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Mallavarapu Narasamma and ors. Vs. Boggavarapu Bulli Veerraju - Court Judgment

LegalCrystal Citation
SubjectCivil;Banking
CourtChennai
Decided On
Reported inAIR1935Mad769; 160Ind.Cas.768
AppellantMallavarapu Narasamma and ors.
RespondentBoggavarapu Bulli Veerraju
Cases Referred and (Raghavalu Chetty v. Sabapathy Chetty
Excerpt:
.....say they have done. it may also be noticed in passing that in illustration (c) to section 114, evidence act, the presumption is only stated to be that the bill was accepted or endorsed 'for good consideration'.10. as a corollary to the above rule, of pleading it was recognised in england that if is not enough in the plea of want of consideration merely to say that the defendant never had any value or consideration-the plea must go on to aver the circumstances which show that there was no consideration: 174. but the weight due to recitals may vary according to circumstances and, in particular circumstances, the burden of rebutting them may become very light, especially when the court is not satisfied that the transaction was honest and bona fide: 155; see also story's equity, section..........for the transfer. it may also be noticed in passing that in illustration (c) to section 114, evidence act, the presumption is only stated to be that the bill was accepted or endorsed 'for good consideration'.10. as a corollary to the above rule, of pleading it was recognised in england that if isnot enough in the plea of want of consideration merely to say that the defendant never had any value or consideration-the plea must go on to aver the circumstances which show that there was no consideration: southal v. rigg 11 c.b. 481.11. in byles on bills (at p. 125), the rule is stated in the following terms:consideration is presumed until the contrary appears or at least appears probable.12. the expression until the contrary is proved' in section 118, indian negotiable instruments act,.....
Judgment:

Varadachariar, J.

1. These appeals arise out of suits instituted by different plaintiffs against the same defendant, for varying sums of money claimed to be due under promissory notes executed by the defendants. As the defence was to a certain extent common to all the suits they were tried together and the whole evidence for the defendants was recorded in O.S. No. 42 of 1927 (A.S. No. 250 of 1930). In two of the suits, the defendant admitted receipt of small sums and to that extent those suits were decreed; the other two suits were dismissed.

2. The defendant is the youngest son of a rich Vysia family of Cocanada. Born in July 1907 he was married in 1921 into a rich family of Akkiveedu and his wife joined him early in 1925. Nevertheless, in the course of 1926, he seems to have taken to bad ways, with the help and under the evil influence of two of his father's dismissed clerks - Bhaskara Row and Majeti Venkataramana - and one Immidi Sooryam, the husband of a deceased sister. The transactions which led to these suits took place between September 1926 and May 1927, and as the lower Court points out, the defendant must, according to the tenor of these pro-notes, have borrowed more than Rs. 23,000 (Rupees twenty-three-thousand) in the course of about eight months. The father and the brothers of the defendant had been doing their best to wean him from, his bad ways and the defence to the present suit is admittedly conducted by them. The issues as originally framed threw the burden of proof on the defendant, as his plea amounted to denial of consideration but at a later stage, an additional issue was framed in the following terms. Whether there are circumstances in the case which in law would shift the burden of proving consideration for the pro-notes, on the plaintiffs.'

3. There was some further discussion, before the trial commenced, and the learned Judge ruled that the defendant, should adduce evidence on the whole case and then the plaintiff will be allowed to adduce his evidence. The defendant will not be allowed to adduce further evidence after the plaintiff closes his case - (but he may) ask the Court that from the circumstances that may be proved in the case, the plaintiff should bear the burden of establishing the consideration for the suit notes. An issue of 'fraud and undue influence' was also-raised, but at an early stage of the case, counsel for the defendant seems to have intimated that he relied on fraud and undue influence only as reasons for executing the suit pro-notes and that his main plea was that defendant received little or no consideration for the-promissory notes. A mass of evidence, oral and documentary, has been produced on behalf of the defendant, to prove the course of life led by him during these eight months and the attempts of the elder members of the family to get at him and save him. Though some remarks have been made against the genuineness or reliability of portions of this documentary evidence, nothing seems to have been said against them in the Court below and such portions of the correspondence as consist of postcards are absolutely above criticism. It-does not seem to us necessary to examine, this part of the evidence in detail, as we find no difficulty in accepting the summary of its result, as set out in para 21 of the lower Court's judgment in O.S. No. 42 of 1927.

