Ranganathan @ Panduranga vs Ramakrishnan Gounder and Nesamani

Honourable Mr. Justice M. Venugopal

The Appellant/Plaintiff has filed the present Second Appeal as against the Judgment and Decree dated 17.04.1998 in A.S. No. 46 of 1997

passed by the Learned Subordinate Judge, Tindivanam in reversing the Judgment and Decree dated 26.02.1997 in O.S. No. 940 of 1995 passed

by the Learned District Munsif, Tindivanam. The 1st Appellate Court, while allowing the A.S. No. 46 of 1997 on 17.04.1998, has, among other

things opined that while perusing Ex.B.1 Agreement receipt dated 19.09.1990, it is evident that the pronote has been executed by the Defendants

(Respondents) in favour of the Plaintiff (Appellant). Since, the nine months old child Manimegalai''s mother has met with an untimely death, for the

maintenance of the child and for her expenses as per resolution of Panchayatdars, executed the same for Rs. 20,000/- and in that way, the suit

pronote is not supported by consideration and based on humanitarian approach and also considering the child''s interest, as admitted by the

Respondents/Defendants, the same has been written, for doubling the same, which transpires from the evidence of two sides and through

documents. The Respondents/Defendants are not liable to pay the suit pronote amount to the Appellant/Plaintiff and resultantly, allowed the

Appeal without costs, by setting aside the Judgment and Decree of the trial Court passed in the main suit and resultantly, dismissed the suit.

Before the trial Court, in the main suit, 1 to 3 issues have been framed for trial. On behalf of the Appellant/Plaintiff, witness P.W.1 has been

examined and Exs.A.1 to A.3 have been marked. On the side of the Respondents/Defendants, witnesses D.W.1 and D.W.2 have been examined

and Exs.B1 to B.4 have been marked.

The trial Court on an appreciation of entire oral and documentary evidence available on record and after scrutinising and analysing, has come to

a clear conclusion that instead of a sum of Rs. 10,000/-, for Rs. 20,000/- the pronote has been written, as spoken to by D.W.1 and the aforesaid

fact has not been mentioned in the written statement and further, when the signatures in the pronote have not been denied, the Appellant/Plaintiff,

based on the aforesaid discussion, is entitled to claim the suit pronote amount and held that the suit pronote is a valid one and therefore, the

Appellant/Plaintiff is entitled to claim the amount as prayed for in the suit and accordingly, granted the Decree with costs.

At the time of Admission of the Second Appeal, this Court has formulated the following substantial question of Law:

Whether the lower Appellate Court is right holding that the suit promissory note is not supported by consideration, overlooking the statutory

presumption u/s 118 of Negotiable Instruments Act especially when the Defendants admitted the execution of the suit promissory note?

The Contentions, Discussions and Findings on substantial question of law: The Learned Counsel for the Appellant/Plaintiff submits that the 1st

Appellate Court has committed an error in reversing the Judgment and Decree of the trial Court.

The Learned Counsel for the Appellant/Plaintiff urges before this Court that when the Respondents/Defendants have admitted the execution of

the suit pronote, the burden is on them to prove that the same is not supported by consideration. The plea of the Appellant/Plaintiff is that once the

execution of the pronote is admitted by the Respondents/Defendants, a statutory presumption u/s 118 of the Negotiable Instruments Act arises in

regard to the passing of the consideration.

Advancing his arguments, the Learned Counsel for the Appellant/ Plaintiff submits that the presumption u/s 118 of the Negotiable Instruments

Act is not merely confined to what is mentioned in the negotiable instrument, but for any kind of consideration, which is valid in law.

The Learned Counsel for the Appellant/Plaintiff projects a plea that D.W.1 admitted in his deposition that they agreed to deposit Rs. 20,000/- in

the name of the minor child Manimegalai and for that, they executed the suit pronote Ex.A.1 dated 19.09.1990 and therefore, the suit pronote is

supported by consideration, though not received any cash.

