Section 118(a) would arise that it is supported by consideration. Such a presumption is rebuttable. = 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, shall act upon the plea that it did not exist. We find ourselves in the close proximity of the view expressed by the Full Benches of the Rajasthan High Court and Andhra Pradesh High Court in this regard. Hence, in view of admission of execution of the Ex.A1 promissory note, the burden is on the defendant to prove his case. Besides himself, the defendant examined DWs.2 to 4 to show that the said Mohana Rao was in the habit of lending money, but did not speak of non-passing of consideration. On the other hand, it is the case of the defendant that he was borrowing amounts from Mohana Rao and the suit promissory note was executed for a much higher amount than the amount borrowed by him. That borrowing of higher amount was also not proved by the defendant in the instant case by producing any documentary evidence. In view of the same, the judgment and decree passed by the trial Court cannot be set aside and accordingly it is affirmed.
THE HONBLE SRI JUSTICE A.RAMALINGESWARA RAO
Appeal Suit No. 1006 of 1999
20.04.2018
Siram Srirama MurthyAppellant
Meka Suryanarayanamma Respondent
Counsel for the Appellant: Sri M.V. Suresh
Counsel for the Respondent: Sri K.V. Subba Reddy
<Gist :
>Head Note :
?Cases referred:
1. AIR 1999 SC 1441
2. AIR 1973 Calcutta 465
3. (1999) AIR (SC) 1008
HONBLE SRI JUSTICE A. RAMALINGESWARA RAO
Appeal Suit No.1006 of 1999
Judgment:
This appeal is directed against the judgment and decree dated
22.01.1999 passed in O.S.No.27 of 1992 on the file of the learned Senior
Civil Judge, Razole. The suit was filed for recovery of Rs.88,400/- being
principal and interest due as on the date of filing of the suit with costs and
future interest.
It was alleged in the plaint that the defendant borrowed an amount
of Rs.65,000/- for the purpose of his necessities and executed a
promissory note on 01.09.1989 in favour of the plaintiff undertaking to
repay the same together with interest thereon at Rs.1.50 per mensem per
hundred to her or her order on demand. The plaintiff issued a notice on
03.08.1992 and the defendant received the same. The defendant issued
a reply notice on 08.08.1992 with false allegations. The suit was filed for
Rs.88,400/- calculating interest at 12% p.a., on the original amount of
Rs.65,000/-.
The defendant filed a written statement stating that the plaintiff is
the sister of one Bolla Veera Venkata Rama Mohana Rao of Mondepulanka
village, the plaintiff in O.S.No.37 of 1992 is the younger brother of the
said B.V.V.R. Mohana Rao and the plaintiff in O.S.No.28 of 1992 is the
mother of said B.V.V.R. Mohana Rao. All the pronotes were executed on
the same date, but the date on the pronote in O.S.No.37 of 1992 was put
as 26.10.1989. The plaint allegations are denied. The execution, passing
of consideration under the promissory note and the validity of the same
are specifically denied by the defendant. It was also stated that the suit
promissory note was not true, valid and it is not supported by
consideration. The defendant denied the knowledge of the plaintiff and
also stated that there are no transactions between him and the plaintiff,
but admitted that one B.V.V.R. Mohana Rao has got some transactions
with the defendant. The said B.V.V.R. Mohana Rao was stated to be an
unscrupulous money lender. It was also stated that the defendant and
the said B.V.V.R. Mohana Rao stored the paddy by purchasing with a view
to sell the same for higher price and in that transaction the defendant has
to pay an amount of Rs.33,900/- as on 01.09.1988 and interest accrued
thereon up to 01.09.1989 came to Rs.8,136/-. The defendant also
borrowed an amount of Rs.20,000/- on 29.05.1988 and the interest
accrued thereon came to Rs.10,500/- calculated up to 31.08.1989. The
defendant further stated that he borrowed an amount of Rs.10,000/- on
06.01.1989 and the interest came to Rs.3,134/- calculated up to
31.08.1989. He also borrowed an amount of Rs.5,000/- on 07.01.1989
and the interest came to Rs.1,564/- as on 31.08.1989. The defendant
and the said B.V.V.R. Mohana Rao did business in fire works during Diwali
season of 1988. In that connection the defendant borrowed Rs.8,600/-
and the interest came to Rs.3,612/- calculated up to 31.08.1989. When
the said Mohana Rao gave pressure, threatened and coerced the
defendant to execute fresh promissory notes on 01.09.1989, he executed
the promissory notes in the name of his mother, Bolla Sathemma, W/o
Subba Rao for Rs.43,900/- by putting the excess amount of Rs.10,000/-
and the plaintiff made a material alteration in the said promissory note.
The said promissory note is the subject matter of O.S.No.28 of 1992. The
promissory note in favour of the present plaintiff was made up of
borrowings on different dates and the total interest came to Rs.26,946/-,
out of which the defendant paid an amount of Rs.4,260/- and the balance
interest amount of Rs.22,686/- remained. He stated that on 01.09.1989,
the promissory notes were obtained and the promissory notes in favour of
the plaintiff herein and in favour of Bolla Sathemma, which is the subject
matter of O.S.No.28 of 1992, are not supported by consideration. He also
stated that he executed another promissory note in favour of younger
brother of Mohana Rao which is the subject matter of O.S.No.37 of 1992.
Thus, the promissory notes under three suits being O.S.Nos.27 of 1992,
28 of 1992 and 37 of 1992 were not supported by consideration, they
were not executed, they were not valid and they were not enforceable
under law. The alleged attesting witnesses were not present at the time
of execution of the promissory notes and the attesting signatures were
subsequently obtained without the knowledge of the defendant. So, the
said promissory notes were vitiated by material alterations. The
defendant is entitled to the benefit of Act 45 of 1987 and also Act 1 of
1990 and other enactments. The suit debt even if it is true was abated.
On the basis of the above pleadings, the following issues were
framed by the trial court:
1. Whether the suit promissory note is true, valid and supported
by consideration?
2. Whether the suit promissory note came into existence under the
circumstances mentioned in the written statement/
3. Whether the defendant is a small farmer and whether he is
entitled to the benefits of Act 45 of 1987 and Act 1 of 1990.
4. To what relief?
On behalf of the plaintiff, PWs.1 and 2 were examined and Exs.A1
to A4 were marked. On behalf of the defendant, the defendant himself
was examined as DW.1 besides examining three more witnesses as DWs.2
to 4 and Exs.B1 to B19 were marked.
