2024 (11) TMI 47 - HC - Indian Laws

Suit for recovery of money filed by the plaintiff - Rebuttal of presumption under Section 118 of the Negotiable Instruments Act - failure to prove the consideration by producing the account books, bank statement, income tax returns, etc. - failure to consider and appreciate the oral and documentary evidence on record in their proper perspective and based their conclusions on mere surmises and conjectures - burden to prove - HELD THAT - In this case, both the Courts below have analyzed the evidence of P.W.1 to P.W.3 and they have recorded their finding that the promissory note itself is sufficient to prove the passing of consideration since there is a clear acknowledgement of the receipt of the same. Further, the defendant has not denied the thumb impression or signatures. After the plaintiff has proved the consideration and the execution of the promissory note, then, the burden shifts on the defendant to probabilize his case that the promissory note was not executed in favour of the plaintiff. The Apex Court in Kundan Lal Rallaaram vs. Custodian Evacuee Property, Bombay 1961 (3) TMI 100 - SUPREME COURT declared that the Section 118 of the Negotiable Instruments Act lays down a special rule of evidence. It enables the Court to presume that the negotiable instruments or the endorsement was made or endorsed for consideration and the burden of proof of failure of consideration is thrown on the maker of the note or the endorser as the case may be. A Combined reading of the defendant side witnesses only shows that they have come up with the case that D.W.4-Raj acted like an agent for the plaintiff and through him, D.W.1 to D.W.3 have borrowed loans and promissory note executed by them and later it was misused by the plaintiff - In the absence of any proof establishing the collusion between the plaintiff and the said Raj, and in the absence of any repayment of loan as stated by the defendant in his evidence and pleadings, the evidence adduced on the side of the plaintiff's side, shall be placed on higher pedestal since their evidence is supported by the promissory note-Ex.A1 and consequent legal notice issued which was not replied by the defendant. The defendant had come forward to lodge a complaint only the year 2011 that too, after decree being passed against him. Both the Courts have not erred in drawing a presumption under Section 118(a) of the Negotiable Instruments Act against the defendant. Both the Courts have rightly held that the execution of promissory note itself is sufficient to prove the passing of consideration, hence rightly decreed the suit. The Judgment and Decree dated 31.10.2012 passed in A.S. No. 62 of 2011 on the file of the III Additional District and Sessions Court, Cuddalore at Virudhachalam confirming the Judgment and Decree dated 29.08.2011 passed in O.S. No. 110 of 2010 on the file of the Sub Court, Neyveli are hereby confirmed - the Second Appeal is dismissed.

Summary

Issues Involved:

1. Whether the plaintiff is entitled to recover the suit amount.
2. Whether the promissory note is genuine and supported by consideration.
3. Whether the judgments and decrees of the lower courts are sustainable.
4. Whether the courts below erred in applying Section 118 of the Negotiable Instruments Act.

Detailed Analysis:

1. Entitlement to Recover the Suit Amount:

The primary issue was whether the plaintiff is entitled to recover the amount claimed in the suit. The trial court found in favor of the plaintiff, concluding that the defendant had indeed executed a promissory note for Rs.1,50,000/- and failed to repay the loan amount. The appellate court upheld this decision, agreeing with the trial court's findings. The evidence presented by the plaintiff, including the promissory note and testimony from witnesses, was deemed sufficient to establish the claim. The defendant's contention that he only received Rs.42,000/- from a third party and not from the plaintiff was not substantiated with credible evidence.

2. Authenticity and Consideration of the Promissory Note:

The courts examined whether the promissory note was genuine and supported by consideration. The defendant argued that the promissory note was executed in favor of another individual and not the plaintiff. However, the courts found that the defendant's signature on the promissory note was not disputed, and the plaintiff's evidence, including witness testimonies, supported the claim that the promissory note was executed for the loan amount. The courts relied on Section 118 of the Negotiable Instruments Act, which presumes consideration for negotiable instruments unless proven otherwise. The defendant failed to provide sufficient evidence to rebut this presumption.

3. Sustainability of Lower Courts' Judgments:

The defendant challenged the judgments of the lower courts, arguing that they were based on presumptions and lacked proper consideration of evidence. However, the High Court found that both the trial and appellate courts had thoroughly analyzed the evidence and correctly applied legal principles. The High Court emphasized that it would not interfere with concurrent findings of fact unless there was a substantial question of law or a miscarriage of justice, neither of which was present in this case.

4. Application of Section 118 of the Negotiable Instruments Act:

A significant legal issue was whether the courts erred in applying the presumption under Section 118 of the Negotiable Instruments Act. The defendant argued that the presumption should not have been applied as he provided oral evidence to rebut it. However, the courts held that the defendant's evidence was insufficient to displace the presumption of consideration. The High Court reiterated that once the execution of a promissory note is admitted, the burden shifts to the defendant to prove the absence of consideration, which the defendant failed to do.

Conclusion:

The High Court dismissed the second appeal, affirming the judgments and decrees of the lower courts. It concluded that the plaintiff successfully established the execution and consideration of the promissory note, and the defendant failed to rebut the presumption under Section 118 of the Negotiable Instruments Act. The courts' reliance on the promissory note as evidence of the loan was deemed appropriate, and the defendant's arguments were insufficient to overturn the concurrent findings.