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Andhra Pradesh High Court
Thadikonda Ramulu Firm - Appellant
Versus
Mallavarapu Kasivisweswara Rao - RESPONDENT
Decided On: 07-13-99
The presumption of consideration under Section 118 of the Negotiable Instruments Act arises upon the execution of a pronote, but this presumption can be rebutted by evidence to the contrary.
Headnote:
NEGOTIABLE INSTRUMENTS ACT - SECTION 118 - PRESUMPTION OF CONSIDERATION - REBUTTAL - EVIDENCE - BURDEN OF PROOF - EXECUTION OF PRONOTE - ADMISSION - DENIAL OF CONSIDERATION - SPECIFIC PLEA REQUIRED - RECITALS IN PRONOTE - INTERPRETATION - PASSING OF CONSIDERATION - DOUBT - BURDEN OF PROOF.
Fact of the Case:
Plaintiff filed a suit for recovery of Rs. 5,22,353-33ps. due on two pronotes and subsequent interest. The defendants denied the execution of the pronotes and alleged that they were forged. The trial court found that the defendants had executed the pronotes but dismissed the suit for the amount covered by one of the pronotes (Ex. A-21) and decreed the suit for the amount covered by the other pronote (Ex. A-20).
Finding of the Court:
The court held that the presumption of consideration under Section 118 of the Negotiable Instruments Act arises upon the execution of a pronote, but this presumption can be rebutted by evidence to the contrary. In the present case, the court found that the evidence of the plaintiff was inconsistent with the presumption of consideration and that the defendants had not specifically denied the passing of consideration under Ex. A-20. Therefore, the court held that the plaintiff had failed to discharge the burden of proving that Ex. A-21 was supported by consideration, but had succeeded in proving that Ex. A-20 was supported by consideration.
Issues: 1. Whether the two suit pronotes dated 29-8-1986 and 29-8-1987 are true, valid and binding on the defendants? 2. Whether the plaintiff is entitled to recover the suit amount with subsequent interest and costs thereon? 3. Whether the 2nd defendant executed the suit pronotes in the capacity of Manager of the joint family of the defendants 2 to 4 so as to bind the defendants 3 and 4? 4. Whether the defendant No. 2 executed pronotes as the Managing partner of D-1 firm so as to bind its partners 3 and 4? 5. To what relief?
Ratio Decidendi: The court held that the presumption of consideration under Section 118 of the Negotiable Instruments Act arises upon the execution of a pronote, but this presumption can be rebutted by evidence to the contrary. In the present case, the court found that the evidence of the plaintiff was inconsistent with the presumption of consideration and that the defendants had not specifically denied the passing of consideration under Ex. A-20. Therefore, the court held that the plaintiff had failed to discharge the burden of proving that Ex. A-21 was supported by consideration, but had succeeded in proving that Ex. A-20 was supported by consideration.
Final Decision: The court dismissed the appeal filed by the plaintiff against the dismissal of the suit for the amount covered by Ex. A-21 and confirmed the judgment and decree of the trial court on grounds other than those mentioned by the trial court. The court also dismissed the appeal filed by the defendants against the decree for the amount covered by Ex. A-20.
( 1 ) THESE two appeals arise out of the judgment and decree in O. S. No. 33 of 1987 on the file of the learned Additional subordinate Judge, Kakinada. Plaintiff is the appellant in A. S. No. 721 of 1992 and the defendant is the appellant in A. S. No. 1872 of 1991. The suit was filed for recovery of rs. 5,22,353-33ps. which was due on two pronotes and for subsequent interest.
( 2 ) THE plaint averments in brief are as follows: The parties are referred to as arrayed in the suit. The 2nd defendant is the father of defendants 3 and 4. The first defendant is the firm belonging to defendants 2 to 4 and the 2nd defendant is the managing partner of the 1st defendant-firm. The plaintiff introduced one Pynda ramkumar, who agreed to advance monies on the understanding that the defendants will repay the amount and that the plaintiff executed pronotes as sureties. The plaintiff is the son-in-law of the 2nd defendant. He executed certain pronotes, the consideration of which was received by the defendants. The defendants were sending monies by drafts or otherwise in the name of Narayana murthy by opening the account in the banks. After encashing the TTs. or Drafts narayana Murthy was paying the amount to Pynda Ramkumar and at his convenience he is taking endorsements made and got signed by the plaintiff. The defendants failed to pay the balance amount due to pynda Ramkumar. Therefore, he pressurised the plaintiff for the payment of the amounts due to him. In spite of several demands as they could not pay the amounts, therefore, they executed a pronote on 29-8-1986 after calculating the amounts due and payable by them. Accordingly the 2nd defendant executed pronote for a sum of Rs. 4,72,000/- and for Rs. 2,15,000/- on behalf of the 1st defendant-firm and on his behalf as the manager of the joint family agreeing to repay the amount with interest at Rs. 2. 50 ps. and Rs. 1. 50 ps. respectively per annum. In spite of the repeated demands the defendants have not paid the amount and therefore a notice was issued on 3-10-1986 to which the defendants gave a reply with false allegations. Hence the suit.
( 3 ) THE defendants filed a written statement denying the execution of pronotes. However, it is stated that no cash consideration was paid. Defendants 3 and 4 also filed a written statement stating that they have not signed the pronotes, Exs. A-20 and A-21. It was alleged that the pronotes are forged by the plaintiff with the assistance of his brother-in-law and his clerk and the recitals of the pronotes are false.
( 4 ) ON the basis of the pleadings the trial court framed the following issues:" (1) Whether the two suit pronotes dated 29-8-1986 and 29-8-1987 are true, valid and binding on the defendants? (2) Whether the plaintiff is entitled to recover the suit amount with subsequent interest and costs thereon? (3) Whether the 2nd defendant executed the suit pronotes in the capacity of Manager of the joint family of the defendants 2 to 4 so as to bind the defendants 3 and 4? (4) Whether the defendant No. 2 executed pronotes as the Managing partner of D-1 firm so as to bind its partners 3 and 4? (5) To what relief?"
( 5 ) IN support of his case the plaintiff examined P. Ws. 1 to 3 - P. W. 1 being the plaintiff himself, P. Ws. 2 and 3 the scribe and attestor of the pronotes respectively. The defendants were examined as D. Ws. 1 to 4. On behalf of the plaintiff Exs. A-1 to a-30 and Exs. X-1 to X-4 were marked. The defendants marked Exs. B-1 to B-17 on their behalf. On a consideration of the evidence adduced during the trial the learned First additional Subordinate Judge dismissed the suit for the amount covered by Ex. A-21 for Rs. 4,72,000/- and decreed the suit covered by Ex. A-20 for a sum of rs. 2,33,125/- with proportionate costs. The trial Court also granted interest at 18% per annum. Aggrieved by the dismissal of the suit covered by Ex. A-21, the plaintiff filed the appeal in A. S. No. 721 of 1992 and the defendants filed A. S. N
