Back
1992 Supreme(Ori) 165
IN THE HIGH COURT OF ORISSA
S.C. Mohapatra, J.
MILKIMAL PESHWANI - APPELLANT
Versus
SUDHIR KUMAR PRADHAN - RESPONDENT
First Appeal No. 142 of 1977
Decided On : 18-11-1992
The presumption of consideration under Section 118 of the Negotiable Instruments Act can be rebutted by a presumption of fact under Section 114 of the Evidence Act.
Headnote:
NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 118 - PRESUMPTION OF CONSIDERATION - REBUTTAL BY PRESUMPTION OF FACT UNDER SECTION 114 OF THE EVIDENCE ACT, 1872.
Fact of the Case:
Plaintiff filed a suit for recovery of Rs. 7,000/- with interest on a dishonored cheque issued by Defendant. Defendant claimed that the cheque was issued as an advance payment for bricks to be supplied, and that the final settlement of accounts showed that Plaintiff owed him money.
Finding of the Court:
The court found that the Defendant had discharged the burden of proof arising out of the presumption of consideration under Section 118 of the Negotiable Instruments Act by attracting the presumption of fact under Section 114 of the Evidence Act.
Issues: Whether the presumption of consideration under Section 118 of the Negotiable Instruments Act can be rebutted by a presumption of fact under Section 114 of the Evidence Act.
Ratio Decidendi: The court held that the presumption of consideration under Section 118 of the Negotiable Instruments Act can be rebutted by a presumption of fact under Section 114 of the Evidence Act. The court relied on the Supreme Court decision in Kundan Lal Rallaram v. Custodian, Evancuee Property, Bombay, which held that the burden of proof can be shifted by presumptions of law or fact, and presumptions of law or presumptions of fact may be rebutted not only by direct or circumstantial evidence but also by presumptions of law or fact.
Final Decision: The court dismissed the appeal and held that the parties shall bear their own costs throughout.
JUDGMENT :
S.C. Mohapatra, J. - Dishonour of a cheque issued by Defendant in favour of Plaintiff for Rs. 7,000/- bearing date 9-4-1971 is the cause of action for the suit for recovery of the amount with interest which being dismissed, Plaintiff is Appellant in this appeal.
2. Plaintiff is a manufacturer of bricks. He entered into agreement (Ext. A) with Defendant for supply of bricks required by Defendant to execute works contract. Case of Plaintiff is that in course of supply of bricks, Defendant issued the cheque dated 9-4-1971 (Ext.1) towards price of the bricks supplied. Plaintiff deposited the cheque for collection. However, the same was dishonoured. Therefore, the suit was filed for realisation of the amount with interest.
3. While submitting issue of cheque and the same being dishonoured, Defendant explained that Plaintiff was to receive the price of the bricks on periodical settlement of accounts. At times, he was being paid advances for being adjusted at the time of settlement of accounts. In course of such transaction, Plaintiff requested for advance of Rs. 7,000/- in March, 1971. Since Defendant had no fund available, he explained the position to Plaintiff and stated that he is likely to receive payments from Government departments towards end of March and hence, he would issue a post dated cheque in favour of Plaintiff which can be deposited for collection on getting clearance from the Plaintiff for which Defendant was to be inform Plaintiff before deposit of the cheque for realisation. Defendant could not deposit any amount for which the cheque could not be honoured by the Bank. However, after the date given in the cheque, there was settlement of accounts. Plaintiff supplied bricks worth Rs. 11,760. Adjusting amount of Rs. 5,000/- taken as advance by Plaintiff balance amount was paid to Plaintiff in respect of which he has acknowledged in Ext. B/1.
4. Plaintiff examined himself as P. W. 1 and proved the cheque and intimation from Bank marked as Exts. 1 and 2. Defendant examined himself as D.W. 1 and another as D.W. 2. He proved the agreement and the account in the. handwriting of the Plaintiff marked as Exts. A and B/1. On consideration of materials on record, trial Court accepted explanation of Defendant and dismissed the suit.
5. In case a cheque would have been issued by person in favour of another is dishonoured by the Bank for want of funds, the holder of the cheque is entitled to the amount as reflected in the cheque since cheque is a negotiable instrument governed under the Negotiable Instruments Act and presumption u/s 118 is attracted. Where, however background of the issue of the cheque has been given in support of validity of the cheque, if the background is not accepted, the presumption u/s 118 would stand rebutted. In the present case Plaintiff has given one background and Defendant has given another background. In case, explanation of Defendant is accepted, Plaintiff's claim would statted rejected.
6. Mr. B.L.N. Swamy, learned Counsel for the Appellant submitted that on the premises of the admitted facts that Plaintiff was supplying bricks to Defendant, when cheque was issued for Rs. 7,000/- it is to be presumed that the same was validly issued for consideration and the necessary presumption that followed is that Defendant accepted his liability to pay the amount reflected therein. This is a presumption of law as envisaged u/s 118 of the Act and on that basis suit is to be decreed.
7. Mr. P. Misra, learned Counsel for the Respondent while not disputing the legal position submitted that the presumption stands rebutted on account of Ext. B/1, the accounts settled after issue of the cheque where Plaintiff accepted that he was to receive only Rs. 6,030/- which he has acknowledged to have received. This conduct of the Plaintiff proves the explanation of the Defendant that consideration for the cheque was to be effective on the clearance from the Defendant and in fact Defendant requested for return of the cheque
