ANIL K. NARENDRAN, J.
The appellant is the plaintiff in O.S.No.1184/1993 on the file of the Subordinate Judge's Court, Thrissur, a suit for realisation of a sum of 7,80,800/- from the respondent/ defendant together with interest at the rate of 12% per annum for the principal sum of 6,10,000/- from the date of suit till realisation and cost. The trial court by the impugned judgment dated 16.7.1998 dismissed the suit and both the parties were directed to suffer their respective costs. Feeling aggrieved by the judgment and decree of the trial court, the appellant/plaintiff is in appeal before this Court.
2. Going by the plaint averments, the suit was one for realisation of money based on Ext.A5 pro-note alleged to have been executed by the defendant in favour of the plaintiff on 21.6.1991 for a sum of 6,10,000/-. The A.S.No.83/99 -:2:- plaintiff and the defendant were doing jewellery business along with others on the basis of an oral partnership. Later, the business was stopped and the shop was closed down. Though the plaintiff was willing to continue the business with the help of his brothers, the defendant was not willing. A sum of 6,10,000/- was found as the share of the plaintiff and since the building was in the name of the defendant, he was found liable to pay the said amount to the plaintiff. The defendant had agreed to pay the said amount with interest at the rate of 12% per annum and executed Ext.A5 pro- note on 21.6.1991. Since the defendant failed to pay the said amount, the plaintiff caused to issue Ext.A7 lawyer notice dated 18.10.1993 and thereafter, filed the suit for realisation of the said amount.
3. The defendant filed written statement denying execution of any promissory note in favour of the plaintiff. The defendant contended that Ext.A5 pro-note is not supported by consideration. The plaintiff and the defendant were friends. Since the defendant was in gulf countries in connection with his job, the plaintiff was managing all the affairs of the defendant in India. On 11.4.1988, A.S.No.83/99 -:3:- the plaintiff wrote Ext.B2 letter to the defendant demanding to sent a letter authorising the plaintiff to deal with the responsibilities and matters which the defendant had in the business. The plaintiff had also sent two revenue stamps along with the said letter. The request made in Ext.B2 was to send back the signed stamp on white paper without putting any date. Accordingly, the defendant forwarded the signed stamp on blank paper, which was made use of by the plaintiff to create Ext.A5 pro- note.
4. The plaintiff filed replication contending that the plaintiff and defendant with the intention of becoming partners of Asa Jewellery deposited several lakhs of rupees. Subsequently, it was found that the jewellery was not running properly and hence they demanded back the money. But, the partners of the jewellery were not in a position to pay back the amount. Therefore, some ornaments were given towards a portion of the money due and for the balance amount Ext.A1 Karar dated 11.2.1987 was executed between the plaintiff and the defendant on one part and the partners of the jewellery on the other part. Even after execution A.S.No.83/99 -:4:- of Ext.A1 Karar, the amount was not paid. The partners of the jewellery expressed their willingness to handover possession of the room where the jewellery was functioning, the tenancy right of which was in the name of one Joy, who was one of the partners of the jewellery. On the basis of the compromise, three partners of the jewellery handed over possession of the room to the plaintiff and the defendant. The value of the furniture in the room was calculated and it was found that the plaintiff is entitled to half of the amount and it was settled at 6,10,000/-. Accordingly, Ext.A5 pro-note dated 21.6.1991 was executed by the defendant in favour of the plaintiff.
5. The defendant filed additional written statement contending that the plaint was amended with the allegations made in the replication, which contains a new story as to the consideration of Ext.A5 pro-note. The defendant denied execution of Ext.A1 Karar and also handing over possession of the shop room. The defendant contended that he had purchased the said property along with some other properties for valid consideration and the plaintiff has no manner of right or possession over the said A.S.No.83/99 -:5:- property. The defendant has also contended that, the plaintiff has no financial capacity to raise a sum of 6,10,000/-, as alleged in the plaint.
6. On the side of the plaintiff, PWs. 1 and 2 were examined and Exts.A1 to A10 were marked. On the side of the defendant, DW1 was examined and Exts.B1 to B4 were marked. Ext.X1 is the file produced by the Tahsildar, Chavakkad.
7. The plaintiff who was examined as PW1 could not prove his financial capacity to raise the alleged consideration for Ext.A5 pro-note. Ext.B1 is a copy of the counter affidavit filed by the plaintiff dated 17.12.1998 in E.P.No.467/1988 in O.S.No.234/1984 on the file of the Subordinate Judge's Court, Thrissur. In Ext.B1, it has been stated that the plaintiff (who was the judgment debtor in that case), was not having any property or income or job and hence not in a position to clear off the debts in that case. In the said counter affidavit, the plaintiff has also denied the averment in the execution petition that he has got property worth more than 25,000/-. As evident from Ext.X1 file produced by the Tahsildar, Chavakkad, revenue recovery proceedings were initiated against A.S.No.83/99 -:6:- the plaintiff. It was after considering the oral testimony of PW1 and also the documentary evidence on record, the trial court arrived at a finding that the plaintiff was not having any financial soundness to advance the sum as alleged in the plaint. In the absence of any vitiating circumstances, we find absolutely no grounds to interfere with the said finding of the trial court.
