Kerala High Court
Marimuthu Kounder vs Radhakrishnan And Ors. on 5 January, 1990
Equivalent citations: AIR1991KER39, [1990]68COMPCAS658(KER), AIR 1991 KERALA 39, (1990) 1 KER LT 634, (1991) 1 BANKLJ 43, (1990) BANKJ 667, (1990) 3 CURCC 339, (1990) 1 KER LJ 591, (1991) 1 LJR 847, (1990) 2 BANKCLR 77
JUDGMENT Varghese Kalliath, J.
1. This is an appeal by the first defendant. The suit is on a promissory note. The promissory note is Ext.AI. It is dated 20-6-1975. The first defendant executed a promissory note, Ext.A2 on 15-12-1972 in favour of second defendant. The amount covered by Ext. A2 promissory note was Rs. 7,500/-. The second defendant endorsed this promissory note in favour of the plaintiff on 5-6-1973. Thereafter, the first defendant executed a promissory note in favour of the plaintiff showing the consideration of Ext. A2 and the interest on the amount advanced under Ext. A2 as the consideration for Ext.AI promissory note. Even after demand, the first defendant did not pay the amount. So, the plaintiff instituted the suit.
2. The first defendant contended that he has not executed the promissory note. He also contended that there is no consideration for the promissory note. The only question that has to be decided is whether the promissory note is a genuine one or not. Otherwise, the only point that has to be seriously considered is whether the first defendant has executed the promissory note. Normally, the promissory note does not require witnesses. It is really a difficult task for the plaintiff, who institutes a suit on promissory note to prove execution of the promissory note when the defendant denies the execution of the promissory note. In this case, the promissory note is in the handwriting of PW 2. He has been examined as a witness. His examination is plain and clear. He plainly states that the promissory note was executed in the presence of the first defendant and that he has signed the promissory note. This evidence was not shaken at all in the cross-examination of this witness. PW1, the plaintiff has corroborated the evidence of PW 2.
3. The trial court has rightly believed the evidence of PW 1 and PW 2 and found that the promissory note has been executed by the first defendant. Counsel for the appellant submitted that the court below ought not have believed PW 2. I do not see any reason to disbelieve the evidence of PW 2. No circumstance was pointed out to disbelieve PW 2. In the circumstances, I have to hold that the trial court has rightly held that the first defendant has executed the promissory note.
4. When the court finds that the promissory note has been executed by the first defendant, the presumption under S. 118 of the Negotiable Instruments Act is attracted. A controversy is raised in regard to the question whether, in a case where both execution and consideration are denied, the burden to prove lack of consideration is on the defendant, even when the plaintiff was able to prove the execution of the promisssory note. According to me it is not fully correct to say that there is any controversy on this matter. No admission of execution is required under Section 118 of the Negotiable Instruments Act. What is required is the proof of execution of the promissory note.
5. 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 negotiability. Such a presumption has therefore to be made. So the principle is embedded as a rule of equity, justice and good conscience and it is said so by courts even where a presumption under the Act as such was not available.
6. The language of the section is, until the contrary is proved, the following presumption shall be made and Clause (a) of Section 118 says that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred for consideration. So, what is required is the proof of execution of an instrument. The argument that only in case the execution is admitted, the presumption is attracted, is without force. When it is said that execution is admitted, it only means that the party who has got the duty or obligation to prove the execution is freed from that obligation and duty because the contesting party had admitted the execution. If such an admission is not there, certainly the effect of that admission can be obtained by the plaintiff if he proves the execution, and in both cases where execution is admitted or proved, a presumption is raised in favour of the consideration having passed.
7. When once the court finds that the defendant has executed the promissory note, then the burden is on the defendant to prove that there is no consideration. True, the initial burden rests on the plaintiff, who has to prove that the promissory note is executed by the defendant. If there is an admission by the defendant, certainly there is no burden on the plaintiff to prove the execution of the promissory note. But, if the plaintiff discharges his burden in regard to the execution of the promissory note, then the plaintiff is in the same position where the defendant has admitted the execution of the promissory note and the effect and result is that the burden to prove lack of consideration is then with the defendant.
8. As I have held that there is sufficient proof to hold that the promissory note has been executed by the defendant, the burden to prove lack of consideration is on the defendant. In this case, the earlier promissory note is also in evidence. Its endorsement in the presence of the first defendant has been proved by P.W. 3 and P.W. 4. So, there is proof regarding the consideration also. I see no merit in this appeal. The appeal is only to be dismissed and I dismiss the appeal with costs.