T. Kutty Sankaran Nair v. Isappan Joseph — 1990 DIGILAW 383 (KER)

JUDGMENT P.K.Shamsuddin, J. 1. Plaintiff in O. S. No. 8 of 1983 on the file of the Court of Subordinate Judge, Ottappalam, is the appellant. The suit is on a promissory-note. 2. Defendant executed a promissory-note in favour of the plaintiff on 8-2-1982 for Rs. 18,000/- undertaking to return the money on demand together with interest at 12% per annum for value received in cash. Defendant did not pay the amount inspite of demand and hence the suit. 3. Defendant admitted the execution of the promissory-note but denied the passing of consideration. On a consideration of the evidence in the case, the court below held that the promissory-note is not supported by consideration. 4. In this appeal, learned counsel for the appellant has challenged the finding of the court below. Ext. A1 is the promissory-note dated 8-2-1982 executed by the defendant for Rs. 18,000/-. The document recites that consideration was paid in cash for the purpose of constructing a kayyala and for other works in the properties purchased as per document Nos. 244, 245 and 246 of 1982. Defendant denied having received any consideration under Ext. A1. According to the defendant Ext. A1 happened to be executed in a peculiar circumstance. On the date of registration of the assignment deeds, plaintiff stated that there was a balance of consideration of Rs. 18,000/-. In order to see that registration of the assignment deed was not avoided at the instance of the plaintiff, the defendant signed the promissory-note which was prepared by the plaintiff. Ext. B1 dated 6-2-1982 is the sale deeds executed by the plaintiff in favour of the defendant, Ext. B2 of the same date is the sale deed executed by the plaintiff in favour of Annamma, the wife of the defendant, and Ext. B3 dated 8-2-1982 is another sale deed executed by one Ganapathi Nair in favour of the defendant. All these documents were registered on 8th February 1982. 5. Ext. A1, being a negotiable instrument, there is a presumption under S.118 of the Negotiable Instruments Act that it was executed for consideration. In the circumstances the burden is on the defendant to establish that there was no consideration passed. Defendant was examined as D. W. 1. In his evidence be staled that he did not get any amount by way of consideration for executing the promissory-note. In the circumstances the burden is on the defendant to establish that there was no consideration passed. Defendant was examined as D. W. 1. In his evidence be staled that he did not get any amount by way of consideration for executing the promissory-note. According to him, the plaintiff insisted that if only the plaintiff executed Ext. A1 he would get the sale deeds Exts. B1 to B3 registered and that in order to avoid 'greater evil' his father asked him to sign the document Ext. A1. He gave evidence that the plaintiff demanded Rs. 18,000/- as balance of consideration for the assignments under documents Exts. B1 to B3. D. W. 1 stated that Ext. B4 dated 26-10-1982 is a notice sent by him pointing out fraud committed by the plaintiff. It may however be noticed that Ext. B4 was sent more than eight months after the execution of Ext. A1 promissory-note. Further Ext.B4 does not state that Ext. A1 promissory-note was executed without any consideration or that fraud was committed by the plaintiff in getting Ext. A1. It has come out in evidence that the plaintiff had sent a notice demanding the promissory-note amount. Admittedly Ext. A3 dated 16-6-1982 is the letter sent by the defendant in reply to the said notice. In Ext. A3 the defendant stated that his father was in Kottayam Medical College and that he would let the plaintiff know about the matter after his return. It is significant to note that there is no denial of passing of consideration or the liability under Ext. A1. If no consideration had passed as alleged by the defendant, I do not find any reason for the defendant not to send a notice stating that Ext. A1 was obtained under coercion and that he was not liable to pay the said amount immediately after the registration was over and after Ext. A1 was executed. Ext. B4 was sent several months after execution of Ext. A1 promissory-note and in Ext. B4 the defendant only makes certain complaints regarding the survey numbers and extent of the property conveyed and about the attempt of the plaintiff to sell some other property agreed to be said to the defendant. Ext. B4 also calls upon the plaintiff to settle the matter within one month from the date of receipt of the notice. B4 the defendant only makes certain complaints regarding the survey numbers and extent of the property conveyed and about the attempt of the plaintiff to sell some other property agreed to