High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE C. NAGAPPAN
Soundarammal and Others - Appellant
Versus
Vasantha and Others - Respondents
A.S. Nos. 112 and 113 of 1998 and Tran. A.S. No. 356 of 1989
Decided On : 18 January 2001
Negotiable Instruments Act - Section 118(a), Section 82
Fact of the Case:
The plaintiffs filed three suits for recovery of amounts due on promissory notes executed by the deceased Rasu Reddiar. The defendants, who are the legal representatives of Rasu Reddiar, contended that the promissory notes were fabricated and that the liability under the promissory notes got discharged by the execution of a mortgage deed. The trial court dismissed the suits, but the appeals were allowed and the suits were decreed in favor of the plaintiffs.
Finding of the Court:
The court examined the evidence and found that the promissory notes were true, valid, and supported by consideration. The court also held that the execution of a mortgage deed did not discharge the liability under the promissory notes. The court relied on the presumption under Section 118(a) of the Negotiable Instruments Act that a promissory note is supported by consideration once its execution is admitted. The court further held that the defendants failed to prove the non-existence of consideration. Therefore, the court decreed the suits in favor of the plaintiffs.
Ratio Decidendi: The execution of a promissory note gives rise to a presumption under Section 118(a) of the Negotiable Instruments Act that it is supported by consideration. The burden is on the defendant to prove the non-existence of consideration. The liability under a promissory note cannot be discharged by the execution of a mortgage deed.
Result: The appeals are allowed, and the suits are decreed in favor of the plaintiffs.
These three appeals arise out of a common judgment passed by the Subordinate Judge, Vridhachalam in O.S. Nos. 48 and 49 of 1984 and 8 of 1986, dated 2-2-1987.
2. The suit in O.S. No. 48 of 1984 was filed for recovery of a sum of Rs. 31,937/- with subsequent interest from out of the estate of Rasu Reddiar held by the defendants.
3. The suit in O.S. No. 49 of 1984 was filed for recovery of a sum of Rs. 31, 875/- with subsequent interest from out of the estate of Rasu Reddiar held by the defendants.
4. The suit in O.S. No. 8 of the 1986 was filed for recovery of a sum of Rs. 12,437.50 with subsequent interest from out of the estate of Rasu Reddiar held by the defendants.
5. The trial Court tried the above three suits along with the suit in O.S. No. 53 of 1984 and by a common judgment dismissed the suits in O.S. Nos. 48 and 49 of 1984 and 8 of 1986 with costs and decreed the suit in O.S. No. 53 of 1984 with costs. There is no appeal preferred against the decree in O.S. No. 53 of 1984. Aggrieved by the dismissal, the plaintiff in O.S. No. 48 of 1984 preferred an appeal A.S. No. 112 of 1988 and the plaintiff in O.S. No. 49 of 1984 preferred an appeal in A.S. No. 113 of 1988 and the plaintiff in O.S. No. 8 of 1986 preferred an appeal in Transferred Appeal Suit No. 356 of 1989.
6. The averments in the plaint in O.S. No. 48 of 1984 can be summarised as follows.
The deceased Rasu Reddiar borrowed a sum of Rs. 25,000/- from the plaintiff on 5-5-1981 on condition to repay it on demand with interest at 12 % per annum and executed the suit promissory note. Inspite of repeated demands made by the plaintiff, there was no repayment. Rasu Reddiar died on 26-12-1982. The first defendant is the wife of Rasu Reddiar. Defendants 2 to 4 are his sons and fifth defendant is his daughter. The sixth defendant is his mother. The defendants had inherited the properties of Rasu Reddiar and they are liable to repay the suit loan. The defendants are not entitled to the benefit of Debt Relief Act. The plaintiff has asked for 9% interest as per Act 8 of 1973. The plaintiff has filed the suit for the recovery of a sum of Rs. 31,937/- with subsequent interest from out of the estate of Rasu Reddiar held by the defendants.
7. The first defendant had filed the written statement on behalf of the defendants and it is contended as follows .
Plaintiff is the sister of late Rasu Reddiar. Rasu Reddiar owned large properties and the plaintiff tried to grab, it , but failed in her attempts. Last such attempt made by the plaintiff was to give her daughter Sulochana in marriage to Rasu Reddiar as his second wife and it failed and hence she and her husband were making plans. Without knowing this, Rasu Reddiar asked for a loan of Rs. 30,000/- from them and using the opportunity, the family members of the plaintiff obtained the signature of Rasu Reddiar in three blank stamped promissory notes and gave him Rs. 30,000/-. Later, on a promise to return the three signed promissory notes, adding a sum of Rs. 10,000/- towards interest, the plaintiff obtained a mortgage deed in her favour for Rs. 40,000/- executed by Rasu Reddiar on 4-7-1981. After executing the mortgage deed, Rasu Reddiar demanded several times the plaintiff and her husband to return the blank signed promissory notes executed, by him but they did not return them and wantonly delayed it. In view of the close relationship, Rasu Reddiar did not insist for the immediate return of them. Suddenly, Rasu Reddiar expired on 26-12-1982. Taking advantage of it, the three blank singed promissory notes were filled in and fabricated one in favour of the plaintiff, the other in favour of her husband and the remaining one in favour of the daughter of the plaintiff. Apart from this suit, the plaintiff's husband and her daughter had filed two separate suits on those promissory notes. Rasu Reddiar demanded a loan of Rs. 30,000/- only and he was asked to execute a mortgage deed and since Rasu Reddiar was in urgent need of money, he w
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