8. The recitals of Ext.A5 pro-note is to the effect that the plaintiff had advanced a sum of 6,10,000/- to the defendant on 21.6.1991. The specific case put forward by the defendant was that Ext.A5 pro-note was one created by the plaintiff making use of the signed blank stamp paper obtained from the defendant based on the plaintiff's demand in Ext.B2 letter. The plaintiff who was examined as PW1 had admitted that he did not give any such amount to the defendant either on 21.6.1991 or thereafter. He has also admitted that Ext.A5 pro-note is the only document which shows that some amount is due from the defendant.
9. PW2, who was cited as the scribe of Ext.A5 pro-note has deposed that he is a close relative of the defendant and that he was introduced to the plaintiff by the defendant. However, PW2 A.S.No.83/99 -:7:- was not in a position to say about his relationship with the defendant and he cannot even say what is the job of the defendant. On the other hand, the defendant as DW1 has stated that he does not know PW2 and he has no relationship with PW2. As rightly noticed by the trial court, PW2 was highly interested in the case of the plaintiff. As such, the evidence of PW2 as to the execution of Ext.A5 pro-note can only be discarded.
10. The case of the plaintiff was to the effect that as a token of Ext.A5 pro-note, possession of the room purchased vide Ext.A4 deed dated 22.6.1991 was given by the plaintiff to the defendant. As rightly noticed by the trial court, the property covered by Ext.A4 deed was not purchased as on the date of Ext.A5 pro-note, but only on a subsequent date. If the tenancy arrangement was terminated on the date of execution of Ext.A5 pro-note, the tenancy right of one Sunitha would not have been mentioned in Ext.A4 deed. Therefore, there was no evidence to show that as on the date of execution of Ext.A4 deed, the plaintiff obtained key of the said room from Sunitha.
11. Ext.A1 is a Karar alleged to have been executed by the A.S.No.83/99 -:8:- plaintiff and the defendant on one part and the partners of the Asa Jewellery on the other part. Ext.A1 Karar is dated 11.2.1987. According to the plaintiff, at the time of execution of Ext.A1 Karar, the defendant was in India, who had taken part in the mediation talk held on 10.2.1987 and the Karar was thereafter signed on 11.2.1987. In the additional written statement, the defendant denied the execution of Ext.A1 Karar. The defendant had proved through Ext.B4 passport that he left India on 13.1.1987 and thereafter returned only on 26.2.1987. Therefore, from the oral testimony of DW1 coupled with Ext.B4, it has come out in evidence that the defendant was not in India at the time of the mediation talk alleged to have taken place on 10.2.1987 and also on the date of execution of Ext.A1 Karar, i.e., on 11.2.1987. After considering the pleadings and evidence on record, the trial court has also found that the defendant came to know about Ext.A1 Karar only when he received a copy of the said document produced in Court. The trial court has also noticed various incriminating circumstances to suspect the genuineness of Ext.A1 Karar.
12. Section 118 of the Negotiable Instruments Act, 1881 A.S.No.83/99 -:9:- which deals with presumptions as to negotiable instruments, is extracted hereunder;
"118. Presumptions as to negotiable instruments.- Until the contrary is proved, the following presumptions 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) as to stamps - that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course - that the holder of a negotiable instrument is a holder in due course: provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has A.S.No.83/99 -:10:- been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him."
13. In Kundan Lal v. Custodian, Evacuee Property (AIR 1961 SC 1316) a Three-Judge Bench of the Apex Court held that, Section 118 of the Negotiable Instruments Act lays down a special rule of evidence applicable to negotiable instruments. The presumption is one of law and thereunder a Court shall presume, inter alia, that the negotiable instrument or the endorsement was made or endorsed for consideration. In effect it throws the burden of proof of failure of consideration on the maker of the note or the endorser, as the case may be. On the question as to how this burden can be discharged, the Apex Court, with reference to the rules of evidence pertaining to burden of proof as embodied in Chapter VII of the Evidence Act, held that the phrase 'burden of proof' has two meaning - one the burden of proof as a matter of law and pleading and the other the burden of establishing a case. The former is fixed as a question of law on the basis of the pleadings and is unchanged during the entire trial, whereas the A.S.No.83/99 -:11:- latter is not constant but shifts as soon as a party adduces sufficient evidence to raise a presumption in his favour. The evidence required to shift the burden need not necessarily be direct evidence, i.e., oral or documentary evidence or admissions made by opposite party; it may comprise circumstantial evidence or presumptions of law or fact.
