Karnataka High Court
H. Maregowda And Etc. vs Thippamma And Ors. on 1 October, 1999
Equivalent citations: AIR2000KANT169, AIR 2000 KARNATAKA 169
ORDER T.N. Vallinayagam, J.
1. In these civil revision petitions, the decree of the trial court refusing the claim of the plaintiff based on a promissory note is challenged. The facts in all the cases are similar. Therefore, this common judgment is delivered as has been done in the suits by the trial Court.
2. Three suits were filed based on promissory note. S. C. 313/93 and 314/93 were filed by one Maregouda; S. C. 319/3 was filed by one Eramma, his wife. The defendants in all the three suits are common. The case of the plaintiff in S. C. 313/93 is that on 12-11-87, the defendants jointly borrowed a sum of Rs. 12.000/- for agricultural expenses and executed the promissory note agreeing to repay the said sum with interest at 24% p.a. In S. C. 314/97, the date of the promissory note is 3-11-1987; the amount is the same. In S. C. 319/93, the promissory note was for a sum of Rs. 15,000/- and the date is 2-11-1987. In respect of the three promissory notes, notice of demand was made and an interim reply followed by final reply was given by the defendants denying their liability.
3. The trial Court framed as many as eight points for determination and holding that the plaintiffs have not proved execution of the promissory notes and the necessity of the defendants to prove that no consideration was passed under the promissory notes, the suits were ultimately dismissed.
4. The main defence in the suits by the defendants was one of total denial, contending that the left thumb impression of the 1st defendant and the signature of the 2nd defendant were taken on blank stamp papers for the purpose of change of khatha of the lands and in view of the disputes that arose between the plaintiff and the defendants, the suits came to be filed. The defence was accepted by the trial Court and the suits came to be rejected.
5. In all these three civil revision petitions, it is contended by the learned counsel for the petitioner that once execution of the promissory note is admitted, there cannot be denial of a decree; the presumption under Sections 118 and 121 of the Negotiable Instruments Act regarding passing of consideration and capacity of the plaintiff has not been taken note of by the court below; the question of treating the promissory note as a suspicious document does not arise and the question of capacity of the person lending the loan also does not matter much. Further, the question of proving by attesting witnesses does not arise in respect of a promissory note. However, the scribe and attesting witnesses have been examined. It is also submitted that the family of the plaintiff owns 35 acres of land and they are cultivating it personally. Therefore, the theory of change of khatha was denied.
6. On the other hand, the learned counsel for the respondent submitted that the trial court has given a specific finding that:
'It has been elicited in the cross-examination itself that he has signed on blank papers about 7 years back. This squarely fits in with the case of the defendants that their thumb impression and signature have been taken on blank pro-notes'.
The trial Court also found as follows :
'It has been elicited from PW1 himself that during the year 1984, the 1st defendant had executed a mortgage deed in his favour and the amount under the mortgage had not been repaid by the 1st defendant. So, when 3 years prior to the date of suit transaction had been a mortgage-deed executed in favour of the plaintiff in S. C. 313/93 and the said amount had not been paid, I am sure that no ordinary prudent man would have lent again total sum of Rs. 39,000/-. So, I am of the opinion that the case of the plaintiffs in all these S. Cs. is most improbable and most unbelievable one.
On the above basis, the submission that the order of dismissal is correct and it does not call for any interference.
7. On the question of revisional power of this court, in the case of Manick Chandra Nandy v. Debdas Nandy , it is held as under :
The exercise of revisional jurisdiction is confined to questions of jurisdiction. While in a first appeal the court is free to decide all questions of law and fact which arise in the case, in the exercise of its revisional jurisdiction the High Court is not entitled to re-examine or re-assess the evidence on record and substitute Its own findings on facts for those of the subordinate Court'.
In the case of Dastagirkhan Ajamkhan Pathan v. Sayad Nazimpacha Babasaheb Inamdar reported in AIR 1985 NOC 67 (Kant), it has been held as under :
The scope of enquiry under Section 115, C. P. C. by the court is very much restricted and limited. There must be jurisdictional error. The court below must have exercised Jurisdiction which it did not possess or it should have failed to exercise jurisdiction over the subject matter or should have committed material irregularity or illegality which has nexus with the question of jurisdiction of the court. The argument of the petitioner in revision pertained to the appreciation of evidence and the application of law to the facts of the case and those could not be enquired into by the High Court in revision'.
