Madras High Court
K.Kamaraj vs B.Rajasekaran on 10 January, 2025
A.S(MD)No.46 of 2024
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Reserved on : 23.10.2024
Pronounced on : 10.01.2025
CORAM:
THE HONOURABLE MR.JUSTICE P.VADAMALAI
A.S(MD)No.46 of 2024
and
C.M.P(MD)No.3066 of 2024
K.Kamaraj ... Appellant/Defendant
Vs.
B.Rajasekaran ...Respondent/Plaintiff
PRAYER :-
This Appeal Suit is filed under Section 96 r/w Order 41 of the
Civil Procedure Code, to set aside the impugned judgment and decree,
dated 01.11.2023 passed in O.S.No.12 of 2019 on the file of the Principal
District Judge, Tiruchirapalli.
For Appellant : Ms.S.Mahalakshmi
For Respondent : Mr.M.Muthu Geethayan
https://www.mhc.tn.gov.in/judis
1/19
A.S(MD)No.46 of 2024
JUDGMENT
This Appeal Suit is filed against the judgment and decree, dated
01.11.2023 passed in O.S.No.12 of 2019 on the file of the learned
Principal District Judge, Tiruchirappalli.
2. The appellant is the defendant in O.S.No.12 of 2019 on the file
of the Principal District Court, Tiruchirappalli. The respondent is the
plaintiff in that suit. The respondent/plaintiff filed the suit for recovery of
money based on the promissory note against the appellant/defendant.
The appellant/defendant contested the suit. The suit was decreed by the
trial Court.
3. For the sake of convenience, the parties are referred to as per
their rank before the trial Court.
4. The brief facts are as below:
(a) The case of the plaintiff is that the defendant borrowed
Rs.9,00,000/- (Rupees Nine lakhs only) from the plaintiff on 02.01.2018
and executed a promissory note in favour of the plaintiff agreeing to
repay the same with interest at 1% p.m. After borrowal of loan, the
defendant has not repaid any amount either towards principal or interest,
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in spite of several demands made by the plaintiff. Hence, the plaintiff
has filed the suit.
(b) The case of the defendant is that the defendant asked loan of
Rs.2,50,000/- each from the plaintiff for his colleagues one Selvi and
Venkatesan for their urgent medical and family expenses. Accordingly,
the plaintiff has advanced loans to them. At that time, the plaintiff
obtained signature of defendant in an unfilled Rs.50/- stamp paper and
white papers. After two months, the husband of Selvi died and the
aforesaid Venkatesan had availed loans upto Rs.60 lakhs from various
persons. However, the defendant has repaid Rs.9,00,000/- till November,
2017 towards loan and demanded return of signed Rs.50/- stamp paper
and white papers and so, the defendant lodged a police complaint.
But, the plaintiff has not returned them. By making use of them, the
plaintiff has falsely filed this vexatious suit.
5. The trial Court framed the following issues upon the pleadings
of both parties:
''(1) Whether the defendant had borrowed a
loan of Rs.9,00,000/- from the plaintiff on 02.01.2018
and executed the suit promissory note?
(2) Whether the plaintiff is entitled to the suit
claim?
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(3) To what other reliefs, the plaintiff is entitled
to?''
6. The dispute went to trial and during trial, the plaintiff examined
himself as P.W.1 and also examined the 2nd attesting witness as P.W.2
and marked Ex.A.1. The defendant entered into the witness box and
examined himself as D.W.1 and also examined D.W.2, and marked
Ex.B.1.
7. On appreciation of evidence and the submissions made on
behalf of the parties, the trial Court has chosen to decree the suit holding
that the plaintiff has established his case.
8. The judgment and decree of the trial Court is under challenge in
this Appeal Suit.
9. The learned counsel for the appellant/defendant has argued that
the defendant is working in railway, he never obtained any loan from the
plaintiff and never executed any pronote. He approached the plaintiff
asking loan for his colleagues Selvi and Venkatesan, who obtained loan
of Rs.2,50,000/- each from the plaintiff. The plaintiff obtained the
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signature of the defendant in stamp paper and white papers.
