IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 12.3.2008 C O R A M THE HONOURABLE Mr.JUSTICE C. NAGAPPAN Appeal Suit No.1376 of 1995 R.Kamalam 5/12, Kangeyam Road, Kodumudi Village, Erode Taluk, Periyar District. ... Appellant/Defendant -Vs- K.K.Kumarasamy S/o.Kuppusamy Gounder Kallipatti Kondayampalayam Village Gopichettypalayam Taluk, Periyar District. ... Respondent/Plaintiff Appeal against the judgment and decree dated 27.3.1995 made in O.S.No.200 of 1990 on the file of II Additional Subordinate Judge, Erode. For appellant ... Mr.R.Raja Raman for Mr.G.Rajan For respondent ... Mr.N.Manokaran JUDGMENT The defendant has preferred this appeal challenging the judgment and decree dated 27.3.1995 passed in O.S.No.200 of 1990 by the learned II Additional Subordinate Judge, Erode. 2. The respondent herein filed the suit seeking for a decree against the defendant for a sum of Rs.74,800/- with future interest and costs. The case of the plaintiff is that the defendant borrowed a sum of Rs.55,000/- from the plaintiff for her business and family expenses on 30.3.1987 and executed the suit pronote agreeing to repay the same with interest at 12% per annum https://hcservices.ecourts.gov.in/hcservices/ and the defendant did not repay any amount either towards principal or interest inspite of demand and the defendant was doing business and hence the interest was claimed at the rate of 12% per annum in the suit. 3. The defendant, in the written statement, has denied the plaint allegation that she borrowed a sum of Rs.55,000/- and executed the suit promissory note and stated that the suit promissory note was executed under the following circumstances by the defendant. According to the defendant, she and four others entered into a partnership deed under the name and style of 'Premier Steels' in May 1984 and purchased land at Thekkalur Village, Avanashi Taluk, Coimbatore and the defendant's share was 25% in the firm and the plaintiff, a close friend of the defendant's husband, expressed his desire to become a partner in the firm and the defendant's husband agreed to give half of her share i.e., 12.5% to the plaintiff and the value of 12.5% share was fixed at Rs.1,10,000/- and the partnership was re-constituted by taking the plaintiff as one of the partners in the firm in the month of November, 1985 and during the beginning of 1987, the plaintiff doubted the actual value of the land which was purchased in the name of the firm and felt his 12.5% is not worth to the value of Rs.1,10,000/- and he valued it at Rs.55,000/- and he wanted some record for the remaining Rs.55,000/- from the defendant and in view of close friendship, the suit promissory note was executed in favour of the plaintiff. The defendant has further stated that she did not receive any amount from the plaintiff on the suit promissory note and the same is not supported by consideration and no demand of payment was made. The defendant in her additional written statement has stated that when her signature was taken in the suit promissory note, it did not bear the signature of the second attestor, by name Devaraj and behind the back of her, the plaintiff has fabricated the suit promissory note by introducing the second attestor and the same is not valid in law and it is vitiated on the ground of fabrication. 4. The plaintiff, in his reply statement, has stated that the suit promissory note was written by the husband of the defendant in the presence of both the attestors and the defendant and the defendant admitted the contents of suit promissory note as correct and signed the same in the presence of witnesses and it is false to state that Devaraj, the attestor was not present at the time of execution of the suit promissory note and did not sign as attestor. 5. The Trial Court framed three issues and the plaintiff examined himself as P.W.1 and examined P.W.2 and marked Ex.A1 Promissory Note on his side and the defendant examined herself as D.W.1 and examined D.W.2 and did not adduce any documentary evidence on her side. On a consideration of oral and documentary evidence, the trial Court held that the suit promissory note is supported by consideration and the plaintiff is entitled for the relief sought for https://hcservices.ecourts.gov.in/hcservices/ and granted a decree for a sum of Rs.74,800/- together with subsequent interest at 6% per annum from the date of the suit till the date of realisation with costs. Challenging the same, the defendant has preferred the present appeal. For the sake of convenience, in this judgment, the parties are referred to as arrayed in the suit. 6. The Points for determination in this appeal are:- 1. Whether the suit promissory note is not supported by consideration and came to be executed in the circumstances stated by the defendant. 