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Krishna and Co. Vs. Firm Bhagat Ram Girdhari Lal - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtPunjab and Haryana High Court
Decided On
Case NumberSecond Appeal No. 531 of 1965
Judge
Reported inAIR1968P& H552
ActsNegotiable Instruments Act, 1881 - Sections 118; Evidence Act, 1872 - Sections 114
AppellantKrishna and Co.
RespondentFirm Bhagat Ram Girdhari Lal
Appellant Advocate J.L. Gupta, Adv.
Respondent Advocate P.S. Jain,; N.C. Jain and; V.M. Jain, Advs.
DispositionAppeal allowed
Cases ReferredChandan Lal Joura v. Amin Chand Mohan Lal
Excerpt:
.....on the grounds of a decree or order. thus the contention that against an order passed by a single judge in an appeal filed under section 104 c.p.c., a further appeal lies to a division bench cannot be accepted. the newly incorporated section 100a in clear and specific terms prohibits further appeal against the decree and judgment or order of a single judge to a division bench notwithstanding anything contained in the letters patent. the letters patent which provides for further appeal to a division bench remains intact, but the right to prefer a further appeal is taken away even in respect of the matters arising under the special enactments or other instruments having the force of law be it against original/appellate decree or order heard and decided by a single judge. it has to be kept..........on this amount.'in corroboration of his statement with regard to the payment of rs. 2400/- as cash consideration for the hundi, he examined jai narain, p. w. 1, through whom the loan was advanced. he deposed:--'i brought about an agreement with the plaintiff and defendant for the loan of rs. 2400/-. the amount was paid in my presence to the defendant. the letter marked 'a' was written by muni lal, defendant. my name is also mentioned in this writing as a broker. muni lal signed this writing in my presence.'he stuck to this statement in his cross-examination and again asserted:--'rs 2400 were paid in cash and no interest in advance was included in this sum. i do not know if the partnership between the sons of girdhari lal and muni lal was entered into on the same day, as the.....
Judgment:

Gurdev Singh, J.

1. The firm Messrs Bhagat Ram Girdhari Lal, respondent before me, brought a suit for recovery of Rs. 3250/-on the basis of a Hundi (Exhibit P. 4) admittedly executed by Muni Lal, proprietor of the concern known as 'Messrs Krishna and Company', the present appellant, alleging that the principal amount of Rs. 2400/-,for which the Hundi had been executed by Muni Lal on the 7th November, 1959, had been advanced to him as loan in relation to his business through Jai Narain, broker. Muni Lal resisted the suit mainly on the plea that the Hundi was without consideration and it is asserted in paragraph 3 of his written statement that he was neither engaged in any business nor the amount of Hundi was ever received by him. One of the issues tried in the suit was. 'Whether the document in question was executed without consideration as alleged in the written statement? If so, with what effect?'

2. In the course of the trial, the plaintiff-firm examined Girdhari Lal, P. W. 3, one of its partners, who stated on oath:--

'I paid Rs. 2400/- in cash. The letter marked 'A' was executed by Muni Lal and signed by him in my presence. Rupee one per cent per month was agreed as interest to be paid by the defendant on this amount.'

In corroboration of his statement with regard to the payment of Rs. 2400/- as cash consideration for the Hundi, he examined Jai Narain, P. W. 1, through whom the loan was advanced. He deposed:--

'I brought about an agreement with the plaintiff and defendant for the loan of Rs. 2400/-. The amount was paid in my presence to the defendant. The letter marked 'A' was written by Muni Lal, defendant. My name is also mentioned in this writing as a broker. Muni Lal signed this writing in my presence.'

He stuck to this statement in his cross-examination and again asserted:--

'Rs 2400 were paid in cash and no interest in advance was included in this sum. I do not know if the partnership between the sons of Girdhari Lal and Muni Lal was entered into on the same day, as the advancing of Rs. 2400. I do not know for what purpose Rs. 2400/-were taken by Muni Lal. I do not know that Rs. 2400/- were advanced towards the capita] of the Lal Metal Works. I do not know if any other Hundi had been written on that day.'

3. Muni Lal, D. W. 3, while appearing as his own witness, denied the receipt of Rs. 2400/- in cash and stuck to his plea that the Hundi was without consideration. He denied having borrowed any money on the basis of this Hundi, dated 7th November, 1959, and to explain its execution stated as follows:

'I had written another Hundi of Rs. 4,000/- on the same day. The Hundi of Rs. 2400/- had been executed by me in order to bring raw material for the Laj Metal Works. The Hundi for Rupees 4,000/- had been executed by me for purchasing a rolling machine. I had been paid Rs. 4,000/- for the purposes of bringing the machine, but as regards Rs. 2400/- I was asked not to make the purchase as the amount was not available and that the plaintiffs had not the money in hand at that time. Rs. 2400/- were not, therefore, paid to me. I asked my Hundi back whereupon I was told that the Hundi had been in possession of Roop Chand, who had gone on some errand and was expected to return after an hour or go. Since I had to so to Jandiala for purchasing rolling machine, I asked Girdhari Lal to credit the sum of Rs. 2400/-to my account. The sum of Rs. 2400/-was, therefore, credited to my account and I set off to purchase the rolling machine.

