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2002 DIGILAW 1254 (AP)

Moden Venkataramana v. Palagiri Rasool Saheb

2002-10-25

G.BIKSHAPATHY

body2002
G. BIKSHAPATHY, J. ( 1 ) THE Second Appeal is filed against the judgment and decree rendered by the learned Senior Civil Judge, Pileru reversing the judgment and decree of the learned district Munsif, Vayalapad in O. S. No. 45 of 1988. ( 2 ) THE appellant is the plaintiff. He filed suit in O. S. No. 45 of 1988 for recovery of certain amount on the basis of a pronote dated 15-3-1985. The defendant resisted the suit on the ground that no consideration was passed under the said pronote and that the pronote was executed as security for the chit, which he had lifted from the plaintiff who has been doing chit business and he was a subscriber of a chit of the value of rs. 15,000/ -. After the chit was lifted, he had executed the pronote as a security and therefore, there was no consideration at all. The defendant also contended that he is a small farmer and he is entitled for the protection under A. P. Act No. 45 of 1987. ( 3 ) ON the basis of the respective contentions, the lower court framed the following issues:1. Whether the suit promissory note is supported by consideration? 2. Whether the suit promissory note came into existence out of the chit transaction? 3. Whether the defendant is entitled to the benefits of Act 45/87? 4. To what relief?the plaintiff himself was examined as P. W. I and Ex. A-1 - pronote was marked. On behalf of the defendant, D. Ws. l to 4 were examined and Ex. X-1 was marked. The trial court after considering the matter felt that the pronote was properly executed and was supported by consideration and that the defendant was not a small farmer and accordingly, decreed the suit by judgment and decree dated: 3-8-1996. Aggrieved by the said judgment and decree, the defendant carried the matter in appeal. ( 4 ) THE appellate court reversed the finding of the trial court and allowed the appeal dismissing the suit in O. S. No. 45 of 1988, against which, the present Second appeal has been filed. ( 5 ) THE learned counsel for the appellant submits that the findings recorded by the lower appellate court are wholly erroneous and contrary to law. The lower appellate court has completely misread the provisions relating to the presumptions under Sec. 118 of the Negotiable Instruments Act. ( 5 ) THE learned counsel for the appellant submits that the findings recorded by the lower appellate court are wholly erroneous and contrary to law. The lower appellate court has completely misread the provisions relating to the presumptions under Sec. 118 of the Negotiable Instruments Act. The lower appellate court also failed to take into considerations the provisions contained in act No. 45 of 1987 and erroneously held that the appellant failed to discharge the burden placed on him. ( 6 ) ON the other hand, the learned counsel for the respondent submits that the findings recorded by the lower appellate court are quite just and reasonable and inasmuch as the burden which is placed on the plaintiff with regard to the passing of consideration and also to establish that the defendant was not a small farmer was not discharged, the lower appellate court was justified in reversing the judgment of the trial court. ( 7 ) THE substantial question that arises for consideration is whether the lower appellate court was justified in placing the burden of proof on the plaintiff. The execution of the pronote was admitted by the defendant, but the defendant has come forward with the explanation that no consideration was passed on and it was only executed as a security for the chit, which he had lifted from the plaintiff who was doing chit business and he was member of the chit. It is also in the evidence of D. W. 2 that he was a scribe to the pronote and that no consideration was passed on and that D. W. 2 also admitted that plaintiff had also filed suit against him on the foot of a simple pronote. The question that calls for consideration is whether placing of burden on the plaintiff is justified. In this regard section 118 of the Negotiable Instruments act is relevant, which is extracted below:"118. The question that calls for consideration is whether placing of burden on the plaintiff is justified. In this regard section 118 of the Negotiable Instruments act is relevant, which is extracted below:"118. Presumptions as to negotiable instruments: Until the contrary is proved, the following presumptions shall be made: (a) of consideration: 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) as to date: that every negotiable instrument bearing a date was made or drawn on such date; (c) as to time of acceptance: that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity; (d) as to time of transfer: that every transfer of negotiable instrument was made before its maturity; (e) as to order of indorsement: that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon; (f) as to stamp: that a lost promissory note, bill of exchange or cheque was duly stamped; (g) that holder is a holder in due course: that the holder of a negotiable instrument is a holder in due course: provided that, where instrument has been obtained from its lawful owner, or from any person in 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. "from a reading of the aforesaid provision, it is clear that when once execution of the pronote is accepted, the presumption contained under Section 118 comes into play and the burden lies upon the defendant to rebut those presumptions. Therefore, unless contrary is proved, the execution and the validity of the pronote has to be presumed. The learned counsel for the appellant relies upon the judgment of the Supreme Court in bharat Barrel and Drum Mfg. Co. v. Amin chand Pyarelal wherein