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2017 Supreme(Mad) 948
IN THE HIGH COURT OF JUDICATURE AT MADRAS
N.SATHISH KUMAR, J.
M/s. Eastern Trading Company and others – Appellants
Versus
C.V. Sivasubramanian – Respondent
A.S.No.897 of 2012 and Cross Objection 106 of 2013
Decided On : 03-05-2017
For the Appellant : Mr. B. Giridhar Rao
For the Respondent: Mr. B. Raviraja
Once the execution of a negotiable instrument is admitted, the burden is on the defendant to prove that the instrument was not supported by consideration. Filling up the interest column in a pronote with the consent of the promiser does not amount to material alteration.
Headnote:
Negotiable Instruments Act - Section 20, Section 87, Section 118, Section 139; Limitation Act - Section 19; Evidence Act - Section 114, Section 65B; Contract Act - Section 25(3)
Fact of the Case:
The plaintiff, a close relative of the defendants, advanced a sum of Rs.2,70,000/- in cash to the defendants for their business. The defendants also issued cheques for additional amounts. The defendants failed to repay the amount and the cheques were dishonoured. The plaintiff filed a suit to recover the amount.
Finding of the Court:
The court examined the evidence and found that the pronotes and cheques were executed by the defendants. The court rejected the defendants' claim of material alteration and held that the pronotes and cheques were valid. The court also held that the legal presumption of consideration attached to the negotiable instruments was not rebutted by the defendants. The court relied on various judgments to support its findings.
Ratio Decidendi: The court held that once the execution of a negotiable instrument is admitted, the burden is on the defendant to prove that the instrument was not supported by consideration. The court also held that filling up the interest column in a pronote with the consent of the promiser does not amount to material alteration.
Result: The court modified the interest awarded by the trial court and decreed the suit for a total sum of Rs.5,50,000/- with interest at different rates. The appeal filed by the defendants was partially allowed and the cross-objection filed by the plaintiff was allowed in part.
Aggrieved over the decree and judgment of the learned trial Court decreeing the suit for Rs.3.00 lakhs with interest at 24% per annum the present appeal came to be filed by the defendant.
Similarly, the plaintiff has filed Cross-Objection No.106 of 2013 challenging the decree and judgment of the learned trial Court disallowing the suit claim of Rs.2,80,000/- being the value of the money lent to the appellants/defendants in respect of transaction covered by post dated cheques under Ex.A17 to A39.
For the sake of convenience, the parties are arrayed as per their own ranking before the trial Court.
2. Brief facts of plaintiff's case is as follows:-
The first Defendant is the partnership firm, Defendants 2 and 3 are partners of the first Defendant firm, carrying on electrical goods business and garment exports. The defendants 2 and 3 are the blood brothers and are also cousin brothers of the plaintiff and they were in good terms. On 03.04.2000 the second and third defendants requested the plaintiff for financial help for carrying out business in the firm of the first defendant. The plaintiff taking into consideration of the relationship and due respect to the paternal uncle i.e. Defendants' father, during the month of April & May 2000, on various promissory notes dated 15.4.2000, 17.4.200, 19.4.2000, 20.4.2000, 23.4.2000, 25.4.2000, 26.4.2000, 29.4.2000, 2.5.2000, 3.5.2000, 4.5.2000, 6.5.2000, 7.5.2000 and 10.5.2000 advanced a sum of Rs.2,70,000/- in cash to the defendants. The defendants also agreed to pay interest at the rate of 36% per annum. However, the defendants failed to pay interest as well as the principal. When the plaintiff insisted for payment of interest for the money borrowed on promissory notes, the second and third defendants informed the plaintiff that they are in heavy financial crisis in the business and to meet out the same they have decided to sell the properties of the partners and promised to pay interest from the sale proceeds. At the end of April 2002, the defendants again approached the plaintiff and represented that sale of property was still under negotiation, but the creditors were creating pressure on the defendants 2 and 3 to pay their dues and therefore requested the plaintiff to arrange further finance for interest at 36% p.a. for them and the sale will be finalized within 3 months and assured the repayment in August 2002. As per the request, the plaintiff had arranged Rs.30,000/- from one S.Durarraj on 5.5.2002 for which the defendants issued a cheque on 20.5.2002 in favour the said S.Durairaj. Similarly, another sum of Rs.30,000/- was arranged by the plaintiff from M/s. Clement Engineering Consultants on 10.8.2002 for which the defendants issued a cheque on 25.8.2002 in favour of M/s. Clement Engineering Consultants. Similarly the plaintiff also advanced a sum of Rs.2,80,000/- for which 22 cheques were issued by the second defendant for various amounts and dates between 24.9.2002 and 24.10.2002. Thereafter, the defendants have failed to repay the amount and the cheques issued by the second defendant when presented also dishonoured for insufficient funds. Therefore, the defendants are liable to pay to the plaintiff a sum of Rs.10,28,430/- as on 10th April, 2003. Hence the suit.
3. Denying the allegations in the plaint, it is the contention of the defendants that they borrowed a sum of Rs.2,80,000/- from the plaintiff and the plaintiff insisted the defendants to execute Demand Promissory Notes and also blank cheques in support of the said transaction and directed the defendants that the name, date and rate of interest columns of the relevant instruments/cheques be left blank. It is the contention of the defendants that the said pronotes and cheques were simultaneously executed in the manner as requested by the plaintiff, handed over to the plaintiff as incomplete documents in trust. The demand promissory notes and cheques had been issued only in respect of one and the same transaction that ha