4. We therefore proceed to deal with the case on the footing, that the defendant who was a junior member of a rich family, but not in possession or management of its properties got into bad ways and began to borrow recklessly, under the influence of bad companions, when he was aged only nineteen years and a few months. During portions of this period of eight months, he was away from his house and people on at least three occasions: (1) between 16th February 1927 and 7fch March 1927 at Madras, Tirupati etc.; (2) between 7th March 1927 and 22nd March 1927 at Calcutta, Bombay and Hyderabad and (3) between 30th March 1927 and 30th April 1927 at Calcutta, Benares etc. During the first two of these trips the members of the defendant's family were unable, in spite of their best efforts, to get at him, but on the third trip they managed to keep one of their men with him and were gradually able to re-assert their influence over him. There can be little doubt that it was under the advice of his father and brothers that the defendant (while still in Calcutta) declined to leceive the notice of demand sent on 30th March 1927 by the vakil for the plaintiff in O.S. No. 42. That suit was filed on 30th April 1927 (i.e., immediately after the defendant's return to Cocanada). The defendant's father, now that he gained control over his son, got notices issued on 8th May 1927, to the plaintiffs in the other three suits, repudiating defendant's liability to them, on grounds similar to those raised in the present written statement.

5. As regards the alleged associates of the defendant, we see no reason to differ from the conclusion of the learned Subordinate Judge that they were bad people, that Bhaskara Row and Majeti Venkararnana were possessed of no property, that Immidi Sooryam was addicted to drink and had lost all his property by leading an extravagant and immoral life and that the defendant was under their influence and control during 1926 and up to 30th March 1927. Two episodes require a passing reference here in view of certain arguments urged on behalf of the appellants. The defendant purchased a motor car (Baby Austin) early in November 1926. An attempt was made by the plaintiffs to show that part of the moneys borrowed from one or two other of these plaintiffs might have been utilised for that purpose, but the dates clearly disprove that suggestion as the car seems to have been paid for, quite early in November 1926. In some of the suits, it was suggested with more ingenuity that the defendant might have borrowed for the purchase of the car and repaid that loan out of the suit transactions, but the documentary evidence, notwithstanding some defects in the entries in the accounts, shows that it was the family that purchased the car for the defendant, apparently with a view to keep him in good humour, when he showed a tendency to get out of control by reason of the influence of his boon companions. P.W. 2 in O.S. No. 42 definitely speaks to this fact; and he does not appear to have been regarded as hostile by the party that called him. Reference has been made in the course of the arguments, disputes between a brother of the defendant (by name Satyam) and the other members of the family, culminating in the institution by him of a suit for partition in April 1927; but beyond vague suggestions that the defendant might have been in sympathy with him or helped him with funds out of his own borrowings even before the institution of the partition suit no tangible connexion between Satyam's doings and the defendant's borrowings has been made out. A suggestion was also made that the defendant represented to some of the plaintiffs that he himself required money for instituting a partition suit but that story was put forward for the first time at a very late stage and is not in accordance with probabilities. There is undoubtedly more force in the argument that if the defendant was in the company of bad companions for several months and was wandering about not merely in his own locality but also, in distant places like Calcutta, Benares, Bombay and Hyderabad, he must have required large sums for that very purpose and this makes the suit borrowing probable. Though the family appears to have sent some moneys to the defendant in the course of his wanderings, the amount thus supplied by the family is not very large and the sums of Rs. 350 and 500, which the defendant admits he received under the pro-notes sued on in. O.S. Nos. 42 and 51 are utterly inadequate to have met all the wants of himself and his companions during this period.

