Madras High Court
N. Abdul Azeez vs S. Mohamed Hanifa And Others on 9 February, 1996
Equivalent citations: AIR1997MAD1, AIR 1997 MADRAS 1, (1997) 2 BANKLJ 130
JUDGMENT
1. Plaintiff is the appellant. He filed O.S. No. 415 of 1978 on the file of Sub Court,- Coimbatore, for recovery of a sum of Rs. 6,795/- being the principal and interest due on a promissory note dated 25-4-1975 under Ex. A-1. According to the plaintiff, the defendants executed a promissory note for Rs. 5000/- on 25-4-1975 in favour of Kairoon Bibi on 26-3-78 agreeing to repay the same with interest at 12 per cent. The plaintiff got assignment of the promissory note from Kairoon Bibi on payment of consideration provided in the promissory note. Since the defendants failed to comply with the demand as per his notice dated 21-4-1978. he laid the above suit.
2. The first defendant filed a written statement which was adopted by the 2nd defendant with the following contentions :--
The first defendant did not execute the suit promissory note being along with the second defendant in favour of the plaintiff's assignor and the 2nd defendant did not receive the consideration of Rs. 5000/- from the plaintiff's assignor. Therefore, the alleged assignment is not valid and the assignment is purposely made to, to circumvent the provisions of law. The assignor is none else than the sister of the plaintiff. The plaintiff's father has lent money to the defendant's wife, the 2nd defendant on a registered mortgage on 2-8-75 and took the mortgage deed in favour of plaintiffs mother Jaithoon Bibi. The plaintiffs father actually lent money and had taken signatures on blank stamped papers from the first defendant and also 2nd defendant under the pretext that he required them for the purpose of the said mortgage transaction. He was also under the impression that the signatures on the blank papers were required for the purpose of mortgage. Now it is learnt that the plaintiffs father misused them by manipulating the same as promissory note. Moreover Kairoon Bibi had no independent means to lend any money on that date. Further, after the said mortgage transaction, the first defendant was never in need of any money and he did not borrow from the plaintiffs assignor Kairoon Bibi, who was penniless and did not have any money at the time of the alleged execution of the promissory note. It is clear that the plaintiff was the brother (sic) and the plaintiffs father colluded and manufactured the alleged promissory note with the assignor with the stamped blank signatures of the first and 2nd defendants in order to make illegal gain. The first defendant is entitled to the benefit of Act 40 of 1978. Therefore he prayed for dismissal of the suit.
3. On the above pleadings, the following issues were framed by the teamed Subordinate Judge, Coimbatore: --
(1) Whether the suit pronote is not supported by consideration?
(2) Whether the plaintiff is not a holder in due course?
(3) Whether the defendants are entitled to the benefits under Ordinance V/78?(TN Act 40/78)?
(4) To what relief?
4. The plaintiff was himself examined as P.W. 2. One Thirumoorthi, scribe of Ex. A-1 was examined as P.W. 1. One of the attestors of Ex. A-2 was examined as P.W, 3. Suit pronote was marked as Ex. A-1. The endorsement made over by Kairoon Bibi was marked as Ex. A-2. The lawyer's notice was marked as Ex, A-3 and the reply sent by the defendant's counsel to the plaintiffs counsel was marked as Ex. A-4. On the other hand, the first defendant was examined as D.W. 1 and Kairoon Bibi was examined as D.W. 2. They also marked receipts issued by Jaithoon Bibi ih favour of Hyarunnis as Ex. B-1. The trial Court after noting that the execution of the suit promissory note was accepted; and the plaintiff is a holder in due course, decreed the suit as prayed for with costs.
5. Against the judgment and decree of the Sub-Court, Coimbatore, the unsuccessful defendant filed appeal A.S. No. 47 of 1981 before the District Court, Coimbatore. After narrating the pleadings of the parties and the conclusion of the trial Court, the learned District Judge, Coimbatore, determined the following points for consideration in the appeal:--
(1) Whether the suit pronote was not supported by consideration as alleged by the appellants?
(2) Whether the assignment of the said pronote in favour of the plaintiff was not valid and consequently whether the plaintiff was not a holder in due course?
6. The appellate Judge even though has held that execution of the promissory note is admitted, on the basis of the oral evidence of Kairoon Bibi. Promisee of the suit promissory note as D.W. 2 stating that she did not pay any money to the defendants and no consideration was passed under the pronote, allowed the appeal and set aside the judgment and decree passed by the lower Court.
7. Against the Judgment and Decree of the District Court, Coimbatore, dated 25-1-82, the plaintiff has filed the present second appeal before this Court. While entertaining the second appeal, this Court has framed the following substantial question of law:--
"Whether the plaintiff is not a holder in due course?"
