Orissa High Court
Sri Khetramohan Ray vs Udayanarayan Panda And Anr. on 5 July, 1990
Equivalent citations: AIR1991ORI25, AIR 1991 ORISSA 25, (1990) 3 CURCC 659, (1990) 70 CUT LT 538, (1991) CIVILCOURTC 58, (1994) 1 BANKLJ 165, (1994) 1 BANKLJ 378, (1991) 1 BANKCLR 401, (1991) 1 CIVLJ 802, (1991) BANKJ 485
JUDGMENT S.C. Mohapatra, J.
1. Unsuccessful in the suit for recovery of Rs. 15,000/- with interest at the rate of 12% per.annum from the defendants, plaintiff has preferred this appeal.
2. Defendants are two brothers, residents of Bhadrakh Sub-Division in Balasore District. Defendant No. 1 at one time was an employee of son of the plaintiff who carries on business of transport having a branch office at Bhadrakh.
3. Case of plaintiff is that on 25-10-1971, defendant No. 1 who was known to plaintiff previously as an employee of his son, approached him for a loan of Rs. 15,000/- for maintaining the joint family shop known as Mamata Store in Kuchery Bazar at Bhadrak managed by his younger brother (Defendant No. 2) and for purchasing medicine for himself. Plaintiff who had received his retirement benefits advanced the loan to Defendant No. 1 on his executing a promissory note (Exl. 1) which was scribed by P.W. 2. Since defendant No. 1 did not pay the amount despite notice, suit was filed.
4. Defendants Nos. 1 and 2 filed separate written statements. Case of defendant No. 1 is that he has not borrowed any amount from plaintiff and has not executed any promissory note. When he was in search of a job, son of plaintiff (P.W. 3) being approached employed him in his Cuttack Office and at the time of joining, son of plaintiff took his signature on blank paper on which four revenue tickets were affixed as security. Getting Government employment, when defendant No. 1 left the employment of P.W. 3 there was altercation and P.W. 3 did not return the blank paper on the plea that the same has been misplaced and would be returned when available. He did not return the same despite demands made by defendant No. 1 several times. In view of the hidden grudge on account of altercation at the time of leaving employment, P.W. 3 converted the blank paper to a handnote and on that basis, plaintiff has filed this suit. Defendant No. 1 further claimed that he being a Government servant has no connection with the business of his brother named Mamata Store.
Defendant No. 2 in his written statement, claimed that Defendant No. 1 has got no connection with Mamata Store and no amount was borrowed for Mamata Store by defendant No. 1 from plaintiff.
5. Plaintiff examined himself as P.W. 1, scribe as P.W. 2 and his son as P.W. 3 and proved the document marked as Ext. 1. Defendant No. 1 examined himself as D.W. 1 and another clerk of Bhadrakh Sub-Divisional Office as P.W. 2 and proved three letters marked Exts. 'A' to 'C' in support of his case. Trial court having dismissed the suit, this appeal has been filed.
6. Main ground of attack of Mr. C. R. Nanda, learned counsel for the appellant is that Defendant No. 1 having admitted his signature on Ext. 1, the handnole. presumption under Section 118(a) of the Negotiable Instruments Act is attracted and suit ought to have been decreed on that basis specially when P.W. 2 has proved execution of the document. Mr. Nanda submitted that trial court acted contrary to law in placing onus on plaintiff to prove execution of the handnote.
7. Undoubtedly plaintiff is entitled to the presumption under Section 118(a) of the Act that handnote in question is for consideration and burden will be heavy on the defendant to show that in fact no consideration passed when he executed the handnote. When, however, both parties have adduced evidence regarding passing of consideration, the question ultimately depends on appreciation of evidence. See ILR 1960 Cut 295 : AIR 1972 Orissa 172 (Bishnu Dayal Jhunjhunwalla v. Atal Behari Acharya).
