K.N. Wanchoo, C.J.
1. This appeal has been referred to a Full Bench by a learned Single Judge as it involves important questions of law. The learned Judge has framed the questions also, but finally referred the whole appeal to the Full Bench.
2. The facts leading to this second appeal may be briefly narrated to understand the point involved. A suit was brought by Himmatmal and another against Jeevraj and another on the basis of a 'hundi' said to have been executed by Jeevraj in favour of Himmatmal on Migsar Sud 15 Samwat 1993 (equivalent to 1936 A.D.). The date on which the suit was filed is 4-1-1943.
The case of the plaintiffs was that Jeevraj owed Rs. 450 to them for which he had executed this 'hundi'. But as the 'hundi' was dishonoured, the present suit was brought for Rs. 450 as principal and Rs. 300 as interest.
3. The suit was resisted by Jeevraj defendant. He admitted the execution of the 'hundi', but his case was that Himmatmal wanted a loan from him. Jeevraj had no ready mone., He, therefore, gave this 'hundi' to Himmatmal and that the 'hundi' was-without consideration. He also disputed the allegation of the plaintiff that the 'hundi' was executed in Dhamli. His case was that it was executed in Soda-was and that the court of Sojat had no jurisdiction.
4. Four issues were framed by the Munsif in this connection which are these:
1. Did the plaintiff ask for a loan from the-defendant and in consequence the defendant gave this 'hundi' Ex. P. 1 to Himmatmal to enable him-to get the money?
2. Was the Hundi Ex. P. 1 executed at Dhamli and has the court jurisdiction to hear the suit?
3. Whether the 'hundi' was dishonoured by Keshrimal Mishrimal to whom it was addressed.
4. Is the plaintiff entitled to any relief?
5. The burden of proving the first issue was placed on the defendant. The defendant examined four witnesses in support of his case. The plaintiff examined six witnesses on his behalf. In his evidence the plaintiff definitely put forward the case that he had paid Rs. 450 in cash to Jeevraj when the 'hundi' Ex. P. 1 was executed. The Munsif, on a review of the evidence on both sides, came to* the conclusion that the defendant's case was proved and that no cash was paid by the plaintiff to the defendant when the 'hundi' was executed. He therefore dismissed the suit.
6. There was an appeal by the plaintiff which was dismissed by the Civil Judge who held that the conclusion of the Munsif on the main issue was correct and that Himmatmal had not paid anything in cash to Jeevraj and that the 'hundi' had been executed in the circumstances mentioned by Jeevraj.
7. Then came the present second appeal to this Court. The learned Single Judge was not prepared to agree with the findings of the courts below that the defendant had discharged the burden of proving issue No. 1, namely that the 'hundi' had been executed in order that Himmatmal may get a loan from Jeevraj.
The learned Single Judge also came to the conclusion that the findings of the courts below that the plaintiff had failed to establish the case that a cash loan had been advanced to defendant Jeevraj and that the 'hunch' was executed in lieu thereof did not call for any interference.
8. In this state of the finding, the learned Judge was of opinion that three important tions of law arose for considertion which mulated as below :
1. Whether the rule as to presumption of consideration embodied in section 118 of the Negotiable Instruments Act is a technical provision which can come into play only where the Negotiable Instruments Act is in force or it is a matter of principle based on general considerations as to negotiability of certain instruments, and effect should as a matter of law be given to it, irrespective of the consideration whether the Negotiable Instruments Act as such may or may not have been in force at the time the instrument was executed or when a suit in relation thereto happens to be brought.
2. Assuming that the aforesaid presumption is a matter of principle and not a technical provision, will the presumption be of help to the plaintiff in that type of cases where the court comes to the finding that the evidence of the maker of the negotiable instrument as to failure of consideration is untrustworthy and also the evidence of the plaintiff fails to carry conviction in the sense that it fails to establish the consideration that is alleged or relied upon by him; or would it be correct in such cases to hold that both parties having led their entire evidence the matter then rests upon such evidence and not upon presumption at all.
3. Is it a correct proposition of law to say that the presumption available under section 118 stands rebutted merely because one kind of consideration has been mentioned in the negotiable instrument but another kind of consideration is admitted by the plaintiff to have passed from him or appears to have flowed from him, and in such circumstances the burden to prove consideration is shifted to the plaintiff; or in such a case, the true rule of law still is that the burden continues to remain upon the defendant and it is for him to satisfv the court that no consideration had passed, and if he fails to discharge that burden, he should still fail.
9. I shall first deal with the three questions referred to the Full Bench for answer and then go on to consider the entire case. Let me begin with the first question. The question as framed is general, but I prefer to deal with it so far as the point raised therein which I confine to section 118(a) applies to the former State of Marwar from which this case comes. Before I actually take up the consideration of the question, I should like to refer to Shrinarain v. Chunnilal, AIR 1957 Raj 159 (A), to which I was a party.
That was also a case of a 'huudi', which was executed in the former State of Kishengarh where also the Negotiable Instruments Act (hereinafter referred to as the Act) was not in force. The main point, however, with which the Court was concerned in that case is covered by the third question which has been put to us. While dealing with that aspect of the matter, the following observation was made at page 160 :
'Under the circumstances, we cannot strictly apply the technical provisions of section 118 of the Negotiable Instruments Act in the appellants' favour.'
10. It is said that these observations, particularly the use of the word 'technical' in this sentence shows that the provisions of section 118 of the Negotiable Instruments Act are not matters of principle and cannot, therefore, be applied in areas where the Act was not in force. I should like to say that the first question which has been referred to this Bench was not under consideration in that case and the use of the word 'technical' in the above suit should not be held to mean that the Court was then of opinion that section 118 was a mere technical provision with no principle behind it and that the presumptions which that section contains can never be applied to an area where the Act is not in force,
The word 'technical' appears to have slipped into that sentence and should not be given the far reaching implication that is sought to be given to it. I propose, therefore, to examine whether the presumption raised in section 118(a) is a mere technical provision with no principle behind it, so that it cannot be enforced in an area where the Act is not in force irrespective of this sentence in that case.
11. Now let me turn to the state of things as it was in Marwar before the Act was introduced in 1949. It is undoubted that the provisions in the Act are not all technical provisions, but are based on principles which may be enforced in areas even where the Act was not applicable. I may in this connection refer to Kanhyalal v. Ramkumar, AIR 1956 Raj 129 (B), to which I was a party.
That was a case of the former State of Bikaner where also the Act was not in force. It was held in that case that the provisions of the Negotiable Instruments Act 1881 in terms cannot be held to apply to cases of 'hundis' arising in the former State of Bikaner, but the principles underlying those provisions must be held to be applicable as rules of equity, justice and good conscience or as being rules as are being observed generally in practice among the merchants in this country.
It was also observed that the stringent or technical provisions of the Negotiable Instruments Act with respect to presentment or notice of dishonour cannot be called into operation in determining the liability in the ease of 'hundis' which came to be executed in a territory where there was no Act in force at the relevant time.
But where such 'hundis' are in oriental language, the rights of the parties concerned with respect to these 'hundis' fall properly to be determined cnly on the basis of and in consonance with the principles underlying the Negotiable Instruments Act or in accordance with the general custom in vogue in dealing with such instruments among merchants in that part of the country.
