N. Ramalingam vs J. Srinivasan

R. Mala, J.—This Appeal Suit (First Appeal) has been arising out of the judgment and decree dated 22.11.2006 made in O.S. No. 44 of

2005 on the file of Principal District Court, Vellore.

The averments made in the plaint are as follows:

(i) The Defendant herein has borrowed a sum of Rs. 1,00,000/- on 19.04.2002 from the Plaintiff and agreed to repay the same with interest at

0.09 paise per Rs. 100/- per month to the Plaintiff on demand and executed a promissory note.

(ii) Likewise on 22.05.2002, the Defendant borrowed Rs. 50,000/- from the Plaintiff and agreed to repay the same with interest at 32.4% per

annum on demand and executed the promissory note.

(iii) On 17.06.2002, the Defendant borrowed Rs. 1,00,000/- from the Plaintiff and agreed to repay the same with interest at the rate of 0.09 paise

per Rs. 100/- per month on demand and executed the promissory note.

(iv) On 11.07.2002, the Defendant borrowed Rs. 2,00,000/- from the Plaintiff and agreed to repay the same with interest at 32.4% per annum on

demand and executed the promissory note.

(v) On 26.08.2002, the Defendant borrowed Rs. 50,000/- from the Plaintiff and agreed to repay the same with interest at 32.4% per annum on

demand and executed the promissory note.

(vi) The Defendant is endowed with sufficient immovable properties, so he is not entitled benefits under the Debt Relief Acts. In spite of several

demands, the Defendant refused to repay the amount. Hence he come forward with the suit for recovery of amount due on promissory notes and

prayed for a decree.

The gist and essence of the written statement filed by the Defendant are as follows:

(i) The Defendant specifically denied the execution of all the five promissory notes.

(ii) The Plaintiff and his father are coconut merchants. They also conducting Finance Companies in Gudiyatham Town. This Defendant used to

supply coconuts to the Plaintiff''s firm and in the course of the said transaction, he introduced several persons to the Plaintiff and they used to

supply coconuts. The Plaintiff used to advance amounts to them through the Defendant. At that time, the Defendant''s signatures were obtained by

the Plaintiff in blank printed promissory note forms and the Defendant distribute the funds to the others and after they supply the coconuts, the

amount given to the Defendant will be adjusted. The Plaintiff used to retain the promissory notes and the Defendant did not insist for the return of

the same. Now the blank promissory notes have been concocted for the purpose.

(iii) The Plaintiff advanced to the Defendant nearly a sum of Rs. 5,75,000/- on various dates in the year 1996 and he paid the principal and interest

in the year 1998. There is no amount due to the Plaintiff. The Defendant had no transaction after the year 1998 and there is no lending or

borrowing from the year 1998. The Plaintiff and his father in all received nearly 11 1/2 lakhs towards the amounts advanced. They passed chits for

the payment made by the Defendant.

(iv) There was misunderstanding between the Defendant and the Plaintiff and his father from the year 1998. Due to the same, the Defendant was

insisting the return of the blank printed promissory notes in the custody of the Plaintiff, which was signed by the Defendant in the year 1996 on

various dates. Taking advantage of the same, the Plaintiff and his father created various promissory notes as if this Defendant borrowed the

amounts in the year 2002 and filed the suit. The father of the Plaintiff also filed another suit on the file of the Sub-Court, Gudiyatham on two

concocted promissory notes.

(v) The Plaintiff and his father in the Panchayat held in the year 2003 agreed to return the said blank promissory notes in their custody and

confessed to the Panchayatars that there is no due from the Defendant.

(vi) In the year 2002, the Defendant never received any amount and executed any promissory notes. All the promissory notes are created one and

no amount is due from the Defendant to the Plaintiff. The suit filed by the Plaintiff is fraudulent and illegal one and hence, he prayed for the dismissal

of the suit.

The trial Court, after considering the averments both in the plaint and the written statement and arguments of both the counsel, has framed four

issues and considering the oral evidence of P.W.1 to P.W.3 and D.W.1 and D.W.2 and documentary evidence of Exs.A1 to A5 and B1 to B4,

decreed the suit as prayed for in the plaint, against which, the Appellant/ Defendant has preferred this appeal.

After hearing the arguments of both sides counsel, the following points for consideration are framed:

Whether the trial Court is correct in held that Exs.A1 to A5 are true and genuine documents and supported by consideration?