4. The learned trial Judge, on thorough scrutiny of the evidence adduced by the parties, returned the finding that the explanation given by Muni Lal was plausible, that no cash consideration was paid to him for the Hundi and this 'Hundi, Exhibit P. 4, had been obtained in anticipation of the payment to be made but which was never made,' Accordingly, he dismissed the suit, leaving the parties to bear their own costs. In appeal, the learned Additional District Judge agreed with the findings of the trial Court that nothing in cash was paid to Muni Lal by the plaintiff on the 7th November, 1959 and the consideration originally pleaded had not been proved. He further held that a new case regarding consideration had been set up by the plaintiff-firm in the memorandum of appeal. All the same he reversed the finding of the trial Court on the issue relating to consideration.

Accepting the new case that the plaintiff-firm had set up in ground No. 3 of its appeal regarding the payment of consideration he held: 'By legal fiction it can be held that the firm Bhagat Ram Girdhari Lal had paid a sum of Rupees 2400/- to Laj Metal Works for being credited 1' the account of Muni Lal and in that manner consideration for the Hundi-chithi, Exhibit P. 4, stands established,' Admittedly, no such version with regard to the payment of consideration or nature of consideration was put forward at the trial by the plaintiff-firm or any of its witnesses. The learned Judge based his finding entirely on the assertions made in the grounds of appeal and derived support for it from the alleged admission of Muni Lal in the course of his statement at the trial as D. W. 3. The relevant portion of this statement on which the learned Additional Judge placed specific reliance runs thus:

'Since I had to go to Jandiala to purchase rolling machine, I asked Girdhari Lal to credit the sum of Rs. 2400/- to my account. The sum of Rs. 2400/- was therefore, credited to my account and I set off to purchase the rolling machine.'

5. As a result of his finding that though the original consideration pleaded by the plaintiff had not be in proved but a different consideration had been made out, the learned Judge accepted the appeal and granted the plaintiff-firm a decree for Rs. 2400/-. It is against this appellate decree dated 31st March, 1965 that the defendant-concern Messrs Krishna and Company has come up in second appeal.

6. Mr. J. L. Gupta has strenuously argued that since the consideration, as cited in their Hundi and as pleaded at the trial by the plaintiff, had not been established and both the Courts below had found that not a single penny was paid in cash to Muni Lal, proprietor of the appellant-concern at the time of the alleged execution of the Hundi, the plaintiff-firm was not entitled to any relief and the learned Additional District Judge had no justification for making out a case which was never pleaded by any of the parties to decree the suit. In this connection he has cited Siddik Mahomed Shah v. Mt. Saran, AIR 1930 PC 57, Trojan and Co. v. Nagappa Chettiar, AIR 1953 SC 235, Sheodhari Rai v Suraj Prasad Singh, AIR 1954 SC 758.

In AIR 1953 SC 235 (supra) it has been ruled that the decision of a case cannot be based on ground outside the pleadings of the parties and it is the case pleaded that has to be found. It was further observed in that case that without an amendment of the plaint the Court was not entitled to grant the relief not asked for in the suit. It is an admitted fact that in the case out of which this appeal has arisen, no prayer was made at any stage of the trial, or even in the Court of the Additional District Judge, for amendment of the plaint and the evidence as recorded by the trial Court clearly negatived the plaintiff's assertion that consideration for the Hundi Exhibit P. 4, was paid in cash. Even though Girdhari Lal, one of the partners of the firm appeared as P. W. 3, he not only never put forward the version regarding the passing of consideration, which was later on taken up by the plaintiff-firm in its grounds of appeal before the District Court, but on the other hand, he had stuck to the original plea that the consideration was paid in cash at the time the Hundi was executed. In these circumstances, so Mr. J. L. Gupta argues, the learned District Judge was not entitled to make out a case simply by treating the story put forward in the grounds of appeal as a part of the pleadings and dispensing with the proof of the averments contained therein.

He further submits that the statement of Muni Lal, D. W. 1, upon which the learned Judge has based his finding on the question of consideration does not warrant the conclusion at which he has arrived as the statement of this witness has to be read as a whole and if read in that manner, it is nothing but an emphatic denial of receipt of any consideration for the Hundi.