12. It is clear, therefore, that even though the Act may not be in force in any particular area, the principles behind the Act may be applied as rules of equity, justice and good conscience, though what are called technical or stringent provisions in the Act may not be so applied.
13. Now let me turn to the state of law in Marwar with respect to the Act so far as it is possible to find it. I may in this connection refer to certain decisions of the Marwar Chief Court which deal with the Act.
In Meghraj v. Tulsiram, 1938 Mar LR 91 (2) (Civil) (C), section 76 of the Act was considered and applied. In Mt Jamni v. Ramnath, 1938 Mar LR 132 (Civil) (D), section 79 of the Act was considered and applied. In Meghraj v. Naraindas, 1940 Mar LR 76 (Civil) (E), section 48 of the Act was considered and applied. In Lachhmansingh v. Karansee, 1947 Mar LR 94 (Civil) (F), section 64 of the Act was considered and applied. I have not been able to lay my hands on any case relating to the application of section 118 of the Act,
But these cases do show that though the Act was not in force in the former State of Marwar, its provisions were being actually applied in terms in that State. Of course, it would not be right to deduce from these judgments that the Act was in force in terms in the former State of Marwar; but it would, in my opinion, be right to hold that even though the Act was not in force, certain provisions of it which appeared to be based on principle were being applied as rules of equity, justice and good conscience.
14. Now the question is whether section 118(a) is merely a technical or stringent provision which should not be applied where the Act is not in force or there is some principle behind it and that principle should be applied even though the Act was not in force in the former State of Mar-war. I am of opinion that there is a principle behind section 118(a) and it is not a mere technical provision to be found in the Act. The principle is that there is a presumption of consideration in the case of a negotiable instrument.
The reason for this presumption is that negotiable instrument passes from hand to hand on endorsement and it would make trading very difficult and negotiability of the instrument impossible unless such a presumption of consideration was made. The presumption, therefore, is a matter of principle to facilitate negotiability as well as trade. There was such a presumption of consideration at Common Law also in England till it was given statutory recognition, in section 80 of the English Bills of Exchange Act. In Byles on Bills page 125 the rule is stated in the following terms :
'Consideration is presumed until the contrary appears or at least appears probable.'
In Halsbury's Laws of England, Third Edition, Volume 3 para 218 page 142, principles of negotiability are mentioned and presumption of consideration is one of them as will appear from the fcllowing :
'The outstanding characteristics common to bills, cheques and notes which found expression in the cases decided before 1882 (this is the date of the English Bills of Exchange Act) and are embodied in the codifying statute are (1) that in the case of such instruments a valuable consideration is presumed, so that there is no necessity to state it.'
15. Presumption, therefore, as to consideration is the very ingredient of negotiability and in the case of a negotiable instrument, presumption as to consideration has to be made.
I have therefore no difficulty in coming to the conclusion that there is a principle behind Section 118(a) of the Act and it is not a mere technical provision which cannot be looked into where the Act is not in force.
16. The next question which arises then is the exact form of this presumption of consideration which may be applied as principle of equity, justice and good conscience in the absence of the Act. Section 118(a) has been the subject of innumerable rulings and it is not necessary to refer to them here. But I should like to refer to one case decided by the Bombay High Court and reported as Tarmahomed Haji Abdul Rehroan v. Tyeb Ebrahim, AIR 1949 Bom 257 (G). That case has explained the extent of the presumption under Section 118(a) of the Act.
I feel, however, that the interpretation given in that case goes to the extreme of the extent of the presumption. I am not prepared to hold that the principle behind Section 118(a) is of that extreme nature. I have my doubts with all respects about the correctness of that extreme view, but it is not necessary for present purposes to go into that. It is enough to say that the principle behind Section 118(a) whatever may be the exact meaning of the terms used in the section, cannot be of that extreme character.
The principle can only be as mentioned by Byles on Bills that consideration is presumed until the contrary appears or at least appears probable. To put it in the language of Indian enactments I would say that the principle behind Section 118(a) is that consideration shall be presumed in the case of a negotiable instrument.
17. Section 4 of the Evidence Act which was in force in the former State of Marwar also defines three terms, namely 'may presume', 'shall presume' and 'conclusive proof'. The first raises a discretionary presumption and it is open to the Court to raise a presumption or not. The second raises a compulsory presumption and the Court is bound to presume the fact to which such compulsory presumption applies as proved unless and until it is disproved.
The words 'conclusive proof' go a little further and where a law declares one fact as conclusive proof of another, the Court shall on proof of the one fact regard the other as proved and shall not allow evidence to be given for the purpose of disproving it.
18. Now to my mind, the principle behind the presumption of consideration under Section 118(a) is of the second kind, namely that the Court shall presume a negotiable instrument to be for consideration and shall regard the consideration as proved unless and until it is disproved. The conclusion, therefore, to which I arrive is that in the former State of Mar-war, the principle behind Section 118(a) was applicable and that principle was that the Court shall presume a negotiable instrument to be for consideration, that is it shall regard the consideration as proved unless and until it is disproved. The word 'disproved' is also defined in the Evidence Act us follows :
''A fact is said to be disproved when, after considering the matters before it, the Court either believes that it does not exist, or considers its non-existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist.'
19. Applying this definition to the principle behind the presumption in Section 118(a) the principle comes to this. The Court shall presume a negotiable instrument to be for consideration unless and until after considering the matters before it, it either believes that consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the cicumstances of the particular case, to act upon the supposition that the consideration does not exist. I would, therefore, say that the principle as explained by me above behind Section 118(a) was in force in the former State of Marwar even when the Act was not in force before 1949.
20. This brings me to the second question. I find some difficulty as to the form of the question. I know that the question as put is based on the decision of the Bombav High Court in Tarmahomed Haji Abdul Rehman's case (G), but I find it difficult to understand how a Court could deal with the evidence in two water-tight compartments, first saying that the evidence of the maker of the negotiable instrument as to failure of consideration is untrustworthy and then saying that the evidence of the plaintiff fails to establish the consideration that is alleged or relied upon by him and stopping short there.
Even in such a case the Court has, in my opinion, to go further and come to the conclusion where there is presumption of consideration in the sense explained above whether the consideration has been disproved. If it comes to the conclusion that the consideration has been disproved, the presumption is rebutted and the plaintiff must fail.
If, on the other hand, it conies to the conclusion that the consideration has not been disproved, the defendant would fail and the plaintiff would get a decree on the negotiable instrument. Whether the consideration has been disproved or not in a particular case has to be decided by the Court after considering all the matters before it and then deciding whether it believes that the consideration does not exist or considers its non-existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist.
That seems to be the only way in which the Court has to arrive at the conclusion whether the presumption of consideration, which it is bound to make in favour of the plaintiff in a case based on a negotiable instrument, has been displaced and the consideration has been disproved. The question, as put, seems to presume that the Court is not prepared to take the third step after it has taken two steps, namely that it has come to the conclusion that the evidence of the maker of the negotiable instrument as to failure of consideration is untrustworthy and also to the conclusion that the evidence of the plaintiff fails to establish the consideration that is alleged or relied upon by him.
