Promissory notes are a fundamental instrument of credit in India. They provide written acknowledgment of debt and carry a statutory presumption of consideration under Section 118(a) of the Negotiable Instruments Act, 1881. Once execution is admitted, the law presumes that the money was advanced, and the burden shifts to the borrower to disprove the liability.
In GEORGEKUTTY CHACKO V. M.N. SAJI (CIVIL APPEAL NO.11309 OF 2025), the Supreme Court of India gave an important ruling. It held that courts cannot reduce the amount written in a promissory note just because part of the money was paid in cash.
Georgekutty Chacko gave ₹30.80 lakhs to M.N. Saji. This amount was acknowledged by Saji in a promissory note. The trial court ordered repayment of ₹35.29 lakhs (including interest). The Kerala High Court reduced it to ₹22 lakhs, saying only that much could be proved through bank records. Georgekutty appealed to the Supreme Court.
The Supreme Court said that the appellant (lender) clearly stated that he gave ₹30.80 lakhs to the respondent (borrower) through a promissory note. Since the promissory note was accepted and not challenged, the burden was on the borrower to prove that this money was not actually given. In money dealings, it is common that part of the payment is in cash. Just because there is no record of cash through banks or cheques, it does not mean the money was never given. The law (Negotiable Instruments Act, 1881) already presumes that a promissory note represents a legally enforceable debt. Documentary proof is often not available for cash payments, but that alone cannot make the claim false. The High Court had wrongly divided the loan into “proved” (₹22 lakhs through bank) and “not proved” (₹8.8 lakhs in cash). This was erroneous and unsustainable.
The said reaffirms the sanctity of promissory notes and strengthens creditor protection. The Court made it clear that:
- A promissory note binds the borrower to the full amount acknowledged.
- Cash transactions, when admitted in writing, are valid and cannot be rejected simply for lack of bank proof.
- The burden always lies on the borrower to rebut the presumption of debt.
- Courts should not dilute or split acknowledged debts without strong evidence.
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