JUDGMENT V.D. Bhargava, J.
1. The two questions which have been referred to this Bench for decision are:
"1. Whether the presumption mentioned in Clause (a) of Section 118, Negotiable Instruments Act, 1881, can be invoked in insolvency proceedings where an alleged debt against the insolvent is called in question by the official receiver or by a creditor or by the insolvent?
2. If it can be invoked, would circumstances tending to make it doubtful that consideration passed under the negotiable instrument, even though coupled with a denial on the part of the maker of the instrument, suffice to deprive the creditor of the benefit of the presumption and inquire him to prove by evidence that consideration did actually pass?"
2. I had the advantage of going through the judgments of my brothers Agarwala and Desai, JJ. On the first question I am inclined to agree with my brother Desai, J. and I would only add a few words.
3. Section 118, Negotiable Instruments Act appears in Chapter 13 of the said Act which is headed "Special Rules of Evidence". This, to my mind, means that so far as general rules of evidence are concerned they are abrogated and this chapter should be deemed to be engrafted on the law of evidence so far as negotiable instruments are concerned. There is nothing in the section to suggest that this procedure of proof will apply only between the parties.
The presumption mentioned in Section 118 attaches to the instrument because it has been made negotiable and the custom of trade demanded it. The Negotiable Instruments Act, as its preamble shows, was passed with the object of defining and amending the law relating to promissory notes, bills of exchange and cheques.
It was not with the object of laying down any procedure relating to mercantile law, but it was the law of promissory notes, and, therefore, wherever that promissory note might be produced, it would go with the qualification as attached to it by the Negotiable Instruments Act. Actually this is not a presumption which had been prescribed by the Negotiable Instruments Act only. Section 114, Evidence Act, Illustration (c) enacts:
"A Court may presume a bill of exchange accepted or endorsed, was accepted or endorsed for good consideration."
The only difference between Section 114, Evidence Act and Section 118, Negotiable Instruments Act is that while the Evidence Act has used the word "may", Section 118 Negotiable Instruments Act has used the word "shall".
The inferences in the illustrations contained in Section 114: Evidence Act include all those natural inferences which the common course of natural events, human conduct and public and private business suggest to us, and if the presumption of consideration in the case of promissory note has been treated as such in Section 114, the Court will ordinarily presume the promisspry note to be for good consideration.
The difference, as has been pointed out in Section 4, Evidence Act, between "may presume" and "Shall presume" is that in the former the Court shall regard such fact as proved unless and until it is disproved or may call for proof of it, while in the latter the Court shall presume the fact as proved unless and until it is disproved. Thus, so far as, the right of the other side to disprove is concerned, it is there in both cases.
It cannot be doubted that presumption under Section 114 will apply to insolvency proceedings. Even under Section 114, Evidence Act if the Court accepts the promissory note as for consideration no objection could be taken and I can see no reason why this law of Negotiable Instruments Act should be confined only to suits between the parties and should not be made applicable to insolvency proceedings.
4. In Section 118, this is not the only presumption, but there are other presumptions also and from the nature of these presumptions it cannot be said that they should not apply, in case the instrument is filed in insolvency proceedings. A promissory note or a 'hundi' which is a negotiable instrument in the market had to be protected and given special sanctity. It was for this purpose that the usage and custom of trade demanded this, rule of evidence, in respect of negotiable instruments.
This presumption was necessary because when the document was made negotiable, the transferee would not be safe if that presumption had not been attached to it. If, 'the holder in due course', has obtained a negotiable instrument, on the belief that it was for consideration, it will not be fair to him, later on, to call upon him to prove consideration of the same.
5. It is significant to note that while presumption and estoppels under Sections 119 to 122 are limited in terms to a "suit upon the instrument", section 118 is not so limited and if in one chapter from one section these words are missing, while in the other four, they occur, it means that the legislature intentionally did not want to confine this presumption only to suits based on the 'instrument', but that this presumption was to apply generallv. In -- 'Narayana Rao v. Venkatapayya', 1937 Mad 182 (AIR V 24) (A), a bench of that Court observed as follows :
"Though this section is not like Sections 119-122 limited in terms of a "suit upon the instrument", it seems only reasonable to hold that the special rules of evidence as laid down in Section 118 must have been intended to apply only as between the parties to the instrument or those claiming under them."
6. With respect, I am unable to agree with the observations made therein. When an Act uses particular words in some sections, and omits to use them in the following sections, it is safer to presume, that the omission is deliberate, than that it, is due to forgetfulness or made per incuriam.
It would be supplying, in any case, a defect which the legislature could easily have supplied, and in that event, we would be making a law and not interpreting it. It, cannot be said that the words, "suit upon an instrument", were not known to the legislature at the time when the Act was passed as they have used those words in the following sections and, therefore, it must be supposed to have been omitted intentionally.
"No case can be found that authorises any Court to alter a word so as to produce a 'casus omissus'", said Lord Halsbury in -- 'Mersey Docks v. Hendenson', (1888) 13 AC 595 (B). In --'Leader v. Duffey', (1888) 13 AC 294 (C), it was said by Lord Halsbury:
"It is arguing in a vicious circle to begin by assuming an intention, apart from the language of the instrument itself and having made that fallacious assumption to bend the language in favour of the assumption so made."
7. Every statute is to be expounded according to the intent of the legislature that made it, arid the intent of the legislature can best be gathered from the words used therein. Omission in a statute is not to be lightly inferred. We cannot change the meaning, on the ground of reasonableness, propriety or the general public policy. The duty of the Court is not to make a law reasonable, but to expound it as it stands according to the real sense of the words.
8. There was nothing easier for the legislature than to put those words in Section 118, also when they had inserted those words in the othe four sections. To my mind, if the legislature deliberately omitted those words it will not be proper to confine the section to suits on promissory notes only. Reading Chapter 13, Negotiable Instruments Act as a whole and comparing the different sections contained therein it is clear that the operation of Section 118 cannot be confined to suits on the basis of promissory notes between the parties to the instrument.
9. Section 118 does not say that a debt is proved, but it only raises a presumption in favour of the consideration being there, and, if any other suit, in the absence of any evidence to the contrary, can be decreed on the basis of the presumption I fail to see why, if in insolvency proceedings a promissory note is produced, the debt should not be accepted in the absence of any evidence to the contrary.
The question, as to what amount of evidence will be necessary to rebut that presumption, will be a question Of fact, varying in different cases. But, in case the debtor or the other creditors do not produce any evidence against consideration having been given, the presumption under Section 118 ought to prevail, and the promissory note should be deemed to be for consideration.
