Kunhikalandar v. Abdul Khader

1. Plaintiff sues on a promissory note for rs. 5000/ - executed by the defendant on 19 91958. The only plea of the defendant that is relevant for the purpose of this second appeal is one that the promissory note is not supported by consideration to the extent of rs. 1900/ -. This plea was accepted by the trial court and in appeal by the plaintiff this has been confirmed. Though plaintiff called into aid the presumption under s. 118 (a) of the negotiable instruments act, 1881, The courts below have held that the benefit of that presumption would not be available to the plaintiff since, Even the plaint allegations would show that the payment of consideration was not in the manner mentioned in the promissory note.

2. Ex. A1, The promissory note, Mentions the consideration of rs. 5000/ - as paid in cash. But in the plaint it is averred by the plaintiff that rs. 1600/ - was paid by way of cheque, Rs. 1900/ - was paid in cash and later the sum of rs. 1500/ - was paid by cheques. The payment of consideration in cash on 19 91958, The date of execution of the promissory note, Is denied by the defendant. If the presumption under s. 118 (a) could be called into aid and such presumption would also extend to presuming that consideration as recited in the document was paid, Then plaintiff will succeed even without proving the payments. On the evidence the courts below have come to the conclusion against the plaintiff. But what the appellate court has stated is this: "the result is that the evidence "adduced by both parties is found to be unreliable and unsatisfactory. When the court is unable to arrive at a determinate conclusion on the evidence adduced by both parties, The burden of proof on the pleading must turn the - scale. The plaintiff having failed to prove that the promissory note is supported by consideration to the extent of rs. 1,900/ - the conclusion of the learned munsiff cannot be said to be incorrect. " on the evidence i am not prepared to hold that i should come to different conclusion in the second appeal. If plaintiff does not succeed on the basis of the presumption he calls into aid it must follow that the decision of the courts below must stand.

3. The question really turns on the construction of s. 118 (a) of the negotiable instruments act of 1881. This section reads as follows: "118. Until the, Contrary is proved, The following presumptions shall be made:

(a) that every negotiable instrument was made or drawn for consideration, And that every such instrument, When it has been accepted, Indorsed, Negotiated or transferred, Was accepted, Indorsed, Negotiated or transferred for consideration. "

the presumption under this section is different from the presumption arising under s. 114 of the evidence act. The discretion to presume is left with the court in a case arising under s. 114 whereas if the circumstances attract s. 118 (a) the presumption thereunder must necessarily be drawn by a court. It is contended that though in this case the presumption should otherwise have arisen by virtue of s. 118 (a), It does not arise because the plaintiff's statement in the plaint itself amounts to an admission that the consideration is not as shown in the promissory note. It is this argument which has appealed to the courts below. I have to examine the correctness of this view.

