Madras High Court
K. Mani vs Elumalai on 17 April, 2002
Equivalent citations: (2003)2MLJ190
JUDGMENT K. Gnanaprakasam, J.
1. The defendant is the appellant. The plaintiff filed a suit for recovery of the amount due on promissory notes dated 3.2.1998 and 15.7.1998.
2. The plaintiff's case is that on 3.2.1998, the defendant borrowed a sum of Rs.3500/= promising to repay the same together with 12% interest per annum and executed the first promissory note. The defendant also borrowed another sum of Rs.5000/= on 15.7.1998 and executed the second promissory note, promising to repay the same together with 12% interest per annum. The defendant has not paid any amount towards these promissory notes and to the notice dated 23.7.1999, the defendant sent a reply on 5.8.1999. As the defendant has not paid the amount, the plaintiff laid the suit.
3. The defendant in his written statement had stated that he never borrowed any amount on 3.2.1998 or on 15.7.1998. The defendant was conducting a chit and in respect of the same, the defendant was liable to pay a sum of Rs.1750/= only, for which, the plaintiff obtained the signature of the defendant in the blank printed promissory notes and filled up the same with the help of his men. The second promissory note dated 15.7.1998 was also filled up by the plaintiff in the same manner. The defendant did not borrow any amount from the plaintiff.
4. On the said pleadings, the trial court framed the necessary issues and answered that the second promissory note Ex.A2 was materially altered and came to the conclusion that both the promissory notes were not executed by the defendant and the promissory notes were not true and valid, and dismissed the suit. Aggrieved by the same, the plaintiff preferred an appeal in A.S.No.170 of 1997 before the District Court, Tiruvannamalai and the learned District Judge found that the defendant has not raised any plea with regard to material alteration and in the absence of the necessary pleading, the trial court's finding that the suit promissory notes were materially altered and thereby dismissed the suit is not proper. The lower appellate court further held that the defendant failed to prove that the plaintiff obtained Exs.A1 and A2 Promissory Notes in the blank printed promissory notes and allowed the appeal. As against the same, the defendant has preferred this appeal.
5. The appeal came up for admission and notice of motion alone was ordered. Thereafter, it was felt that trial court's records are necessary and they were sent for. After the receipt of the Trial court records, Second Appeal was taken up for enquiry.
6. The learned advocate for the defendant/appellant has submitted that the findings of the learned District Judge that the trial court dismissed the suit only on the ground of `material alteration' in Ex.A2 is not correct. But on the other hand, the trial court dismissed the suit on the ground that Exs.A1 and A2 were not validly executed. It is submitted, even if there is no pleading as to material alteration of the documents, during the trial of the suit, if the court finds that there is any material alteration of the documents, that can be taken into account in deciding the issue even in the absence of such a pleading.
7. The appellant has raised two Substantial Questions of Law in this second appeal, which are,
(i) Is the learned District Judge correct in decreeing the suit on the ground that the question of material alteration has not been pleaded by the defendant when the court has power to look into the material alterations if any to decide the issue without the pleadings of either party ?
ii) Are not the judgment and decree of the learned District Judge vitiated for not considering the evidence of both sides as the first appellate being the last court on facts?
8. The learned advocate for the respondent/plaintiff has submitted that there is no material alteration at all in the suit promissory notes and the defendant also has not pleaded so in the written statement. That in the absence of the pleadings, the trial court erred in holding that the suit promissory notes were materially altered and the first appellate court has correctly held that the said finding of the trial court was not based upon the pleadings in the written statement and therefore it is not sustainable, and allowed the appeal.
9. It is further argued that the defendant having admitted his signature in the suit promissory notes, the burden is upon him to prove that the signature of the defendant was obtained in the blank printed promissory notes. Even if it is true, that would not amount to material alterations and the defendant has given prima facie authority to the holder (plaintiff) to make or complete the instrument and make it negotiable and that therefore the dismissal of the suit by the trial court is not proper. The learned counsel argued in support of the findings rendered by the lower appellate court.
10. Though the defendant raised only two substantial questions of law, after hearing the learned advocates for the respective parties, I feel that the following further substantial questions of law would arise for consideration of this Court:
(i) When the defendant/appellant admitted his signature under promissory notes (Exs.A1 and A2), can the defendant shift the burden of proving the promissory notes to the plaintiff ?
(ii) Whether the plaintiff is entitled to the benefit of statutory estoppel under Section 20 of The Negotiable Instruments Act ?
(iii) Whether the evidence adduced without pleadings is admissible in law?
