Madras High Court
Samikannu Naicker vs Sigamani on 1 February, 2002
JUDGMENT K. Gnanaprakasam, J.
1.The plaintiff is the appellant.
2.The plaintiff filed the suit for recovery of the amount due by the defendant in respect the promissory note dated 1.2.1992.
3.The defendant denied the borrowing from the plaintiff. It is stated, in the written statement, that the defendant has not seen the plaintiff and he is a stranger to the defendant. The defendant was not having any transaction with the plaintiff. The defendant has not received any amount from the plaintiff. The defendant has purchased vessels and certain articles from Sri. Selvasubramania Vilas Vessels Shop, Virudhachalam on 9.6.1990 to the extent of Rs.13,980, out of which, the defendant has paid Rs.7,000/- to the owner of the said Shop, leaving the balance of Rs.6,980/-. The defendant has also paid Rs.2,500/- and the remaining balance is Rs.4,480/- (wrongly typed as Rs.41,480/- in the written statement). The shop owner has compelled and demanded the defendant to put his signature on two stamped unwritten blank paper and the defendant had put his signature on the said two stamped unwritten blank paper. The Shop owner has fabricated the said stamp paper as promissory note in the name of the plaintiff. Therefore, the promissory note is a fabricated one. No consideration was passed under the promissory note. On 25.7.1992, the defendant has paid the entire balance of Rs.4,480/-.
4.The defendant also filed additional written statement, wherein he has contended that the plaintiff has no means to pay the suit promissory note amount. The plaintiff was also not having amount to pay the suit promissory note amount at the time of the execution of the promissory note.
5.Based upon the above said pleadings, the trial court framed necessary issues. The plaintiff has examined himself as PW.1 and also examined the scribe as PW.2. The defendant had examined himself as DW.1 and also examined one more witness. The plaintiff has filed Exs.A1 to A8 and the defendant has filed Ex.B1. The trial court, after taking into consideration the materials placed before it, came to the conclusion that the suit promissory note was a fabricated one and dismissed the suit.
6.On appeal by the plaintiff in AS.No.26 of 1997 before the Sub Court, Virudhachalam, the lower appellate court came to the conclusion that the plaintiff had necessary means to pay the suit promissory note amount. But, however, it was held that it would not entitle him to claim the amount under the suit promissory note, as the evidence of the plaintiff was prevaricating and dismissed the appeal. Aggrieved by the same, the plaintiff has preferred this second appeal.
7.When the second appeal came up for admission, this court ordered only notice of motion and when it came up for hearing on 7.2.2002, the appellant requested this court that the trial court records are necessary to advance his argument and upon which, the trial court records were sent for and they are available.
8.The appellant has raised five substantial questions of law in this second appeal and I consider the 1st question is as unnecessary and the substantial questions of law Nos.2 to 5 are extracted hereunder :-
i.When the respondent had categorically admitted his signature in Ex.A1 promissory note, whether the courts below are correct in law in shifting the burden of proving Ex.A1 promissory note on to the appellant?
ii.Whether the courts below are correct in non-suiting the case of the appellant inspite of clear and categorical admission by the respondent that he has signed in Ex.A1 promissory note?
iii.When the burden cast upon the appellant had been shifted to the respondent by virtue of his admitting the signature in Ex.A1 promissory note, whether the courts below are correct in law in relying upon nugatory contentions of the respondent and thereby deciding in his favour?
iv.Whether the presumption under Section 118 of the Negotiable Instruments Act can be drawn up in the present case?
9.The learned advocate for the appellant/plaintiff has submitted that when the defendant having admitted his signature in the suit promissory note Ex.A1, the burden shifts upon the defendant to prove that the suit promissory note was fabricated with his signatures. He also relied upon the judgements reported in 1997-I-LW-843 (P. Talamalai Chetty Vs. Rathinasamy) and AIR-1995(2)-LW-719 (Chidambaram Vs. P. T. Ponnuswamy) to support his submission. The appellant also submitted that under Section 20 of the Negotiable Instruments Act, the person signs either wholly blank or having written thereon an negotiable instrument, shall be liable to pay the amount to any holder in due course for such amount.