It is true that in insolvency proceedings the official receiver represents both the interest of the debtors as well as of the creditors; but in that capacity in the absence of any evidence he cannot be permitted to doubt the 'bona fides' of the creditors, who had advanced money on the basis of a promissory note.
10. The only rule of proof in the Insolvency Act is contained in Section 49, Provincial Insolvency Act and that requires only an affidavit of the creditor. If the debt of a creditor is merged into a decree, he files the decree before the receiver. In the absence of any proof that, that decree was obtained by fraud or collusion, ordinarily, that decree is accepted.
Similarly if a promissory note is filed before the receiver it should be accepted unless the want of consideration has been established. A decree passed by a competent Court can be challenged in insolvency proceedings, but ordinarily no proof of the decree is required beyond the filing of the decree, unless there be doubtful circumstances; and, I think, the same considerations will apply in the case of a promissory note.
11. It is true that in -- 'Ex Parte Lennox; in Re. Lennox', (1885) 16 QBD 315 (D), it was held:
"The Count of Bankruptcy has power to go behind a judgment and inquire into the consideration for the judgment debt, not only at the instance of the trustee in the bankruptcy of the debtor upon the question of the proof of the debt, but also at the instance of the judgment debtor himself upon the hearing of a petition by the judgment creditor for a receiving order, even though the debtor has consented to the judgment;"
It was further held :
"If on the hearing of the petition facts are alleged by the debtor, of which no evidence is tendered, and which, if proved, would shew that, notwithstanding the judgment, there is, by reason of fraud or otherwise, no real debt, the Court ought not to make a receiving order without first inquiring into the truth of the debtor's allegation."
This case was considered in -- 'In Re, Platau; Ex Parte Scotch Whisky Distillers Ltd.', (1889) 22 QBD 83 (E). A question arose in that case whether the Court was bound to decide the question again even though a judgment had been obtained and Esher, M. R. held :
"It is not necessary to repeat that, when an issue has been determined in any other Court, if evidence is brought before the Court of Bankruptcy of circumstances to shew that there has been fraud, or collusion, or miscarriage of justice, the Court of Bankruptcy has power to go behind the judgment and to inquire into the validity of the debt. But that Court of Bankruptcy is bound in every case as a matter of course to go behind a judgment is a preposterous proposition. There is no statute which imposes any such obligation on the' Court of Bankruptcy."
12. Fry, L.J. agreed with the observation made by the Master of Rolls in -- 'In Re, Saville', (1887) 4 Morr 277 (F), at page 279 :
'It seems to me that the case of (1885) 16 QBD 315 (D), shows that the mere fact of a judgment having been recorded does not, prevent the Court of Bankruptcy, if sufficient reasons are given for doing so, from going behind the judgment. But it does not decide that there being a judgment, on the mere suggestion of the debtor that the judgment is bad, the Court of Bankruptcy is bound to go behind the judgment and inquire into the validity of the debt."
And as in that case, no sufficient cause had been shown to call upon the Registrar to inquire into the validity of the debt, the judgment was accepted.
13. The case of -- 'Ex Parte Kibble; In Re, Onslow', (1875) 10 Ch A 373 (G), is a case where the Court of Bankruptcy went into the validity of the judgment. But that was a case where an 'ex parte' judgment was obtained. In that case an infant had given a bill of exchange payable after his majority to a jeweller in payment for jewellery. After'his majority the creditor obtained judgment 'ex parte' in an action on the bill of exchange and then took out a debtor's summons and on his failing to comply with it filed a petition for adjudication against him.
It was, on these facts, held that the Court of Bankruptcy could go into the question of consideration for the judgment. Even the Court which passed the decree, should not have passed the decree because under the Infants Relief Act a minor could not be liable, even on his attaining majority, for the debt incurred by him during his minority. That case would stand on a different footing.
14. Arguments were advanced that this presumption would not be binding on the insolvency Court on the ground that if a decree of a Court is not binding much less would this presumption be binding.
15. An ordinary decree of a Court is actually not binding on any Court. Section 40, Evidence Act enacts :
"The existence of any Judgment, order or decree which by law prevents any Court from taking cognizance of a suit or holding a trial, is a relevant fact when the question is whether such Court ought to take cognizance of such suit or to hold such trial."
16. In other words, it refers to Section 11, Civil P. C. by virtue of which no court is to try any suit in which a matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, has been heard and finally decided. If there was no Section 11, Civil P. C., the judgment would not have been binding at all.
Section 40 touches the question only to this extent, that it makes a previous judgment relevant in order that the adjective law or law procedure may be given effect to by showing that the existence of a previous judgment is a par to a second suit. A judgment would not be otherwise binding under any law. It is only judgments 'in rein' which are mentioned in Section 41, Evidence Act that are binding. The case of a promissory note stands on a higher footing, because it is by, virtue of a provision of law that that presumption arises.
Apart from this fact, any judgment can be challenged by anyone including a party to a suit on the basis of fraud or collusion by virtue of Section 44, Evidence Act and it is usually only under these circumstances that even an insolvency Court goes behind a judgment or a decree. The Courts of Bankruptcy or insolvency Courts in India have as a general rule not gone behind a decree unless it was alleged and evidence given to the effect that either the decree was obtained by fraud or collusion or the decree itself could not be passed by the Court which passed the decree on account of some legal flaw.
17. As ordinarily, a decree is always binding unless there are circumstances justifying interference, on the same analogy, it can be said that the presumption would prevail unless the other creditors, the receiver or the debtor himself, is able to show circumstances, and rebut that Presumption of consideration. It cannot be doubted that the Bankruptcy Court has jurisdiction to go into the nature and validity of a debt.
But merely on that ground it cannot be said that the procedure laid down in Section 118 should not be followed by the Insolvency Court. Section 118 only prescribes the manner of approach in deciding the question, whether the promissory note was for consideration or not, and it will be open to the Court, if satisfied, even on very meagre evidence to hold that that presumption has been rebutted.
But if there is absolutely no evidence to the contrary and the only evidence before an insolvency Court is the promissory note executed by a debtor and no suggestion is made either by another creditor or by the receiver or even by the debtor, there seems to be no reason why that promissory note should not be given effect to.
18. I am, therefore, of opinion that the first question must be answered in the affirmative.
19. On the second question, I regret I am unable to agree with my brother Desai J. Without expressing any final opinion, I would say that, if the question related to an ordinary suit, probably I would have agreed with him. But the question referred to us, not only relates to insolvency proceedings, but is confined to proceedings in the insolvency Courts I think the insolvency Courts can, on lesser evidence, regard the presumption as displaced.
