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Premchand Surana Vs. Laxmichand Parakh - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMadhya Pradesh High Court
Decided On
Case NumberSecond Appeal No. 178 of 1964
Judge
Reported inAIR1971MP124; 1970MPLJ598
ActsCode of Civil Procedure (CPC) , 1908 - Sections 100; Evidence Act, 1872 - Sections 101 and 114
AppellantPremchand Surana
RespondentLaxmichand Parakh
Appellant AdvocateA.P. Sen, Adv.
Respondent AdvocateJ.P. Sanghi and ;Rama Gupta, Advs.
DispositionAppeal dismissed
Cases ReferredUdebhan v. Vithoba
Excerpt:
.....had failed to discharge the burden or account for rs. 8,000/-.it did, however, properly place on him the burden of proving, as pleaded by him, that the amount was paid towards old debts and took into consideration ms failure to discharge that burden, along with other affirmative evidence, to conclude that the amount was paid towards the loan of rs. 8,000/-.the lower appeal court could, though it did not, regard the failure of the plaintiff to account for rs. (as he then was) observed :had the learned judge believed a single witness for the defendant or had he stated clearly in his judgment that such and such facts (setting them forth or indicating them) establish the fraud pleaded, there would have been an end of the matter......pieces of evidence. there is an essential distinction between burden of proof and onus of proof; burden of proof lies upon the person who has to prove a fact and it never shifts, but the onus of proof shifts. the burden of proof in the present case undoubtedly lies upon the plaintiff to establish the factum of adoption and that of partition. the said circumstances do not alter the incidence of the burden of proof. such considerations, having regard to the circumstances of a particular case, may shift the onus of proof. such a shifting of onus is a continuous process in the evaluation of evidence. the criticismlevelled against the judgment of the lower courts, therefore, only pertains to the domain of appreciation of evidence.' in kundan lal's case, air 1961 sc 1316 (supra),.....
Judgment:

K.L. Pandey, J.

1. This is a plaintiff's appeal against a reversing decree of the lower appellate Court whereby his claim grounded on a promissory note was dismissed.

2. The plaintiff Ratanchand, who filed the suit out of which this appeal arises, died during the pendency of the appeal. His son, who was brought on record as his legal representative, is prosecuting the appeal. It will, however, be convenient to refer in this judgment to Ratanchand as the plaintiff.

3. The suit was laid against Mangalchand (defendant 1) and his father Laxmichand Parakh (defendant 2), the present respondent. The Court of first instance, however, dismissed the claim against Mangalchand. The plaintiff did not appeal against that decree. Further, Mangalchand has not been joined as a party respondent in this second appeal also.

4. The facts which are no longer disputed are these. The plaintiff was a registered moneylender and advanced, in the usual course of business loans on interest terms. Mangalchand is a natural son of Laxmichand. They used to take loans from the plaintiff. On 15 December 1958, Mangalchand executed a promissory note Ex. P-1 for an apparent consideration of Rs. 8,000/-. The plaintiff received payment of two sums, Rs. 3,000 on 27 July 1959 and Rs. 1,500/- on 8 August 1959.

5. Briefly stated, the plaintiff's case was this. Mangalchand and Laxmi-chand were members of a joint Hindu family. Mangalchand was the manager of the family. In his capacity as such manager, he executed the promissory note Ex. P-1 for a consideration of Rupees 8,000/- and orally promised to pay interest at Rs. 1/8/- per cent per month. Since the loan was taken for joint family business, it was binding on Laxmichand also. After taking into account the two repayments of Rs. 3,000/- and Rs. 1,500/-, the amount remaining due, including interest came to Rs. 4,775/- which was, therefore, claimed in the suit.

6. The defendants denied that they were members of a joint Hindu family or that the loan was taken for jointfamily business. They, however, pleaded that Mangalchand (defendant 1) executed the promissory note dated 15 December 1958 as agent of Laxmichand (defendant 2), received only Rs. 6,900/- as consideration and promised to pay that amount by 13 April 1959. They denied that there was any oral agreement about payment of interest. According to them, the payments of Rs. 3,000/- and Rs. 1,500 were on account of a contract for purchase of a plot of land. They pleaded that they repaid on 1 September 1959, as evidenced by the receipt Ex. D-1, Rupees 7,500/- in full satisfaction of the amount due on the promissory note dated 15 December 1958.

7. The plaintiff did not dispute that he executed the receipt Ex. D-l He, however, pleaded that it was passed for Rs. 6,500/- paid on 2 July 1956 towards a loan of Rs. 5,500/- borrowed on 14 August 1954. He pleaded that no repayment was made on 1 September 1959 and that the defendants were falsely using an old receipt to show that Rupees 7,500/- was paid towards the loan on that date.