8. In the case of Katie Shivappa v. Kori Eranna to the effect that the plaintiff cannot succeed by establishing cogent and positive evidence that the document was supported by consideration, the following passage was relied on :
Though the plaintiff was entitled to an initial presumption under Section 118(1) of the Negotiable Instruments Act, the course of trial has brought in various factors and circumstances, the cumulative effect of which has been sufficient to destroy the presumption and to place the plaintiff in a position where he cannot succeed only on the basis of presumption and where he is required to establish affirmatively by cogent and positive evidence that the document sued upon was supported by consideration'.
The case of M. G. Gurubasappa v. Rudraiah reported in AIR 1969 Mys 269 was relied On to the effect that a presumption will arise only when there is execution of a promissory note and when the document executed is not a pro-note, no presumption can arise. The following passage is relied on .
The presumption under Section 118 of the Negotiable Instruments Act was thus unavailable to the plaintiff. That presumption becomes available only when there is a pro-note admittedly executed. A document which is not signed by the maker is not a pro-note since according to the definition of a pro-note contained in the N. I. Act. it is an instrument in writing signed by the maker containing an unconditional undertaking to pay a certain sum of money either to the payee or to his order. But if as found by the lower appellate Court, Ex. P1 did not contain signature of the defendant, it was not a promissory note when it was delivered to the plaintiff by the defendant. That being so, no appeal could be made to the presumption directed by Section 118 of the N. I. Act'.
9. In the case of Kundanlal Rallaram v. Custodian Evacuee Property, Bombay, reported in AIR 1961 SC 1316 for the proposition that if relevant evidence was withheld by the plaintiff, the presumption should be held rebutted, the following passage was relied on :
'Section 118 lays down a special rule of evidence applicable to negotiable instruments. The presumption is one of law and a court shall presume inter alia that the negotiable instrument or the endorsement was made or endorsed for consideration. In effect, it throws the burden of proof of failure of consideration on the maker of the note or endorser, as the case may be. The phrase 'burden of proof has 2 meanings; one, burden of proof as a matter of law and pleading and the other, burden of establishing a case; the former is fixed as a question of law on the basis of pleadings and is unchanged during the entire trial, whereas the latter is not constant but shifts as soon as a party adduces sufficient evidence to raise a presumption in his favour. The evidence required to shift the burden need not necessarily be direct evidence, i.e. oral or documentary evidence or admissions made by opposite party: it may comprise circumstantial evidence or presumptions of law or fact. A plaintiff who says that he had sold certain goods to the defendant and that a promissory note was executed as consideration for the goods and that he is in possession of the relevant account books to show that he was in possession of the goods sold and that the sale was effected for a particular consideration should produce the said account books. If such a relevant evidence is withheld by the plaintiff, Section 114, Evidence Act enables the court to draw a presumption to the effect that, if produced, the said accounts would be unfavourable to the plaintiff. This presumption, if raised by a Court, can under certain circumstances, rebut the presumption of law raised under Section 118 of the Negotiable Instruments Act'.
10. On behalf of the petitioner, in the dictum of Alapati Sivaramakrishnayya v. Kasiwiswanadham reported in AIR 1957 Andh Pra 584 was relied on to show that where a man's signature appears in a document, it is for him to explain and if the document turns out to be a promissory note, then a presumption at the relevant act, will come. This decision was rendered with regard to Section 114 of the Evidence Act. The following passage was relied on :
'In the case of a letter where there can be no possible question of execution in the sense that, no formalities are insisted upon by law, proof of a man's signature under it is prima facie proof that the contents of the letter are attributable to his authorship. If a person denies that he has written a letter which contains his signature, then surely he must prove what he alleges, i.e. the letter was got up on a blank piece of paper containing his signature, as also the circumstances in which he happened to put his signature on such a piece of paper. There is no question of proving the 'execution' of a letter by the signatory.
Even where formal execution as such has got to be proved, cases have held that where a man's signature appears in a document at the place where the executant of such a document would normally sign, then the signature may prima facie be taken as having been put in token of execution and that therefore the proof or admission of a signature in a document requiring the execution in a particular form is prima facie proof that the document was executed by the signatory because normally it has to be presumed under Section 114, Evidence Act that a person only puts a signature in a document in token of his execution thereof. But the case of letter is an fortiori case because in such a case, there is no question of any execution'.
