Case Law Details
Rani Vs Arokiyammal (Madras High Court)
The Madras High Court dismissed the second appeal filed by the plaintiff and confirmed the concurrent findings of the Trial Court and the First Appellate Court that the promissory note was not supported by consideration. The suit had been filed for recovery of Rs.40,000 allegedly borrowed by the defendant under a promissory note dated 26.12.1995. While the defendant admitted execution of the promissory note, he denied that any consideration had passed and contended that the promissory note had been executed only as security during a village settlement relating to a dispute involving his son and the plaintiff’s son.
According to the defendant, the dispute arose after an incident involving family members in Bombay, leading to a village panchayat in which it was agreed that Rs.10,000 would be paid towards medical expenses and a further Rs.20,000 would be payable in the event of permanent disability. He claimed that, following village custom, a promissory note for Rs.40,000 was executed as security and that, simultaneously, a Muchalika (Ex.B.1) recording the settlement was also executed.
The Trial Court dismissed the suit after finding that no consideration had passed under the promissory note, and the First Appellate Court affirmed that finding. The plaintiff challenged the concurrent judgments by contending that once execution of the promissory note was admitted, the burden shifted entirely to the defendant under Section 118 of the Negotiable Instruments Act to prove absence of consideration.
The High Court examined the evidence and observed that Ex.A.1 (promissory note) and Ex.B.1 (Muchalika) had been executed on the same day. It questioned whether, if a dispute between the parties was pending on that very day, the plaintiff would have advanced the alleged loan. The Court further noted that the plaintiff had claimed to possess sufficient funds and stated that the money had been withdrawn from a bank. However, no bank records or other documents were produced to establish withdrawal of the amount or the plaintiff’s financial capacity to lend Rs.40,000.
The Court referred to earlier decisions explaining that the presumption under Section 118 of the Negotiable Instruments Act is only a prima facie presumption and that the burden of proof is ambulatory, shifting according to the evidence produced. It observed that once circumstances created genuine doubt regarding the passing of consideration, the burden shifted back to the plaintiff to establish that consideration had in fact passed.
The High Court held that the plaintiff failed to discharge this burden. It noted that the attesting witness to the promissory note was not examined, although the same individual was also the attesting witness to the Muchalika. While the scribe of the Muchalika was examined as a defence witness, he could not speak about the alleged passing of consideration. The Court held that non-examination of the attesting witness became fatal in the facts of the case, particularly because the defendant had specifically disputed the passing of consideration.
The Court also observed that the plaintiff’s evidence contained contradictions. It noted that the plaintiff failed to prove withdrawal of the alleged loan amount from the bank, did not establish her financial capacity, and was unable to state the date of execution of the promissory note. These circumstances supported the findings of the courts below that the plaintiff had failed to prove that consideration had passed.
On the fourth substantial question of law regarding non-framing of points for determination by the First Appellate Court, the High Court held that the appellate court had in fact framed an appropriate point for determination, examined the evidence in detail, and delivered a reasoned judgment. Therefore, no infirmity arose on that ground.
Answering all four substantial questions of law against the plaintiff, the High Court found no reason to interfere with the concurrent findings of the Trial Court and the First Appellate Court. Consequently, the second appeal was dismissed, and the judgment and decree of the First Appellate Court dated 05.09.2008 were confirmed. There was no order as to costs.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Second Appeal is filed by the unsuccessful plaintiff against the judgment and decree of the learned Principal Subordinate Judge at Villupuram dated 05.09.2008 made in A.S.No.47 of 2007, confirming the judgment and decree of the learned II Additional District Munsif, Tirukoilur, dated 03.08.2005 made in O.S.No.139 of 2004, wherein the Lower Court has held that the suit pro-note has not been supported by consideration.
