2018 (5) TMI 839 - HC - Indian Laws

Suit for recovery of borrowed amount alongwith interest - execution of promissory notes - burden of proof - Whether the suit promissory note is true, valid and supported by consideration? - benefits of Act 45 of 1987 and Act 1 of 1990. Held that - The instant case is a converse case, where, though the plaintiff did not enter the witness box, but the facts were spoken by PW.1 on behalf of the plaintiff and the case of the plaintiff to the extent of execution of the document was admitted by the defendant, though he denied the consideration and attestation. The suit promissory note is not a compulsorily attestable document and there is no dispute with regard to execution of Ex.A1 promissory note - as rightly pointed out by the learned counsel for the respondent/plaintiff, Section 118(a) of the Negotiable Instruments Act comes into operation. The burden of proof is of importance only where by reason of not discharging the burden which was put upon it, a party must eventually fail, where, however, parties have joined issue and have led evidence and the conflicting evidence can be weighed to determine which way the issue can be decided, the abstract question of burden of proof becomes academic. Where, in a suit on a promissory note, the case of the defendant as to the circumstances under which the promissory note was executed is not accepted, it is open to the defendant to prove that the case set up by the plaintiff on the basis of the recitals in the promissory note, or the case set up in suit notice or in the plaint is not true and rebut the presumption under Section 118 by showing a preponderance of probabilities in his favour and against the plaintiff. He need not lead evidence on all conceivable modes of consideration for establishing that the promissory note is not supported by any consideration whatsoever. In view of admission of execution of the Ex.A1 promissory note, the burden is on the defendant to prove his case. Besides himself, the defendant examined DWs.2 to 4 to show that the said Mohana Rao was in the habit of lending money, but did not speak of non-passing of consideration - That borrowing of higher amount was also not proved by the defendant in the instant case by producing any documentary evidence. In view of the same, the judgment and decree passed by the trial Court cannot be set aside and accordingly it is affirmed. Appeal suit is dismissed.

Summary

Issues Involved:
1. Whether the suit promissory note is true, valid, and supported by consideration.
2. Whether the suit promissory note came into existence under the circumstances mentioned in the written statement.
3. Whether the defendant is a small farmer and entitled to the benefits of Act 45 of 1987 and Act 1 of 1990.
4. Relief to which the parties are entitled.

Issue-wise Detailed Analysis:

1. Validity and Consideration of the Promissory Note:
The defendant admitted the execution of the promissory note (Ex.A1) but denied its validity and consideration. The trial court applied Section 118 of the Negotiable Instruments Act, which presumes that the promissory note is supported by consideration once its execution is admitted. The court found that the plaintiff proved the execution of Ex.A1 by examining one of the attestors. The oral evidence of DWs.2 to 4, which suggested that the promissory notes were executed for amounts higher than lent, was not considered reliable due to their close acquaintance with the defendant. The court concluded that the suit promissory note was valid and supported by consideration.

2. Circumstances of the Promissory Note's Existence:
The defendant claimed that the promissory note was executed under coercion and was not supported by consideration. The trial court, however, found no credible evidence to support this claim. The defendant's own admission of borrowing amounts from B.V.V.R. Mohana Rao and executing the promissory note contradicted his defense. The court held that the promissory note was executed voluntarily and was valid.

3. Status as a Small Farmer and Entitlement to Benefits:
The defendant claimed benefits under Act 45 of 1987 and Act 1 of 1990, asserting he was a small farmer. However, the trial court rejected this plea, noting the defendant's admission of owning a medical shop and two kirana shops. There was no evidence of the defendant owning agricultural land, disqualifying him from the claimed benefits.

4. Relief:
The trial court decreed the suit for a sum of ?88,400 with future interest at 12% per annum. The defendant's appeal challenged this judgment, arguing that the plaintiff's non-appearance in the witness box should have precluded the decree. The appellate court, however, upheld the trial court's judgment, referencing the principle that once the execution of a promissory note is admitted, the presumption of consideration under Section 118(a) of the Negotiable Instruments Act applies. The appellate court found that the defendant failed to rebut this presumption effectively.

Conclusion:
The appellate court affirmed the trial court's judgment and decree, dismissing the appeal with costs. The court emphasized that the defendant's admission of executing the promissory note and the lack of credible evidence to counter the presumption of consideration justified the decree in favor of the plaintiff. The miscellaneous petitions pending in the appeal were also closed.