Lastly, it is the submission of the Learned Counsel for the Appellant/Plaintiff that when Ex.B.1 Agreement dated 19.09.1990 being a

contemporaneous document to Ex.A.1 suit pronote, has been accepted, then the Respondents/Defendants are bound to repay the amount

mentioned in the pronote.

Per contra, it is the submission of the Learned Counsel for the Respondents/Defendants that the 1st Appellate Court has elaborately discussed

about the oral and documentary evidence adduced in the case and has come to a definite conclusion that the suit pronote, admittedly, has come

into existence and that the Appellant/Plaintiff has not advanced money to the Respondents/Defendants on the day of coming into existence of

Ex.A.1 pronote dated 19.09.1990 and only on the date of death of their daughter, the suit pronote has come into existence and therefore, there is

truth on the side of the Respondents/Defendants'' pleading etc., and further, since the nine months female child Manimegalai''s mother has met with

an untimely death, for the child''s maintenance etc, the Respondents/Defendants, as per resolution of Panchayatdars have executed the suit pronote

for Rs. 20,000/- and only for doubling the amount, the suit pronote has been admittedly written, as seen from the evidence of two side witnesses

and documents and accordingly, it has been held that the Respondents/Defendants are not liable to pay the amount based on suit pronote to the

Respondents/Defendants and these findings of fact recorded by the 1st Appellate Court do not suffer from any material irregularity or from

perversity and as such, the First Appeal has been rightly allowed by setting aside the Judgment and Decree passed by the trial Court in the main

suit, which need not be interfered with by this Court sitting in Second Appeal.

The Learned Counsel for the Appellant/Plaintiff in support of the contention that the negotiable instrument is to be presumed that it is negotiable

for consideration relies on the decision of this Court S.Perumal Chettiar V. T.Santhanam in S. Perumal Chettiar Vs. T. Santhanam, wherein it is

held as follows:

In the instant case, 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 the presumption was raised, it had the effect of shifting the burden on to the defendant to

establish that there was no consideration. In this case the defendant had not satisfied the Court that there was no consideration whatever with

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

interest due on the mortgages admittedly executed by him. The mere fact that the mortgages were not produced before the Court would not make

any difference nor would it detract from the effect of admission made by the defendant in the written statement. In this view it may be said that even

the burden which shifted on to the defendant was not discharged by him in view of the clear and careful admission made by him. But, even,

otherwise, if the defendant had established, in this case, that the promissory note was not supported by consideration as recited therein and the

burden shifted on to the plaintiff, would it be still open to the plaintiff to recover on the footing that the promissory note is supported by

consideration though not necessarily in the shape of the consideration recited in the promissory note? With reference to this, two views have been

taken. One is that the presumption regarding consideration u/s 118 of the Negotiable Instruments Act is not merely confined to what is mentioned

in the negotiable instrument but for any kind of consideration which is valid consideration under law. The other view is where the recital of

consideration under the promissory note is admittedly false and not made out, then the presumption u/s 118 of the Negotiable Instruments Act is

displaced and thereby the burden is shifted to the holder of the promissory note as against the marker of the note himself.

He also relies on the Division Bench Judgment of this Court V.R.S.RM. Ramaswami Chettiar and Another Vs. Sri Devi Talkies by partner K.

Ramakrishnan and Others, wherein it is held as follows:

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 u/s 118 of the Negotiable Instruments 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.

At this juncture, this Court pertinently points out that the presumption relating to consideration as per Section 118 of the Negotiable

Instruments Act is not confined to what is stated in the negotiable instrument but for any kind of consideration which is valid consideration as per

law.