The defendant repaid Rs.9,00,000/- towards the loan obtained by the said
Selvi and Venkatesan and demanded the return of signed stamp paper and
white papers. Since the plaintiff has not returned, the defendant lodged a
police complaint before the Assistant Commissioner of Police, Trichy
where the plaintiff was enquired. The plaintiff has given a statement
during police enquiry. The defendant disputed the execution of
Ex.A.1 - Pronote. Whileso, the plaintiff has to prove the execution of
pronote and passing of consideration thereon. It is a settled principle of
law that in cases involving financial transactions, especially promissory
note, the credibility and impartiality of witnesses play a crucial role in
determining the genuineness of the transaction. P.W.2 is the relative of
the plaintiff and the alleged scribe of pronote is the father of the plaintiff.
The plaintiff has not proved his means to lend money. The plaintiff has
also not filed any income tax return to prove the means or to prove the
advancement of the loan to the defendant. No independent witness was
examined to prove the execution of pronote. Mere possession of a
pronote does not establish a valid financial transaction. The plaintiff who
asserts the existence of a fact, the burden is on the plaintiff to prove the
execution of the pronote and the transaction. But the plaintiff failed to
do so and the trial Court has not presumed its correctness without any
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adequate evidence. The defendant disputed his signature in the
Ex.A.1 - Pronote. Hence, the learned counsel requested to remand back
for obtaining expert opinion U/s.73 of the Evidence Act. In support of his
contention, the learned counsel relied on the following citations:
1) (2018) 2 CTC 225 (Ashok Kumar vs, Mrs.Latha), wherein it
is observed and held as follows:
''17.The circumstances brought out in the
cross-examination of P.W.1 clearly show that
the defendant has dislodged the legal
presumption. Therefore, the burden again shifts
on the plaintiff to prove the passing of
consideration. Absolutely there is no materials
and evidence available on record to show that
the plaintiff had capacity to pay the huge
amount of Rs.9,75,000/- at the relevant time.
No bank account or passbook has been filed to
show that in fact he had capacity to mobilize
such huge funds. Ex.B1 is the publication issued
by one Vetrivel against the defendant in respect
of some agreement. This publication was issued
on 30.4.2010. Ex.B2 is also a publication issued
by the defendant as against Ex.B1. Ex.B3 has
been filed to show that one Sampath said to be
close friend of Vetrival also filed another case
against the defendant. Though these documents
were not germane for consideration the
admission of P.W.1 that Vetrivel is also
interested in the case clearly probabilize the
defence theory that the plaintiff is only name
lender and he has failed to prove the passing of
consideration. Therefore, Ex.A1 cannot be
enforceable in the Court of law. The points are
answered accordingly.''
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2) 1961 AIR SC 1316 (Kundan Lal Rallaram vs. Custodian,
Evacuee Property), wherein it is held by the Hon’ble Supreme Court as
follows:
“Section 118 lays down a special rule of
evidence applicable to negotiable instrument.
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”.
3) (2020) 3 CivCC 608 (E.Vishnu Namoothiri vs,
V.Balachandran), wherein it is observed as follows:
''3. ........The
expression ‘may be
compared’ in the main portion of Section 73
and the expression ‘for the purpose of enabling
the court to compare’ incorporated in the
second paragraph would amply show that a
comparison under the section is only a rule of
caution and prudence and cannot be
substituted in the place of proof. The finding
rendered by both the courts below on the sole
basis of comparison under Section 73 of the
Evidence Act regarding the due execution of
disputed promissory note cannot be sustained.
The non-examination of an independent witness
and absence of an expert opinion under Section
45 of the Evidence Act are fatal to the case of
the plaintiff regarding proof of execution of
disputed promissory note.”
