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1968 Supreme(Pat) 164

PATNA HIGH COURT
Anwar Ahmad and Shambhu Prasad Singh JJ.
Bhagwati Prasad Bhagat
Versus
Pahil Sundari
Appeal From Appellate Decree No. 609 of 1965 ;
Decided On : SEPTEMBER 03, 1968

The onus of proving that a negotiable instrument was not executed for consideration lies on the defendants.

Headnote:

MONEY LENDERS ACT - SECTION 4 - PROMISSORY NOTE - EXECUTION - CONSIDERATION - ONUS OF PROOF - NEGOTIABLE INSTRUMENTS ACT, SECTION 20 AND 118 - INTERPRETATION - EFFECT.

Fact of the Case:

Plaintiffs filed a suit for recovery of Rs. 2061.00, the principal advanced on the basis of a handnote dated 8th November 1957, besides interest. The trial court dismissed the suit, and the lower appellate court confirmed the decree. The plaintiffs and defendant No. 6 filed a second appeal.

Finding of the Court:

The court held that the suit was maintainable as appellant No. 4 was a registered money lender during the period the loan was advanced. The court also held that the onus was on the defendants to prove that the hand-note was not executed for consideration. The court further held that the handnote being a negotiable instrument, a presumption will arise under Sec.118 of the Negotiable Instruments Act that it was made or drawn for consideration.

Issues: 1. Whether the suit was maintainable as appellant No. 4 was a registered money lender during the period the loan was advanced? 2. Whether the onus was on the defendants to prove that the hand-note was not executed for consideration? 3. Whether the handnote being a negotiable instrument, a presumption will arise under Sec.118 of the Negotiable Instruments Act that it was made or drawn for consideration?

Ratio Decidendi: 1. The court held that the suit was maintainable as appellant No. 4 was a registered money lender during the period the loan was advanced. The court relied on the certified copy of the money lenders licence (Ext. 2) showing that appellant No. 4 was a registered money lender during the period the loan was advanced. 2. The court held that the onus was on the defendants to prove that the hand-note was not executed for consideration. The court relied on Sec.118 of the Negotiable Instruments Act which provides that a presumption will arise that a negotiable instrument was made or drawn for consideration. 3. The court held that the handnote being a negotiable instrument, a presumption will arise under Sec.118 of the Negotiable Instruments Act that it was made or drawn for consideration.

Final Decision: The court set aside the judgment and decree of the court of appeal below and remanded the case to it for rehearing the appeal in accordance with law and in light of the observations made above.

Judgment

Shambhu Prasad Singh, J.

1. This second appeal by the plaintiffs and defendant No. 6 arises out of a suit for recovery of Rs. 2061.00, the principal advanced on the basis of a handnote dated the 8th of November, 1957, besides interest, which has been dismissed by the trial court. An appeal by the plaintiffs before the lower appellate court against the decree of the trial court was also dismissed. The handnote is in favour of defendant No. 6, who is appellant No. 4 before this Court, and was executed by Mosst. Pahil Sun-dari and Naresh Mishra, respondents 1 end 2 before this Court of the defendants first party.

2. According to the plaintiffs, at the time of the execution of the handnote (Ext. 1), the body portion of which was also written by respondent No. 2, they and defendant No. 6 constituted a Hindu Mitakshara joint family of which defendant No. 6 was the karta and the money advanced was of the joint family. Subsequently there was a partition between the plaintiffs and defendant No. 6. The handnote in question fell to the share of the plaintiffs. Their further case was that respondents 1 and 2 took this loan as managing members of a Hindu Mitakshara joint family of the defendants first party and all the five defendants first party were liable to pay it. Respondent No. 1 is the mother of respondent No. 2. The other three respondents are minor sons of respondent No. 1. Their father and husband of respondent No. 1 is dead.

3. The defence of respondents 1 and 2 who contested the suit as disclosed in their written statement and in reply to interrogatories which they were called upon to answer by the court at the instance of the plaintiffs was that the hand-note was not executed by them though the thumb marks and signatures on the paper on which the handnote was written were theirs. They denied passing of any consideration under the handnote. Their case further was that the plaintiffs having no money lending licence, the suit was hit by Sec. 4 of the Bihar Money Lenders Act and not maintainable. According to them, it was also not maintainable as there was no endorsement in favour of the plaintiffs of the handnote by defendant No. 6.

4. The trial court held that besides the signatures and the thumb impressions the execution portion of the handnote (Ext. 1) below the stamp and up to the date was in the pen of respondent No. 2, but the body portion of the handnote was not in his pen, that the handnote in question was not a promissory note and that it was not for cash consideration for Rs. 2061/-. It further held that the plaintiffs had no locus standi to institute the suit though it was not hit by Section 4 of the Bihar Money Lenders Act. The court of appeal below has confirmed all the findings of the trial Court except that the suit was not hit by Sec. 4 of the Bihar Money Lenders Act. According to the lower appellate court. Sec. 4 of the Bihar Money Lenders Act was also a bar to the maintenance of the suit by the plaintiffs.

5. A preliminary objection has been taken by learned counsel for the respondents that there being no decree against appellant No. 4, an appeal by him is not maintainable. Along with the memorandum of appeal appellant No. 4 also filed a petition before this court for transposing him to the category of a plaintiff. That application has not been disposed of so far and has been heard along with the appeal itself. The fate of the preliminary objection depends on the fate of that application. In case that application is allowed, it has to be held that appellant No. 4 as a plaintiff is entitled to maintain the appeal and there is no merit in the preliminary objection, but in case that application is dismissed, the preliminary objection will prevail.

6. Lengthy arguments have been advanced by learned counsel for the appellants as well as the respondents on the merit of the said application for transposition by appellant No. 4 obviously for the reason that if that prayer is allowed, two of the grounds on which











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