I am of opinion that in such a case the Court must take the third step also namely whether on a consideration of all the matters before it, it is of opinion that consideration has been disproved and there is no question of the Court not taking this third step and decreeing the suit after taking only these two steps on the basis of the presumption of consideration. It must, as the Evidence Act stands and as the words 'shall presume' and 'disproved' are defined in it, take this final step. I would, therefore, say in answer to the second question that the correct position in a case of this kind is that where both parties have led their entire evidence, the matter certainly rests on such evidence.
It would, however not be correct to say that it does not rest upon presumption at all, for the Court cannot forget the presumption. It will always remember the presumption and judge the evidence in the light of the presumption, that is, it must come to the conclusion that the consideration has been disproved. In order to arrive at that conclusion, it will have to consider all the matters before it and then decide whether it believes that consideration does not exist or considers its non-existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist.
If, however, I must answer the second question as it is put, my answer to the first part of it would be that if the Court is only prepared to take the two steps mentioned therein and is not prepared to take the further step indicated by me, the presump-tion will not be of help to the plaintiff. My answer to the second part of the question is that the correct position in such cases where both parties have led their entire evidence is that the matter rests upon such evidence, but the Court must not forget the presumption in favour of consideration and must come to the conclusion on the entire evidence whether the consideration has been disproved.
21. Then I come to the third question. The whole case has been referred to us and I am of opinion that on the facts of this case, the third question does not arise, for there is no variation of considera-tion at any stage in this case. I would, therefore, not express any opinion on this question at present and leave it to be considered in a case where the variation arises. Till then the view taken in Shrinarain's case (A) which was directly concerned with this question must stand.
22. Let me now turn to the facts of this case. As I have already said earlier, the view of the learned Single Judge was that the defendant's evidence as to failure of consideration was untrustworthy. His view also was that the evidence of the plaintiff tailed to establish the consideration that was alleged and relied upon by him.
I have already said that in such circumstances the presumption cannot be of help to the plaintiff and a decree cannot be passed merely on the presumption and the Court must take the third step which is necessary, namely whether the consideration has been disproved in this case after considering the entire evidence both of the plaintiff and the defendant. I am of opinion that on a consideration of the entire evidence both of the plaintiff and the defendant, I would be prepared to say that the consideration has been disproved. Therefore, though the Court was bound to presume consideration until it was disproved on a consideration of all the matters before it, I am of opinion that it has been disproved in the circumstances of this case within the meaning of the word 'disproved' in Section 3 of the Evidence Act. I would therefore dismiss the appeal, but in the circumstances leave the parties to bear their own costs throughout.
Jagat Naeayan, J.
23-24. I respectfully agree with my Lord the Chief Justice both in respect of the manner in which the questions referred to us should be answered and the manner in which the appeal should be disposed of.
I.N. Modi, J.
25. I have had the advantage of perusing the judgment of my Lord the Chief Justice in this appeal which has come before this Full Bench on reference from a single Judge. As a few questions of general importance are involved in this appeal, and as the findings to which I have felt persuaded to come unfortunately do not coincide with those of my Lord on some of the points raised in the appeal or as to the final conclusion thereof, it has become necessary for me to state my conclusions separately together with the reasons therefor.
26. The facts in so far as they are material and which have culminated in the present reference may be shortly stated as follows. It would be convenient to refer to the appellant as plaintiff and the respondents as defendant for the purposes of this judgment. The plaintiff brought this suit against the defendant on the footing of a Hundi alleged to have been executed by the defendant for ,a sum of Rs. 450/- on Migsar Sudi 15, Smt. 1993 (equal to some time in 1936 A. D.).
The said defendant drew this Hundi in favour of the plaintiff on one Kesrimal Misrimal of Chik-jajur, a village in the former State of Mysore. The plaintiff was a resident of village Dhamli (Paragana. Sojat) and the defendant of a village called Sodawas (Paragana Pali) -- both being in the former State of Jodhpur though the latter lived in village Kherwa. in Pargana Pali at the time the Hundi was executed. Kesrimal Misrimal conveyed their refusal to honour this Hundi by a letter dated Poh Badi 5, Smt. 1993. Consequently, the Plaintiff instituted this suit for Rs. 450/- as principal and Rs. 300/- as interest, total Rs. 750/- on 21-12-1942.
27. The defendant Jeevraj (the other defendant remaining ex parte) admitted to have executed the Hundi in suit but traversed the claim on the ground that he had received no consideration in lieu of the Hundi from the plaintiff. The defendant came out with a counter-story. That story was that the plaintiff was in need of money and he came to the defendant's village and wanted a loan from the defendant,
The latter had no ready money with him and so he gave the Hundi in suit on Kesrimal Misrimal at Chikjajur. It may also be stated in this connection that the defendant's case was that he was a partnr of Kesrimal's firm in Chikjajur in Samvvat 1993 --but had separated from it, a year later, and that Kesrimal's alleged letter refusing to honour the Hundi had been secured by the plaintiff by collusion with the said Kesrimal later and not on Poh Badi 5, Smt, 1993 as alleged.
28. The Munsiff dismissed the suit on the main ground that the defendant's version that he had executed the Hundi by way of advancing a loan to the plaintiff was correct. On appeal the Civil Judge upheld the same finding and maintained the dismissal of the suit. A second appeal was then filed in the High Court which came before me sitting singly.
As some important questions of law emerged for decision particularly in view of a bench decision of this Court in AIR 1957 Raj 159 (A) to which I propose to refer in some detail later, I proposed this reference to a full bench.
29. It is necessary at this stage briefly to point but what were the difficulties which made it necessary for this appeal being referred to the full bench. The main reason was whether the presumption as to consideration embodied in Section 118(a) of the Negotiable Instruments Act was attracted into application in the circumstances of this case. I may state at once that the Negotiable Instruments Act as such was not in force in the former State of Jodhpur either at the time the Hundi in suit was executed or when the present suit was brought.
There were, however, a number of decisions of the Chief Court of the former State of Jodhpur which unmistakably lead to the inference that the principles underlying the Negotiable Instruments Act were time and again held to be applicable in that State, as it then was. These decisions have been referred to in the judgment of my Lord the Chief Justice and are 1938 Mar LR 91(2) (C); 1938 Mar LR 132 (D); 1940 Mar LR 76 (E) and 1947 Mar LR 94 (F).
On the strength of these decisions, I have no doubt that if this case had come up before the Chief Court or later the High Court of the former State of Jodhpur, that court would not have had any hesitation in applying (at least) the principle embodied in Section 118(a) of the Negotiable Instruments Act.
It was, however, strenuously argued before me sitting singly that the decision of the division bench in AIR 1957 Raj 159 (A) was authority for holding that the rule as to presumption of consideration embodied in Section 118 or the Act was in the nature of a technical rule of law applicable only where the Negotiable Instruments Act was in force, and that it could not be applied elsewhere except in so far as it may be applied as a presumption under Section 114 of the Evidence Act. The decision in Shri Narain's case (A), with all respect, seemed to me to require fuller examination by larger bench, hence a reference to a full bench seemed to me to be called for. (30) Another difficulty which arose before me was caused by the fact that the judgment of the learned Civil Judge on appeal, seemed, and still seerns to me, to be vitiated by his entirely wrong approach to the case, inasmuch as he decided the appeal before him as if the burden of proving the main issue in this case lay on the plaintiff. I should like at this stage to reproduce the issue itself, so that we know how the case proceeded to trial. This issue translated into English runs as follows:
'Did the plaintiff ask for a loan from the defendant and in consequence the defendant gave this Hundi Ex. P. 1 to Himmatmal to enable him to get the loan.'