be said to the defendant. Ext. B4 also calls upon the plaintiff to settle the matter within one month from the date of receipt of the notice. In the circumstances there is much force in the contention of the learned counsel for the appellant that Ext. B4 was sent for setting up certain claims against the plaintiff in order to avoid payment of the promissory-note amount. In Ext. B5 reply notice sent by the plaintiff to Ext. B4 the plaintiff pointed out that it was after receipt of the notice demanding the promissory-note amount that the defendant thought of sending Ext. B4 with certain ulterior motive. It can also be noticed that in Ext. A1 there is a recital that the amount was received in cash for construction of a kayyala and other works in the properties purchased by the defendant under document Nos. 244, 245 and 246 of 1982. Ext. B1 to B3 are the documents referred to in Ext. A1. If the contention of the defendant that it was to avoid a greater evil that he executed the document when the plaintiff insisted that he would get the documents registered only if the defendant signed the document Ext. A1 is true, then it is not possible to find registration numbers of the documents in Ext. A1. According to the defendant it was before the registration of documents that Ext.A1 was executed. The mention of registration numbers of the documents in Ext.A1 is sufficient to belie the evidence of D.W. 1 that the defendant insisted that he would get the document registered only if the defendant signed the document and that it was in those circumstances that Ext. A1 was executed. 6. The court below found that it was not probable that the defendant would have asked for a loan of Rs. 18,000/- on the same day of registration of Exts. B1 to B3. The court below also expressed doubt as to whether such a big, amount was required for construction of a Kayyala and other works in the property. I am unable to agree with the view taken by the court below in this regard. 18,000/- on the same day of registration of Exts. B1 to B3. The court below also expressed doubt as to whether such a big, amount was required for construction of a Kayyala and other works in the property. I am unable to agree with the view taken by the court below in this regard. It may be that the parties might have earlier agreed that out of the sale consideration an amount of Rs. 18,000/- would be given as loan to the defendant. It is also to be noted that what was stated in Ext. A1 is that the amount was taken as loan not only for constructing a kayyala but also for some other works. In any event, this circumstance is not sufficient to rebut the presumption of passing of consideration. 7. The court below has placed great reliance on Ext. B6 letter dated 3-12-1982 allegedly sent by the wife of the plaintiff to the defendant. The letter is addressed to defendant's father Ouseph and the defendant. On the basis of this letter, the court below assumed that it would be probable that the balance of consideration of the sale deeds formed the consideration for Ext. A1 and not the stated consideration of cash for construction of the Kayyala and other works. Of course there is a statement in the letter that the properties were assigned to the defendant and his wife without getting full consideration believing their words and that if they had any conscience they should pay the money. It is also true that in Ext. A2 suit notice dated 2-12-1982 demand was made to the promissory-note amount and not for the balance of sale consideration and that the plaintiff in his evidence denied the suggestion that Rs. 18,000/- represented the balance of consideration. I am prepared to assume on the basis of Ext. B6 that Rs. 18,000/- really represented the balance of sale consideration, but even then it would not absolve the plaintiff of his liability under Ext. A1 or of his burden to result the presumption that consideration passed. 8. A Division Bench of the Bombay High Court in Tarmohamed Haji Abdul Rehman v. Tyeb Ibrahim Bharamchari (AIR (36) 1949 Bomb. 257) had occasion to consider the scope of presumption under S.118 of the Negotiable Instruments Act. A1 or of his burden to result the presumption that consideration passed. 