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4) 2012 (3) MLJ 658 (Thangarasu vs. Arumugam), wherein it is
observed as follows:
''39. In short, in regard to the manner in
which the Suit Pronote came into existence, as
to who is the correct person who has recited
the versions of Suit Pronote, there is no cogent,
consistent, convincing and acceptable evidence
of witnesses, i.e. P.Ws.1 to 4. If really, the
execution of Ex.A1-Pronote has been made by
the Respondent/Plaintiff as projected by the
Appellant/Plaintiff, then the witness would
have clearly spelt out in a cogent and
convincing manner without any doubt. But, in
the instant case on hand, the witnesses
P.Ws.1 to 4 have not only substantially differed
from their evidence in regard to the Revenue
Stamps being found in the Suit Pronote and
also as to who has recited the details of the
Suit Pronote, viz., whether the
Appellant/Plaintiff or the P.W.4-Scribe. In this
regard, the evidence of P.W.4, Scribe cannot be
brushed aside so easily because of the reason
that he himself has deposed in his evidence
that in the Suit Pronote, recitals have been
made mention by the Appellant/Plaintiff.
40. There is no reason to discredit his
evidence in this regard by this Court.
Therefore, the shroud, cloud or mist
surrounding the execution of Ex.A1-Pronote
have not been sufficiently discharged on the
side of the Appellant/Plaintiff to the
satisfaction of this Court. As stated already, the
initial onus of execution of the Pronote in
favour of the Appellant/Plaintiff will have to be
established by the Appellant/Plaintiff himself
to the effect that the Pronote has been executed
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by the Respondent/Defendant. Therefore, the
normal presumption as per Section 118 of the
Negotiable Instruments Act is that Ex.A1 has
been executed by the Respondent/Defendant. In
the present case, when it has been rebutted by
the Respondent/Defendant, the same has not
been proved to satisfy the judicial conscience
of this Court and the transaction namely,
Ex.A1 Pronote, in the considered opinion of
this Court, suffers from want of onus in regard
to the execution of the document in issue.
Looking at from that perspective, this Court
comes to an irresistible conclusion that both
the Courts have not committed any material
irregularity or patent illegality in overlooking
the presumption under Section 118 of the
Negotiable Instruments Act and the Substantial
Question of Law No.1 is answered against the
Appellant/Plaintiff.
10. Per contra, the learned counsel for the plaintiff submitted that
the defendant has not specifically denied Ex.A.1 - Pronote in his written
statement. According to Ex.B.1, both sides admitted to work out remedy
before the Civil Court. The plaintiff has not executed any statement
during police enquiry that he has obtained the signature of the defendant
in stamp paper and white papers. The police complaint was lodged only
on the alleged attack against the defendant. The defendant has not issued
any legal notice to return back the alleged unfilled signed stamp paper.
The plaintiff has established the execution of Ex.A.1 - Pronote by
examining himself and P.W.2 - attestor. The wife of the plaintiff was
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examined as D.W.2, who categorically proved the financial capacity of
the plaintiff. The defendant has not raised any plea regarding interested
witnesses and regarding filing of income tax return by the plaintiff during
trial Court proceedings, it is only an afterthought in this appeal. Even as
per appeal grounds, the defendant admitted the execution of pronote,
specifically grounds Nos.6 and 11. The defendant admitted in his
evidence about the source of income of the plaintiff. The defendant
admitted his signature but stated that he put his signature in stamp paper
and white paper. Though the defendant now disputed his signature he
had not taken steps to prove the same for obtaining handwriting expert
opinion. No need for remand back. Since the signature on the pronote is
proved, the presumption under Section 118 of the N.I Act would come
into operate. The plaintiff has proved the presumption whereas the
defendant failed to disprove that presumption by letting in rebuttal
evidence. Therefore, the learned counsel submitted that there is no
necessity to interfere with the finding of the trial Court and he further
prayed to dismiss the Appeal Suit.
11. The point for consideration in this Appeal Suit is;
''Whether Ex.A.1 is not executed by defendant
and it is a forged one?''
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12. The Point:-
Heard both sides and material records were perused. The defendant
admitted that he approached the plaintiff for loan for his colleagues Selvi
and Venkatesh. At that time the defendant put his signature in an unfilled
stamp paper and white paper. It is the case of the defendant that since
Selvi and Venkatesh failed to repay, he settled the loan by paying Rs.9
lakhs till November 2017 and demanded the return of unfilled signed
stamp paper and white paper. Though the defendant claimed that he filed
the police complaint, on perusal of Ex.B.1, the police complaint was
lodged by the defendant alleging the plaintiff assaulted him. On further
perusal of Ex.B.1, it is clear that the plaintiff has not given any statement
as if he obtained unfilled signed stamp paper from the defendant.