The burden of this issue was obviously placed upon the defendant.
31. The learned Civil Judge, however while dealing with this case discussed the plaintiffs evidence, to begin with, in more than three pages of his judgment, and then came to the conclusion that the plaintiffs story that he had advanced a cash loan of Rs. 450/- to the defendant was not worthy of reliance. Thereafter in a single paragraph covering just a few lines, he dealt with the defendant's evidence and expressed himself in the following words : --
'I am further fortified in holding this view when I see that the defendant Jeevraj as D.W. 4 and his witnesses D.W. 1 Pukhraj and D.W. 3 Meg-raj satisfactorily prove the story of the defence. D.W. 3 Megraj's statement cannot be discarded simply because he is related to the defendant unless he appears to be biassed. Hence I hold that Ex. P-l is void for want of consideration.'
32. This is the entire discussion of the evidence of the defendant in the judgment of the court of first appeal. In such circumstances I was (and am) definitely of the opinion that the judgment of that court was entirely vitiated and robbed of much of the value that would have otherwise attached to it as a final court of fact, and I felt constrained to go into that evidence independently of what the first court of appeal had said about it.
On an independent appraisal of that evidence, I clearly formed the opinion and to this opinion I still adhere, for reasons which I shall have occasion to mention at some length presently, that the defendant's version that the Hundi had been executed by him by way of a loan to the plaintiff was quite false and no reliance could possibly be placed on it.
I must further mention here that even so I was also not impressed with the veracity of the plaintiff's evidence to the effect that the defendant had executed the Hundi in suit for a cash loan of Rs. 450/- and formed the opinion that the plaintiff's evidence in support of that story could not be accepted at its face value.
33. It was in these circumstances that a somewhat difficult situation arose, and it became a serious question for consideration whether if at all, and if so, how far the presumption underlying Section 118 of the Negotiable Instruments Act was attracted into application in this case, or whether the rule embodied in Clause (a) of that section was a sort of a technical provision as stated by the Bench of this Court in Shri Narain's case (A), and, therefore, no help could be derived from the said rule in those areas where the Negotiable Instruments Act was not in force; and further assuming that the presumption as to consideration did arise, how it would work out in a case like the present where the evidence of both sides failed to carry conviction.
It was strenuously argued before me sitting singly that the provision contained in Section 118(a) was a technical rule of evidence as held in Shri Narain's case (A) and that I was bound by that decision as a Single Judge. Consequently, I decided to make the present reference, and though I propounded a few questions to concentrate attention on the salient points which seemed to me to arise for determination, I thought it best, having regard to all the circumstances of the case, to refer the entire appeal to the, Full Bench for decision. The following questions were framed by me in this connection:--
(1) Whether the rule as to presumption of consideration embodied in Section 118 of the Negotiable Instruments Act is a technical provision which can come into play only where the Negotiable Instruments Act is in force or it is a matter of principle based on general considerations as to negotiability of certain instruments, and effect should as a matter of law be given to it, irrespective of the consideration whether the Negotiable Instruments Act as such may or may not have been in force at the time the instrument was executed or when a suit in relation thereto happens to be brought.
(2) Assuming that the aforesaid presumption is a matter of principle and not a technical provision, will the presumption be of help to the plaintiff in that type of cases where the court comes to the finding that the evidence of the maker of the negotiable instrument as to failure of consideration is untrustworthy and also the evidence of the plaintiff fails to carry conviction in the sense that it fails to establish the consideration that is alleged or relied upon by him; or would it be correct in such cases to hold that both parties having led their entire evidence the matter then rests upon such evidence and not upon presumption at all.
(3) Is it a correct proposition of law to say that ths presumption available under Section 118 stands rebutted merely because one kind of consideration has been mentioned in the negotiable instrument but another kind of consideration is admitted by the plaintiff to have passed from him or appears to have flowed from him and in such circumstances the burden to prove consideration is shifted to the plaintiff; or in such a case, the true rule of law still is that the burden continues to remain upon the defendant and it is for him to satisfy the court that no consideration had passed, and if he fails to discharge that burden, he should still fail.
34. Now before I address myself to the aforesaid questions, I should like to dispose of a preliminary objection which was forcefully raised before the Full Bench by learned counsel for the defendant. That objection, put briefly, was that both courts below had held that the Hundi was without consideration and that this finding was binding upon the High Court, that is as much on the single Judge as also upon the Full Bench, no matter that the impugned finding was erroneous.
Reliance was placed in support o this submission on the decisions of the Privy Council in Mahi-pati Surya Rao v. Secy, of State, AIR 1929 PC 152 (H), and Ramji Patel v. Rao Kishore Singh, AIR 1929 PC 190 (I). I have carefully examined this contention and am categorically of the view that, howsoever plausible the contention may seem, it is without any merit. I have already pointed out above what the precise issue settled by the trial court on this aspect of the case was and need not repeat it.
The burden of proving that issue was laid, and rightly laid, on the defendant. I have also shown how the learned Judge of the appellate court below disposed of that issue. He dealt with the case as if the burden of proving this issue rested on the plaintiff, and having dealt with the plaintiffs evidence at considerable length he came to the conclusion that it did not inspire confidence.
The learned Judge then directed his attention to the defendant's evidence (let it be remembered that the burden of proof was on the defendant) and dealt with it in a very summary, if not perfunctory manner and contented himself by saying that he was 'fortified' in the view he came to because the defendant's evidence was as he roundly put it satisfactory and he saw no reason to discard it. Now what I firmly maintain, with all respect is that the approach of the learned Civil Judge in the appeal before him was thoroughly wrong and inverted.
His discussion of evidence was naturally one sided. Leaving entirely out of account the consideration that the judgment of a first court of appeal to which the law in our country attaches a finality on questions of fact should show that such court has applied its own judicial mind to all important evidence on the record, what in my opinion vitiates the judgment of the Civil Judge is that he disposed of the appeal before him from an entirely wrong angle, that is, as if the burden of issue No. 1, which was the main issue in the case, lay upon the plaintiff.
I am, therefore, unhesitatingly of the opinion that such a judgment cannot be rightly held to be binding on this Court in second appeal. I am also of opinion that a faulty approach like this in itself is a good ground for second appeal for that amounts to an error of law. I would invite attention in this connection to Ganga Ram v. Rulia, AIR 1921 Lah 128 (J), Rangavva v. Seshappa, AIR 1927 Bom 228 (K), and Pandurang v. Tukaram, AIR 1934 Nag 253 (L). Lastly, there is a judgment of their Lordships of the Privy Council reported in the same volume from which learned counsel for the defendant has cited certain cases in support of his contention and that judgment appears at page 13 (W. C, Macdonald v. Fred Latimer, AIR 1929 PC 13) (M). Their Lordships made the following observation in dealing with the appeal before them which in my opinion concludes the matter:
'Their Lordships would further observe that all the courts below seem to have thrown the onus upon the appellant of proving that the properties he claimed were his own instead of placing it as it should be upon the plaintiff. 'It therefore appears to their Lordships that there is no question of tact so found that can be binding upon the appellate court on a second appeal,' and that it is necessary for them to consider what is the true position'. (The underlining here in ' ' is mine).