The Appellant/Plaintiff in the plaint pleadings has averred that the 1st Respondent is the husband of the Appellant/Plaintiff''s own sister and as

such, the Appellant/Plaintiff has given in marriage his daughter Tamilselvi to the 2nd Respondent/2nd Defendant and as a result of the wed lock

between the 2nd Respondent/2nd Defendant and Tamilselvi, a female child Manimegalai has born and the said Tamilselvi returned to the house of

the 2nd Respondent/2nd Defendant on 18.09.1990 with her nine months old child and on the next day, the Appellant/Plaintiff has received the

news that his daughter Tamilsevi has died and when the Appellant/Plaintiff has gone to Venganthur with family, he has come to know that mystery

has surrounded the death of his daughter.

Continuing further, it is also averred in the plaint that the 2nd Respondent/2nd Defendant and his mother have harassed the daughter Tamilselvi

prior to that, on numerous occasions has demanded money etc., and later, the Appellant/Plaintiff has completely severed his relationship with the

Respondents/Defendants and demanded all the articles given to Tamilselvi and also, demanded a sum of Rs. 20,000/-, which has been given to the

2nd Respondent/2nd Defendant for purchasing a land and since, the Respondents/ Defendants have not been possessed with money, at the

instance of close people of the Respondents/Defendants, the Respondents/Defendants informed that a pronote will be executed for the amount to

be paid by them and after the performance of last rites on 19.09.1990, the Respondents/Defendants have executed a pronote for Rs. 20,000/- to

and in favour of the Appellant/Plaintiff.

The Respondents/Defendants, as agreed, have not paid the pronote loan amount to the Appellant/Plaintiff. Hence, the Appellant/Plaintiff has

filed the present suit for recovery of Rs. 25,400/- (principal sum of Rs. 20,000/- and interest of Rs. 5,400/- for the period from 19.09.1990 to

19.09.1993, calculated at 9% per annum) together with subsequent interest from the date of the suit.

The Respondents/Defendants, in the written statement, have stated that it is false to state that they have agreed to execute a pronote for the

amount to be paid by them, because they have not been in possession of the amount. The Appellant/Plaintiff has suppressed the true facts and has

filed the suit by twisting the facts. The 2nd Respondent/2nd Defendant''s wife Tamilselvi has gone to the house of her father, the Appellant/Plaintiff

at Odaiveli Village at Pondicherry and returned to Venganthur on 18.09.1990 and on the same day, she met with an untimely death. The

Respondents/Defendants on being shocked, has informed the death of Tamilselvi to the Appellant/Plaintiff. On 19.09.1990, the Appellant/Plaintiff

has come to Venganthur and for the death of Tamilselvi, they levelled allegations that the Respondents/Defendants are responsible. They have not

allowed the cremation of Tamilselvi''s body and the Appellant/Plaintiff, as desired by him, has created a pronote and asked the

Respondents/Defendants to put their signature. On a sorrowful condition and under a dejected circumstance, the Respondents/Defendants have

falsely affixed their signature in the pronote. Even a single pie has not been received by the Respondents/Defendants for the suit pronote dated

19.09.1990. The suit pronote is not supported by consideration. The 2nd Respondent/2nd Defendant is the natural guardian of the child

Manimegalai. O.P. No. 25 of 1994 has been filed before the Pondicherry Family Court for handing over the custody of the minor child and the

said proceedings are pending. It is false to state that during the lifetime of Tamilselvi, for purchasing land, a sum of Rs. 20,000/- has been given to

the 2nd Respondent/2nd Defendant. The suit is barred by limitation. The suit is filed after a long delay. Hence, the frivolous suit is liable to be

dismissed with exemplary costs to the Respondents/Defendants, as per Section 35 A of the Civil Procedure Code.

Ex.A.1 is the suit pronote dated 19.09.1990 in favour of the Appellant/Plaintiff executed by the Respondents/Defendants for Rs. 20,000/-.

The recitals of Ex.A.1 pronote shows that for purchasing a land, a sum of Rs. 20,000/- has been received in cash by the Respondents/Defendants

from the Appellant/Plaintiff, agreeing to repay the said amount with 1 Re interest per annum.