Whether the trial Court is correct in granting decree as prayed for in the plaint?

To what relief, the Appellant/Defendant is entitled to?

Point No. 1:

(i)The learned Counsel for the Appellant/Defendant submitted that the Appellant/Defendant is used to supply coconuts to the Respondent/Plaintiff.

At that time, he also introduced some of the coconut suppliers to the Respondent/Plaintiff. In the said transaction, the Appellant/Defendant has

received the amounts given by the Respondent/Plaintiff and distributed to the coconut suppliers. He also put his sign in various blank printed

promissory note forms in the year 1996 and he discharged the same. Since there was misunderstanding between both the parties in the year 1998,

there was no necessity for the Appellant/Defendant to obtain a loan from the Respondent/Plaintiff in the year 2002, which were marked as Exs.A1

to A5. The Respondent/Plaintiff herein has not issued any notice to the Appellant/Defendant before filing the suit. He was surprised to receive

Attachment Before judgment application, which shows that Exs.A1 to A5 were concocted one.

(ii) A Panchayat was held in the year 2003 and in that Panchayat, the Respondent/Plaintiff agreed to return the blank promissory notes in his

custody. But he has not returned the same and filed the suit.

(iii) The learned Counsel for the Appellant/Defendant further submitted that it is true, as per Section 118 of Negotiable Instruments Act, 1881,

there is a presumption, but it is rebuttable one. The Appellant/Defendant herein has proved that the presumption u/s 118 of Negotiable Instruments

Act, 1881 is rebutted by way of examination of D.W.2-Krishnamoorthy, Inspector of Income Tax Department, Vellore, and filed Ex.B4-income

tax returns and statement of accounts, which shows that the Respondent/Plaintiff herein is a coconut merchant. But he has not shown the loan

amounts or debts. The amounts mentioned in Exs.A1 to A5 are assets of the Respondent/Plaintiff. If so, that amounts should be included in his

income tax returns. But he has not included the same, which falsifies the case of the Respondent/Plaintiff herein. That factum has not been

considered by the trial Court. Therefore, the judgment and decree passed by the trial Court are not sustainable and hence, he prayed for allowing

the appeal by setting aside the suit.

(iv) Per contra, the learned Counsel for the Respondent/Plaintiff submitted that the Appellant/Defendant herein has fairly conceded that in the year

1996, he has borrowed amounts from him and put his sign in blank promissory notes. In his written statement, the Appellant/Defendant himself

stated that he had repaid that amounts and discharged the same in the year 1998. The Appellant/Defendant has also fairly conceded that the

Respondent/Plaintiff and his father had received that amounts and passed the chit for the payment made by the Appellant/Defendant. To prove the

same, the Appellant/Defendant has not filed the chit given by the Respondent/Plaintiff and no one has been examined to prove that the

Appellant/Defendant had discharged the amounts. The Appellant/Defendant has neither issued notice nor given police complaint against the

Respondent/Plaintiff for taking back the promissory notes, which were given by him. He himself stated that he has discharged the loan in the year

1998. In his defence, the Appellant/Defendant has stated that Panchayat has been conducted by the Coconut Merchants Association in the year

2003, but none of the Panchayatar was examined before the trial Court to prove the same and no coconut suppliers were examined. Hence the

trial Court had considered the same in its judgment and came to the correct conclusion and decreed the suit as prayed for in the plaint.

(v) The learned Counsel for the Respondent/Plaintiff further submitted that even though the Appellant/Defendant herein has raised the plea in the

grounds of appeal as questioning the quantum of rate of interest and non issuance of suit notice, but no pleadings regarding the same in his written

statement. Now he raised such a plea, which is after thought. So the Appellant/Defendant is not entitled to canvas the same. The trial Court has

considered all these aspects in proper perspective and came to the correct conclusion that the Appellant/Defendant is not entitled any relief. So the

decree and judgment passed by the trial Court does not warrant any interference and he prayed for the dismissal of the appeal.

(vi) Admittedly, the suit is based on Exs.A1 to A5-the promissory notes. The defence raised by the Appellant/Defendant is that he admitted his

signature in the promissory notes. The Appellant/Defendant has introduced some of the coconut suppliers to the Respondent/Plaintiff, who is a

coconut merchant. The Respondent/Plaintiff has used to pay the amounts through the Appellant/Defendant. At that time, he obtained signature from

the Appellant/Defendant in the blank promissory note forms and the same have been utilised because of the misunderstanding arose between them.

