IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD FRIDAY, THE EIGHTEENTH DAY OF FEBRUARY TWO THOUSAND AND ELEVEN PRESENT THE HON'BLE SRI JUSTICE VILAS V. AFZULPURKAR SECOND APPEAL No.69 OF 2000 BETWEEN Abbisetti Krishnamoorthy. …APPELLANT AND Singasani Raghuramaiah (died) and three others. …RESPONDENTS Counsel for the Appellant: MR. GOPALA RAO GANDRAKOTA Counsel for the Respondents: MR. K.L. NARASAIAH The Court made the following: - JUDGMENT: This appeal is by the defendant arising out of a suit O.S.No.37 of 1986 filed by the plaintiff/respondent herein for recovery of money based on a pronote. The said suit was dismissed by the trial Court by judgment and decree dated 19.12.1988 but has been decreed by the lower appellate Court in A.S.No.22 of 1989 by judgment and decree dated 20.10.1992. Hence, this second appeal. 2. The facts, in brief, are as follows: (a) The respondent/plaintiff claimed that on 14.04.1985, the appellant/defendant borrowed a sum of Rs.20,000/- from the plaintiff and executed a pronote – Ex.A1 on the same day. It was alleged that the said amount is repayable with interest at 24% per annum on demand and in spite of repeated reminders the defendant failed to discharge the liability. Hence, the plaintiff issued notice – Ex.A2 dated 09.12.1985 but the registered cover was returned refused by the defendant as per postal endorsement – Ex.A3. The plaintiff, thereafter, has filed the present suit on 01.04.1986. (b) The defendant filed a written statement claiming that his wife was running chit business and in the course of the said business, she became indebted to several persons and in order to pay the creditors, the defendant had mortgaged his house in favour of the plaintiff and borrowed Rs.20,000/- on 27.10.1984. Later, as more money was required, the defendant again approached the plaintiff to borrow further amount and on executing second mortgage deed on 08.11.1984, the defendant borrowed further amount. However, with these two borrowings also he could not repay the entire amount and again approached the plaintiff and requested further loan of Rs.20,000/- to help his son in his business. The plaintiff was reluctant initially but later agreed to advance, but instead of obtaining third mortgage, the plaintiff desired the defendant to execute a pronote. The defendant, thereafter, executed the said pronote – Ex.A1 but after receiving the pronote the plaintiff stated that he required sometime to pay consideration, as he had already paid substantial amounts to the defendant and as such, believing the plaintiff, the defendant approached the plaintiff after a couple of days but the plaintiff evaded and thereafter, though the defendant approached the plaintiff several times, the promised amount was not paid. It is also alleged that defendant had also sent D.Ws.3 and 4 for demanding the amount but in spite of that the plaintiff did not pay the amount and on the contrary, agreed to pay the amount if defendant agrees to sell the mortgaged property to him for which the defendant was not agreeable, therefore, the plaintiff has filed the present suit. 3. It would be, thus, noticed on the above pleadings of the appellant/defendant that he denied passage of any consideration on execution of Ex.A1 pronote and as such, the trial Court framed the following issues for consideration: 1. Whether the suit pronote is not supported by consideration? 2. To what relief? 4. Plaintiff examined himself as P.W.1 and as stated above, marked Exs.A1 to A3 whereas defendant examined himself as D.W.1 apart from D.Ws.2 and 3, who are attestors of Ex.A1 and D.W.4, who was scribe of Ex.A1. 5. While the plaintiff in his evidence asserts that the pronote was duly supported by consideration and executed in the presence of D.Ws.2 to 4, the defendant as well as all his witnesses assert that no consideration was paid either on the date of execution of Ex.A1 or thereafter. The trial Court considered the oral and documentary evidence and came to the conclusion that the defendant has successfully rebutted the presumption attached to Ex.A1 and consequently, dismissed the suit. The lower appellate Court, however, on appeal has reversed the said decree by finding that the theory put forward by the defendant regarding the consideration being promised at a later point of time than that of Ex.A1 was not in conformity with his written statement. The lower appellate Court also felt that the oral evidence of D.Ws.2 to 4, who are all retired people meeting at the dispensary of D.W.2 and one of them being a relative of the defendant, was not creditworthy. It has, accordingly, held that the presumption under Section 118 of the Negotiable Instruments Act has to be drawn on Ex.A1 and consequently, the suit is liable to be decreed. 6. This Court admitted the second appeal on 27.04.2000 but the substantial question of law was not formulated. Therefore, the following substantial question of law is formulated under Section 100 (5) of the Code of Civil Procedure, 1908: “Whether the lower appellate Court was justified in thinking that the presumption under Section 118(a) of the Negotiable Instruments Act is available to the plaintiff notwithstanding the evidence of D.Ws.2 to 4?” 