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TMI Blog1997 (10) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... efendant in 0.5. No. 6334 of 1979 by the XIth Assistant Judge, City Civil Court, Madras, against the decree for ₹ 13,720 together with interest on ₹ 10,000 at 18 per cent. from the date of plaint till the date of realisation with proportionate cost. 5. A.S. No. 639 of 1981 is filed by the defendants against the decree in O.S. No. 6338 of 1979 on the file of XIth Assistant Judge, City Civil Court, Madras, for ₹ 13,760 together with interest on ₹ 10,000 at 24 per cent. from the date of the plaint till the date of realisation with proportionate costs. 6. A.S. No. 640 of 1981 is filed by the defendant in O.S. No. 6339 of 1979 on the file of XIth Assistant Judge, City Civil Court, Madras, for - ₹ 13,720 together with interest on ₹ 10,000 at 24 per cent. from the date of the plaint till the date of realisation with proportionate cost. 7. A.S. No. 821 of 1982 is filed by the plaintiff in O.S. No. 6332 of 1979 on the file of XIIth Assistant Judge, City Civil Court, Madras, with regard to rate of interest only. 8. A.S. No. 822 of 1982 is filed by the plaintiff in O.S. No. 6335 of 1979 on the file of XIIth Assistant Judge, City Civil Court, Mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the cheques by one month and paid interest over the said sum of ₹ 10,500 for every month till January 4, 1978. It so happened that those cheques and many other cheques were seized by the Income Tax Department in January, 1978, and were returned to the plaintiff only on July 25, 1979. Therefore, the cheque could be presented for collection on July 26, 1979, but the same was returned with bank memo out of date . Immediately the plaintiff issued a telegraphic notice to the defendant demanding payment. The defendant sent a reply with untenable allegations. The amount due by the defendant including interest works out to ₹ 14,546 as on date of plaint. Therefore, the plaintiff is constrained to file the suit for recovery of the said sum of ₹ 14,546 with future interest and costs of suit against the defendant. 13. The defendant filed a written statement wherein it is contended that he had no occasion to meet the plaintiff. The defendant never borrowed from the plaintiff a sum of ₹ 5,500 by discounting his cheque leaving the date blank and post-dated as August 5, 1977. The defendant never discounted any cheque and obtained any consideration on the suit cheques. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decree for ₹ 10,533 with proportionate costs together with future interest at 6 per cent. per annum over ₹ 10,500 from the date of suit till the date of realisation was granted in O.S. No. 6335 of 1979. 16. The very same plaintiff in both the suits aggrieved by the rate of interest filed A.S. Nos. 821 of 1982, 822 of 1982. There is no need to narrate the facts once again in these appeals also. 17. The points for consideration in all the four appeals, namely, A.S. Nos. 308 of 1982, 434 of 1982, 821 and 822 of 1982, are (1) whether the defendant has borrowed the suit claim from the plaintiff by discounting the suit cheques, (2) whether the decree granted by the trial court is justified, (3) whether the defendant is entitled to interest at 24 per cent. till the date of realisation instead of 6 per cent. as awarded by the trial court. 18. The facts leading to the filing of A.S. No. 637 of 1981 are briefly stated hereunder : 19. According to the plaintiff, on July 4, 1977, the defendant borrowed a sum of ₹ 10,000 by discounting his cheque leaving the date blank to be post-dated as August 4, 1977, drawn on Indian Bank, Madras-17, the cheque bearing No. 70-A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 979, alleging false and untenable objections. Hence the plaintiff has filed the above suit. In the written statement the defendant contended that the first defendant had not borrowed from the plaintiff any money on February 10, 1977, much less the sum of ₹ 10,000 discounting the suit cheque. The first defendant has also denied the statement that he had left blank cheques with the plaintiff. There is no consideration for the suit cheque nor the first defendant did borrow any amount from the plaintiff. It is a fictitious claim. The defendant never agreed to pay any interest much less at the rate of 24 per cent. per annum. They prayed for dismissal of the suit. The trial judge on the basis of the oral and documentary evidence, decreed the suit as prayed for with costs. Aggrieved by the said decree, the defendants filed the above appeal. 