Karnataka High Court
India Saree Museum vs P. Kapurchand And Anr. on 4 April, 1989
Equivalent citations: [1992]73COMPCAS375(KAR), 1989(2)KARLJ410
JUDGMENT Chandrakantaraj Urs, J.
1. This is a first defendant's appeal directed against the judgment and decree dated October 31, 1986, passed in O.S. No. 1136 of 1980 on the file of the II Additional City Civil Judge, Bangalore City. In the course of this judgment, we will refer to the parties by the ranks assigned to them in the trial court.
2. The plaintiff, Kapurchand, a businessman carrying on business at Bangalore paid in all a sum of Rs. 60,000 to the defendant, a partnership firm, discounting three cheques drawn by the first defendant in favour of the second defendant. He obtained, on printed discount forms, the signatures of the partner of the second defendant-firm evidencing payment of cash to the second defendant. When the cheques were presented after the due dates, they came to be dishonoured. Therefore, the suit for recovery of money together with interest at 18 per cent. per annum which the second defendant had to pay at the time of discounting in case of dishonour of the cheques. The defendants were served with notice of suit and only the first defendant entered appearance. The second defendant did not appear and, therefore, he was placed exparte.
3. The first defendant filed a written statement admitting the fact of having drawn the cheques in certain circumstances in favour of the second defendant. He also took the stand in his written statement that the plaintiff was not a holder in due course and he ran the risk of negotiating the post-dated cheques and, therefore, on account of non-performance of certain obligations undertaken by the second defendant at the time of drawing the cheques in his favour, he stopped payment on those cheques and, therefore, the cheques were dishonoured and as such he was not liable to make good any amount to the plaintiff as he had received no consideration for the cheques. On such pleadings, the court framed as many as 8 issues which are as follows :
(1) Does the plaintiff prove that, on March 10, 1973, defendant No. 2 discounted with the plaintiff the cheques bearing No. FS. 43142, FS. No. 431463 and FS. No. 431468 dated May 10, 1973, May 27, 1973, and April 30, 1973, respectively, for Rs. 20,000 each drawn by defendant No. 1 in favour of defendant No. 2 for valuable consideration ?
(2) Does the plaintiff prove that all the three cheques were dishonoured ?
(3) Does the plaintiff prove that defendant No. 2 agreed to pay interest at the rate of 18 per cent. per annum in case of dishonour till payment ?
(4) Whether the plaintiff is a holder in due course for valuable consideration and defendant No. 1 is not entitled to stop payment of above cheques ?
(5) Whether the suit is bad for the reasons stated in para 1 of the written statement ?
(6) Does defendant No. 1 prove that he issued the above cheques under the circumstances mentioned in para 7 of his written statement ?
(7) Does defendant No. 1 prove that the above cheques are vitiated on ground of fraud as stated in para 9 of his written statement ?
(8) Whether the suit is maintainable as against defendant No. 1 ?
4. The plaintiff examined himself and got marked as many as nine documents. The defendant examined himself in part and got marked two documents. On appreciating the evidence on record and the arguments advanced by learned counsel appearing for the parties, the suit has come to be decreed as prayed for. Therefore, the present appeal.
5. Before us, three grounds have been canvassed. They are :
(1) The suit was not maintainable for the reason that the plaintiff was not a holder in due course;
(2) That plaintiff clearly admitted in his cross-examination that he was not the person who presented the cheques for payment to the bank concerned and, therefore, he could not file the suit;
(3) That the court below did not take into account the evidence produced by the defendant and, therefore, the judgment and decree are liable to be set aside. Therefore, the questions that fall for our determination are whether the above contentions should be upheld.
6. The first ground urged does not stand the scrutiny of the court. The learned judge has examined that question in detail and having regard to the definition "holder in due course" in section 9 of the Negotiable Instruments Act (hereinafter referred to as "the Act") has come to the conclusion, having regard to the oral and documentary evidence of the plaintiff, that the plaintiff was a holder in due course. The fact that cheques were drawn in favour of the second defendant by the first defendant was admitted in the written statement and was, therefore, not required to be proved by the plaintiff. The plaintiff, in the course of his oral testimony in the trial court, has said that he knew the second defendant for a number of years as businessman in the area and, therefore, negotiated the cheques and obtained the necessary documents in the discount forms as at exhibits P-7, P-8 and P-9 on different dates. He has also said that he paid the sum of Rs. 20,000 the face value of each of the cheques, to the second defendant. He produced the cheques themselves as at exhibits P-1, P-2, and P-3. He also produced the endorsements issued by the bank intimating that the cheques could not be encashed for the reasons indicated. The learned judge has recorded that there was nothing useful elicited by the first defendant in the cross-examination of the plaintiff which induced the court below to disbelieve the oral testimony of the plaintiff of the documentary evidence produced by him. Therefore, he found in his favour on all the issues.
