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MADRAS HIGH COURT
K. Govindarajan Thilakavadi, J.
Velchandiran – Appellant
versus
Rajavanniyan – Respondent
S.A. No.1069 of 2019 & C.M.P. No.22971 of 2019
Decided on 2.9.2025
(A) Civil Procedure Code, 1908 – Order XXXVII Rule 1 – Negotiable Instruments Act, 1881 – Section 118 – Money suit – Suit for recovery of money due under Promissory Note – First Appellate Court reversed judgment and decree of trial court and decreed suit in favour of plaintiff – Once signature in promissory note is admitted, presumption would go to support execution of Pronote – Once defendant admitted execution of Promissory note but pleaded that it was not supported by consideration, burden is on defendant to show that promissory note was not supported by consideration and it is a fabricated document – First appellate court has rightly concluded that suit promissory note is a genuine document and that defendant is liable to pay suit amount with interest. (Paras 9, 9.1 and 9.4)
(B) Indian Stamp Act, 1899 – Section 35 – Indian Stamp Rules, 1925 – Rule 6(2) – Stamp paper – There is no impediment for a stamp paper purchased more than six months prior to proposed date of execution, being used for a document – Stamp paper purchased by or for use of a person, can be used by that person or his legal representatives or his duly authorised agent only – Others cannot make use of that stamp paper purchased for use of a person – If contrary to Rule 6(2) of Stamp Rules, a deed is engrossed on a stamp paper not purchased by or for the benefit of any of parties to that deed, such deed would become an improperly or insufficiently stamped deed, and consequences contemplated by Section 35 of Stamp Act would follow. (Paras 9.2 and 9.3)
Result: Second Appeal dismissed.
JUDGMENT
In this Second Appeal, challenge is made to the judgment and decree dated 16.11.2018 passed in A.S. No.45 of 2017, on the file of the III Additional District and Sessions Court, Cuddalore, Virudhachalam, reversing the Judgment and decree dated 04.10.2016 passed in O.S. No.64 of 2014, on the file of the Subordinate Court, Neyveli.
2. The appellant is the defendant in O.S. No.64 of 2014. The respondent, as a plaintiff, filed the said suit for recovery of money due under Promissory note dated 15.08.2011.
3. For the sake of convenience the parties are referred to as per their ranking in the trial court.
4. The case of the plaintiff is that the defendant borrowed a sum of Rs.2,00,000/- from the plaintiff for his family expenses on 15.08.2011 and agreed to repay the same along with interest at the rate of 12% per annum and executed a suit promissory note (Ex.A1) on twenty rupees stamp paper. The defendant failed to repay the said amount despite several demands made by the plaintiff. Hence the plaintiff issued a legal notice (Ex.A2) on 11.03.2013 for which the defendant sent a reply notice with false averments. Hence, he was constrained to file the above suit.
4.1. The claim of the plaintiff was resisted by the defendant by stating that he never borrowed money from the plaintiff on 15.08.2011 for his family expenses and agreed to repay the same with interest as alleged in the plaint and that the defendant signed two blank stamp papers of the value Rs.20/- and Rs.10/- and gave the same to his elder brother K. Ramalingam and younger brother K.Arul for the purpose of getting loan by mortgaging the joint family properties and his elder brother K. Ramalingam utilised the said stamp paper and fabricated the suit promissory note. It is further stated that the defendant’s brother K.Ramalingam filed a suit in O.S. No.209 of 2006 before the District Munsif Court, Virudhachalam, against the defendant and two others and the same is pending and that the said Ramalingam, due to enmity against the defendant as he having failed to get the property as per the unregistered partition deed, fabricated the suit promissory note dated 15.08.2011 in the name of the plaintiff with ulterior motive. The defendant is working in Neyveli Lignite Corporation and there was no necessity for him to borrow the amount as alleged. Hence, he prayed for dismissal of the above suit.
4.2. The trial court, based on the materials on record, dismissed the suit vide its order dated 04.10.2016 against which the plaintiff preferred an appeal suit in A.S.No.45/2017 before the III Additional District and Sessions Court, Cuddalore at Virudhachalam. The first appellate court reversed the judgment and decree of the trial court and decreed the suit in favour of the plaintiff. Aggrieved by this, this Second Appeal has been preferred by the defendant.
5. The Second Appeal has been admitted on the following Substantial questions of law:—
“(1) Whether the lower appellate court was right in decreeing the suit based on Ex.A1, particularly, when the same is not admissible in evidence, in view of Rule 6(2) of the Indian Stamp Rules and Section 35 of the Indian Stamp Act?
(2) Whether the lower appellate court was right in reversing the findings of the trial court which are based on the demeanour of the witnesses?”
6. The learned counsel for the appellant/defendant would submit that the suit promissory note is not a genuine document and the same has been fabricated; that the stamp paper was purchased on 22.10.2003 in the name of one K. Ramalingam, who is not the father of the plaintiff and that the suit promissory note is dated 15.08.2011, which would go to show that the same is a fabricated document. His further contention is that the name found in the suit promissory note is the name of the defendant’s brother and that the plaintiff’s father’s name is R.Ramalingam, S/o. Rathinam. The trial court has rightly dismissed the suit by observing that the suit promissory note marked as Ex
(1) Once signature in promissory note is admitted, presumption would go to support execution of Pronote.(2) Stamp paper purchased by or for use of a person, can be used by that person or his legal re....
The presumption of execution in promissory notes under the Negotiable Instruments Act outweighs claims of fabrication by the defendant without substantial evidence.
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.
The presumption under Section 118 of the Negotiable Instruments Act arises when execution of a promissory note is established, placing the burden on the defendant to disprove the transaction.
The mere admission of a signature on a Promissory Note does not invoke the presumption under Section 118 of the Negotiable Instruments Act without proof of execution and passing of consideration.
The burden of proof lies with the Plaintiff to establish the execution and validity of the promissory note, and the Court can compare signatures to determine authenticity.
The presumption of consideration applies to promissory notes once execution is admitted, placing the burden on the defendant to prove otherwise.
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