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2025 DIGILAW 827 (MAD)

S. Prakash v. K. Ravichandran

2025-02-06

N.SATHISH KUMAR

body2025
JUDGMENT : Challenge has been made to the decree and judgment of the Trial Court in decreeing the suit for recovery of money. 2. The parties are hitherto referred to as per their own ranking. 3. It is the case of the plaintiff that the defendant had borrowed a sum of Rs.8 lakhs for his family and business expenses on 14.03.2012 and executed a pronote. Since, the defendant has not paid either the principal nor the interest, on the repeated demands, the defendant issued two cheques bearing Nos.176463 for a sum of Rs.575000/- dated 10.05.2013 and 176453 for a sum of Rs.430000/- dated 27.03.2013. When the plaintiff presented the cheque dated 10.05.2013, the same was dishonored and returned with endorsement "Account No.6951710000068 was closed". Hence, the plaintiff did not present the other cheque. The plaintiff filed a suit for recovery of money. 4. It is the case of the defendant in written statement that the plaintiff is running finance companies and also chit business, besides, the defendant was was a subscriber to the chit funds and also was in the habit of receiving money from the plaintiff. There were money transactions between 2007 to 2013 between the plaintiff and the defendant. In the month of November 2012, he was a successful bidder to chit, for the purpose of security, the defendant has handed over unfilled pro-notes and two blank cheques. According to him, he is liable to pay only a sum of Rs.3,05,340/- towards chit amount. Therefore, according to him, the suit pronotes have been fabricated and the plaintiff had filed the suit. 5. On the basis of pleadings, the Trial Court framed the following issues: a. Whether the plaintiff is entitled to claim for the amount? b. Whether the suit deed is fabricated? c. To what relief? 6. On the side of the plaintiff, plaintiff was examined as PW1 and marked Exs.A1 to A4. On the side of the defendant, defendant was examined as DW1 and marked Exs.B1 to B3. 7. The Trial Court, on consideration of the oral and documentary evidences, decreed the suit and directed the defendant to pay the suit amount a sum of Rs.10,31,600/- with subsequent interest @ 9 % pa for the principal amount a sum of Rs.8 lakhs from the date of filing suit to date of decree and thereafter @ 6% pa till realisation of amount. Hence, the appeal. 8. Hence, the appeal. 8. The main contention of the learned counsel for the appellant is that there was a chit transaction between the parties, at that time only blank cheques and suit pro notes were given. The evidence of PW1 itself shows that there was chit transaction. Ex.B1 marked in the cross examination proves the above fact. Further, the plaintiff has not proved the passing of consideration. It is the further contention that the notice of dishonour has not been issued which is mandatory as per Section 93 of the Negotiable Instruments Act. Therefore, the Trial Court has not appreciated the matter. Hence, seeks to interfere with the judgment. 9. Whereas, the learned counsel for the respondent submitted that the execution of pronote and the issuance of cheques have been clearly proved. Defendant has not brought any materials to dislodge the legal presumption. The very defence set up by the defendant is that there was money transaction till 2013 and the defendant had handed over the pronotes and cheques to the plaintiff. Therefore, when the defendant himself has admitted the issuance of cheques and pronote, there was passing of consideration. Hence, seeks for dismissal of the appeal. 10. In light of the above, the following points arises for consideration:- i). Whether the execution of the pronote has been established in the manner known to law? ii). Whether the legal presumption attached to the Negotiable Instruments Act have been dislodged by the defendant? 11. Heard both sides and perused the materials placed on record. Points i) & ii) 12. The suit has been filed for recovery of money based on the Ex.A1/pro-note dated 14.03.2013, Ex.A2/Cheque dated 10.05.2012, Ex.A4/Cheque dated 23.07.2013. It is the case of the plaintiff that the defendant approached and borrowed a sum of Rs.8 lakh and executed pronote/Ex.A1. Since, the defendant has not paid either the principal nor the interest, on the repeated demands, the defendant issued two cheques bearing Nos.176463 for a sum of Rs.575000/- dated 10.05.2013 and 176453 for a sum of Rs.430000/- dated 27.03.2013. When the plaintiff presented the cheque dated 10.05.2013, the same was dishonoured and returned with endorsement "Account No.6951710000068 was closed". Hence, the plaintiff did not present the other cheque. The issuance of cheque as well as the pronote has not been disputed by the defendant. When the plaintiff presented the cheque dated 10.05.2013, the same was dishonoured and returned with endorsement "Account No.6951710000068 was closed". Hence, the plaintiff did not present the other cheque. The issuance of cheque as well as the pronote has not been disputed by the defendant. The only contention is that in the chit transactions, he has handed over all these documents, however the fact remains that the so-called chit transaction has not established by way of any materials. 13. It is also relevant to note that execution of the pro-note has been clearly proved by the plaintiff. On the side of the plaintiff, PW1 to PW3 were examined., wherein, PW2 and PW3, in unison, they have spoken about the execution of the pro-note. The initial burden of the plaintiff in proving the execution has been discharged by plaintiff, therefore, burden shifts on the defendant to dislodge the legal presumption. However, the very pleadings in the written statement indicate that there were money transactions and the suit pro-note and cheques, in fact, were handed over by the defendant. Therefore, once the execution of the pronote has been clearly established in the manner known to law, the legal presumption available under Section 118 of the Negotiable Instruments Act will apply. With regard to passing of consideration is concerned, as the burden shifts on the defendant to dislodge such legal presumption, whereas, as long as such burden has not been dislodged, it has to be held that such pronote is supported by consideration. As far as the issuance of blank cheque is concerned, even assuming that such contention is true, it is relevant to note cheque remains as a bill of exchange, till it gets filled. 