The legal presumptions in favor of the plaintiff as per Section 118 of the Negotiable Instruments Act must be considered in determining the status of a holder in due course.

Pandrang Row, J.

1. This is a petition to revise the decree of the principal District Munsif of Guntur dated 10th November 1933, in S.C.S. No. 1403 of 1933, a suit to recover Rs. 191 odd being the amount due on a promissory note dated 6th July 1930, executed by defendant 1 in favour of the plaintiffs transferor one Kameswara Rao. Defendant 2 is the undivided son of defendant 1. It was alleged in the plaint that the plaintiff had obtained the transfer of the promissory note by endorsement on 22nd June 1933, for good consideration. It was contended by the defendant that the debt due under the suit promissory note had been discharged long ago by the transfer of another promissory note to Kameswara Rao in full discharge of the suit debt. It was also contended that the plaintiff is not a holder in due course. The two questions that were decided by the District Munsif were that the discharge pleaded was true and that the plaintiff was not a holder in due course. So far as the truth of the plea of discharge is concerned, it has not been contended in the argument that the finding of the District Munsif is not according to law. The argument has been con. fined to the District Munsifs finding on the second point and the main complaint is that the learned District Munsif has ignored the presumptions contained in Clauses (a), (c) and (g), Section 118, Negotiable Instruments Act, and that on account of this omission to bear in mind the legal presumptions in favour of the plaintiff the finding must be deemed to be vitiated by an error of law. There is no doubt that this complaint is fully justified as will be seen from the following extract from the District Munsifs judgment which deals with this point.

The plaintiff is not certainly a bona fide holder in due course. The plaintiff has not chosen to go into the box. The allegation in the plaint that the endorsement was for consideration has not been proved. I find that no consideration was paid for the transfer of the suit promissory note and that the plaintiff is not a bona fide holder in due course.

2. It is clear therefore that the finding was based on the fact that the plaintiff did not go into the box and did not prove that he had paid consideration for the endorsement. It is not as if there is any evidence to show that the plaintiff did not act in good faith or did not pay consideration for the endorsement. In these circumstances the finding cannot be up-held as it is vitiated by a material error of law. It has however been attempted to be supported by a reference to Section 60, Negotiable Instruments Act in view of the finding that the debt due under the suit promissory note had been discharged. It has not been clearly found that the discharge took place actually before the endorsement. Even assuming that the discharge was prior to the endorsement, there is no evidence whatever to show that the fact of the discharge was known to the plaintiff when he took the endorsement or that he was aware that any demand had been made for payment of the debt due under the suit promissory note before he took the endorsement. In the absence of any evidence as to the knowledge of the plaintiff in this case it must be assumed in deciding this point that he had no such knowledge.

3. Reliance has been placed on the decision reported in Venkanna v. Subbayya AIR1933Mad300 . Even in that decision, which goes counter to at least two previous decisions of this Court in Muthu Reddi v. Velu Asari (1916) 2 MWN 107 and Ramanathan Chettiar v. Gundu Ayyar 1928 113 IC 456, it is stated at the end that the case would be different if in the case of a promissory note payable on demand the discharge takes place before the demand. There is no evidence here that the discharge in this case was not made before the demand. The question of maturity does not arise in the case of a promissory note payable on demand; it cannot be said that a promissory note becomes mature the moment after it is executed and that any endorsement