The trial Court noticed that the defendant as DW.1 admitted the
execution of Ex.A1 promissory note and held that in view of the said
admission, Section 118 of the Negotiable Instruments Act comes into
operation and presumption could be drawn in favour of the promisee that
the promissory note was supported by consideration. In view of the
same, the oral evidence of DWs.2 to 4 to the effect that the said Mohana
Rao was in the habit of getting promissory notes executed in favour of his
family members for excess amount than lent was not taken into
consideration. It was also observed that DWs.2 to 4 are well acquainted
with the defendant and their oral evidence cannot be relied upon. Since
the plaintiff proved the execution of Ex.A1 by examining one of the
attestors, the trial Court came to the conclusion that the suit promissory
note was proved, valid and supported by consideration. With regard to
plea of small farmer and his entitlement to the benefit of Act 45 of 1987
and 1 of 1990, in view of the admission of the defendant that he is having
one medical shop and two kirana shops at Gannavaram and in the
absence of any evidence of ownership of agricultural lands by the
defendant, the plea of small farmer was rejected. Accordingly, the suit
was decreed, by judgment and decree dated 22.01.1999, for a sum of
Rs.88,400/- with future interest at 12% p.a. Challenging the said
judgment and decree, the above appeal was filed.
In the present appeal, the point that falls for consideration is
whether, in the facts and circumstances of the case, the judgment and
decree of the trial court is correct or not?
Learned counsel for the appellant/defendant submitted that in the
absence of the plaintiff coming to the witness box, the suit should not
have been decreed and he placed reliance on a decision of the Honble
Supreme Court reported in Vidhyadhar v. Manikrao .
Learned counsel for the respondent/plaintiff, on the other hand, by
relying on the decision reported in Bijoy Kumar Karnani v. Lahori
Ram Prashe , submitted that adverse inference under Section 114 of the
Evidence Act cannot be drawn for mere non-examination of the plaintiff
when other material witness is produced. He further submitted that when
once execution of promissory note is admitted, presumption under Section
118(a) of the Negotiable Instruments Act would arise that it is supported
by consideration and in support of the said contention he relied on a
decision reported in Bharat Barrel and Drum Manufacture Company
Limited v. Amin Chand Payrelal .
It is no doubt true that the plaintiff did not enter the witness box.
The said B.V.V.R. Mohana Rao @ Bolla Rama Rao was examined as PW.1
and he stated that the plaintiff is the daughter of his elder sister and he
has been looking after her affairs. He spoke about the defendant
borrowing an amount of Rs.65,000/- from the plaintiff and scribing the
promissory note in favour of the plaintiff on 01.09.1989. He denied doing
any business with the defendant jointly. The other averments made in
the written statement were also denied by him. He further stated that
DW.2 is a tailor by profession and close friend of DW.1. In the cross-
examination he stated that himself, his mother and his brother are
residing in the same house at Mondepulanka village and the plaintiff was
not having any properties at Mondepulanka village. He further stated that
except the amount lent under the promissory note, he did not lend any
amount. He denied the other transactions alleged by the defendant in his
cross-examination.
On behalf of the plaintiff, PW.2 was also examined and he is one of
the attestors of the pronote. He stated that he attested Ex.A1 pronote
along with elder son of the defendant who attested Ex.A1.
The defendant as DW.1 spoke on the lines of his written statement.
In the chief-examination he admitted that the said Rama Mohana Rao
obtained a pronote for Rs.65,000/-, which includes Rs.43,600/- borrowed
with interest at Rs.10,000/- and the balance amount of Rs.11,400/-. He
admitted the execution of pronote in the name of the plaintiff.
DW.2 denied his presence at the time of negotiations between
Bolla Rama Rao and the defendant. DW.3 who is the supplier of eggs
stated that he used to borrow money from Bolla Rama Rao. He stated
that himself, defendant and Bolla Rama Rao were only present at the time
of execution of Exs.B15 and 16. Similarly, DW.4 stated that he borrowed
the amount from B. Rama Rao and discharged the said amount. He is an
agriculturist and doing fishing business.
Thus, the plaintiff did not enter the witness box and PW.1 who
stated that he is acquainted with the facts of the case deposed on behalf
of the plaintiff. One of the attestors was examined as PW.2. The
defendant admitted the execution of the promissory note, but disputed
the attestation and consideration.
In Vidhyadhars case (supra) the plaintiff filed a suit against the
defendants for redemption of the mortgage by conditional sale or in the
alternative for a decree of specific performance of contract for repurchase.
The property involved is 4.04 acres of land. The second defendant
executed a document called kararkharedi in favour of the first defendant
for a sum of Rs.1500/- and delivered possession thereof to him. The
document contained a stipulation that if the entire amount of Rs.1500/-
was returned to the first defendant before 15th of March, 1973, the
property would be given back to the second defendant. The land was
subsequently transferred by the second defendant in favour of the plaintiff
for a sum of Rs.5,000/- by a registered sale deed dated 19.06.1973. After
purchase of the property, the plaintiff filed the above suit stating that the
second defendant had offered the entire amount to the first defendant but
he did not accept the amount and since the document executed by the
second defendant in favour of the first defendant was a mortgage by
conditional sale the property was liable to be redeemed. It was also
stated that if it was held by the Court that the document did not create a
mortgage but was an out and out sale, the plaintiff as transferee of the
second defendant was entitled to a decree for re-conveyance of the
property as the second defendant already offered the entire amount of
sale consideration to the first defendant which he refused and the plaintiff
was still prepared to offer the said amount to the first defendant.
The second defendant admitted the case of the plaintiff, whereas
the first defendant contested the suit and stated that the document was
not a mortgage by conditional sale but an out and out sale and since the
amount of consideration was not tendered within the time stipulated, the
plaintiff could not claim re-conveyance of the property in question. The
trial Court decreed the suit and was confirmed in appeal, but was
reversed by the High Court in the Second Appeal.