2. Originally, the suit has been filed by the plaintiff in O.S.No. 139 of 2004 before the II Additional District Munsif, Tirukoilur, for recovery of money due on a pro-note. In the plaint, the plaintiff has averred that the defendant has borrowed a sum of Rs.40,000/- on 26.12.1995 and executed a pro-note in favour of the plaintiff agreeing to repay the amount along with interest at the rate of 12% per annum whenever demanded by the plaintiff. As the defendant did not pay the money even after several oral demands made by the plaintiff, a legal notice was issued on 22.01.1997, which emanated in filing a reply containing false allegations. Hence, the suit was filed by the plaintiff for recovery of money on the basis of the pro-note. The defendant has filed a written statement admitting the execution of the pro-note, but, he disputed as regards the passing of consideration. In the written statement, the defendant has further averred that his son, by name, Babu was working in Bombay and was residing in Bombay along with his wife, by name, Lourdhumary. The plaintiff’s son Sivashankar was also employed at Bombay, who stayed with Babu. The plantiff’s son took one Thirumurthy from the Village to Bombay. He also stayed along with the son of the plaintiff and defendant. The said Thirumurthy being a Tailor did tailoring business by staying in the house of Babu. While so, an illicit intimacy arose between Thirumurthy and Lourdhumary and they eloped during October, 1995. Because of that, there arose a quarrel between the said Babu and Sivashankar. In that quarrel, Sivashankar suffered grievious injury and his leg was fractured. Thereafter, there was a Panchayat convened in the Village in which the elders decided that the defendant has to pay a sum of Rs.10,000/- for the Medical Expenses of the said Sivashankar and if there is any permanent disability, then the defendant has to pay a further sum of Rs.20,000/-, for which, as per the Village customs double the amount was filled up in the pro-note i.e., for Rs.40,000/- as security and because of the compulsion of the Panchayatar, the defendant had signed the pro-note (Ex.A.1), but, fortunately Sivashankar did not sustain any permanent disability, therefore, when the defendant sought for return of the pro-note, it was not given. Even during the execution of the pro-note itself, the plaintiff’s husband and Sivashankar have executed a Muchalika (Ex.B.1) stating that the quarrel between Babu and Sivashankar has been settled. Therefore, according to the defendant, the very pro-note is not supported by any consideration and the defendant has no necessity to borrow any amount from the plaintiff and further the plaintiff has no source to lend such a huge sum, therefore, the suit has to be dismissed. Considering the oral and documentary evidence, the Lower Court having found that even though the execution of the pro-note is admitted, for the execution of the same no consideration has been passed, especially when Exs.A.1-pro-note and B.1-Muchalika for settlement of dispute between the parties were executed on the same day and when there was a settlement talk, the non-examination of the attesting witness of the pro-note is fatal to the case and hence, disbelieving the theory of plaintiff for advancement of money, has ultimately dismissed the suit. Aggrieved against the same, the plaintiff filed an appeal in A.S.No.47 of 2007 before the Principal Subordinate Court, Villupuram. In the appeal also, the Lower Appellate Court categorically held that the attesting witness in the pro-note (Ex.A.1) has not been examined. Even the plaintiff, who was examined as P.W.1, in her cross-examination has admitted that the witness in Exs.A.1 and B.1 is one and the same and she had also deposed that as per Ex.B.1 a sum of Rs.30,000/- has been paid to the plaintiff’s son totally goes against the case of the plaintiff. Therefore, the Lower Appellate Court holding that the consideration was not passed as per the pro-note dismissed the appeal, thereby, confirming the judgment and decree of the lower Court, by judgment dated 05.09.2008. Aggrieved against the concurrent finding, the plaintiff has come forward with the Second Appeal.
3. At the time of admission of the Second Appeal the following substantial questions of law were framed for consideration:-
1. Whether the Court below is right in dismissing the claim of the plaintiff when the defendant has admitted the execution of the promissory note, Ex.A.1 ?
2. Whether the Court below is right in dismissing the plaintiff’s promissory note claim when the defendant has failed to discharge his onus of proof by showing directly or probabilizing the nonexistence of consideration ?
3. Whether the Court below is right in dismissing the plaintiff’s suit when the Trial Court has disbelieved the theory of defendant under Ex.B.1 and the same cannot amount to rebutting the presumption under Section 118 of the Negotiable Instruments Act ?
4. Whether the Judgment of the Court below is liable to be set aside for non-framing of points of determination ?
4. The learned counsel for the appellant/plaintiff in respect of question of law Nos. 1 to 3 would contend that once the defendant admits the execution of the pro-note, the burden will automatically shift on the shoulders of the defendant and it is for the defendant to prove that no consideration has been passed. He would further add that the question for determination has not been framed by the Lower Appellate Court and therefore, the judgment and decree of the Lower Appellate Court has to be set aside.
5. The learned counsel appearing for the respondent/defendant would submit that when there arise a doubt as to the actual proof of consideration being passed, then, the onus automatically shifts on to the shoulders of the plaintiff and the burden is not discharged by the plaintiff either by letting in any evidence or by producing any documents and therefore, he prayed for the dismissal of the Second Appeal.
