Andhra Pradesh High Court
Y.M.PRASAD - Appellant
Versus
Janiab Begum Abdullah Rowji - RESPONDENT
Decided On: 06-12-87
Presumption of Consideration - Negotiable Instrument - The court held that the statutory presumption under Section 118 of the Act, which places the onus on the maker to prove consideration, deprives the needy and indigent of the normal burden of proof and aids unfair advantage. The court called for a reconsideration or recasting of the efficacy of the statutory presumption to afford equal right to justice to the needy and indigent.
Fact of the Case:
The respondents claimed that the appellants owed a sum of money and provided share certificates as evidence of payment. However, the court found that the respondents failed to prove the passing of consideration under the relevant documents.
Finding of the Court:
The court held that the respondents did not prove the execution of the relevant documents or passing of consideration, and therefore, the liability of the appellants was not established. The appeal was allowed, the trial court's decree was set aside, and the suit was dismissed.
Issues: The main issue was whether the respondents had proved the passing of consideration under the relevant documents.
Ratio Decidendi: The court discussed the statutory presumption under Section 118 of the Act, highlighting its impact on the burden of proof and the need for reconsideration or recasting to ensure equal right to justice.
Final Decision: The appeal was allowed, the trial court's decree was set aside, and the suit was dismissed. Each party was directed to bear its/his own costs.
( 1 ) THE defendants are the appellants. Respondents 1, 2 and 3, 4 and 5 being the legal representatives of the second respondent who died subsequently, laid the suit on the foot of the promissory note, Ex. A-9 dated april 15, 1971, executed by the first appellant in favour of the first respondent and the second appellant stood as surety, for a sum of Rs. 50,000/ -. The trial court decreed the suit. Thus, the apeal
( 2 ) THE first respondent-first plaintiff is a partnership firm consisting of 2nd and 3rd respondents. Earlier, the second respondent and her mother, begum Lulu Hasan Nawaz Jung were partners. Their present case is that the first appellant borrowed a sum of Rs. 50,00/- from Bsgum Lulu Hasan nawaz Jung, for short, "the promisee" under Exs. A-5 and A-6 in the year 1968 in sums of Rs. 30,000/- and Rs. 20,000/- respectively and the second appellant endorsed two cheques, Exs. A-7 and A8, which bore initially the date April 1, 1968 but later corrected as July 1, 1968, as collateral security. Before expiry, when demanded, the first appellant executed Ex. A-9 suit promissory note dated April 15, 1971, in renewal of the promissory notes ex. AS and A6 and despite promising to pay, he did not pay. Hence the suit.
( 3 ) THE defence of the appellants is that the first appellant did not borrow any amount from promisee. He was introduced by the second appellant to one Abdullah Rowji, the husband of the second respondent,who was now admitted to be looking after the business of the first respondant-firm. The said Abdullah Rowji lent a sum of Rs. 50,000/- He executed Ex. A-30 in favour of the first respondent and for recovery thereof, O. S. No. 130/72 was laid and on admission, it was decreed. Since late Abdullah Rowji was involved in money-lending business with black money he requested the appellant to execute blank promissory notes. He accommodated him by signing several blank papers for the purpose of- income-tax. He denied the execution of the promissory note under Ex. A-9 and receipt of consideration and also denied the execution of any promissory note in favour of the promisee. He denied Ex. A-9, a renewal of Exs. A-5 and A-6. Yet, the Court below accepted the plea of the respondents and held that the first appellant had executed Ex. A-9, it is a renewal of Exs. A-5 and A-6 ; consideration was paid thereunder ; the second appellant stood as a surety and accordingly decreed the suit.
( 4 ) THE facts proved at the trial are that Ex A-9 is a promissory note signed by the first appellant ; and the recital that cash consideration of Rs. 50,000/- was paid thereunder is not the case set up. In the plaint it is the case that Ex. A-9 is a renewal of Exs. A5 and A6 of 1968 and that Exs. A7 and a8, cheques, which were initially dated as April 1, 1968 but later corrected as July 1, 1968 and signed for Key and Key Enterprises Private Ltd. , by the second appellant as its Director and were issued as collateral security. Subsequently they were renewed on April 15, 1971, under the suit promissory note Ex. A-9. Or the same date, Ex. A-30, another promissory note also was executed for another sum of Rs. 50,000/-, the subject matter of the suit, O. S. 130/72, the execution of which was admitted and the suit decreed. No suit notice was issued before filing the suit on the last day of limitation. Thus, it is the respondents case that the original debt incurred by the first appellant having borrowed from promisee under Exs. A-5 and A-6 in 1968 is the consideration for Ex. A-9 as renewal thereof, to which the second appellant stood surety. The first question, therefore, is whether the decree is valid. Under sec. 4 of the Negotiable Instruments Act (Act 26 of 1881), for short, "the act", the promissory note is defined as "an instrument in writing containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument. " Under Section 1
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