7. Now, if we look at section 9 of the Act which is as follows :
"9. Holder in due course. - '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 indorsee thereof, if payable to order, 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."
it is not only the endorsee who becomes a holder in due course but also a person who gets possession of the negotiable instrument for consideration, which means that he need not be an endorsee to be a holder in due course. Exhibits P-7, P-8 and P-9 clearly evidence the manner in which the plaintiff obtained possession of exhibits P-1, P-2 and P-3. Therefore, that he had acquired the cheques in question for consideration cannot be disputed. Once that is established satisfactorily, the court below did not commit any error of law in coming to the conclusion that the plaintiff was a holder in due course, and, therefore, could maintain a suit to recover moneys from the drawer when the cheques had been dishonoured. In any event, we should not disregard the fact that the signature of the plaintiff is to be found on the reverse of all the cheques. We have carefully scrutinised the cheques in the records summoned from the lower court. There is no endorsement as such by the payee of the cheques calling upon the bank to pay the endorsee. There is merely a signature of the partner of the second defendant firm and the seal. Below that is found the signature of the plaintiff. Further below that is the seal of the firm which evidently had presented the cheques to the bank. It is, in that circumstance, that the court came to the conclusion that the plaintiff was the holder in due course and could enforce the payment on the negotiable instruments in question as they were dishonoured.
8. We must agree with the conclusion reached and we do not find any flaw in the reasoning adopted by the trial court in appreciating the evidence though our attention was drawn to the fact by learned counsel for the appellant that the plaintiff had admitted in the cross-examination that he had not presented the cheques to the bank. That would not make any difference. The drawer of the cheque is liable to pay or make good the payment to the payee and every other holder in due course. Therefore, it is immaterial as to which one of the holders in due course presented the cheques as long as the law permits each and every one of the payee and the holder in due course to enforce the payment under the Act. We, therefore, reject the argument. Therefore, grounds 1 and 2 are rejected for the reasons given by us.
9. The last ground urged, namely, that no consideration was passed by the second defendant when the cheque was drawn in his favour and the court has not noticed exhibits D-1 and D-2 the agreements, in terms of which the cheques were issued should not detain us long. At the outset, we should reject the argument summarily in view of section 118(a) of the Act. Section 118(a) of the Act is as follows :
"Of consideration. - (a) 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;"
10. It is well-settled law that presumption is not proof but in the absence of rebuttal, presumption becomes operative. The defendant had an opportunity of examining himself and tendering the evidence, he got marked exhibits D-1 and D-2, the agreements between himself and the second defendant. His examination was not complete on a particular date when the court adjourned for the day and in that circumstance, the plaintiff made an application to recall DW-1, first defendant, for cross-examination. That application came to be allowed on payment of costs. But the defendant never subjected himself to cross-examination. For various reasons, he remained absent. In that circumstance, the court below has treated his evidence as incomplete and, therefore, as no evidence at all and as such it has ignored the same. In our view, it has rightly done so. Therefore, it is now not open to the defendant to contend before us that for various unavoidable reasons, the defendant could not be subjected to cross-examination even though he has orally prayed for receipt of additional evidence. Original order of the court on I.A. No. 3 was not challenged by way of revision under section 115 of the Civil Procedure Code. In this appeal, the I.A. No. 3 was wrongly allowed and, therefore, constitutes a good ground for remand of the case is also not taken.
11. In that view of the matter, we do not see may merit in this appeal and we dismiss the same.
12. After we had dictated this judgment in the open court, an oral application was made by learned counsel for the appellant to grant certificate of fitness to appeal to the Supreme Court as a substantial question of law of general importance arises for its consideration. We do not think so. The certificate is refused.