14. It is also to be noted that the drawee is entitled to fill the cheque. In this regard, it is useful to refer the judgment of the Hon'ble Supreme Court in the case of Bir Singh vs. Mukesh Kumar reported in (2019) 4 SCC 197 , which reads as follows: 34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence. 36. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence. 36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt. 15. The same issue was also dealt in the case of Oriental Bank of Commerce vs. Prabodh Kumar Tewari reported in 2022 SCC OnLine SC 1089 . 16. It is also relevant to note that the classic judgment of the Hon'ble Supreme Court in the case of Kundan Lal Rallaram vs. The Custodian, Evacuee Property Bombay reported in AIR 1961 SC 1316 has dealt with as to how the burden has to be discharged by the parties based on the Negotiable Instruments Act. The relevant paragraph reads as follows: 5. This section lays down a special rule of evidence applicable to negotiable instruments. The presumption is one of law and thereunder a court shall presume, inter alia, that the negotiable instrument or the endorsement was made or endorsed for consideration. In effect it throws the burden of proof of failure of consideration on the maker of the note or the endorser, as the case may be. The question is, how the burden can be discharged? The rules of evidence pertaining to burden of proof are embodied in Chapter 7 of the Evidence Act. The phrase “burden of proof” has two meanings — one the burden of proof as a matter of law and pleading and the other the burden of establishing a case; the former is fixed as a question of law on the basis of the pleadings and is unchanged during the entire trial, whereas the latter is not constant but shifts as soon as a party adduces sufficient evidence to raise a presumption in his favour. The evidence required to shift the burden need not necessarily be direct evidence i.e., oral or documentary evidence or admissions made by opposite party; it may comprise circumstantial evidence or presumptions of law or fact. The evidence required to shift the burden need not necessarily be direct evidence i.e., oral or documentary evidence or admissions made by opposite party; it may comprise circumstantial evidence or presumptions of law or fact. To illustrate how this doctrine works in practice, we may take a suit on a promissory note. Under Section 101 of the Evidence Act, “Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist”. Therefore, the burden initially rests on the plaintiff who has to prove that the promissory note was executed by the defendant. As soon as the execution of the promissory note is proved, the rule of presumption laid down in Section 118 of the Negotiable Instruments Act helps him to shift the burden to the other side. The burden of proof as a question of law rests, therefore, on the plaintiff; but as soon as the execution is proved, Section 118 of the Negotiable Instruments Act imposes a duty on the court to raise a presumption in his favour that the said instrument was made for consideration. This presumption shifts the burden of proof in the second sense, that is, the burden of establishing a case shifts to the defendant. The defendant may adduce direct evidence to prove that the promissory note was not supported by consideration, and, if he adduced acceptable evidence, the burden again shifts to the plaintiff, and so on. The defendant may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling, the burden may likewise shift again to the plaintiff. He may also rely upon presumptions of fact, for instance those mentioned in Section 114 and other sections of the Evidence Act. Under Section 114 of the Evidence Act, “The court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case”. Illustration (g) to that section shows that the court may presume that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it. Illustration (g) to that section shows that the court may presume that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it. A plaintiff, who says that he had sold certain goods to the defendant and that a promissory note was executed as consideration for the goods and that he is in possession of the relevant account books to show that he was in possession of the goods sold and that the sale was effected for a particular consideration, should produce the said account books, for he is in possession of the same and the defendant certainly cannot be expected to produce his documents. In those circumstances, if such a relevant evidence is withheld by the plaintiff, Section 114 enables the court to draw a presumption to the effect that, if produced, the said accounts would be unfavourable to the plaintiff. This presumption, if raised by a court, can under certain circumstances rebut the presumption of law raised under Section 118 of the Negotiable Instruments Act. Briefly stated, the burden of proof may be shifted by presumptions of law or fact, and presumptions of law or presumptions of fact may be rebutted not only by direct or circumstantial evidence but also by presumptions of law or fact. We are not concerned here with irrebuttable presumptions of law. 17. The defendant having admitted the money transaction and also admitted that the defendant has to pay a sum of Rs.2 lakhs and further that the execution of the pronote is clearly proved and as the defendant has not placed any probabilities to dislodge the legal presumption, it has to be held that pronote is supported by consideration and statutory presumption will automatically apply to suit document. Accordingly, these points are answered and this Court does not find any infirmity in the judgment and decree. 18. In the result, the appeal stands dismissed. No costs. Consequently, connected miscellaneous petition stands closed.