IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 08.01.2010
CORAM :
THE HONOURABLE Mrs.JUSTICE R.BANUMATHI
Second Appeal No. 92 of 2007
T.G.Balaguru .. Appellant/
Defendant
vs.
Ramachandran Pillai .. Respondent/
Plaintiff.
PRAYER : Second Appeal is filed under Sec.100 C.P.C. against the Decree and Judgment dated 21.04.2006 made in A.S.No.31/2005 on the file of Principal District Court, Nagapattinam confirming the Decree and Judgment of the Principal Sub-Court, Mayiladuthurai made in O.S.No.27/2004 dated 07.03.2005.
For Appellant : Mr.S.Saravanan
for
Mr.G.Veerapathiran
For Respondents : Mr.S.Gajendraraj
for
Mr.V.Raja
JUDGMENT
This Second Appeal arises out of concurrent findings of Courts below decreeing Plaintiff's suit for recovery of amount of Rs.1,17,900/- with subsequent interest based on promissory note. Unsuccessful Defendant is the Appellant.
2. Case of Plaintiff is that Appellant-Defendant borrowed a sum of Rs.50,000/- from one Thiyagarajan and executed Ex.A1 promissory note [19.06.1997] and the said promissory note was endorsed infavour of Plaintiff for consideration. Further case of Plaintiff is that Defendant paid Rs.100/- on 15.6.2000 and the said payment was endorsed in the suit promissory note. After issuing pre-suit notice, Plaintiff filed the suit for recovery of suit claim of Rs.1,17,900/- along with subsequent interest and cots.
3. Resisting the suit, Defendant filed written statement denying execution of any promissory note. Defendant raised plea that he never knew Thiyagarajan and that Thiyagarajan connived with one Murugesan Pillai and filed the suit. Defendant also pleaded that any amount more than Rs.20,000/- ought to have been paid by way of cheque and therefore, the suit is not maintainable.
4. On the above pleadings, trial court framed four Issues. On the side of Plaintiff, Plaintiff himself was examined as PW1 and attestor of suit promissory note one Sekar was examined as PW2. Exs.A1 and A2 were marked. On the side of Defendant, Defendant was himself examined as DW1. No document was marked on the side of Defendant. Specimen signature of Defendant was marked as Ex.X1.
5. Upon consideration of oral and documentary evidence and exercising power under Section 73 of Indian Evidence Act, trial Court compared the disputed signature of the Defendant in Ex.A1 promissory note with his admitted signature in the Written Statement and Vakalat and Ex.X1 and arrived at the conclusion that the disputed signature in Ex.A1 promissory note is that of the Defendant. Since plea of forgery had been taken by the Defendant, trial Court held that defence plea regarding incapacity of Thiyagarajan to pay the amount will not be an issue arising for determination and on those findings, trial Court decreed Plaintiff's suit.
6. Being aggrieved by the decree of suit, Defendant filed A.S.No.31/2005 before Principal District Court, Nagapattinam. Lower Appellate Court also held that Plaintiff has proved borrowal of amount of Rs.50,000/- by the Defendant on 19.06.1997 from the said Thiyagarajan and also payment of Rs.100/- on 15.06.2000 acknowledging the liability and thereby reviving the limitation. Holding that Ex.A1 promissory note and endorsement in the promissory note is genuine and valid, lower Appellate Court confirmed the Judgment of trial Court and dismissed the Appeal preferred by the Defendant.
7. Being aggrieved by the concurrent findings of Courts below, unsuccessful Defendant has filed this Second Appeal. At the time of admission the following substantial questions of law were formulated for consideration:-
i) Whether the Courts below are right in decreeing the suit without appreciating ingredients under the provisions of Sections 118, 121 and 122 of the Negotiable Instruments Act?
ii) Whether the Courts below are right in accepting the contention of the respondent that the burden lies with the defendant?
iii) Whether the Courts below failed to consider under Section 118 of the Negotiable Instruments Act that the burden of proof switches to the plaintiff once the signature and genuineness of the pro-note (Ex.A1) were disputed by the defendant?