6. Heard both sides. By consent, the main Second Appeal itself is taken up for final disposal.
7. Insofar as question of law Nos. 1 to 3 is concerned, the learned counsel appearing for the appellant/plaintiff would submit that once the defendant admits the execution of the pro-note, the burden will automatically shift on the shoulders of the defendant and it is for the defendant to prove that no consideration has been passed. But, when we carefully analyse the case on hand, as it was analysed by both Courts below, admittedly, Exs.A.1-pro-note and B.1-Muchalika for settlement of dispute between the parties were executed on the same date. As per Ex.B.1-Muchalika the dispute between the parties has been settled. In my considered opinion, if really the dispute is not settled as claimed by the plaintiff, whether at all the plaintiff would have advanced money on that particular day when there is a dispute between the parties. Further more, the case of the defendant is that a sum of Rs.10,000/- was paid for medical expenses and for the balance sum of Rs.20,000/- as per the Village customs, double the amount was filled up in the pro-note as security, whereas, according to the plaintiff, for payment of money, she had necessary funds and she even went to the extent of stating that money has been withdrawn from the Bank. As rightly pointed out by the Lower Appellate Court, for the withdrawal of money from the Bank, no documents have been produced and no evidence has been let in. There is no proof for having passed the consideration. Further, the wherewithal has to be proved, which is also not done due to non-production of bank statement.
8. Further more, even though, there is an initial burden on the defendant on the basis of the admitted signature in the pro-note, but, when it touches the conscience of the Court regarding the actual proof of consideration being passed, definitely, the onus will shift on to the shoulders of the plaintiff. The question of the presumption and burden of proof was decided in the decision of this Court reported in 1976 (1) MLJ 22, Ramasamy Chettiar vs. Sridevi Talkies, wherein this Court has held as under:-
“Until the contrary is proved, every negotiable instrument which is duly made or deemed to have been made should prima facie be held to be one supported by consideration. Presumption under Section 118 of the Negotiable Instrument Act, 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. It is therefore clear that the burden is ambulatory; at one time it is on the plaintiff, and according to the proof and circumstances, it shifts on to the shoulders of the defendant.”
9. Similar question came up for consideration before this Court in 1976 (2) MLJ 191, H.M.Kari Gowder vs. S.A.K.Chinnathambi Chettiar & Others, in which, this Court has held as under:-
“..The presumption under Section 118 of Negotiable Instrument Act is only a prima facie presumption. If the defendant satisfied. The conscience of the court that the consideration was not passed and he executed the same under certain circumstances which are not far from truth, then the ordinary presumption would not arise…”
10. In the case on hand, the burden of proving the passing of consideration shifts on to the shouders of the plaintiff. When that be so, the non-examination of the attesting witness by the plaintiff is fatal, which has rightly been held by both Courts below. It has been pointed out that the witness in the Ex.A.1-pro-note as well as Ex.B.1-Muchalika for settlement of dispute between the parties is one and the same, though, the scribe of Ex.B.1 has been examined as D.W.5, he is not the person, who can speak about the passing of consideration. When specific stand has been taken by the defendant that the consideration has not been passed, naturally, the plaintiff ought to have atleast examined the attesting witness of the pro-note. When that is not done, both Courts below have rightly held that the consideration has not been passed. Further, the wherewithal of the plaintiff has been questioned by the defendant in the cross-examination and in fact, the Lower Court has categorically stated that the evidence of P.W.1 is contradictory and the plaintiff has never proved that she has withdrawn the amount from the Bank. In fact, she has also not been able to say the date of execution of the pro-note. Therefore, both Courts below have rightly held that the defendant has proved her case, whereas, when the burden of discharging proof heavily shifted on the plaintiff, she has failed to discharge her onus of proving the consideration being passed. Therefore, first three questions of law are answered against the appellant/plaintiff.
11. As far as the fourth question of law is concerned, the Lower Appellate Court has framed a question for determination, as to whether the appeal has to be allowed and the said Court has elaborately dealt with the said question and answered in detail the entire matter in issue and has concurred with the judgment of Lower Court. In fact, the Lower Appellate Court has also clearly pointed out that the evidence on the side of the defendant has clearly proved regarding the payment of Rs.10,000/- only made by the defendant in the presence of Panchayatar and there is a promise for paying Rs.20,000/- in the event of permanent disability. On the side of defendants, D.Ws. 1 to 5 have been examined and D.W.5 is the scribe of Ex.B.1. The Lower Appellate Court has framed proper question for determination and has dealt with the entire matter in issue and answered the said question and passed a reasoned judgment. Therefore, the question of law No.4 is also answered against the appellant. I do not find any reason to interfere with the reasoned judgment of both Courts below.
12. In the result, the Second Appeal is dismissed. The judgment and decree passed by the Lower Appellate Court dated 05.09.2008 is confirmed. No costs.
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