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1970 Supreme(Ker) 76

Judges : P.SUBRAMONIAN POTI
KUNHIKALANDAR - Appellant
Versus
ABDUL KHADER - Respondent
Case No : S. A. No. 1352 of 1966
Decided On : 06/16/1970
Advocates Appeared :
M. M. Pareed Pillai; A. Shahul Hameed; B. Moosakutty; For Appellant T. S. Venkiteswara Iyer; R. C. Plappilly; For Respondent

The presumption under S.118(a) of the Negotiable Instruments Act is limited to the existence of consideration and does not extend to the quantum of consideration mentioned in the instrument. The plaintiff's admission regarding the nature of consideration does not affect the presumption under S.118(a).

Headnote:

Presumption - Negotiable Instruments Act - S.118(a)

Fact of the Case:

Plaintiff sues on a promissory note for Rs. 5000/- executed by the defendant. Defendant pleads that the promissory note is not supported by consideration to the extent of Rs. 1900/-. Plaintiff's plea based on the presumption under S.118(a) of the Negotiable Instruments Act is rejected by the courts below.

Finding of the Court:

The courts below found the evidence adduced by both parties to be unreliable and unsatisfactory. The burden of proof on the pleading must turn the scale, and since the plaintiff failed to prove that the promissory note is supported by consideration to the extent of Rs. 1,900/-, the decision of the courts below was upheld.

Issues: The main issue revolves around the construction of S.118(a) of the Negotiable Instruments Act of 1881 and the applicability of the presumption of consideration in the present case.

Ratio Decidendi: The court held that the presumption under S.118(a) of the Negotiable Instruments Act enures until it is proved that the negotiable instrument was not made for consideration. The presumption is limited to the existence of consideration, and there is no presumption regarding the quantum of consideration mentioned in the instrument. The plaintiff's admission in the plaint that the consideration is not as shown in the promissory note does not affect the presumption under S.118(a).

Final Decision: The second appeal was dismissed, and both parties were directed to suffer costs in the second appeal.

Judgment :-

1. Plaintiff sues on a promissory note for Rs. 5000/- executed by the defendant on 19 91958. The only plea of the defendant that is relevant for the purpose of this second appeal is one that the promissory note is not supported by consideration to the extent of Rs. 1900/-. This plea was accepted by the trial court and in appeal by the plaintiff this has been confirmed. Though plaintiff called into aid the presumption under S.118 (a) of the Negotiable Instruments Act, 1881, the courts below have held that the benefit of that presumption would not be available to the plaintiff since, even the plaint allegations would show that the payment of consideration was not in the manner mentioned in the promissory note.

2. Ex.A1, the promissory note, mentions the consideration of Rs. 5000/-as paid in cash. But in the plaint it is averred by the plaintiff that Rs. 1600/- was paid by way of cheque, Rs.1900/- was paid in cash and later the sum of Rs. 1500/- was paid by cheques. The payment of consideration in cash on 19 91958, the date of execution of the promissory note, is denied by the defendant. If the presumption under S.118 (a) could be called into aid and such presumption would also extend to presuming that consideration as recited in the document was paid, then plaintiff will succeed even without proving the payments. On the evidence the courts below have come to the conclusion against the plaintiff. But what the appellate court has stated is this: "The result is that the evidence "adduced by both parties is found to be unreliable and unsatisfactory. When the court is unable to arrive at a determinate conclusion on the evidence adduced by both parties, the burden of proof on the pleading must turn the-scale. The plaintiff having failed to prove that the promissory note is supported by consideration to the extent of Rs. 1,900/ -the conclusion of the learned Munsiff cannot be said to be incorrect." On the evidence I am not prepared to hold that I should come to different conclusion in the second appeal. If plaintiff does not succeed on the basis of the presumption he calls into aid it must follow that the decision of the courts below must stand.

3. The question really turns on the construction of S.118 (a) of the Negotiable Instruments Act of 1881. This section reads as follows: "118. Until the, contrary is proved, the following presumptions shall be made:

(a) 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."

The presumption under this section is different from the presumption arising under S.114 of the Evidence Act. The discretion to presume is left with the court in a case arising under S.114 whereas if the circumstances attract S.118 (a) the presumption thereunder must necessarily be drawn by a court. It is contended that though in this case the presumption should otherwise have arisen by virtue of S.118 (a), it does not arise because the plaintiff's statement in the plaint itself amounts to an admission that the consideration is not as shown in the promissory note. It is this argument which has appealed to the courts below. I have to examine the correctness of this view.

4. The presumption under S.118 of the Negotiable Instruments Act is one which would enure until it is proved that the negotiable instrument was not made for consideration. The words "for consideration" in this section are general in character. There is no presumption either that the instrument is supported by the consideration which is mentioned in the negotiable instrument or the consideration which is in the nature of what is mentioned therein. To hold otherwise would be to read into the section words which are not there. It is not difficult to see the purpose also in providing for a presumption as to consideration. A negotiable instrument is a document which passes from ha



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