Case: Kundan Lal Rallaram Vs. Custodian, Evacuee Property, Bombay

2. One Abdul Satar Ahmedbhoy owned a factory known as Empire Tin Factory at Hathi Baug, Love Lane, Mazagaon, Bombay. On partition of the country he migrated to Pakistan. One Nathuram Ramaldas, a resident of Karachi, owned a shop there named Inidan Electric and Trading Company. Abdul Satar Ahmedbhoy and Nathuram Ramaldasagreed to enter into a transaction of exchange in respect of the said properties. For the purpose of exchange the Empire Tin Factory at Bombay was valued at a sum of Rs. 1,48,000/and the Indian Electric and Trading Company at Karachi was valued at Rs. 1,00,000/In respect of the balance of Rs. 48,000/payable by Nathuram Ramaldas to Abdul Satar Ahmedbhoy, the former paid to the latter a sum of Rs. 11,000/in cash and executed a promissory note dated December 24, 1947, in his favour for the balance of Rs. 37,000/On or about march 22, 1948, Abdul Satar Ahmedbhoy endorsed the said promissory note in favour of the appellant Kundan lal Rallaram. It is said that the said endorsement was made in consideration of the transfer of theof the appellants business in radios and gramophones in Karachi. On November 13, 1948, the appellant made a demand on Nathuram Ramaldas for the payment of the amount due under the promissory note, but Nathuram Ramaldas denied his liability Thereupon, having made a demand for payment on Abdul Satar Ahmedbhoy and having received his reply repudiating his liability. Nathuram Ramaldas filed a suit (No. 411 of 1950) in the High Court at Bombay against Abdul Satar Ahmedbhoy and the executant of the promissory note for the recovery of the amount due thereunder. Subsequent to the filing of the suit, the Deputy Custodian of Evacuee Property, Bombay, issued a notice dated September 23, 1950, to Abdul Satar Ahmedbhoy to show cause why he should not be declared an evacuee under the Administration of Evacuee Property Act. 1950 (Act XXXI of 1950) (hereinafter called the Act) The Deputy Custodian, by his order dated Oct 25, 1950, declared the said Abdul Satar Ahmedbhoy an evacuee under S. 2 (d)(I) and (ii) of the Act and the said promissory note as an evacuee property. The appellant filed a petition under S. 40 of the Act before the Custodian of Evacuee Property, Bombay for confirmation of the transaction of exchange whereunder he became the endorsee of the promissory note. The Deputy Custodian, by his order dated July 10, 1951, held that the endorsement of the promissory note was not bona fide or for valuable consideration and, on that finding, rejected the petition. The appellant filed an appeal against that order to the Custodian of Evacuee Property, Bombay, on August 10, 1951, and the same was dismissed on September 10, 1951. But theby his order dated December 7, 1955, in revision remanded the case to the custodian for further enquiry after giving the parties an opportunity to produce fresh evidence with regard to the genuineness or otherwise of the signature of Abdul Satar Ahmedbhoy to the endorsement. On remand, the Custodian, after considering the entire evidence placed before him, found that the transaction of exchange between Abdul Satar Ahmedbhoy and Nathuram Ramaldas was without consideration, though the endorsement on the reverse of the promissory note by Abdul Satar Ahmedbhoy in favour of the appellant was proved. On revision the Custodian General agreed with the Custodian that the endorsement was not supported by consideration and, on that finding dismissed the petition. Hence this appeal.

Court's reasoning:
Briefly stated, the burden of proof may be shifted by presumptions of law or fact, and presumptions of law or presumptions of fact may be rebutted not only by direct or circumstantial evidence but also by presumptions of law or fact. We are not concerned here with irrebuttable presumptions ofthree decisions lay down that it is the duty of a party to a suit in possession of important documents to produce them in court, and if that duty is not discharged the court may as well draw the presumption which it is entitled to do under S. 114 of the Evidencemerely can the Court base its conclusion on the effect of the evidence taken as a whole but it may also draw adverse inferences against a party who being in a position to adduce better evidence deliberately abstains from doing so; AIR 1917 PC 6, Guruswami Nadan v. Goplaswami Odayar, ILR 42 Mad 629   : (AIR 1919 Mad 444) and Raghavendra Rao v. Venkataswami Naicken, 30 Mad LW 966 at p. 971 : (AIR 1930 Mad 251   at p.respectifully accept the correctness of the saidthis case the appellant gave evidence before the Deputy Custodian. His evidence discloses the following facts : the appellant was doing business in radios and gramophones in Karachi in partnership with one Sarup Singh; he transferred his shop to his friend Iqbal Hussain with the consent of the landlord without consideration and thefor consideration to Abdul Satar Ahmedbhoy; he did not remember the name of the landlord whose permission he took before transferring the shop to Iqbal Hussain; he sold all his goods to Abdul Satar Ahmedbhoy who was a stranger to him and took from him a sum of Rs.in cash and took from him an endorsement in his favour of the promissory note for Rs. 37,000/executed by another who was also a stranger to him; he prepared a list of articles in the shop at the time of valuation, but the list was not produced; he admitted that he had accounts and that they might be in Delhi, but did not produce them; he stated that the whole business was managed by his partner, Sarup Singh, and though the partner is alive and in India, he did not examine him as a witness. The aforesaid evidence discloses the circumstances under which theof the appellant was transferred to Abdul Satar Ahmedbhoy and the promissory note was endorsed in his favour. It also establishes that the appellant had documentary evidence as well as oral evidence to prove that consideration passed but he wilfully withheld them. The said circumstantial evidence and the wilful withholding of the material evidence in the case would be legal evidence on the basis of which theheld that the presumption raised under s. 118 of the Negotiable Instruments Act wasl stated in his order ascannot be denied that prima facie a negotiable instrument which had been endorsed shall be taken to have been drawn for consideration. But if there is evidence to prove that there was no consideration for the endorsement then there can be no presumption to that effect. As I have set out above the evidence and the circumstances of the case negative the fact that the promissory note was endorsed for consideration.The proposition of law enunciated by theis correct and on the basis of the relevant legal evidence he held that the presumption was rebutted. The order of theis, therefore, correct both in law and in fact.