Andhra HC (Pre-Telangana)
G. Venkata Rama Subbaiah vs D. Rasool Naik on 7 March, 2003
Equivalent citations: 2003(4)ALD887, 2003(4)ALT414
JUDGMENT Dubagunta Subrahmanyam, J.
1. This appeal is filed against the judgment and decree dated 16-4-1990 in A.S. No. 57 of 1988 on the file of II Additional District Judge, Kurnool setting aside the judgment and decree dated 8-8-1988 in OS No. 21 of 1988 on the file of Principal Subordinate Judge, Kurnool. The plaintiff is the appellant
2. Necessary facts for the disposal of this appeal are as follows:
Plaintiff filed a suit for recovery of a sum of Rs. 18,210/- on the plea that on 1-4-1985 the defendant borrowed Rs. 18,000/-from the plaintiff and executed the suit promissory note Ex.A1 agreeing to repay the amount with future interest at 12% per annum. The defendant contested the suit. He is the owner of a printing press. The plaintiff is also owner of a printing press. According to the defendant, the District Collector invited tenders for printing ration cards, the plaintiff and owners of some small printing presses formed themselves into a syndicate and approached the defendant and requested him to file a tender quoting rate at 0-75 paise per card and the plaintiff and other printers would file tenders quoting a higher price and after the lowest tender of the defendant is accepted by the District Collector, he has to entrust printing work to the plaintiff and other members of the syndicate and as a security for the entrustment of that printing work to the plaintiff and others, defendant executed a pronote for Rs. 18,000/- in favour of the plaintiff and similar pronotes in favour of other printers on the same day. It is also his case that at the time of finalizing the tenders, the Joint Collector persuaded him to accept the rate at 0-60 paise per card and he agreed for the said proposal. It is also his case that subsequently the District Collector reduced the rate to 0-40 paise per card. According to the defendant, as differences arose between himself and the plaintiff and other printers, the plaintiff filed the suit. Subsequently, he amended his written statement and took the plea that he has verified the suit pronote Ex.A1 in the Court and found that it is not the pronote executed by him on 1-4-1985. He pleaded that when he executed the pronote for Rs. 18,000/- no interest was stipulated in the said pronote and as per the recitals in Ex.A1 pronote there is a stipulation for payment of interest at 12% per annum. Accordingly, he pleaded that the suit pronote Ex.A1 is a forged pronote. Both parties adduced oral and documentary evidence before the Trial Court. On a consideration of the entire evidence available on record, the learned Principal Subordinate Judge held that the suit pronote is true, that defendant failed to prove that it is not supported by consideration and accordingly decreed the suit of the plaintiff. Aggrieved thereby, the defendant preferred an appeal before II Additional District Judge, Kurnool. The learned II Additional District Judge concurred with the finding of the Trial Court that the suit pronote Ex.A1 is a genuine pronote. Regarding the consideration, the learned Additional District Judge held that the plaintiff failed to produce his accounts to show that consideration was passed under Ex.A1 pronote and, therefore, he allowed the appeal and dismissed the suit holding that the suit pronote is not supported by consideration. Aggrieved thereby, the plaintiff preferred the present appeal.
3. At the time of admission of this appeal, the learned admission Judge treated the following points formulated in the memorandum of grounds of appeal as substantial questions of law that arise for consideration in the present appeal.
"(1) Whether the learned Additional District Judge is justified in holding that the suit pronote Ex.A1 was not supported by consideration after having given a categoric finding that Ex.A1 was executed by the defendant in view of the provisions of Section 118 of the Negotiable Instruments Act.
(2) Whether the learned Additional District Judge is justified in drawning an adverse inference for non-production of the account books especially when the presumption under Section 114 of the Evidence Act and under Section 118 of the Negotiable Instruments Act is not rebutted with regard to passing of the consideration."
4. The suit is based on the suit pronote Ex.A1. The consideration for Ex.A1 is Rs. 18,000/-. Even though the defendant pleaded that the suit pronote Ex.A1 is a forged pronote, both the Courts below concurrently held that the suit pronote is a genuine pronote executed by the defendant. This finding is not challenged by the defendant during the course of hearing of this appeal. Therefore, Ex.A1 is a promissory note executed by the defendant for a consideration of Rs. 18,000/-. The alternative plea of the defendant is that Ex.A1 is not supported by consideration. Section 118 of the Negotiable Instruments Act lays down that if the execution of a promissory note is admitted, unless the contrary is proved, it shall be presumed that the suit promissory note is supported by consideration recited in the pronote. The lower appellate Court relied upon two decisions reported in Kundal Lal v. Custodian, Evancuee Property, AIR 1961 SC 1316, and G. Vasu v. S.Y.S. Quadri, 1987 (1) ALT 1 (FB), and held that as the plaintiff did not produce his accounts he failed to show that the suit promissory note is supported by consideration. I have considered the judgment of the lower appellate Court. I am satisfied that the decision is contrary to the principles of law laid down by the Full Bench of this Court.