8. Normally, a person desiring a Court to give a judgment as to any legal right or liability has to prove the facts on which such right or liability is to be fastened on the other party. This is the principle provided in Section 101 of the Evidence Act. When plaintiff claims that defendant has taken a loan and has executed a promissory note, he is to prove that defendant executed the same, if defendant would have admitted he executed the promissory note, such fact is not necessary to be proved. On such admission, presumption under Section 118(a) of the Negotiable Instruments Act would have been attracted and it is to be presumed that consideration passed. This is a presumption of law as has been held in AIR 1961 SC 1316 (Kundan Lal Rattaram v. Custodian, Evacuee Property, Bombay) and defendant has to prove to the satisfaction of the Court that there was payment of the amount under the promissory note. Scope of such presumption and the manner in which it is to be rebutted was analysed by Supreme Court in the aforesaid decision.
9. In ILR 1965 Cut 445 (Mahanta Shri Ram Dayalu Das Babaji v. Dukha Jena) following the aforesaid decision of Supreme Court, it has been observed :
"On admission of the execution of Ext. 1, the burden of rebutting the presumption shifts to the defendant. The defendant might adduce direct evidence to prove that the suit promissory note was not supported by consideration. If that evidence is acceptable, the burden again shifts to the plaintiff. Defendant might also rely on circumstantial evidence and if this is compelling, the burden may shift to the plaintiff. Defendant may also rely on presumption of facts as those mentioned in Section 114 of the Evidence Act. The presumption under Section 114 of the Evidence Act, if raised by the Court, can in certain circumstances rebut the presumption of law under Section 118 of the Negotiable Instruments Act. The burden of proof may be shifted by presumption of law or of fact which may be rebutted not only by direct or circumstantial evidence but also by presumptions of law and fact".
In 1LR (1978) 1 Cut 511 (Gangapani Palo v. Smt. Shyamadei Padhi) execution of the promissory note was admitted but it was explained that on account of demand of dowry by plaintiff at the time of his daughter's marriage with son of plaintiff which he could not pay, the document was executed but no consideration passed under the Promissory note. It was observed :--
"Execution of the document Ext. 1 is admitted, there is no dispute about the fact that under Section 118(a) of the Negotiable Instruments Act, there is a presumption in law that the document is supported by consideration. Accordingly, onus lies on the defendant to establish that what is apparent on the document is not true".
These two decisions of this Court, make it clear that on admission of execution of promissory note, onus lies on defendant to prove that no consideration passed since there is a presumption of law under Section 118(a) of the Negotiable Instruments Act that consideration passed under the promissory note proved. Mr. C. R. Nanda. learned counsel for the appellant would have been justified in rely ing upon the presumption of law, if there would have been an admission of execution of the document.
10. In cases where signature is admitted but contents of the document proved to a promissory note are dissented either on account of lack of knowledge of the contents or signing on a blank paper, plaintiff has to prove that defendant knowing it to be a promissory note put his signature. On proof of execution of the promissory note, presumption of law under Section 118(a) of the Negotiable Instruments Act, is attracted and defendant has to prove that no consideration passed under the same. Mere admission of signature or thumb impression does not mean admission of execution of the promissory note.
11. In (1955) 21 CLT 561 : AIR 1956 Orissa 58 (Radhanath Swain v. Madhusudan Senapaty), Division Bench of this Court relying upon two decisions of Patna High Court reported in AIR 1931 Pat 219 (Ramlakhan Singh v. Gog Singh) and AIR 1931 Pat 266 (Chulbai Lal Dass v. Kuldip Singh) observed:-
"Mere admission of the thumb impression or the signature on blank paper does not mean an admission of execution which means that the executant must have signed or put his thumb impression only after the document is fully read out".
In (1969) 35 C.L.T. 794 (Agasti Maha-nanda v. Ramaprasad Padhi) the same view has been expressed observing :--
"Where the defendant advances a story that a blank paper signed by him was handed over to the plaintiff, he does not admit the execution of the document. In such a case the onus is still on the plaintiff to prove execution and payment of consideration".
