M. Krishnaswamy Naicker vs S. Radhakrishna Naicker

Swamikkannu, J.—This is a second appeal filed by the defendant M. Krishnaswamy Naicker in O.S. No. 327 of 1976 on the file of the

Court of the learned District Munsif, Kovilpatti, against the judgment and decree, dated 30th November, 1979 in A.S. No. 156 of 1979 on the file

of the Court of the learned Subordinate Judge, Tenkasi. The suit was filed for recovery of money. The case of the plaintiff is that on 11th

December, 1973, the defendant M. Krishnaswamy Naicker executed a pronote in favour of the plaintiff, obtaining a sum of Rs. 3,500 on loan

from the plaintiff, with a stipulation of interest at the rate of 12 per cent per annum. The defendant is the sales-tax assessee. He is not entitled to the

benefits of the Debt Relief Act. Notice was sent demanding the payment of amount with interest on 21st August, 1976. Since the defendant was

evading to receive the notice, it was returned ''unserved''. Hence the suit was filed for realisation of Rs. 4,743.77 from the defendant and for costs.

In the written statement filed on the side of the defendant it is contended that the suit is not bona fide., that the plaintiff is not not entitled to any

relief, that the suit is not maintainable either under law or on facts, that the suit pronote is not supported by consideration, that for the suit pronote

the defendant received no amount from the plaintiff and that the reasons for execution of the suit pronote are not disclosed by the plaintiff.

It is then contended that the defendant has obtained a loan of Rs. 5,000 from the plaintiff, but he had executed a pronote for Rs. 6,000 to the

plaintiff in connection with the amount of Rs. 5,000 received. The plaintiff stated that there is balance of interest amount payable to him and the

amount wilt be ascertained subsequently and at present there is no time for looking into the accounts and as such as a sort of security, a pronote

for Rs. 3,500/- should be executed by the defendant and after calculating the accounts, the amount arrived at can be paid by the defendant.

Believing the words of the plaintiff as well as his mother, the suit pronote was executed by the defendant, and as such the suit pronote is not fully

supported by consideration. After one year, the defendant went and paid Rs. 3,000 in discharge of Ex.A1 pronote. The Plaintiff''s mother said that

the pronote was misplaced and that it could be given to the defendant subsequently, but surprisingly the suit has been filed. The defendant is a

debtor and he is entitled to the benefits of the Debt Relief Act. I The plaintiff is not entitled to get the amount as prayed for.

The plaintiff examined himself as P.W.1 and also filed Ex.A1 pronote dated 12th November, 1973 for Rs 3,500 executed by the defendant in

favour of the plaintiff Ex A.2 is the unserved lawyer''s notice dated 21st August, 1976 sent by the plaintiff to the defendant in a cover. The

defendant examined himself as D.W.1. D.W.2 Velu Konar was also examined. Ex.B1 pronote, dated 14th November, 1967 for Rs. 6,000

executed by the defendant in favour of the plaintiff, and Ex. B2 endorsement of payment dated 13th November, 1970 on the back of Ex.B1 were

filed on behalf of the defendant.

The following issues were framed by the trial Court for consideration:�

Whether the suit pronote is not supported by consideration as pleaded by defendant?

Whether the plaintiff is entitled to the amount or the interest claimed?

Whether the suit is maintainable and not affected by any Debt Relief Enactment?

To what relief is the plaintiff entitled?

Under Issue numbers 1 and 2, the trial Court held that there is nothing to disbelieve the evidence of D.W.2 and so the evidence of D.Ws. 1 and

2 go together showing that Ex.B1 pronote is not supported by consideration. The trial Court held that the plaintiff has failed to establish his case.

The trial Court held that the suit pronote is not supported by consideration and that the plaintiff is not entitled to any amount either towards

principal or towards interest. Under issue Number 3, the trial Court found that no evidence was let in on the side of the defendant, that he is

entitled to the benefits of the Debt Relief Enactment and the issue was decided accordingly. In the result, the suit was dismissed with costs.

Aggrieved by the above decision of the trial Court the plaintiff preferred A.S. No. 156 of 1979 before the Court of the learned Subordinate Judge,

Tenkasi. The lower appellate Court framed the following two points for consideration:-

Whether the suit promissory note is not supported by consideration?

Whether the defendant is entitled to the benefits of Debt Relief Act?

Under point number 1, the lower appellate Court held that the oral evidence of D.W.1 to the effect that Ex. A1 is not supported by consideration

is against the written contents in Ex.A1, and as such, it is not acceptable. Accordingly, believing P.W.1''s corroborated version as inscribed in Ex.

Al, the point was answered in favour of the plaintiff and against the defendant. Under point number 2, the lower appellate Court held that the

defendant, who is assessed to sales tax cannot be taken as a ''debtor'' under the relevant enactments that apply to the instant case. In the result, the

appeal was allowed and the judgment and decree of the trial court were set aside and the suit was decreed as prayed for with costs throughout.

Aggrieved by the above decision of the lower appellate court, the defendant has come forward with this second appeal. During the time of

admission of this second appeal, the following two substantial questions of law were framed for determination in the second appeal:

Whether the finding of the learned Subordinate Judge that the burden under S. 118(a) of the Negotiable Instruments Act has not been

discharged by the defendant, can be legally supported when the learned Judge has not considered the various points adverted to by the trial Court

in its judgment?

Whether the judgment of the learned Subordinate Judge can be legally supported when he has not clearly given a finding on the question of

discharge pleaded by the defendant?

The point for consideration in this second appeal is:-

Whether the lower appellate Court is correct in coming to the conclusion that the suit pronote is supported by consideration?