In the said case, the Honble Supreme Court noticed that the first
defendant did not enter the witness box, did not state the facts pleaded in
the written statement on oath in the trial Court and avoided the witness
box so that he may not be cross-examined and that would itself be
enough to reject the claim that the transaction of sale between the
plaintiff and the second defendant was a bogus transaction. In that
connection the Honble Supreme Court observed as follows:
16. Where a party to the suit does not appear into the
witness box and states his own case on oath and does not offer
himself to be cross examined by the other side, a presumption
would arise that the case set up by him is not correct as has been
held in a series of decisions passed by various High Courts and
the Privy Council beginning from the decision in Sardar
Gurbakhsh Singh v. Gurdial Singh (AIR 1927 PC 230). This
was followed by the Lahore High Court in Kirpa Singh v. Ajaipal
Singh (AIR 1930 Lahore 1) and the Bombay High Court in
Martand Pandharinath Chaudhari v. Radhabai Krishnarao
Deshmukh (AIR 1931 Bombay 97). The Madhya Pradesh High
Court in Gulla Kharagjit Carpenter v. Narsingh Nandkishore
Rawat (AIR 1970 Madh Pra 225), also followed the Privy Council
decision in Sardar Gurbakhsh Singh's case (supra). The
Allahabad High Court in Arjun Singh v. Virender Nath (AIR
1971 Allahabad 29) held that if a party abstains from entering the
witness box, it would give rise to an inference adverse against
him. Similarly, a Division Bench of the Punjab and Haryana High
Court in Bhagwan Dass v. Bhishan Chand (AIR 1974 Punj and
Har 7), drew a presumption under Section 114 of the Evidence Act
against a party who did not enter into the witness box.
17. Defendant No. 1 himself was not a party to the
transaction of sale between defendant No. 2 and the plaintiff. He
himself had no personal knowledge of the terms settled between
defendant No. 2 and the plaintiff. The transaction was not settled
in his presence nor was any payment made in his presence. Nor,
for that matter, was he a scribe or marginal witness of that sale
deed. Could, in this situation, defendant No.1 have raised a plea
as to the validity of the sale deed on the ground of inadequacy of
consideration or part-payment thereof? Defendant No. 2 alone,
who was the executant of the sale deed, could have raised an
objection as to the validity of the sale deed on the ground that it
was without consideration or that the consideration paid to him
was highly inadequate. But he, as pointed out earlier, admitted
the claim of the plaintiff whose claim in the suit was based on the
sale deed, executed by defendant No. 2 in his favour. The
property having been transferred to him, the plaintiff became
entitled to all the reliefs which could have been claimed by
defendant No. 2 against defendant No. 1 including redemption of
the mortgaged property.
The instant case is a converse case, where, though the plaintiff did
not enter the witness box, but the facts were spoken by PW.1 on behalf of
the plaintiff and the case of the plaintiff to the extent of execution of the
document was admitted by the defendant, though he denied the
consideration and attestation. The suit promissory note is not a
compulsorily attestable document and there is no dispute with regard to
execution of Ex.A1 promissory note. In such circumstances, as rightly
pointed out by the learned counsel for the respondent/plaintiff, Section
118(a) of the Negotiable Instruments Act comes into operation and the
decision in Vidhyadhars case (supra) is not applicable to the facts of the
present case.
The facts in Bijoy Kumar Karnanis case (supra) are identical to
the facts of the present case. The case of the plaintiff was that the
defendant executed two promissory notes for a sum of Rs.5,000/- and
Rs.12,000/- respectively. He also executed two receipts on the dates of
the promissory notes. In spite of giving notice, the defendant failed to
pay the amount and accordingly the suit was filed. In the suit, the
defendant admitted the execution of the promissory notes and the
receipts of the monies under the said promissory notes. He also admitted
the execution of two separate receipts/vouchers in favour of the plaintiff,
but stated that the promissory notes and the receipts/vouchers were not
executed at Calcutta within the jurisdiction of the Court but the same
were executed out side the jurisdiction of the Court. He also pleaded that
he repaid the sum covered by the promissory notes in due course and
thus they were discharged. The plaintiff returned the promissory notes
duly discharging it to the defendant. In the said suit, the plaintiff did not
come to the witness box. The Accountant also was not called for
evidence. He placed reliance on Section 114, illustration (g) of the Indian
Evidence Act. In this connection, the Calcutta High Court observed as
follows:
10. I do not understand how this decision of the Privy
Council establishes the proposition made by Dr. Das that under
the facts of the instant case before me for non-calling of Bejoy
Kumar Karnani and the Accountant Kundu I shall draw the
adverse inference which the Privy Council was pleased to draw by
non-calling the second widow of Jawalla Singh. In the instant
case, Sanak Chandra Biswas an employee of Bejoy Kumar Karnani
gave evidence before me, stating that two documents were
executed before him by the defendant at No.17, Chowringhee
Road, Calcutta, and he made payment of the money which he
carried to the defendant at that place. He took the promissory
notes and two vouchers were signed in his presence at No.17,
Chowringhee Road, Calcutta. When he took the money to the
defendant No.17, Chowringhee Road, only the Darwan
accompanied him. He did not remember the name of the Darwan.
Apart from the Darwan, driver of the defendant drove the car.
Therefore, at the time when the promissory notes were executed
Bijoy Kumar Karnani was not present. There is no dispute with
regard to making of the vouchers. The execution of the receipts in
the vouchers is also admitted. Only the place of execution is
disputed. In view of the evidence given on behalf of the plaintiff,
I do not understand how the plaintiff was a material witness to
prove the fact of the place of the execution of two promissory
notes and why I should draw any adverse inference which the
Privy Council was pleased to draw under entirely different facts
and circumstances. It is true that the defendant made the case
that the promissory notes were executed at 22/23, Gariahat Road,
outside the said jurisdiction. But this was not the case of the
plaintiff. In cross-examination it was suggested that paragraphs 1
and 2 of the plaint are verified by the plaintiff as true to his
knowledge and it was suggested that the plaintiff should have
come and deposed. But in view of the evidence given by the
plaintiff's witness I do not think that the plaintiff himself was a
material witness to prove the place of execution. The accountant
Kundu is also not a material witness in this suit. The argument
made by Dr. Das, if accepted, would mean that the plaintiff should
have been called to disprove the defendant's case. In my view,
there is no question of invoking presumption of Section 114,
illustration (g) of the Indian Evidence Act and the principles laid
down in the said Privy Council decision, cannot apply in this case.