The Insolvency Courts stand on a little different footing from the ordinary Courts where a suit may be filed on the basis of a promissory note. The ordinary Courts decide a suit between the parties, and, even if a promissory note has been passed without consideration, since it was accepted by the debtor, he may be bound by it.
On the other hand, the object of an Insolvency Court is to procure proper distribution of the debtor's money to his just creditors and, therefore, it can require a greater degree of proof for establishment of debt, or, in other words, if a promissory note has been filed and the creditor relies merely on presumption, it may require, a lesser amount of proof to come to the conclusion that that presumption has been dislodged and in that event, unless the creditor is able to satisfy the insolvency Court, not only by mere production of the promissory note, but by other evidence, the Court can treat the presumption as rebutted on a much lesser evidence than as would be required in a suit between the parties.
20. The scheme of the Insolvency Act prescribes special procedure and Insolvency Courts under Section 50, Provincial Insolvency Act have been given power to expunge any debt and they have been given special power of enquiry. That enquiry is to be made when there are allegations made against a debt being of a genuine nature.
Whether those debts are debts which have merged into a decree or are debts on a promissory note, if there are sufficient circumstances, which made it doubtful it would clearly be a case under Section 50 for enquiry, and if it comes to that stage the Court, in my opinion, can call upon a creditor to prove his debts by further evidence than the mere production of the promissory note itself.
21. Again Sections 51-55, Provincial insolvency Act occur under the sub-heading "Effect of Insolvency on Antecedent Transactions". a reading of those sections makes it quite clear that in certain circumstances an insolvency Court presumes certain transactions as not binding on the receiver. Any transaction within three months giving preference to a creditor shall be deemed to be fraudulent and void. If a transaction has been entered into within two years before the presentation of a petition the burden of proof of good faith and valuable consideration has been specially placed on the creditor.
Under Section 4 Insolvency Act the insolvency Courts have been given very wide power to challenge transactions which probably ordinary Courts are not entitled to go into. Therefore, I am of opinion, that doubtful circumstances In insolvency proceedings may deprive a creditor of the benefit of presumptions and require him to prove by evidence that consideration did actually pass.
22. While considering the first question I had made reference to the case of (1885) 16 Q.B.D. 315 (D)', wherein it is said that if facts are alleged by the debtor, which if proved, would show that, notwithstanding the judgment, there is, by reason of fraud or otherwise, no real debt, the Court ought not to make a receiving order without first enquiring into the truth of the debtor's allegation.
Therefore, if the Courts have reasonable doubt, on the circumstances placed before it, that the promissory note was obtained by fraud or collusion, or was not actually for consideration, it would clearly be a case where the insolvency Court can say, in the absence of any further evidence on behalf of the plaintiff, that the presumption has been disproved.
23. There is no case which has been cited at the bar and I have also not been able to find any case where this question had arisen in connection with Insolvency proceedings. The cases that have been referred to at the bar are all cases based on promissory notes in suits between the parties. I have already held that the presumption exists even in the case of insolvency proceedings, but I would hold that that presumption is weak in the case of insolvency proceedings.
The quantum of evidence required for the displacing or' that presumption may be far less than what may be necessary in ordinary proceedings. The insolvency Court will, in the first instance, proceed with the presumption that the promissory note was for consideration. The creditor at that stage need not give any further evidence. If any other creditor or the defendant gives any evidence of the circumstances which can reasonably create a doubt or establish the presumption as displaced, then it is for the creditor himself, who relies on the basis of the promissory note to give further evidence.
Alter the further evidence has been given the insolvency Court will weigh the presumption plus further evidence on one side and the evidence against it on the other and then it would come to a conclusion, whether it has been proved or not, that the promissory note was for consideration. The advantage of the presumption is that initially the creditor will not be called upon to lead evidence.
But once evidence is led by the opposite party making the transaction doubtful, the Court can require further evidence from the creditor to establish that the promissory note was for consideration.
24. I would, therefore, answer this question in the affirmative.
Agarwala, J.
25. The following two questions have been referred to this Bench for decision:
"1. Whether the presumption mentioned in Clause (a) of Section 115, Negotiable Instruments Act, 1881, can be invoked in insolvency proceedings where an alleged debt against the insolvent is called in question by the official receiver or by a creditor or by the insolvent?
"2. If it can be invoked, would circumstances tending to make it doubtful that consideration passed under the negotiable instrument, even though coupled with a denial on the part of the maker of the instrument, suffice to deprive the creditor of the benefit of the presumption and require him to prove by evidence that consideration did actually pass?"
Section 118, Negotiable Instruments Act runs as follows--.
"Until the contrary is proved, the following presumptions shall be made:
" (a) that every negotiable instrument was made or drawn for consideration."
26. In answering the first question one must have regard to the nature of insolvency proceedings and the object behind the enactment, of Section 118, Negotiable Instruments Act. The object of the bankruptcy laws is to procure a just distribution of a debtor's goods among his honest and bona fide creditors (per Cotton L. J., in (1885) 16 QBD 315 (D) at p. 326) and the Bankruptcy Court must be satisfied about the existence of the debt before it can either issue the order of bankruptcy or hold that a certain debt exists.
An insolvency proceeding is a proceeding in rem. The rights of all the creditors of the debtor are involved. The proof of debts due to an Individual creditor is to be adjudged not only as against the debtor but also as against all other creditors. The receiver in insolvency represents not merely the debtor tout all the creditors. Any presumption in favour of the existence of a debt which may apply as between a particular creditor and a debtor may not necessarily apply as against all other creditors of the debtor.
The scheme of the Insolvency, Act bears out these propositions, under Section 19 of the Act where the insolvency petition is admitted notice is given to all the creditors. Under Section 25 the Court is directed to dismiss the petition where the petitioner is a creditor and the Court is not satisfied of the proof of his right to "Present the petition, or where the petitioner is the debtor himself, the Court is not satisfied about his right to present the petition.
Under Section 33 when an order of adjudication has been made the creditors are directed to tender proof of their respective debts by producing evidence of the amount and particulars thereof and the Court is then directed to determine the persons who have proved themselves to be the creditors of the insolvent and the debts due to them and to frame a schedule of such persons and debts.
In these proceedings every creditor has a right to object to the debt of any other creditor, vide
-- The Allahabad Bank Ltd. v. Murlidhar', 34 All 442 (H), Section 50 provides for a case where at first a debt has been entered in the schedule but later on on she objection of the receiver or a creditor or the debtor it is expunged after an enquiry.
