M. Shanmugham vs S. Rangasamy Gounder

N.V. Balasubramanian, J.—The appellant is the defendant in O.S. No. 206 of 1985 of the file of the Subordinate Judge''s Court, Sankari.

The respondent herein is the plaintiff in the said suit for recovery of Rs. 65,900/-. The plaint averments are that on 26-11-1981, the defendant

borrowed a sum of Rs. 50,000/- as loan from the plaintiff for his family expenses, and executed a promissory note promising to pay the said sum

with interest at 18% p.a. either to the plaintiff or to his order on demand. It is stated that the defendant has not paid any amount either towards the

principal amount or towards the interest in spite of demands, and after issue of notice and hence the suit was filed for recovery of the suit

promissory note debt.

The case of the defendant is that it is not correct to state that the defendant had Borrowed Rs. 50,000/- from the plaintiff on 26-11.1981 and

according to him, on 13.10.1980, he borrowed a sum of Rs. 25,000/ - only from the plaintiff and left with him a signed blank promissory note,

without filling up the date and consideration. According to the defendant, the plaintiff had fabricated the suit promissory note and hence it is a

forged document. The defendant has also stated that, he has made certain payments on several dates, but the plaintiff has not given credit to the

said payments.

The trial Court on the basis of the pleadings framed an issue as to whether the plaintiff is entitled to the suit amount. The trial Court, on the basis

of the oral and documentary evidence, held that the execution of the suit promissory note by the defendant was proved and that the defendant has

not paid either the principal or the interest towards the promissory note debt and accordingly decreed the suit as prayed for. As against the said

judgment and decree of the trial Court, the defendant has preferred the present appeal.

Learned counsel for. the appellant submitted that the appellant has signed only the blank promissory note and that the amount mentioned in the

promissory note is disputed. According to the learned counsel for the appellant, the defendant has borrowed only a sum of Rs. 25,000/- and the

respondent/ plaintiff has not produced the account books though he is stated to be carrying on money-lending business.

Learned counsel for the appellant submitted that the plaintiff has neither examined the scribe, nor the attestors to the promissory note. I am

unable to accept the submission of the learned counsel for the appellant. It is relevant to notice here that the appellant has not denied his signature

in the promissory note and there is no dispute about the execution of the promissory note. Moreover, the appellant was examined as D.W. 1 on

6.2.1986 and through him only. the promissory note (Ex. A-1) was marked. The plaintiff was examined only subsequently on 7.2.1986. When the

defendant was examined, he identified the promissory note and he has also admitted his signature found in Ex. A-1. Further, it is not very clear why

the trial Court has examined the defendant as the first witness in the trial of the suit, even before the commencement of examination of the plaintiff

as there are no reasons recorded in the judgment for adopting such a course. However, the fact remains the defendant was examined as a first

witness in the trial of suit. It is not also clear why the trial Court has not forwarded B-Diary which would contain the reason why the defendant was

examined as the first witness in the trial of suit. The evidence on record clearly shows that the defendant has admitted the signature found in Ex. A-

1, promissory note. Since the defendant has admitted the signature in Ex. A-1, there is no necessity for the plaintiff to prove the signature of the

defendant by examining either the scribe or the attestors to the said document.

Learned counsel for the appellant relied on the judgment of this Court reported in A.S. Duraisami Chettiar Sons and Others Vs. S.

Rathnaswami Gounder, . This Court in the above case held that the plaintiff in that case was a professional money lender and he deliberately

suppressed his account books and the rebuttal u/s 118 of the Negotiable Instruments Act need not necessarily be by direct evidence. I am of the

view that the said decision has no application. In that case, the defendant has called upon the plaintiff to produce the account books to prove the

payment and the plaintiff has stated in the box that he will produce the account books within four hours to prove the fact of payment but he never

produced the account books in spite of adjournments and notice. The plaintiff then deposed that the account books were with the auditor and

when he made efforts to get the said account books from the auditor, the auditor said that he would look up and give them to the plaintiff. Since the

plaintiff has purposely suppressed the account books, the non-production of the account books would disprove his case. The trial court in that

case held that the non-production of the account books by the plaintiff would show that no money was advanced by the plaintiff to the defendant.

It is in the circumstances of the case, this Court held that since there was a deliberate suppression in production of account books, the defendant

has discharged the burden u/s 118 of the Negotiable Instruments Act. This Court also held that the rebuttal of presumption u/s 118 of the

Negotiable Instrument Act by the defendant need not always be direct evidence that will be adduced by the defendant, and the court on the basis

of the evidence as a whole can draw an adverse inference against a party who was in possession of account books who is expected to adduce

better evidence, but deliberately abstained from doing so. I hold that the said decision is not applicable to the facts of the case.