In Bharat Barrel and Drum Manufacture Company Limiteds
case (supra) also the defendant admitted the execution of the promissory
note. The Honble Supreme Court, interpreting the scope of Section 118
of the Negotiable Instruments Act and the presumptions arising under it
held as follows:
11. Section 118 of the Act deals with the presumptions as
to negotiable instruments. One of such presumptions is, 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. This presumption is
based upon a principle and is not a mere technical provision. The
principle incorporated being, inferring of a presumption of
consideration in the case of a negotiable instrument. A Full Bench
of the Rajasthan High Court in Heerachand v. Jeevraj (AIR
1959 Raj. 1) held that, presumption, therefore, as to consideration
is the very ingredient of negotiability and in the case of negotiable
instrument, presumption as to consideration has to be made. A
Full Bench of the Andhra Pradesh High Court in G. Vasu v. Syed
Yaseen Sifuddin Quadri (AIR 1987 Andhra Pradesh 139) while
dealing with the words until the contrary is proved held that it
was permissible for the Court to look into the preponderance of
the probabilities and the entire circumstances of the particular
case. After referring to Sections 3, 4 and 101 to 104 of the
Evidence Act, the Court held that while dealing with the absence
of consideration, the Court shall have to consider not only
whether it believed that consideration did not exist but also
whether it considered the non-existence of the consideration so
probable that a reasonable man would, under the circumstances
of a particular case, could act upon the supposition that the
consideration did not exist. Once the defendant showed either by
direct evidence or circumstantial evidence or by use of the other
presumptions of law or fact that the promissory note was not
supported by consideration in the manner stated therein, the
evidentiary burden would shift to the plaintiff and the legal burden
reviving his legal burden to prove that the promissory note was
supported by consideration and at that stage, the presumption of
law covered by Section 118 of the Act would disappear. Merely
because the plaintiff came forward with a case different from the
one mentioned in the promissory note it would not be correct to
say that the presumption under Section 118 did not apply at all.
Such a presumption applies once the execution of the promissory
note is accepted by the defendant. The circumstances that the
plaintiffs case was at a variance with the one contained in the
promissory note could be relied by the defendant for the purpose
of rebutting the presumption of shifting the evidential burden to
the plaintiff. After referring to the catena of authorities on the
point, the Full Bench held:--
"Having referred to the method and manner in
which the presumption under Section 118 is to be
rebutted and as to how, it thereafter disappears we shall
also make reference to three principles which are
relevant in the context. The first one is connected with
the practical difficulties that beset the defendant for
proving a negative, namely that no other conceivable
consideration exists. We had occasion to refer to this
aspect earlier. Negative evidence is always in some sort
circumstantial or indirect, and the difficulty or proving a
negative lies in discovering a fact or series of facts
inconsistent with the fact which we seek to disprove
(Gulson, Philosophy of Proof, 2nd Edition, p. 153
quoted in Cross on Evidence, 3rd Edition, page 78 Fn).
In such situations, a lesser amount of proof than is usually
required may avail. In fact, such evidence as renders the
existence of the negative probable may shift the burden on to the
other party (Jones, quoted in A Sarkar on Evidence, 12th
Edition, p. 870). The second principle which is relevant in the
context is the one stated in S.106 of the Evidence Act. That
section states that when any fact is especially within the
knowledge of any person, the burden of proving that fact is upon
him. It is very generally stated that, where the party who does
not have the evidential burden, such as the plaintiff in this case,
possesses positive and complete knowledge concerning the
existence of fact which the party having the evidential burden,
such as the defendant in this case, is called upon the negative or
has peculiar knowledge or control of evidence as such matters,
the burden rests on him to produce the evidence, the negative
averment being taken as true unless disapproved by the party
having such knowledge or control. The difficulty or proving a
negative only relieves the party having the evidential burden from
the necessity of creating a positive conviction entirely by his own
evidence so that, when he produces such evidence as it is in his
power to produce, its probative effect is enhanced by the silence
of the opponent (Corpus Juris, Vol. 31, Para 113). The third
principle that has to be borne in mind is the one that when both
parties have led evidence, the onus of proof loses all importance
and becomes purely academic. Referring to this principles, the
Supreme Court stated in Narayan v. Gopal (AIR 1960 SC 100)
as follows:
The burden of proof is of importance only where
by reason of not discharging the burden which was put
upon it, a party must eventually fail, where, however,
parties have joined issue and have led evidence and the
conflicting evidence can be weighed to determine which
way the issue can be decided, the abstract question of
burden of proof becomes academic.
We have referred to these three principles as they are
important and have to be borne in mind by the Court while
deciding whether the initial evidential burden under Section 118
of the Negotiable Instruments Act has been discharged by the
defendant and the presumption disappeared and whether the
burden has shifted and later whether the plaintiff has discharged
the legal burden after the same was restored.
For the aforesaid reasons, we are of the view that where, in
a suit on a promissory note, the case of the defendant as to the
circumstances under which the promissory note was executed is
not accepted, it is open to the defendant to prove that the case
set up by the plaintiff on the basis of the recitals in the promissory
note, or the case set up in suit notice or in the plaint is not true
and rebut the presumption under Section 118 by showing a
preponderance of probabilities in his favour and against the
plaintiff. He need not lead evidence on all conceivable modes of
consideration for establishing that the promissory note is not
supported by any consideration whatsoever. The words until the
contrary is proved in Section 118 do not mean that the defendant
must necessarily show that the document is not supported by any
form of consideration but the defendant has the option to ask the
court to consider the non-existence of consideration so probable
that a prudent man ought, under the circumstances of the case,
to fact upon the supposition that consideration did not exist.
Though the evidential burden is initially placed on the defendant
by virtue of Section 118 it can be rebutted by the defendant by
showing a preponderance of probabilities that such consideration
as stated in the pronote, or in the suit notice or in the plaint does
not exist and once the presumption is so rebutted, the said
presumption disappears. For the purpose of rebutting the initial
evidence burden, the defendant can rely on direct evidence on
circumstantial evidence or on presumptions of law or fact. Once
such convincing rebuttal evidence is adduced and accepted by the
Court, having regard to all the circumstances of the case and the
preponderance of probabilities, the evidential burden shifts back
to the plaintiff who has also the legal burden. Thereafter, the
presumption under Section 118 does not again come to the
plaintiffs rescue. Once both parties have adduced evidence, the
Court has to consider the same and the burden of proof loses all
its importance.
12. Upon consideration of various judgments as noted
hereinabove, the position of law which emerges is that once
execution of the promissory note is admitted, the presumption
under Section 118(a) would arise that it is supported by
consideration. Such a presumption is rebuttable. The defendant
can prove the non-existence of 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 dis-entitle 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 as 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
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,
shall act upon the plea that it did not exist. We find ourselves in
the close proximity of the view expressed by the Full Benches of
the Rajasthan High Court and Andhra Pradesh High Court in this
regard.
Hence, in view of admission of execution of the Ex.A1 promissory
note, the burden is on the defendant to prove his case. Besides himself,
the defendant examined DWs.2 to 4 to show that the said Mohana Rao
was in the habit of lending money, but did not speak of non-passing of
consideration. On the other hand, it is the case of the defendant that he
was borrowing amounts from Mohana Rao and the suit promissory note
was executed for a much higher amount than the amount borrowed by
him. That borrowing of higher amount was also not proved by the
defendant in the instant case by producing any documentary evidence. In
view of the same, the judgment and decree passed by the trial Court
cannot be set aside and accordingly it is affirmed.