8. A Division Bench of the Bombay High Court in Tarmohamed Haji Abdul Rehman v. Tyeb Ibrahim Bharamchari (AIR (36) 1949 Bomb. 257) had occasion to consider the scope of presumption under S.118 of the Negotiable Instruments Act. In that case it came out that the consideration mentioned in the Hundi was not correct and the consideration was something different from what was stated in the Hundi. Dealing with the question, Chagla C. J. who delivered the judgment on behalf of the Division Bench stated as follows: "Now, S.118, Negotiable Instruments Act, raises a statutory presumption in favour of there being consideration for every negotiable instrument, and the language of the section is that 'until the contrary is proved, the following presumptions shall be made: (a) that every negotiable instrument was made or drawn for consideration............. Those are the material words with which we are concerned. Therefore the statutory presumption continues until it is rebutted, and the only way it can be rebutted is by proving the contrary, viz. that the negotiable instrument was without consideration. xx xx xx xx It is perfectly true that if a particular consideration is mentioned in ' a negotiable instrument and that consideration is found to be false and some other consideration is set up, that is a factor which the Court would take into consideration in deciding whether the defendant has discharged the burden cast upon him by S.118. But it is a very different thing to say that merely because the consideration mentioned in the negotiable instrument turns out to be false, therefore the statutory presumption is rebutted and the burden is thrown upon the plaintiff to prove the consideration." 9. In Kunhikalandar v. Abdul Khader ( 1971 KLT 620 ), Subramonian Poti J. (as he then was) considered a similar question. The learned Judge observed; "The presumption under S.118 of the Negotiable Instruments Act is one which would be there until it is proved that the negotiable instrument was not made for consideration. The words "consideration" in this section are general in character. There is no presumption either that the instrument is supported by the consideration which is mentioned in the negotiable instrument or the consideration which is in the nature of what is mentioned therein. The words "consideration" in this section are general in character. There is no presumption either that the instrument is supported by the consideration which is mentioned in the negotiable instrument or the consideration which is in the nature of what is mentioned therein. To hold otherwise would be to read into the section words which are not there." 10. In Alex Mathew v. Philip ( 1973 KLT 545 ) a Division Bench of this Court had occasion to consider the scope of S.118 of the Negotiable Instruments Act, The Division Bench observed that it would not be correct merely on the basis of finding, negativing the case of a plaintiff regarding consideration to hold that the presumption under S.118 (a) has been rebutted and quoted with approval the following observation of Chagla C. J. in Tarmahomed Haji' Abdurahman's case. (Supra): "It is one thing to say that the plaintiff has failed to prove a particular consideration for the three hundis; it is an entirely different thing to say that it was proved that there was no consideration at all for the three hundis. The mere failure to prove consideration on the part of the plaintiff did not establish that the hundis were for accommodation as the defendant alleged, or that the defendant had succeeded in proving that there was no consideration at all for these hundis". 11. Learned counsel for the respondent relied on the decision of a single Judge of Gauhati High Court in Beni Madhab Nath and Others v. Jayandra Nath Barmanand and another (AIR 1979 Gah. 46). In that case the suit was based on a hand note. In the course of judgment, the Court observed: "The language of S.118 (a) clearly shows that when a consideration is set up in the plaint being different from that set out in the document, is if no consequence. It has been held in Tarmahomed (supra) that the presumption that is raised under S.118 is not in respect of the consideration mentioned in negotiable instrument but the presumption is in favour of there being a consideration for the negotiable instrument, any consideration which is a valid consideration in law." In the above case, the court took the view that since the particular consideration asserted by the plaintiff was found to be false, the party was forbidden to plead any other new consideration. This view is not consistent with the principle laid down in the decisions of Tarmahomed, Kunhikalendan and Alex Mathew (supra). 12. Learned counsel for the respondent also relied on a Division Bench decision of the Punjab High Court in Chandan Lal Joura v. M/s. Amin Chand Mohan Lal (AIR 1960 Punj. 500). In that case, the Bench observed that under S.118 of the Negotiable Instruments Act, a party denying consideration has to prove want of consideration or, to rebut the presumption that negotiable instrument was made or drawn for consideration The Court found that the story of passing of consideration was false and that the defendants were not liable to pay the amount in view of the failure on the part of the plaintiffs to perform their part of the agreement. The above decision has no application to the facts of this case. It only laid down that presumption can be rebutted by relying upon the facts and circumstances of the case and also by referring to the flaws in the evidence of the plaintiff. 