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2026 Supreme(Ker) 1028
IN THE HIGH COURT OF KERALA AT ERNAKULAM
MOHAMMED NIAS C.P., J.
Francis T. Chacko, S/o. Late T.J. Chacko - Appellant
Versus
T.K. Sajeevan - Respondent
RFA No. 13 of 2016 (B)
Decided On : 30-07-2026
For the Appellant : Sri. V.V. Asokan (SR.), Sri. K.I. Mayankutty Mather (SR.), Sri. P. Rahul.
For the Respondent: Sri. Dinesh R.Shenoy, Sri. Sanil Jose.
Execution of a negotiable instrument requires both signature and intentional delivery. Once execution is admitted or proven, statutory presumptions regarding debt liability arise. Courts must decide based on evaluated evidence rather than assumptions regarding the professional relationship between parties.
Headnote:(A) Negotiable Instruments Act, 1881 - Sections 118(a) and 139 - Code of Civil Procedure, 1908 - Order XLI Rule 27 - Suit for realization of money - Execution of promissory note and cheque - Distinction between signing, issuance, and execution - Statutory presumptions arise only once execution is proved or admitted - Court must strictly distinguish between denial of signature and denial of underlying liability or circumstances of issuance (Paras 15, 16, 17, 19, 21)
(B) Appeal - Remand - Power of appellate court to receive additional evidence - Requirement for trial court to base findings on records and admitted evidence rather than assumptions or probabilities - Remand necessitated when trial court fails to properly consider material pleadings and evidence on record (Paras 27, 28, 31)
Facts of the case:
The appellant filed a suit for the recovery of money alleging that the respondent borrowed funds and executed a promissory note and a cheque. The respondent denied the execution, contending that while the appellant, who served as an auditor, was in possession of various signed blank papers and cheques, those documents were misused. The trial court dismissed the suit based on assumptions about the nature of the relationship and the alleged misuse of documents. The appellant appealed the decision, introducing additional evidence regarding financial capacity and conviction records of the respondent.
Findings of Court:
The court observed that the trial court failed to distinguish between signing, issuance, and execution of a cheque. The lower court's findings were found to be based on personal assumptions regarding the professional relationship rather than the evidence presented. Because the trial court did not address the core issue of execution with reference to the pleadings and the impact of the respondent's admitted signatures, a fresh determination was required after admitting additional evidence.
Issues: Whether the execution of the promissory note and cheque was sufficiently proved, and whether the trial court’s dismissal of the suit was based on valid evidentiary findings or improper assumptions regarding the professional relationship between the parties.
Ratio Decidendi: Execution of a cheque is a legal concept encompassing signing and delivery with the intent to create an operative instrument. Once execution is admitted or proved, statutory presumptions arise, shifting the evidentiary burden to the respondent; failure by the trial court to analyze evidence based on this distinction while relying instead on probability-based assumptions renders the judgment unsustainable, necessitating a remand for re-evaluation incorporating newly admitted evidence.
Result: Appeal allowed; judgment and decree set aside, and the suit remanded for fresh disposal.
JUDGMENT :
1. The defeated plaintiff in a suit for realisation of money is the appellant.
2. The plaintiff is a Chartered Accountant by profession. The defendant is running a business by the name “Span Travels” dealing with hiring of taxis and other ancillary services. The plaintiff contended that the defendant and he are close friends for the past 15 years and the plaintiff used to audit the accounts of the defendant till 31.03.2010. The defendant had borrowed money from the plaintiff on several occasions in the past, which were repaid. The plaintiff contended that the defendant approached him for financial help to overcome his financial business crisis and also for augmentation of business. It is alleged that the defendant had borrowed an amount of Rs.14,15,000/- on four dates. Rs.1,00,000/- was borrowed on 09.08.2010, Rs.3,00,000/- on 11.08.2010, Rs.10,00,000/- on 23.10.2010 and Rs.15,000/- was borrowed on 09.04.2011. It is stated that the defendant had executed a demand promissory note for an amount of Rs.14,15,000/- on 19.04.2011.
3. Though the plaintiff demanded the amount covered by the promissory note on 18.04.2012, the defendant did not repay the same and sought two months to clear the liability and agreed to pay interest at 12% per annum from the date of the promissory note. Thereafter, the defendant issued a cheque for Rs.16,13,000/- dated 18.06.2012 bearing number 939007 drawn on Catholic Syrian Bank Ltd., Banerjee Road, Ernakulam. The defendant had also acknowledged the issuance of the cheque covering the amount. The cheque, when presented, was dishonoured due to the reason of “payment stopped by drawer”. Thereafter, the suit was filed claiming the amount with interest.
4. The defendant filed a written statement admitting that the plaintiff and the defendant were closely acquainted for the last 12 years and that the plaintiff used to audit the defendant's accounts for the past several years from 2001 onwards. It is the specific case that the defendant had not borrowed any amount from the plaintiff at any point of time and that he did not need funds for his business purposes in 2010 or 2011. It is alleged that though the plaintiff is a Chartered Accountant, he is also a moneylender. It is contended that the plaintiff had taken the defendant's signature on several blank papers on several occasions for preparing and filing the defendant's returns. The defendant had also given the plaintiff signed cheques for payment of tax, and some of the cheques and papers, though not used, were left with the plaintiff, who was maintaining a fiduciary relationship with the defendant as his Chartered Accountant.
5. The defendant suspects that the plaintiff has misused the papers and cheques and fabricated the same. It is also contended that the defendant, as requested by the plaintiff, had introduced several persons for availing loans from the plaintiff, and two such persons by name Omanakuttan and Raveendran defaulted in payment, and since the plaintiff could not trace out those persons, he turned against the defendant and demanded money from the defendant for the dues made by the persons mentioned above.
6. The trial court framed issues as to whether the defendant has executed a cheque in favour of the plaintiff for Rs.16,13,000/- in discharge of an existing liability as alleged. The plaintiff examined himself as PW1 and marked Exts.A1 to A9 on his side. The defence evidence comprises the testimonies of DW1 to DW3 and Exts.B1 to B13.
7. The Trial Court considered the issues and found that the plaintiff failed to prove execution of Ext.A4 cheque with cogent evidence in the context of specific denial of its execution by the defendant. The Trial Court further found that the underlying transaction of Ext.A4, which is a promissory note and the alleged borrowing of Rs.14,15,000/- based on Ext.A1 promissory note was not proved. The Trial Court further found that Exts.A2 and A3 cast a cloud of suspicion on the genuineness and veracity of Exts.A1