22. The facts leading to the filing of A.S. No. 640 of 1981 are briefly stated hereunder : 23. According to the plaintiff, the defendant on July 10, 1977, borrowed a sum of ₹ 10,000 from him by discounting his cheque bearing No. 74/BG-924055 leaving the date blank to be post-dated drawn on Indian Bank, Madras-17. According to him, thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiff nor to borrow any amount from him. The transaction referred to in the plaint is totally incorrect and false. The defendant never discounted any cheque and obtained any consideration on the suit cheque. Here also it is contended that the plain-tiff's father, Muthiah Chettiar ? with whom the defendant had certain transactions was in possession of certain cheque leaves with blank dates and now the plaintiff has utilised the same for putting forth a fictitious claim. The defendant never agreed to pay interest and in any event the claim at 24 per cent. is against the provisions of section 80 of the Negotiable Instruments Act. With these averments, he prayed for dismissal of the suit. The trial court on the basis of the oral and documentary evidence, decreed the suit as prayed for with costs. Aggrieved by the said decree, the defendant has filed an appeal before the Principal Judge, City Civil Court, Madras. In view of the pendency of the other appeals before this court, on direction by this court, the said appeal has been transferred to this court and numbered as Transferred Appeal No. 888 of 1982. 26. In the light of the above pleadings, I have heard R. Krishnaswamy, lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the plaintiff by discounting the suit cheques. Before going into the oral evidence, I shall consider the legal position advanced by both the counsel. 28. Relying on a decision in I. Armugam v. Channagiri N. Govindaraj Shetty AIR 1992 Kant 347, R. Krishnaswamy, learned counsel for the appellants in some of the appeals contended that mere payment by cheque is not a prima fade evidence of advancing loan. It is true that the Division Bench in the said decision have concluded thus (page 349): No doubt it is stated by learned authors Sriyuthus Bhashyam and Adiga thus : `Prima facie all payments by cheque are to extinguish an existing debt, not to create a new one. Hence a cheque presented and paid is of itself no evidence of money lent or advanced by the banker to the customer, on the other hand, it is prima facie evidence of the repayment of money previously lodged by the customer in the banker's hands, except perhaps, when the cheque was paid without funds or when the payment itself creates an overdraft. Nor again a paid cheque is in itself an evidence of a loan by the drawer to the payee. Yet it may be shown by other evidence that the cheque was in fact loaned to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawn on such date (c) as to time of acceptance - that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity; (d) as to time of transfer - that every transfer of a negotiable instrument was made before its maturity (e) as to order of endorsement 1. - that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon (f) as to stomps - that a lost promissory note, bill of exchange or cheque was duly stamped (g) that holder is a holder in due course - that the holder of a negotiable instrument is a holder in due course : provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him. 32. In the light of the specific provision namely sections 13 and 118 of the Act, I shall consider the following decisions referred to by learned counsel for the respondents. 33. In Heerachand v. Je ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration or not has been vitiated by the failure to consider this presumption of law. 39. In Marimuthu Kounder v. Radhakrishnan AIR 1991 Ker 39, the Kerala High Court made the following observation (page 660 of 68 Comp Cas) : Section 118 of the Negotiable Instruments Act is mandatory in nature, though it deals with a presumption. A presumption has always a limitation in the sense that only in very exceptional cases, there will be an irrebuttable presumption. It is difficult to say that the presumption in section 118 of the Negotiable Instruments Act is a presumption against which no evidence can be adduced in order to take away the rigour of the presumption. In other words, it is a rebuttable presumption, but imperative in its terms and so, the presumption under it continues with all its rigour until the contrary is proved. The reason for the presumption is that a negotiable instrument passes from hand to hand on endorsement and it would make trading very difficult and the negotiability of the instrument impossible, unless such a presumption was made. Passing of consideration must be presumed in a negotiable instrument then alone the instrument can earn the hall-mark of neg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount than he would have been if such cheque had been paid. (2) In determining what is a reasonable time, regard shall be had to the nature of the