11. The learned advocate for the defendant/appellant has submitted that the defendant has not borrowed any amount from the plaintiff. But however, the defendant had signed in the printed stamped promissory notes for the amount due in respect of some chit transactions and the suit promissory notes were fabricated by the plaintiff with the help of those unfilled promissory notes and therefore the defendant is not at all liable to pay the suit claim.
12. The learned advocate for the defendant/appellant has further submitted that in Ex.A1, the consideration amount was written as Rs.5000/= and subsequently it was deleted and it was written as Rs.4000/= and it would amount to material alteration and it would make the instrument as void and also relied upon Section 87 of the Negotiable Instruments Act. These things are taken note of by the trial court and dismissed the suit. But however, the lower appellate court has taken a different view and the same is not proper.
13. On the contrary, the learned advocate for the respondent/plaintiff would submit that the defendant having admitted his signature in the suit promissory notes Exs.A1 and A2, the burden shifts upon the defendant to prove that the suit promissory notes were fabricated with his signature. He has relied upon the case of CHIDAMBARAM VS. P. T.PONNUSAMY (1997(1) L.W. 843 to substantiate his submission.
14. The respondent/plaintiff has also submitted that under Section 20 of The Negotiable Instruments Act, wherein it is stated that "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, shall be liable to pay the amount to any holder in due course for such amount."
15. The learned advocate for the respondent/plaintiff further relied upon the case of BHARAT BARREL AND DRUM COMPANY VS. AMIN CHAND PAYRELAL , wherein it was held, " The evidence led by the defendant in that regard was not accepted by any of the Judges dealing with the case as noticed herein earlier. In the absence of disproving the existence of the consideration, the onus of proof of the legal presumption in favour of the plaintiff could not be shifted."
16. The respondent/plaintiff further submitted that there is no material alteration at all in the promissory notes, especially in Ex.A2, the amount shown in the numericals alone is corrected but the amount written in words are shown properly. If that be so, under Section 18 of The Negotiable Instruments Act, if the amount undertaken or ordered to be paid is stated differently in figures and in words, the amount stated in words shall be the amount undertaken or ordered to be paid. He relied upon the case of KISHANLAL VS. JOGRAJ BANTIA (100 L.W. 981), for the above said preposition. It is further argued that there is no material alteration at all as contended by the defendant. Only when the defendant proves that there is any material alterations of the negotiable instrument, then only it will render the same void and in the absence of the same, the defendant is not entitled to make the instrument as void.
17. The respondent/plaintiff's case is that the defendant borrowed the amount under the promissory notes Exs.A1 and A2, but the same is being denied by the defendant. But however, the defendant admits his signatures but would deny the consideration thereon. Further case of the defendant, is that he has signed in the blank stamped printed promissory notes and the same were utilised by the plaintiff to file the suit. I had an occasion to consider a similar case in the case of SAMIKANNU NAICKER VS. SIGAMANI (2000(2) CTC 140), wherein I have considered about 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 somebody else. Section 20 of The Negotiable Instruments Act was relied upon, 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."
18. In the said case after considering those aspects, I came to the conclusion that the plaintiff is the "holder in due course" and the same was 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. In fact, the said view of mine is supported by the view already taken by this Court in the case of CHIDAMBARAM V. P.T.PONNUSAMY (1995(2) L.W. 719 and P.TALAMALAI CHETY V. RATHINASAMY (1997 (1) L.W. 843. That apart, a passage from the commentaries on the Negotiable Instruments Act by Bashyanm and Adigar's Eighth Edition, page 201, was also relied upon, wherein it is stated that " 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." After analysing all the aspects of the case, here also I have to hold that 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 extricate from the liability and therefore, I hold that the defendant is liable to pay the amount as shown in the promissory notes.
19. With regard to certain alterations in the suit promissory notes, it is submitted that the said alterations are material alterations and the plaintiff is not entitled to recover the amount. The said argument of the Appellant was countered by the learned Advocate for the respondent-plaintiff that in the absence of pleadings to that effect, the evidence let in is inadmissible and cannot be considered. But once again it is submitted on behalf of the defendant that the trial court accepted the material alterations found in Ex.A.2 and dismissed the suit. But the lower appellate court declined to accept the said case of the defendant on the ground that in the absence of pleadings the evidence let in by he defendant cannot be accepted and set aside the findings of the Trial Court. For the purposes of my satisfaction, I have also verified Exs.A1 and A2 and there is no deletion or addition or overwriting in Ex.A1. But in Ex.A2, the amount in words was written and it was deleted and written as Rs.5000/=. But however, I do not find any alterations, deletions in words. As such, there is no difference at all in between the amount written in the letter and in the words. Even otherwise, under Section 18 of The Negotiable Instruments Act if the amount undertaken or ordered to be paid is stated differently in figures and in words, the amount stated in words, shall be the amount undertaken or ordered to be paid. Even the benefit of that section is not available to the defendant, as there is no difference of the amount in the words and in the figures and therefore, the amount shown is to be accepted.
