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.

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, neither receipts were issued nor the cheques returned. The suit has been filed misutilising the cheques, it was contended.

4. The trial court held that the cheque was duly supported by consideration and accordingly decreed the suit.

5. The appellant-defendant died pending the appeal. Based on a Will executed by the defendant, DW5 was impleaded as additional appellant.

6. I have heard Shri.Prakash P. George, the learned counsel for the appellant and Shri.A.T. Anilkumar, the learned counsel for the respondent.

7. The point that arises for determination is, “Is the finding of the trial court that Ext.A1 cheque is supported by consideration, based on the evidence on record”.

8. The learned counsel for the appellant would contend that, the trial court has proceeded as if the suit is laid on a dishonoured cheque; however, the suit is instituted on the original cause of action. To buttress the contention, he would place reliance on paragraph 3 of the plaint, which mentions the cause of action. He would further contend that, since the suit is based on the original cause of action, the plaintiff is not entitled for the presumption under Section 118 of the Negotiable Instruments Act, 1881 . The plaintiff is bound to prove the original transaction in order to get a decree, it is contended. It is also argued that, though the plaintiff, as PW1, would depose that the amounts for payment were withdrawn from the bank account and one of the payments was effected out of the amounts paid by his brother-in-law, neither the bank accounts are produced nor the brother-in-law examined. This disproves the plaintiff's claim, it is argued. The learned counsel for the appellant would further contend that, though at paragraph 2 of the plaint it is pleaded that, at the time of issuance of Ext.A1 cheque on 01.04.2006 there was sufficient funds in the account, the cheque is post-dated-28.04.2006, and the same was presented only on 05.05.2006. If as claimed by the plaintiff he was appraised by the defendant that amounts were available in the account, then there is no reason why the cheque should have been post dated as 28.04.2006. All these cast doubt on the genuineness of the plaintiff's claim, as it is urged.

9. Admittedly, the parties are closely related. The defendant is the sister-in-law of the plaintiff (brother's wife). The defendant as DW1 has admitted that she had very cordial relationship with the plaintiff. That there had been construction/repair works for the building of the defendant, is admitted. According to DW1, the cost of such construction is more than Rs.30,00,000/-. The defence plea is that the works were done by availing loan from the Bank. Ext.B1 is the loan sanction letter. However, the same is only for an amount of Rs.10,00,000/-. Though DW1 and her nephew, DW5, wo