10.On the contrary, the learned advocate for the respondent has submitted that the defendant has not borrowed any amount from the plaintiff. With regard to the amount due to one Sri Selvasubramania Vilas Shop owner, he had signed in an unwritten blank stamped paper and the suit promissory note was fabricated by the plaintiff with the help of the said shop owner and therefore, it is a clear case of fabrication of the promissory note and the defendant is not at all liable to pay the suit promissory note amount. The respondent/defendant also relied upon the judgements reported in 1997-1-LW-474 (A.Irudayasamy Vs. V.Perumal Naidu) and 2000(1)-CTC-505 (Santosh Hazari Vs. Purushottam Tiwari (Dead) By LRs.
11.The plaintiff's case is that the defendant borrowed the amount under the promissory note dated 1.2.1992 and the same is being denied by the defendant. But, however, the defendant admits his signature in the suit promissory note, but would deny the rest of the writings in the suit promissory note. The defendant's case is that he had signed in blank stamped papers and the rest of the writings in the suit promissory note were filled up and fabricated.
12.Let us assume what has been stated by the defendant is true. What would be the legal consequences that would flow from the admission made by the defendant that the signature in the suit promissory note is, his signature, but the rest were filled up by some body else. In this connection only, the learned advocate for the plaintiff relied upon Section 20 of the Negotiable Instruments Act, which reads as follows:-
"Inchoate stamped instruments: Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in the States, 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 shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder."
13. The said section empowers the person, who is the holder of an inchoate stamped and signed instrument, to fill up the blanks and to negotiate the 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. In our case, the plaintiff is the holder in due course. "Holder in due course" is defined under Section 9 of the Negotiable Instruments Act as follows:-
"Holder in due course" means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or endorsee thereof, payable to, or to the order of, a payee, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title."
14.In our case, the plaintiff is "the holder in due course" and the same is not in dispute. As such, the plaintiff is entitled to fill up the blanks and to negotiate the instrument. The only limitation is that 'the holder in due course' can recover any amount specified thereunder and not exceeding the amount covered by the stamp. The suit promissory note is consisting of two 20 paise revenue stamps, totalling 40 paise revenue stamps and therefore, the amount claimed under the suit promissory note is properly stamped. The view expressed above that the holder in due course is empowered to fill up the blanks and to negotiate the instrument is supported by the view taken by the learned Judge (S.M. Ali Mohamed, J.) of this Court, in the case of Chidambaram Vs. P. T. Ponnuswamy (1995-2-LW-719). The said decision is relied upon by another learned single Judge of this court in the case of 1997-(1)-LW-843 (P. Talamalai Chetty Vs. Rathinasamy). A passage from the commentaries on the Negotiable Instruments Act by Bashyam and Adigar's, Eighth Edition, Page 201, reads as "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."
15.The above said judgements fortify the case of the plaintiff. Even assuming that the contents of the promissory note were filled up by the plaintiff, when once it is proved that he is the holder in due course, the defendant cannot deny his liability.
16.Now let us consider the decision relied upon by the defendant in the case of 1997-1-LW-474 (A.Irudayasamy Vs. V.Perumal Naidu). That is also a case, where the suit is filed by the plaintiff for recovery of the amount due under a promissory note. The defendant admitted the execution of the promissory note, but denied the consideration, stated in the promissory note. As against a sum of Rs.15,000/- being the consideration stated in the promissory note , the defendant admitted the receipt of only Rs.5,000/- and pleaded failure of consideration to the extent of Rs.10,000/-. But, the plaintiff's suit was decreed. On appeal, the lower appellate court modified the decree. In the said case, the provisions of Section 92 of the Evidence act and the presumption that could be drawn under Section 118 of the Negotiable Instruments Act, were considered at length. In that case, the defendant admits not only his signature, but also the execution, but pleaded only failure of the consideration to the extent of Rs.10,000/-. The facts in the said decision differ from the facts of the present case. But, even in the said case, the presumption available under Section 118 of the Negotiable Instruments Act was drawn in favour of the plaintiff and the judgement and decree of the lower appellate court was set aside and the judgement and decree of the trial court was restored.
