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Smart Summary

Structured Summary of the Opinion (Second Appeal)

Factual and Procedural Background

The plaintiff (now the appellant in this second appeal) sued to recover money due under a registered hypothecation/mortgage bond dated 23 December 1910 (Ex. A) executed by Karuppa Goundan, who was the paternal grandfather of defendant 1. Defendant 1 pleaded that Ex. A was not supported by consideration and that it was executed to spite defendant 1 (the written statement specified the reason for spite, which the court did not recite in the opinion). Issue No. 1 in the case was whether the mortgage sued on was genuine and supported by consideration. It was admitted that the mortgaged property was ancestral property of Karuppa Goundan and that defendant 1, as a coparcener, had an interest in it; defendant 1 was a major when Ex. A was executed.

At trial the District Munsif found that execution of Ex. A had been proved and, relying on an admission by the executant (the paternal grandfather) that consideration was received, placed the onus of proving want of consideration on defendant 1 and decided Issue No. 1 in favour of the plaintiff. Nonetheless, the District Munsif dismissed the suit on the ground of limitation: he held that an acknowledgment contained in a benami sale deed executed by the mortgagor in favour of a third person was not a proper acknowledgment of liability within the meaning of Section 19 of the Limitation Act.

The plaintiff appealed. The Subordinate Judge reversed the District Munsif on the limitation point (holding the District Munsif wrong), but confirmed the dismissal of the suit on the alternative ground that Ex. A was not supported by consideration. The plaintiff then brought this second appeal.

Legal Issues Presented

  1. Whether the mortgage/hypothecation bond (Ex. A) was a true instrument supported by consideration.
  2. Whether an acknowledgment contained in a sale deed (including a benami sale deed executed by the debtor in favour of a third person) can constitute a proper acknowledgment of liability for the purposes of Section 19 of the Limitation Act.
  3. What is the onus of proof (burden) in respect of establishing consideration for a written instrument where execution is admitted, particularly when the defendant is not the executant or an heir claiming under the executant.

Arguments of the Parties

Appellant's Arguments (Plaintiff)

  • The lower appellate Court's statement that "The burden is certainly upon the plaintiff to show that the document is supported by consideration" was said to be incorrect.
  • The appellant relied on a recent decision: Raghavendra Rao v. Venkataswami Naicken, A.I.R. 1930 Mad. 251 (Appeal No. 95 of 1925), to contend that the earlier view in Kumarappan Chetti v. Narayana Chettiar (1916) 35 I.C. 455 (attributed to Spencer, J.) should not be followed; the appellant urged that the onus rules in that recent decision supported his position on burden of proof.

Defendant 1's Arguments

  • Ex. A was not supported by consideration.
  • The instrument (Ex. A) was executed to spite defendant 1 (the written statement set out the particular reason, which the present judgment does not recite).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Raghavendra Rao v. Venkataswami Naicken, A.I.R. 1930 Mad. 251 (Appeal No. 95 of 1925) Stated (per Ramesam, J.) that prima facie the onus of proof of want of consideration is upon the executant when execution of the document is proved; where no suspicious circumstances appear, proof of execution and recitals makes out a prima facie case for the plaintiff and the defendant must meet it; recitals may lose weight if suspicious circumstances appear. The court considered these principles but held that Raghavendra Rao did not justify reversing the lower appellate Court in this case because (a) defendant 1 was not the heir of the executant and (b) other suspicious circumstances appeared in the evidence that justified the lower appellate Court's finding that Ex. A lacked consideration.
Kumarappan Chetti v. Narayana Chettiar, [1916] 35 I.C. 455 The earlier view (attributed to Spencer, J.) that, with reference to subsequent mortgagees, the onus of proving consideration for a prior mortgage was on the prior mortgagee who sued to realize moneys due on his mortgage. The court noted that Raghavendra Rao disagreed with this earlier view. The present opinion relied on the more recent analysis but found that the factual distinctions in the present case (defendant not claiming as heir and presence of suspicious circumstances) meant the earlier-onus discussion did not require reversing the lower appellate Court.
Itishan Ali v. Jamna Prasad, A.I.R. 1922 P.C. 56 (Privy Council) The Privy Council observed: "The burden is on him and on people claiming under him to prove that what apparently happened did not happen." This reflects the rule that the executant and those claiming under him bear the burden of proving that apparent facts did not in truth occur. The court invoked this statement to explain the ordinary rule that the onus lies upon the executant and those claiming under him. The court then noted the factual distinction that defendant 1 was not the heir of the executant, which affected the application of this principle in the present case.