4. The presumption under s. 118 of the negotiable instruments act is one which would enure until it is proved that the negotiable instrument was not made for consideration. The words "for consideration" in this section are general in character. There is no presumption either that the instrument is supported by the consideration which is mentioned in the negotiable instrument or the consideration which is in the nature of what is mentioned therein. To hold otherwise would be to read into the section words which are not there. It is not difficult to see the purpose also in providing for a presumption as to consideration. A negotiable instrument is a document which passes from hand to hand in the ordinary course of business and every holder could not be expected to satisfy himself before he comes into possession that the document is supported by consideration. If that be the case and if the purpose of the presumption is this, It is very difficult to read the section as enabling a presumption to be drawn not only that a negotiable instrument is supported by consideration but that it is supported by the consideration which is mentioned in the instrument itself. There may be instances where the instrument makes a recital that consideration is received in ready cash and actually it may turn out that the consideration is adjustment of some outstanding claims. It is possible that the consideration may not be of the amount mentioned in the promissory note. The fact that the plaintiff in a suit on a promissory note admits that, The consideration is not of the nature mentioned in the promissory note does not in any way affect the rule of presumption under s. 118 (a) as that rule enables only a presumption as to the existence of consideration being drawn. In this i am supported by the decisions of the bombay high court reported in tarmahomed haji 'abdul rehman v. Tyeb ebrahim bharamchari (air. 1949 bom. 257), Balkisandas v. Rambakas laxmandas shop (air. 1930 nag. 187), And premraj bheoraj agarwal v. Nathumal rupchand marwadi (air. 1936 nag. 130). The learned counsel for the respondent has brought to my notice the decisions which have taken a contrary view. My attention is drawn to the decision in mallavarapu narasamma v. Boggavarapu bulli veerraju (air. 1935 mad. 769). Justice varadachariar was there considering a case where the question of presumption under s. 118 (a) arose for consideration. The learned judge held that no presumption arose as to the quantum of consideration but only the existence of consideration. I see nothing in that decision which would go against the view taken in the decisions already referred to by me. The decision in fulchand v. Laxminarayan (air. 1952 nag. 308) is also brought to my notice. That learned judge also held that the presumption ordinarily available to a person suing on a promissory note that there was consideration for the promissory note was not available in that case. That was because the suit did not appear to be on the promissory note at all. It was admitted by the plaintiff himself that the promissory note was not executed on the date it was alleged to have been executed, That the amount mentioned in the promissory note was not the amount paid, And that whatever amount was paid was not on the date. Therefore plaintiff himself by way of abundant caution based the suit on the original cause of action. It was taking into account these circumstances that the learned judges took the view that the presumption under s. 118 (a) will not be available to such a case. My attention has been drawn to the decision of the rajasthan high court in shrinarain v. Chunnilal (air. 1957 raj. 159). No doubt the view taken in that decision is not consistent with the view taken in the case which i have adverted to. It does not appear that the view taken in that cases was correct, Though the result reached by the learned judges in that case will be justified by the facts of that case. The high court of andhra pradesh in the decision in maddali raghava reddi v. Yella sundarurami reddi (1958 (2) andhra weekly reporter p. 570) has considered this very question. I need refer only to the headnote of that case.

"s. 118 of the negotiable instruments act raises a statutory presumption in favour of there being consideration for every negotiable instrument. The presumption continues until it is rebutted and the only way it can be rebutted is by proving the contrary, Namely, That the negotiable instrument was without consideration. The presumption, That is raised under that section, Is not in respect of the consideration mentioned in the instrument, But the presumption is in favour of there being a consideration for the negotiable instrument, Any consideration which is a valid consideration in law.

where the defendant has admitted the execution of the pronote, The burden initially is on him to show that the document was without consideration. The fact that the payment is not on the date of the execution of the promissory note is not sufficient to shift the burden on the plaintiff and rebut the presumption under s. 118. "

5. It follows from what i have said above that the pleadings of the plaintiff in this case do not in any way go against the application of the presumption of s. 118 (a). To that extent both the courts were wrong. But this does not assist the plaintiff in this case. There is one aspect of the matter which has not been noticed by the courts below. The presumption which arises under s. 118 (a> is necessarily limited to one regarding the existence of consideration, As i have already mentioned. Therefore, Assuming that presumption would apply here the plaintiff cannot succeed in his plea that the sum of rs. 5000/ - which is mentioned in the document has been actually paid by him. No doubt, A recital in a document as to the quantum of consideration of the document may give rise to a presumption against the parties to that document, Though such presumption is not by virtue of s. 118 (a) of the negotiable instruments act. It is for any party to the document who wants the court to hold otherwise to show that the recital is wrong and until it is so shown that will be evidence against the party concerned. Therefore, Unless otherwise is shown plaintiff could have relied on the recital of receipt of consideration of rs. 5000/ - in ex. Al to support his case. But that presumption will not be of any assistance to the plaintiff in this suit because even in the plaint he has admitted that a sum of rs. 5000/ - was not paid on the date of execution and whatever payment was made was itself not in ready cash. If so, Whatever weight the recital could have is set at naught and the plaintiff has necessarily to prove the quantum of consideration. Though normally the question of burden of proof would be of academic interest only in a court of second appeal when the evidence adduced by both parties is before court, The presumption is called to aid when the evidence on either side is either unreliable or inconclusive. That is why i examined this case to see whether plaintiff could get the benefit of any presumption in his favour. Since there is none available it follows that the decision of the courts below must stand. I hold that the plaintiff has not proved consideration to the extent of rs. 1900/ -. The second appeal is therefore dismissed, But in the circumstances i direct both parties to suffer costs in the second appeal.