Consequently, the Appeal Suit is dismissed with costs. The
miscellaneous petitions, if any, pending in this appeal shall stand closed.
________________________
A.RAMALINGESWARA RAO, J
Date: 20th April 2018
Appeal Suit No. 1006 of 1999
20.04.2018
Siram Srirama MurthyAppellant
Meka Suryanarayanamma Respondent
Counsel for the Appellant: Sri M.V. Suresh
Counsel for the Respondent: Sri K.V. Subba Reddy
<Gist :
>Head Note :
?Cases referred:
1. AIR 1999 SC 1441
2. AIR 1973 Calcutta 465
3. (1999) AIR (SC) 1008
HONBLE SRI JUSTICE A. RAMALINGESWARA RAO
Appeal Suit No.1006 of 1999
Judgment:
This appeal is directed against the judgment and decree dated
22.01.1999 passed in O.S.No.27 of 1992 on the file of the learned Senior
Civil Judge, Razole. The suit was filed for recovery of Rs.88,400/- being
principal and interest due as on the date of filing of the suit with costs and
future interest.
It was alleged in the plaint that the defendant borrowed an amount
of Rs.65,000/- for the purpose of his necessities and executed a
promissory note on 01.09.1989 in favour of the plaintiff undertaking to
repay the same together with interest thereon at Rs.1.50 per mensem per
hundred to her or her order on demand. The plaintiff issued a notice on
03.08.1992 and the defendant received the same. The defendant issued
a reply notice on 08.08.1992 with false allegations. The suit was filed for
Rs.88,400/- calculating interest at 12% p.a., on the original amount of
Rs.65,000/-.
The defendant filed a written statement stating that the plaintiff is
the sister of one Bolla Veera Venkata Rama Mohana Rao of Mondepulanka
village, the plaintiff in O.S.No.37 of 1992 is the younger brother of the
said B.V.V.R. Mohana Rao and the plaintiff in O.S.No.28 of 1992 is the
mother of said B.V.V.R. Mohana Rao. All the pronotes were executed on
the same date, but the date on the pronote in O.S.No.37 of 1992 was put
as 26.10.1989. The plaint allegations are denied. The execution, passing
of consideration under the promissory note and the validity of the same
are specifically denied by the defendant. It was also stated that the suit
promissory note was not true, valid and it is not supported by
consideration. The defendant denied the knowledge of the plaintiff and
also stated that there are no transactions between him and the plaintiff,
but admitted that one B.V.V.R. Mohana Rao has got some transactions
with the defendant. The said B.V.V.R. Mohana Rao was stated to be an
unscrupulous money lender. It was also stated that the defendant and
the said B.V.V.R. Mohana Rao stored the paddy by purchasing with a view
to sell the same for higher price and in that transaction the defendant has
to pay an amount of Rs.33,900/- as on 01.09.1988 and interest accrued
thereon up to 01.09.1989 came to Rs.8,136/-. The defendant also
borrowed an amount of Rs.20,000/- on 29.05.1988 and the interest
accrued thereon came to Rs.10,500/- calculated up to 31.08.1989. The
defendant further stated that he borrowed an amount of Rs.10,000/- on
06.01.1989 and the interest came to Rs.3,134/- calculated up to
31.08.1989. He also borrowed an amount of Rs.5,000/- on 07.01.1989
and the interest came to Rs.1,564/- as on 31.08.1989. The defendant
and the said B.V.V.R. Mohana Rao did business in fire works during Diwali
season of 1988. In that connection the defendant borrowed Rs.8,600/-
and the interest came to Rs.3,612/- calculated up to 31.08.1989. When
the said Mohana Rao gave pressure, threatened and coerced the
defendant to execute fresh promissory notes on 01.09.1989, he executed
the promissory notes in the name of his mother, Bolla Sathemma, W/o
Subba Rao for Rs.43,900/- by putting the excess amount of Rs.10,000/-
and the plaintiff made a material alteration in the said promissory note.
The said promissory note is the subject matter of O.S.No.28 of 1992. The
promissory note in favour of the present plaintiff was made up of
borrowings on different dates and the total interest came to Rs.26,946/-,
out of which the defendant paid an amount of Rs.4,260/- and the balance
interest amount of Rs.22,686/- remained. He stated that on 01.09.1989,
the promissory notes were obtained and the promissory notes in favour of
the plaintiff herein and in favour of Bolla Sathemma, which is the subject
matter of O.S.No.28 of 1992, are not supported by consideration. He also
stated that he executed another promissory note in favour of younger
brother of Mohana Rao which is the subject matter of O.S.No.37 of 1992.
Thus, the promissory notes under three suits being O.S.Nos.27 of 1992,
28 of 1992 and 37 of 1992 were not supported by consideration, they
were not executed, they were not valid and they were not enforceable
under law. The alleged attesting witnesses were not present at the time
of execution of the promissory notes and the attesting signatures were
subsequently obtained without the knowledge of the defendant. So, the
said promissory notes were vitiated by material alterations. The
defendant is entitled to the benefit of Act 45 of 1987 and also Act 1 of
1990 and other enactments. The suit debt even if it is true was abated.
On the basis of the above pleadings, the following issues were
framed by the trial court:
1. Whether the suit promissory note is true, valid and supported
by consideration?
2. Whether the suit promissory note came into existence under the
circumstances mentioned in the written statement/
3. Whether the defendant is a small farmer and whether he is
entitled to the benefits of Act 45 of 1987 and Act 1 of 1990.
4. To what relief?
On behalf of the plaintiff, PWs.1 and 2 were examined and Exs.A1
to A4 were marked. On behalf of the defendant, the defendant himself
was examined as DW.1 besides examining three more witnesses as DWs.2
to 4 and Exs.B1 to B19 were marked.
