mention of any document due to the plaintiff when the partnership was terminated. This is sufficient to hold that Ext. A-2 note is not supported by consideration to the extent of Rs. 10,000. Evidence of P.W. 1 is highly contradictory as regards the payment of consideration. P.W. 1 asserted twice in his testimony that Rs. 10,000 was paid by him to the defendants in cash. According to P.W. 2, there was no cash payment when the note was executed. P.W. 1 in cross-examination deposed that at the time of Ext. B-1 he invested Rs. 10,000 and when the partnership was terminated he obtained Ext. A-1 for Rs. 15,000 which included consideration under Ext. A-2 promissory note. In cross-examination he stated that on 28th June 1974 he paid Rs. 15,000 in cash.. Immediately, he shifted his stand and stated that Rs. 5,000 was on account of Ext. A-2 note and Rs. 10,000 as per the agreement. P.W. 1 also stated that fifteen days prior to Ext. A-1 he had asked the defendants to come prepared to sign Ext A-1 and on the date of Ext. A-1 he obtained Rs. 13,000 from Coimbatore and out of that Rs. 10,000 was paid to the 1st defendant. Thus, the evidence of P.W. 1 would show that he has no consistent case with regard to the payment of consideration to the extent of Rs, 10,000 on the date of Ext. A-1. The learned Sub Judge has rightly held that Ext. A-1 is not supported by consideration to the extent of Rs. 10,000 as alleged by the plaintiff. As there is reliable evidence in the case to hold that Ext. A-2 was executed by the 1st defendant and that he received consideration of Rs. 5,000 the trial court was justified in decreeing the suit for that amount. We do not find sufficient reasons to interfere with the judgment and decree of the court below. The judgment and decree of the trial court are hereby confirmed. Appeal and Gross Objections stand dismissed. We make no order as to costs.