On the other hand, the decision of this Court in S. Perumal Chettiar vs. T. Santhanam (92 L.W. 225) would apply to the facts of the present

case. V. Ratnam, J., (as His Lordship then was) held that though the question whether a statutory presumption is rebutted by the rest of the

evidence is a question of fact, the presumption is not left to the discretion of the Court, and in every suit on a negotiable instrument, the Court shall

presume that such instruments were made, drawn, accepted or negotiated for consideration, so much so, it has been held that where the lower

Court ignored the presumption and found that the document was not supported by consideration, the decision regarding consideration was vitiated.

The learned Judge has held that when the execution of the promissory note was admitted, a presumption was raised in favour of the plaintiff that

the said instrument was made for consideration, and when this presumption was raised, it had the effect of shifting the burden on the defendant to

establish that there was no consideration. Learned Judge further held that the defendant has not satisfied the Court that there was no consideration

whatever with reference to the promissory note sued on, because it was his admission in the written statement that the promissory note represented

the interest due on the mortgage admittedly executed by him and the mere fact that the mortgage deeds were not produced before the Court would

not make any differences nor would it detract from the effect of the admission made by the defendant in his written statement. I hold that the above

decision will squarely apply to the facts of the case and the burden was shifted to the defendant and he has not discharged the burden in view of

the admission made by him that the suit promissory note was executed by him for consideration and it is for him to prove that the consideration

stated therein is not true, which he miserably failed to do so. The same view has been reiterated in Meenakshisundaram v. Rangasami (1996 1

MLJ 297). In that case, the plaintiff has no inconsistent case regarding the passing of consideration and the case of the defendant was that the

document was not supported by consideration and it was not his case that the quantum mentioned is incorrect. The learned Judge therefore held

that the case of the plaintiff cannot be disbelieved u/s 118 of the Negotiable Instrument Act and his case cannot be found as disapproved. Applying

the said decision to the facts of the case, it is not the case of the plaintiff herein that the consideration stated in the promissory note is different from

the real fact and the case of the defendant is that the consideration stated in the promissory note is incorrect and then it is for him to discharge the

burden.

In Rajamani Vs. Seeralan, the Learned Judge has held that where the defendant contends that the promissory note was executed for payment of

interest on mortgage and that twice the amount due was executed, the burden of proof would shift to the defendant and it was not discharged on

account of his admission. The Learned Judge further held that the burden was not discharged by the defendant and the plaintiff would be entitled to

decree as prayed for.

In Chidambaram v. P. T. Ponnusamy (1995 2 L.W. 719), a learned Judge of this Court held that Section 20 of the Evidence Act, is itself

authority to the holder of inchoate stamped and signed instrument to-fill up the blanks and to negotiate the instrument. Learned Judge further held

that u/s 20 of the Evidence Act, the holder has the authority to make or complete the instrument as a negotiable one. The same view was followed

in P. Thalamalai Chetty vs. Rathinasamy (1997 11 MLJ, 147), wherein the learned Judge held that once it is admitted that the defendant has signed

the promissory note, his liability cannot be denied.

In so far as the decision of this Court in Chinnasamy Vs. Perumal, is concerned, the Learned Judge on the facts of the case found that the

presumption raised u/s 118 of the Negotiable Instruments Act has been satisfactorily rebutted by the defendant and he has produced satisfactory

evidence both oral and documentary which proved that no consideration was passed for the promissory note and the Plaintiff failed to prove his

case by producing the proper account books. I am of the view that the above decision does not apply to the facts of the present case. Though

learned Counsel for the appellant relied upon certain other decisions, I find that they were all decided according to facts of each case.

Learned counsel for the appellant next submitted that the plaintiff, claiming to be a money-lender, has not produced the account books,

particularly when the defendant has disputed that the consideration for the promissory note was not Rs. 50,000/- as stated in the promissory note,

but only a sum of Rs. 25,000/-. Though the submission appears to be attractive, on close scrutiny, it does not merit acceptance. The evidence of

the defendant shows that he has admitted the execution of the promissory note, and once the execution of the promissory note is admitted, the rule

of presumption in Section 118 of the Negotiable Instruments Act operates and the burden shifts from the plaintiff to the other side. Though there is

no presumption as to the quantum of consideration, the following observation of Varadachariar, J. (as His Lordship then was) in Mallavarapu

Narasamma and Others Vs. Boggavarapu Bulli Veerraju, is relevant for the purpose of this case :-

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

section 118, Negotiable Instruments Act, or even u/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"".

