Failure to Prove Execution of a Promissory Note: Implications under Indian Law

Failure to Prove Execution of a Promissory Note: Implications under Indian Law

Introduction

A promissory note, as defined under Section 4 of the Negotiable Instruments Act, 1881 (hereinafter "NI Act"), is a significant instrument in commercial and personal financial transactions in India. It represents an unconditional undertaking to pay a certain sum of money. While the NI Act provides certain presumptions to facilitate commerce, particularly regarding consideration (Section 118) and the holder in due course, these presumptions are fundamentally predicated upon the valid execution of the instrument itself. This article delves into the critical legal requirement of proving the execution of a promissory note and analyzes the profound implications under Indian law when a party fails to discharge this primary evidentiary burden. The discussion will draw upon statutory provisions and judicial precedents to elucidate the principles governing this foundational aspect of negotiable instrument litigation.

The Legal Framework: Execution and Presumptions

The term "execution" of a document, in legal parlance, signifies more than mere affixation of a signature. As observed by the Allahabad High Court in Ch. Birbal Singh v. Harphool Khan And Another (AIR 1975 All), "execution consists in signing a document written out, read over and understood and does not consist of merely signing a blank paper." This understanding is crucial because the legal validity and enforceability of a promissory note hinge on its due execution by the alleged maker.

Section 118(a) of the NI Act states that until the contrary is proved, it shall be presumed that every negotiable instrument was made or drawn for consideration. However, this presumption, as affirmed in numerous judicial decisions, can only be invoked once the execution of the promissory note is admitted or proved. The Supreme Court in Mallavarapu Kasivisweswara Rao v. Thadikonda Ramulu Firm And Others (2008 SCC 7 655) reiterated that once the execution of a promissory note is proven, the burden shifts to the defendant to disprove consideration. This inherently implies that the initial onus lies elsewhere.

The general principles of burden of proof are enshrined in Sections 101 to 103 of the Indian Evidence Act, 1872. Section 101 states: "Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist." Thus, in a suit based on a promissory note, the plaintiff asserting the defendant's liability under the note must first prove the foundational fact of its execution by the defendant.

Proving Execution: The Plaintiff's Initial Onus

The initial and primary burden to prove the execution of a promissory note rests squarely on the plaintiff. The Supreme Court in Kundan Lal Rallaram v. The Custodian, Evacuee Property Bombay (AIR 1961 SC 1316) implicitly supported this by discussing the shifting of burden after certain facts are established. More explicitly, various High Courts have consistently held this position. The Madras High Court in K. Rajendra Kumar Jain v. D. Jayanthi & Another (2017), explained that the burden initially rests on the plaintiff to prove execution, and only then does Section 118 of the NI Act help shift the burden regarding consideration. Similarly, the Punjab & Haryana High Court in Rawat Singh v. Mahender Singh (2011 SCC ONLINE P&H 4849) emphasized that if the execution of the pronote itself is not proved, no presumption under Section 118 NI Act can be drawn. The Madras High Court in Kannamma v. P. Sagunthala (2017), citing Thiruvengadam Pillai v. Navaneethammal ((2008) 4 SCC 530), held that if the defendant denies execution, the burden is on the plaintiff to prove it.

Methods of proving execution include:

  • Direct Evidence: Testimony of the plaintiff, the scribe who wrote the document, and any attesting witnesses. In Ch. Birbal Singh (AIR 1975 All), the plaintiff examined himself and a marginal witness, but their contradictory evidence led to the rejection of their testimony.
  • Expert Evidence: Testimony of a handwriting expert can be crucial, especially when signatures are disputed. The Supreme Court in Kapil Kumar v. Raj Kumar (2022 SCC 10 281) upheld a decree where execution was proved, inter alia, by a handwriting expert, even when an attesting witness was not examined. This case reversed the High Court's decision in Raj Kumar v. Kapil Kumar (2019 SCC OnLine P&H 6345) which had held non-examination of the attesting witness to be fatal.
  • Defendant's Admission: An admission by the defendant regarding the signature or execution, even if qualified (e.g., signature on blank paper), can shift the onus. In Harnek Singh v. Kansi Ram (2008 PLR 149 210), where the defendant admitted his thumb impressions were obtained on blank papers, the onus shifted to him to prove misuse.
  • Circumstantial Evidence: Surrounding circumstances, correspondence, or subsequent conduct of parties might corroborate execution.

The standard of proof required from the plaintiff to establish execution in a civil suit is the preponderance of probabilities.

Consequences of Failure to Prove Execution

If the plaintiff fails to prove the execution of the promissory note, the suit based on that instrument must fail. As established in Rawat Singh (2011 SCC ONLINE P&H 4849), the statutory presumption regarding consideration under Section 118 of the NI Act does not come into play if the execution itself is not established. The very foundation of the claim collapses.

A related question is whether the plaintiff can sue on the original consideration if the suit on the promissory note fails due to non-proof of execution. The Allahabad High Court in Sheo Nath Prasad v. Sarju Nonia (1943 All WR HC 60) considered a situation where a pronote was inadmissible (due to being unstamped). It was held that if the intention was to reduce the terms of the contract to the form of a document (the pronote), and that document is inadmissible, the loan could not be proved by oral evidence. While non-proof of execution is different from inadmissibility, if the execution is not proved, the document is essentially a nullity for the purpose of founding a claim upon it. Whether an alternative claim on an underlying debt can succeed would depend on the pleadings and whether the pronote was given as conditional payment, collateral security, or represented the contract itself.