The principle of the aforesaid decision fully applies to this case and concludes the preliminary objection as untenable. I have, therefore, no hesitation in holding that the judgment of the lower court of appeal cannot be of binding force on this Court whether in single bench or before this full bench, and the result, therefore, must be that the whole case is open before this Court, and it is for this Court to determine what the true position is without being tramelled by the consideration that the Civil Judge's finding on the issue in question is against the plaintiff.
35. I now turn to consider the question propounded for answer by the full bench.
36. Now, taking up the first question first, 'the point for determination is whether the rule embodied in Section 118(a) of the Negotiable Instruments Act enshrines a general principle which ought to be held to apply to a negotiable instrument like the Hundi in the present case, regardless of the consideration that the Negotiable Instruments Act was not in force in the former State of Jodhpur at the time the Hundi was executed or it is a technical provision which applies and can be made use of only in those places where the Negotiable Instruments Act has, as such been brought into force.
This brings us back to decision of the bench of this Court in Shri Narain's case (A). That was also a case based on Hundi and the Hundi was executed in the former State of Kishengarh at a time when the Negotiable Instruments Act was not in force there. It appears to have been stated in the plaint in that case that the Hundi was drawn partly for cash consideration and partly for the balance which was payable by the defendant on accounting. The terms of the Hundi are not given in the judgment, but it seems to have been taken for granted that the Hundi was written for cash.
In these circumstances it was contended before the bench that the consideration which was mentioned in the Hundi was different from the consideration pleaded by the plaintiffs in their plaint, and, therefore the burden of proving the consideration was on the plaintiffs themselves and that the trial court had rightly placed the burden on them. It was in these circumstances that the Bench made the following observation :
'We cannot strictly apply the technical provisions of Section 118 of the Negotiable Instruments Act in the appellant's favour. It is settled law that when the execution of a document is admitted by the executant thereof, the burden of proving want of consideration lies on him; but if the plaintiff pleads a consideration different from that which is mentioned in the document sued upon, then the burden still rests upon the plaintiff to prove the consideration pleaded by him.'
Now, it may be accepted at once that all the provisions of the Negotiable Instruments Act cannot be bodily applied where the Act is not in force, as many of such provisions do not embody any principle at all but are technical rules, or matters of mere procedure. It would, therefore, have to be decided with respect to each such provision when it is sought to be applied to a particular case, where the Negotiable Instruments Act was not in force as to whether the provision sought to be applied embodies a principle, and if so, what that principle precisely is.
This is what was said by the bench in AIR 1956 Raj 129 (B), to which I was a party, in connection with a suit which arose from the former State of Bikaner, where also the Negotiable Instruments Act was not in force. The question which mainly arose for decision in that case was whether a notice of dishonour to an endorser under Section 35 of the Negotiable Instruments Act by an endorsee was a requirement of principle which must be enforced by the courts even when the Act may not have been in force. After a careful discussion of the relevant matters, it was held that 'a notice of dishonour must be given so far as the endorser is concerned and we consider that to be a matter of principle and not a mere technicality and we further consider that failure to give a notice of dishonour within reasonable time must absolve the endorser from all liability to the holder.'
It was further observed that
'that is the principle which underlies Section 35 of the Negotiable Instruments Act, and must be enforced in the case of Hundis even though the Act may not in terms be applicable to them. This rule is in perfect accord with justice, equity and good conscience.'
At the same time it was held that the provisions as to adequacy of time for the notice of dishonour were in the nature of technical provisions and a strict compliance thereof need not be called for where the Negotiable Instruments Act as such has not been brought into force, and that the only requirement of principle in this regard would be that the notice given must be reasonable having regard to the surrounding circumstances of each particular case and the nature of the instrument involved and the usual course of dealing with respect to it.
37. It clearly seems to me that in order to determine whether a particular provision contained in the Negotiable Instruments Act, or for that matter in any other Act, the application whereof may be similarly invoked is a matter of principle or not, and if so to what extent, we must primarily look at the provision itself, find out its object and determine its general applicability or otherwise having regard to that object, and also take into account the consequences which would ensue by a refusal to apply such a provision in the light of public interest and it is only in this manner that we can decide about the character of a given provision as to whether it is a matter of principle or otherwise. Section 118, Clause (a) is in the following terms:
'118. Until the contrary is proved, the following presumptions 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.'
38. Now I am willing to concede that we are not strictly called upon to determine in the present case the exact force and effect of the language of Section 118 with reference to Clause (a) thereof as the present is not a case which can be held to be governed in terms by the said section, and therefore, I think it best not to enter into any controversy for the purposes of the present appeal whether the interpretation put upon it by the learned Judges in AIR 1949 Bom 257 (G), is correct or not; but even without entering into that controversy, I am disposed to hold the view that it may be safely postulated that this clause embodies not, in any real sense, a merely technical provision but a far reaching principle and the principle embodied in the section in so far as it is material for the purposes of this appeal is that a negotiable instrument 'shall be' presumed or deemed to have been made for consideration.
The reason is not far to seek and is this. The one fundamental characteristic of instruments (for which provision has been made in the Act under consideration) is that such instruments are negotiable. In other words, they admit of being passed on from hand to hand like cash, and this is preeminently true of Hundis. The Legislature has obviously enacted this provision in the general interests of trade and traders.
It is well-known that the Indian Negotiable Instruments Act is broadly speaking based upon the principles of English law, and under that law also^ a negotiable instrument is deemed to be for consideration. The relevant portion of Section 30 of the Bills of Exchange Act reads as follows;
'Every party whose signature appears on a bill is prima facie deemed to have become a party thereto for value.'
Again, a negotiable instrument is one which when transferred by delivery or by indorsement and delivery, as the case may be, passes to the transferee a good title to payment quite irrespective of the title of the transferor provided of course he is a bona fide holder for value without notice of any defect attaching to the instrument or in the title of the transferor.
A negotiable instrument is thus a substitute 'par excellence' for money and as has been aptly said, 'the party to whom such a bill of exchange is intended has only to read it, need look no further and has nothing to do with any private history that may belong to it.' Now, this rule as to consideration, to my mind is clearly an inevitable deduction from the element of negotiability inherent in such instruments both according to law and the general custom in daily vogue in what may be called the trading world.
It is that the Indian Act has put Section 118 under the heading 'Special rules of evidence', but this is certainly not to say that this or the other rules enacted in this section are technical rules. I may again point out that if this rule were not to be regarded as a matter of principle, then the position of Hundis and the lot of those who may have had anything to do with their execution or acceptance would be reduced to a state of utter precariousness and the channels of trade would be thrown into tremendous confusion.