while dealing with section 118 of the Negotiable Instruments act, the Supreme Court held as follows:"once execution of the promissory note is admitted, the presumption under Section 118 (a) would arise that it is supported by a consideration. Such a presumption is rebuttable. Co. v. Amin chand Pyarelal wherein while dealing with section 118 of the Negotiable Instruments act, the Supreme Court held as follows:"once execution of the promissory note is admitted, the presumption under Section 118 (a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under section 118 (a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something, which is probable, has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist. "he also relies on the judgment of the learned single Judge of this Court reported in v. Surya Rao v. G. Gopala Krishna, wherein, the learned Single Judge held as follows:"two types of cases may arise-one where there is a denial as to the execution and pleading forgery and two, while admitting the instrument explain the circumstances. Therefore, subject to proving otherwise, the presumptions follow in both the matters with variation. Normally, one comes across with both the plea of total denial and then with some explanation by way of defence, which run totally contradictory. Though a defendant is entitled to raise contradictory pleadings in defence, however, the same vary from case to case. Especially, in the case of negotiable instruments, such pleas have to be strictly scrutinized in a proper perspective within the limitations prescribed under the law and should not allow the defendant to go scot free with unsustained pleas. Therefore, to restrict the enquiry, the law contemplates such presumption and once the instrument is proved, all presumptions follow. Shifting the burden apart, it certainly casts doubts on the bona fides in respect of pleas like denying the very note on the plea of forgery and then coming out with some explanation. In such cases, if due execution of the instrument once proved the presumption operates with more vigour and it should shut out the explanation sought to be given. The enquiry into a plea of forgery is a comprehensive one, calling for detailed evidence and material on either side and such plea of forgery even constitutes a serious offence under the provisions of the Indian Penal Code. Therefore, the conduct of the parties prior to the suit and their silence goes a long way in considering the said plea. Claims based on forged promissory notes cannot be ruled out. However, either way, the instrument and the evidence thereon requires to be considered in its proper perspective and in the circumstances of each case. Therefore, the conduct of the parties prior to the suit and their silence goes a long way in considering the said plea. Claims based on forged promissory notes cannot be ruled out. However, either way, the instrument and the evidence thereon requires to be considered in its proper perspective and in the circumstances of each case. Thus, looking from the principles as laid down, the presumption automatically follows that once the execution is proved and especially in the case where the plea of total denial of execution and forgery has been negatived, the necessity to go into the circumstances or the theories or the story as sought to be explained by the defendant becomes very circumspective and narrow. "from the aforesaid judgments, it is clear that when once the execution of pronote is admitted, the onerous burden is shifted to the defendant to establish contrary. But, in the instant case, the lower appellate court came to the conclusion that the burden vests (sic. rests) with the plaintiff to establish that no consideration was passed and that one of the attestors was not examined. The said finding runs contrary to the principles laid down by the Supreme Court and also the learned Single Judge. Thus, I find that the lower court has not properly appreciated the legal aspect. Even with regard to the aspect that the burden of proof that the debtor is not entitled to the protection of Act No. 45 of 1987 lies on the creditor, when the debtor himself has come forward in his own admission that he is doing business and he owns property more than three lakhs and that he is eking out livelihood by vegetable vending, in such circumstance, can it be said that still the burden lies on the plaintiff to prove that the defendant is not a small farmer. This aspect also was not properly considered by the lower appellate court with reference to Section 13 of A. P. Agricultural indebtedness (Relief) Act, 1977. This aspect also was not properly considered by the lower appellate court with reference to Section 13 of A. P. Agricultural indebtedness (Relief) Act, 1977. In the above circumstances, this Court finds that it is a fit case where the matter has to be reconsidered by the lower appellate court keeping in view the legal provisions contained in Section 118 of the Negotiable Instruments Act and section 13 of A. P. Agricultural Indebtedness (Relief) Act, 1977 with reference to the dicta laid down by the Supreme Court as also the learned Single Judge referred to above. Under these circumstances, I hold that the judgment and decree of the lower appellate court is not sustainable in law. Accordingly, it is set aside and the matter is remanded back to the lower appellate court for fresh consideration after affording opportunity to both the parties. The lower appellant Court shall consider the contentions raised and also the issues which have been referred to above with reference to the principles laid down by the Supreme Court and decide the matter in accordance with law within a period of three months from the date of the receipt of a copy of this order. ( 8 ) THE Second Appeal is allowed accordingly. No costs.