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Karnataka High Court
M. Jeetendar Gandhi - Appellant
Versus
Huthappa -Respondent
Decided On : 05-26-99
The presumption of consideration under Section 118 of the Negotiable Instruments Act applies to a case where the execution of the promissory note is proved and the defendants do not rebut the presumption.
Headnote:
NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 118 - PRESUMPTION OF CONSIDERATION - APPLICABILITY - COURT'S DUTY TO APPLY PRESUMPTION - REBUTTAL OF PRESUMPTION.
Fact of the Case:
Plaintiff filed a suit for recovery of money lent to defendants, evidenced by a promissory note and consideration receipt executed by defendants. Defendants did not file a written statement and did not appear in court. The trial court dismissed the suit, holding that the plaintiff failed to prove the loan transaction and was not entitled to the benefit of Section 118 of the Negotiable Instruments Act.
Finding of the Court:
The court found that the plaintiff's evidence, though unchallenged, was not reliable as it did not explain why the defendants came from Bangalore to borrow money from the plaintiff. The court also found that the plaintiff failed to produce any other documents to support his claim.
Issues: 1. Whether the plaintiff proved the execution of the promissory note and consideration receipt by the defendants. 2. Whether the presumption of consideration under Section 118 of the Negotiable Instruments Act applies to the plaintiff's case. 3. Whether the defendants rebutted the presumption of consideration.
Ratio Decidendi: 1. The court held that the plaintiff's evidence, though unchallenged, was not reliable as it did not explain why the defendants came from Bangalore to borrow money from the plaintiff. However, the court also held that the plaintiff's evidence was sufficient to prove the execution of the promissory note and consideration receipt by the defendants in view of Order VIII Rule 5 of the Code of Civil Procedure, which provides that non-denial of a plaint allegation specially has to be taken to be the admission of that allegation of fact. 2. The court held that the presumption of consideration under Section 118 of the Negotiable Instruments Act applies to the plaintiff's case, as the defendants did not file any written statement denying the plaintiff's case and did not appear in court. 3. The court held that the defendants did not rebut the presumption of consideration, as they did not allege or prove any facts or circumstances showing the non-existence of consideration.
Final Decision: The court allowed the revision petition, set aside the judgment and decree of the trial court, and decreed the plaintiff's suit with full costs.
( 1 ) THIS revision under the Small Cause Courts Act, 1964 arises from the judgment and decree dated 2-1-1996 passed by the XV Additional Small Causes Judge (SCCH. 17), Bangalore (Mr. N. Subba Rao), whereby the trial Court dismissed the plaintiff's suit for the recovery of money to the tune of Rs. 22,925. 00.
( 2 ) ). The case of the plaintiff is that the defendants 1 to 3 have taken loan of Rs. 15,000/- on 10-10-1990 from the plaintiff - revision petitioner for interest at the rate of 18% per annum and agreed to repay the same within one year. According to the plaintiff's case the promissory note and consideration receipt were executed by defendants. The plaintiff's further case is that despite issue of legal notice dated 15-4-1993 the defendants-respondents did not repay the loan with interest. So the plaintiff has filed a suit for the recovery of a sum of Rs. 15,000/- together with interest at the rate of 18% p. a. amounting to Rs. 7425/- and notice charges of Rs. 500/- in all Rs. 22,925. 00.
( 3 ) THE defendant No. 2 on the summons being served put in their appearance through a counsel, but did not file any written statement. The first defendant though served did not put in his appearance and the case proceeded ex parte.
( 4 ) THE plaintiff examined himself as P. W. 1 and produced 6 documents which were marked at Exs. P-1 to P-6. The trial Court dismissed the suit holding that the plaintiff is not entitled to the decree.
( 5 ) FEELING aggrieved from the judgment of the trial Court dismissing the suit, the plaintiff has come up in revision under Section 18 of the Karnataka Small Cause Courts Act, 1964.
( 6 ) IT has been contended by the learned counsel for the revision petitioner that the plaintiff has proved the execution of the transaction and promissory note by his own evidence. He submitted that P. W. 1 has stated that the defendants have taken loan and executed the promissory note and consideration receipt in the presence of two witnesses viz. , Noor Ahamad and D. P. Gupta. The learned Counsel further contended that the Court below acted illegally in ignoring the presumption of law under Section 118 of the Negotiable Instruments Act, whereunder there is a rebuttal presumption of consideration to the effect that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.
( 7 ) THE learned counsel for the revision petitioner contended that presumably under Section 118 of the Negotiable Instruments Act, did apply to the present case and as there is no case or evidence in rebuttal of presumption aforesaid the Court below did not act according to law as well as acted illegally in not applying its mind to the presumption as well as in dismissing the suit.
( 8 ) THE contentions of the learned counsel for the petitioner has been hotly contested by the respondents. The learned counsel for the respondents submitted that execution of the promissory note has not been proved as no witness has been examined and the plaintiff's evidence was not reliable, as held by the trial Court that P. W. 1 could not explain why the defendants had come from Bangalore to borrow money from the plaintiff. He further submitted that the plaintiff's evidence does not show that the promissory note was executed in his presence and therefore the trial Court rightly held that the plaintiff has failed to prove the loan transaction and the revision petitioner is not entitled to the benefit of Section 118 of the Negotiable Instruments Act.
( 9 ) I have applied my mind to the contentions advanced by the learned counsel for both parties as well as gone through the records and got the statement of P. W. 1 read and translated into English by the learned Counsel for the revision petitioner in the presence of the learned counsel for the respondents.
( 10 ) PLAINTIFF (P. W. 1) has st
