The burden of proof lies on the plaintiff to establish that a payment by cheque was a loan, and all payments by cheques are prima facie indicative of extinguishing an existing debt, not creating a new one.

1. The appeal is filed by the plaintiff in O.S. 89/75 of the Sub Court, Tellicherry. Plaintiff filed the suit for realisation of money on the ground that 1st defendant took a loan of Rs. 10,000/-for his business purposes. In the plaint it is stated that two cheques were issued by the plaintiff to the 1st defendant on 24-4-72 and 29-4-72 for Rs. 8,000/- and Rs. 2,000/- respectively drawn on the Indian Bank, Tellicherry, that cheques were encashed by the 1st defendant and that despite repeated demands he did not repay the amount. Ist defendant contended that the cheques were issued by the plaintiff in repayment of the loans advanced by him in December 1971 for the purchase of a bus and that the plaintiff's claim in the plaint is totally unfounded. The learned Sub Judge dismissed the suit.

2. 1st defendant had filed O.S. 109/75 against the plaintiff (appellant) for realisation of amount due to him. That suit was also dismissed by the Sub Judge. 1st defendant has not filed any appeal against that decision.

3. In the written statement, 1st defendant's contention is that by giving him the cheques plaintiff was repaying the amount due to him. The question that has to be decided is as to whether the cheques issued by the plaintiff to the 1st defendant evidence a loan transaction as alleged by the plaintiff or repayment of an earlier loan as alleged by the 1st defendant.

4. The burden of proving that the sum advanced to the 1st defendant was towards loan is on the plaintiff. Merely because 1st defendant admitted that he received the cheques it would not follow that he obtained a loan of the said amount. No legal presumption arises when a sum is admitted to have been received, that it was meant to be repaid because the same may have been paid for various reasons. It is for

the plaintiff to substantiate his case that the amount covered by the cheques was really given to the 1st defendant as a loan.

5. All payments by cheques are prima facie indicative of the fact that they are issued to extinguish an existing debt and not to create a new one. A cheque issued to a person by itself is not indicative of the fact that money was lent to him. On the other hand, it is prima facie evidence of the repayment of money owed by the drawer to the payee. Of course, it is always open to the plaintiff to establish that the payment of the amount by cheque was in fact a loan to the 1st defendant. In this context, it is apposite to refer to Sangappa Basappa Gogi v. Chidananda Baswantraya Aski. (I.L.R. (1980) 2 Karnataka 1133) wherein it is held as follows:

"A cheque drawn, presented and paid is by itself no evidence of any money lent or advanced by the drawer to the payee. It may be a prima facie evidence to extinguish an existing debt, however, not to create a new one. However, it is open to the drawer to show by other evidence that the cheque was in fact loaned to the payee. A mere issue of a Cheque in favour of the payee, by itself will not be evidence of a loan even if the cheque is encashed by the payee. That it was loaned to the payee must be proved by the drawer by other evidence. The burden is upon the person who sets up a case of loan based on the issuance of a cheque to establish by other evidence that it was a loan to the payee."

6. The burden of proving that the sum paid as per the cheque was towards a loan is always on the plaintiff. In Bihari Lal v. Lata Chandu Lal (A.I.R.1939 Lahore 386) it has been held as follows:

"When a sum is admitted to have been received, there is no legal presumption that it was meant to be repaid. The payment may have been made for various reasons and it is for the person who comes to Court and sues for recovery of the sum of money to prove that it was meant to be repaid".

Merely because 1st defendant admitted receipt of the cheques it would not follow that he received the amount as a loan. As the burden is always on the plaintiff in a suit where he claims amounts due to him from the defendant to substantiate his