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2012 Supreme(Mad) 854
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE M. VENUGOPAL
Ranganathan @ Panduranga
Versus
Ramakrishnan Gounder & Another
S.A.No.991 of 1999
Decided On : 20-02-2012
For the Appellant:A.K. Kumarasamy, Advocate.
For the Respondents:A.R. Nixon, Advocate.
The statutory presumption under Section 118 of the Negotiable Instruments Act applies to pronotes, and the burden of proof shifts to the defendant to establish lack of consideration.
Headnote:
Pronote - Consideration - Negotiable Instruments Act - Section 118
Fact of the Case:
The Appellant/Plaintiff filed a Second Appeal against the lower court's decision to reverse the Judgment and Decree in a suit pronote case. The trial court had ruled in favor of the Appellant/Plaintiff, but the 1st Appellate Court overturned the decision, stating that the suit pronote was not supported by consideration.
Finding of the Court:
The court found that the suit pronote was supported by consideration based on the statutory presumption under Section 118 of the Negotiable Instruments Act, and the 1st Appellate Court erred in holding otherwise. The Second Appeal was allowed, and the Judgment and Decree of the 1st Appellate Court were set aside.
Issues: The main issue was whether the suit pronote was supported by consideration, and the substantial question of law was whether the lower Appellate Court was right in holding that the suit pronote was not supported by consideration.
Ratio Decidendi: The court held that the statutory presumption under Section 118 of the Negotiable Instruments Act applies to the case, and the recitals mentioned in the contemporaneous document supported the consideration for the suit pronote. The court emphasized that the presumption of consideration arises when the execution of the pronote is proved, and the burden of proof shifts to the defendant to establish lack of consideration.
Final Decision: The Second Appeal was allowed, and the Judgment and Decree of the 1st Appellate Court were set aside. The Respondents/Defendants were directed to pay the principal sum of Rs.20,000 with interest and costs to the Appellant/Plaintiff.
1. The Appellant/Plaintiff has filed the present Second Appeal as against the Judgment and Decree dated 17.04.1998 in A.S.No.46 of 1997 passed by the Learned Subordinate Judge, Tindivanam in reversing the Judgment and Decree dated 26.02.1997 in O.S.No.940 of 1995 passed by the Learned District Munsif, Tindivanam.
2. The 1st Appellate Court, while allowing the A.S.No.46 of 1997 on 17.04.1998, has, among other things opined that while perusing Ex.B.1 Agreement receipt dated 19.09.1990, it is evident that the pronote has been executed by the Defendants (Respondents) in favour of the Plaintiff (Appellant). Since, the nine months old child Manimegalai's mother has met with an untimely death, for the maintenance of the child and for her expenses as per resolution of Panchayatdars, executed the same for Rs.20,000/- and in that way, the suit pronote is not supported by consideration and based on humanitarian approach and also considering the child's interest, as admitted by the Respondents/Defendants, the same has been written, for doubling the same, which transpires from the evidence of two sides and through documents. The Respondents/Defendants are not liable to pay the suit pronote amount to the Appellant/Plaintiff and resultantly, allowed the Appeal without costs, by setting aside the Judgment and Decree of the trial Court passed in the main suit and resultantly, dismissed the suit.
3. Before the trial Court, in the main suit, 1 to 3 issues have been framed for trial. On behalf of the Appellant/Plaintiff, witness P.W.1 has been examined and Exs.A.1 to A.3 have been marked. On the side of the Respondents/Defendants, witnesses D.W.1 and D.W.2 have been examined and Exs.B1 to B.4 have been marked.
4. The trial Court on an appreciation of entire oral and documentary evidence available on record and after scrutinising and analysing, has come to a clear conclusion that instead of a sum of Rs.10,000/-, for Rs.20,000/-the pronote has been written, as spoken to by D.W.1 and the aforesaid fact has not been mentioned in the written statement and further, when the signatures in the pronote have not been denied, the Appellant/Plaintiff, based on the aforesaid discussion, is entitled to claim the suit pronote amount and held that the suit pronote is a valid one and therefore, the Appellant/Plaintiff is entitled to claim the amount as prayed for in the suit and accordingly, granted the Decree with costs.
5. At the time of Admission of the Second Appeal, this Court has formulated the following substantial question of Law:
“Whether the lower Appellate Court is right holding that the suit promissory note is not supported by consideration, overlooking the statutory presumption under Section 118 of Negotiable Instruments Act especially when the Defendants admitted the execution of the suit promissory note?”
6. The Contentions, Discussions and Findings on substantial question of law: The Learned Counsel for the Appellant/Plaintiff submits that the 1st Appellate Court has committed an error in reversing the Judgment and Decree of the trial Court.
7. The Learned Counsel for the Appellant/Plaintiff urges before this Court that when the Respondents/Defendants have admitted the execution of the suit pronote, the burden is on them to prove that the same is not supported by consideration. The plea of the Appellant/Plaintiff is that once the execution of the pronote is admitted by the Respondents/Defendants, a statutory presumption under Section 118 of the Negotiable Instruments Act arises in regard to the passing of the consideration.
8. Advancing his arguments, the Learned Counsel for the Appellant/ Plaintiff submits that the presumption under Section 118 of the Negotiable Instruments Act is not merely confined to what is mentioned in the negotiable instrument, but for any kind of consideration, which is valid in law.
9. The Learned Counsel for the Appellant/Plaintiff projects a plea that D.W.1 admitted in his deposition that they agreed to