11. The presumption under Sections 101 to 103 and 114 of Evidence Act was considered in the case of Lakshmamma v. M. Jayaram reported in AIR 1952 Mysore 114 and the following passage was relied on :
'When a thumb impression or a signature that purports to have been put in a document in token of its execution is admitted by a person to be his, there arises a presumption that he must have executed the document. If he says that his thumb impression or signature found in the document was taken for attesting the document though it purports to have been put in for executing the document, it is for him to prove that it is so. If it is his case that he affixed his signature or thumb impression on a blank paper on which the document must have been written later he has to prove that fact. If he fails to do so, the presumption is against him. At the same time, before any presumption arises against him, he must have unequivocally admitted that the signature on the document is his. It is not sufficient if he merely states that he has on some occasion affixed his signature on a blank paper and the document in question might have been got up with the help of that document. It may not be necessary for the defendant to specifically state that his thumb impression or signature has been taken to the document in question'.
12. In the case of P. Talamalai Chetty v. Rathinasamy reported in AIR 1998 Mad 23 wherein a blank paper is considered, the following passage was relied on :
The judgment of the lower court has to be set aside in view of the provisions of Section 20 of the Negotiable Instruments Act. The Section 20 reads thus :
"Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount. Provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder".
Further, the learned authors of the Negotiable Instruments Act comment as follows :
The instrument may be wholly blank or incomplete in any particular, in either case, the holder has the authority to make or complete the instrument as a negotiable one".
"The authority implied by a signature to a blank instrument is so wide that the party so signing is bound to be a holder in due course even though the holder was authorised to fill for a certain amount, and he in fact fills a greater amount, but it is necessary that the sum ought not to exceed the amount covered by the stamp".
Therefore, once it is admitted that the defendant has signed the promissory note, his liability cannot be denied. I am fortified in my view by the case reported in Chidambaram v. P.T. Ponnuswamy (1995) 2 Mad LW 719, wherein this court has held that: "from a reading of the above Section 8, it is clear that Section 20 of the N. I. Act is itself authority to the holder of inchoate stamped and signed instrument to fill up the blanks and to negotiable instrument. The instrument may be wholly blank or incomplete in particular and in either case, the holder has the authority to make or complete the instrument as a negotiable one".
13. It is thus common knowledge that 'blank paper' theory is always advanced in almost all cases of promissory note on the ground that the signatures were taken on a blank stamp paper and were all filled up by the person who took the signature and retained the document. Consequently, it is claimed that such an instrument cannot be considered to be a promissory note and the suit must therefore, be dismissed.
14. A reading of Section 20 of the Negotiable Instruments Act which is extracted above will reveal that the words used are 'either wholly blank or having written thereon an incomplete negotiable instrument'. Thus, even if a blank promissory note is given, it cannot be taken as a defence to avoid a decree based on such instrument, once tt is found that the document produced before the Court satisfies the requirements of a promissory note within the meaning of the Negotiable Instruments Act. The instrument may be wholly blank or incomplete in particular in either case, the holder has the authority to make or complete the instrument as a negotiable one. The authority implied by a signature to a blank instrument is so wide that the party so signing is bound to be a holder in due course. Even though the holder was authorised to fill a certain amount and he in fact inserts a greater amount, it is necessary that the sum ought not to exceed the amount covered by the same.
15. As per the law laid down in Queen's Bench in LYODS 'If there is a blank space left for rate of interest, the holder is entitled to insert the legal rate. However, a pro-note containing blank with regard to rate of interest is not incomplete as Section 80 provides for rate of interest at 6% p.a. where the rate of interest is not specified in the instrument'.
Promissory notes are often executed in the name of the payer and left unfilled to be afterwards filled by the actual holder, the object being to enable the owner to pass it off to another with incurring the responsibility as an endorser. Thus, it is seen that the person in possession of an instrument incomplete in material particulars, has the authority prima facie to fill it up and thus, the executant becomes liable to pay the amount due.
16. In the light of the above stated decisions, it is not open to the defendant to claim that what has been given by him is only a blank promissory note. There is a clear finding of fact rendered by the trial Court that a blank signature on stamp paper was given and the document now produced before the Court satisfies the conditions of a promissory note. There could be no impediment to grant a decree and the trial Court, not following the principles of law, has committed an error apparent on the face of the record.
17. No doubt, the learned counsel for the respondent relies on the authorities mentioned above to indicate the powers of this Court sitting in revision to interfere, with reference to the finding of fact rendered by the Small Causes Court, but those powers do not restrict interference in cases where the law is misunderstood and the finding is an error apparent on the face of the record.
18. In this view of the matter, setting aside the decree of the trial Court, all the civil revision petitions, i.e. 1574/95, 1590/ 95 and 1591/95 are allowed, and the suits are decreed with costs as prayed for. No order as to costs.