That the learned Judges of the Chief Court of Marwar in cases relating to negotiable instruments were prepared to follow several provisions of law contained in the Negotiable Instruments Act in 1938 and onwards clearly shows to my mind at least this much that the learned Judges were prepared to adopt the provisions of the said Act to regulate dealings in negotiable instruments in so far as they were matters of principle because the adoption of a contrary practice would not have been in the interests of trade and would have made things needlessly complicated and uncertain in the commercial circles in this part of the country.
It was contended by learned counsel for the defendant that the only rule of presumption which we should recognise as properly deducible from Clause (a) of Section 118 where the Negotiable Instruments Act is not in force is that such a presumption may be raised and not that it shall or must be raised. I am definitely of the opinion that this submission cannot be accepted.
The acceptance of such a view would place negotiable instruments on the same level as ordinary documents. Such a course would, to my mind, be an unwarranted infliction upon traders in this part of Rajasthan in relation to Hundis executed before 1949, when the Negotiable Instruments Act was first brought into force in the former Jodhpur State. Besides the adoption of this view would be clearly ruinous to the interests of trade and traders and would throw unnecessary confusion into the commercial circles.
I may also add that such an answer would be entirely contrary to the tenor or decisions given by the highest Court in the former State of Marwar having regard to its decisions given over a number of years with, reference to several other sections of the Negotiable Instruments Act.
39. My answer, therefore, to the first question is that the rule as to consideration enacted in Clause (a) of Section 118 is essentially a matter of principle, and it is not a technical provision with the result that the Courts are bound to presume a negotiable instrument to be for consideration even though the Negotiable Instruments Act as such may not have been in force at the time the instrument was executed, and that this principle is founded upon and flows from the very element of negotiability which is an inherent and fundamental characteristic of such instruments.
40. I next turn to the second question.
41. Now before I deal with the second question, I consider it proper and desirable to deal with the evidence led by the parties on the main issue in this case and in particular with the evidence of the defendant upon whom the burden thereof was laid by the trial Court. The issue, if I may repeat it for facility of understanding was settled like mis :
'Did the plaintiff ask for a loan from the defendant and in consequence the defendant gave the Hundi Ex. P-1 to Himmatmal to enable him to get the money'.
The defendant produced D.W. 1 Pukhraj and D.W. 3 Megraj apart from examining defendant Teevraj himself in support of his case. I shall briefly examine this evidence now.
42. The evidence of Pukhraj is that the plaintiff Himmatmal had asked for a loan for Rs. 400/- or Rs. 500/- from defendant Jeevraj in his presence. Jeevraj said that he had no money with him and that he could draw a Hundi upon Kesrimal Misrimal at Chikjajul, and he identified the Hundi Ex. P-2 to be the same which had been written by Jeevraj. According to this witness, Jeevraj had inquired from him whether the Hundi had been properly written, whereupon the witness told him that it was all right.
This witness is a resident of Pali and he states to have gone to Kherwa on that day to purchase wool which, surprisingly, he does not seem to have' cared to purchase at all. This witness is a businessman who has a shop in Pali. He was asked whether the expenses of his going to Kherwa were written in his account-books, and he evaded the question by saying that he had gone to Kherwa on foot, and therefore, had incurred no expenditure.
There is nothing in the evidence of this witness to show why he happened to go to the defendant's house. He admitted that the defendant had no business dealings or Khata with him (the witness) at all. This witness seems to me to be a pure and simple chance witness. No reliance can be placed upon the evidence of such a witness.
43. The next witness D.W. Meghraj's evidence is, in my opinion, no better. He doubtless supports the story of the advance of a loan to the appellant by means of the Hundi. He is, however, the husband of defendant Jeevraj's own sister, a relationship which he seems to have been prepared not to disclose in his examination-in-chief and which he was compelled to admit in his cross-examination.
I am not surprised therefore if this witness was prepared to support the defendant who is his brother-in-law in whatever the latter said. This witness was also asked whether he knew that there were any earlier dealings between the plaintiff and the defendant, and he deposed that he did not know. This witness also said that the main reason why Jeevraj gave the Hundi on Kesrimal at Chikjajur was that the defendant's brother Hemraj was in service at the shop of Kesrimal -- a story which the defendant Jeevraj does not himself propound.
44. The only other witness on the point is the defendant Jeevraj himself. He is the main witness in the case, and if his story does not inspire confidence, the rest of the evidence, in my opinion, cart-not improve his case, and is of little consequence in a case like this.
His story is that Himmatmal had come to him in Kherwa and asked him for a loan of Rs. 400/- to Rs. 500/- whereupon the latter said that he could give a Hundi, as he had no ready money with him. Thereupon Himmatmal said that Jeevraj might give a Hundi, and this is how the Hundi was executed by him. In his cross-examination, this defendant clearly admitted that there were dealings between him and Himmatmal from before and that the earlier Khatas should be in possession of the plaintiff. This part of the defendant's evidence is in my opinion not without significance.
To my mind, it strongly suggests that the plaintiff was the lending party and financially better placed than the defendant, and, consequently, the story that the plaintiff required to borrow or hoped to obtain money from the defendant sounds not a little strange. Earlier Jeevraj had stated in his exa-mination-in-chief that 15 days after the Hundi had been executed, Himmatmal again came to Kherwa and told Jeevraj that he had no need for money, and that he had not sent the Hundi to Kesrimal Misri-mal, and, therefore, Jeevraj sent a letter to Kesri-mal Misrimal that the Hundi should not be cashed.
Now, I have no hesitation in saying that the story of the defendant being in a position to lend money to the plaintiff is highly improbable. Besides, if one wants to arrange for a loan and undertakes a journey for it, one would require to have it handy and soon enough, and a Hundi on a firm (in which the defendant was a partner) in Mysore would under such circumstances not be found convenient at all for a person in need of money, and there was no sense, therefore, in Himmatmal being content with such an arrangement
This is not all. The further story propounded by Jeevraj that Himmatmal had come to Kherwa just to inform him (Jeevraj) that he was no longer in need of money also sounds to me to be artificial to a degree. But if that story is correct as the defendant would have us believe then one should have clearly expected Jeevraj to take back or at least ask for the Hundi back as it was clearly a document which was very much liable to mis-use; but curiously enough, Jeevraj does not say a word on that aspect of the matter.
45. Having carefully considered the entire evidence of the defendant, therefore, I have no hesitation in coming to the conclusion that the defendant's story that he had executed the Hundi Ex. P-l by way of advancing a loan to the plaintiff is patently false and cannot be believed for a moment.
46. Now, if the matter had rested at this, this case would not have offered any serious difficulty in its decision, and the plaintiff would be clearly entitled to succecd on the ground that the defendant had failed to discharge me burden which lay upon him to disprove consideration. A good deal of confusion bas been created in the present case because the plaintiffs also led evidence to show that a cash considera tion of Rs. 450/- had been advanced to the defendant in lieu of which the lattei bad executed the Hundi..
Both plaintiffs Himmatmal and Hirachand exa-mined themselves, and they also produced P.W. 1: Chandmal, P.W. 2 Lumbaram and P.W. 6 Ganesh, This evidence has not been believed by the two Courts below, and having been taken through it myself, I am not prepared to hold that this evidence can be taken at its face value. The plaintiff's evidence is briefly as follows.
