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Haribhagvandas Parasram and Co. Vs. A.D. Thaker - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKarnataka High Court
Decided On
Case NumberCivil Revn. Petn. No. 624 of 1962
Judge
Reported inAIR1963Mys107
ActsNegotiable Instruments Act, 1881 - Sections 118
AppellantHaribhagvandas Parasram and Co.
RespondentA.D. Thaker
Appellant AdvocateS.B. Srinivasan, Adv.
Respondent AdvocateM. Nagappa, Adv.
Excerpt:
.....recital in the promissory note but wants to set up a different form of consideration for the suit pronote, he ought to prove the consideration, and the burden therefore is initially on him rather than on the defendant who denies consideration. it is perfectly true that if a particular consideration is mentioned in a negotiable instrument and that consideration is found to be false and some other consideration is set up, that is a factor which the court would take into consideration in deciding whether the defendant has discharged the burden cast upon him by section 118. but it is a very different thing to say that merely because the consideration mentioned in the negotiable instrument turns out to be false, therefore the statutory presumption is rebutted and the burden is thrown..........amendment of issues nos. 3 and 4.the suit was one on a pronote. according to the recitals in the suit pronote, cash consideration had been paid. but in the plaint, it had been pleaded that the pronote had been executed for the money due from the defendant. the defendant admitted in his written statement, the execution of the suit pronote; he pleaded that it had been executed by him under certain unusual circumstances and that it was not supported by consideration. then, the plaintiff stated in his reply statement that the defendant who had been an employee under the plaintiff had collected certain amounts due to the plaintiff and that the defendant having utilised the same for himself, executed the suit pronote for the said moneys. amongst other contentions, the defendant had pleaded.....
Judgment:
ORDER

M. Sadasivayya, J.

1. This revision petition is directed against an order made by the Additional First Munsiff, Bangalore, allowing an application made by the defendant for the amendment of issues Nos. 3 and 4.

The suit was one on a pronote. According to the recitals in the suit pronote, cash consideration had been paid. But in the plaint, it had been pleaded that the pronote had been executed for the money due from the defendant. The defendant admitted in his written statement, the execution of the suit pronote; he pleaded that it had been executed by him under certain unusual circumstances and that it was not supported by consideration. Then, the plaintiff stated in his reply statement that the defendant who had been an employee under the plaintiff had collected certain amounts due to the plaintiff and that the defendant having utilised the same for himself, executed the suit pronote for the said moneys. Amongst other contentions, the defendant had pleaded in his written statement that he had not collected a sum of Rs. 1399.50 nP. from Amba Book Binding Works and a sum of Rs. 324-50 nP. from the Jupiter Press. According to the plaintiff, these amounts also had been collected by the defendant and had been utilised by the defendant. According to issues 3 and 4 as originally framed, the burden had been thrown on the defendant to establish that these amounts had not been collected by the defendant from the Amba Book Binding Works and the Jupiter Press and that, therefore, the pronote was not supported by consideration to that extent. Consequent on the application for amendment filed by the defendant, the lower Court modified the 4th issue throwing the burden of proof on the plaintiff and thereby requiring the plaintiff to prove that the defendant had collected these sums from the Amba Book Binding Works and the Jupiter Press. Aggrieved by the said order passed by the lower Court, the plaintiff has preferred the present revision petition.

2. In amending issue No. 4 and throwing the burden of proof on the plaintiff, the learned Munsiff seems to have been influenced by the fact that the allegations in the plaint in regard to the nature of the consideration differed from the relevant recitals in the suit pronote. The short, but important question which arises for consideration in this revision petition is whether in the face of the statutory presumption arising under Section 118(a) of the Negotiable Instruments Act, the burden of proving the consideration for a pronote the execution of which is admitted by the defendant, should be thrown on the plaintiff, merely because the consideration alleged in the plaintiff's pleading is different from the consideration as recited in the suit pronote. Section 118(a) of the Negotiable Instruments Act is as follows:

'118. Until the contrary is proved, the following presumption shall be made:

(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;'

According to the plain language of the Section, it is clear that the presumptions mentioned therein should be made, until the contrary has been proved. But, the contention sought to be advanced by Sri Nagappa the learned Advocate for the respondent-defendant is, that the presumption arising under Section 118(a) has been sufficiently rebutted in the present case, by the fact that the consideration is admittedly different from that recited in the suit pronote, and that, therefore, the trial Court was justified in throwing the burden of proof on the plaintiff. In support of his contentions, he has referred to some cases; it appears to be sufficient to refer to two of them on which he has mainly relied. One of them is a case reported in Mt. Zohra Jan v. Mt. Rajan Bibi, 28 Ind Cas 402: (AIR 1915 Lah 86(2)). The other is a case reported in Venkatareddi v. Nagireddi, : AIR1951Mad851 . The learned Advocate for the respondent has drawn my attention to the following observations in the above two cases which support his contentions. In 28 Ind Cas 402 at p. 404: (AIR 1915 Lah 86 (2) at pp. 88-89), it is stated as follows:

'We start with the presumption laid down in Section 118 of the Negotiable Instruments Act that the promissory note in suit was executed for consideration, and the onus lies on the defendant to prove that no consideration passed to her under the promissory note. To this extent the plaintiff has an advantage over the defendant. But when we find that in the body of the promissory note the consideration for it is stated to be the sum of Rs. 30,000 borrowed in cash by the defendant from Nabi Bakhsh without interest, and when in the course of the pleadings the plaintiff is forced to admit that the consideration as stated in the promissory note did not pass,................................ is not the Court justified in holding that the Initial presumption raised in favour of the plaintiff by Section 118 of the Negotiable Instruments Act has been rebutted and that the onus has been shifted on to the plaintiff to prove that the promissory note was executed by the defendant for consideration.....................?'