Therefore the weight to be attached to the recitals in a promissory note may vary according to the circumstances of the case, but at least there

must be some evidence to show that the transaction was not honest or bona fide and only then the Court can draw an inference that the recitals in

the promissory note are not true. It is no doubt true that in case where the plaintiff carries on business of money-lending, the Court is entitled to

draw an adverse inference against the money-lender, when he deliberately suppressed the account books. But, the question in each case would

depend upon whether the defendant has proved that the consideration as stated in the promissory note is incorrect. The case of the defendant is

that at the time of signing the promissory note, the consideration was not filled up. The defendant has not chosen to examine either the attestors or

the scribe of the said document. Assuming that the case of the defendant is true, the document would be regarded only as an inchoate stamped

instrument, and u/s 20 of the Negotiable Instruments Act, the defendant has given prima facie authority to the holder of the promissory note to

make or complete the promissory not for any amount specified therein and not exceeding the amount covered by the stamp.

That apart, the defendant has produced account books, and only certain portions of the account books were marked as exhibits. It is seen

from the entry in the day book (Ex. B-1) that the opening balance started only on 1.10.1980 and the next entry was made on 13.10.80. It is also

seen that the day book was not produced before any of the statutory authorities and there was no tallying of the accounts when the entries were

closed on 29.9.1981. In so far as ledgers in Exs. B-2 to B-7 are concerned, they were not produced before any of the authorities. In so far as

Exs. B-5, 6 and 7 are concerned, the entries were not supported by the entries in the day book. It is also seen that books produced by the

defendant were not produced before some independent authority. The defendant has also not established that he was regularly following the

accounting period from 1st October to 30th September. Since the defendant has not discharged the burden cast upon him, I hold that the recitals

found in the promissory note (Ex. A-1) are true. I hold that the plaintiff cannot be non-suited on the ground that he has not produced the account

books, though he is a money-lender. There is nothing to suggest that the transaction entered into was not a bona-fide transaction or not a honest

transaction. It was purely a commercial transaction between the parties and the fact that the defendant has not taken steps to examine the attestors

or the scribe of the promissory note shows that the defendant has not discharged the burden and proved that the recitals in Ex. A-1 are not true or

correct. Though D.W. I in his evidence has stated that he did not know who are the attestors, nothing prevented him from taking steps through the

court to summon the attestors and examine them. In the light of the principles of law laid down by various decisions referred to above, I hold that

the defendant has not discharged the burden cast on him that the consideration mentioned in the promissory note is neither true nor correct. Since

he has not discharged the burden, the plaintiff cannot be non-suited for his failure to produce the account books. Hence, I reject the second

submission of the learned counsel for the appellant.

Learned counsel for the appellant also submitted that when the defendant has produced the account books, the plaintiff has not chosen to

produce account books. I have already held that when the defendant has not discharged the burden that the recitals in Ex. A-1 are not true or

correct, no adverse inference can be drawn against the plaintiff for the non-production of account books.

Moreover, in the written statement filed by the defendant, there is no averment that the amount was borrowed by the defendant in his capacity

as proprietor of Balaji Trading Concern and he has also signed the suit promissory note in that capacity only. The account books. Exs. B-1 to B-9

relate to the Balaji Trading Concern and as rightly observed by the trial Court, there is no evidence to show that the accounts were maintained in

the regular course of its business. In so far as the evidence of D.W.2 is concerned, he is neither an attestor, nor the scribe of the promissory note

and his evidence discloses that he has no personal knowledge about the transaction. The case of the defendant that he has signed a blank

promissory note was rightly disbelieved by the trial Court; the evidence of P.W.1 clearly shows that the suit promissory note was executed for the

consideration as stated therein. The defendant has also not proved that he has paid interest as stated by him and there are no endorsements found

in the suit promissory note. I do not find any error or infirmity in the judgment of the trial court in holding that the plaintiff is entitled to the suit

amount. Accordingly, I hold that the issue raised in the suit, which is also the point for consideration in the appeal, was rightly answered by the trial

court against the appellant. I do not find any justifiable reason to take a different view on the facts of the case. Accordingly, the appeal fails and it is

dismissed. However, in the circumstances, there will be no order as to costs herein.