47. P.W. 1 Chandmal deposed that Jeevraj had executed the Hundi Ex P-l at Dhamli (where the plaintiff lived) in his presence. The witness was asked whether money had been given to Jeevraj in his presence by Himmatmal, and his reply was that money was lying there, and then he said that Jeevraj might have been paid the money but the witness appears to have been put in a state of considerable hesitancy and eventually said that Himmat-mal had given the money to Jeevraj in bis pre-sence. The evidence of this witness does not inspire confidence.
48. The evidence of P.W. Lumbaram is that he had met Jeevraj and Himmatmal at the house of Dulechand where he had gone to inquire after the latter's health and Jeevraj and Himmatmal were also there. Himmatmal asked for money in lieu of the Hundi to which Jeevraj's reply was that he would give it after some time.
Thereupon Himmatmal said that if Jeevraj had no money he might give another Hundi. This evidence obviously relates to the non-payment of money in lieu of the Hundi in suit and it sounds strange that Himmatmal should have asked for another Hundi when the first one, which he had, had turned out to be of no use.
49. The evidence of P. W. Ganesh is that some money was due from him to the plaintiff and that Hirachand had come to him to ask for money in Section 1993, and Ganesh's version is that he was told by Hirachand that some money had to be given to Jeevraj who had come to Hirachand for the purpose. Thereupon according to the witness, he immediately gave Rs. 500/- to the plaintiff Heera-chand, and later when he went to Himmatmal's house he found defendant Teevraj there and had a talk with him. Heerachand of course supports this story.
It is curious, however, that this story was not mentioned by Himmatmal when he had given his evidence earlier with respect to issue No. 1. Him-matmal's story simply is that he had given Rs. 450/-in cash to defendant Jeevraj at his village Dhamli where the latter had come and thereupon the latter had given him a Hundi in the name of Kesrimal Misrimal. He also said that be had written a letter to Kesrimal Misrimal whether they would be prepared to encash the Hundi in which case he might send it over to them. Kesrimal's reply was an emphatic negative, vide Ex. P-2.
A question was put to the witness whether he maintained any Rokar or Nakal Bahi to which his reply was that he did not. He was also asked why he took a Hundi from Jeevraj on firm Kesrimal Misrimal The reply of Himmatmal was that defendant Jeevraj's brother Hemraj was in service at that shop; and we have it from the defendant Jeevraj himself that he was a partner of the firm Kesrimal Misrimal.
This witness stated that when he gave the money, Chandmal and Jeevraj were present. The name of Hirachand was not mentioned among those present nor did Himmatmal say that money had been sent for from Ganesh through Heerachand and that Ganesh had paid it. In these circumstances I am not prepared to hold that the plaintiffs have succeeded in establishing the story that a cash payment had been paid to the defendant at the time the Hundi was executed by the defendant.
50. This is the gist of evidence of either party. The question arises: what is the legal effect of it:
51. Now let us look at the second question because having analysed the evidence of both parties, we should be in a proper position to appreciate this question, and if I may say so, with respect, we should be better prepared to answer it. I have already held above that there is a principle underlying Section 118(a) of the Negotiable Instruments Act and further that the presumption of consideration is not a discretionary one but it is obligatory.
52. Now Section 4 of the Indian Evidence Act, broadly speaking, classifies presumptions into permissive and obligatory. Again, both kinds of presumptions are rebuttable unless they fall under the category of conclusive proof within the meaning of that phrase as defined by this section. The definitions of the expression's 'may presume' and 'shall presume' are as follows:
'May presume.' When it is provided by this Act that the Court may presume a fact, it may either regard such fact as proved, unless and until it is disproved, or may call for proof of it.
'Shall presume.' Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such fact as proved, 'unless and until it is disproved'.' (The underlining, here in 'is mine).
53. Again Section 3 of the Evidence Act defines 'disproved' as follows:
'A fact is said to be disproved when, after considering the matters before it, the court either believes that it does not exist or considers its non-existence so probable that a prudent man ought under the circumstances of the particular case, to act upon the supposition that it does not exist.'
54. Having regard to the answer given by me to the first question and the aforesaid definitions, the correct position in law may in my opinion be stated as something like this. Where the execution of a negotiable instrument is proved against or admitted by a defendant, the burden of proving absence of consideration lies very heavily upon him.
This burden of proof in my opinion is not shifted merely because the plaintiff may have chosen to lead evidence in the first instance as in this case. In considering whether the burden has been successfully discharged. I agree with my Lord the Chief Justice, that the court should view the whole evidence, for both the parties, and try to arrive at a positive conclusion; and it would always be a matter of fact dependent upon the surrounding circumstances of each case whether this burden has been discharged or not.
Now, three types of cases may arise in this connection. The first type is where the defendant's evidence is good and sufficient to disestablish the presumption whether by itself or taken with the evidence of the plaintiff upon a review of the entire evidence led by both parties. There should be no trouble as to the final result in such a case, and I am of opinion that there must be a decree in favour of the defendant and the plaintiff must fail. Another type of case arises where the evidence of the defendant is weak and the plaintiff has either led no evidence or his evidence discloses nothing against him. There need, in my opinion, be no trouble as to this type of case either, and there must be a decree against the defendant. There is, however, a third category of cases where the evidence led by the defendant is untrustworthy and the plaintiff has also led evidence in support of consideration and that evidence also inspires little belief. It is this type of case which presents considerable difficulty and the case before me falls precisely within this category.
55. Now, my lord the Chief Justice has laid down that in every case the court must come to the conclusion on a consideration of the evidence of both the parties whether consideration has been disproved or not, and that a court cannot and should not deal with the evidence.
'in two water-tight compartments first saying that the evidence of the maker of the negotiable instrument as to failure of consideration is untrustworthy and then saying that the evidence of the plaintiff fails ^:o establish the consideration that is alleged or relied upon by him and stopping short there.'
With utmost respect, I find it extremely difficult to accept this position without reservation. I quite agree that in the vast majority of cases the court should be in a position to strike a just balance between the evidence of the contending parties and would be in a position to come to a final and positive conclusion one way or the other.
But it would, in my humble judgment, be an over simplification to hold that cases will not and cannot occur where the court cannot or in all conscience may not be prepared to hold that consideration has been disproved on such evidence as has been led on behalf of both parties. Such a case undoubtedly occurs where the evidence of the defendant upon whom the initial burden lay - has miserably failed (as in the present case) to establish the counter-case put forward by him as to how the negotiable instrument came to be executed by him and further the plaintiff, who need not have led any evidence, foolishly sets out to prove the passing of a consideration but also fails to carry conviction.
It is not unknown that such cases do occur in the practical administration of justice and have come before the courts, and the presiding judges have found themselves unable to hold that the presumption as to consideration must necessarily stand disproved in such cases. The question of questions in such marginal cases is whether the presumption is of any help and how it operates.
Such a case arose before the learned Judge of the Bombay High Court in Tarmahomed v. Tyeb -Ebrahim (G). This type of case also seems to me to have arisen ito Madho Ram v. Nandu Mal, AIR 1920 Lah 295 (N), and Ram Nath v. Ram Chandra Mal, AIR 1935 All 154 (O). The same might be said of the present case so far as I am concerned. The way I look at the case is this. Here was a Hundi. The plaintiff founded his suit on it. The defendant admits to have executed this Hundi. The Hundi itself contains an admission that it had been executed for value received.