Ex.B.1 is the Panchayatdar Agreement/Arrangement dated 19.09.1990 entered into between the Respondents/Defendants and the Appellant/

Plaintiff. In Ex.B.1 Agreement/Arrangement receipt, it is made mention of that since nine months old female child Manimegalai''s mother has met

with an untimely death and the mother being the daughter of the Appellant/Plaintiff, for the maintenance of the child and for her welfare, the

Respondents/ Defendants 1 and 2 have executed the pronote for Rs. 20,000/- as per Panchayatdars resolution and the principal amount of the

pronote will have to be paid before 21.04.1991 by the Respondents/Defendants 1 and 2 and the Appellant/Plaintiff and the Panchayatdars will

have to deposit the said amount into the Bank. In Ex.B.1 Agreement/Arrangement dated 19.09.1990, the Respondents/Defendants, the

Panchayatdars and also the Writer of the Agreement have signed.

The Learned Counsel for the Appellant/Plaintiff strenuously contends that Ex.B.1 Agreement dated 19.09.1990 between the Respondents/

Defendants and the Appellant/Plaintiff have come into existence on Ex.A.1 pronote dated 19.09.1990. Ex.B.1 Agreement is a contemporaneous

document, since, in Ex.B.1 Agreement, the amount of Rs. 20,000/- have been mentioned and also that as per Panchayat resolution, for Rs.

20,000/-, a promissory note in favour of the Appellant/Plaintiff has been written and the said amount of Rs. 20,000/- is to be paid before

21.04.1991. Even though, for Ex.A.1 pronote there is no actual consideration, yet, the recitals in Ex.B.1 Agreement dated 19.09.1990 are to the

effect that the Respondents/Defendants, as per Panchayatdars resolution, have executed a pronote for Rs. 20,000/- in favour of the

Appellant/Plaintiff, is itself a consideration for the pronote. The consideration mentioned in Ex.B.1 Agreement dated 19.09.1990 is a valid

consideration and as such, it cannot be said that Ex.A.1 pronote is not supported by consideration.

P.W.1 (Appellant/Plaintiff) in his evidence has deposed that his daughter is Tamilselvi, who has gone to her mother-in-law''s house on

18.09.1990 and he has been informed that she died of snake bite and when he attempted to go to the police station, the Panchayatdars have

prevented him from proceeding and the last rites of his daughter has taken place and considering the future of his grand-daughter, they have abided

by the Panchayatdars'' direction and that his brother-in-law has already received a sum of Rs. 20,000/- and he demanded this amount for which

pronote has been executed by them and Ex.A.1 is the pronote and for purchasing a land and for other expenses, the amount has been received

and he has not obtained the pronote after threatening them and it has been executed by them voluntarily.

It is the further evidence of P.W.1 that as per Ex.B.1 receipt, a sum of Rs. 20,000/- has been agreed to be paid and there has been no talk of

payment of Rs. 10,000/- being made on the date of execution of the pronote and the amount has been agreed to be paid within three months from

the date of execution of the pronote and inspite of numerous demand being made for the return of the amount, the Respondents/Defendants have

not paid the amount.

P.W.1 (in his cross examination) has clearly deposed that on the day of the execution of pronote, no amount has been paid and the money has

been taken from him towards purchase of land and the amount to be paid to him has been requested to be deposited in his grand-daughter''s

name, for which he has agreed and it is not correct to state that only if a sum of Rs. 20,000/- is mentioned for the amount of Rs. 10,000/-, the said

amount will be collected and it is not correct to state that he has not paid the amount.

