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ShrinaraIn and anr. Vs. Chunnilal and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberFisrt Appeal No. 15 of 1954
Judge
Reported inAIR1957Raj159
ActsNegotiable Instruments Act, 1881 - Sections 118; Evidence Act, 1872 - Sections 101 to 104 and 163
AppellantShrinaraIn and anr.
RespondentChunnilal and ors.
Appellant Advocate Sohannath, Adv.
Respondent Advocate M.M. Vyas, Adv.
DispositionAppeal dismissed
Cases ReferredKanhyalai v. Ramkumar
Excerpt:
.....1 was executed for good consideration, 9. learned counsel for the appellants has urged that the trial court has drawn a wrong conclusion that part of the consideration was at least imaginary because shrinarain, plaintiff, admitted in his statement that the accounts between the parties are mentioned in rokars of samwat 2004, section 2005 and section 2006. it is pointed out that the trial court has remarked in its judgment that since the 'hundi' was written in magh samwat 2005, it could not be covered by the account of samwat 2006 and, therefore, at least part of the consideration, if not the whole, was imaginary. 1 was written for good consideration. --this rule of presentment for payment is however subject to certain well-recognised exceptions which are enumerated in section 76 of the..........it purports to be a 'shah jog' hundi and its contents show as if this 'hundi' for rs. 5,000 was drawn on account of cash value received by the drawer before drawing it. paragraph no. 2 of the plaint, on the other hand shows that (i.e., according to the plaintiffs own admission) the said 'hundi' was drawn on account of the balance which was payable by the defendants to the plaintiffs on account of certain transactions between them. in other words, it was not averred in the plaint that the plaintiffs had advanced rs. 5,000 as cash amount and the 'hundi' was drawn by the defendant in lieu thereof. when the plaintiff, shri narain, was examined as a witness on 11th of april, 1950, it became all the more clear from his statement that the said document was not drawn after receiving cash.....
Judgment:

Dave, J.

1. This is plaintiffs' first appeal against the judgment 'and decree of the Additional Civil Judge, Udaipur, dated 28th September, 1953 whereby their money suit based on a 'hundi' has been dismissed with costs.

2. The appellants' case was that the respondents Chunilal, Leharilal and Mohanlal are brothers; but in the partnership of respondent No. 4 Mangilal, they had a joint business and their firm went by the name of Leharilal Maugilal. On behalf of this firm, respondent Leharilal handed over to the plaintiffs a 'darshani hundi' dated Magh Sud 13 Samwat 2005 for Rs. 5,000/- in consideration of the money which the respondents' said firm was liable to pay to the plaintiffs.

Thus the drawer of this 'hundi' was Leharilal on behalf of the defendants' firm, the drawee was the defendants' firm and the payee was the plaintiffs' firm. The plaintiffs sold this 'hundi' to the Bank of Jaipur Ltd. at Kishangarh. The bank, however, returned it to the plaintiffs on 19th of February 1949 as it was not honoured by the respondents' firm. The plaintiffs, therefore, claimed Rs. 5,000/-for the 'hundi' and Rs. 76/10/9 for interest and incidental expenses. In all, they brought a claim for Rs. 5,076/10/9.

3. The respondents' reply was that the said 'hundi' was without consideration and it was written out by Leharilal simply to cover the losses that he might incur in the Satta transactions to the respondents, it was not a 'darshani hundi' but a 'Jokhami hundi' which was to serve the purpose of a security for future losses, if any. They raised several other objections, on whose basis the following issues were framed :

1. Whether the plaintiff and defendant firms deal in 'adat' and cash transactions and Shri Narain is the Manager of the plaintiff company.

2. Whether the defendant firm gave the 'hundi' in question in consideration of balance standing in favour of the plaintiff company and whether the defendant No. 1 has signed them as Manager of the defendant firm.