13. Another decision cited by the learned counsel for the respondent is that of a single Judge of the Madhya Pradesh High Court in Radheyshyam Chironjilal Agrawal v. Rashinath Balkishan (AIR 1957 Madh. Bharat 82). It was observed in that case that where the plaintiff himself sets up a case destroying the presumption by pleading facts contrary to the plain tenor of the promissory note, then it is impossible for the plaintiff to take recourse to the presumption and he must prove the consideration. The plaintiff has not pleaded any thing contrary to the tenor of the document in the present case and the decision referred to above has no application to the facts of this case. 14. Similarly, the decision in Chudalamadan Nadar Chellamuthu Nadar v. Padmanabha Pillai Balakrishna Pillai (1969 KLR 409), relied on by the court below only lays down that the presumption can be rebutted by producing definite evidence showing that the consideration has not passed or by relying on the facts and circumstances of the case, and also by referring to the flaws in the evidence on the plaintiff's side. 15. Finally learned counsel for the respondent relied on a decision of the Supreme Court in Kundar Lal Rallaram v. Custodian. Evacuee Property, Bombay ( AIR 1961 SC 1316 ). 15. Finally learned counsel for the respondent relied on a decision of the Supreme Court in Kundar Lal Rallaram v. Custodian. Evacuee Property, Bombay ( AIR 1961 SC 1316 ). In that case, the plaintiff stated that he had sold certain goods to the defendant and that a promissory-note was executed as consideration for the goods and that he was in possession of the relevant account books to show that he was in possession of the goods sold The plaintiff did not produce the account books and the Supreme Court held that if such a relevant evidence is withheld by the plaintiff, S.114 of the Evidence Act enables the court to draw a presumption to the effect that, if produced, the said accounts would be unfavourable to the plaintiff and this presumption, if raised by a court, can under certain circumstances rebut the presumption of law raised under S.118 of the Negotiable Instruments Act. In the instant case, no such evidence was with held so as to raise a presumption under S.114 of the Evidence Act and therefore the above decision has also no application to this case. 16. In the course of cross examination the counsel for the defendant asked PW.1 whether what is stated in Ext. P6 is the truth. He replied that he did not know. Evidently, the suggestion was that the amount of Rs.18,000/- shown in Ext. A1 is the balance consideration for the sale of the properties and not that no consideration passed. 17. In the course of cross examination the counsel for the defendant asked PW.1 whether what is stated in Ext. P6 is the truth. He replied that he did not know. Evidently, the suggestion was that the amount of Rs.18,000/- shown in Ext. A1 is the balance consideration for the sale of the properties and not that no consideration passed. 17. From the above discussion the following principles emerge: (1) There is a presumption under S.118 of the Negotiable Instruments Act, that consideration has passed for execution of the document; (2) In order to rebut the presumption the defendant has to prove that no consideration has passed; (3) If it is found that some form of consideration passed that is sufficient and it is necessary for the plaintiff to prove that particular consideration mentioned in the document had passed; (4) Even if the plaintiff fails to prove that particular consideration mentioned in the promissory-note had passed, still presumption continues under S.118 of the Negotiable Instruments Act and the plaintiff is entitled to succeed on the basis of this presumption unless the defendant rebuts the presumption by establishing that no form of consideration had passed; and (5) The presumption can be rebutted by producing definite evidence that no consideration has passed or by relying on the facts and circumstances of the case as well as the flaws in the evidence of the plaintiff's side. In the instant case the defendant has not succeeded in establishing that no consideration had passed or in rebutting the presumption that consideration had passed in any manner referred to above. It follows that the judgment and decree of the court below are unsustainable and they are liable to be set aside and I do so. The appeal is allowed and the suit is decreed as prayed for. The parties will suffer their respective costs.