2021 (8) TMI 376 - HC - Indian Laws

Dishonor of Cheque - rebuttal of presumption or not - non-consideration of version of P.W.1 - burden of proof will shift to the defendant or not - reliance placed upon the nugatory contentions of the defendant - Section 118 of the Negotiable Instruments Act - HELD THAT - The suit in question has been laid on the strength of the promissory note. In the written statement itself, the defendant had admitted his signature in the promissory note. His only defence is that when the defendant handed over the promissory note, it was blank. In other words, in a blank promissory note, his signature was taken. The defendant would explain that the plaintiff was conducting an unregistered chit business and that at the time of disbursing the prize money, the plaintiff was the habit of taking signature in the blank pro-note from the subscribers of the chit group. The defendant had also handed over the suit pro-note only under such circumstances. Since the relationship between the parties came under strain, the plaintiff had chosen to misuse the suit promissory note and filed the suit on that basis. In the case on hand also, the signature in the suit pro-note has been admitted - there has been a gap of almost 16 years between the date of execution of the suit pro-note and the examination of the witnesses in the Court. In view of the efflux of time, the memories are likely to fail. The contradictions noted in the deposition of the witnesses by the First Appellate Court are not really material. The only way the defendant could have rebutted the presumption is to show that the plaintiff was running the chit business and that, when he had bid for the prize money, the suit pronote was taken. The plaintiff had categorically stated that the defendant was none other than his nephew. The plaintiff had originally stated that the defendant was the son of his elder brother. Later, the plaintiff clarified that the defendant was his cousin's son. But the fact remains that the defendant and the plaintiff are close relatives. Hence, there is no merit in the contention that the witnesses examined on the side of the plaintiff are relatives. In view of the relationship between the parties namely the plaintiff and the defendant, the fact that the attestor is also a relative pales into insignificance. The first Appellate court has unnecessarily given importance to minor contradictions. The impugned Judgment and decree passed by the First Appellate Court is set aside - Appeal allowed.

Summary

Issues:
1. Applicability of Section 118 of the Negotiable Instruments Act.
2. Burden of proof on the defendant.
3. Rebuttal of presumption regarding the execution of the promissory note.
4. Consideration of evidence and contradictions in witness testimonies.

Analysis:
1. The plaintiff claimed that the defendant borrowed a sum and executed a promissory note. The defendant denied borrowing any amount and alleged the pro-note was a blank security document. The trial court decreed in favor of the plaintiff, drawing a presumption under Section 118 of the Negotiable Instruments Act. The appellate court, however, reversed the decision based on discrepancies in witness testimonies. The appellant argued that the presumption was not rebutted, citing legal precedents supporting the presumption under Section 118.

2. The defendant's defense centered on the pro-note being blank when signed, alleging misuse by the plaintiff due to strained relations. The appellant contended that the burden of proof shifted to the defendant to disprove consideration. The appellate court highlighted contradictions in witness accounts, leading to doubts about the execution and attestation of the pro-note. The plaintiff's relationship with witnesses was also scrutinized, but the court found these aspects insignificant given the familial ties.

3. The appellate court emphasized discrepancies in witness testimonies and lack of documentary evidence from the defendant. The appellant argued that the efflux of time between the pro-note's execution and witness examination could lead to memory lapses, downplaying the contradictions as immaterial. The court held that the defendant failed to rebut the presumption under Section 118, as no substantial evidence was presented to challenge the plaintiff's claims.

4. The judgment reinstated the trial court's decision, dismissing the appellate court's findings. The court highlighted the lack of evidence supporting the defendant's defense and the failure to establish a credible rebuttal of the presumption. The judgment focused on the legal principles of the Negotiable Instruments Act and the burden of proof, ultimately ruling in favor of the plaintiff based on the presumption of consideration in negotiable instruments.

This comprehensive analysis reflects the legal intricacies and evidentiary considerations involved in the judgment, emphasizing the application of statutory provisions and case law to determine the outcome of the dispute.