R.S.A. No. 3234 of 2008 1 IN THE PUNJAB AND HARYANA HIGH COURT AT CHANDIGARH R.S.A. No. 3234 of 2008 (O&M) Date of Decision : 19.3.2009 Gurdial Singh .......... Appellant Versus Chand Singh ...... Respondent CORAM : HON'BLE MR. JUSTICE VINOD K. SHARMA Present : Mr. V.K. Shukla, Advocate for the appellant. **** VINOD K. SHARMA, J. (ORAL) This regular second appeal is directed against the judgments and decree dated 29.8.2007 and 5.4.2008 passed by the learned Courts below vide which suit filed by the plaintiff / appellant for recovery of Rs. 1,36,000/- on the basis of pronote and receipt dated 14.12.1999 has been ordered to be dismissed. The plaintiff / appellant brought a suit on the plea that defendant / respondent had taken a loan of Rs. 1,00,000/- on 14.12.1999 from the plaintiff and executed a pronote and receipt which was got attested from the witnesses. The defendant had promised to repay the loan amount along with interest @ 1% per month. However, on request and reminder the defendant did not make any payment of principal or interest, thus, it was R.S.A. No. 3234 of 2008 2 claimed that plaintiff was entitled to recover Rs. 1,00,000/- along with interest from the date of pronote and receipt dated 14.12.1999 with future interest till the date of realization. The suit was contested by the defendant on the plea that the alleged pronote and receipt were forged and fabricated documents as no consideration was passed on to the defendant. The pronote and receipt were said to have been prepared by the plaintiff in connivance with the attesting witnesses. Other objections qua maintainability were also raised. The learned trial Court decreed the suit by holding that as the defendant / respondent had admitted to his signatures on the pronote and receipt, therefore, presumption under Section 118 of the Negotiable Instruments Act was drawn against him, that the pronote and receipt was for consideration. However, in appeal the findings recorded by the learned trial Court have been ordered to be reversed by holding as under :- “11. After considering the rival contentions of learned counsel for the parties and also after going through the entire record I have arrived at a conclusion that the learned trial Court has erred in not appreciating the import of Section 118 of the Act comes into play that such execution was for consideration but such presumption is rebuttable. Once such presumption is rebutted mere execution of pronote is not sufficient to fasten liability to the defendant. In the present case, it is admitted case of the plaintiff and his R.S.A. No. 3234 of 2008 3 witnesses that no money was paid to the defendant at the time of execution of pronote Ex.P1 and receipt Ex.P2. Although execution of pronote is proved by the plaintiff but such presumption under Section 118 of the Act is rebutted from the evidence of the plaintiff itself. In a case titled Bharat Barrel and Drum Manufacturing Company Vs. Amin Chand Payrelal, 1999(2) RCR (Civil) 615, the Hon'ble Supreme Court of India recognized the findings of Full Bench of the Hon'ble Andhra Pradesh High Court in a case titled G.Vasu Vs. Syed Yaseen, AIR 1987 A.P. 139 (F.B.), in which it was observed as under :- “For the aforesaid reasons, we are of the view that where, in a suit of promissory note, the case of the defendant as to the circumstances under which the promissory note was executed is not accepted, it is open to the defendant to prove that the case set up by the plaintiff on the basis of the recitals in the promissory note, or the case set up in suit notice or in the plaint is not pure and rebut the presumption under S. 118 by showing a preponderance of probabilities in his favour and against the plaintiff. He need not lead evidence on all conceivable modes of consideration for establishing that the promissory note is not supported by any consideration whatsoever. The words 'until the contrary is proved' in S. 118 do not mean that the defendant must necessarily R.S.A. No. 3234 of 2008 4 show that the document is not supported by any form of consideration but the defendant has the option to ask the Court to consider the non-existence of consideration so probable that a prudent man ought, under that circumstances or the case, to act upon the supposition that consideration did not exist. Though the evidential burden is initially placed on the defendant by virtue of S. 118 it can be rebutted by the defendant by showing a preponderance of probabilities that such consideration as stated in the pronote, or in the suit notice or in the plaint does not exist and once the presumption is so rebutted, the said presumption 'disappears'. For the purpose of rebutting the initial evidence burden, the defendant can rely on direct evidence or circumstantial evidence or on presumptions of law or fact. Once such convincing rebuttal evidence is adduced and accepted by the Court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the