27. Because an Insolvency Court has to find the debts which are really due 'from the debtor both at the stage of making of the order of adjudication as also at the time of preparing the schedule of creditors and debts, it has been given the power of going behind admissions of the debtor and even the judgments of Courts in respect of a particular debt, vide (1886) 16 QBD 315 (D); (1889) 22 QBD 83 (E); -- 'In re, Praser; Ex parte Central Bank of London', 1892-2 QB 633 (I);
-- In re, Van Laun; Ex Parte, Chatterton', (1907) 1 KB 155 (J). As Mulla has observed in his Law of Insolvency at page 121, "the debtor himself may be estopped from denying the debt, but there is no estoppel as against An Insolvency Court. There are obviously strong reasons for this, because the object of the bankruptcy Jaws is to procure the distribution of a debtor's estate among his just creditors.
It a judgment were conclusive, a man might allow any number of judgments to be obtained against him by his friends on relatives without any being due to them at all, it is therefore necessary that the consideration of the judgment debt should be liable to investigation", vide (1875) 10 Ch A 373 (G), at pp. 376-377.
This enquiry may be made not only at the Instance of the Official Assignee or Receiver, but also at the instance of the debtor, vide (1885) 16 QBD 315 (D).
28. The same reasoning will, in my judgment, apply to the case of a negotiable instrument. Section 118, Negotiable Instruments Act which raises a presumption of proof of consideration for the negotiate instrument cannot override the powers of the Insolvency Court in demanding such proof of the debt from the creditor as would satisfy the conscience of the Court that the debt is really due. The Insolvency Acts throw the burden of proving the debt upon the creditor irrespective of any admission, act or conduct of the debtor.
The mere fact that the debtor has executed an instrument does not amount to a proof of the debt and the same must be duly proved by the creditor before the Court of Insolvency will admit it and eater it in the schedule or pass an order of adjudication on its basis. If this were not so, the debtor might execute any number of pronotes or bills of exchange in favour of his friends or relatives without any debt being due to them at all. If this were allowed to be done, it, may work injustice on the other creditors for they or the official receiver not being conversant with the affairs of the debtor may not be able to prove that no real debt existed. This was the view taken in the case of -- 'Ram Lal v. Koshi Charan', 1928 All 380 (AIR V 15) (K), and in my opinion that case was correctly decided.
29. It should be remembered in this connection that Section 118, Negotiable Instruments Act relates to a negotiable instrument and raises a Presumption that it was executed for consideration. It does not raise any presumption as to the nature or quantum of the consideration. The Insolvency Act on the other hand requires proof of the debt, its nature arid extent. The presumption mentioned in Section 118 cannot therefore furnish proof of the debt as required by the insolvency law.
30. There is another aspect from which the matter may be approached. The Negotiable Instruments Act is intended to codify the law of merchants regarding dealings upon negotiable instruments. It refers to ordinary mercantile transactions occurring between the maker of a negotiable instrument and its acceptors or holders from time to time. All its provisions relate to these dealings.
The presumption raised under Section 118 occurs in Chapter 13 which relates to special rules of evidence relating to negotiable instruments. Having regard to the fact that the Act itself codifies the law for the purposes of dealings relating to negotiable instruments the presumptions embodied in Section 118 must in their very nature have reference to parties to a negotiable instrument, and the presumption raised under the section must apply when the question arises between those parties.
The question whether a negotiable instrument was made or drawn for consideration is a matter, between the maker or drawer of the instrument and the person in whose favour it is drawn or the acceptor, endorser, negotiator or transferee thereof. The question of consideration in ordinary mercantile transactions does not arise between the parties to the instrument and a stranger who has no connection with it. It is only in insolvency proceedings where the assets of a debtor are to be distributed amongst his various creditors that such a question arises.
I have no doubt that the Legislature was not thinking of insolvency proceedings in enacting Section 118, Negotiable Instruments Act. Sections 119 to 122 deal with other presumptions relating to suits upon a negotiable instrument. The presumption under Section 118 is not confined to suits on negotiable instruments but is applicable to dealings upon them between party and party, but the presumption cannot be extended to bind strangers to a negotiable instrument who might have occasion to challenge its consideration.
The presumption raised under Section 114, Illustration (c), Evidence Act, however, is applicable to all cases and is not confined to suits or dealings upon negotiable instruments, but the presumption under Section 114 is only discretionary. The Court may or may not make it according to the circumstances of each case. This view finds support from the decision in 1937 Mad 182 (AIR V 24) (A), where Vardachariar J. (as he then was) observed :
"Though this section (i.e. Section 118) is not, like Sections 119 to 122, limited in terms to a 'Suit upon the instrument', it seems only reasonable to hold that the 'other rules of evidence' laid down in Section 118 must have been intended to apply only as between the parties to the instrument or those claiming under them. In other cases the presumption can only be in the terms enacted in Section 114, Evidence Act, which by the use of the expression 'may presume' leaves it to the Court to apply the presumption or not according to the circumstances."
The learned Judge was Sealing with a suit upon a negotiable instrument executed by the father against his undivided sons and he held that the presumption under Section 118 did not apply to the case.
31. The argument that the words of Section 118 are absolute and are not confined to suits or deal-
Ings upon negotiable instruments 'and that they are applicable to all cases wherever the question of consideration of a negotiable instrument falls to be determined is, in my judgment, untenable.
It is settled law that a provision of an enactment must be read in the light of the entire scheme and purpose of the enactment.
"The true meaning of any passage, it is said, is to be found not merely in the words of that passage, but in comparing it with other parts of the law, ascertaining also what were the circumstances with reference to which the words were used, and what was the object appearing from these circumstances which the Legislature had in view. It is an elementary rule that construction is to be made of all the parts of an enactment together, and not of one part only by itself.
Such a survey is often indispensable, even when the words are the plainest, for the true meaning of any passage is that which (being permissible) best harmonises with the subject and with every other passage of the Statute" (vide Maxwell, 10 Edition, page 20 and pp. 28 and 29).
32. Section 118, Negotiable Instruments Act cannot be read except in tune with the entire scope and object of the Act and the broad words of Section 118 must be limited to that scope and object.
33. I am, therefore, of opinion that the first question must be answered in the negative. -
34. In view of my answer to the first question the second question does not arise, but as the question has been referred it has to be answered and in my opinion it should be answered in the affirmative. In answering this question in this way I have assumed that the question arises in insolvency proceedings.