20. With regard to certain corrections in the promissory note, the learned advocate for the defendant/appellant submitted that though there is no plea about the corrections/material alteration in the written statement there is material alteration in Ex.A2 and the same was pointed out before the trial court and it was accepted, but the same was not accepted by the lower appellate court. It is of the view that in the absence of any pleadings in the written statement, the findings of the trial court that the suit promissory notes were materially altered, is a wrong finding. In the case of K. GOPALAN NAIR VS. V. KAMALAMMAL (1981-I M.L.J. 40), it was observed as follows:
" I am firmly of the opinion that the learned Appellate Authority should not have looked into this piece of evidence of P.W.1 in the absence of any allegation that the non-residential building is required for any textile business of the respondent's husband."
21. The Supreme Court in the case of MRS. OM PRABHA JAIN VS. ABNASH CHAND AND ANOTHER has held that "the ordinary rule of law is that evidence is to be given only on a plea properly raised and not in contradiction of the plea." Here, the defendant not having raised the plea of material alteration in the written statement, it is not open to develop his case during letting in evidence. In fact, viz-a-viz namely, when there is a plea and there is no evidence to support the said pleadings, the pleadings cannot also be admitted. This is a view taken by the Bombay High Court in the case of SAKHARIBAI HASANALI MAKANI AND OTHERS V. GIRISH KUMAR RUPCHAND GADIA AND OTHERS (1997 ACJ 95). That case arises out of a claim in a motor accident, wherein the claimant had stated that the deceased was earning about Rs.3500/= to Rs.3600/- per month and on an average he was contributing Rs.2000/= per month for the household expenses. The witness was not cross examined and the claim was not disputed. But however, it was found that initially the claimant had claimed that the deceased was earning Rs.1500/= to Rs.1600/= per month and it was only by subsequent amendment that the claim was made that the deceased was earning Rs.3500/= or more. The Court held that "we do not find any merit in the contention that the amendment should not have been granted. The contents of the application are not the evidence and substantive evidence is only deposition of the witness entering into the witness-box. However, in a civil suit, the pleadings, namely the plaint and the written statement formed the basic structure over which the case is built by filing documents and let in oral evidence. The pleadings of the statement of facts, where the parties are expected to state all the facts and material facts and so that the other party can either accept or deny. That in the absence of pleadings, if any evidence is let in, the other party would be taken unaware of and in the said situation only, the courts have held that any amount of evidence in the absence of a plea not being raised is inadmissible". In this case also, the defendant had not chosen to plead that the suit promissory notes are materially altered, but however, he had let in evidence and the trial court accepted the case of the defendant and dismissed the suit. But however the lower appellate court took a correct view that the findings of the trial court without pleadings, is not proper and set aside the judgment and decree of the trial court. I am in complete agreement with the findings of the lower appellate court that the dismissal of suit by the trial court is not proper. As such any amount of evidence in the absence of a plea not being raised is inadmissible.
22. The lower appellate court has also drawn the presumption available under Section 118 of The Negotiable Instruments Act in favour of the plaintiff. Section 101 of the Evidence Act states that "whoever desires any Court to give judgment 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.
23. 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 is was obtained by fraud, which A denies.
If no evidence were given on either side, A would succeed, as the bond not disputed and the fraud is not proved."
In our case also, the defendant having admitted the signature in the suit promissory notes would state that the rest of the contents in the suit promissory notes were filled up subsequently by the plaintiff in his absence. To such a contention, Section 20 of The Negotiable Instruments Act is the answer, which empowers the holder in due course to fill up the blanks and to negotiate the instrument. As such, the signatures of the defendant in the promissory notes is admitted and the burden shifts upon the defendant that there is a material alteration in the promissory notes and that he has not borrowed the amount shown in the suit promissory notes, which the defendant has not proved in this case. Drawing presumption available under Section 118 and Section 20 of The Negotiable Instruments Act, I hold that the plaintiff is a holder in due course of the promissory notes and the defendant is liable to pay the said amount. All the questions raised in this Appeal are answered accordingly.
24. For all the reasons stated above, the judgment and decree of the lower appellate court is hereby confirmed and this appeal is dismissed in the admission stage itself. No costs. Consequently, connected CMP is also dismissed.