The main legal point established in the judgment is that the presumption under Section 118 of the Negotiable Instruments Act can be rebutted by the defendant using documentary evidence to show that a promissory note is not supported by consideration.

1. The plaintiff in O.S. No. 139 of 1994 on the file of the Subordinate Judge, Virudhachalam, who lost before the two Courts below is the appellant in this second appeal.

2. On 13.2.1999, R. Jayasimha Babu, J., ordered notice regarding admission returnable in six weeks. The respondent has been served and he has entered appearance through Mr. D. Bharathachkravarthy.

3. The second appeal is taken up for final disposal with the consent of Counsel for either side. The learned Counsel for the appellant raised the following substantial questions of law:

"1. Whether the Courts below are right in holding that the pronote is not supported by the consideration when there are no vitiating circumstance and the execution of pronote is proved and when the presumption under Section 118 of Negotiable Instruments Act hold the field?

2. Whether in law the Courts below right in overlooking the presumption laid down in Section 118 of Negotiable Instruments Act that a Negotiable Instrument is fully supported by consideration and that the onus is on the respondent who sought to rebut on it to prove his case especially when the execution of pronote is proved?"

4. The above two questions of law could be considered together. For convenience, the parties will be referred as arrayed before the Trial Court.

5. The plaintiff instituted the suit O.S. No. 139 of 1994 on 14.7.1994 for recovery of a sum of Rs. 55,057.50 with subsequent interest due thereon. According to the plaintiff the defendant borrowed Rs. 45,000 on 20th January, 1992 from the plaintiff and executed the suit promissory note Ex. A.1 Despite demands the defendant failed to repay the amount due. Hence the suit.

6. The defendant pleaded that he has not executed the suit promissory note Ex. A.1, dated 20.1.1992 in favour of the plaintiff, the suit promissory note is a fabricated document. The defendant further pleaded that he and the plaintiff were thick friends for over four decades and they were jointly doing P.W.D. contract works. On 20.1.1992 the defendant borrowed Rs. 30,000 from the plaintiff by pleading his three rows gold chain weighing 6 sovereigns bearing the initial KPS and a 6 sovereign chain with dollar bearing red and white stones, in all aggregating to 22 << sovereigns. In proof of the said pleading the plaintiff executed a letter in his letterhead and handed over the same to the defendant. Thereafter the defendant has not done the contract work jointly. The plaintiff has fraudulently fabricated the promissory note and filed the present suit. The suit promissory note is false and it is not supported by consideration and the defendant prayed for dismissal of the suit.

7. The plaintiff examined himself as P.W.1 besides one Shanmugham as P.W.2 and marked Exs. A.1 to A.3, being suit promissory note, notice and reply respectively. The defendant examined himself as D.W.1, besides one Ramanathan as D.W.2. The defendant also marked Ex. P.1, the plaintiff's letter dated 20.1.1992 and the contents of the Ex. B.1 letter has been marked as Ex. B.2.

8. The Trial Court though held that the signature found on Ex. A.1 promissory note is that of the defendant but noticed that there is signature not only on the revenue stamp affixed, but also beneath creating a doubt. The Trial Court also concluded that the defendant had executed Ex. A.1 promissory note. But in the light of Ex. B.1 held that Ex. A.1 promissory note was executed on blank form, no amount was advanced under Ex. A.1, but the defendant had pleadged his jewels and availed a jewel loan of Rs. 30,000, on the very same date as seen from Ex. B.1/B2. There is no chance for the plaintiff advanced another sum Rs. 40,000 under Ex. A.1. The Trial Court also held that the plaintiff has not advanced the money under Ex. A.1, Promissory note and that the promissory note is not supported by consideration while accepting the evidence of D.W.1 and Ex. B.1.

9. Aggrieved by the dismissal of the suit, the plaintiff preferred first appeal in A.S.No.