If the question arose in an ordinary suit my answer would have been in the negative because in my view the Lahore High Court decision in --'Bannu Mal v. Munshi Ram', 1935 Lah 599 (AIR V 22) (L), ought to be preferred over the decision in -- 'Moti Gulab Chand v. Mahomed Mehdi', 20 Bom 367 (M), and the cases following it namely
-- 'Sundarammal v. Subramanya Chettiar', 1916 Mad 278 (AIR V 3) (N); -- 'Sami San v. Parthasarathy Chetty', 1916 Mad 862 (AIR V 3) (O) and -- 'Kadher Mal v. Sheo Narain', 1943 All 80 (AIR V 30) (P). But in the case of insolvency proceedings special power has been conferred on the Insolvency Court to require proof of a debt from the creditor.
Under Section 50, Provincial Insolvency Act where a receiver thinks that a debt has been improperly entered in the schedule, the Court may, on the application of the receiver and after notice to the creditor, and such enquiry (if any) as the Court thinks necessary, expunge such entry or reduce the amount of the debt. Under this section the Court has power to require the creditor to Prove the consideration for the negotiable instrument on which he relies for proof of his debt.
The Court will readily order an enquiry and put the creditor to proof when it has been made to appear to the Court that there are circumstances which throw doubt upon the passing of consideration for any debt including a debt preyed by the production of a negotiable instrument. Although a presumption of the Passing of consideration may initially arise in favour of the creditor by virtue of Section 118, Negotiable Instruments Act the presumption is displaced as soon as circumstances are shown to the Insolvency Court Which make it doubtful whether the consideration actually passed or not and it is for this reason that the Court has been given power to order an enquiry into the existence of the debt.
35. It is not necessary to pursue this matter any further because the reasons which I have given in holding that the presumption laid down in Section 118, Negotiable Instruments Act does not apply to insolvency proceedings are equally applicable for the displacement of that presumption which may be initially raised in favour of the creditor when circumstances are shown to exist which make it doubtful that consideration passed under the negotiable instrument.
Desai, J.
36. The following two questions have been referred to a Pull Bench:--
1. Whether the presumption mentioned In Clause (a) of Section 118, Negotiable Instruments Act, 1881, can be invoked in insolvency proceedings where as alleged debt against the insolvent is called to question by the official receiver or by a creditor or by the insolvent?
2. If it can be invoked, would circumstances tending to make it doubtful that consideration passed under the negotiable instrument, even though coupled with a denial on the part of the maker of the instrument, suffice to deprive the creditor of the benefit of the presumption and require him to prove by evidence that consideration did actually pass?
37. It is laid down in Section 118 that "until the contrary is proved, the following presumptions shall be made:--
(a) that every negotiable instrument was made or drawn for consideration".
38. The language could not be simpler or more emphatic or more absolute. The presumption is a compulsory presumption of law; the Court is bound to presume that every negotiable instrument was made or drawn for consideration. There are absolutely no conditions attached to the drawing of the presumption; the drawing of the presumption is confined neither to proceedings in a particular Court nor to proceedings of a particular nature nor to proceedings between particular persons.
The presumption is couched in such wide language admitting of no restrictions or exceptions that on the face of it it prevails whenever the question arises whether a negotiable instrument was made or drawn for consideration. Whenever such a question arises, the Court must start with the presumption that the negotiable instrument was made or drawn for consideration. Section 118 occurs in Chap. XIII which bears the heading ''Special Rules of Evidence". Sections 119 to 122 also occur in the same chapter.
Sections 120, 121 and 122 enact special rules of estoppel barring particular persons connected with negotiable instrument from denying certain facts in suits filed by particular persons. Section 118 deals with the question of onus of proof and not of estoppel and is not restricted in its applicability to suits against particular persons. Every negotiable instrument carries with it the presumption that it was made or drawn for consideration; thus the presumption is an incident of the negotiability of the instrument.
There is nothing in the Act to suggest that the presumption is to be availed of only against the maker. The effect of the presumption is simply to shift the burden of proof to the party, whoever he be, alleging that there was no consideration; it is for him to prove the absence of consideration. If he leads evidence but the evidence is of an unsatisfactory nature and, falls short of proving the absence of consideration, he fails to rebut the presumption and the Court will be bound to hold that the instrument was made or drawn for consideration.
This would be the result even if the party relying upon the instrument led evidence to prove the consideration and that evidence also was unsatisfactory and not fit to be relied upon. The effect of the presumption simply being to shift the onus, the onus is shifted if the presumption prevails regardless of whether the presumption is strong or weak.
The strength of the presumption simply affects the quantum of the evidence required to rebut it; if the presumption is strong, strong evidence would be required to rebut it whereas if it is a weak one, little evidence may suffice to rebut it. But the evidence in either case must be led by the party having the onus to rebut it; in other words, the question whether the presumption is strong or weak is entirely different from the question on whom the onus lies to rebut it.
39. It was observed in 'Kishen Chand v. Jamna Das, 5 Ind Cas 891 (Lah) (Q) that the Legislature, in the interest of the business community generally, has placed the onus upon the person who promises to pay upon a negotiable instrument. In 'Jagmohan Misir v. Mendhai Dube', 1932 All 164 (AIR V19) (R) there was a suit based on a promissory note; it was contested by the defendant on the ground' that there was no consideration, both sides produced evidence on the point, the defendant's evidence was found to be insufficient to prove the absence of consideration, and' it was held that the suit should be decreed.
In Rain Nath v. Ram Chandra Mal', 1935 All 154 (AIR V22) (S), it was held that when the evidence of neither party on the question of consideration was satisfactory the suit should be decided in accordance with the presumption. The effect of the presumption was stated by the Judicial Committee in the following words in 'Shanmuga Rajeswara Sethupathi v. Chidambaram Chettiar', 1938 PC 123 (AIR V25) (T) at p. 125.-
"A promissory note having been given, consideration is to be presumed. The question is not, therefore, whether the plaintiff; has formally and sufficiently proved that there was a stipulation for a fresh advance, but whether it is sufficiency shown by the appellant that there was no consideration for the promissory note".
It was explained in 'Tarmahomed v. Tyeb Ebrahim'. 1949 Bom 257 (AIR V36) (U) that "the statutory presumption continues until it is rebutted, and the only way it can be rebutted is by proving the contrary, viz., that the negotiable instrument was without consideration". It was further observed in that case at p. 259:--
"As soon as the learned Judge had decided that the defendant had failed to prove that the hundis were passed for accommodation it was entirely unnecessary and! irrelevant to consider whether the plaintiff had failed to prove consideration or not. It was not necessary for the plaintiff to prove any consideration. The presumption under Section 118 continued in all its rigour".