Ex.A1 is the suit pronote. It is written in Tamil. It is not the case of the defendant that he does not know Tamil. Ex.A1 clearly, reads that it has

been executed by the defendant on receipt of a cash consideration of Rs. 3,500. The relevant passage in Ex.A1 reads as follows:-

The plaintiff as P.W.1 has clearly deposed that Ex.A1 has been executed by the defendant on receipt of a cash consideration of Rs. 3,500. This

version of P.W.1 is also corroborated by the contents of Ex.A1. So the evidence of P.W.1 is acceptable so far a the consideration of the suit

pronote is concerned. It is relevant to note that one Ayyappa Naicker, son of Kottiyappa Naicker of Narayanapuram, has attested Ex.A1.

The defendant/appellant herein who admits the execution of Ex.A1 alleges that it is devoid of consideration. The burden to prove failure of

consideration lies very heavily upon the defendant. Apart from the presumption regarding consideration, it is relevant to note that there is both oral

and documentary evidence on the side the plaintiff to show that Ex.A1 has been executed for due consideration of Rs. 3,500 as mentioned in it.

The mere oral denial of D.W.1 cannot be allowed to prevail over the written contents in Ex.A1. Similar is the case with the testimony of D.W.2.

D.W.2 admittedly is not an attestor for Ex.A1, and as such, his version cannot be of much help to show that Ex.A1 is not supported by

consideration. As already mentioned, it is significant to note that the attestor to Ex.A1 is not D.W. 2, but one Ayyappa Naicker. Ayyappa Naicker

has not been examined in this case as a witness. The defendant/appellant herein has failed to examine the said Ayyappa Naicker. Under the above

circumstances, it cannot be said that the defendant/appellant herein had discharged the burden of proving failure of consideration in this case. In the

instant case�before us where the execution of Ex.A1 is admitted by the defendant/appellant herein, the law presumes that Ex.A1 is supported by

consideration under the provisions of S. 118(a) of the Negotiable Instruments Act. S. 118 of the Negotiable Instruments Act (Act 26 of 1881)

reads as follows:-

Presumption as to negotiable instruments: Until the contrary is proved, the following presumptions shall be made:-

On consideration:� (a) 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;

as to date�(b) that every negotiable instrument bearing a date was made or drawn on such date;

as to time of acceptance�(c) that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;

as to time of transfer�(d) that every transfer of a negotiable instrument was made before its maturity,

as to order of endorsement ):�(e) that the endorsements appearing upon a negotiable instrument were made in the order in which they appear

thereon;

as to stamp�(f) that a lost promissory note, bill of exchange or cheque was duly stamped;

that holder is a holder in due course�(g) that the holder of a negotiable instrument is a holder in due course; provided that where the instrument

has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from

the maker or acceptor thereof by means of an offence or fraud or for unlawful consideration, the burden of proving that the holder is a holder in

due course lies upon him.

In Narasamma v. Veerraju 58 Mad 841 : 42 L.W. 321 Varadachariar. J., observed as follows:

Any presumption as to quantum of consideration as distinguished from the mere existence of consideration, has to be drawn, not by virtue of S.

118, Negotiable Instruments Act or even under S. 114 Evidence Act, but only from the recitals, it has long been established that being prima facie

evidence against the parties to the instrument they may operate to shift on to the party pleading the contrary, the burden of rebutting the inference

raised by them. But the weight due to recitals may vary according to circumstances and in particular circumstances the burden of rebutting them

may become very light, especially when the court is not satisfied that the transaction was honest and bona fide.

The consideration referred to is valuable, consideration, that is, any consideration which will support a simple contract. The rule is stated in Byles

(24th Edn., p. 206) on bills in the following terms:�

Consideration is presumed till the contrary appears or at least appears probable.

The presumption is not one to be derived from the recitals in the instruments, but is one of law.

In Kundan Lal v. Custodian, Evacuee Property AIR 1961 S.C. 1316, the Supreme Court examined the scope of the presumption under S.

118 of the Negotiable Instruments Act and also the different methods available to a person against whom such a presumption is drawn to rebut the

same and the law is stated thus:

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 be discharged? The

rules of evidence pertaining burden of proof are embodied in Chapter VII 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.

To illustrate how this doctrine works in practice, we may take a suit on a promissory note. Under S. 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 S. 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,

S. 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, 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 S. 114 and other sections of the Evidence Act. Under S. 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. 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, S. 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 S. 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 irrefutable presumptions of law.

In Official Receiver, Kanpur and Another Vs. Abdul Shakur and Others, it was held that the question whether a statutory presumption is

rebutted by the rest of the evidence is a question of fact. In Tarmahomed Haji Abdul Rehman Vs. Tyeb Ebrahim Bharamchari, it was held that the

language of S. 118(a), clearly shows that consideration set up in the plaint being different from that set out in the document is of no consequence,

for, the emphasis must be laid upon the following words, viz., that every negotiable instrument was made or drawn for consideration''. The

presumption that is raised under S. 118 is not in respect of consideration mentioned in the negotiable instrument. The presumption is in favour of

there being a consideration for the negotiable instrument, any consideration which is a valid consideration in law. In the instant case before us, the

oral evidence of D.W.1 to the effect that Ex.A1 is not supported by consideration is but an ipse dixit and is against the written contents in Ex. A1,

and as such, we have to hold that the said oral evidence of D.W.1, is not acceptable. The lower appellate Court is correct in having believed the

evidence of the plaintiff as P.W.1, which is corroborated by the contents of Ex.A1. The lower appellate Court is correct in allowing the appeal and

setting aside the judgment and decree of the trial Court. The suit was rightly decreed as prayed for with costs throughout. Hence this second

appeal is dismissed. Under the circumstances, there is no order as to costs.