8. Contending that Defendant never borrowed any amount from one Thiyagarajan and executed Ex.A1 suit promissory note and that the said Thiyagarajan never endorsed the suit promissory note infavour of Plaintiff, Mr.S.Saravanan, learned counsel for the Appellant has submitted that Courts below failed to note that comparison of signature arises only when the original payee of the pronote is examined. Learned counsel for the Appellant further contended that Plaintiff has not proved that he is the holder in due course and the Courts below did not record a finding that assignment infavour of Plaintiff by Thiyagarajan is proved and did not also frame issues regarding assignment. Placing reliance upon AIR 1996 SC 1140 [O.Bharathan v. K.Sudhakaran and another], learned counsel for the Appellant contended that the approach of trial Court is not in conformity with the spirit of Section 73 of Evidence Act.
9. Taking me through the Judgment of the Courts below, Mr.S.Gajendraraj, learned counsel for the Respondent-Plaintiff submitted that Courts below have recorded concurrent findings that Plaintiff has discharged his initial burden of proving Ex.A1 promissory note. It was further submitted that upon analysis of evidence , Courts below recorded concurrent findings that Defendant is liable to pay the suit claim to the Plaintiff. It was mainly argued that to substantiate the defence plea, Defendants have not filed any documents or other materials and Courts below rightly decreed Plaintiff's suit and exercising jurisdiction under Sec.100 C.P.C., High Court cannot interfere with the findings of the Courts below.
10. Defendant has denied execution of Ex.A1 promissory note and Defendant has also raised plea of forgery. Since there was denial of execution, to prove execution, Plaintiff himself was examined as PW1 and one Sekar-attestor to Ex.A1 promissory note as PW2. PWs.1 and 2 have consistently spoken about borrowal and execution of Ex.A1 promissory note. During cross examination of Defendant, his sample signature was obtained and marked as Ex.X1. Exercising powers under Section 73 of Indian Evidence Act, trial Court held that there are no differences or dissimilarities between the disputed signature and admitted signatures and arrived at the conclusion that the signature in Ex.A1 promissory note is that of the Defendant.
11. Learned counsel for the Appellant contended that initial burden lies on the Defendant to prove execution of promissory note. It was further contended that when Plaintiff had not taken steps to prove execution of promissory note, Courts below erroneously raised presumption under Section 118 of Negotiable Instruments Act.
12. In Ex.A1 promissory note, there is an endorsement dated 15.06.2000 by which an amount of Rs.100/- was paid towards principal and interest and the said endorsement has also been signed by the Defendant with date. As pointed out by the lower Appellate Court, the Written Statement is silent as to the endorsement dated 15.06.2000. Endorsement of payment of Rs.100/- in Ex.A1 promissory note strengthens the Plaintiff's case as to execution of suit promissory note and its genuiness.
13. To appreciate this argument, it would be necessary to notice the scope of the presumption under Section 118 of Negotiable Instruments Act and also the different methods available to a person against whom such a presumption is drawn to rebut the same. The relevant part of Section 118 of Negotiable Instruments Act reads:
"Until the contrary is proved, the following presumptions shall be made:-
(a) 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."
14. Considering the scope of presumption under Section 118 of Negotiable Instruments Act, in AIR 1961 SC 1316 [Kundan Lal Rallaram v. Custodian, Evacuee Property, Bombay], the Supreme Court has held as under:-
"5. This section 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. The question is, how the burden can be discharged? The rules of evidence pertaining to burden of proof are embodied in Chapter VII of the Evidence Act. The phrase "burden of proof' has two meanings 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 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. To illustrate how this doctrine works in practice, we may take a suit on a promissory note. Under S.101 of the Evidence Act, "Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist". Therefore, the burden initially rests on the plaintiff who has to prove that the promissory note was executed by the defendant. As soon as the execution of the promissory note is proved, the rule of presumption laid down in S.118 of the Negotiable Instruments Act helps him to shift the burden to the other side. The burden of proof as a question of law rests, therefore on the plaintiff; but as soon as the execution is proved, S.118 of the Negotiable Instruments Act imposes a duty on the Court to raise a presumption in his favour that the said instrument was made for consideration. This presumption shifts the burden of proof in the second sense, that is, the burden of establishing a case shifts to the defendant. The defendant may adduce direct evidence to prove that the promissory note was not supported by consideration and, if he adduced acceptable evidence, the burden again shifts to the plaintiff, and so on. The defendant may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling, the burden may likewise shift again to the plaintiff. He may also rely upon presumptions of fact, for instance those mentioned in S.114 and other sections of the Evidence Act. Under S.114 of the Evidence Act, "The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case." Illustration (g) to that section shows that the Court may presume that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it. A plaintiff, who says that he had sold certain goods to the defendant and that a promissory note was executed as consideration for the goods and that he is in possession of the relevant account books to show that he was in possession of the goods sold and that the sale was effected for a particular consideration, should produce the said account books, for he is in possession of the same and the defendant certainly cannot be expected to produce his documents. In those circumstances, if such a relevant evidence is withheld by the plaintiff, S.114 enables the Court to draw a presumption to the effect that, if produced, the said accounts would be unfavourable to the plaintiff. This presumption, if raised by a court, can under certain circumstances rebut the presumption of law raised under S.118 of the Negotiable instruments Act. 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 of law."