40. There is nothing- in the Negotiable Instruments Act to suggest that the presumption is not to be applied in proceedings under the In-
solvency Act. Powers of an Insolvency Court are wholly statutory and as pointed out in Halsbury's Laws of England Vol. II, second edition, para 2 under Bankruptcy and Insolvency "there is no such thing as a common law of bankruptcy". What, therefore, an Insolvency Court can do or cannot do must be found in the statute dealing, with insolvency.
The Insolvency Act contains no provision whatsoever affecting, expressly or even impliedly the presumption, contained in Section 118, Negotiable Instruments Act. To lay down that the presumption is not to be drawn in insolvency proceedings is nothing short of adding the words "except in insolvency proceedings" or "as between the parties thereto" to Section 118. These words do not exist there nor does there exist anything from which their existence may be implied. It is outside the province of a Court to read words which do not exist even impliedly.
As I pointed out earlier the presumption is an incident of the negotiability of the instrument. It confers a privilege upon the holder of an instrument; it does not impose a liability on the maker or his successor-in-interest. Therefore the holder is entitled to the presumption regardless of the person against whom he wishes to enforce the instrument. It is like a right in rem to be exercised against the whole world, It is irrelevant to consider that the maker is an insolvent or that his estate vests in the official receiver or that there are other creditors who are also interested in his indebtedness. In spite of all these facts the holder is entitled to the presumption and to call upon any party, who alleges that the instrument was executed without consideration, to prove the allegation.
41. An Insolvency Court can go behind a judgment and can go into the question of consideration. In (1885) 16 QBD 315 (D) it was observed by Lord Esher, M.R., at p. 323:--
".....although by consenting to a judgment the debtor is estopped everywhere else from saying that there was no debt due -- although the judgment is binding upon him by reason of his consent, and of its being the judgment of the Court, yet no such estoppel is effectual as against the Court of Bankruptcy. The Court is not estopped by the conduct of the parties, but it has a right to inquire into the debt".
Vaughan Williams, L. J., observed in Re Beau-champ, Ex parte Beauchamp', (1904) 1 KB 572 (V) at p. 581:--
"....undoubtedly the Court of Bankruptcy has the power on the hearing of a bankruptcy petition to go behind the judgment and to inquire into the consideration for the judgment debt, not-only at the instance of the trustee, but also at the instance of the judgment-debtor himself".
In 1907-1 KB 155 (Y) the official receiver rejected, the proof of Chatterton, a creditor of the insolvent Van Laun, on account of his refusal to supply dates and items of the sums agreed by the insolvent. Chatterton's appeal was dismissed, Bigham J., observing at p. 162:--
"But I am not dealing with the rights between Mr. Van Laun and Mr. Chatterton, I am dealing with the rights between Mr. Chatterton and the general body of creditors as represented by the trustee. The trustee's right and duty when examining a proof for the purpose of admitting or rejecting it is to require some satisfactory evidence that the debt on which the proof is founded is a real debt.
No judgment recovered against the Bankrupt, no covenant given by or account stated with him can deprive the trustee of this right. He is entitled to go behind such forms to get at the truth, and the estoppel to which the bankrupt may have, subjected himself will not prevail against him",
42. There are two stages at which an Insolvency Court may have to go into the question whether a debt exists, once when it is moved by a creditor for adjudication and secondly when a creditor wants his debt to be entered in the schedule. At either stage it is open to the Insolvency Court to go behind the decree and to hold that in spite of the decree there was no consideration for the debt.
The insolvent may be bound by the decree but not the other creditors nor the official receiver, and Section 4, Provincial Insolvency Act expressly confers powers upon every Insolvency Court to decide all questions of any nature whatsoever which may arise in any case of insolvency coming within its cognizance. Therefore, it cannot be doubted that whether a negotiable instrument was drawn or made for consideration or not is a question which can be gone into by an Insolvency Court.
The presumption contained in Section 118 does not remove the issue of consideration from the jurisdiction of the Court; it simply regulates the onus of proof by calling upon the other party to lead evidence to prove the absence of consideration. The onus that is placed by Section 118 upon the other party is not shifted back to the holder of the instrument by the Insolvency Act. An Insolvency Court is entitled to go into the question of consideration, but it does not follow necessarily that the consideration must be proved first by the holder of the instrument, A creditor has to prove his debt and when he produced the negotiable instrument and proves its execution, he is entitled to rely upon the presumption and to call upon the other party to prove the absence of consideration. The law requires him to prove the debt but not necessarily the consideration. He has to prove the debt in accordance with the rules of evidence and one of the rules of evidence is that it shall be presumed that a negotiable instrument was made or drawn for consideration.
Whatever onus rests upon him for proving his debt is discharged by his producing the negotiable instrument and proving its execution by the insolvent. If the insolvent or another creditor or the official receiver challenges the validity of the instrument on the ground of want of consideration, the Insolvency Court is not precluded from going into the question and will go into it but the onus will lie upon the insolvent or the other creditors or the official receiver to rebut the presumption by proving the want of consideration.
If the want of consideration is proved, then only will the holder be called upon to prove the passing of consideration. The presumption has been borrowed by the Indian Legislature from the English law; many of the provisions of the Provincial Insolvency Act also are borrowed from British Bankruptcy Acts. But no English authority has been cited in support of the proposition that the presumption is to be drawn against the maker of the negotiable instrument and not against other persons such as an official receiver or other creditors of the maker.
There is also no English authority suggesting that the onus of proof shifts in certain circumstances from the party alleging the want of consideration to the party relying upon it. The English authorities, which I have referred to above, simply lay down that an Insolvency Court is entitled to go behind a decree or judgment and decide whether there was a good consideration for the debt. They were referred to by this Court in --
'Union Indian Sugar Mills Co., Ltd. v. Brij Lal Jagannath', 1927 All 426 (AIR V 14) (W), and by a Bench of the Bombay High Court in -- 'Jethmal Narandas v. Mahadeo Anandji', 1941 Bom 62 (AIR V 28). (X).
It is unnecessary to deal with the cases of 'Union , Indian Sugar Mills Co. Ltd., (W), and 'Jethmal Narandas (X)', because they do not decide anything more than what was decided in the English cases.
43. In 'Ram Lal Tandon v. Kashi Charan', 1928 All 380 (AIR V 15) (Y), a Bench of this Court acknowledged that there is no direct authority for the contention that the presumption under consideration cannot be invoked in insolvency proceedings but held that because an Insolvency Court is entitled to go behind a decree of a Court, it is not bound by the presumption.