6. The learned trial Judge realized the force of this argument and refused to believe the defendant's story as to the amounts actually received by him. But he held that all the transactions had been entered into under very suspicious circumstances and without making any inquiries of the elder members of the defendant's family, though they were well known to the lenders, that they could not have been bona fide loans as the lenders were or must have been aware of the kind of life that defendant was leading and the purposes for which he required moneys, that in the circumstances they were not likely to have advanced the full amounts shown in the various pronotes, that the facts proved by the defendant sufficed to throw on the plaintiffs the burden of proving the amounts actually advanced by them and this onus they had not discharged by the production of reliable evidence. On the question of burden of proof, he relied on Moti Gutabchand v. Mahomed Mehdi (1896) 20 Bom. 367, Sundarammal v. Subramania Chettiar 1916 Nad, 278, Sami Sah v. Parthasarathy Chetty 1916 Mad. 862, which undoubtedly support his view. The correctness of these decisions has been questioned as also their applicability to the circumstances proved in the present suits. It has also been contended that the lenders were not dealing with a 'limited owner' or pardhanashin lady and were under no obligation to satisfy themselves as to the propriety of the purpose for which the loans were taken or to communicate with the defendant's father or his brothers.

7. The last argument may be briefly disposed of. The learned Judge does not rely on these considerations as part of the precaution which the lenders were bound under law to take but only as throwing light on the circumstances under which the defendant incurred these debts and the probability or otherwise of the plaintiffs having lent such large sums to one circumstanced like the defendant, in the manner in which they say they have done. We do not think the learned Judge has fallen into any error in taking such considerations into account, though opinions may differ as to the weight to be given to them. On the question of burden of proof, reliance has been mainly placed by the appellants on Section 118, Negotiable Instruments Act, and it has been argued that the decision in Moti Gutabchand v. Mahomed Mehdi (1896) 20 Bom. 367, which has been followed in Sundarammal v. Subramania Chettiar 1916 Nad, 278 and Sami Sah v. Parthasarathy Chetty 1916 Mad. 862, practically ignores the marked difference in language between that section and Section 114, Evidence Act, and illustration (c) thereto. Whatever comment may be made upon the way in which the learned Judges have expressed themselves in these cases, the principle underlying these decisions seems to us unexceptionable; and in dealing with rebuttable presumptions, it is common knowledge that the Court is often obliged to rely more upon circumstances than upon direct or definite evidence negativing the fact presumed : cf. Singer Kunwar v. Basdeo 1930 All. 568 and T.M. Ramaswami Iyer v. Ganapathia Pillai 1914 Mad. 118 : see also Tatam v. Haslar (1889) 23 Q.B.D. 345.

8. The appellant's arguments seem to read a great deal into Section 118, Negotiable Instruments Act; that section must be understood in the light of the reason of the rule and the history of the law as to the presumption in favour of negotiable instruments. From the definitions and from illustrations in the Act, it will be seen that it is not required or even expected that the 'consideration' should be stated in the instrument itself. So, no presumption can ordinarily arise in such cases out of 'recitals' in the document. At one time, it was a matter of doubt in England whether a statement, in the bill of the transaction which gave rise to the bill might not detract from its character as an unconditional' order or promise to pay and Clause (3), Section 3, Bills of Exchange Act, was put in, to remove this apprehension. Having regard to mercantile usage and the interests of business, it had been developed as a rule of practice and pleading in the English law, that in the case of bills and notes there need be no reference either in the document itself or in the plaintiff's pleading, to 'value received' or to payment of consideration : see Hatch v. Trayes (1840) 11 A & E 702, Foster v. Dawar (1871) 6 Ex. 839. In later cases, this idea came to be embodied in the rule that a bill or note prima facie imports consideration or value : Southal v. Rigg 11 C.B. 481 and Jones v. Gordon (1877) 2 A.C. 616, and the same is reproduced in Section 30, Bills of Exchange Act, in the words:

Every party whose signature appears on a bill is prima facie deemed to have become a party thereto for value.