7. I have heard the learned counsel for the appellant, who has placed the entire oral evidence lead by the parties and has made detailed submissions in support of his case that Ex.A1 being not supported by consideration and the defendant having proved to the contrary, the presumption under Section 118 of the Negotiable Instruments Act was erroneously drawn by the lower appellate Court, in teeth of the categorical evidence of D.Ws.2 to 4. He also pointed out that the plaintiff himself reposed faith in D.Ws.2 to 4 and as such, merely because they are retired people, their evidence cannot be ignored by the lower appellate Court. He points out that D.W.2 is a RMP Doctor at whose dispensary, admittedly, the execution of Ex.A1 has taken place. The scribe and the attestors’ evidence fully support the defendant’s version that no consideration had passed on the date of execution of pronote and there is no evidence to establish that the plaintiff paid the said consideration at any time thereafter also. He, therefore, submits that the finding of the lower appellate Court is contrary to the evidence on record. He also points out that the pleadings of the defendant are misappreciated by the lower appellate Court and in spite of there being a specific pleading by the defendant that no consideration was paid on the date of execution of pronote, the lower appellate Court erroneously thought, as if there was no pleading on the part of the defendant. It is, therefore, contended that the lower appellate Court committed serious error in reversing the well considered the judgment of the trial Court. 8. There was no appearance on behalf of the respondents either on 28.01.2001 when the appeal was heard and at any time thereafter, though this appeal was posted for hearing the respondents on 29.01.2011, 10.02.2011 and 11.02.2011. I am, therefore, constrained to dispose of the appeal. 9. Section 118 of the Negotiable Instruments Act stipulates as under: “118. Presumption as to negotiable instruments. – Until the contrary is proved, the following presumption shall be made: - (a) of consideration – 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; (b) as to date – that every negotiable instrument bearing a date was made or drawn on such date; (c) as to time of acceptance – that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity; (d) as to time of transfer – that every transfer of a negotiable instrument was made before its maturity; (e) as to order of indorsements – that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon; (f) that holder is a holder in due course – that the holder of a negotiable instrument is a holder in due course. 10. A bare reading of the aforesaid provision shows that the presumption attached to passage of consideration (as is the subject matter of this appeal) just like other presumptions also is clearly rebuttable and it is for the defendant to satisfy the Court that in a given case, the presumption cannot be drawn in view of the contra evidence on record. In normal course, a pronote would be executed only on receiving consideration and therefore, a statutory presumption is attached in that regard. In a given case, like the present one, the defendant has pleaded that there were previous borrowings on two occasions by executing mortgage of his house in favour of the plaintiff and on the third occasion also when the plaintiff agreed to advance further amount of execution of pronote there was no reason for the defendant to doubt the capacity or the bonafides of the plaintiff. It is, therefore, the case of the defendant that he executed the pronote, as desired by the plaintiff and thereafter, the plaintiff expressed that he cannot advance the amount immediately but would give the money a little later. In view of the past transactions between the parties it is probable that the defendant had believed the plaintiff and executed the pronote and later accepted to receive the amount subsequently. The sole evidence of the defendant in support of the above pleadings would not perhaps be sufficient to displace the presumption but in the present case, we have the evidence of attestors as well as the scribe, who support the defendant’s case that no consideration was paid on the date of execution of Ex.A1 pronote. The said evidence together with the evidence of the plaintiff, therefore, has to be examined to answer the substantial question of law. 11. The aforesaid question was authoritatively considered by the Full Bench of this Court in G. VASU v. SYED YASEEN SIFUDDIN QUADRI[1] and the relevant para 31 is extracted as under: “3 1 . Having referred to the method and manner in which the presumption under Section 118 is to be rebutted and as to how, it thereafter “disappears”, we shall also make reference to three principles which are relevant in the context. The first one is connected with the practical difficulties the beset the defendant for proving a negative, namely that no other conceivable consideration exists. We had occasion to refer to this aspect earlier. Negative evidence is always in some sort circumstantial or indirect, and the difficulty of proving a negative lies in discovering a fact or series of facts inconsistent with the fact which we seek to disprove (Gulson, Philosophy of Proof, 2nd Ed. p. 153 quoted in Cross On Evidence, 3rd Ed. p. 78 fn). In such situations, a lesser amount of proof than is usually required may avail. In fact, such evidence as renders the existence of the negative, probable, may shift the burden to the other party (Jones, quoted in Sarkar on Evidence, 12th Ed. p. 870). The second principle which is relevant in