The trial Court noticed that the defendant as DW.1 admitted the
execution of Ex.A1 promissory note and held that in view of the said
admission, Section 118 of the Negotiable Instruments Act comes into
operation and presumption could be drawn in favour of the promisee that
the promissory note was supported by consideration. In view of the
same, the oral evidence of DWs.2 to 4 to the effect that the said Mohana
Rao was in the habit of getting promissory notes executed in favour of his
family members for excess amount than lent was not taken into
consideration. It was also observed that DWs.2 to 4 are well acquainted
with the defendant and their oral evidence cannot be relied upon. Since
the plaintiff proved the execution of Ex.A1 by examining one of the
attestors, the trial Court came to the conclusion that the suit promissory
note was proved, valid and supported by consideration. With regard to
plea of small farmer and his entitlement to the benefit of Act 45 of 1987
and 1 of 1990, in view of the admission of the defendant that he is having
one medical shop and two kirana shops at Gannavaram and in the
absence of any evidence of ownership of agricultural lands by the
defendant, the plea of small farmer was rejected. Accordingly, the suit
was decreed, by judgment and decree dated 22.01.1999, for a sum of
Rs.88,400/- with future interest at 12% p.a. Challenging the said
judgment and decree, the above appeal was filed.
In the present appeal, the point that falls for consideration is
whether, in the facts and circumstances of the case, the judgment and
decree of the trial court is correct or not?
Learned counsel for the appellant/defendant submitted that in the
absence of the plaintiff coming to the witness box, the suit should not
have been decreed and he placed reliance on a decision of the Honble
Supreme Court reported in Vidhyadhar v. Manikrao .
Learned counsel for the respondent/plaintiff, on the other hand, by
relying on the decision reported in Bijoy Kumar Karnani v. Lahori
Ram Prashe , submitted that adverse inference under Section 114 of the
Evidence Act cannot be drawn for mere non-examination of the plaintiff
when other material witness is produced. He further submitted that when
once execution of promissory note is admitted, presumption under Section
118(a) of the Negotiable Instruments Act would arise that it is supported
by consideration and in support of the said contention he relied on a
decision reported in Bharat Barrel and Drum Manufacture Company
Limited v. Amin Chand Payrelal .
It is no doubt true that the plaintiff did not enter the witness box.
The said B.V.V.R. Mohana Rao @ Bolla Rama Rao was examined as PW.1
and he stated that the plaintiff is the daughter of his elder sister and he
has been looking after her affairs. He spoke about the defendant
borrowing an amount of Rs.65,000/- from the plaintiff and scribing the
promissory note in favour of the plaintiff on 01.09.1989. He denied doing
any business with the defendant jointly. The other averments made in
the written statement were also denied by him. He further stated that
DW.2 is a tailor by profession and close friend of DW.1. In the cross-
examination he stated that himself, his mother and his brother are
residing in the same house at Mondepulanka village and the plaintiff was
not having any properties at Mondepulanka village. He further stated that
except the amount lent under the promissory note, he did not lend any
amount. He denied the other transactions alleged by the defendant in his
cross-examination.
On behalf of the plaintiff, PW.2 was also examined and he is one of
the attestors of the pronote. He stated that he attested Ex.A1 pronote
along with elder son of the defendant who attested Ex.A1.
The defendant as DW.1 spoke on the lines of his written statement.
In the chief-examination he admitted that the said Rama Mohana Rao
obtained a pronote for Rs.65,000/-, which includes Rs.43,600/- borrowed
with interest at Rs.10,000/- and the balance amount of Rs.11,400/-. He
admitted the execution of pronote in the name of the plaintiff.
DW.2 denied his presence at the time of negotiations between
Bolla Rama Rao and the defendant. DW.3 who is the supplier of eggs
stated that he used to borrow money from Bolla Rama Rao. He stated
that himself, defendant and Bolla Rama Rao were only present at the time
of execution of Exs.B15 and 16. Similarly, DW.4 stated that he borrowed
the amount from B. Rama Rao and discharged the said amount. He is an
agriculturist and doing fishing business.
Thus, the plaintiff did not enter the witness box and PW.1 who
stated that he is acquainted with the facts of the case deposed on behalf
of the plaintiff. One of the attestors was examined as PW.2. The
defendant admitted the execution of the promissory note, but disputed
the attestation and consideration.
In Vidhyadhars case (supra) the plaintiff filed a suit against the
defendants for redemption of the mortgage by conditional sale or in the
alternative for a decree of specific performance of contract for repurchase.
The property involved is 4.04 acres of land. The second defendant
executed a document called kararkharedi in favour of the first defendant
for a sum of Rs.1500/- and delivered possession thereof to him. The
document contained a stipulation that if the entire amount of Rs.1500/-
was returned to the first defendant before 15th of March, 1973, the
property would be given back to the second defendant. The land was
subsequently transferred by the second defendant in favour of the plaintiff
for a sum of Rs.5,000/- by a registered sale deed dated 19.06.1973. After
purchase of the property, the plaintiff filed the above suit stating that the
second defendant had offered the entire amount to the first defendant but
he did not accept the amount and since the document executed by the
second defendant in favour of the first defendant was a mortgage by
conditional sale the property was liable to be redeemed. It was also
stated that if it was held by the Court that the document did not create a
mortgage but was an out and out sale, the plaintiff as transferee of the
second defendant was entitled to a decree for re-conveyance of the
property as the second defendant already offered the entire amount of
sale consideration to the first defendant which he refused and the plaintiff
was still prepared to offer the said amount to the first defendant.
The second defendant admitted the case of the plaintiff, whereas
the first defendant contested the suit and stated that the document was
not a mortgage by conditional sale but an out and out sale and since the
amount of consideration was not tendered within the time stipulated, the
plaintiff could not claim re-conveyance of the property in question. The
trial Court decreed the suit and was confirmed in appeal, but was
reversed by the High Court in the Second Appeal.
In the said case, the Honble Supreme Court noticed that the first
defendant did not enter the witness box, did not state the facts pleaded in
the written statement on oath in the trial Court and avoided the witness
box so that he may not be cross-examined and that would itself be
enough to reject the claim that the transaction of sale between the
plaintiff and the second defendant was a bogus transaction. In that
connection the Honble Supreme Court observed as follows:
16. Where a party to the suit does not appear into the
witness box and states his own case on oath and does not offer
himself to be cross examined by the other side, a presumption
would arise that the case set up by him is not correct as has been
held in a series of decisions passed by various High Courts and
the Privy Council beginning from the decision in Sardar
Gurbakhsh Singh v. Gurdial Singh (AIR 1927 PC 230). This
was followed by the Lahore High Court in Kirpa Singh v. Ajaipal
Singh (AIR 1930 Lahore 1) and the Bombay High Court in
Martand Pandharinath Chaudhari v. Radhabai Krishnarao
Deshmukh (AIR 1931 Bombay 97). The Madhya Pradesh High
Court in Gulla Kharagjit Carpenter v. Narsingh Nandkishore
Rawat (AIR 1970 Madh Pra 225), also followed the Privy Council
decision in Sardar Gurbakhsh Singh's case (supra). The
Allahabad High Court in Arjun Singh v. Virender Nath (AIR
1971 Allahabad 29) held that if a party abstains from entering the
witness box, it would give rise to an inference adverse against
him. Similarly, a Division Bench of the Punjab and Haryana High
Court in Bhagwan Dass v. Bhishan Chand (AIR 1974 Punj and
Har 7), drew a presumption under Section 114 of the Evidence Act
against a party who did not enter into the witness box.