But as per Ex.B4-income tax return of the Respondent/Plaintiff, he has mentioned that he is doing coconut business. So it is the duty of the

Appellant/Defendant to prove that he received the amount, which is more than Rs. 5,50,000/- and that has been distributed to the coconut

suppliers and at that time, he put his signature in blank promissory notes. Admittedly, no coconut supplier was examined to prove the same before

the trial Court.

(vii) Further, the Appellant/Defendant has stated that he repaid the amount he received (i.e.) Rs. 5,75,000/- on various dates in the year 1996 and

also he received the chit for the payment of the said amount from the Respondent/Plaintiff and his father. In para-6 of the written statement filed by

the Appellant/Defendant, he has stated as follows:

The Plaintiff advanced to this Defendant nearly a sum of five lakhs and seventy five thousands on various dates in the year 1996 and he paid the

principal and interest in the year 1998 and there is no amount due to the Plaintiff. This Defendant had no transaction after the year 1998 and there

is no lending or borrowing from the year 1998. The Plaintiff and his father in all received nearly 11 and half lakhs towards the amounts advanced.

They passed chits for the payment by this Defendant.

(viii) Admittedly, the Appellant/Defendant filed four documents; Ex.B1-counter filed in Transfer O.P. No. 3 of 2006; Ex.B2-plaint in O.S. No. 17

of 2005 filed by the Respondent/Plaintiff''s father against this Appellant/Defendant; Ex.B3-petition and affidavit filed in I.A. No. 27 of 2005 in O.S.

No. 17 of 2005 under Order 38 Rule 5 of Code of CPC (i.e.) attachment before judgment and Ex.B4-income tax returns and statement of

accounts. But he has not filed the chit issued by the Respondent/Plaintiff and his father, after receipt of Rs. 11,50,000/-. Even though he pleaded

the discharge and receipt of the chit, which was received from the Respondent/Plaintiff, he has not filed the same. So it shows the defence raised

by the Appellant/Defendant in paragraphs-5 and 6 of his written statement is not a genuine one.

(ix) Besides this, the Appellant/Defendant has pleaded that he has paid the amount, which was received from the Respondent/Plaintiff. But he has

not taken back the signed blank promissory note forms. Admittedly, the Appellant/Defendant himself stated that in the year 1998, there was

misunderstanding between himself and the Respondent/Plaintiff. But he has not taken any steps to get back the signed blank promissory note

forms. Regarding the same, neither he issued notice through his counsel to the Respondent/Plaintiff nor preferred the police complaint against him.

But he has stated that in the year 2003, he gave a complaint before the Coconut Merchant Association. His defence is that in the said Panchayat

and mediation, the Respondent/Plaintiff and his father confessed to hand over the promissory notes to the Appellant/Defendant. But they did not

return the same. Till now, he has not taken any steps to issue notice to the Respondent/Plaintiff and preferred a complaint against him. Moreover,

he has not examined any of the Panchayatar to prove that the Panchayat was held in the year 2003 and in that Panchayat, the Respondent/Plaintiff

and his father confessed to hand over the promissory notes to the Appellant/Defendant. So I am of the view that the Appellant/Defendant herein

has not proved that he received Rs. 5,75,000/- from the Respondent/Plaintiff in the year 1996 and discharged Rs. 11,50,000/- in the year 1998.

So the argument advanced by the learned Counsel for the Appellant/Defendant does not merit acceptance.

(x) The learned Counsel for the Appellant/Defendant submitted that as per Section 118 of Negotiable Instruments Act, the presumption is

rebuttable presumption, so the Appellant/Defendant has every right to rebut the presumption by letting either direct or by bringing on record the

preponderance of probabilities by reference to the circumstances upon which he relies. There is no quarrel over the said proposition.

(xi) At this juncture, it is appropriate to refer the following decisions relied upon by the Appellant / Defendant reported in

(a) Bharat Barrel and Drum Manufacturing Company Vs. Amin Chand Payrelal, , which reads as follows:

Once execution of the promissory note is admitted, the presumption u/s 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 disentitle 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 an 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 nonexistence of the consideration, the Plaintiff would invariably be held entitled to the benefit of

presumption arising u/s 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.

(b) Chinnasamy Vs. Perumal, , which reads as follows:

Presumption raised u/s 118 has been satisfactorily rebutted by Defendant as held by first Appellate Court.