14. In Bharat Barrel and Drum Manufacturing Company v. Amin Chand (1999 (3) SCC 35) the Apex Court held that, once execution of the promissory note is admitted, the presumption under clause (a) to Section 118 of the Negotiable Instruments Act would arise that it is supported by consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument.
A.S.No.83/99 -:12:-
15. In Bharat Barrel's case (supra) the Apex Court held further that, the burden upon the defendant of proving the non- existence of 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 defendant 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 consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under clause (a) to Section 118 in his favour.
16. In Bharat Barrel's case (supra) the Apex Court held further that, the Court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as existence of negative evidence is neither possible nor contemplated and even if led is to be seen with a doubt. The bare denial of passing of consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the A.S.No.83/99 -:13:- plaintiff. To disprove the presumption the defendant has to bring on record such facts and circumstances, upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist.
17. Section 4 of the Evidence Act 1872 provides that, whenever it is provided by the said Act that the Court may presume a fact, it may either regard such fact as proved, unless and until it is disproved, or may call for proof of it. Section 3 of the Evidence Act, define the words 'proved' and 'disproved', which are extracted hereunder;
"'Proved'.- A fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. 'Disproved'.- A fact is said to be disproved when, after considering the matters before it, the Court either believes that it does not exist, or considers its non-existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist."
A.S.No.83/99 -:14:-
18. In M.S. Narayana Menon @ Mani v. State of Kerala (2006 (6) SCC 39), applying the dentition of the words 'proved' and 'disproved' under Section 3 of the Evidence Act, in the context of the presumption of consideration under clause (a) to Section 118 of the Negotiable Instruments Act, the Apex Court held that, the Court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies.
19. In Mallavarapu Kasivisweswara Rao v. Thadikonda A.S.No.83/99 -:15:- Ramulu Firm (2008 (7) SCC 655) the Apex Court reiterated that, under clause (a) to Section 118 of the Negotiable Instruments Act, the Court is obliged to presume, until the contrary is proved, that the promissory note was made for consideration. The initial burden in this regard lies on the defendant to prove the non-existence of consideration by bringing on record such facts and circumstances which would lead the Court to believe the non-existence of consideration either by direct evidence or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal. 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 would be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. If the defendant fails to discharge the initial onus of proof by showing the non-existence of consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under clause (a) to Section 118 in A.S.No.83/99 -:16:- his favour.
20. The legal position that emerges from the decisions of the Apex Court referred to above is that, once the execution of the promissory note is admitted, the presumption under clause (a) to Section 118 of the Negotiable Instruments Act would arise that it is supported by consideration, which throws the burden of proof of failure of consideration on the maker of the promissory note or the endorser, as the case may be. However, the presumption under clause (a) to Section 118 of the Act is a rebuttable presumption. The defendant can prove non-existence of consideration by raising a probable defence. The burden upon the defendant of proving non-existence of consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable A.S.No.83/99 -:17:- instrument. A bare denial of the passing of consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. If the defendant fails to discharge the initial onus of proof by showing non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under clause (a) to Section 118 in his favour.
21. In the instant case, though the defendant had admitted his signature in Ext.A5 pro-note, the defendant who was examined as DW1 has succeeded in rebutting the presumption under clause
(a) to Section 118 of the Negotiable Instruments Act, by preponderance of probabilities showing that the existence of consideration was improbable and doubtful. Further, the plaintiff as PW1 has admitted that he did not give 6,10,000/- to the defendant either on 21.6.1991, the date of execution of Ext.A5 pro-note or thereafter. Still further, the documents marked as Exts.B1 and X1 would make it explicitly clear that the plaintiff was not having any financial soundness to advance a sum of A.S.No.83/99 -:18:- 6,10,000/-, the alleged consideration for Ext.A5 pro-note. It has also come out in evidence that Ext.A1 Karar was one executed when the defendant was admittedly abroad, as evident from Ext.B4 passport. It was after considering the pleadings and evidence on record that the trial court arrived at a conclusion that Ext.A5 pro-note is not a genuine one which is not supported by any consideration, and as such, the plaintiff is not entitled for a decree as prayed for. The said finding of the trial court is perfectly legal, which warrants no interference in this appeal.
22. In the result, the appeal fails and the same is accordingly dismissed.
The parties shall bear their respective costs.
Sd/-
V.CHITAMBARESH, JUDGE Sd/-
ANIL K.NARENDRAN, JUDGE dsn True copy P.S. to Judge