In 1971 (1) CWR 949 (Harekrushna Swain v. Bijay Kumar Mall) defendants took the plea that plaintiff might have taken the signature and thumb mark on a blank paper at the time of continuance of a Civil litigation where plaintiff and Iswar were litigating with villagers, which plaintiff was utilising as a promissory note. At a later stage, defendant admitted the thumb mark and signature of Iswar appearing on the suit promissory note. This Court relied upon evidence of plaintiff and his agent about the execution of the document and held that examination of the scribe was not necessary. It held :--
"The document by itself, after the admission by the defendants regarding the endorsements, signature and left hand thumb impressions and the evidence of the plaintiff and his agent are sufficient to prove execution of Ext. I".
On such finding, this Court, relied upon the decisions reported in, AIR 1961 SC 1316 (supra) and ILR 1965 Cut 445 (supra) to draw the presumption that consideration passed. It observed :--
"In the present case there is clear evidence of P.Ws. 1 and 2 about the passing of the entire consideration. Thus, the presumption supported by oral evidence clearly establishes that the entire consideration for which Ext. I purports to be the promissory note had passed.
In(1976) 42 CLT 1180 (Jagannath Padhi v. B. Madha Patra) the earlier quoted passage of (1969) 35 CLT 794 (supra) was followed.
12. In AIR 1961 SC 1316 (supra) it has been clearly laid down that the burden initially rests on the plaintiff who has to prove that promissory note was executed by the defendant and as soon as execution of the promissory note is proved, the rule of presumption laid down under S. 118 of the Negotiable Instruments Act helps him to shift the burden to the other side. How the burden shifts from stage to stage has been clearly explained in, ILR 1965 Cut 445 (supra). In (1955)21 CLT561 (supra) in case of signature on blank paper, burden was held to be on the plaintiff to prove execution of the document. In view of these decisions, there is no scope to put the burden on plaintiff to prove passing of consideration also. To this extent (1969) 35 CLT 794 (supra) and (1976) 42 CLT 1180 (supra) putting the burden on plaintiff to prove passing of consideration are contrary to the principle laid down in, AIR 1961 SC 1316 (supra).
13. Correct principle is that in a case where defendant takes the plea of signature or thumb impression on a blank paper, burden lies on plaintiff to prove execution of promissory note by the defendant whereafter onus shifts to the defendant to prove that there was no consideration for such document in view of presumption of law under Section 118(a) of the Negitiable Instruments Act. Defendant can rebut such presumption either by direct evidence or circumstantial evidence as has been held in, ILR 1965 Cut 445 (supra).
14. In the aforesaid background of legal position, it is to be considered whether plaintiff has proved his case for fixing liability on the defendants. Court is to consider the case made out in pleadings of the parties and is not to make out a third case./Plaintiff in this case has sought to recover the loan advanced to Defendant No. 1 for benefit of business claimed to be joint with defendant No. 2. Defendant No. 2 in no other manner is connected with the loan. Both defendants in their written statements deny the common interest in the business. Even if defendant No. 1 is held to have borrowed the money, defendant No. 2 shall not be liable since he claims no benefit out of the loan and plaintiff has not adduced any acceptable evidence to fix liability on defendant No. 2. Accordingly, suit against defendant No. 2 has rightly been dismissed.
15. As regards liability of defendant No. 1, case of plaintiff is that he took loan of Rs. 15,000/- and executed Ext. 1. First question for consideration is whether Ext. 1 was executed by defendant No. I, Ext. 1 is a promissory note. Such a document is said to be executed by a person who signs it or puts mark on it knowing the contents thereof. While case of plaintiff is that knowing Ext. 1 to be a promissory note, defendant No. 1 signed it, case of defendant No. 1 is that he signed a blank paper on the revenue tickets fixed which was kept as security by P.W. 3 son of plaintiff. In view of the pleadings, onus lies on the plaintiff to prove that defendant No. 1 executed the pronote (Ext. 1). Since burden of proof shifts from stage to stage as has been held in, AIR 1961 SC 1316 (supra) and ILR 1965 Cut 445 (supra), both parties adduced evidence in support of their respective cases. When both parties have adduced evidence, such materials are to be considered to determine if defendant No. 1 executed the promissory note (Ext. 1).
