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IN THE HIGH COURT OF KERALA AT ERNAKULAM
SATHISH NINAN, J
Cicily (Died, Lr Impleaded), W/o. Late E.K. Paulose – Appellant
Versus
E.K. Antony, S/o. Late E.K. Kochappu – Respondent
JUDGMENT :
(SATHISH NINAN, J.)
The decree in a suit for money is under challenge by the defendant.
2. The defendant is the plaintiffs sister-in-law (brother’s sister). According to the plaintiff, the defendant had on various occasions borrowed amounts totaling to Rs.12,00,000/-, for the personal needs of the defendant and for her building construction/repair. Because of the close relationship between the parties, no security documents were obtained on each occasions. However, since the amount was not being repaid, finally, the defendant on 01.04.2006 issued Ext.A1 cheque dated 28.04.2006. The cheque, when presented for payment, was dishonoured for insufficiency of funds. It is accordingly that the suit is filed.
3. The defendant denied of having had any financial transactions with the plaintiff. It was contended that, the defendant's nephew (brother's son- DW5) had a financial transaction with the plaintiff in the year 1998; he borrowed an amount of Rs.3,00,000/- from the plaintiff. As was required by the plaintiff, two signed blank cheques, one of the defendant and of the nephew-DW5, were entrusted with the plaintiff as security. Though DW5 repaid the borrowed amount in installments,
The court affirmed that a suit based on a dishonoured cheque is valid under Section 118 of the Negotiable Instruments Act, requiring proof of the original transaction.
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The plaintiff failed to prove the existence of consideration for the cheque, leading to the dismissal of the appeal based on the legal presumption under the Negotiable Instruments Act.
An admission of signature on a negotiable instrument creates a legal presumption of consideration, which must be rebutted effectively by the defendant.
The court ruled on the erroneous burden of proof and misinterpretation of evidence regarding a dishonored cheque, impacting the enforceability of monetary claims.
The burden of proof lies with the plaintiff to establish the transaction and source of funds for a cheque in a suit based on a negotiable instrument.
The presumption of consideration under the Negotiable Instruments Act applies to issued cheques, placing the burden on the defendant to prove otherwise.
The presumption of a cheque being issued for a legally enforceable debt under Section 118 of the N.I. Act cannot be rebutted without sufficient evidence from the defendant.
once execution of the promissory note is admitted, or proved, the presumption under Section 118(a) of the Act would arise that it is supported by consideration. It is a rebuttable presumption. The ac....
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