8. The Court of first instance held that the loan was taken by Mangalchand (defendant 1) as agent of Laxmi-chand (defendant 2), that Rs. 8,000/-, and not merely Rs. 6,900/-, was the amount advanced as loan and that there was an oral agreement to pay interest at Rupees 1/8/- per cent, per month. That Court further held that Rs. 7,500/- was not repaid towards that loan on 1 September 1959. In the result, that Court, after disallowing interest and a part of the costs for failure to comply with the provisions of the Moneylenders Act, 1934, decreed the claim against only Laxmichand (defendant 2) for Rs. 3,500/- with interest at a reduced rate from the date of suit.

9. The lower appeal Court, however, took the view that Rs. 7,500/- was repaid towards the loan of Rs. 8,000/-advanced on the foot of the promissory note dated 15 December 1958 and that the entire amount due thereon was, in fact, overpaid. The finding that Rs. 7,500 was so repaid is a conclusion of fact, it is not open to challenge in second appeal on the ground that it is erroneous, however gross or inexcusable the error may seem to be: Mt. Durga Choudhrani v. Jawahir Singh Chowdhri, (1890) 17 Ind App 122 (PC); D. Pattabhiramaswamy v. S. Hanymayya, AIR 1959 SC 57; Paras Nath v. Mohani Dasi, AIR 1959 SC 1204; Sinha Ramanuja v. Ranga Ramanuja, AIR 1961 SC 1720 and Ramachandra v. Ramalingam, AIR 1963 SC 302. The learned counsel, however, argued that a conclusion of fact is open for reconsideration in second appeal if it has been arrived at by wrongly placing the burden of proof. This contention is clearly well-founded. When the lower appellateCourt places the burden of proof on a wrong party and its finding of fact is the result of this wrong approach there is what may be called a substantial defect of procedure affecting the decision of the case on merits and interference on that ground is justified under Section 100 of the Code of Civil Procedure; Jogi Reddi v. Chinnabbi Reddi, ILR 52 Mad 83 = (AIR 1929 PC 13); Joeesh Chandra Rov v. Emdad Miya, ILR 59 Cal 1012 = (AIR 1932 PC 28); Balwant Transport Company, Ltd. v. Y. H. Deshpande, ILR (1955) Nag 1016 = (AIR 1956 Nag 20) & AIR 1363 SC 302.

10. In Kundan Lal v. Custodian,Evacuee Property, AIR 1961 SC 1316, theSupreme Court considered the meaningof the phrase 'burden of proof. This iswhat their Lordships said at page 1318:'The phrase 'burden of proof' has two meanings--one the burden of proof as a matter of law and pleading and the other the burden of establishing a case; the former is fixed as a question of law on the basis of the pleadings and is unchanged during the entire trial, whereas the latter is not constant but shifts as soon as a party adduces sufficient evidence to raise a presumption in his favour. The evidence required to shift the burden need not necessarily be direct evidence, i.e., oral or documentary evidence or admissions made by opposite party; it may comprise circumstantial evidence or presumption of law or fact.' Referring to the distinction between the two, their Lordships observed in Raghavamma v. Chenchamma, AIR 1964 SC 136 at p. 143, as follows :

'Learned Advocate General contends that the learned Subordinate Judge as well as the High Court did not draw the appropriate presumptions arising from the fact that the transactions were old ones; nor did they give sufficient weight to the entries in the revenue records, the admissions made by the parties and to the conduct of the parties and such other important circumstances and, therefore, their findings are liable to be questioned in this appeal. This argument in effect and substance means that the Courts below have not given due weight to particular pieces of evidence. There is an essential distinction between burden of proof and onus of proof; burden of proof lies upon the person who has to prove a fact and it never shifts, but the onus of proof shifts. The burden of proof in the present case undoubtedly lies upon the plaintiff to establish the factum of adoption and that of partition. The said circumstances do not alter the incidence of the burden of proof. Such considerations, having regard to the circumstances of a particular case, may shift the onus of proof. Such a shifting of onus is a continuous process in the evaluation of evidence. The criticismlevelled against the judgment of the lower Courts, therefore, only pertains to the domain of appreciation of evidence.' In Kundan Lal's case, AIR 1961 SC 1316 (supra), their Lordships illustrated by an example how the doctrine worked ha practice. They observed :