7. Mr. P. S. Jain, appearing for the respondent-firm, has, however, argued that there is sufficient material on the record to justify the finding of the learned District Judge on the question of consideration and the mere fact that & consideration different from the one that has been found by the Court was originally pleaded by the plaintiff does not debar the Court from granting the decree. In this connection, he has placed reliance on Barhamdeo Singh v. Kari Singh, AIR 1936 Pat 498, Ramani Mohan Bhattacharjee v. Surjya Kumar, AIR 1943 Cal 22, Tarmahomed Haji Abdul v. Tyeb Ebrahim, AIR 1949 Bom 257, Pardhan Purshottam v. Shantilal Pursushottam, AIR 1954 Sau 42, besides referring to certain observations made by a Full Bench in Heerachand v. Jeevraj, AIR 1959 Raj 1.

8. In AIR 1943 Cal 22, after pointing out that under Section 118(a) of the Negotiable Instruments Act, there is a presumption that any negotiable instrument is for consideration, it was ruled that the words 'for consideration' as used in Section 118(a) are quite general and there is no difficulty in applying in their full literal sense.

9. In AIR 1949 Bom 257 a Division Bench of that Court observed 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 a 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.'

10. Mr. Jain has, however, not cited any authority of this Court or of the Lahore High Court in support of his contention and I find that the decisions of both these Courts are against him. In Kishen Sarup v. Tara Chand, AIR 1915 Lah 86 (1) a Division Bench of that Lahore Court ruled that where the consideration of a promissory note was paid in cash, but the plaintiff was constrained to admit that the consideration as stated in the promissory note did not pass, the initial presumption arising under Section 118 of the Negotiable instruments Act was rebutted and the onus shifted on the plaintiff to prove affirmatively that the pronote was executed by the defendant for full consideration.

This decision was followed by Tek Chand J. in Sunder Singh v. Khushi Ram, AIR 1827 Lab 864, and his Lordship ruled that where, in a suit on promissory note, the plaintiff set up different stories as to consideration at different stages, the burden of proving consideration shifts on him. Again in Bishamber Das v. Ismail, AIR 1933 Lah 1029, a Division Bench held that in a suit on the basis of a promissory note, defendant can discharge onus of proving his plea by relying on fact and circumstances of the case and also flaws in the plaintiff's evidence, and it is not always necessary for him to prove want of consideration by producing definite evidence on his own behalf.

11. So far as this Court is concerned, the matter stands concluded by the decision of the Division Bench in Chandan Lal Joura v. Amin Chand Mohan Lal, AIR 1960 Punj 500. After adverting to the provisions of Section 114 of the Evidence Act and Section 118(a) of the Negotiable Instruments Act, and noticing the various authorities bearing on the point, Tek Chand J., who delivered the judgment of the Court, summed the legal position up, in these words:

''A defendant may discharge the burden at proof placed upon him under Section 118(a) either by producing definite evidence, showing that consideration had not passed, or, by relying upon facts and circumstances of the case, and also by referring to the flaws in the evidence of the plaintiff and may then contend that the presumption has been rebutted. If the plaintiff goes into the witness-box and the result of his evidence is, that he fails to establish the passing of consideration, and the Court is thus satisfied, that the plaintiff did not give the consideration which he alleges, the defendant can certainly avail himself of the contrariety and the provisions of Section 118(a) are not thereby entrenched upon.'

12. The cases referred to above clearly disclose conflict of judicial opinion on the question of onus where it is found that the consideration originally pleaded has been found to be false. I am, however, bound by the decisions of this Court which are in consonance with the view taken by the Lahore High Court and following those decisions, I am bound to hold that once the defendant had shown that the cash consideration which was originally pleaded for the Hundi did not pass, he had discharged the onus which lay upon him of proving the lack of consideration in view of the presumption that is attached to the Hundi as a negotiable instrument under Section 118 of the Negotiable Instruments Act and the onus then shifted upon the plaintiff to prove that there was consideration. The question of onus in such a case where no, other consideration excepting cash was ever pleaded by the plaintiff at the trial cannot be said to be mere academic. Once the plaintiff had failed to prove that the consideration recited in the Hundi did not pass, it was for him to satisfy the Court that the Hundi was in fact for consideration and also to disclose what that consideration was.

Apart from this, the interpretation placed by the Additional District Judge on the evidence of Muni Lal D. W. 3 is also not correct. He never admitted the passing of consideration and he always maintained that the Hundi was executed by him in anticipation of the payment of consideration, and he required the other party to make an entry creating that amount to him so as to square up the account of that Hundi. I, accordingly, find that the findings of the lower appellate Court that Hundi was for consideration cannot be maintained. The appeal must accordingly, succeed and I accept the same. In view of the fact that there has been considerable divergence of judicial opinion on the legal question involved, the parties are left to bear their own costs.


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