2023 (12) TMI 1358 - HC - Indian Laws

Dishonour of Cheque - Challenge to the decree for money granted in the suit which was predicated on a dishonoured cheque - defendant resisted the suit contending that he never borrowed any money from the plaintiff - presumption u/s 118 of NI Act - HELD THAT - No doubt, a strong presumption arises by the force of Section 118, ibid. in a case where the suit is filed based on a negotiable instrument. But, such a presumption is rebuttable. While considering the question as to how such a presumption can be rebutted, the Supreme Court in, BHARAT BARREL DRUM MANUFACTURING COMPANY VERSUS AMIN CHAND PAYRELAL 1999 (2) TMI 627 - SUPREME COURT has observed ' Once the defendant showed either by direct evidence or circumstantial evidence or by use of the other presumptions of law or fact that the promissory note was not supported by consideration in the manner stated therein, the evidentiary burden would shift to the plaintiff and the legal burden reviving his legal burden to prove that the promissory note was supported by consideration and at that stage, the presumption of law covered by Section 118 of the Act would disappear.' The plaintiff has admitted that he has not produced any document to show the lending; he has not produced any document to show that he was in possession of a sum of Rs. 23 lakhs on 04.11.2012, the date of alleged lending; he has not produced any document to show that he was carrying on some business fetching him income on the relevant date; he has admitted that he had no bank account; he has also admitted that he is not an Income Tax assessee. His claim that his mother lent him a sum of Rs. 15 lakhs, has been proved to be false by his own document, viz., Ex.A.12, sale deed, which shows that his mother had sold the property six years ago for a paltry sum of Rs. 4 lakhs. A reading of the cross-examination of P.W.1 would show that not even a single utterance of him in his proof affidavit and the plaint is true. Undoubtedly, the conduct of the defendant in not lodging a police complaint and not sending a reply to the legal notice militates against him. But, the presumption that is drawn from the silence on the part of the defendant cannot undo the damage done by the plaintiff in his own cross-examination as P.W.1. The evidence in cross-examination of P.W.1 leads us to firmly believe that the presumption under Section 118, ibid., stood rebutted by the force of such evidence of P.W.1 himself. It is not required to agree with the Trial Court in granting a decree for payment of money - the judgment and decree of the Trial Court are set aside - appeal allowed.

Summary

Issues:
Challenge to the decree for money granted in a suit based on a dishonored cheque.

Analysis:
The plaintiff claimed that the defendant borrowed Rs. 23 lakhs and issued a post-dated cheque, which was dishonored. The defendant denied borrowing any money and alleged that the plaintiff, with the help of a local politician, took documents, including the cheque, by force. The Trial Court framed issues related to the loan, consideration for the cheque, and entitlement to recovery.

The Trial Court relied on the presumption under Section 118 of the Negotiable Instruments Act and granted a decree in favor of the plaintiff. The defendant argued that the plaintiff's evidence did not prove the borrowal, citing the Supreme Court's judgment in Bharat Barrel & Drum Manufacturing Company case. The defendant's cross-examination raised doubts about the plaintiff's financial capacity to lend the amount claimed.

The Court examined the evidence and concluded that the plaintiff's own testimony contradicted his claims of having the funds to lend. Despite the defendant's conduct and failure to reply to the legal notice, the plaintiff's lack of concrete evidence regarding the loan transaction weakened the presumption under Section 118. The Court found the presumption rebutted by the plaintiff's evidence.

Based on the analysis, the Court disagreed with the Trial Court's decree and set it aside, allowing the appeal with costs and dismissing the suit. The judgment highlighted the importance of concrete evidence to support claims in cases involving negotiable instruments and emphasized the need to rebut legal presumptions with factual evidence.