'To illustrate how this doctrine works in practice, we may take a suit on a promissory note. Under Section 101 of the Evidence Act, 'whoever desires any Court to give judgment as to any legal right or liability dependant on the evidence of facts which he asserts, must prove that those facts exist'. Therefore, the burden initially rests on the plaintiff who has to prove that the promissory note was executed by the defendant. As soon as the execution of the promissory note is proved, the rule of presumption laid down in Section 118 of the Negotiable Instruments Act helps him to shift the burden to the other side. The burden of proof as a question of law rests, there fore, on the plaintiff, but as soon as the execution is proved, Section 118 of the Negotiable Instruments Act imposes a duty on the Court to raise a presumption in his favour that the said instrument was made for consideration. This presumption shifts the burden of proof in the second sense, that is, the burden of establishing a case shifts to the defendant. The defendant may adduce direct evidence to prove that the promissory note was not supported by consideration and, if he adduced acceptable evidence. the burden again shifts to the plaintiff and so on. The defendant may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling, the burden may likewise shift again to the plaintiff. He may also rely upon presumption of fact for instance those mentioned in Section 114 and other sections of the Evidence Act. Under Section 114 of the Evidence Act, 'the Court may presume the existence of any fact which it thinks likely to have happened. regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case'. Illustration (g) to that section shows that the Court may presume that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it. A plaintiff, who says that he had sold certain goods to the defendant and that 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, for he is in possession of the same and the defendant certainly cannot be expected to produce his documents. In these circumstances, if such, arelevant evidence is withheld by the plaintiff, Section 114 enables the Court to draw a presumption to the effect that, if produced, the said accounts would be unfavourable to the plaintiff. The presumption, if raised by a Court, can under certain circumstances rebut the presumption of law raised under Section 118 of the Negotiable Instruments Act. Briefly stated, the burden of proof may be shifted by presumptions of law or fact, and presumptions of law or presumptions of fact may be rebutted not only by direct or circumstantial evidence but also by presumptions of law or fact.'

(pages 1318-9)

11. 'In the instant case, the Court of first instance relied upon the plaintiff's statement on oath to hold that Rs. 7,500/-mentioned in the receipt Ex. D-1 related to a payment towards some previous transactions. This was challenged before the lower appeal Court which formulated the following question for its consideration :

'Whether the receipt Ex. D-l for Rs. 7,500/- was executed for the payment towards old debts?'

(End of paragraph a)

That Court observed that the burden rested on the plaintiff to prove the existence of those old debts and the exact year in which he had executed the receipt Ex. D-1 and credited the said amount to the defendant. After examining the evidence bearing on the point, that Court held that the plaintiff had failed to discharge the burden or account for Rs. 7,500/- admittedly received by him and inferred that the amount should be regarded as paid towards the loan of Rs. 8,000/- advanced on Ex. P-1. That Court observed:

'Therefore, in absence of proof from the plaintiff accounting for the payment of these Rs. 6,500/- and Rs. 1,000/- towards the amount of a Hundi on Bhadwa 13 Sudi or Badi of any Samvat, the necessary conclusion will be that this entire amount of Rs. 7,500/- was paid towards the suit transaction against the said Hundi for Rs. 8,000/-.'

In support of that conclusion, the lower appeal Court relied also upon the testimony of Mangalchand D. W. 1 and the entries in the defendant's account books Exs. D-2 and D-3. In adopting this process of reasoning, that Court did not place on the plaintiff the burden of proving that Rs. 7,500/- was not paid towards the loan of Rs. 8,000/-. It did, however, properly place on him the burden of proving, as pleaded by him, that the amount was paid towards old debts and took into consideration Ms failure to discharge that burden, along with other affirmative evidence, to conclude that the amount was paid towards the loan of Rs. 8,000/-. The lower appeal Court could, though it did not, regard the failure of the plaintiff to account for Rs. 7,500/- admittedly received by him as shifting the onus. This is clear from the observations in Kundan Lal's case, AIR 1961 SC 1316 (supra) and Raghavamma's case, AIR 19(54 SC 136 (supra). But even that would have been a matter falling within the domain of appreciation of evidence, of which reappraisal is not permissible in second appeal.

12. It remains to add that the question of burden of proof becomes one of law only when it is used as a final deciding factor and it cannot be regard-ed as having been so used when, as in this case, the judgment is based also upon appreciation of the evidence led by the other side. So, in Udebhan v. Vithoba, ILR (1939) Nag 160 = (AIR 1939 Nag 78), Bose J. (as he then was) observed :

'Had the learned Judge believed a single witness for the defendant or had he stated clearly in his judgment that such and such facts (setting them forth or indicating them) establish the fraud pleaded, there would have been an end of the matter. There would then have been a positive finding based on positive evidence and it would not have mattered where the burden lay.' (Page 162 of ILR) = (at p. 79 of AIR).

13. As earlier indicated, apart from the question of misplacing the burden of proof, the main ground urged in support of this appeal is that, for various reasons given in the memorandum of appeal, the finding of fact, that Rupees 7,500/- was paid on 1 September 1959 towards the loan of Rs. 8,000/-, is erroneous. But even if the conclusion of fact be grossly erroneous--and I should not be regarded as saying that it may not be such--there is no jurisdiction to interfere in second appeal with that finding of fact based on appreciation of evidence. In this view, the appeal fails and is dismissed. Costs throughout shall follow that event. Hearing fee according to schedule.


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