It is the evidence of D.W.1 (1st Respondent/1st Defendant) that it is not correct to state that towards purchase of land, a sum of Rs. 20,000/-

has been given to the 2nd Respondent/ 2nd Defendant and the Appellant/Plaintiff has not demanded for return of the amount and village people

have been called in to execute a land, for which they refused and the Appellant/Plaintiff has demanded Rs. 50,000/- and when they refused for the

same, they informed that amount of Rs. 10,000/- has to be paid, but a pronote has been written for Rs. 20,000/- and on that day, an Agreement

has been written and Ex.A.1 is the suit pronote executed by the Respondents/Defendants to and in favour of the Appellant/Plaintiff. It is the further

evidence of D.W.1 that it is not correct to state that he has received a sum of Rs. 20,000/- and that the Appellant/ Plaintiff has no means to

advance a sum of Rs. 20,000/- and that in Ex.A.1 pronote, his signature is seen and further, his son has also signed in the pronote and that Ex.A.1

pronote has been written by Mukilvannan.

Continuing further, it is the evidence of D.W.1 that during the day of last rites, Ex.A.1 pronote has been written and is ready to deposit the

amount, as agreed to by him.

D.W.2 in his evidence, has deposed that the Appellant/Plaintiff is the brother-in-law of the 1st Respondent/1st Defendant and the 2nd

Respondent/2nd Defendant has married Tamilselvi, the daughter of the Appellant/Plaintiff and Tamilselvi has expired and that she has committed

suicide and on the next day of her death, the Appellant/Plaintiff has come along with numerous persons and a dispute has arisen and Panchayat has

taken place and it is not correct to state that Ex.B.1 Agreement has been written as per the desire of the 1st Respondent/1st Defendant and in

Ex.B.1, the signature of the Appellant/ Plaintiff is seen and the money will have to be paid one year later and the amount mentioned in the pronote

has not come into the hands of the Appellant/Plaintiff.

D.W.2 (in his cross examination) has deposed that firstly, Ex.A.1 pronote has been written and later, Ex.B.1 Agreement has been written and

Ex.B.1 Agreement has been written after writing Ex.A.1 and in Ex.B.1 Agreement, his signature is not found and in Ex.B.1 Agreement, it is written

that a sum of Rs. 20,000/- will have to be deposited before 21.04.1991 and that the amount has to be deposited in the name of the child.

In a suit pronote, it is not necessary to make an averment as against consideration or to prove it, as opined by this Court. A Court of Law

places the burden on the Defendant to prove want of consideration where consideration mentioned is one thing, but infact, a different consideration

has been given, even so the presumption remains intact. As a matter of fact, the presumption does not depend upon admissions or denials of the

Defendant. A mere failure on the part of a Plaintiff to prove a consideration or the fact that to the type of consideration which he is trying to

establish is not infact given is not sufficient to rebut or overthrow the presumption of consideration.

It is to be pointed out that all types of transaction, which takes place with reference to negotiable instrument as such or presumed to be for

consideration, the presumption arises when the execution of pronote is proved. It is not necessary that the Defendant should admit that he executed

the instrument. Even if the Defendant denies the execution, presumption arises, if otherwise, the execution is proved. As soon as the making of the

pronote is proved or admitted, the presumption operates in law.

It is to be noted that the description of the instrument as a pronote, the language of the document taken as a whole, the circumstances under

which it has come to be executed, the aim of the parties, as seen from the face of the document and the attending circumstances, will have a

cumulative bearing on a proper appreciation of the instrument whether it is a pronote or otherwise. There is some value and sanctity to the pronote

and when once such a document is projected in evidence, it virtually out weighs everything else on record as per decision Rangappa V.

Krishnamurthy in II (1995) 2 BC 144.

The primary thing to be looked into in arriving at a decision whether an instrument is a pronote is to consider not whether it is negotiable or not

but to consider whether in substance and the primary intention at the time of its execution it was a note and whether it contains the necessary

recitals and is not intended to record a different kind of transaction altogether.