Moreover, it is settled proposition that any statement before police
enquiry in respect of civil nature did not have any credibility.
13. On perusal of the evidence of P.W.1, P.W.2 and D.W.2, it has
clearly substantiated the execution of pronote and financial capacity of
the plaintiff. On a totality of evidence adduced on both sides, it is clear
that the defendant admitted his signature in an unfilled stamp paper and
white paper and it is his case that by making use of them plaintiff created
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Ex.A.1 - Pronote. However, the defendant has not substantiated his
stand. Except himself as DW.1, no other independent witness was
examined to substantiate his case. DW2’s evidence strengthens the case
of the plaintiff that the defendant received the money from the plaintiff
including her money of Rs.4 lakhs.
14. In a suit filed for recovery of money based on the promissory
note, once the plaintiff established the execution of the promissory note,
the presumption under Section 118 of the N.I. Act will automatically
arise. Once the presumption arises, the onus is shifted on the defendant
to rebut the presumption by producing acceptable defence to prove that
the instrument is not supported by consideration. On the defendant's
side, suggestions were put to the plaintiff that the loan was advanced by
the plaintiff from the funds of his father and wife. D.W.2 clearly deposed
that she has given four lakhs to the plaintiff to lend money to the
defendant. Once the defendant took risk and has gone to the extent of
examining the plaintiff's wife as his side witness and she was not treated
as hostile by the defendant, then her entire evidence is to be believed.
The evidence of DW2 strengthens the plaintiff's case. So, as per the case
of the defendant, it is established that the plaintiff has sufficient means.
When the signature of the defendant on the pro-note is proved with oral
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and documentary evidence, the presumption under Section 118 of the
Negotiable Instruments Act clearly arises, until the contrary is proved.
15. Section 118 of the Negotiable Instruments Act reads as
follows:
“Section 118 : Presumptions as to
negotiable instruments.-
Until the contrary is proved, the
following presumptions shall be made:-
(a) of consideration – 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.
(b) as to date – that every negotiable
instrument bearing a date was made or
drawn on such date;
(c) as to time of acceptance – that
every accepted bill of exchange was
accepted within a reasonable time after its
date and before its maturity;
(d) as to time of transfer – that every
transfer of a negotiable instrument was
made before its maturity;
(e) as to order of indorsements – that
the indorsements appearing upon a
negotiable instrument were made in the
order in which they appear thereon;
(f) as to stamps – that a lost
promissory note, bill of exchange or cheque
was duly stamped;
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(g) that holder is a holder in due
course – that the holder of a negotiable
instrument is a holder in due course;
In this case, the defendant contended that he signed an unfilled
stamp paper. When the signature in the stamped paper is admitted and
when the signatory states that at the time of putting his signature, it was
blank, then the law permits the plaintiff to fill the pronote as if the
plaintiff was authorised by the signatory of the pronote.
16. This Court had an occasion to deal with a similar issue, in the
decision reported in 2002 (4) LW 360 (supra), wherein it has been held
that when the signature in the pro-note is admitted and the signatory
states that he executed the pro-note in blank, it is inchoate pro-note and
held that the pronote is proved in the absence of any rebuttal evidence by
the defendant, based on the decision of Hon’ble Supreme Court, which is
held in paragraph No.7 reads as follows:
"7. The Supreme Court in
Mohideenkutty Hajee Vs. Pappu Manjooran
(1996 (8) SCC 586), following a number of
earlier pronouncements, held that when a suit
is based on a promissory note and the
promissory note is proved to have been
executed, Section 118(a) raises a presumption,
until the contrary is proved, that the
promissory note was made for consideration.
In the case of Kundan Lal Vs. Custodian
Evacuee Property (AIR 1961 SC 1316), the
Supreme Court has held that the presumption
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under Section - 118 Negotiable Instruments Act
is one of law and a Court shall presume, inter
alia, that the Negotiable Instrument was made
or endorsed for consideration. Therefore, the
said Judgment of the learned Single Judge is
not in conformity with the Judgment of the
Supreme Court. Under Section-118 of the
Negotiable Instruments Act, there is a valid
presumption with respect to consideration also.