the context is the one stated in Section 106 of the Evidence Act. That section states that when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. It is very generally stated that, where the party who does not have the evidential burden, such as the plaintiff in this case, possesses positive and complete knowledge concerning the existence of fact which the party having the evidential burden, such as the defendant in this case, is called upon to negative, or has peculiar knowledge or control of evidence as to such matters, the burden rests on him to produce the evidence, the negative averment being taken as true unless disproved by the party having such knowledge or control. The difficulty of proving negative only relieves the party having the evidential burden from the necessity of creating a positive conviction entirely by his own evidence so that, when he produces such evidence as it is in his power to produce, its probative effect is enhanced by the silence of the opponent (Corpus Juris Vol. 31 para 113). The third principle that has to be borne in mind is the one that when both parties have led evidence, the onus of proof looses all importance and becomes purely academic. Referring to this principle, the Supreme Court stated in Narayana v. Gopal [AIR 1960 SC 100] as follows: “The burden of proof is of importance only where by reason of not discharging the burden which was put upon it, a party must eventually fail. Where, however, parties have joined issue and have led evidence and the conflicting evidence can be weighed to determine which way the issue can be decided, the abstract question of burden of proof becomes academic”. We have referred to these three principles as they are important and have to be borne in mind by the Court while deciding whether the initial ‘evidential burden’ under Section 118 of the Negotiable Instruments Act has been discharged by the defendant and the presumption ‘disappears’ and whether the burden has shifted and later whether the plaintiff has discharged the ‘legal burden’ after the same was restored.” 12. In addition to the above the Honourable Supreme Court also considered this question in M.S. NARAYANA MENON v. STATE OF KERALA[2] and the relevant paras 33, 34 and 35 whereof are extracted below: “3 3 . A Division Bench of this Court in Bharat Barrel & Drum Manufacturing Company v. Amin Chand Payrlal [(19990 3 SCC 35] albeit in a civil case laid down the law in the following terms: “upon consideration of various judgments as noted hereinabove, 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 a consideration. Such a presumption is rebuttable. The defendant can prove the non- existence of a 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 it failure to prove would disentitle 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. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt…” 34. This Court, therefore, clearly opined that it is not necessary for the defendant to disprove the existence of consideration by way of direct evidence. 35. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on records but also by reference to the circumstances upon which he relies.” 13. Plaintiff, as P.W.1, states in his evidence that Ex.A1 pronote was executed at Badvel at the clinic of D.W.2 and that he paid the consideration to the defendant in the presence of D.Ws.2 to 4 and that D.Ws.2 and 3 have attested Ex.A1 whereas D.W.4 has scribed it. In the cross-examination P.W.1 states as follows: “…The entire transaction under Ex.A1 took place in the clinic of D.W.2. D.W.2 is not related to D.W.1 but he is a friend of D.Ws.3 and 4. I got D.Ws.2 and 3 attested Ex.A1 and D.W.4 scribed Ex.A1 because I got faith in them. It is not true to suggest that I did not pay the consideration under Ex.A1 to D.W.1 on the date of execution of Ex.A1 and I promised to pay the cash within one week…” It appears that the plaintiff’s evidence was recorded after defendants’ evidence, as the issue framed by the trial Court had put the burden of proof on the defendants. The plaintiff, therefore, was aware of the evidence lead by the defendants but has chosen to lead only his evidence and not of any other witness or any other evidence to establish passage of consideration on the date of Ex.A1. 14. The evidence of D.W.1 is in conformity with his pleadings where he states that the plaintiff did not pay any money on the date of execution of pronote but he asked D.W.1 to given him one week for payment of the money and D.W.1 agreed for the same. After one week, when D.W.1 met the plaintiff and asked for Rs.20,000/- the plaintiff did not pay and postponed it by one month. Subsequently also, though D.W.1 asked for money, the plaintiff did not pay. He also states that the plaintiff being related to D.W.1 through his mother, he did not issue any notice to the plaintiff but he sent D.Ws.3 and 4 to plaintiff to demand the payment of money but the plaintiff did not pay. D.W.1, further, states that the plaintiff later sent a person asking D.W.1 to sell the house then only he will pay the amount covered by the pronote for which D.W.1 did not agree, therefore, the present suit. 15. In the cross-examination D.W.1 stated that he did not suspect the plaintiff, as he is related, when he did not agree for his proposal to have third mortgage of his house. D.Ws.3 and 4 belong to Badvel. D.W.4 is his father- in-law and D.W.3 is not related to him but related to