K. Ram Mohan Reddy vs N. Sudhakar Reddy
2023 Latest Caselaw 967 Tel

             THE HON'BLE SRI JUSTICE SANJAY KUMAR

                   SECOND APPEAL NO.289 OF 2016

                               JUDGMENT

Aggrieved by the judgment of the learned X Additional District &

Sessions Judge (Fast Track Court), Ranga Reddy District at L.B.Nagar, in A.S.No.75 of 2013, confirming the judgment of the learned I Additional

Senior Civil Judge, Ranga Reddy District at L.B.Nagar, in O.S.No.301 of

2010, the defendant in the said suit is in second appeal.

The suit, O.S.No.301 of 2010, was filed for recovery of a sum of Rs.2,78,800/- with interest and costs. The case of the respondent-plaintiff

was that he and the appellant-defendant were cousins and that the appellant-defendant obtained a hand loan of Rs.2,00,000/- from him for family necessities on 10.06.2008. When asked to repay the amount, the

appellant-defendant issued two post-dated cheques of Rs.1,00,000/- each bearing the dates 30.07.2009 and 30.08.2009 (Exs.A.1and A.2). The cheques were however dishonoured upon presentation for

insufficiency of funds. After issuing a legal notice on 23.12.2009

(Ex.A.7), the respondent-plaintiff filed the suit.

The appellant-defendant contested the suit claim and asserted that the cheques were created and forged for the purpose of filing the case.

He denied having taken any hand loan from the respondent-plaintiff and alleged that the respondent-plaintiff had somehow picked up Exs.A.1 and

A.2 cheques which were not meant for payment of any amount to him.

The respondent-plaintiff examined himself as P.W.1 and reiterated his plaint averments. He also examined as P.W.2, the nephew of the

respondent-plaintiff and the appellant-defendant. P.W.2 was stated to

have been present at the time of payment of the amount by the respondent-plaintiff to the appellant-defendant. The respondent-plaintiff

also marked in evidence Exs.A.1 to A.7. The appellant-defendant

examined himself as D.W.1 but did not mark any documents in evidence.

He reiterated the contents of his written statement. He stated that the respondent-plaintiff and he had done real estate business for some time

but some differences arose between them. He further asserted that

taking advantage of their relationship, the respondent-plaintiff had picked up the two cheques which were not meant for any payment of amount

due to him.

The trial Court found that no evidence had been adduced in proof of the parties having done any real estate business together. The trial

Court was also inclined to hold against the appellant-defendant as he

had not chosen to respond to the legal notice dated 23.12.2009 issued by the plaintiff (Ex.A.7) and had not taken any steps about the alleged

misplacing of the cheques in the year 2009, even if his version was to be

believed. As regards wrong mentioning of the initial of the appellant-

defendant on Ex.A.7 notice, the trial Court found that though the initial

was, in fact, wrongly mentioned, the house number and the remaining address were correct and the said notice was not returned with the

endorsement that there was no such addressee but with the endorsement

that it was unclaimed. As the endorsement 'unclaimed' indicated

knowledge of the addressee about issuance of the notice, the trial Court

held against the appellant-defendant on this point also.

As regards failure of the respondent-plaintiff to file a case under Section 138 of the Negotiable Instruments Act, 1881 (for brevity, 'the Act

of 1881'), after the dishonour of the cheques, the trial Court accepted his

explanation that he did not do so owing to the close relationship between

the parties. On these grounds, the trial Court decreed the suit directing

payment of a sum of Rs.2,78,800/- with future interest at 6% per annum

along with costs.

In appeal, the first appellate Court took note of the fact that the appellant-defendant did not deny his signatures on Exs.A.1 and A.2

cheques. He only alleged that the respondent-plaintiff had somehow

come into possession of these cheques. Applying the presumption

arising under Section 118 of the Act of 1881, the first appellate Court

concluded that the said cheques must have been drawn up for valid consideration and in relation to an enforceable debt thereby casting the burden upon the appellant-defendant to rebut the said presumption. As

he failed to dislodge the same and as he had not even taken any steps in

relation to the two signed cheques (Exs.A.1 and A.2) going missing, the

first appellate Court affirmed the findings of the trial Court and

accordingly confirmed the decree under appeal.

Heard Sri S.Vijay Prashanth, learned counsel for the appellant-

defendant, and Sri Sharad Sanghi, learned counsel for the respondent- plaintiff.

Sri Vijay Prashanth, learned counsel, would contend that the

transaction put forth by the respondent-plaintiff as the foundation for

Ex.A.1 and Ex.A.2 cheques is shrouded in doubt. He would point out that

according to the respondent-plaintiff, speaking as P.W.1, there were no

mediators between him and the appellant-defendant and he did not say that anyone else was present at the time the money was handed over,

but P.W.2, on the other hand, stated that the amount was paid in his

presence. Learned counsel would further state that as the transaction

was not proved by any independent documentary evidence such as IT

returns etc., the Courts below ought not to have applied the presumption under Section 118 of the Act of 1881.