17.In the case of 2000(1)-CTC-505 (Santosh Hazari Vs. Purushottam Tiwari (Dead) By LRs, the plaintiff filed the suit for declaration of title and recovery of possession and for permanent injunction in respect of certain items of land. The defendant contended that he was in possession of the suit property and also contended that the suit was barred by limitation in view of the fact that the suit was filed more than 12 years after the date of dispossession of the plaintiff. The trial court decreed the suit in entirety. On appeal, the appellate court allowed the appeal and reversed the judgement and decree of the trial court and the suit was directed to be dismissed. Aggrieved by the same, the plaintiff has preferred a second appeal and the same came to be dismissed in-limni by the High Court , passing a brief order that "the matter stood concluded by findings on facts and no substantial questions of law has arisen for determination". Aggrieved by the same, the plaintiff took up the matter before the Supreme Court by a Special Leave Petition. The apex court directed notice to be issued to the defendant on a limited question "as to why the matter should not be remanded back to the High Court for deciding the appeal after framing the necessary substantial questions of law". In the said factual matrix, the Supreme Court had analysed the power of the appellate court under Section 100 CPC and ultimately remanded the matter back to the High Court for hearing and deciding the second appeal afresh.
18.I am aware that under Section 100 CPC, this court is not entitled to reappreciate the evidence. But, if the finding of the lower appellate court is not based on materials or pleadings or the same is against the legal principles, I am entitled to interfere with the said finding.
19.In our case, I would be able to point out that Section 20 of the Negotiable Instruments Act was not brought to the notice either before the trial court or before the lower appellate court, which resulted in the dismissal of the suit by the trial court and affirmal by the lower appellate court. A fair and careful reading of Section 20 of the Negotiable Instruments Act would make it very clear that when the defendant signs and delivers to another a paper stamped in accordance with the law, relating to negotiable instruments, the holder of the inchoate stamped instrument is entitled to fill up the blanks and to negotiate the 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. In our case, it is the case of the defendant that he has signed only in a blank stamped paper and the rest of the writings were filled up by some body else and the suit promissory note is a created one and it is not his case that the signature in the suit promissory note is not his signature and in the said circumstances, Section 20 of the Negotiable Instruments Act supports the case of the plaintiff and therefore, as it has been observed that even assuming that the contents of the suit promissory note were filled up by the plaintiff, he is authorised to do so and make the instrument negotiable and the defendant is liable to pay the amount as shown in the instrument.
20.That apart, Section 101 of the Evidence Act speaks about the 'Burden of Proof' as under:-
"Whoever desires any Court to give judgement as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist.
When a person is bound to provide the existence of any fact, it is said that the burden of proof lies on that person."
21.Section 102 of the Evidence Act speaks about 'on whom burden of proof lies' as follows:-
"The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.
Illustration (b) states as "A sues B for money due on a bond.
The execution of the bond is admitted, but B says that it was obtained by fraud, which A denies.
If no evidence were given on either side, A would succeed, as the bond is not disputed and the fraud is not proved.
Therefore the burden of proof is on B.
22.In our case, the defendant admitted the signature in the suit promissory note and what he would state is that the rest of the contents in the suit promissory note were not there at the time when he signed in the stamped paper and the writings were subsequently filled up. We have already seen Section 20 of the Negotiable Instruments Act, which empowers the 'holder in due course' to fill up the blanks and to negotiate the instrument. As such, the promissory note given by the defendant is admitted and the burden shifts upon the defendant that the writings in the promissory note were subsequently filled up and he has not borrowed the amount under the promissory note, which the defendant has not proved in this case. Presumptions with regard to the negotiable instruments as stated under Section 118 of the Negotiable Instruments Act are also in favour of the plaintiff. As the defendant is not able to prove the contrary versions with srcm K. Gnanaprakasam, J.
regard to consideration, as to date............. as to stamps and also that holder is a holder in due course and in the said circumstances, the presumptions have got to be drawn in favour of the plaintiff and therefore, on that score also the defendant has to fail.
23.In the said circumstances, I hold that the courts below have committed a legal error in not having considered the provisions of Sections 20 and 118 of the Negotiable Instruments Act and Sections 101 and 102 of the Evidence Act and that therefore, the judgement and decree of the courts below are liable to be set aside and accordingly, set aside.
24.In the result, the judgement and decree of the courts below are set aside and the appeal is allowed. No costs. Consequently, connected CMP is closed.