9. There is no reason to think that Section 118, of the Indian Act lays down anything more than this. Neither the earlier case law nor the language of the section justifies any presumption being made as to the quantum of consideration. The English Act merely states that any consideration sufficient to support a simple contract may constitute 'valuable consideration' for a bill or note see Section 27). Though there is no corresponding provision in the Indian Act, the principle must be the same here : see Samuel v. Anantanatha (1883) 6 Mad. 351 at p. 353. In Clause (a), Section 118, the same language covers cases both of making or drawing' and of 'negotiation' and in the latter case, the presumption can only be of a transfer for value and not in favour of any particular amount as consideration' for the transfer. It may also be noticed in passing that in illustration (c) to Section 114, Evidence Act, the presumption is only stated to be that the bill was accepted or endorsed 'for good consideration'.

10. As a corollary to the above rule, of pleading it was recognised in England that if is

not enough in the plea of want of consideration merely to say that the defendant never had any value or consideration-the plea must go on to aver the circumstances which show that there was no consideration: Southal v. Rigg 11 C.B. 481.

11. In Byles on Bills (at p. 125), the rule is stated in the following terms:

Consideration is presumed until the contrary appears or at least appears probable.

12. The expression until the contrary is proved' in Section 118, Indian Negotiable Instruments Act, must also be read in this expanded sense, having regard to the definitions of the word 'disproved' and of the expression 'shall presume' in Sections 3 and 4, Evidence Act. The difference between Section 114, Evidence Act, and Section 118, Negotiable Instruments Act, consists only in this: that under the first the Court has a discretion to make the presumption or not, whereas under the second the Court is bound to start with the presumption; but once the presumption is made, there is no difference between the two cases, in the manner of displacing the presumption) or disproving the presumed' fact.

13. Any presumption as to quantum of consideration, as distinguished from the mere existence of consideration, has to be drawn, not by virtue of Section 118, Negotiable Instruments Act or even under Section 114, Evidence Act, but only from the recitals, if any, that the instrument may contain. As to such recitals, it has long been established that being prima facie evidence against the parties to the instrument, they may operate to shift onto the party pleading the contrary, the burden of rebutting the inference raised by them: see Zamindar S.G.R. V. Bomaya Nayik v. Virappa Cherti 2 M.H.C. 174. But the weight due to recitals may vary according to circumstances and, in particular circumstances, the burden of rebutting them may become very light, especially when the Court is not satisfied that the transaction was honest and bona fide: see Brajeshwara Peshakar v. Buddanuddi (1881) 6 Cal. 268 and 2,78; see also Zohara Jan v. Rajam Bibi 1915 Lah. 86.

14. In applying the principles above adverted to, Courts have in course of time come to regard certain types of cases as specially calling for scrutiny from the debtor's point of view. It is immaterial whether or not 'fraud' in the sense of 'deceit' or 'undue influence' as defined in Section 16, Contract Act, is made out, the grounds in favour of a wide exercise of equitable jurisdiction in certain types of cases were explained by Lord Hardwicke in Chesterified (Earl of) v. Jansoon 2 V.S. 125 at p. 155; see also Story's Equity, Section 348. One of these well known types is represented by the category of transactions between money lenders and expectant heirs. As early as in Freeman v. Bishop 2 Atk 39, the reason of the rule governing such cases was stated to be the 'necessity' that young heirs are in, for the most part, which naturally lays them open to imposition; and in O'Rorke v. Bolingbroke (1877) 2 A.C. 814 it was pointed out that in such cases the parties do not really meet on equal terms and the opportunity for the one party to take advantage of the weakness or necessity of the other, raises a presumption of fraud' in the sense of improper use of the power arising out of the circumstance. In Smith v. Kay 7 HLC 750 , Lord Cranworth strongly condemned the practice of getting hold of a young man of fortune, supplying him with means and pandering to his extravagance. The young man who has gone through a course of wilful and culpable folly and extravagance is, in such cases, relieved from its consequences, not because he has any ' merits of his own to plead' but that ' there is a principle of public policy in restraining' such conduct on the part of lenders, that

This system of undermining and blasting, as it were, in the bud, the fortunes of families is a public as well as a private mischief : per Lord Solbonrne in Earl of Aylesford v. Morris (1873) 8 Ch. 484.