15. Applying the above legal position, let us consider the facts of present case. PW1's evidence is to the effect that Defendant borrowed Rs.50,000/- from Thiyagarajan. PW2-Sekar, attestor to Ex.A1 promissory note has also spoken about the borrowal and execution of Ex.A1 promissory note. Evidence required to shift the burden upon the Defendant need not necessarily be by direct evidence or oral or documentary evidence. Evidence of PWs.1 and 2 are sufficient to raise presumption under Section 118 of Negotiable Instruments Act.
16. Learned counsel for the Plaintiff nextly contended that Thiyagarajan was not examined and to prove the borrowal and execution, Thiyagarajan ought to have been examined by the Plaintiff. Learned counsel for Plaintiff has drawn Court's attention to the Plaint in which originally name of Thiyagarajan was typed and subsequently struck off and Plaintiff's name was written. It was contended that such filing of Plaint in the name of Thiyagarajan fortifies the contention of Plaintiff that assignment was made infavour of Plaintiff only for pursuing the litigation.
17. It is not the case of Appellant that Thiyagarajan is a non-existent person. The existence of Thiyagarajan is admitted and the said Thiyagarjan himself has written the assignment infavour of the Plaintiff. Under Section 118(g) of Negotiable Instruments Act, holder of negotiable instrument is presumed to be the holder in due course. Each and every one of holder of negotiable instrument to enforce payment. In view of the presumption under Section 118 (g) of Negotiable Instruments Act, non-examination of Thiagarajan is not fatal to Plaintiff's case.
18. As soon as execution of promissory note is proved, rule of presumption laid down under Section 118 of Negotiable Instruments Act is to be raised that promissory note is supported by consideration. Presumption under Section 118 of Negotiable Instruments Act is one of law and thereunder a Court shall presume inter alia that negotiable instrument or the indorsement was made for consideration. Once statutory presumption is raised, onus of proving absence of consideration is on the executant. When initial burden is discharged by the Plaintiff, the burden shifts to the Defendant to prove that promissory note is not supported by valid consideration. It is for the Defendant to rebut the presumption by establishing that he did not receive consideration by direct evidence or by bringing on record the preponderance of probabilities.
19. Observing that rebuttal could be established by direct evidence or by bringing on record the preponderance of probabilities, in (1993) 3 SCC 35 [Bharat Barrel and Drum Manufacturing Company v. Amin Chand Payrelal], the Supreme Court held as under:-
"..... The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under under Section 118 (a) in his favour. ......"
20. Presumption could be rebutted either by circumstantial evidence or by oral evidence. Mere defence plea of denial of signature in Ex.A1 promissory note is not sufficient to rebut the statutory presumption raised under Section 118 of Negotiable Instruments Act. It cannot be said that Courts below erred in placing burden of proof upon the Defendant and the Substantial Question of law No.2 is answered against the Appellant-Defendant.
21. Both trial Court as well as Appellate Court compared the disputed signature of Defendant in Ex.A1 promissory note with that of his admitted signature and held that there are no dissimilarities between the disputed signature and admitted signature and held that signature in Ex.A1 promissory note is that of the Defendant. Learned counsel for the Appellant contended that even though, Section 73 of Indian Evidence Act gives power to the Court, Court should not take upon itself the task of comparing the disputed signature and Court has to adopt cautious approach in basing its conclusion slowly on the opinion formed by the Court.