At page 852 of : AIR1951Mad851 , it is stated as follows:

'On a consideration of the facts of the case I am inclined to hold that in a case like this when the plaintiff does not want to rely upon the original recital in the promissory note but wants to set up a different form of consideration for the suit pronote, he ought to prove the consideration, and the burden therefore is initially on him rather than on the defendant who denies consideration.'

It seems to me, with great respect to the learned Judges who have decided the above two cases, that due weight has not been given to the mandatory nature of the presumption arising under Section 118(a) of the Negotiable Instruments Act. It is mandatory that the presumption under Section 118(a) should be made, until the contrary is proved; therefore, it follows that until the contrary is proved, that presumption ought to continue. There is nothing in the language of that section which would justify the proposition that the statutory presumption should not be made, merely because the consideration alleged in the plaintiffs pleading is different from that recited in the negotiable instrument. The fact that the nature of the consideration as recited in the negotiable instrument is different from that alleged in the plaint, may have to be considered by the Court at a later stage, along with the entire evidence in the case, while determining whether the contrary to the statutory presumption has been proved. But the mere existence of such a fact would not, by itself, be a justification for the Court to disregard Section 118 and frame an issue casting the burden on the plaintiff to prove the consideration for a negotiable instrument, the execution of which has been admitted. The burden should still be on the executant to prove want of consideration, This view of mine finds support in what has been stated in a decision of the Bombay High Court reported in Tarmahomed Haji Abdul v. Tyeb Ebrahim, AIR 1949 Bom 257. At p. 257, Chagla, C. J., states as follows:

'......what has been urged before us is that as soon as it is shown that the consideration mentioned in the negotiable instrument is not the real consideration, the presumption under Section 118 is rebutted and it is for the plaintiff who is suing on the negotiable instrument to prove what the real consideration was. Looking to the plain language of the section, it is impossible to accept that contention, because the presumption that is raised under Section 118 is not in respect of the consideration mentioned in the negotiable instrument; the presumption is in favour of there being a consideration for the negotiable instrument, any consideration which is a valid consideration in law.'

Later, his Lordship states as follows:

'It is perfectly true that if a particular consideration is mentioned in a negotiable instrument and that consideration is found to be false and some other consideration is set up, that is a factor which the Court would take into consideration in deciding whether the defendant has discharged the burden cast upon him by Section 118. But it is a very different thing to say that merely because the consideration mentioned in the negotiable instrument turns out to be false, therefore the statutory presumption is rebutted and the burden is thrown upon the plaintiff to prove the consideration.'

Then again, his Lordship makes the following statement:

'In order to determine whether the contrary is proved or not, as required by Section 118, the whole volume of the evidence led before the Court must be considered............ But in considering the whole volume of evidence the Court must always bear in mind the statutory presumption under Section 118 and also the fact that the burden of proof lies upon the defendant and that burden has got to be discharged by the defendant.'

I find myself in respectful agreement with the above observations made by the High Court of Bombay.

In the present case, as has been contended by Sri Srinivasan the learned Advocate for the petitioner, the allegation of the defendant that he has not collected the said amount from Amba Book Binding Works and the Jupiter Press is, in substance, a pleading to the effect that to that extent the suit pronote is not supported by consideration. That being so, there cannot be any doubt that the burden of proving want of consideration to that extent, should be on the defendant.

In the course of the arguments, my attention was also drawn to a recent decision of Tukol, J. in Second Appeal No. 311 of 1958 (Mys). It is not disputed that the facts and circumstances of that case, are distinguishable from those of the present one. Having regard to the facts of the present case, it seems to me that the view taken by me does not conflict with that taken by his Lordship in the said second appeal.

For the reasons above stated, I am satisfied that this revision petition should be allowed and the order made by the lower Court allowing the amendment of issues Nos. 3 and 4, should be set aside; it is hereby set aside. The learned Counsel bring to my notice that in issue No. 3 as it stood originally there has been an error; they point out that the sum of Rs. 324-50 nP. alleged to have been due from the Jupiter Press, ought not to have been included in the original issue No. 3 and that it ought to have been properly included in original issue No. 4. As suggested by them, the original issue No. 3 shall stand amended by omitting the said sum of Rs. 324-50 nP. therefrom and the original issue No. 4 is modified to read as follows:

'Whether the defendant has not collected 'Rs. 1399-50 nP. and Rs. 324-50 nP. from Amba Book Binding Works and the Jupiter Press, Bangalore, respectively?'

Original issues Nos. 3 and 4 as modified above, are restored. Parties will bear their own costs in this revision petition.


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