Apart from that there is an obligatory presumption as to consideration (which cannot be lightly brushed aside) in favour of the plaintiff. The defendant wanted to meet this case by proving that he did not execute this Hundi for value received by him but that he had executed it by way of a loan to the plaintiff.
It is not the defendant's case that he had got any khata executed by the plaintiff for this loan or that he took any receipt for this loan from the plaintiff. The story of loan to my mind is patently false, and, if I may say so, utterly absurd. The matter, however, did not rest at that. And, stupidly enough, the plaintiff also led evidence to show that he had advanced cash money to the defendant for which the Hundi was executed by the defendant. This story also does not inspire any belief and cannot be accepted at its face value.
If I may venture to express my own opinion in this connection (I am not unconscious that it is possible to condemn this as a pure conjecture but even so I maintain it is a conjecture which errs on the side of justice rather than otherwise) it seems to me that this Hundi was executed not for cash given by the plaintiff but in lieu of past liabilities owing by the defendant to the plaintiff.
Again, that this reading of the situation is not simple imagination on my part will be apparent from the deposition of the defendant himself in which a question appears to have been put to him whether the defendant had any past dealings with the plaintiff and the defendant replied in the affirmative and further said that the Khatas connected with those dealings should be with the plaintiff. But even if this appraisement of the real situation be not accepted as permissible, the one difficulty which I am completely unable to get over in order to hold that consideration has been disproved in this case is how in reason it can possibly be held that the defendant has succeeded in discharging the burden which lay upon him when his own case is held to be utterly false and entirely unconvincing.
I know that a defendant may discharge the burden resting upon him by relying on the plaintiff's evidence; but here again I would be very loath to accept that a defendant in such a position can or should be held to have been successful in discharging the burden which lay upon him by multiplying, if I may say so, his evidence which amounts to a cypher with something else.
56. It is this type of cases in relation to which the second question framed by me is really directed. Again from a slightly different angle, it may be said that such cases fall within a well-recognised category under the caption of burden of proof, of which it may justly be said that the evidence on both sides is equally bad, or that there is little to choose between them; and where that is so, the proper and the only possible view to take in my judgment is that the party upon whom the onus lay cannot be said to have discharged the burden of disproving consideration and must lose.
I am clearly of opinion that in such cases the circumstance that the presumption operates in favour of the plaintiff cannot but assume importance and is bound to tilt the scales in his favour.
I may also add that it is from this branch of the law of evidence that the oft-used principle flows that the party upon whom the burden of proof lies cannot benefit by the weakness of his opponent's proof. There are innumerable cases in the law reports and text books to illustrate the force of this principle and I consider it entirely unnecessary to cite any cases in support of this.
The second question is founded on this class of cases, and, with utmost deference, I find myself unable to assent to the proposition that such cases are or should be an impossibility, or that they should not be allowed to occur because the Judge must in any event find either that consideration has been disproved or that it has not been. That such a class of cases has arisen or would still arise in the various High Courts cannot be disputed.
I am of opinion that in this class of cases where there is little to choose between the evidence produced on either side or that the Court cannot arrive at such a conclusion one way or the other, it is inevitable that the question of onus probandi must play a dominating roie and must be held to be decisive of the fate of the case.
57. My answer to the second question is, therefore, this. As a rule, a court should arrive at a conclusion one way or the other as to whether the consideration underlying a negotiable instrument has been disproved or not by a cumulative examination of the entire evidence of both the parties.
But it is not possible to lay down a rigid and inflexible, formula in this regard and exceptional cases are possible where a court cannot strike a just or positive conclusion between the evidence of one party and the other, or considers that the evidence of both the parties is evenly balanced, or, again, that there is little to choose between their evidence, then in such cases the court is bound to have due regard to the factor of presumption of consideration in favour of the party in whose favour the negotiable instrument has been made, and the defendant in such a case must fail on the principle that that side must fail upon whom the onus has been placed by law or in accordance with the principle of justice, equity or good conscience which clearly governs it. In such cases the onus is a potent factor and must determine the final deci-sion, the evidence on either side as if cancelling each other.
58. As to the third question, I need say only this much that it seemed to me sitting singly, and I have not been able to shake off that impression, that the truth of the matter in this case has been suppressed by both parties and was that the consideration for the suit Hundi was not cash advanced by the plaintiff to the defendant at the time of the execution of the Hundi but past dealings between the parties, of which suggestion is not wanting on this record, though naturally there is no positive evidence in this respect. But as this last question was not debated before the Full Bench at any length, I would not venture any opinion on it.
I should, however, like to add, with great respect, that the view propounded in this connection in Shri Narain's case (A), requires closer examination and I reserve my own opinion on that question until a proper opportunity may arise to deal with and decide it.
59. This brings me to the question as to how the present appeal should be decided on the premi-sas held by me above. Put very succinctly the net position is this. The Hundi in the present case was admittedly executed by the defendant Jeevraj. It was upon him to disprove the consideration for the Hundi. His case was that he had executed the Hundi by way of a loan, and not in lieu of any consideration received by him from the plaintiff. I have held that this counter story is quite false and incredible.
The plaintiff also led evidence to show that the defendant had executed the Hundi for a cash loan given to him at the time the Hundi came to be executed. I also find it difficult to accept this story at its face value. The truth seems to me to lie midway between the two stories, and to my mind is that the Hundi was in all probability executed by the defendant in lieu of his past liabilities towards the plaintiff.
Be that as it may, I find it very difficult for myself to hold that a party upon whom the burden of disproving consideration lay should be or can be held to have discharged the heavy burden which rested on him even though the story which he sought to prove is found to be utterly impossible of belief. In arriving at this conclusion I am fully alive to the consideration that the plaintiff's evidence also does not inspire belief.
Even putting the matter in another way, I maintain from a perusal of the entire evidence on the record that the only conclusion to which I am able to come is that there is not much to choose between the evidence led on either side in the case and, therefore, I do not find myself in a position to predicate with any approach to reasonable probability that there was absence of consideration in the present case and in any case I find it very difficult for me to hold that the defendant has successfully disproved consideration the burden of which lay heavily on him.
In this state of affairs the circumstance that it was on the defendant that the burden to disprove consideration rested must receive its due importance, and in the net effect he must fail, having not been able to discharge that burden.
60. I would, therefore, hold that this appeal should be partly allowed and the suit decreed against defendant Jeevraj, the drawer of the Hundi for Rs. 450 with 6 per cent per annum simple interest from the date of the Hundi up to the date of suit.
I also pass a decree for the same amount against the other defendant Shukanraj who being. Jeevraj's son (and was admittedly joint with him) is under a pious obligation to pay his father's debt even during the latter's life time, but this decree shall be executable against him to the extent of his interest in the joint family property only and shall not be personal. The plaintiff shall also be entitled to receive interest at 4 per cent per annum simple from the date of this decree until realisation. As to costs, I would direct that the parties shall bear their own costs throughout as both parties have suppressed the true state of things.
By The Court
61. In accordance withthe view of the majority, we answer the three questions put to us in the manner indicated in thejudgment of the learned Chief Justice. We dismissthe appeal hut order parties to bear their own coststhroughout.