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Kadher Mal v. Kunwar Sheo Narain
Summary of the Opinion (Bajpai and Dar, JJ.)
Factual and Procedural Background
The plaintiff, Kunwar Sheo Narain, sued the defendant, Kadher Mal, for recovery of Rs. 2,400 (claimed to be Rs. 1,800 plus interest and costs), alleging that on 15 June 1935 he had advanced Rs. 1,800 to the defendant and the defendant had executed a promissory note promising repayment with interest at 1% per mensem. The defendant denied borrowing money or executing the promissory note and pleaded minority (born 18 February 1919, thus a minor on 15 June 1935). The defendant also asserted that he was induced into drinking and gambling by the plaintiff and others and that any writing might have been obtained while he was intoxicated. The plaintiff had also filed an application under the Encumbered Estates Act but, it was alleged, did not disclose this debt there.
At trial four issues were framed: (1) whether the promissory note was executed by the defendant; (2) whether consideration passed or the signature was obtained while the defendant was intoxicated; (3) whether the defendant was a minor on the date of the note; and (4) the relief to which the plaintiff was entitled. The trial court found that the defendant failed to prove minority and that the note was duly executed, but held that the plaintiff had not proved that Rs. 1,800 in hard cash had passed; the suit was dismissed though the defendant was deprived of costs for raising false pleas.
The plaintiff appealed to the lower appellate court and the defendant filed cross-objections as to costs. The lower appellate court allowed the plaintiff's appeal, decreed the suit in full, and awarded full costs in the trial court and the court of first appeal to the plaintiff.
On second appeal (by the defendant) the primary contest concerned the application of the presumption in section 118 of the Negotiable Instruments Act and the proper allocation of the burden of proof given the surrounding circumstances.
Legal Issues Presented
- Did the defendant execute the promissory note in suit?
- Was the consideration for the promissory note actually paid to the defendant or was his signature obtained while he was intoxicated?
- Was the defendant a minor on the date of the promissory note (15 June 1935)?
- What relief is the plaintiff entitled to, if any, having regard to the evidence on execution and consideration?
- How should the evidentiary presumption in section 118 of the Negotiable Instruments Act be applied in the facts of this case, and how does the burden of proof shift in light of circumstances similar to those considered in Moti Gulabchana v. Mahomed Mehdi Tharia Topan?
Arguments of the Parties
Defendant (Appellant) — Arguments
- Denied borrowing any money from the plaintiff and denied executing any promissory note in the plaintiff's favour.
- Plead minority: born 18 February 1919, thus a minor on 15 June 1935.
- Asserted lack of necessity to borrow (was joint with his father and paid substantial Government revenue and income-tax in 1935).
- Alleged inducement into drinking and gambling by the plaintiff and others; suggested any writing may have been obtained while he was intoxicated.
- Contended on second appeal that the lower court had given an exaggerated view of the presumption under section 118 of the Negotiable Instruments Act and had not properly considered the case in its true perspective (pointing to the plaintiff's indebtedness, the defendant's circumstances and the improbability of an Rs. 1,800 advance in cash).
Plaintiff (Respondent) — Arguments
- Asserted that he advanced Rs. 1,800 to the defendant on 15 June 1935 and that the defendant executed a promissory note promising repayment with interest at 1% per mensem.
- Sought recovery of the claimed sum together with costs and pendente lite and future interest.
- The record notes that the plaintiff did not keep books that could corroborate the alleged cash advance; beyond the claim of advance and the promissory note, no detailed account by the plaintiff of documentary proof was described in the opinion.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Moti Gulabchana v. Mahomed Mehdi Tharia Topan | The practical effect of illustration (c) to section 114 of the Evidence Act and the approach to onus of proof: where the defendant is a young man recently of age and circumstances (e.g., extravagance, family estate not in possession, plaintiff a professional moneylender) weaken the ordinary presumption that a negotiable instrument was executed for value, the denial by the defendant that full consideration was received can shift the burden of proof to the plaintiff to satisfy the court that full consideration was paid; if plaintiff affirms and is corroborated by books/witnesses, the onus can shift back. | The court held that the facts of the present case were sufficiently similar to that case to apply its guiding principles: the presumption under section 118 applied but was significantly weakened by the circumstances (young defendant, plaintiff's vices and lack of security or inquiry). Consequently the burden lay on the plaintiff to prove that Rs. 1,800 in hard cash passed; the plaintiff failed to discharge that burden as to the full amount, and the court awarded a decree for a reduced sum (Rs. 900). |
Court's Reasoning and Analysis
The court proceeded by examining the evidential picture and the legal presumption in favour of a negotiable instrument under section 118 of the Negotiable Instruments Act, together with the guidance given in the cited Bombay case (Moti Gulabchana). The analysis unfolded as follows:
- Recognition of the statutory presumption in section 118 that a negotiable instrument is presumed to have been executed for consideration, but acknowledgment that this presumption can be weakened by surrounding circumstances.
