The burden of proof under sec.118 N.I. Act and the significance of the defendant's failure to rebut the presumption were central to the court's decision.

JUDGMENT :

Prayer: Second Appeal is filed under Section 100 of C.P.C, against the decree and judgment in A.S.No.10/2009 on the file of the District Judge and Appellate Authority of Nilgiris at Udagamandalam dated 08.12.2009 reversing the judgment and decree passed in O.S.No.16/2008 on the file of the Subordinate Judge Udagamandalam, dated 23.01.2009.

1. This second appeal has been preferred against the judgment and decree passed in 10/2009 on the file of the District Judge and Appellate Authority of Nilgiris at Udagamandalam dated 08.12.2009 reversing the judgment and decree passed in O.S.No.16/2008 on the file of the Subordinate Judge Udagamandalam, dated 23.01.2009.

2. The Appellant is the plaintiff. The short facts of the plaintiff’s case is that the plaintiff lent a loan of Rs.1,50,000/- to the defendant on 22.10.2006. The defendant agreed to repay the same with interest @ 18% p.a. and executed a promissory note on 22.10.2006. Since the defendant failed to repay the said amount, the plaintiff sent a legal notice on 14.02.2007 calling upon the defendant to pay the suit amount. The defendant acknowledged the said notice on 17.04.2007 and he sent a reply after 5 months with false and frivolous allegations. Hence the plaintiff has filed this suit for recovery of a sum of Rs.1,77,000/- together with subsequent interest and cost.

3. The written statement of the defendant in brief is that the defendant never borrowed the amount from the plaintiff and he has not executed the promissory note as alleged by the plaintiff. The plaintiff and the defendant had money transactions between themselves before eight years and during such time, the plaintiff obtained the signature of the defendant on unfilled and revenue stamp affixed promissory notes, blank judicial, non judicial stamp papers, green and white papers on an assurance that he obtained it only as a security. The plaintiff has extorted the signature of the defendant by making use of those papers and filed this suit. The plaintiff should prove the genuineness of the signature by sending it to a handwriting expert. The plaintiff lent a loan to one Yogamani, who is known to this defendant. The said Yogamani failed to repay the loan and because of that the plaintiff got angry and concocted a promissory note by forging the signatures of the defendant. Subsequently, a Panchayat was convened in the presence of three (named) known people and the loan of Yogamani was settled by the defendant for a sum of Rs.45,000/-. Though the plaintiff received Rs.45,000/- as a full settlement, he refused to issue any receipt for the same. The suit promissory note is a fabricated one and the suit itself is vexatious.

4. The Trial Court has decreed the suit as prayed for. Aggrieved over that the defendant has filed the first appeal and the first appellate Court set aside the judgment of the trial Court and allowed the appeal. Hence the plaintiff has filed this second appeal. The second appeal has been admitted on the following substantial question of law:

“Whether the lower appellate Court has misconstrued the provision in Section 12(2) (b) and 12(3) of Indian Stamp Act?”

5. The learned first Appellate Judge had reversed the judgment of the trial court by making an observation that the respondent/defendant has not affixed his signature on the stamp of the promissory note and the stamp has been crossed in a different ink and that would show that stamp has been affixed by the plaintiff himself at a later point of time. By making such an observation, the first appellate Court has come to the conclusion that there was a material alteration done on the promissory note as found under Section 87 of the Negotiable Instrument Act-1881.

6. The learned first Appellate Judge relied on the judgment of this Court passed in K.M. Srinivasan Pillai Vs. R. Kanniappa Pillai (71 LW page 393). In the said judgment it is held that the subsequent affixture of a revenue stamp on a promissory note is a material alteration within the mea