2. Whether the plaintiff is entitled for the suit claim. POINT NOS.1 AND 2: 7. The learned counsel for the appellant submits that the case of the defendant is that Ex.A1 promissory note was executed as security for the recovery of half of the investment of the share capital made by the plaintiff in the 'Premier Steels' business and the plaintiff, in the cross-examination, has admitted the share capital invested by the defendant in the said business and thus the defendant has shown by preponderance of probabilities there is no consideration in the manner pleaded in the plaint and the presumption under Section 118 of the Negotiable Instruments Act disappears and the plaintiff has not proved the consideration for the suit promissory note and hence the judgment and decree of the Trial Court are liable to be set aside. In support of his submission, the learned counsel for the appellant relies on a decision of the Full Bench of the Andhra Pradesh High Court in G.VASU v. SYED YASEEN SIFUDDIN QUADRI (AIR 1987 ANDHRA PRADESH 139) and the decision of the Apex Court in K.P.O.MOIDEENKUTTY HAJEE v. PAPPU MANJOORAN AND ANOTHER (AIR 1996 SUPREME COURT 3356). 8. Per contra, the learned counsel for the respondent submits that the defendant having admitted the execution of the suit promissory note, the presumption under Section 118 (a) of the Negotiable Instruments Act would arise that it is supported by consideration and the defendant has not adduced evidence to prove the circumstances upon which she relies to disprove the presumption and in any event, the plaintiff has let in evidence by examining the attestor to prove the passing of consideration under the suit promissory note and proved his case and hence the judgment and decree of the Trial Court are sustainable. In support of his submission, the learned counsel for the respondent relies on the decision of the Supreme Court in BHARAT BARREL v. AMIN CHAND PYARELAL (1999 (I) CTC 497 (S.C.). https://hcservices.ecourts.gov.in/hcservices/ 9. Ex.A1 is the suit promissory note, dated 30.3.1987, for a sum of Rs.55,000/- and the defendant has admitted the execution of the same in favour of the plaintiff. According to the defendant, Ex.A1 is not supported by any consideration and it came to be executed in the following circumstances and she has further stated that she along with four others entered into partnership under the name and style of 'Premier Steels' in May 1984 and purchased the land at Thekkalur Village and her share was 25% and the plaintiff being a close friend of her husband, expressed his desire to become a partner in the firm and the defendant's husband agreed to give half of her share i.e., 12.5% to the plaintiff, valued at Rs.1,10,000/- and the partnership was re-constituted by taking the plaintiff as one of the partners in the firm in the month of November, 1985 and in the beginning of the year 1987, the plaintiff doubted the actual value of the land purchased by the firm and he valued his share of 12.5% at Rs.55,000/- and wanted some record for the remaining Rs.55,000/- from the defendant and in view of the close acquaintance, she executed the suit promissory note in favour of the plaintiff without receiving consideration. 10. It is true that the plaintiff in his testimony as P.W.1, has admitted that he invested in the share capital of the firm, but he has denied that the suit promissory note was executed as a security for recovery of half of his investment. According to P.W.1, the partnership business transaction is entirely different from the suit transaction and independently, the defendant borrowed a sum of Rs.55,000/- as loan from the plaintiff and executed the suit promissory note. Since the execution of Ex.A1 promissory note was admitted by the defendant, the presumption under Section 118 (a) of the Negotiable Instruments Act would arise that it is supported by consideration and the burden is on the defendant to prove the non-existence of the consideration by bringing on record the preponderance of probabilities by reference to the circumstances upon which she relies. 11. The law in this regard is well settled. Their Lordships of the Supreme Court, while interpreting the presumption arising under Section 118 of the Negotiable Instruments Act, in the decision relied on by the learned counsel for the respondent and reported in 1999 (I) CTC 497 (S.C), referred to both the decisions cited by the learned counsel for the appellant mentioned above and have laid down the law as under:- " 14. Upon consideration of various judgments as noted herein above, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118 (a) would arise that it is supported by consideration. https://hcservices.ecourts.gov.in/hcservices/ Such a presumption is rebuttable. The defendant can prove the non-existence of consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would dis-entitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. .......... To disprove the presumption the defendant has to bring on record such facts and circumstances, upon consideration of which the court may either believe that the consideration did not exist or its non- existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist. We find ourselves in the close proximity of the view expressed by the Full Benches of the Rajasthan High Court and Andhra Pradesh High Court in this regard. 