The learned Judges relied upon '(1875) 10 Ch A 373 (G)', in which it was held that an Insolvency Court can enquire into the consideration for a judgment debt. The conclusion that the presumption cannot be drawn in insolvency proceedings does not follow necessarily from the Insolvency Court's power to enquire into the consideration for a judgment debt.
As I explained earlier, consideration is not the same thing as debt, the presumption is an incident of negotiability and one cannot conceive of a negotiable instrument without the presumption attaching to it and the presumption simply lays down a rule of onus of proof and does not deal with the question whether a certain matter is justiciable in an Insolvency Court or not. In my opinion this case does not lay down the correct law. In '1937 Mad 182 (AIR V 24) (A)', Varadachariar and Mockett JJ., observed at p. 184:
"Though this section is not, like Sections 119 to 122, limited in terms to a 'suit upon the instrument', it seems only reasonable to hold that the 'special rules of evidence' laid down in Section 118 must have been intended to apply only as between the parties to the instrument or those claiming under them. In other cases, the presumption can only be in the terms enacted in Section 114, Evidence Act: (vide Illus. c) which by the use of the expression 'may presume' leaves it to the Court to apply the presumption or not according to circumstances,"
Intention of the Legislature has been aptly described as a "very slippery phrase"; unless one is careful in selecting the source from which the intention of the Legislature is to be inferred one is likely to resort to judicial legislation in the guise of giving effect to the Legislature's intention. It is not given to a Court to assume that the Legislature had a certain intention and then to enforce an enactment as if it contained) express words indicating such intention.
A Court is entitled to take into account an intention of the Legislature only when interpreting words used by it which are ambiguous. II there is no ambiguity in the words themselves no problem of interpretation arises at all, an enquiry into the supposed intention of the Legislature becomes irrelevant and the Court's plain duty is to give effect to the simple words used by the Legislature. The language contained) in Section 118 does not admit of any ambiguity and it is not open to a Court to depart from its plain meaning.
Even when the language used by the Legislature is ambiguous and presents a problem of interpretation to the Court, the Court must have some material from which to infer the Legislature's intention in order to interpret the language in conformity with it. There must be some words used by the Legislature either in the very enact-
ment sought to be interpreted or in another enactment.
The Court cannot assume, without any data whatsoever supplied by the Legislature itself, that it had] a certain intention. Lord Thankert on stated in -- 'Wicks v. Director of Public Prosecutions', (1947): 1 All ER 205 (Z) at p. 207, that "the intention of the Parliament is not to be judged by what is in its mind but by its expression of that mind in the statute." Lord Watson said in--Aron Salomon v. Saloman & Co., Ltd.', (1897) AC 22 (Z1) at p. 38:
" 'Intention of the Legislature' is a common but very slippery phrase, which, popularly under-stood, may signify anything from intention embodied in positive enactment to speculative opinion as to what the Legislature probably would have meant, although there has been an omission to enact it. In a Court of Law or Equity, what the Legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact, either in express words or by reasonable and necessary implication."
The observation was quoted with approval by Lord Uthwatt in -- 'Lord Howard De Walden v. Inland Revenue Commissioners', (1948) 2 All ER P. 825 (Z2). With great respect to the learned Judges, I do not find any words used by the Legislature in Section 118 or any other section of the Negotiable Instruments Act indicating that the Legislature intended to apply the presumption only as between the parties to the instrument and their privies.
It is not open to the Court to speculate about the intention of the Legislature. Section 118 does not lay down that the contrary should be proved by the maker or the drawer of the instrument; it leaves the contrary to be proved by any party that alleges that the instrument was made or drawn without consideration. I am unable to appreciate the statement on p., 184 that though the presumption contained in Section 118 may not be drawn in a suit to enforce the Hindu Law theory of pious obligation, the presumption contained in Section 114, Evidence Act may be drawn.
There is certainly no conflict between the provisions of Section 118, Negotiable Instruments Act and Illus. (c) to Section 114, Evidence Act, The Evidence Act was enacted earlier and Section 114 describes what matters can be presumed by Court. One of them is that a bill of exchange, acceptedl or endorsed was accepted or endorsed for good consideration. When deciding whether to draw the presumption or not the Court is required to have regard to such facts as that the drawer was a man of business and that the accepter was a young and ignorant person completely under his influence.
The Negotiable Instruments Act was enacted subsequently and with full knowledge of the law contained in Illus. (c) to Section 114. It makes it obligatory upon the Court to presume that a negotiable instrument was made or drawn for consideration. It gives no discretion to the Court such as that given by Section 114, Evidence Act; it can be said with good reason that the discretion conferred by Illus. (c) to Section 114, Evidence Act is withdrawn by Section 118, Negotiable Instruments Act.
In a case to which both the provisions apply, the mandatory provision contained in Section 118, Negotiable Instruments Act, must supersede the discretionary provision contained in Section 114(c). Evidently where there are two provisions of law, both dealing with the same subject, but one being of a mandatory nature and the other a discretionary or permissive nature, the mandatory provision must prevail.
When a question arises whether a negotiable instrument was made or drawn for consideration or not, the Court is bound to presume that it was; it is not competent to disregard the mandatory provision of Section 118, Negotiable Instruments Act and without disregarding it cannot treat the matter as a discretionary matter. It is bound by the law contained in both the provisions and it can comply with both only by drawing the presumption. It is undoubtedly true that when a creditor wishes to enforce the doctrine of pious obligation against sons of the maker of a negotiable instrument, the onus lies upon him to prove that the debt exists.
But as I explained above, how the onus is to be dischagred by him is a different question and the existence of a debt can be proved without proving the consideration if the existence of consideration is to be presumed under the law. I do not see any difficulty in applying the presumption even in such a suit as the one in 'Narayana Rao's case (A)'. The sons can avoid their liability by proving either that there was no consideration at all or that it was illegal or immoral.
The presumption is operative only when the contrary is not proved; the law allows the contrary to be proved. On p. 185 it is stated that in a suit to enforce the doctrine of pious obligation the onus of proving the existence of a debt must prima facie be laid upon the creditor who can of course call in aid the presumption permissible under Section 114, Evidence Act. I confess my inability to see why in such a suit the provisions of Section 114, Evidence Act, can be applied but not those of Section 118, Negotiable Instruments Act.
The two presumptions are not in identical language but the difference in the language has no connection at all with the nature of the suit or proceeding. There is absolutely nothing in the language used in the two provisions to indicate that one provision or the other can be applied, or cannot be applied, in a particular suit or in a suit between particular persons.
