Karnataka High Court
M. Jeetendar Gandhi vs Huthappa And Others on 26 May, 1999
Equivalent citations: 1999(5)KARLJ261, AIR 1999 KARNATAKA 453, (2000) BANKJ 805 (1999) 5 KANT LJ 261, (1999) 5 KANT LJ 261
ORDER
1. This revision under the Small Causes Courts Act, 1964 arises from the judgment and decree dated 2-1-1996 passed by the XV Additional Small Causes Judge (SCCH 17), Bangalore (Mr. N. Subba Rao), whereby the Trial Court dismissed the plaintiffs suit for the recovery of money to the tune of Rs. 22,925-00.
2. The case of the plaintiff is that the defendants 1 to 3 have taken loan of Rs. 15,000/- on 10-10-1990 from the plaintiff-revision petitioner for interest at the rate of 18% per annum and agreed to repay the same within one year. According to the plaintiffs case the promissory note and consideration receipt were executed by defendants. The plaintiff's further case is that despite issue of legal notice dated 15-4-1993 the defendants-respondents did not repay the loan with interest. So the plaintiff has filed a suit for the recovery of a sum of Rs. 15.000/- together with interest at the rate of 18% p.a. amounting to Rs. 7,425/- and notice charges of Rs. 500/- in all for Rs. 22,925-00.
3. The defendant 2 on the summons being served put in their appearance through a Counsel, but did not file any written statement. The first defendant though served did not put in his appearance and the case proceeded ex parte.
4. The plaintiff examined himself as P.W. 1 and produced 6 documents which were marked at Exs. P-l to P-6. The Trial Court dismissed the suit holding that the plaintiff is not entitled to the decree.
5. Feeling aggrieved from the judgment of the Trial Court dismissing the suit, the plaintiff has come up in revision under Section 18 of the Karnataka Small Causes Courts Act, 1964.
6. It has been contended by the learned Counsel for the revision petitioner that the plaintiff has proved the execution of the transaction and promissory note by his own evidence. He submitted that P.W. 1 has stated that the defendants have taken loan and executed the promissory note and consideration receipt in the presence of two witnesses viz., Noor Ahamad and D.P. Gupta. The learned Counsel further contended that the Court below acted illegally in ignoring the presumption of law under Section 118 of the Negotiable Instruments Act, whereunder there is a rebuttal presumption of consideration to the effect that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.
7. The learned Counsel for the revision petitioner contended that presumption under Section 118 of the Negotiable Instruments Act, did apply to the present case and as there is no case or evidence in rebuttal of presumption aforesaid the Court below did not act according to law as well as acted illegally in not applying its mind to the presumption as well as in dismissing the suit.
8. The contentions of the learned Counsel for the petitioner has been hotly contested by the respondent" The learned Counsel for the respondents submitted that execution of he promissory note has not been proved as no witness has been examined and the plaintiff's evidence was not reliable, as held by the Trial Court that P.W. 1 could not explain why the defendants had come to Bangalore to borrow money from the plaintiff. He further submitted that the plaintiff's evidence does not show that the promissory note was executed in his presence and therefore the Trial Court rightly held that the plaintiff has failed to prove the loan transaction and the revision petitioner is not entitled to the benefit of Section 118 of the Negotiable Instruments Act.
9. I have applied my mind to the contentions advanced by the learned Counsels for both parties as well as gone through the records and got the statement of P.W. 1 read and translated into English by the learned Counsel for the revision petitioner in the presence of the learned Counsel for the respondents.
10. Plaintiff (P.W. 1) has stated in his evidence that the defendants have taken money from him and when the money was given, thereafter the defendants executed the promissory note and signed the consideration receipt and at that time Noor Ahamad and D.P. Gupta were present and they have signed the document as witnesses. This statement clearly reveals that the promissory note and consideration receipt, according to the plaintiff were executed in his presence by the defendants-respondents and they have signed it in the presence of two witnesses. The case of the plaintiff is unchallenged and undenied as the defendants have not filed any written statement denying the plaintiff's case. This circumstance also goes in favour of the plaintiff-revision petitioner. Apart from that when the plaintiff's own statement proves the execution of the promissory note and consideration receipt by the defendants, it clearly shows that it was executed in his presence and signed in his presence. The presumption under Section 118 of the Negotiable Instruments Act, did apply to the plaintiff's case and the material portion of Section 118 of the Negotiable Instruments Act, reads as under:
"Presumption as to negotiable instruments.--Until the contrary is proved, the following presumption shall be made:--
(a) of consideration--that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred was accepted, indorsed, negotiated or transferred, for consideration".