- Comparison of the present facts with those in Moti Gulabchana: the defendant had recently attained majority, was young and inexperienced, was joint with his father (whose death soon after made it likely a large estate would come to the defendant), and stood in no apparent need of money. The plaintiff, though not a professional moneylender, had habits (drinking, nautches, gambling) that placed him in a position of influence over the defendant.
- Application of the Bombay case principle: where such circumstances are present, a clear denial by the defendant that full consideration passed can shift the burden to the plaintiff to prove payment of consideration in full. The court noted that though the plaintiff was "a fairly big man" he was heavily indebted and kept no corroboratory books.
- Examination of the evidence led the court to conclude that the greater portion of the alleged Rs. 1,800 consideration consisted of the plaintiff supplying the defendant with wine and entertainment (nautches and jalsas) rather than hard cash advances. The court accepted the trial court's finding that the promissory note was executed by the defendant in full sense, but found that the plaintiff had not established that Rs. 1,800 in cash passed.
- Having weighed the available evidence, including admissions that some sums were spent for the defendant's benefit, the court determined that equities would be met by finding that Rs. 900 (one half of the claimed amount) actually passed as consideration.
- The court therefore adjusted the plaintiff's entitlement accordingly and quantified interest and costs in the decree.
Throughout its reasoning the court emphasized that the presumption under section 118 is not absolute and that the surrounding circumstances (defendant's youth and situation, plaintiff's character and lack of corroboration) materially affected the allocation of the burden of proof.
Holding and Implications
Core Ruling: The appeal is allowed in part. The court passed a decree in favour of the plaintiff for Rs. 900 (i.e., a finding that Rs. 900 of the consideration actually passed).
Interest: Interest at 6% per annum simple from 15 June 1935 (date of the promissory note) to the date of the suit, and thereafter interest at 3% per annum until realization.
Costs: The parties will bear their own costs of this appeal. In the courts below the defendant will bear his own costs and the plaintiff will recover one-third of his costs.
Implications: The direct effect on the parties is a reduced decree (Rs. 900 with specified interest) and the described apportionment of costs. The court applied the guiding principles from the cited Bombay case regarding the shifting of onus where the presumption under section 118 is weakened by surrounding circumstances. The opinion did not announce any new legal rule; it applied existing principles to quantify the plaintiff's recovery on the facts before the court.
Bajpai and Dar, JJ.:— This is an appeal by the defendant. The plaintiff, Kunwar Sheo Narain, brought a suit against the defendant, Kadher Mal, for the recovery of Rs. 2,400 together with costs and pendente lite and future interest on the allegation that he had advanced to the defendant on the 15th of June, 1935, a sum of Rs. 1,800 and the defendant had executed a promissory note promising to pay the said amount together with interest at the rate of 1 per cent. per mensem. The defendant pleaded that he did not borrow any money from the plaintiff, nor had he any necessity to borrow money and that he did not execute any promissory note in favour of the plaintiff. It was further pleaded that the defendant was born on the 18th of February, 1919, and he was, therefore, a minor on the 15th of June, 1935. In 1935 the defendant used to pay Government revenue of about Rs. 3,000 and an income-tax of Rs. 500. But the plaintiff was given to drinking and gambling and the defendant was induced by certain persons to go to the place of the plaintiff and there he got the habit of drinking and gambling and the plaintiff and his friends might have obtained some writing on some paper from the defendant while he was under the influence of drink. It was said that the plaintiff had filed an application under the Encumbered Estates Act but had not shown therein the debt in question.
The trial court struck four issues in the suit:
(1) Did the defendant execute the promissory note in suit?
(2) Was the consideration of the said promissory note paid to the defendant or was his signature obtained while he was intoxicated?
(3) Was the defendant minor on the date of the promissory note in dispute?
(4) To what relief is the plaintiff entitled?