The learned counsel for the appellant contended that once execution of the pronote is admitted, it is not open to contend that there was no consideration. The learned counsel also argued that as per Section 118 of the Negotiable Instruments Act, the Court has to presume that the document was drawn for consideration. The learned counsel for the appellant also reiterated that on the basis of the evidence of P.Ws. 1 to 3 the decree of the trial Court has to be retained and judgment of the lower appellate Court has to be sst aside. The learned counsel for the appellant also relied upon Sections 9, 36, 43 and 120 of Negotiable Instruments Act and also placed reliance on the decisions reported in (1) Nunna Gopalal v. Vuppuluri Lakshminara-samman (AIR 1940 Mad 631); (2) Federal Bank v. P. S. Carves Ltd., ; (3) G.Vasu v. S.Y.S. Quadri, (FB) and (4) Beni Madhab Nath v. Jayandra Math, (AIR 1979 Gauhati 46) in support of his arguments.
8. I have carefully considered the sub-missions of both the learned counsel. Even though the defendants admit the execution of the promissory note, contended that the promissory note is not supported by consideration and the father of the plaintiff got a mortgage in favour of his wife from the 2nd defendant on stamped blank papers from the defendants under the pretext that he requires them for the purpose of mortgage transaction. The defendants also contended that the evidence of D.W. 2 promises of the suit pronote stated that she did not pay any money to the defendants. The argument of the learned counsel for the respondents herein is that in view of the categorical statement of D.W. 2, the defence that in order to secure the mortgage mortgage deed obtaining signatures in the blank stamped paper is more probable. I am afraid his contentions is (not?) acceptable. If really the mortgage and the promissory note were brought into existence on the same date, the mortgage as well as the promissory note would bear the same date. Here the mortgage transaction is said to have taken place on 2-4-75 and Ex. A-1 is said to have been executed on 25-4-75. As stated inasmuch as the execution of the promissory note is admitted, as per Section 118 of the Negotiable Instruments Act, the Court has to presume that the document was drawn for consideration. Section 118 of Negotiable Instruments Act reads as follows:--
"118. Presumption as to negotiable instruments. Until the contrary is proved, the following presumptions shall be made: --
Of consideration:-- (a) that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred, for consideration:--
as to date:-- (b) that every negotiable instrument bearing a date was made or drawn on such date;
as to acceptance:-- (c) that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
as to time of transfer:-- (d) that every transfer of a negotiable instrument was made before its maturity;
as to order of indorsement:-- (e) that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
as to stamp:-- (f) that a lost promissory note, bill of exchange or cheque was duly stamped;
that holder is a holder in due course:-- (g) that the holder of a negotiable instrument is 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 accepter 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."
9. In order to prove execution apart from the evidence of the plaintiff as P.W. 2, the scribe was examined as P.W. 1 and he would state that the consideration was passed at the time of Ex. A-1 and the defendants subscribed their signatures on the promissory note. P.W. 3 attestor of Ex. A-2 was also examined. The trial Court has correctly appreciated that due to misunderstanding between the brother and the sister D.W. 2 deposed against his own brother. Having got the promissory note from the defendants and assigned in favour of the plaintiff now D.W. 2 has come forward to say that it was not supported by consideration. As stated earlier, since the execution is proved by ail means, the legal presumption that consideration was passed on the promissory note when execution is proved.
10. It is also contended by the teamed counsel for the respondent that the plaintiff is not a holder in due course, because Ex. A-1 itself is not supported by consideration and the assignment Is a false one. I am unable to agree with this contention. In support of the plaintiff's case, apart from the evidence of writer of the pronote, one of the attestors of Ex. A-1 has been examined to speak that the assignment was made after passing proper consideration for the promissory note. Even if the promisso'ry note is discharged prior to the assignment and it was not brought to the knowledge of the" endorse has presumed that he has such knowledge. If it is brought to the knowledge that the promissory note was discharged prior to his knowledge, the assignee must be deemed to be a holder in due course. There is no acceptable evidence on the side of the defendants to show that the promissory note was not executed by defendants 1 and 2. Hence, I accept that the plaintiff is a holder in due course. Inasmuch as the plaintiff has discharged his burden and proved his case, the principle enunciated by the Full Bench of Andhra Pradesh High Court in the judgment (FB) cannot be useful to the respondents' contentions.. Inasmuch as the finding of the lower appellate Court is perverse and not based on evidence, the decision, namely AIR 1979 Gauhati 46 cited by the learned counsel for the respondents is also not applicable to this case.
11. It is well settled law that it is not strictly open to the promissor to question the passing of the consideration for the assignment as between the assignor and assignee and ex facie evidence to show that assignment was taken for consideration. The evidence of P.Ws. 1 to 3 Exs. A-1 to A-4 and the law on this subject with reference to Sections 9, 36 and 43 of Negotiable Instruments Act I accept the conclusion of the learned Subordinate Judge, Coimbatore. Consequently, the second appeal is allowed. The judgment and decree of the District Court". Coimbatore dated 25-1-1982 made in A.S. No. 47 of 1981 is set aside and the judgment and decree dated 18-7-1980 made in O.S. 415 of 1978 on the file of the Subordinate Judge of Coimbatore decreeing the suit as prayed for is confirmed:
No order as to costs.
12. Appeal allowed.