Court's Reasoning and Analysis

The court proceeded in two main strands of reasoning: (A) limitation (Section 19 Limitation Act) and (B) whether Ex. A was supported by consideration (including onus of proof).

(A) Limitation — Section 19 Limitation Act

The court agreed with the Subordinate Judge that the District Munsif was wrong in holding that an acknowledgment by a mortgagor in a benami sale deed executed by him in favour of a third person was not a proper acknowledgment of liability within the meaning of Section 19 of the Limitation Act. The court explained that the relevant inquiry is whether a particular document contains an acknowledgment of liability in respect of the debt now sued upon; the ulterior motive of the sale deed or the fact that it was not to take effect does not, in itself, make the document irrelevant for the purpose of the Limitation Act. On this basis the District Munsif's limitation finding was set aside.

(B) Consideration and Onus of Proof

The Subordinate Judge had nonetheless confirmed dismissal of the suit on the alternative ground that Ex. A was not supported by consideration. The appellate decision under challenge had stated that "The burden is certainly upon the plaintiff to show that the document is supported by consideration." The appellant relied on the recent decision in Raghavendra Rao (A.I.R. 1930 Mad. 251), which revised earlier authority (Kumarappan Chetti) and articulated that ordinarily, when execution of a document containing recitals is proved, the plaintiff makes out a prima facie case and it is for the defendant to rebut that case; recitals lose weight only if suspicious circumstances emerge.

The court examined Ramesam, J.'s observations in Raghavendra Rao and acknowledged that the general rule is that the onus of proving want of consideration falls upon the executant (or those claiming under him) once execution is proved. However, the court emphasized that the general rule applies particularly to executants and persons claiming under them (citing Section 102 of the Evidence Act and the Privy Council in Itishan Ali). In the present case, defendant 1 was not the heir of the executant and the mortgaged land comprised joint family property which passed to defendant 1 as a coparcener by survivorship — a factual distinction relevant to the allocation of onus.

More importantly, the court accepted that the record contained several suspicious circumstances which the Subordinate Judge and lower appellate Court legitimately took into account:

  • Although Ex. A recited that the whole consideration was paid in cash at the time of execution, the plaintiff admitted that Rs. 200 was paid before execution and Rs. 200 after execution (showing inconsistency with the recital).
  • The amount was allegedly borrowed to pay a person named Guruva Boyan according to the recital in Ex. A, but Guruva Boyan was not examined and no voucher from him was produced; while Ex. A did not obligate the plaintiff to produce such a voucher, the absence of this evidence was a circumstance diminishing confidence in the recital.
  • There was an endorsement on the back of Ex. A dated 22 October 1911 reciting a payment of Rs. 50; in the lower Court the plaintiff's pleader did not rely upon that endorsement and it was not asserted that the amount was paid at that time.
  • Karuppa Goundan executed a sale deed (Ex. B) for Rs. 900 to defendant 2, and that deed contained recitals as to the amount due under Ex. A but gave the amount incorrectly; those recitals tended to show that Ex. A might have been without consideration.
  • The plaintiff admitted he did not inquire whether the mortgagor had debts or whether there was a necessity for borrowing; such omissions added to the suspicious circumstances.

The court observed the well-known principle that the question of onus loses practical significance where both parties have adduced evidence: the trier of fact may decide on the totality of the evidence. Given the factual matrix and the suspicious circumstances identified and relied upon by the lower appellate Court, the present court concluded that relevant materials were available to the Subordinate Judge to find that Ex. A was not supported by consideration and had been executed to spite defendant 1.

Because that finding of fact (that the mortgage was not supported by consideration and was executed to spite defendant 1) was a conclusion open on the record and binding in a second appeal, the court dismissed the second appeal.

Holding and Implications

Holding: Appeal dismissed. The second appeal was dismissed with costs.

Implications:

  • The Subordinate Judge's reversal of the District Munsif on the limitation point (holding that the sale deed acknowledgment could constitute a proper acknowledgment under Section 19 of the Limitation Act) was accepted by this court.
  • However, the Subordinate Judge's conclusion (affirming the District Munsif's decree in substance) that Ex. A was not supported by consideration was sustained: the suit to realize the mortgage was therefore properly dismissed on the merits for want of consideration.
  • The decision rests on the factual findings and the presence of suspicious circumstances in the evidence; the court emphasized that distinctions of fact (e.g., that defendant 1 was not the executant's heir and the joint-family nature of the property) affected the application of general onus principles. The opinion does not purport to lay down a new, sweeping rule of law beyond its application to the facts of the case.

