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HIGH COURT OF ORISSA
R. L. Narasimham, C. J. And J. K. Misra, J.
BISHNU DAYAL JUNJHUNWALLA - Appellant
Versus
ATAL BEHARI ACHARYA - Respondent
First Appeal 80 Of 1951
Decided On : JANUARY 11, 1960
NEGOTIABLE INSTRUMENTS ACT - SECTION 78 - BENAMI TRANSACTION - PRESUMPTION OF CONSIDERATION - BURDEN OF PROOF - EVIDENCE - ADMISSIBILITY - RES JUDICATA - MAINTAINABILITY OF APPEAL.
Fact of the Case:
Plaintiff B.D. Jhunjhunwalla filed a suit against Defendant Dr. Atal Behari Acharya for recovery of Rs. 4,500/- with interest on the basis of a hand-note executed by the defendant in favor of the plaintiff. The defendant claimed that the hand-note was a benami transaction taken by the plaintiff on behalf of his brother D.K. Jhunjhunwalla, who had financial dealings with the defendant.
Finding of the Court:
The court found that the hand-note was not supported by consideration and was executed as a security for the balance of the sum due to D.K. Jhunjhunwalla from the defendant out of an original advance of Rs. 6,000/- made to the defendant's firm. The court held that the plaintiff was a benamidar for his brother and dismissed the suit.
Issues: 1. Whether the hand-note was executed for consideration or was a benami transaction? 2. Whether the presumption of consideration under Section 118(a) of the Negotiable Instruments Act applies in this case? 3. Whether the evidence adduced by the defendant is sufficient to rebut the presumption of consideration? 4. Whether the principle of Section 78 of the Negotiable Instruments Act bars the defendant from raising the plea of benami? 5. Whether the appeal is maintainable in view of the dismissal of a connected appeal arising out of a suit between the same parties?
Ratio Decidendi: 1. The court held that the presumption of consideration under Section 118(a) of the Negotiable Instruments Act applies to the hand-note in question, but the burden of proof is on the defendant to show that no consideration passed when the hand-note was executed. 2. The court found that the evidence adduced by the defendant, including entries in the account books of his firm and receipts granted by D.K. Jhunjhunwalla, was sufficient to rebut the presumption of consideration. 3. The court held that the principle of Section 78 of the Negotiable Instruments Act, which prohibits a promisor from asserting that the holder of a hand-note is a benamidar for someone else, does not apply in this case because the suit was based on the original consideration and not on the hand-note itself. 4. The court declined to decide the issue of maintainability of the appeal in view of the dismissal of the connected appeal, as the main question of fact had already been decided.
Final Decision: The court dismissed the appeal with costs.
NARASIMHAM, C. J.
( 1 ) THIS is an appeal from the judgment of the First Additional Subordinate Judge, Cuttack, dated 31st July 1951 dismissing with costs the plaintiff's suit for recovery of a sum of Rs. 4,000/- with interest on the basis of a hand-note, Ext. 1-- (1) dated 1st January, 1947, for Rs. 4,500/- executed by defendant No. 1 in favour of the plaintiff. The suit under appeal (O. S. 202 of 1949) was instituted in the Court of the Subordinate Judge, Cuttack on the 12th September 1949. On the 23rd December 1949, defendant No. (1) Dr. Atal Behari Acharya filed another suit against Sri D. K. Jhunjhunwalla (own brother of Sri B. D. Jhunjhunwalla plaintiff in O. S. No. 202 of 1949) and another person for rendition of accounts and for other reliefs. That suit was numbered as O. S. No. 866 of 1949. Both the suits were tried analogously and disposed of by the learned Subordinate Judge in one judgment dated 31st July 1951. But in the judgment he kept the two suits separately and also discussed separately the issues arising in those two suits. While dismissing the suit under appeal (O. S. No. 202 of 1949) he passed a preliminary decree in the other suit filed by Dr. Atal Behari Acharya and directed the appointment of a Commissioner to go into the accounts between the parties, to find out the amount due from one to the other. Against that decision Sri D. K. Jhunjhunwalla filed an appeal before this Court on the 19th November, 1952 which was numbered as F. A. 62 of 1952. But he allowed that appeal to be dismissed for non-prosecution on 24th November 1954 as the requisite costs were not deposited.
( 2 ) TO appreciate the contentions of the parties it is necessary to recapitulate certain admitted facts. Dr. Atal Behari Acharya is a Medical practitioner of Cuttack Town owning a medical shop known as the Swaraj Medical Hall. He was also the Managing Director of a firm known as Utkal Salt and Chemical Works Ltd. That firm had taken on lease certain lands in Talpada and Inchuri in Balasore district in Tua in Puri district from the Khasmahal for the purpose of manufacturing salt. Shri D. K. Jhunjhunwalla and Sri B. D. Jhunjhunwalla are two brothers who with some other persons were running a Glass Factory at Barang known as Shri Durga Glass Works. Dr. Acharya's case was that some time in 1943 or 1944 Sri D. K. Jhunjhunwalla claiming himself to be the Managing Partner of a firm known as Bharat Salt and Chemical Works at Tua, took lease of the salt factory of Dr. Acharya at Talapada and Inchuri for a certain period, on payment of a stipulated rent. In pursuance of that lease, Dr. Acharya handed over to Shri Jhunjhunwalla, the Salt works at Talpada and Inchuri and allowed him to manufacture salt there. He remained in possession of the factory till about March 1948, but did not render accounts to Dr. Acharya. It is unnecessary to describe in detail the various matters in controversy between the parties in O. S. No. 866 of 1949 and it is sufficient to state that Dr. Acharya's suit was for rendition of account and for other consequential reliefs against Shri D. K. Jhunjhunwalla (who was the principal defendant on the one hand) and Bharat Salt and Chemical Works (of which he was said to be the managing partner,) on the other.
( 3 ) DR. Acharya further alleged that as Shri D. K. Jhunjhunwalla wanted to purchase a large quantity of salt stored in the warehouse at Bhutmandi in Cuttack district by the Utkal Salt and Chemical Works and that for that purpose he gave an advance of Rs. 6,000/- in three instalments, viz. on the 9th July, 16th July and 25th July 1945. Subsequently, however, Shri Jhunjhunwalla refused to accept delivery and wanted Dr. Acharya to return the advance money. Dr. Acharya had paid certain sums in re-payment of the said advance and after checking the accounts between the parties it was found that the balance due to the said Jhunjhunwalla came to Rs. 4,500/- Then at his suggestion a hand-note Ext. 1 (1) was executed by Dr. Acha
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