instrument, the usage of trade and of bankers, and the facts of the particular case. (3) The holder of the cheque as to which such drawer or person is so discharged shall be a creditor, in lieu of such drawer or person, of such banker to the extent of such discharge and entitled to recover the amount from him. 43. As per section 84(2) of the Act, the reasonable time with regard to the nature of the instrument, the usage of trade and of bankers is six months. The said fact has not been disputed by both sides. In this case it is the evidence of the plaintiff as P.W. 1 that on January 11, 1978, a raid was conducted by the Income Tax Department and most of the documents including the suit cheques have been seized by the Income Tax Department. It is the specific contention of the plaintiff that only on July 25, 1979, the Income Tax Department returned the documents including the suit cheques. Immediately on July 26, 1979, the suit cheques were presented for collection. 44. Those cheques were returned with the bank's memo ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. No doubt R. Krishnaswamy, learned counsel for the appellants submitted that there is no proof how the above document has been called for from the bank and through whom the same has been marked. However, the fact remains the said document has been marked as exhibit A-20, dated November 26, 1980, and there is no proof from the record that no such objection was taken at the appropriate time before the trial court. Accordingly, I am unable to appreciate the objection of the learned counsel for the appellants at this stage. 50. In the light of the above factual position and in view of the provisions of the Negotiable Instruments Act referred to above. I hold that the defendant in each case had borrowed money from the plaintiff as claimed by the plaintiff, and accordingly, I confirm the finding of the trial court in all the above suits with regard to the above aspects. 51. Regarding the payment of interest, admittedly there is no agreement or any written deed. No doubt, the case of the plaintiff is that since the defendant could not pay the amount as requested on receipt of interest at the rate of 24 per cent., the presentation of the respective cheques were postponed. In the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 347 , is very relevant and the same is extracted hereunder (page 354) : It is next contended that the provisions of section 80 of the Act as they stood prior to December 30, 1988, governed the suit transactions as the three cheques were issued prior to December 30, 1988, therefore, the interest ought to have been awarded at the rate of 6 per cent. per annum from the date the amount became payable until tendered or realisation of the amount due thereof and not at the rate of 18 per cent. per annum because the amendment effected by Central Act No. 66 of 1988 is not, and cannot be construed as, retrospective. On the contrary, it is contended on behalf of the plaintiff that the plaintiff is entitled to interest at the rate of 18 per cent. at least from December 30, 1988, as the amendment has come into force on that day. We are of the view that the contention of the learned counsel for the plaintiff cannot at all be accepted All the three cheques were issued prior to December 30, 1988. Section 80 of the Act as it stood prior to December 30, 1988 was as follows : ₹ 80. Interest when no rate specified. - when no rate of interest is specified in the instrument, interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m December 30, 1988. 52. The above conclusion makes the position clear that the amendment effected by Act No. 66 of 1988 which came into force on December 30, 1988, does not apply to the transaction effected prior to December 30, 1988. There is no dispute in all cases before me that the transactions were effected long prior to December 30, 1988. As stated earlier, in the absence of any written agreement with regard to rate of interest or acceptable evidence and when the instrument is silent as to the rate of interest, the plaintiff is entitled to interest only at the rate of 6 per cent. as per section 80 of the Act. The same view has been expressed by Swamikkannu J. in a decision in Syndicate Bank v. N. C. Kalyani AIR 1985 Mad 254. 53. In the light of the above position with regard to rate of interest, in the absence of anything specified in the instrument with regard to rate of interest and in the absence of any specific agreement, the interest has to be calculated only at the rate of 6 per cent. per annum from the date at which the amount ought to have been paid by the defendant. Accordingly, I confirm the finding of the trial court with regard to the amount payable by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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