On the question of minority the trial court came to the conclusion that the defendant had failed to prove his minority on the date of the promissory note in suit. It also held that the promissory note was duly executed, but on the other issues the trial court came to a conclusion adverse to the plaintiff. The learned Additional Munsif thought that the evidence led by the plaintiff on the question of consideration was very doubtful. The plaintiff himself was indebted to the extent of Rs. 80,000 and the debt had come down to him from the time of his grandfather and he himself had added to it. The plaintiff made no inquiry about the fact whether the defendant was joint or separate with his father and it was not possible that a man who was himself indebted to the extent of Rs. 80,000 would advance Rs. 1,800 to a young man without getting some assurance about the safety of his money. The learned Additional Munsif laid the burden of proof, under the circumstances of the case. On the plaintiff and held that “although the plaintiff may have made some small advances to the defendant or the sum might be due on account of losses of gambling or price of wines but it was not possible that hard cash to the extent of Rs. 1,800 could have been advanced under the circumstances of the case”. The story of the defendant that he might have executed the promissory note when the was under intoxication was not believed by the learned Additional Munsif who thought that the promissory note was executed by the defendant in his full senses, but at the same time the plaintiff had failed to discharge the burden that Rs. 1,800 actually passed from the plaintiff to the defendant. In this view of the matter the learned Additional Munsif dismissed the plaintiff's suit, but as the defendant had been guilty of raising many false pleas the defendant was deprived of his costs.
There was an appeal before the lower appellate court by the plaintiff and cross-objections by the defendant. The appeal was in respect to the dismissal of the suit and the cross-objections were in respect to the order of costs. The learned Civil Judge held the view that inconsistent defences had been raised by, the defendant and the plaintiff, although he was himself indebted to the sum of Rs. 80,000 and although he had made no inquiries and taken no security from the defendant, was entitled to a decree inasmuch as “the burden of proof lay upon the defendant to show that the written receipt could not be true for certain definite reasons and not out of mere presumptions”. The lower appellate court took notice of the fact that the plaintiff was indebted and that he had not shown this sum in his application under the Encumbered Estates Act, but at the same time the plaintiff was a fairly big man inasmuch as he paid about Rs. 1,200 as land revenue and it was not at all unlikely that, he should have some cash in his house. As regards the application under the Encumbered Estates Act the learned Judge felt “that this was a matter which concerned his creditors rather than his debtors and the plaintiff was not bound under the Encumbered Estates Act to show all his assets in order to legalise the debt due to him”. In the result, the appeal was allowed and the cross-objections were dismissed and the plaintiff's suit was decreed with full costs in the trial court as well as in the court of first appeal.
In second appeal on behalf of the defendant it is argued that the court below has taken an exaggerated view of the presumption laid down in section 118 of the Negotiable Instruments' Act and has not approached the case in its true perspective. The admitted facts are that the plaintiff, although he is a fairly big man, is heavily indebted and he has not been able to liquidate his debts although they have come to him from the time of his grandfather; what to speak of liquidating the debts, the plaintiff has added to his debts. The defendant was a young man who had just emerged out of his minority, who was joint with his father and who had really no necessity to borrow any money. From what the plaintiff and the defendant said in the trial court it is clear that no amount could have been advanced by the plaintiff to the defendant for the purpose of starting any business as is set down in the promissory note and the receipt. It is also clear that the plaintiff was given to taking wine and to indulging in nautches and jalsas and gambling. The defendant—a young man such as has been described above—was introduced to the plaintiff and joined the plaintiff in gambling, nautch and drinking and although the defendant has failed to prove that the promissory note was executed at a time when he was not in possession of his sense's being under the influence of drink, we have grave doubts about the actual passing of consideration in the shape of hard cash.