Judicial Scrutiny of Execution Claims

Courts meticulously examine the evidence adduced to prove execution. In Gian Chand And Brothers And Another v. Rattan Lal Alias Rattan Singh (2013 SCCR 1 437), the Supreme Court emphasized the importance of specific denials in pleadings as per Order 8 Rules 3, 4, and 5 of the Code of Civil Procedure, 1908. A vague denial of execution might not be sufficient if the plaintiff presents credible evidence.

Contradictions in the testimonies of the plaintiff's witnesses can be fatal to the claim of due execution, as seen in Ch. Birbal Singh (AIR 1975 All). The credibility of witnesses who depose about the execution, such as the scribe or attesting witnesses, is paramount. For instance, in Rawat Singh (2011 SCC ONLINE P&H 4849), doubts about the presence and veracity of a witness (PW-1) contributed to the finding that execution was not proved.

The Supreme Court's decision in Kapil Kumar v. Raj Kumar (2022 SCC 10 281) is significant. It clarified that non-examination of an attesting witness to a pronote is not necessarily fatal to proving its execution if other credible evidence (like testimony of the scribe, handwriting expert, and the plaintiff) sufficiently establishes execution. This provides a balanced approach, preventing hyper-technical dismissals while ensuring robust proof.

Distinguishing Proof of Execution from Proof of Consideration

It is crucial to distinguish between the proof of execution and the proof (or presumption) of consideration. Execution is the antecedent fact that must be established by the plaintiff. Only upon successful proof of execution does the presumption under Section 118(a) of the NI Act, regarding consideration, arise in favor of the plaintiff. The burden then shifts to the defendant to rebut this presumption.

The Madras High Court in Ashok Kumar v. Mrs. Latha (2017 SCC ONLINE MAD 1831) found that though execution of the pronote was proved, the passing of consideration was highly improbable based on the plaintiff's own evidence, thereby dislodging the presumption. This illustrates the two distinct stages. Conversely, if execution is not proved, the court does not even reach the stage of presuming consideration.

Cases like Mallavarapu Kasivisweswara Rao (SC, 2008) and Kundan Lal Rallaram (SC, 1961) primarily address the nature and rebuttal of the presumption of consideration, operating on the premise that execution has been established or is not the central point of contention. The Andhra Pradesh High Court in its earlier decision in Thadikonda Ramulu Firm And Others v. Mallavarapu Kasivisweswara Rao (1999 (2) ALD 389), which was later taken to the Supreme Court, detailed how evidence (PW1, PW2, and documentary exhibits A-4, A-5) established both execution and consideration.

The Punjab & Haryana High Court in Sohan Singh v. Amritpal Singh (2011 (4) RCR (Civil) 164) observed that if the passing of consideration is not proved (in that case, the plaintiff admitted receipt of amounts for earlier pronotes), even if execution is proved, the pronote might be a mere paper transaction. This suggests that the presumption of consideration, though strong, can be rebutted by cogent evidence, including admissions by the plaintiff.

The Role of Secondary Evidence in Proving Execution

Occasionally, the original promissory note may not be available. In such scenarios, the plaintiff might seek to prove its execution and contents through secondary evidence, as permissible under Section 65 of the Indian Evidence Act, 1872. The Supreme Court in J. Yashoda v. K. Shobha Rani (2007 SCC 5 730) dealt with the admissibility of photocopies as secondary evidence. The Court held that secondary evidence can be given only when the conditions prescribed in Section 65 are satisfied. If a plaintiff seeks to prove execution of a lost pronote via a photocopy, they must first lay the foundation for accepting secondary evidence (e.g., proving the loss of the original under Section 65(c)).

Material Alterations Affecting Execution

A material alteration in a promissory note, if made without the consent of all parties liable thereon, can render the instrument void under Section 87 of the NI Act. If an alteration pertains to fundamental aspects like the date of execution, it can directly impact the proof of execution of the document in its alleged form. In K.M Basappa & Another v. Patel Marule Gowda & Another (AIR 1951 Kant 102), the Karnataka High Court found an alteration in the date of execution and held it to be material, impacting the enforceability of the pronote. Thus, proving execution means proving the execution of the document as presented to the court, free from unauthorized material alterations.

Conclusion

The requirement to prove the execution of a promissory note is a non-negotiable first step in any claim based upon such an instrument under Indian law. The plaintiff bears the initial onus probandi to establish, by a preponderance of probabilities, that the defendant duly executed the note. Failure to discharge this burden renders the promissory note unenforceable, and the statutory presumptions regarding consideration under Section 118 of the NI Act do not come to the plaintiff's aid.

Judicial precedents, including landmark decisions from the Supreme Court and various High Courts, consistently underscore this principle. The courts demand credible evidence, be it direct testimony of scribes and witnesses, expert opinion on signatures, or compelling circumstantial proof. Recent clarifications, such as in Kapil Kumar (SC, 2022), demonstrate a pragmatic approach to the modes of proving execution, emphasizing substance over mere technicalities, provided the core fact of execution is reliably established. Litigants and legal practitioners must, therefore, meticulously prepare and present their case on the factum of execution, as it remains the gateway to any relief sought on a promissory note.