15. It must not be forgotten that in such cases the prodigal is by the very circumstances of the situation drawn away from the help and advice of his natural guardians and protectors and delivered into the hands of persons interested in taking advantage of his weakness (ibid). In Croft v. Graham (1863) 2 De G.J. & S. 155, Lord Justice Knight Bruce used very strong language, observing that 'it would be a disgrace to the Court', if securities given in such circumstances were allowed to stand for more than the moneys really advanced and a reasonable rate of interest;. In the application of these principles, the mere form of the transaction cannot defeat the power of the Court and pro-notes form no exception to the rule : cf. Nevill v. Snelling (1880) 15 Ch. D. 679.

16. Considerations like those adverted to above have led the Indian Legislature to add to illustration (c) of Section 114, Evidence Act, an explanation stating that, in deciding whether the presumption in favour of consideration is to be drawn or not, the Court shall have regard to the fact that the drawer of the bill of exchange was a man of business and the acceptor a young and ignorant person under his influence. The explanation) only indicates the principle and is not meant to be exhaustive of its application. Its operation is not necessarily limited to cases where the creditor is a professional money lender or excluded in cases where the borrower has a vested right in property as distinguished from a mere spes. The presumed or proved necessity of the borrower and the inequality of position between the lender and the borrower constitute the reason of the rule. If such considerations can justify the Court in refusing to draw the presumption they must equally operate to help to rebut the presumption drawn under Section 118, Negotiable Instruments Act.

17. It is well established in England that in cases where the Court examines a transaction in the light of the foregoing principles, the creditor is only entitled to get what he can prove to have lent, 'by affirmative evidence, beyond the production of the note itself'; per Alderson B in Jones v. Gordon 2 Y & C (Ex.) 498; see also Bill v. Price 1 Vern 467. It is in accordance with this principle that in Moti Gutabchand v. Mahomed Mehdi (1896) 20 Bom. 367, Sundarammal v. Subramania Chettiar 1916 Nad, 278 and Sami Sah v. Parthasarathy Chetty 1916 Mad. 862, the Court refused to give a decree to the plaintiff for more than what he proved to have lent, even when it strongly suspected that the defendant must have received more than he admitted : see also Barkat Ullah v. Hayat Ali 1925 Lah 472; cf. Kishen Ballabh v. Ghure Mal 1915 All. 228.

18. Reference was made, in passing, to the decision in A.S. No. 26 of 1927, apparently with a view, to suggest that even on receipt of a smaller amount there might be a valid promise to repay a larger amount. But that is not the plaintiff's case here and for obvious reasons too; for, in the circumstances, any serious disparity between the amount received and the amount promised to be repaid may go to support the defendant's plea of 'undue influence'. The plaintiffs have insisted that they have advanced the full amount shown in the pronotes, and if the evidence establishes payment only of smaller amounts the case will be clearly governed by Section 44, Negotiable Instruments Act.

19. It only remains to add that the question of onus is of subordinate importance at this stage, when both sides have let in evidence and the appellate Court has to come to a conclusion on the whole evidence. See Sime Darby & Co. v. Official Assignee of the Estate of Lee Pang Singh 1925 P.C. 77 at p. 339 following Robins v. National Trust Co. (1927) A.C. 515. The decision of the Allahabad High Court in Bamnath v. Ramchandra Mal 1925 All. 154 must be understood to relate to a case where, in the words of Lord Dunedin, the evidence pro and con was so evenly balanced that the onus had to determine the conclusion of the Court. Even in suits on Negotiable Instruments, it has been recognised that the debtor can press into his service, facts and circumstances disclosed by the plaintiffs' evidence as well Bishanbar Das v. Ismail 1933 Lah. 1029, Muhammad Shafi v. Muhammad Mouzzan Ali Khan 1923 All. 214; cf. Makund v. Bahori Lal (1881) 3 All. 824 and (Raghavalu Chetty v. Sabapathy Chetty (1911) 2 M.W.N. 253. (After discussing the evidence in each of the suits their lordships modified the decrees of the lower Courts).


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