plaintiff. He also answered that out of confidence, he signed in the suit pronote even though the consideration was not paid. 16. D.W.2, doctor in whose dispensary Ex.A1 was executed and who is also one of the attestors, states that: “…The pronote was executed at my dispensary. One Narasaish scribed the pronote. Pagadala Subbaiah also attested the pronote. Plaintiff did not pay the consideration of pronote to the defendant in my presence at the time of 1st scribing. Plaintiff promised to pay the consideration of pronote to the defendant within one week. The scribe and the other attestor of the pronote used to come to my dispensary after its execution and they stated that the plaintiff did not pay the consideration under the suit pronote. In his cross-examination he states that: “…The scribe and the other attestors of the pronote frequently visited to my hospital because my hospital is on the way to the bazaar from their residences. Two days afterwards I asked the scribe of the suit pronote whether the consideration was paid or not. The scribe told me that the consideration was not yet paid and the plaintiff said that he will pay the consideration of the suit pronote to the defendant two days later…It is not true to say that the plaintiff paid the consideration of the suit pronote to the defendant and as the defendant is my friend I am giving false evidence to help him and cause loss to the plaintiff.” 17. D.W.3 is another attestor, who also supported D.W.2 in all respects. In the cross-examination he states that: “…I asked the defendant whether he received consideration or not. I did not protest for signing as attestor on the suit pronote as the consideration was not paid in my presence…I attested the pronote due to confidence on the parties even if the consideration was not paid before me…I asked the defendant’s father-in-law one week after execution of the pronote whether the plaintiff paid the consideration to the defendant or not. It is not true to suggest that I am giving false evidence…” 18. D.W.4, who is the scribe, admits that the defendant is his son-in-law and that he scribed the pronote but he says that the plaintiff did not pay consideration of the pronote to the defendant and said that he will pay the consideration within one week. He, thereafter, states that: “…As we all are related I kept confidence on the plaintiff’s words. Plaintiff did not pay the consideration of the suit pronote even after one week, though the defendant asked the plaintiff for paying the consideration…Defendant requested to go and ask the plaintiff for paying the consideration. I asked the plaintiff for paying the consideration 15 days after execution 4 or 5 times. Plaintiff said that he will pay the amount to the defendant If he mortgages his house to him…” In the cross-examination D.W.4 states that “ I have no dispute with the plaintiff…After I scribed the pronote the plaintiff told the defendant that he will pay the consideration one week later. As we are related we never obtained any letter from the plaintiff as a security…” 19. The above evidence on the part of D.Ws.2 to 4 fully supports the case of the defendant and after noticing the aforesaid evidence also, the plaintiff in his evidence states, as mentioned above, that he has kept faith in D.Ws.2 to 4. The onus of proving that no consideration passed on the date of Ex.A1 was, therefore, discharged by the defendant and the same shifted back to the plaintiff, but the plaintiff has examined only himself and has not produced any oral or documentary evidence to establish passage of consideration. The trial Court has rightly appreciated the aforesaid aspect but the lower appellate Court has ignored the said evidence of D.Ws.2 to 4 by giving a strange reason that they are all retired people and that their evidence is artificial. The above assumption of the lower appellate Court is not based on any material nor there is anything to discredit D.Ws.2 to 4 when plaintiff himself has faith in them. Even otherwise D.W.2 is a Doctor and he came to attest the document only because Ex.A1 was executed in his dispensary. I am unable to see any reason as to why D.W.2 would support the defendant against the plaintiff nor any reason to discredit D.Ws.3 and 4. The lower appellate Court also was not right in thinking that there are no pleadings on the part of the defendant and that he has tried to improve upon his written statement during the evidence. As stated in the opening paragraphs, the defendant has specifically pleaded that no consideration had passed on the date of execution of pronote and that plaintiff promised to pay after a week. I am, therefore, unable to see any lack of pleading on the part of the defendant. The lower appellate Court, therefore, committed serious error in reversing the well considered judgment of the trial Court and the findings of the lower appellate Court are contrary to the evidence on record and as such, have to be held to be perverse and liable to be set aside. The substantial question of law, therefore, is answered in favour of the appellant. The second appeal is accordingly allowed. The judgment and decree of the lower appellate Court is set aside and that of the trial Court is restored. As the respondent has not appeared, there shall be no order as to costs. _____________________ VILAS V. AFZULPURKAR, J February 18, 2011 DSK [1] 1987 (1) ALT 1 = AIR 1987 AP 139 [2] AIR 2006 SC 3366