The question of burden of proof in cases of this kind always presents some difficulty. But we think that the correct principles have been laid down by Farran, C.J in Moti Gulabchana v. Mahomed Mehdi Tharia Topan(1), and these principles with certain variations can be made applicable to the facts of the present case. The learned Chief Justice in that case observed as follows:
“…we desire to state how the onus of proof in a case like this, irrespective of the order in which the evidence is given, substantially lies. The defendant, when he executed the notes sued upon, was a young man who had only attained his majority nine months previously. He appears to have been of an extravagant and reckless character. He was entitled to a large amount of property under the will of his father, the late Sir Tharia Topan of Zanzibar, but had not come into possession of it, as on account of family disputes it was, in common with the rest of the family estate in the hands of a receiver appointed by this Court. The plaintiffs are a Marvadi firm who are by profession moneylenders. These facts being admitted (apart from the technical rule laid down in section 118 of the Negotiable Instruments Act) the ordinary presumption that a negotiable instrument has been executed for value is so much weakened, that the allegation of the young man that he has not received full consideration is sufficient to shift the burden of proof and to throw upon the moneylender the obligation of satisfying the Court that he has paid the consideration in full. This is, we think, the practical effect of illustration (c) to section 114 of the Evidence Act, and its explanation. Where the plaintiff in answer to such a defence affirms' that he has paid the consideration in full, and is corroborated by his books and witnesses (if any), the onus again shifts. The strength of the case to be rebutted will depend upon the credit to be given to the testimony adduced by the plaintiff as tested by cross-examination, the weight to be attached to his books arising from the manner in which they are kept, and the presence of suspicious circumstances in connection with them, and upon its inherent probability. When these circumstances concur in the plaintiff's favour, a heavy onus is thrown upon the defendant which can only be met by a perfectly truthful and harmonious statement which the Court feels able to rely upon with confidence. In the absence of this, the ordinary presumption laid down in section 118 of the Negotiable Instruments Act must prevail.”
The facts of the present case are very similar to the facts of the Bombay case. The defendant, as we said before, was a young man who had just attained his majority. He was joint with his father (who died shortly after the execution of the promissory note in question and who for alight we know was well advanced in years and likely to the soon with the result that a large estate was likely to come into the possession of the defendant). The defendant stood in no need of any money because, as we have shown above, the allegation of the plaintiff that the money was required for carrying on some business is patently wrong, and no security whatsoever except the written note of hand was taken from the defendant; nor were any inquiries made by the plaintiff from the defendant's father. It is true that the principles which were laid down by Farran, C.J, were not rules of law and were stated only as guides and although there is one striking difference between the Bombay case and the case before us in the fact that in the Bombay case the plaintiff creditor was a professional moneylender and in the case before us the plaintiff is not a professional moneylender but a landlord paying Government revenue, but the plaintiff in the present case fills another capacity. He indulges in certain vices or at any event in habits which are regarded as vices, namely drinking and nautch parties. He is a fairly senior, man and he got the defendant—a very much younger and inexperienced man—in his control and we have not the slightest doubt that the plaintiff initiated the defendant into the mysteries of wine and women. The principles enunciated in the Bombay case, therefore, apply with equal and perhaps with greater force in the present case. The presumption laid down by section 118 of the Negotiable Instruments Act undoubtedly applies in favour of the plaintiff but that presumption is considerably weakened by the circumstances which we have enumerated above and hen there is a clear denial on the past of the defendant, then the circumstances of which notice ought always be taken shift the burden on to the plaintiff and although the plaintiff in the present case as he is not a moneylender cannot produce his books because keeps none in support of his case, the burden nonetheless lies on him and the burden has not been discharged by him, and we are satisfied after an examination of the record that the view taken by the learned Additional Munsif was correct, namely that the plaintiff might have made small advances to the defendant or the sum might be due on account of losses of gambling or price of wines, but hard cash to the extent of Rs. 1,800 did not pass from the plaintiff to the defendant.
We think the circumstances of the case duly demand a consideration of the evidence on the record irrespective of the order in which the evidence was given and a consideration of the evidence leads us to the conclusion that the greater portion of the consideration of Rs. 1,8005 consisted in the plaintiff supplying to the defendant with, wine and with fun in the shape of nautches and jalsas. The defendant might have been well advised in admitting honestly and straightforwardly that some sums of money were actually spent by the plaintiff for the benefit, of the defendant and to that extent a court of law might well have passed a decree in favour of the plaintiff. We have discussed this aspect of the matter with learned, counsel for the parties and from what they have said and from what we ourselyes have gathered, we have come to the conclusion that the equities in the case will be well met by holding that Rs. 900 out of the consideration of the promissory note in question actually did pass.
We, therefore, allow this appeal to this extent that we pass a decree in favour of the plaintiff for a sum of Rs. 900 and interest thereon will run from the date of the promissory note, namely the 15th of June, 1935, to the date of the suit at the rate of 6 per cent. per annum simple and thereafter till the date of realisation at the rate of three per cent. per annum. The parties will bear their own costs of this appeal, and in the courts below the defendant will bear his own costs and the plaintiff will get one-third of his costs.
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