IMPORTANT POINT
Mere denial is not sufficient to rebut the presumption u/s 118(a) of N.I. Act.

Headnote:(a) Negotiable Instruments Act – Section 118(a) – The court is obliged to presume, until the contrary is proved, that the promissory note was made for consideration – Well settled that the initial burden in this regard lies on the defendant to prove the non-existence of consideration – If the defendant discharges the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who would be obliged to prove it. (Paras 12, 13)
        (1993) 3 SCC 35 – Relied upon.
        (b) Negotiable Instruments Act – Section 118(a) – In view of the pronotes having been proved, and the respondents failing to prove non-existence of consideration, presumption under section 118(a) would come into play – Mere denial by the respondents that no consideration had passed would not have been sufficient and something probable had to be brought on record to prove the non-existence of consideration. (Para 15)
       Facts of the case :
        1. The appellant is the son-in-law of respondent no.2. The respondent nos. 3 and 4 are the sons of respondent no. 2 while respondent no. 1 is the firm belonging to respondent nos. 2 to 4 whose managing partner is respondent No. 2.
        2. The appellant introduced one Pynda Ramakumar to the respondents who agreed to advance monies to the respondents on the understanding that the respondents would repay the amount while the appellant would execute pronotes as surety. The appellant accordingly executed certain pronotes whose consideration was received by the respondents.
        3. The respondents were making payments, but when they failed to repay the balance amount due to Pynda Ramakumar, he pressurized the appellant for payment of the balance amount due to him.
        4. Resultantly respondent no. 2 as manager of the joint family and also on behalf of the respondent No. 1 firm executed two pronotes and a Khararnama in favour of the appellant whereby the respondent No. 1 agreed to repay amounts with interest.
        5. Again on default in payment, a notice dated 3rd of October, 1986 was issued to them by the appellant stating that the pronotes and khararnama were executed by respondent no. 1 in favour of the appellant which may be discharged.
        6. The respondents in reply, did not specifically deny the execution of the pronotes and the Khararnama but referred to the allegations made in such notice as false and vague.
        7. In the backdrop of the above mentioned facts, in 1987, the appellant, therefore, filed a suit in the 1st Court of the Additional Subordinate Judge, Kakinada. The 1st Court of the Additional Subordinate Judge, Kakinada decreed the suit of the appellant in part.
        8. Feeling aggrieved by the said judgment of the trial court, both the appellant and the respondents filed two appeals before the High Court of Andhra Pradesh at Hyderabad. By the impugned judgment of the High Court both these appeals were dismissed.
       Findings of the Court :
        Respondents have failed to discharge their burden of proving that there was no consideration.
       Result : Appeal allowed.

JUDGMENT

Tarun Chatterjee, J. —

1. This appeal is directed against the final judgment and order dated 30th of July, 1999 passed by a Division Bench of the High Court of Judicature of Andhra Pradesh at Hyderabad in AS No. 721/92 whereby the High Court had affirmed the judgment and decree dated 5th of August, 1991 in OS No. 33/87 of the 1st Court of the Additional Subordinate Judge, Kakinada, E.G. District, Andhra Pradesh decreeing the suit filed by the appellant in part for a sum of Rs. 2,33,125/- with interest @ 18% from the date of the suit till realization.

2. The facts leading to the filing of this appeal as emerging from the case made out by the appellant in the plaint are as under.

The appellant is the son-in-law of respondent no.2. The respondent nos. 3 and 4 are the sons of respondent no. 2 while respondent no. 1 is the firm belonging to respondent nos. 2 to 4 whose managing partner is respondent No.2. The appellant introduced one Pynda Ramakumar to the respondents who agreed to advance monies to the respondents on the understanding that the respondents would repay the amount while the appellant would execute pronotes as surety. The appellant accordingly executed certain pronotes whose consideration was received by the respondents. As regards repayment, the respondents were sending monies by drafts or otherwise in the name of one Narayan Murthy, who was the clerk of the appellant, by depositing the same in his account. The appellant would withdraw such amount deposited in the clerk’s account by encashing the TTs or Drafts which was then paid to Pynda Ramakumar who then got the endorsements signed by the appellant. This continued for some time but when the respondents failed to repay the balance amount due to Pynda Ramakumar, he pressurized the appellant for payment of the balance amount due to him. The appellant made several demands to the respondents for payment of the amounts due to Pynda Ramakumar but when the respondents could not pay the amounts, the respondent no. 2 as manager of the joint family and also on behalf of the respondent No. 1 firm executed two pronotes for sums of Rs. 2,15,000/- and Rs. 4,72,000/- being Ex.A-20 and Ex.A-21 respectively and a Khararnama in favour of the appellant whereby the respondent No. 1 agreed to repay amounts with interest at Rs. 2.50 ps. and Rs. 1.50 ps. respectively per annum. After execution of such pronotes, when, despite several demands, the respondents did not pay the amounts, a notice dated 3rd of October, 1986 was issued to them by the appellant stating that the pronotes and khararnama were executed by respondent no. 1 in favour of the appellant which may be discharged. The respondents vide letters dated 16th of October, 1986 and 20th of October, 1986 replied to the notice wherein they did not specifically deny the execution of the pronotes and the Khararnama but referred to the allegations made in such notice as false and vague.

3. In the backdrop of the above mentioned facts, in 1987, the appellant, therefore, filed O.S. No. 33/1987 in the 1st Court of the Additional Subordinate Judge, Kakinada for recovery of the amounts due under the pronotes of Rs. 4,72,000/- and Rs. 2,15,000/- with interest and costs. The respondent No. 2 contested the suit by filing written statement on his own behalf and also on behalf of the respondent No. 1 firm denying any execution of the pronotes in favour of the appellant and further stating that the pronotes were forged by the appellant with the assistance of his brother-in-law and the Clerk. It was further alleged that the appellant bore a grudge against the respondents and was involved in many criminal cases and since he was not looking after his wife and children properly, the respondents had opened an account in the name of Narayanmurthy and were sending monies regularly in that account for the maintenance of the appellants’ family and therefore, it was alleged that no money was ever borrowed from the said Pynda Ramakumar, whom the resp

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2008 Supreme(SC) 951

2008(4) Supreme 79SUPREME COURT OF INDIATarun Chatterjee, J.(From Andhra Pradesh High Court)Mallavarapu Kasivisweswara Rao — AppellantversusThadikonda Ramulu Firm and Ors. — RespondentCivil Appeal No. 5597 of 2001Decided on : 16-05-2008

IMPORTANT POINT Mere denial is not sufficient to rebut the presumption u/s 118(a) of N.I. Act.

2008(4) Supreme 79
SUPREME COURT OF INDIA
Tarun Chatterjee, J.
(From Andhra Pradesh High Court)
Mallavarapu Kasivisweswara Rao — Appellant
versus
Thadikonda Ramulu Firm and Ors. — Respondent
Civil Appeal No. 5597 of 2001
Decided on : 16-05-2008

IMPORTANT POINT
Mere denial is not sufficient to rebut the presumption u/s 118(a) of N.I. Act.