16. Ext. 1 on the face of it is a promissory note. Since defendant No. 1 claims that he signed on a blank paper, evidence can be led to show that he signed the blank paper and what is apparent on the document is not real.
17. Plaintiff examined himself as P.W. 1 In his examination-in-chief, he stated that he lent the amount to defendant No. 1 on 26-1-1969 on execution of a promissory note by him which was scribed by P.W. 2. Lastly, he stated that due to his old age, he does not remember things correctly. In cross-examination, he stated that scribe was called by his son with whom he had previous acquaintance. Draft was prepared by P.W. 2. Revenue stamps were affixed to the document after the same was scribed by P.W. 2 and defendant No. 1 read the document himself. P.W. 2 also read over and explained the same. This evidence is to be discarded on his statement that due to old age he does not remember things correctly.
18. P.W. 2, the scribe asserted that receiving remuneration, he scribed Ext. 1. In cross-examination, he stated that when he went to plaintiff, he saw a cartridge paper with revenue stamps affixed was kept for scribing. This is a contradiction with statement of P.W. 1. Further contradiction came out when he stated that he did not prepare draft while P.W. 1 stated that a draft was prepared. He stated that lines towards the end of the writing become closer to each other in comparison with the beginning portion of the writing as it was not possible to write on the stamps which were fixed on the paper earlier to the scribing. P.W. 2 stated in his examination-in-chief that defendant No. 1 requested him to read over and explain the document as he was unable to read Karani Oriya Script. This is again a contradiction to evidence of P.W. 1 who stated that defendant No. 1 read it himself. Besides the contradiction, evidence of P.W. 2 supports defendants' case to some extent. According to P.W. 2, he wrote on a blank paper which had already been fixed with Revenue Stamp. This is not a natural condition of scribing of a document. Inconsistency and contradiction with evidence of P.W. 1 creates grave doubt about execution of the promissory note (Ext. 1) by Defendant No. 1 when part of his case that the contents were written on a blank paper to which revenue stamps were affixed finds support.
19. P.W. 1 stated that P.W. 3 called P.W. 2. According to P.W. 2, P.W. 3 was present when the document was executed. P.W. 1 stated that during evidence, his son was in court. P.W. 3 does not speak a word about execution of the document. Silence of P.W. 3 makes plaintiffs case doubtful when case of defendant No. 1 is that at the time of his employment, under P.W. 3, he signed on revenue stamps affixed to a blank paper which was kept as security by P.W. 3. D.W. 1, a clerk in office of Sub-divisional Office, Bhadrakh states in his examination-in-chief that on 25-10-1971, defendant No. 1 was present in office along with him. In cross-examination, it was suggested that after 7 P.M. it was possible for defendant No. 1 to come to Cuttack and return back. If any of the witnesses of the plaintiff would have stated that Ext. 1 was executed in the evening of 25-10-1971, this suggestion in cross-examination could have been considered. In absence of such evidence, I am inclined to accept cuse of defendant No. 1 that on 25-10-1971 he had not come to Cuttack. Defendant No. 1 also stated the same on oath.
20. Plaintiff having failed to prove that defendant No. 1 executed the handnote, question of passing of consideration under Ext. 1 becomes doubtful. Assuming that Ext. 1 is not acceptable on technical grounds as a promissory note, it is to be examined if otherwise than Ext. 1 defendant No. 1 was paid the loan of Rs. 15,000/-. In his deposition, plaintiff stated that he assured defendant No. 1 to advance Rs. 15,000/- for his business. When he retired he got Rs. 25,000/-which he kept with his son. Out of it, he paid Rs. 15,000/-. P.W. 3 does not breathe a word in this respect. Payment of Rs. 15,000/- to a person like defendant No. 1 who is a clerk in a Sub-Divisional Office whose financial ability is not. known to the plaintiff only on the ground that he had assured earlier and defendant No. 1 calls him 'Mausa' is not believable. Accordingly, 1 am satisfied that plaintiff did not pay any amount as loan to defendant No. 1.
21. In the result, there is no merit in this First Appeal which is dismissed with costs.