15. ......... 16. ......... Even though it is true that the plaintiff's evidence was not believed yet we are of the opinion that the same could not be made basis for rejecting its claim because obligation upon the plaintiff to lead evidence for the purposes of "to prove his case", could not have been insisted upon because the defendant has prima facie or initially not discharged his onus of proof by showing directly or probabilising the non-existence of consideration." 12. In the present case, the existence of the consideration, mentioned in the suit promissory note, was denied by the defendant with reference to the circumstances, which according to her, showed the non-existence of such consideration. According to the defendant, the plaintiff doubted the actual value of the land purchased by the firm and felt his 12.5% share is not worth of Rs.1,10,000/- he has invested in the share capital and he valued it at Rs.55,000/- and wanted some record for the remaining Rs.55,000/- from the defendant and hence she executed the suit promissory note. The defendant adduced only oral evidence by examining herself as D.W.1 and her husband as D.W.2 and she did not adduce any evidence to show that the plaintiff doubted the value of the land and the worth of his investment and he made the defendant to execute the promissory note as security for the half of his investment. In fact, the other partners of the firm have not been examined as witnesses and no https://hcservices.ecourts.gov.in/hcservices/ document has been marked to show the purchase as well as the value of the land. In short, the defendant has not substantiated her case that the suit promissory note came to be executed as a security for the half of the investment made by the plaintiff in the firm and she has failed to prove the circumstances upon which she relied. In the result, the defendant has not discharged the initial burden of proof by showing the non-existence of the consideration and the onus of proof of the legal presumption in favour of the plaintiff could not be shifted and there is no obligation upon the plaintiff to lead evidence to prove his case. 13. It is true that the plaintiff has produced evidence in the case and that evidence is in fact the evidence in rebuttal of the evidence produced by the defendant in the case. The plaintiff, besides examining himself as P.W.1, has examined one of the attestors of suit promissory note as P.W.2. P.W.2 was working as a Lecturer and he is well known to the defendant as admitted by her in her testimony. According to P.W.2, the plaintiff paid a sum of Rs.55,000/- to the defendant in the presence of himself, the other attestor and the husband of the defendant and the husband of the defendant viz., D.W.2-Palaniappan, wrote the suit promissory note and the defendant put her signature in it in their presence. The defendant, in her additional written statement, has disputed the presence of P.W.2 and has stated that the suit promissory note did not bear the signature of P.W.2 on the date of its execution and later, the plaintiff has fabricated the suit promissory note by introducing the signature of P.W.2 in it. The Trial Court has rightly disbelieved this contention of the defendant on the ground that she has not put forth such a contention at the earliest point of time in her original written statement and hence it cannot be believed. 14. The finding of the Trial Court that the testimonies of P.Ws.1 and 2 are acceptable and the plaintiff has proved that the suit promissory note is supported by consideration, is based on proper appreciation of evidence available on record. In view of the discussions made above, the plaintiff is entitled to the suit claim. The Point Nos.1 and 2 are determined accordingly. 15. There are no merits in the appeal and the same is dismissed with costs. sd/- Asst.Registrar /true copy/ Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ vks To 1. The II Additional Subordinate Judge, Erode. Copy to: The Section Officer, V.R.Section, High Court, Madras. +1 cc To M/s.N.Manokaran, Advocate, SR.14040 A.S.No.1376 of 1995 akr [co] gkg/21.4 https://hcservices.ecourts.gov.in/hcservices/