17. Defendant No. 1 himself was not a party to the
transaction of sale between defendant No. 2 and the plaintiff. He
himself had no personal knowledge of the terms settled between
defendant No. 2 and the plaintiff. The transaction was not settled
in his presence nor was any payment made in his presence. Nor,
for that matter, was he a scribe or marginal witness of that sale
deed. Could, in this situation, defendant No.1 have raised a plea
as to the validity of the sale deed on the ground of inadequacy of
consideration or part-payment thereof? Defendant No. 2 alone,
who was the executant of the sale deed, could have raised an
objection as to the validity of the sale deed on the ground that it
was without consideration or that the consideration paid to him
was highly inadequate. But he, as pointed out earlier, admitted
the claim of the plaintiff whose claim in the suit was based on the
sale deed, executed by defendant No. 2 in his favour. The
property having been transferred to him, the plaintiff became
entitled to all the reliefs which could have been claimed by
defendant No. 2 against defendant No. 1 including redemption of
the mortgaged property.
The instant case is a converse case, where, though the plaintiff did
not enter the witness box, but the facts were spoken by PW.1 on behalf of
the plaintiff and the case of the plaintiff to the extent of execution of the
document was admitted by the defendant, though he denied the
consideration and attestation. The suit promissory note is not a
compulsorily attestable document and there is no dispute with regard to
execution of Ex.A1 promissory note. In such circumstances, as rightly
pointed out by the learned counsel for the respondent/plaintiff, Section
118(a) of the Negotiable Instruments Act comes into operation and the
decision in Vidhyadhars case (supra) is not applicable to the facts of the
present case.
The facts in Bijoy Kumar Karnanis case (supra) are identical to
the facts of the present case. The case of the plaintiff was that the
defendant executed two promissory notes for a sum of Rs.5,000/- and
Rs.12,000/- respectively. He also executed two receipts on the dates of
the promissory notes. In spite of giving notice, the defendant failed to
pay the amount and accordingly the suit was filed. In the suit, the
defendant admitted the execution of the promissory notes and the
receipts of the monies under the said promissory notes. He also admitted
the execution of two separate receipts/vouchers in favour of the plaintiff,
but stated that the promissory notes and the receipts/vouchers were not
executed at Calcutta within the jurisdiction of the Court but the same
were executed out side the jurisdiction of the Court. He also pleaded that
he repaid the sum covered by the promissory notes in due course and
thus they were discharged. The plaintiff returned the promissory notes
duly discharging it to the defendant. In the said suit, the plaintiff did not
come to the witness box. The Accountant also was not called for
evidence. He placed reliance on Section 114, illustration (g) of the Indian
Evidence Act. In this connection, the Calcutta High Court observed as
follows:
10. I do not understand how this decision of the Privy
Council establishes the proposition made by Dr. Das that under
the facts of the instant case before me for non-calling of Bejoy
Kumar Karnani and the Accountant Kundu I shall draw the
adverse inference which the Privy Council was pleased to draw by
non-calling the second widow of Jawalla Singh. In the instant
case, Sanak Chandra Biswas an employee of Bejoy Kumar Karnani
gave evidence before me, stating that two documents were
executed before him by the defendant at No.17, Chowringhee
Road, Calcutta, and he made payment of the money which he
carried to the defendant at that place. He took the promissory
notes and two vouchers were signed in his presence at No.17,
Chowringhee Road, Calcutta. When he took the money to the
defendant No.17, Chowringhee Road, only the Darwan
accompanied him. He did not remember the name of the Darwan.
Apart from the Darwan, driver of the defendant drove the car.
Therefore, at the time when the promissory notes were executed
Bijoy Kumar Karnani was not present. There is no dispute with
regard to making of the vouchers. The execution of the receipts in
the vouchers is also admitted. Only the place of execution is
disputed. In view of the evidence given on behalf of the plaintiff,
I do not understand how the plaintiff was a material witness to
prove the fact of the place of the execution of two promissory
notes and why I should draw any adverse inference which the
Privy Council was pleased to draw under entirely different facts
and circumstances. It is true that the defendant made the case
that the promissory notes were executed at 22/23, Gariahat Road,
outside the said jurisdiction. But this was not the case of the
plaintiff. In cross-examination it was suggested that paragraphs 1
and 2 of the plaint are verified by the plaintiff as true to his
knowledge and it was suggested that the plaintiff should have
come and deposed. But in view of the evidence given by the
plaintiff's witness I do not think that the plaintiff himself was a
material witness to prove the place of execution. The accountant
Kundu is also not a material witness in this suit. The argument
made by Dr. Das, if accepted, would mean that the plaintiff should
have been called to disprove the defendant's case. In my view,
there is no question of invoking presumption of Section 114,
illustration (g) of the Indian Evidence Act and the principles laid
down in the said Privy Council decision, cannot apply in this case.
In Bharat Barrel and Drum Manufacture Company Limiteds
case (supra) also the defendant admitted the execution of the promissory
note. The Honble Supreme Court, interpreting the scope of Section 118
of the Negotiable Instruments Act and the presumptions arising under it
held as follows:
11. Section 118 of the Act deals with the presumptions as
to negotiable instruments. One of such presumptions is, 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. This presumption is
based upon a principle and is not a mere technical provision. The
principle incorporated being, inferring of a presumption of
consideration in the case of a negotiable instrument. A Full Bench
of the Rajasthan High Court in Heerachand v. Jeevraj (AIR
1959 Raj. 1) held that, presumption, therefore, as to consideration
is the very ingredient of negotiability and in the case of negotiable
instrument, presumption as to consideration has to be made. A
Full Bench of the Andhra Pradesh High Court in G. Vasu v. Syed
Yaseen Sifuddin Quadri (AIR 1987 Andhra Pradesh 139) while
dealing with the words until the contrary is proved held that it
was permissible for the Court to look into the preponderance of
the probabilities and the entire circumstances of the particular
case. After referring to Sections 3, 4 and 101 to 104 of the
Evidence Act, the Court held that while dealing with the absence
of consideration, the Court shall have to consider not only
whether it believed that consideration did not exist but also
whether it considered the non-existence of the consideration so
probable that a reasonable man would, under the circumstances
of a particular case, could act upon the supposition that the
consideration did not exist. Once the defendant showed either by
direct evidence or circumstantial evidence or by use of the other
presumptions of law or fact that the promissory note was not
supported by consideration in the manner stated therein, the
evidentiary burden would shift to the plaintiff and the legal burden
reviving his legal burden to prove that the promissory note was
supported by consideration and at that stage, the presumption of
law covered by Section 118 of the Act would disappear. Merely
because the plaintiff came forward with a case different from the
one mentioned in the promissory note it would not be correct to
say that the presumption under Section 118 did not apply at all.