Order pronounced: "Appeal dismissed."

Show full summary ...

    Mariappa Goundan v. Palaniappa Goundan

    1. The plaintiff is the appellant in this second appeal. He sued to recover money due on a registered hypothecation bond, dated 23rd December 1910, Ex. A, executed by defendant l's paternal grandfather, Karuppa Goundan. The plea of defendant 1 was that the document sued on was not supported by consideration and that it was executed to spite defendant 1, and the particular reason for spiting defendant 1 was mentioned in the written statement and I do not think it necessary to mention the reason in this judgment. Issue 1 raised in the case was whether the mortgage sued on was true and supported by consideration. It was admitted that the property which was mortgaged to the plaintiff was the ancestral property of Karuppa Goundan, the mortgagor, and that defendant 1, as a coparcener, was also interested in that property. It is also admitted that defendant 1 was a major at that time. During the trial in the first Court the question arose as to the onus of proof. The District Munsif held that the onus of proof was on defendant 1, because the execution of the mortgage was proved and because there was an admission by the paternal grandfather of defendant 1 that the consideration was received. In considering the evidence in the case the learned District Munsif observed in para. 7 of his judgment that apart from the ipsa dixit of the plaintiff as P.W 1 there was no clear proof that consideration passed for the mortgage. But holding that the onus was upon the defendant to prove want of consideration he decided issue 1 in favour of the plaintiff.

    2. In the result however he dismissed the suit on the ground that the plaintiff's claim was barred by limitation, because in his view an acknowledgment by a mortgagor in a benami sale deed executed by him in favour of a third person of the existence and binding nature of the mortgage was not in law a proper acknowledgment of liability within the meaning of Section 19 of the Lim. Act. The plaintiff preferred an appeal, and on appeal the learned Subordinate Judge came to the conclusion that the District Munsif was wrong in his view on the question of limitation and I think he was right.

    3. In considering whether a particular document amounts to a proper acknowledgment within the meaning of Section 19 of the Lim. Act, all that one has to see is whether the document contains an acknowledgment of liability in respect of the debt now sued upon. The circumstance that the acknowledgment was contained in a sale deed executed by the debtor which was not to take effect at all or executed with an ulterior motive is not a relevant consideration in connexion which the question arising under the Limitation Act I therefore agree with the learned Subordinate Judge that the District Munsif was wrong in his view about limitation.

    4. The learned Subordinate Judge, however, confirmed the District Munsif's decree dismissing the suit on the ground that the mortgage-bond, Ex. A, was not supported by consideration. The learned advocate for the appellant urged that the lower appellate Court's view on the question of onus of proof was not correct, because in para. 3 of its judgment the lower appellate Court stated by saying:

    “The burden is certainly upon the plaintiff to show that the document is supported by consideration.”

    5. My attention was also drawn to a very recent case decided by Ramesam, J., and Jackson, J., Appeal No. 95 of 1925: Raghavendra Rao v. Venkataswami Naicken . A.I.R 1930 Mad. 251, where their Lordships disagreed with the view expressed by Spencer, J. in the case of Kumarappan Chetti v. Narayana Chettiar . [1916] 35 I.C 455. where that learned Judge decided in similar circumstances that with reference to subsequent mortgagees the onus of proving consideration for a prior mortgage was on the prior mortgagee who instituted a suit to realize moneys due on his mortgage. It was urged accordingly that the lower appellate Court's view apparently based on the decision in Kumarappan Chettiar v. Narayana Chettiar, is not sustainable having regard to the recent decision in Raghavendra Rao v. Venkataswami Naicken referred to. On reading the leading judgment delivered by Ramesam, J., in that appeal I find that the learned Judge disagreed with the reasoning of Spencer, J., in the case referred to above. The judgment contains a statement of the principles which have to be kept in view when considering the question of onus in particular cases. As I understand his Lordship's judgment it is stated that prima facie the onus of proof of want of consideration will be upon the executant of the document when once execution of the document is proved. Logically it will also be upon the heir of the executant in similar circumstances to prove that consideration did not pass, because when the execution is admitted and the document cites and acknowledges payment of consideration, then, if nothing else be known and no further evidence be let in, the mortgagee should succeed. Following the same line of reasoning his Lordship remarks that in the case of subsequent mortgagees also the same reasoning would ordinarily apply, but what exactly would be the stage in which the burden changes in any particular case, and what exact weight should be attached to other circumstances appearing either in the examination of the plaintiff himself, or other witnesses or otherwise, are not matters on which any invariable rule could be laid down applicable to all cases. His Lordship remarks:

    “It seems to me that in general, by which I mean where no other suspicious circumstances appear, the plaintiff by merely proving the execution of the document containing recitals must be taken to have made out a prima facie case, and it is for the defendant to meet that case by adducing evidence.”

    6. Further in the course of the judgment his Lordship further remarks:

    “Recitals in a document may lose their weight on account of other suspicious circumstances surrounding the execution of the document coming out in the evidence, but where there are no such suspicious circumstances I am unable to see how the weight can diminish because the defendant is other than the original executant.”

    7. Therefore, the decision in Appeal No. 95 of 1925, Raghavendra Rao v. Venkataswami Naicken, is no justification for my reversing the judgment of the lower appellate Court, unless I am satisfied that the other remarks contained in the judgment of Ramesam, J., do not apply to the case before me. In the first place the defendant is not the heir of the mortgagor (executant); the properties are not the self acquired properties of Karuppa Goundan, the executant, but joint family properties which came to defendant 1, a coparcener by survivorship. It is only with reference to executants and persons claiming under them that the general rule enunciated in that judgment would apply. That is also the provision of law contained in Section 102 of the Evidence Act. I may also refer to the remarks of their Lordships of the Privy Council in Itishan Ali v. Jamna Prasad . A.I.R 1922 P.C 56. This is what their Lordships say:

    “The burden is on him and on people claiming under him to prove that what apparently happened did not happen.”

    8. In addition to the fact that defendant 1 is not the heir of the executant we have also got some other circumstances appearing in this case. The lower appellate Court, while discussing this question, though it starts with the statement that the burden is certainly on the plaintiff to show that the document is supported by consideration, in the course of the discussion also remarks as follows:

    “Apart from the onus of proof there is no evidence at all to show the receipt of consideration for Ex. A.”

    9. The lower appellate Court first considers the recital in the document to the effect that the whole of the consideration was paid in cash at the time of the execution, whereas the plaintiff himself admitted that Rs. 200 was paid before execution and Rs. 200 after. Again the amount was borrowed for the purpose of paying Guruva Boyan according to the recital in the document. Guruva Boyan has not been examined, no voucher has been produced from him as regards the payment. No doubt, under the terms of the document, Ex. A the plaintiff is not bound to procure any voucher, but the examination of Guruva Boyan would be a circumstance in favour of consideration having passed with reference to Ex. A but he has not been examined. The plaintiff admits that he did not make any inquiry as to whether the mortgagor had any debts or as to the necessity for borrowing. The learned Subordinate Judge also remarks that there is an endorsement on the back of Ex. A dated 22nd October 1911, reciting a payment of Rs. 50. In the lower Court the plaintiff's pleader did not rely upon the said endorsement and it is not the case here that the amount was paid at the time.

    10. Further, as the learned Subordinate Judge remarks, the circumstance that defendant 1's grandfather executed a sale deed, Ex. B, for Rs. 900 to defendant 2 in which certain recitals were made as regards the amount due under Ex. A (the amount being incorrectly given) also tends to show that Ex. A was without consideration. He mentions other circumstances also which throw suspicion on the transaction and there are circumstances which could legitimately be taken into account in finding whether the onus, even if it be on defendant 1, had been discharged in the circumstances of the case. It is a well-known principle of law that the question of onus does not matter when both parties have let in their evidence in the case. On the circumstances appearing in the judgment of the lower appellate Court I cannot say that relevant materials were not available to it to come to the conclusion that the mortgage was not supported by consideration but that the same was executed with a view to spite defendant 1. That is the other ground on which the lower appellate Court justified the dismissal of the suit; and as I think that finding is binding upon me in second appeal I dismiss the second appeal with costs.

    P.R.S/S.N

    11. Appeal dismissed.

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    Comments

    Mariappa Goundan v. Palaniappa Goundan
    (Aug 23, 1929)