In the present case on hand, it is quite evident that Ex.A.1 pronote dated 19.09.1990 for Rs. 20,000/- and Ex.B.1 Agreement/Arrangement

letter dated 19.09.1990 have come into existence simultaneously and contemporaneously. Though, in Ex.A.1 pronote it is mentioned that for

purchasing a land, a sum of Rs. 20,000/- has been received by the Respondents/ Defendants from the Appellant/Plaintiff, in reality, on the date of

Ex.A.1 pronote dated 19.09.1990, Ex.B.1 Agreement/Arrangement letter dated 19.09.1990 has been executed by the Respondents/Defendants

to and in favour of the Appellant/Plaintiff and the reasons for execution of Ex.A.1 pronote dated 19.09.1990 has been clearly made mention of in

Ex.B.1 letter of Agreement/Arrangement dated 19.09.1990 and in Ex.B.1 Agreement and also in Ex.A.1 pronote, the Respondents/Defendants

have signed and more so, Ex.B.1 letter of Agreement/Arrangement dated 19.09.1990 has been written based on the resolution of PanchayatdaRs.

That apart, the date for payment of principal sum of Rs. 20,000/- has been made mention of as before 21.04.1991. So, it is quite clear that

because of certain circumstances, Ex.B.1 Agreement/ Arrangement letter dated 19.09.1990 has come into existence on the very same day of

execution of Ex.A.1 pronote. Notwithstanding the fact that towards purchase of land a sum of Rs. 20,000/- has been mentioned as the amount

received in cash by the Respondents/Defendants from the Appellant/ Plaintiff in Ex.A.1 pronote dated 19.09.1990, yet the manner in which Ex.B.1

Agreement/Arrangement letter dated 19.09.1990 has come into existence wherein the principal amount is agreed to be paid before 21.04.1991

and also taking note of the maintenance of the female child Manimegalai, under interest, the pronote Ex.A.1 dated 19.09.1990 has been executed

by the Respondents/Defendants, this Court is of the considered view that the recitals mentioned in Ex.B.1 Agreement/ Arrangement letter dated

19.09.1990 are the one which speaks of consideration and even though, as per Ex.A.1 pronote, no cash amount has been paid by the

Appellant/Plaintiff to the Respondents/Defendants, yet this Court opines that Ex.A.1 pronote, for doubling the amount of Rs. 10,000/-, has been

executed by the Respondents/Defendants to and in favour of the Appellant/Plaintiff considering the interest of the nine months old child

Manimegalai''s maintenance and welfare. Therefore, it cannot be said by any means that Ex.A.1 pronote is not for consideration and indeed, one

cannot ignore or brush aside an important fact as per Section 118 of the Negotiable Instruments Act. The said section does not refer to

consideration as mentioned/stated in the negotiable instrument"" and per contra, it only says ""for consideration"" and viewed in that perspective, this

Court comes to an inescapable conclusion that the 1st Appellate Court has erred in law in holding that Ex.A.1 suit pronote dated 19.09.1990 is

not supported by consideration, over looking the statutory presumption to be drawn as per Section 118 of the Negotiable Instruments Act. As

such, its Judgment and Decree in A.S. No. 46 of 1997 dated 17.04.1998 are set aside by this Court in furtherance of substantial cause of justice.

Accordingly, the substantial question of law is answered in favour of the Appellant/Plaintiff. Consequently, this Second Appeal succeeds.

In the result, the Second Appeal is allowed, leaving the parties to bear their own costs. Resultantly, the Judgment and Decree of the 1st

Appellate Court viz., the Learned Subordinate Judge, Tindivanam in A.S. No. 46 of 1997 dated 17.04.1998 are set aside by this Court for the

reasons assigned in the Appeal. The Respondents/Defendants are directed to pay the principal sum of Rs. 20,000/- together with interest at 9%

per annum from the date of execution of Ex.A.1 pronote dated 19.09.1990 till date of passing of the Decree and thereafter, to pay subsequent

interest at 6% per annum from the date of Decree till date of realisation, together with costs. Three months time is granted to the

Respondents/Defendants to pay the suit claim.