3. Whether the Hundi in question was presented for payment and was dishonoured.

4. Whether the plaintiff is entitled to get interest.

5. Whether any notice regarding this suit was served on behalf of the plaintiff on the defendant and what would be its effect on the suit.

6. Whether this 'hundi' was given towards profits and losses of Satta transactions to the plaintiff and was intended to serve as deposit and so the Hundi was without consideration,

7. Whether the Hundi was not 'Shah Jog' but 'Jokhmi'.

8. Whether the plaintiff did not give any notice of dishonour to the defendant and so the former cannot get the suit money from the latter.

9. What is the effect of unstamped Hundi upon the suit?

10. Relief?

4. After recording the evidence of both parties the trial Court decided issues Nos. 1, 4, 7 and 9 in the plaintiffs' favour. Issue No. 5 was decided partly in the plaintiffs' and partly in the defendants' favour. Issues Nos. 2, 3, 6 and 8 were decided against the plaintiffs and so their suit was dismissed.

5. The main arguments advanced before us relate to issues Nos. 2, 6 and 7 and therefore, it would be proper to deal with them before taking up other points. It may be pointed out in the first instance that it was not necessary to frame three issues, namely Nos. 2, 6 and 7 in different language on the same point. The question involved in all the three of them is the same, namely whether the 'hundi' Ex. P. 1 was for consideration or it was written out simply to cover the losses of Satta transactions, if any, that might be incurred by the respondent Leharilal.

It is urged by the appellants' learned counsel that these issues have been wrongly decided against his clients. It is contended that according to Section 118 of the Negotiable Instruments Act, it was incumbent upon the trial Court to presume that the 'hundi' Ex. P-l was drawn for consideration; that the burden of proving want of consideration was on the respondents and since they had failed to discharge that burden, the suit should have been decreed by the Court.

Learned counsel for the respondents has urged on the other hand, that the Negotiable Instruments Act was not in force in Kishangarh as admitted by the appellant himself in his memorandum of appeal and, therefore, its technical rules of evidence could not be invoked by the appellants. It is further urged that the 'hundi' Ex, P-l shows as if it was written for cash received by the drawer Leharilal; but according to the plaint itself, it was clear that Leharilal had not obtained cash amount of Rs. 5,000 before writing the 'hundi'.

It is pointed out that the plaintiffs themselves had stated in their plaint that the 'hundi' was drawn partly in consideration of the cash obtained by the respondents and partly for the balance which was payable by them on accounts. It is urged that thus 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 the trial Court had rightly placed that burden on the appellants.

According to the respondents' learned counsel, the appellants failed to prove the consideration and purposely withheld the production of their account-books and so the trial Court was quite correct in drawing a presumption against them and their suit has been rightly dismissed.

6. We have given due consideration to the arguments advanced from both the sides. It is true that in para. No. 5 of the memorandum of appeal, the appellants have themselves admitted that the Hundi, Ex. P. 1, in dispute was executed at Madanr ganj in the former State of Kishangarh and that the Negotiable Instruments Act was not in force there. They have mentioned this while assailing the trial Court's judgment in connection with the application of the Negotiable Instruments Act about presentment and dishonour of the 'hundi'.

Learned counsel for the respondents has admitted that Negotiable Instruments Act was not in force in Kishengarh State; still we gave a chance to both learned counsel to find out if this position was correct. Since neither of them has been able to point out any order or notification whereby Negotiable Instruments Act might have been brought into force in the former State of Kishengarh, we take it that this Act was not in force there, at the time the 'hundi' was drawn.

Under the circumstances, we cannot strictly apply the technical provisions of Section 118 of the Negotiable Instruments Act in the appellants' 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.

Even Section 118 of the Negotiable Instruments Act says that until the contrary is proved, it will be presumed that every negotiable instrument was drawn or made for consideration. In other words, the Court is to presume that negotiable instrument is for consideration only so long as the contrary is not proved.