5. The Full Bench of this Court followed the decision of the Apex Court in Kundan Lal v. Custodian, Evacuee Property (supra). The Apex Court held that a plaintiff who says that he had sold certain goods to the defendant and that a promissory note was executed as consideration for the goods and that he is in possession of the relevant account books to show that he was in possession of the goods sold and that the sale was effected for a particular consideration should produce the said account books. The Apex Court further held that if such a relevant evidence is withheld by the plaintiff, Section 114, Evidence Act enables the Court to draw a presumption to the effect that, if produced, the said accounts would be unfavourable to the plaintiff. It further held that this presumption, if raised by a Court, can under certain circumstances rebut the presumption of law raised under Section 118 of the Negotiable Instruments Act.
6. In my considered opinion, this decision has no application to the facts of the present appeal. It is not the plea of the plaintiff that he lent to the defendant any sum from his printing press business. Though he deposed that in addition to the business of running a printing press, he is doing money-lending business, it is not his evidence that he is maintaining any accounts in the regular course of his money-lending business. It is not elicited from the plaintiff during his cross-examination that about his lending to the defendant under Ex.A1 pronote, he made entry in his account books. As the defendant himself had withdrawn his earlier plea that the suit transaction has something to do with the business of the printing press run by the plaintiff, he cannot thereafter contend that the suit transaction has anything to do with the business of the printing press run by the plaintiff. Therefore, no adverse inference can be drawn against the plaintiff in view of his conduct in not producing his accounts relating to the printing press invoking the provision under Section 114 of the Evidence Act. It is pertinent to mention that the defendant did not call upon the plaintiff at any stage of the suit proceedings to produce his account before the Court and thereafter plaintiff failed to produce his account books before the Court.
7. The principle of law laid down by the Full Bench of this Court is that Section 118 of the Negotiable Instruments Act does not mean that the defendant must necessarily show that the document is not supported by any form of consideration and he has the option to ask the Court to consider the non-existence of consideration so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that consideration did not exist. This Court further held that though the evidential burden is initially placed on the defendant by virtue of Section 118 it can be rebutted by the defendant by showing a preponderance of probabilities, that such consideration as stated in the pronote, or in the suit notice or in the plaint does not exist and once the presumption is so rebutted, the said presumption 'disappears'. It further held that if once such convincing rebuttal evidence is adduced and accepted by the Court, the evidential burden shifts back to the plaintiff who has also the legal burden. It held that thereafter, the presumption under Section 118 does not come again to the plaintiffs rescue. It also held that if the plaintiffs case is at variance with the one contained in the promissory note or the notice, the said circumstance can be relied upon by the defendant for the purpose of rebutting the presumption and shifting the evidential burden to the plaintiff who has also the legal burden.
8. In the present appeal, the presumption of law that the suit pronote is supported by consideration is not all rebutted by the defendant. Unless he rebuts such presumption by adducing convincing evidence, the evidential burden would not shift back to the plaintiff who has the legal burden. Only after the defendant adduces convincing rebuttal evidence it can be held that thereafter the Presumption under Section 118 does not come to the rescue of the plaintiff. In the present appeal, it is clear from the evidence on record that the defendant failed to rebut initially the said presumption of law. Therefore, overlooking that stage the lower appellate Court committed a mistake in coming to the conclusion that as the plaintiff did not produce his account books, the suit pronote is not supported by consideration. It is not the contention of the defendant that consideration recited in the suit pronote or notice or pleadings in the plaint is in any manner at variance with the evidence adduced by the plaintiff during the trial. I am therefore, of the opinion that as the defendant failed to discharge his initial burden of rebutting the presumption of law envisaged under Section 118 of the Negotiable Instruments Act, the suit of the plaintiff is liable to be decreed. It is thus clear that the judgment of the lower appellate Court is liable to be set aside.
9. In the result, the appeal is allowed with costs. The judgment of the lower appellate Court is set aside. The appeal in AS No. 57 of 1998 is dismissed with costs. The decree passed by the Trial Court in OS No. 21 of 1988 is confirmed.