Such a presumption applies once the execution of the promissory
note is accepted by the defendant. The circumstances that the
plaintiffs case was at a variance with the one contained in the
promissory note could be relied by the defendant for the purpose
of rebutting the presumption of shifting the evidential burden to
the plaintiff. After referring to the catena of authorities on the
point, the Full Bench held:--
"Having referred to the method and manner in
which the presumption under Section 118 is to be
rebutted and as to how, it thereafter disappears we shall
also make reference to three principles which are
relevant in the context. The first one is connected with
the practical difficulties that beset the defendant for
proving a negative, namely that no other conceivable
consideration exists. We had occasion to refer to this
aspect earlier. Negative evidence is always in some sort
circumstantial or indirect, and the difficulty or proving a
negative lies in discovering a fact or series of facts
inconsistent with the fact which we seek to disprove
(Gulson, Philosophy of Proof, 2nd Edition, p. 153
quoted in Cross on Evidence, 3rd Edition, page 78 Fn).
In such situations, a lesser amount of proof than is usually
required may avail. In fact, such evidence as renders the
existence of the negative probable may shift the burden on to the
other party (Jones, quoted in A Sarkar on Evidence, 12th
Edition, p. 870). The second principle which is relevant in the
context is the one stated in S.106 of the Evidence Act. That
section states that when any fact is especially within the
knowledge of any person, the burden of proving that fact is upon
him. It is very generally stated that, where the party who does
not have the evidential burden, such as the plaintiff in this case,
possesses positive and complete knowledge concerning the
existence of fact which the party having the evidential burden,
such as the defendant in this case, is called upon the negative or
has peculiar knowledge or control of evidence as such matters,
the burden rests on him to produce the evidence, the negative
averment being taken as true unless disapproved by the party
having such knowledge or control. The difficulty or proving a
negative only relieves the party having the evidential burden from
the necessity of creating a positive conviction entirely by his own
evidence so that, when he produces such evidence as it is in his
power to produce, its probative effect is enhanced by the silence
of the opponent (Corpus Juris, Vol. 31, Para 113). The third
principle that has to be borne in mind is the one that when both
parties have led evidence, the onus of proof loses all importance
and becomes purely academic. Referring to this principles, the
Supreme Court stated in Narayan v. Gopal (AIR 1960 SC 100)
as follows:
The burden of proof is of importance only where
by reason of not discharging the burden which was put
upon it, a party must eventually fail, where, however,
parties have joined issue and have led evidence and the
conflicting evidence can be weighed to determine which
way the issue can be decided, the abstract question of
burden of proof becomes academic.
We have referred to these three principles as they are
important and have to be borne in mind by the Court while
deciding whether the initial evidential burden under Section 118
of the Negotiable Instruments Act has been discharged by the
defendant and the presumption disappeared and whether the
burden has shifted and later whether the plaintiff has discharged
the legal burden after the same was restored.
For the aforesaid reasons, we are of the view that where, in
a suit on a promissory note, the case of the defendant as to the
circumstances under which the promissory note was executed is
not accepted, it is open to the defendant to prove that the case
set up by the plaintiff on the basis of the recitals in the promissory
note, or the case set up in suit notice or in the plaint is not true
and rebut the presumption under Section 118 by showing a
preponderance of probabilities in his favour and against the
plaintiff. He need not lead evidence on all conceivable modes of
consideration for establishing that the promissory note is not
supported by any consideration whatsoever. The words until the
contrary is proved in Section 118 do not mean that the defendant
must necessarily show that the document is not supported by any
form of consideration but the defendant has the option to ask the
court to consider the non-existence of consideration so probable
that a prudent man ought, under the circumstances of the case,
to fact upon the supposition that consideration did not exist.
Though the evidential burden is initially placed on the defendant
by virtue of Section 118 it can be rebutted by the defendant by
showing a preponderance of probabilities that such consideration
as stated in the pronote, or in the suit notice or in the plaint does
not exist and once the presumption is so rebutted, the said
presumption disappears. For the purpose of rebutting the initial
evidence burden, the defendant can rely on direct evidence on
circumstantial evidence or on presumptions of law or fact. Once
such convincing rebuttal evidence is adduced and accepted by the
Court, having regard to all the circumstances of the case and the
preponderance of probabilities, the evidential burden shifts back
to the plaintiff who has also the legal burden. Thereafter, the
presumption under Section 118 does not again come to the
plaintiffs rescue. Once both parties have adduced evidence, the
Court has to consider the same and the burden of proof loses all
its importance.
12. Upon consideration of various judgments as noted
hereinabove, the position of law which emerges is that once
execution of the promissory note is admitted, the presumption
under Section 118(a) would arise that it is supported by
consideration. Such a presumption is rebuttable. The defendant
can prove the non-existence of 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 dis-entitle 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 as 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
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,
shall act upon the plea that it did not exist. We find ourselves in
the close proximity of the view expressed by the Full Benches of
the Rajasthan High Court and Andhra Pradesh High Court in this
regard.
Hence, in view of admission of execution of the Ex.A1 promissory
note, the burden is on the defendant to prove his case. Besides himself,
the defendant examined DWs.2 to 4 to show that the said Mohana Rao
was in the habit of lending money, but did not speak of non-passing of
consideration. On the other hand, it is the case of the defendant that he
was borrowing amounts from Mohana Rao and the suit promissory note
was executed for a much higher amount than the amount borrowed by
him. That borrowing of higher amount was also not proved by the
defendant in the instant case by producing any documentary evidence. In
view of the same, the judgment and decree passed by the trial Court
cannot be set aside and accordingly it is affirmed.
Consequently, the Appeal Suit is dismissed with costs. The
miscellaneous petitions, if any, pending in this appeal shall stand closed.
________________________
A.RAMALINGESWARA RAO, J
Date: 20th April 2018
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