Sri Sharad Sanghi, learned counsel, on the other hand, would

assert that the appellant-defendant was not consistent in his stand and

would point out that in his written statement, the appellant-defendant

stated at one point that the respondent-plaintiff had picked up two of his

cheques which were not meant for payment of any amount to the

respondent-plaintiff and at another, he stated that the cheques were

created and forged for the purpose of this case.

Given the relationship between the parties and the fact that P.W.2

is related to both of them, the alleged transaction would have to be

viewed accordingly. The factum of the respondent-plaintiff not filing a cheque bounce case would also have to be viewed in the light of their

close relationship. The irrefutable fact that stares from the record is that Exs.A.1 and A.2 cheques were admittedly signed by the appellant-

defendant. In the event such blank signed cheques went missing, the

appellant-defendant would definitely have taken steps to either inform the

bank or at least lodge a police complaint. He did not choose to do either.

This fact coupled with the fact that there is no explanation as to how the

respondent-plaintiff could have come into possession of the said signed

cheques clearly supports the genuineness of the transaction asserted by

the respondent-plaintiff. The presence of P.W.2 at the time of the money

being handed over, as deposed to by him, lends support to the

genuineness of the transaction. No evidence was let in to discredit the

testimony of P.W.2, who is related to both parties.

Section 118 of the Act of 1881 deals with presumptions in relation

to negotiable instruments. It states as under:

(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 indorsement.--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;

(g) that holder is a holder in due course.--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.' These statutory presumptions are however rebuttable and once

the contrary is proved, the presumption in question would stand discharged. Before these statutory presumptions can be drawn,

execution of the instrument must be either admitted or proved. No

presumption would attach to the execution of the negotiable instrument

and in case of denial of such execution by the opposite party, the party

basing its claim on such instrument must first prove its execution.

These are the settled principles of law which Sri S.Vijay

Prashanth, learned counsel, would rely upon in support of his contention

that the Courts below erred in applying the statutory presumption to the

subject cheques. He would also place reliance on the judgment of the

Supreme Court in KUNDAN LAL RALLARAM V/s. CUSTODIAN,

[1] EVACUEE PROPERTY, BOMBAY , wherein it was observed that as

soon as execution of a promissory note is proved, the presumption laid

down in Section 118 of the Act of 1881 would apply and the burden of

proof would be shifted to the other side. The Supreme Court observed

that though the burden of proof, as a question of law, rests upon the

plaintiff, in the event execution of the instrument is proved, Section 118 of

the Act of 1881 imposes a duty on the Court to raise a presumption in his

favour that the said instrument was made for consideration and the

burden of proving to the contrary would shift to the defendant. Learned

counsel would also press into service the observations made by the High

Court of Goa in VISVONATA RAGHUNATH AUDI V/s. MARIANO

[2] COLACO to the effect that before a presumption can be drawn under

Section 118 of the Act of 1881, execution of the instrument must be

admitted or proved as no such presumption as to execution would arise

under the statutory provision. In the case of denial of execution by the

opposite party, the Goa High Court held that the party basing its claim on

such instrument must fully prove its execution.

There is no dispute as to the aforestated settled principles. However, this Court is of the opinion that neither these principles nor the

judgments relied upon are of any avail to the appellant-defendant. As

already pointed out supra, the appellant-defendant did not deny his signatures on the subject cheques. Though he baldly alleged forgery

also at one stage, it was his case that the respondent-plaintiff came into

possession of these cheques somehow. In effect, there was no real

dispute as to the execution of the cheques by the appellant-defendant.

When the said fact is considered in the context of the attending crucial

circumstance of the case - that he took no steps whatsoever after the alleged misplacement of these blank signed cheques, the statutory

presumption under Section 118 of the Act of 1881 would invariably enure

to the benefit of the respondent-plaintiff. The contention of Sri S.Vijay

Prashanth, learned counsel, in this regard therefore warrants rejection.

In that view of the matter, once the respondent-plaintiff produced

cheques which bore the admitted signatures of the appellant-defendant,

the presumption under Section 118 of the Act of 1881 stood attracted and

the onus shifted to the appellant-defendant to disprove the same.

Admittedly, he failed to do so.

Given the aforestated fact situation, this Court finds no error in the

judgments of the Courts below warranting interference by this Court in

second appellate jurisdiction. The appellant also failed to raise a

question of law, much less a substantial question of law, on the facts

obtaining in the present case.

The second appeal is devoid of merit and is accordingly

dismissed. Pending miscellaneous petitions shall also stand dismissed.

No order as to costs.

______________________ SANJAY KUMAR, J

______AUGUST, 2016 Svv/PGS [1] AIR 1961 SC 1316 [2] 1975 Law Suit (Bom) 354