(c) (2001) 2 M.L.J. 753 (M. Shanmugham v.S. Rangasamy Gounder), which reads as follows:

In view of the admission made by the Defendant that the suit promissory note was executed by him for consideration, it is for him to prove that the

consideration stated therein is not true. 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 a case where the Plaintiff carries on the business of money

lending, the Court is entitled to draw an adverse inference against the money lender when he deliberately suppresses the account books. But, the

question in each case would depend on whether the Defendant has proved that the consideration as stated in the promissory note is 15 incorrect.

(xii) It is true that as per Section 118 of Negotiable Instruments Act, presumption is rebuttable one and that should be rebutted by convincing and

cogent evidence. As per the decision reported in (2001) 2 MLJ 753, weight to be attached to the recitals in a promissory note. It is the duty of the

Appellant/Defendant to prove that there must be some evidence to show that the transaction was not honest or bonafide and only then the Court

can draw an inference that the recitals in the promissory notes are not true. But in the promissory notes marked in Exs.A1, A2, A4 and A5, it was

written as ""mtru epkpj;jk;"" (for urgent), which was in the printed forms. In Ex.A3, it was written as "" tpahghu bryt [.F Lk;g bryt[ "" (for business

charges and family expenses).

(xiii) Considering the decisions as well as the recitals in the documents, the defence raised by the Appellant/Defendant is not proved by concrete,

convincing and cogent evidence. In paragraphs-5 and 6 of his written statement, he has stated as follows:

5... This Defendant used to supply coconuts to the Plaintiff''s firm and in the course of the said transaction he introduced several persons to the

Plaintiff and they used to supply coconuts. The Plaintiff used to advance amounts to them and the same was done through this Defendant. This

Defendant''s signature was obtained by the Plaintiff in Blank printed promissory note forms and this Defendant distribute the funds to the others and

after they supply the coconuts the amount given to this Defendant will be adjusted. .. ..

The Plaintiff advanced to this Defendant nearly a sum of five lakhs and seventy five thousands on various dates in the year 1996 and he paid the

principal and interest in the year 1998 and there is no amount due to the Plaintiff. This Defendant had no transaction after the year 1998 and there

is no lending or borrowing from the year 1998. The Plaintiff and his father in all received nearly 11 and half lakhs towards the amounts advanced.

They passed chits for the payment by this Defendant.

But in para-6 of the written statement, he has stated that the Respondent/Plaintiff has advanced him nearly a sum of Rs. 5,75,000/-on various dates

in the year 1996 and he repaid the amount with interest in the year 1998. So he has raised two defence in his written statement. But he has not

proved the same by way of examining coconut suppliers and also producing the receipt issued by the Respondent/Plaintiff and his father, while

discharging the amount. In such circumstances, I am of the view that the Appellant/Defendant herein has not rebutted the presumption u/s 118 of

Negotiable Instruments Act with cogent and convincing evidence.

(xiv) As already stated that to prove the genuinely of Exs.A1 to A5, the Respondent/Plaintiff has examined himself as P.W.1 and attester of

Exs.A1 to A5 has been examined as P.W.2 and Scribe of Exs.A1, A2 and A4 has examined as P.W.3. They are not relatives of P.W.1 and there

is no enmity towards D.W.1, the Appellant/Defendant. So there is no reason has been adduced to discard the evidences of P. Ws.2 and 3.

(xv) Considering the cogent evidences of P.W.2 and P.W.3, which are corroborated the evidence of P.W.1, has proved that Exs.A1 to A5 were

true and genuine documents, hence the trial Court has considered this aspect in proper perspective and came to the correct conclusion that Exs.

A1 to A5 were genuine and true documents, supported by consideration. Hence the Respondent/Plaintiff is entitled a decree as prayed for in the

plaint. So the trial Court is correct in held that the Respondent/Plaintiff is entitled a decree as prayed for in the plaint. Point No. 1 is answered

accordingly.

Points No. 2 and 3:

In view of the answer given to Point No. 1, the judgment and decree passed by the trial Court are fair and proper and it does not warrant any

interference. Therefore, the Appellant/Defendant is not entitled any relief. The First Appeal deserves to be dismissed and hence it is dismissed.

Points No. 2 and 3 are answered accordingly.

In fine,

� The First Appeal is dismissed with costs.

� The judgment and decree passed by the trial Court are hereby confirmed.