2021 (12) TMI 325 - HC - Indian Laws

Dishonor of Cheque - validity of signature of defendant/appellant - presumption under Section 118 of the Negotiable Instruments Act can be raised against the defendant or not - rebuttal of presumption - establishment of due execution or not - HELD THAT - The defendant had rebutted the presumption raised against her and onus once again fell on the plaintiff. The plaintiff should establish that he had lent a sum of ₹ 10,00,000/- to the defendant as per Ex.A.1. Since it has not been established by the plaintiff, the suit has to necessarily fail. The Court below failed to consider the circumstances projected by the defendant. Since the signature appearing in Ex.A1 is that of the appellant, presumption was rightly raised against her. But then, on a balance of probabilities, the defendant had rebutted the presumption. The plaintiff never had the financial capacity to lend the sum of ₹ 10.00 lakhs to the defendant. The defendant was having psychiatric issues and she had under influence of the plaintiff and making use of the same, the plaintiff had obtained certain signed blank documents from her. Ex.A1 was one such document. Due execution of Ex.A1 has not at all been established - appeal allowed.

Summary

Issues:
1. Whether the signature in Ex.A.1 is that of the defendant/appellant?
2. Can the presumption under Section 118 of the Negotiable Instruments Act be raised against the defendant?
3. If so, whether the defendant rebutted the presumption?
4. Whether the due execution of Ex.A.1 had been established?

Issue 1: Signature Verification
The plaintiff alleged that the defendant borrowed a sum and executed a promissory note (Ex.A.1). The defendant contested, claiming influence and coercion. The plaintiff's financial capacity was challenged, with evidence showing prior loans and lack of security for the substantial amount lent. Discrepancies in witness testimonies were noted, raising doubts on the authenticity of the signatures.

Issue 2: Presumption under Section 118
The trial court presumed the signature in Ex.A.1 to be the defendant's, invoking Section 118 of the Negotiable Instruments Act. However, the defendant successfully rebutted this presumption by highlighting inconsistencies in the plaintiff's claims, lack of financial capacity, and coercion tactics used by the plaintiff.

Issue 3: Rebuttal of Presumption
The defendant's defense of being under the plaintiff's influence, coupled with evidence of psychiatric issues, police involvement, and misuse of signed documents, effectively challenged the presumption. The plaintiff failed to prove the loan transaction adequately, leading to the conclusion that the defendant successfully rebutted the presumption, shifting the burden back to the plaintiff.

Issue 4: Due Execution of Ex.A.1
After thorough evaluation, the court found that the due execution of Ex.A.1 was not proven. The plaintiff's lack of financial capacity, coercion tactics, and inconsistencies in witness testimonies undermined the validity of the promissory note. The defendant's defense, supported by evidence of coercion and misuse of signed documents, was deemed credible. Consequently, the judgment and decree in favor of the plaintiff were set aside, and the appeal was allowed without costs.

This detailed analysis of the judgment highlights the key legal issues, evidence presented, witness testimonies, and the court's reasoning leading to the decision to set aside the initial judgment.