plaintiff who has also the legal burden. Thereafter the presumption under S. 118 does not again come to the plaintiff's rescue. Once both parties have adduced evidence, the Court has to consider the same and the burden of proof loses all its importance.” R.S.A. No. 3234 of 2008 5 In these circumstances, the defendant of this case has been able to rebut such presumption under Section 118 of the Act by showing preponderance of probabilities in his favour and against the plaintiff. Although it was alleged by PW1 Nand Singh in his examination-in-chief that the defendant admitted before him to have already received such consideration but his this oral statement is totally contradictory to the contents of pronote Ex.P1 and receipt Ex.P2 according to which such amount was paid to the defendants by the plaintiff at the time of execution of both these documents. There is nothing in any of these documents that at the time of their execution defendant admitted to have already received such amount of the pronote. Once such consideration was not passed in the presence of the attesting witnesses at the time of execution of pronote Ex.P1 and receipt Ex.P2 and there is no reference in these documents about the admission of the defendant to have already received the amount, it is held that the defendant has remained successful to rebut the presumption under Section 118 of the Act from the aforesaid probabilities that no consideration was passed to him and such execution of pronote was without consideration. The learned trial Court failed to take note of such circumstances and, therefore, judgment and decree passed by the learned trial Court is not sustainable.” The learned counsel appearing on behalf of the appellant R.S.A. No. 3234 of 2008 6 contends that the appeal raises the following substantial questions of law for consideration by this Court :- 1. Whether the findings of learned Addl. District Judge, Moga is sheer misreading of oral as well as documentary evidence, which was inadmissible ? 2. Whether in absence of any evidence by the party (respondent / defendant ) the presumption of passing of consideration under Section 118 of the Negotiable Instruments Act can be said to have been rebutted especially when the execution of pronote and receipt has been duly proved by the appellant ? In support of the substantial questions of law the learned counsel appearing on behalf of the appellant vehemently contends that the judgment and decree passed by the learned lower appellate Court is outcome of misreading of evidence oral as well as documentary on record. The contention of the learned counsel for the appellant is that the execution of the pronote and receipt by the plaintiff by examining the attesting witnesses stood proved. The execution of the pronote and receipt has been admitted by the defendant, therefore, there was no occasion for the learned lower appellate Court to have reversed the finding of the learned trial Court by holding that the presumption under Section 118 of the Negotiable Instruments Act stood rebutted. R.S.A. No. 3234 of 2008 7 It is also the contention of the learned counsel for the appellant that in the present case the defendant / respondent led no evidence in support of his contention that the pronote was forged and fabricated document as alleged nor any evidence was led to show that there was no consideration for execution of the pronote and therefore the presumption under Section 118 of the Negotiable Instruments Act has been wrongly held to have been rebutted. On consideration of the matter, I find no force in the contention raised by the learned counsel for the appellant. The attesting witnesses of the pronote and receipt categorically admitted the fact that no consideration was passed on, in their presence, at the time of execution of the pronote and receipt. One of the witnesses stated that pronote and receipt had already been written when he reached there and were signed on the asking of the plaintiff. Once by way of evidence of plaintiff himself, it was proved that the pronote and receipt were without consideration there was hardly any need for the defendant to lead evidence to prove the negative, that the pronote was for no consideration. The view of the learned lower appellate Court is right, that the presumption under Section 118 of the Negotiable Instruments Act is rebuttable and in the present case it stood rebutted by the statements of the witnesses produced by the plaintiff himself. No evidence was led regarding payment of amount except the bald statement of plaintiff. R.S.A. No. 3234 of 2008 8 The finding of fact recorded by the learned lower appellate Court based on appreciation of evidence cannot be said to be outcome of misreading of evidence or perverse as contended. The substantial questions of law are answered against the appellant. No merit. Dismissed. 19.3.2009 ( VINOD K. SHARMA ) 'sp' JUDGE