So if a plaintiff files his suit on the basis of a negotiable instrument and if by his own pleading, it is proved to the contrary that the consideration shown in the negotiable instrument was not the real consideration and if the plaintiff shows a different consideration in his plaint, then Section 118 would not come to his aid and the burden of proving the consideration would still be on the plaintiff.

In a case where the special rules of evidence, as laid clown in Section 118 of the Negotiable Instruments Act are not strictly applicable in terms, it would be all the more necessary for a plaintiff, who pleads a consideration different from the one evidenced by the negotiable instrument, to prove that such a document was for good consideration. In the case of Zohra Jan v. Rajan Bibi, AIR 1915 Lah 86 (2) (A), the consideration of a promissory-note was stated to be the sum of Rs. 30,000 borrowed in cash by the defendant executant; but in the course of pleadings the plaintiff was constrained to admit that the consideration as stated in the promissory note did not pass.

Under the circumstances, it was held that the initial presumption was rebutted and the onus was shifted on to the plaintiff to prove affirmatively that the pre-note was executed by the defendant for full consideration. A similar view was taken in the case of Md. Shafi Khan v. Md. Moazzam Ali Khan, AIR 1923 All 214 (B) and Palaniappa Chettiar v. Rajagopala Pandarathar, AIR 1928 Mad 773 (C).

7. We have, therefore, to see, in view of the said position of law, on which of the parties the burden of proof lay? It is obvious from the 'hundi', Ex. P. 1 on which the suit is founded that it purports to be a 'Shah Jog' Hundi and its contents show as if this 'hundi' for Rs. 5,000 was drawn on account of cash value received by the drawer before drawing it.

Paragraph No. 2 of the plaint, on the other hand shows that (i.e., according to the plaintiffs own admission) the said 'hundi' was drawn on account of the balance which was payable by the defendants to the plaintiffs on account of certain transactions between them. In other words, it was not averred in the plaint that the plaintiffs had advanced Rs. 5,000 as cash amount and the 'hundi' was drawn by the defendant in lieu thereof.

When the plaintiff, Shri Narain, was examined as a witness on 11th of April, 1950, it became all the more clear from his statement that the said document was not drawn after receiving cash only. He admitted in cross-examination that the defendants had partly borrowed cash amount from the plaintiffs and partly there was a balance outstanding against the defendants on account of transactions between the parties and the 'hundi' was thus drawn by the defendant for that balance.

Thus it is quite clear that the consideration mentioned in Ex. P,' 1 was different from the consideration admitted by the plaintiff, Shrinarain himself in the Court and so the burden of proving the consideration lay on the - plaintiffs, inspite of the fact that the execution of Ex. p. 1 by Leharilal was admitted by the defendants.

8. We have next to see whether the appellants have been able to discharge that burden. We find that they did not produce any evidence to show that a balance of Rs. 5,000 was really outstanding against the defendants on the day Ex. P. 1 was executed. On the other hand, it appears from the cross-examination of the plaintiff, Shrinarain, that he was twice asked by the defendants' counsel if he wanted to produce his account-books to prove the consideration and both times he refused to produce them saying that he did not consider it necessary.

Thus, there is no material on record whereby it may be possible for any Court to determine whether the defendants were really liable to pay Rs. 5,000 to the plaintiffs on the date Ex. P. 1 was executed, and whether Ex. P. 1 was executed for good consideration,

9. Learned counsel for the appellants has urged that the trial Court has drawn a wrong conclusion that part of the consideration was at least imaginary because Shrinarain, plaintiff, admitted in his statement that the accounts between the parties are mentioned in Rokars of Samwat 2004, Section 2005 and Section 2006.

It is pointed out that the trial Court has remarked in its judgment that since the 'hundi' was written in Magh Samwat 2005, it could not be covered by the account of Samwat 2006 and, therefore, at least part of the consideration, if not the whole, was imaginary.

