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MADRAS HIGH COURT
S. Rajeswaran, J.
K. Balasubramanian
Versus
S. Palanikumar and Others
S.A. No. 1015 of 2008 and M.P. No. 1 of 2008
Decided on : 19th January, 2009.
Presumption - Negotiable Instrument Act - Section 118 - Summary of Acts and Sections: Negotiable Instruments Act, Section 118 - The court discussed the presumption under Section 118 of the Negotiable Instruments Act, which raises a presumption that a promissory note was made for consideration until the contrary is proved. The court highlighted that once the signature in a promissory note is admitted, the presumption is that it has been validly executed and for consideration. This presumption is rebuttable and requires legally acceptable evidence to rebut it. The court emphasized that if the presumption is not rebutted, the suit is to be decreed.
Fact of the Case:
The plaintiff filed a suit for the recovery of a loan amount covered under two promissory notes executed by the defendant. The defendant claimed that he signed the blank promissory notes as security for a loan received by his friend and did not execute any promissory note in favor of the plaintiff.
Finding of the Court:
The trial court and the lower appellate court found that the defendant failed to establish the circumstances under which he signed the blank promissory note, and thus, the presumption in favor of the valid execution of the promissory note was not rebutted. The courts held that the plaintiff was entitled to the decree as prayed for.
Issues: The main issue was whether the defendant was able to prove the circumstances under which he signed the blank promissory note.
Ratio Decidendi: The court held that the presumption under Section 118 of the Negotiable Instruments Act, which raises a presumption that a promissory note was made for consideration until the contrary is proved, is a crucial legal provision. The court emphasized that once the signature in a promissory note is admitted, the presumption is that it has been validly executed and for consideration. This presumption is rebuttable and requires legally acceptable evidence to rebut it.
Final Decision: The second appeal was dismissed, confirming the judgment and decree of the lower appellate court.
S. RAJESWARAN, J.
The defendant in O.S. No. 365 of 2004 is the appellant before this Court. The suit in O.S. 365 of 2004 was filed by the plaintiff, N. Subbiah Pillai, for recovering a sum of Rs. 3,43,466.66 with subsequent interest. The case of the plaintiff is that the plaintiff was employed in Rameswaram Temple. He was having a sum of Rs. 2,00,000/- as his savings on the verge of his retirement from service and he was contemplating to purchase a house for residence at Rameshwaram. At that point of time, he came into contact with the defendant who belongs to the same place. On the basis of the advice given by the defendant that Rs. 2,00,000/- could be lent to him by way of loan and that the said loan would carry interest at 4% per month and thereby he would be getting more money on the savings. He further suggested that the plaintiff could also be inducted as a member in the chit group conducted by him to the total value of Rs. 2,00,000/- and out of the interest amount, the plaintiff could pay the instalments. Lured by the words of the defendant, the plaintiff acceeded to the suggestion. The defendant in turn had executed two promissory notes dated 12.7.1998 for a sum of Rs. 1,00,000/- (One Lakhs only) each with 4% interest, after receiving a sum of Rs. 2,00,000/- from the plaintiff.
2. Since the defendant did not make any payment and was giving evasive reply, the plaintiff filed the suit for the recovery of the amounts due under the said promissory notes.
3. In the written statement filed by the defendant, the defendant denies all the allegations levelled against him. He also denied the execution of two promissory notes and thus he prayed for the dismissal of the suit.
4. 4.On the basis of the above pleadings, the trial Court framed the following issues:
"(1) Whether the plaintiff is entitled to recover the money with interest?
(2) Whether the defendant received the loan amount or not?
(3) Whether the execution of promissory notes is true?
(4) What are all the other reliefs the plaintiff is entitiled to?"
5. 5.The plaintiff examined himself as P.W.1 and besides examining two other witnesses as P.W.2 and P.W.3 Both the promissory notes were marked as Exhibit A1 and Exhibit A2. The defendant also examined himself as P.W.1 and marked Exhibit B-1 to B-8 on his side. The Trial Court found that the plaintiff has established his case that he had money in his possession and promissory notes were executed by the defendant. Hence, the trial Court held that the plaintiff was entitled to get the decree as prayed for.
6. Aggrieved by the same, the defendant filed A.S. No. 63 of 200The lower appellate Court after re-evaluating the evidence adduced by the both sides, found that the plaintiff has clearly established his case before the trial Court that the defendant had executed two pronotes and the trial Court has correctly admitted the suit. At the same time, the Appellate Court found that interest granted at 24% from the date of judgments is without any basis and accordingly reduced to 6% per annum. Pending appeal, the plaintiff passed away and the respondents herein were brought on record as his legal representatives before the lower appellate Court.
7. As against the concurrent judgments of both the Courts below, the defendant/appellant has filed the second appeal and raised the following substantial questions of law.
"1. Whether presumption Section 118 of Negotiable Instrument Act would get attracted to the facts of this case even though material evidences that are available in the case are against the raising of said presumption in the case?
2. When the evidence of P.W.1 read along with the evidence of other PW's themselves are totally against the case of the plaintiff regarding the borrowal of the loan amount by the defendant, is it correct on the part of the lower Courts to brush aside the said evidences by simply adopting the presumption under Section 118 on Negotiable Instruments Act?
3. When the evidences adduced by the plaintiff, bo
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