Inasmuch as the learned Single Judge has held
that there is no presumption for consideration,
it is not a good law.”
17. The Hon’ble Supreme Court has again reiterated the decision
in its judgment in Civil Appeal No.5854 of 2022, relied on by the
respondent/plaintiff and held in paragraph Nos.6.1 and 7 that
“6.1. ......At this stage it is required
to be noted that as per the provision of
Section 118 of the NI Act there is a
presumption of consideration in the
negotiable instrument [Section 118(a)]. It is
true that such presumption may be rebutted.
However, no rebuttal evidence is led by the
defendant. Under the circumstances also
the High Court has erred in allowing the
second appeal and quashing and setting
aside the decree passed by the learned Trial
Court confirmed by the learned First
Appellate Court..
7. ....…The judgment and decree
passed by the learned Trial Court decreeing
the suit confirmed by the learned First
Appellate Court is hereby restored. The
present appeal is accordingly allowed. No
costs.”
Hence, when the plaintiff has filed the suit based on the pro-note
and the pro-note also proved to have been executed, Section 118(a) raises
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presumption, until the contrary is proved that the pro-note was made for
consideration.
18. In this case, the defendant has not let in any rebuttal evidence.
Moreover, during the trial proceeding even the defendant had not taken
any steps to get expert opinion regarding his signature. Only at the appeal
stage, he raised contention that his signature is forged and so the appeal
may be remanded back, which cannot be considered since it is an
afterthought.
19. Moreover, the defendant admitted a loan of Rs.5,00,000/- for
his friends Selvi and Venkatesh and it is his case that he repaid
Rs.9,00,000/-. When the defendant admitted the borrowal of loan and he
failed to prove the payment of any amount and discharge of the loan,
then he is bound to pay the suit amount. Further, there is no pleading
when the amount was paid, there is no pleading why he repaid
Rs.9,00,000/- for the principal of Rs.5,00,000/- why he failed to examine
his friends Selvi and Venkatesh to prove his case. The non examination
of Selvi and Venkatesh would be fatal to the defence case. Much less,
the defendant has not taken steps even to summon them as a witness.
These aspects strengthen the case of the plaintiff.
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20. Coming to the non-filing of the Income Tax Returns by the
plaintiff, the defendant has not taken such a plea in his written statement
as well as during his examination as D.W.1. When the defendant has not
taken such a specific plea in the written statement, on the unpleaded
averments, the Court is not expected to give a finding. It is a settled
proposition of law that even if a money transaction is not reflected in the
Income Tax Returns it is for the concerned authority to take action.
It is only a violation. The defendant cannot take advantage of such
violation and cannot claim that the non reflection of loan cannot be
recovered by instituting suit. The citations relied on by the
appellant/defendant are not applicable to the facts and circumstances of
the case.
21. In the above material facts and circumstances, this Court holds
that the plaintiff has proved the execution of pronote and receipt of loan
amount as mentioned in Ex.A.1. Hence, the Ex.A.1 - Pronote is not a
forged one and the point is answered accordingly.
22. The trial Court has correctly appreciated the evidence adduced
on both sides and after considering the arguments and citations relied on
by both, the trial Court correctly held that the plaintiff has proved his
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case. For all these reasons, the judgment and decree of the trial Court is
sustainable in law and the same need not be interfered by way of this
Appeal Suit. Thus the Appeal Suit fails.
23. In the result, this Appeal Suit is dismissed with cost.
The judgment and decree, dated 01.11.2023 passed in O.S.No.12 of
2019 on the file of the learned Principal District Judge, Tiruchirappali, is
confirmed. Consequently, connected Miscellaneous Petition is closed.
10.01.2025
NCC : Yes / No
Internet : Yes / No
Index : Yes / No
VSD
To
1.The Principal District Judge,
Tiruchirappalli.
2.The Record Keeper,
Vernacular Records,
Madurai Bench of Madras High Court,
Madurai.
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P.VADAMALAI, J.
VSD
Pre-Delivery Judgment made in
and
10.01.2025
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