11. Section 118 clearly provides that unless contrary is proved, the Court is bound to raise such rebuttable presumption. In this case, nothing contrary to the presumption under Section 118(a) has been asserted or proved by the defendants. In such circumstances, it was the bounden duty of the Court below to have applied its mind to the section i.e., Section 118 of the Negotiable Instruments Act, and to have raised the presumption in favour of the plaintiff, even if for a moment the other evidence is not reliable. When I so observed, I find support for my view from the principle as laid down in the decision of Privy Council in Ra-meshwar Singh. v Bajit Lal and the Supreme Court in the cases of Hiralal v Badkulal, Kundan Lal Rallaram v Custodian, Evacuee Property, Bombay3, K.P.O. Moideenkutty Hajee v Pappu Manjooran and Another.
12. In the last case Moideenkutty, in para 12 their Lordship observe:
"Under Section 118(a) of the Act, until contrary is proved, presumption shall be made that every Negotiable Instrument was made for consideration. Once there is admission of the execution of the promissory note or the same is proved to have been executed the presumption under Section 118(a) is raised that it is supported by consideration".
13. The similar view of law on the point has been laid down by the Hon'ble Supreme Court in the case of Bharat Barrel and Drum Manufacturing Company v Amin Chand Pyarelal, in which their Lordship observe:
"In case, where defendant fails to discharge the initial burden of proof by showing the non-existence of consideration, the plaintiff would invariably be held entitled to benefit of the presumption arising under Section 118(a) in his favour. The bare denial of passing of consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting benefit of shifting the onus of plaintiff. To disprove the presumption the defendant has to bring on record such facts and circumstances upon consideration of which Court may either believe that the consideration did not exist or its non existence was so probable that prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist".
14. In the present case in para 8 the Trial Court has observed this version of plaintiff (as mentioned in para 7) Trial Court's judgment is neither challenged nor disputed by way of cross-examination and the defendants have not filed written statement.
15. This means the defendants (respondents) admitted plaintiff's case that defendant took the loan of Rs. 15,000/- (Rupees Fifteen thousand) from the plaintiff with interest at 18% p.a. and executed and signed the pro note (Promissory Note)-and receipt Exs. P-l and P-2 on 10-1-1990 after having received the money (loan) from plaintiff (revision petitioner) in the presence of Noor Ahamad and D.P. Gupta and one Narasimha. There being non-denial of plaintiff's case it was undisputed position and execution of pronote and giving of loan was almost an admitted fact. There being no denial of plaintiffs case by defendants plaintiffs own evidence has been sufficient, one which proved execution and signing of Promissory Note and receipt by defendants in view of Order VIII, Rule 5 of the Code of Civil Procedure, which provides that non-denial of a plaint allegation specially has to be taken to be the admission of that allegation of fact.
16. The Court below dismissed the plaintiffs suit on the ground the plaintiff has not mentioned in the plaint, if the defendants were his friends or why defendants all the way came from Bangalore to borrow money from the plaintiff unless they were plaintiffs friends and those three persons can take together one loan has not been explained in the pleading. He further observes if on demand promissory Note and Consideration receipt did not show the address, so there must be some other document which has not been produced before the Court. If at all he had paid the amount to the defendants it would have been shown in his accounts he has not produced. Thus the Court below illegally approached the case as these are not the things to be pleaded if at all needed these clarifications ought to have been sought from plaintiff by way of cross-examination by defendant or the Court itself if they were too material things in the view of Court below and without giving such opportunity, the plaintiffs evidence could not be thrown out by approaching the case in a way against the law of pleading.
17. The Court below has wrongly observed that nowhere in the pleading i.e., plaint plaintiff mentions that the amount was paid to defendants. I have perused the plaint and find that in the plaint it has been stated that defendants came to the plaintiff and after receiving the money they executed and signed the promissory note and receipt. Thus in such a case where plaintiffs claim has not been disputed by defendants at all, Court below appears to have approached the case against the law of pleading and its decision cannot be held to be according to law.
18. Further as defendants have not alleged nor proved any facts or circumstances showing the non-existence of consideration, the plaintiff was entitled to benefit of presumption under Section 118(a) and Court below committed error of law by not applying the said presumption which has resulted in the miscarriage of justice.
19. Thus considered the judgment and decree of the Court below dismissing the plaintiff-revision petitioner cannot be one passed in accordance with law and as such is liable to be set aside and the revision as such has to be allowed.
20. The revision is hereby allowed and the plaintiff-revision petitioner's suit decreed with full cost, for the sum of Rs. 15,000/- with interest at the rate of 18% per annum on the principal amount from the date of pro note till the date of suit and for pendents life and further interest at 6% p.a. on the said amount till the date of its recovery i.e., payment by defendants to the plaintiff-revision petitioner.