In -- 'Official Assignee of Madras v. Sambanda Mudaliar', 1920 Mad 977 (AIR V 7) (Z3), it was held that when an official receiver moves the Court for expunction of a mortgage debt from the schedule under Section 55, Presidency Towns Insolvency Act, 1909, the onus lies upon the mortgagee to prove that the mortgage was in good faith and for valuable consideration. There is no presumption that a mortgage deed is executed for consideration just as there is a presumption that a negotiable instrument is made or drawn for consideration. Therefore a mortgagee has to prove the consideration. It does not follow from it that a holder of a negotiable instrument also must prove the consideration.
44. My answer, therefore, to question No. 1 is in the affirmative.
45. The presumption contained in Section 118, Negotiable Instruments Act is couched in such general words as to make it applicable in every case. There is no circumstance in which the presumption may not apply. As I said earlier it is impossible to conceive of a negotiable instrument without the presumption attaching to it. Therefore, a creditor can in no circumstance be disentitled to the presumption.
The effect of the presumption is that the party alleging that there was no consideration must prove his allegation. It is only after he has proved the allegation that the creditor can be required to prove that there was consideration. It is not enough for him merely to create a doubt about the passing of consideration. The law is that a presumption is rebutted only by proof of the contrary and not by merely creating doubt, and that unless it is rebutted, the party in whose favour it is to be drawn is entitled to rely on it and cannot be required to prove the fact by evidence.
In '20 Bom 367 (M)', a young man who had attained majority less than a year previously and who was extravagant and reckless and who expected to inherit a large amount of property under the will of his father, executed promissory notes in favour of a firm of Marwari professional moneylenders. The money-lenders sued the executant of the promissory notes and it was held by Farren C. J., with the concurrence of Starling J., that it was for the money-lenders to prove that the promissory notes were executed for consideration. The learned Judges observed at p. 369:
".....,...... .the ordinary presumption that a negotiable instrument has been executed for value is so much weakened, that the allegation of the young man that he has not received full consideration is sufficient to shift the burden of proof and to throw upon the money-lender the obligation of satisfying the Court that he has paid the consideration in full. This is, we think, the practical effect of Illus. (c) to Section 114, Evidence Act, and its explanation.
Where the plaintiff in answer to such a defence affirms that he has paid the consideration in full, and is corroborated by his books and witnesses (if any), the onus again shifts. The strength of the case to be rebutted will depend upon the credit to be given to the testimony adduced by the plaintiff as tested by cross-examination, the weight to be attached to his books arising from the manner in which they are kept, and the presence or absence of suspicious circumstances in connection with them, and upon its inherent probability.
When these circumstances concur in the plaintiff's favour, a heavy onus is thrown upon the defendant which can only be met by a perfectly truthful and harmonious statement which the Court feels able to rely upon with confidence. In the absence of this, the ordinary presumption laid down in Section 118, Negotiable Instruments Act must prevail."
If the presumption exists, whether it is a strong one or a weak one, the onus to prove the contrary lies upon the other side. The strength or the weakness of the presumption does not affect the question which party has the onus of proof; it would only affect the quantum of the evidence required for rebuttal of the presumption. It is, therefore a contradiction in terms to speak of the onus of proof being shifted on account of the weakening of the presumption. The weakening of the presumption cannot shift the onus of proof at all, though it may lighten the onus.
Even if certain circumstances weaken a presumption, the onus of proof remains where it was. Therefore, the circumstances that the executant of the promissory notes was a young, extravagant and reckless character who expected to come into a large fortune very soon and that the promisees were professional money-lenders may make it easier for the executant to discharge the onus of proof that he had executed the promissory notes without consideration, but cannot shift the onus of proof from him. He has to produce evidence to satisfy the Court that really there was no consideration.
It is only after he has satisfied the Court that the creditors would be required to prove that there was consideration. The very effect of the presumption contained in Section 118, Negotiable Instruments Act being to lay the burden of proving the contrary upon the party alleging that there was no consideration, it would be erroneous to say that the presumption would apply only if the creditor failed to produce satisfactory evidence that he had paid the consideration in full.
The decision in 'Moti Gulabchand's case (M)', was followed by Sir John Wallis C. J. and Seshagiri Aiyar J., in '1916 Mad 278 (AIR V 3) (N)', in which the facts were similar to those in 'Moti Gulabchand's case (M)', if not stronger. There is no discussion of the law in the judgment of the Court which simply followed 'Moti Gulabchand's case (M)', In '1943 All 90 (AIR V 30) (P)', Bajpai and Dar JJ., relied upon 'Moti Gulabchand's case (M)', and observed that the circumstances that the executant of a promissory note had just then attained majority, that he was addicted to drinking and gambling & that he had really no necessity to borrow any money were sufficient to weaken considerably the presumption contained in Section 118. Negotiable Instruments Act and that the burden was shifted to the plaintiff to prove that the promissory note was executed for consideration.
The learned Judges acknowledged that the presumption undoubtedly applied in favour of the plaintiff ; if it applied it means that it did not shift the onus and that the onus remained upon, the executant to prove that there was no consideration. The learned Judges dismissed the plaintiff's suit on the ground that he failed to discharge the onus of proving the consideration. With great respect to the learned Judges I am unable to accept the law laid by them about the shifting of the onus.
It may be that the decision in the suit was correct because whatever evidence the defendant produced was sufficient to prove that he had not received the full consideration for the promissory note executed by him and that consequently the presumption was rebutted and the plaintiff had not succeeded in proving the passing of the consideration.
But the observation on p. 93 that "the circumstances of the case duly demand a consideration of the evidence on the record irrespective of the order in which the evidence was given" does not seem to be in accordance with the law. The Court had to consider the evidence produced by the defendant; it would) consider the evidence produced by the plaintiff only if that produced by the defendant proved that there was no consideration for the promissory note.
'Moti Gulabchand v. Mahomed Mehdi, (M)', did not lay down the correct law and the decision in -- 'Kadher Mal v. Kunwar Sheo Narain', (P) in so far as it endorsed that decision, may be overruled. respectfully agree with the law laid down by Addison and Din Mohammad JJ., in 1935 Lah 599 (AIR V 22) (L)'.
The learned Judges observed that it is an error for a Court to be influenced by the alleged immorality of the defendant and to conclude that no consideration was received by him, that whether the defendant was a scoundrel or a saint is immaterial and that a debtor is bound to repay the money actually borrowed by him, whether he squanders it in debauchery or expends it in charity. They further observed that a professional money lender is as much entitled to the presumption contained in Section 118, Negotiable Instruments Act as any innocent business-man in the world.
46. My answer to question No. 2 is in the negative.
BY THE COURT
47. Both the questions referred to this Bench are answered in the affirmative.