It is urged that the plaintiff had only made a general admission that the accounts between the parties were written in the Rokars of Samwat 2004, Section 2005 and Section 2006, that he never meant to say that the 'hundi' also covered the account of Samwat 2006 and, therefore, the conclusion drawn by the trial Court is wrong. We agree with learned counsel that the trial Court should not have drawn the conclusion which it has drawn from the above statement of the plaintiff, Shrinarain.

We find that the plaintiff had only stated generally that the account between the parties was written in the Rokars of Samwat 2004, Section 2005 and Section 2006. He had not admitted in clear terms that the consideration for the 'hundi' was also to be found in the account of Samwat 2006. An adverse inference against the plaintiff should not, therefore, have been drawn by the trial Court on the basis of this remark appearing in Shrinarain's statement. But, even if this portion of the trial Court's judgment be considered to be wrong, the appellants' position does not improve because they have not been able to prove the consideration of Ex. P. 1.

10. Learned counsel for the appellants has next urged that the respondents had inspected their account-books and, therefore, an adverse inference should not have been drawn by the trial Court against the appellants. It is further urged that according to Section 163 of the Indian Evidence Act, it was the duty of the defendants and not of the plaintiffs to produce the plaintiffs' account-books since the defendants had inspected, the same. Section 163 of the Indian Evidence Act runs as follows:--

'163. When a party calls for a document which he has given the other party notice to produce, and such document is produced and inspected by the party calling for its production, he is bound to give it as evidence if the party producing it requires him to do so.'

11. It is clear from the provisions of this section that the party inspecting the document is bound to give it as evidence only if the party producing the same requires it to do, so. In the present case, the appellants' learned counsel has not been able to show if, at any time, the appellants required the respondents to produce the accounts which they had inspected and, therefore, the respondents were not bound to produce those documents in evidence.

Under the circumstances, Section 163 does not come to the appellants' aid. Since the burden of proving the consideration was still on the appellants, it was their duty to produce their account-books to show that so much amount was given in cash, if any, or that so much amount was really payable by the defendants to the plaintiffs on account of transactions between them and that Ex. P. 1 was written for good consideration.

In our opinion, the appellants were very ill-advised in not producing their own account-books themselves and in further refusing to produce , the same even though the plaintiff, Shrinarain, was twice asked in cross-examination to produce his account-books.

In the absence of any material on record, we find it impossible to come to any conclusion as to what was the nature of the transactions between the parties, and whether any cash was at all advanced at any time by the appellants to the respondents or whether the appellants were entitled to receive anything from the respondents on the date Ex. P. 1 was executed. Under the circumstances, the appellants claim was rightly dismissed by the trial Court.

12. It was also urged by the appellants' learned counsel that the trial Court's decision on issue Nos. 3 and 8 was incorrect in view of the fact that the drawer and the drawee in the present case were the same person. In support of Ms argument he has referred to Kanhyalai v. Ramkumar, AIR 1956 Raj 129 (D). In that case it was observed as follows:--

'This rule of presentment for payment is however subject to certain well-recognised exceptions which are enumerated in Section 76 of the Act (Negotiable Instruments Act) and one such exception is as respects the drawer where the drawer could not suffer damage from the want of such presentment..... .The want of presentment in such a case obviously can not put the drawer to any loss because he must be deemed to know that the hundi was executed and a certain date was the due date of payment there under and that no payment had been made at maturity.'

13. It was contended on behalf of the respondents' learned counsel that in the. present case, the drawer was Leharilal and the drawee was the defendants' firm and since the drawer and drawee cannot be said to be the same person, the above case does not apply.

In view of our decision on issues Nos. 2 and 6, it seems altogether unnecessary to go into this question, but even if it be assumed that Leharilal and the defendants' firm were two different entities, there should have been no difficulty for this Court to pass a decree against Leharilal if consideration were proved. But since the consideration of Ex. P. 1 is not proved, it is not possible to give any relief to the appellants. The appeal is, therefore, dismissed with costs.


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