22. In AIR 1979 SC 14 [State v. Pali Ram], the Supreme Court held that "it is not advisable that a Judge should take up the task of comparing the admitted handwriting with the disputed one to find out whether the two agree with each other and the prudent course is to obtain the opinion and assistance of an expert". Likewise, in AIR 1967 SC 1326 [Fakhruddin v. State of Madhya Pradesh], the Supreme Court observed that comparison of the handwriting by the Court with the other documents not challenged as fabricated, upon its own initiative and without the guidance of an expert is hazardous and inconclusive. In AIR 1996 SC 1140 [O.Bharathan v. Sudhakaran and another], the Supreme Court reiterated necessity for adhering to the sound advice and guidance given in AIR 1979 SC 14 [State v. Pali Ram].
23. As per Section 73 of Indian Evidence Act, Court is competent to compare the disputed writings of a person with the other writings which are admitted or proved to be his writings. Section 73 of Indian Evidence Act gives express power to the Court to compare the disputed handwriting with admitted writings. Appellate Courts are also the competent to exercise powers under Section 73 of Evidence Act. Such comparison by the Court is with a view to appreciate the other evidence available on record on the question of writings. Prudence demands that Court should be extremely slow in venturing an opinion on the basis of mere comparison. Court should be slow to base its conclusion on such mere comparison. In the light of denial of signature by the Defendant and to appreciate the evidence of PWs.1 and 2, Courts below exercising powers under Section 73 of Indian Evidence Act chosen to compare the signature. On such comparison of disputed signature in Ex.A1 with the admitted signatures in the Written Statement, Vakalat and Ex.X1, both trial Court and Appellate Court arrived at concurrent findings that signature in Ex.A1 is that of the Defendant. Such concurrent findings of fact cannot be interfered with by the High Court.
24. Trial Court decreed the suit directing the Defendant to pay the suit claim of Rs.1,17,900/- with interest at the rate of 24% p.a. on the principal amount of Rs.50,000/- from the date of suit i.e. 05.6.2003 till the date of decree [07.3.2005] and at 9% p.a. From 08.3.2005 till the date of realisation. Lower Appellate Court as such confirmed the rate of interest as such awarded by the trial Court.
25. Learned counsel for the Appellant contended that awarding interest at 24% p.a. is exorbitant and contrary to the provisions of Section 34 CPC. It was contended that interest awarded by the Courts below is exorbitant and interest has to be reasonable.
26. The matter of awarding pre-suit interest is a matter of substantive law. In the suit promissory note [Ex.A1], Defendant agreed to repay the amount with interest at the rate of 24% p.a. Courts below awarded pre-suit interest at contractual rate of 24% p.a. In so far as interest pendente lite, award of interest from the date of suit to the date of decree is entirely discretionary. Judicial discretion in awarding interest pendente lite has to be exercised on sound judicial principles so as to advance the cause of justice.
27. Section 34 C.P.C. leaves it to the discretion of the Court as to what interest is to be decreed by way of pendente lite interest. So far as future interest or further interest is concerned, that too also is left entirely to the discretion of the Court, but subject to a limit of 6%. However, the added proviso would remove the limit to the future interest in a arising out of a commercial transaction. But, the proviso does not take away the discretion left to the Court, nor does it limit the scope of exercise of such discretion. Defendant borrowed the amount for meeting his family expenses. While so, there was no justification for awarding interest pendente lite at the rate of 24% p.a. during the pendency of suit and the same is to be reduced to 9% p.a.
28. Grant of interest from the date of decree to the date of payment is also discretionary. Even if the contract rate of interest is more, in the case of a transaction which is not a commercial transaction, the Court will be justified in awarding interest at 6% p.a. from the date of decree to the date of realisation. Awarding interest pendente lite by the trial Court at the rate of 24% p.a. and future interest at the rate of 9% p.a. is unreasonable and is to be reduced.
29. In the result, Judgment and Decree of the lower Appellate Court in A.S.No.31/2005 dated 21.4.2006 is modified in so far as interest alone and the Second Appeal is partly allowed. While confirming decreeing of suit in respect of suit claim rate of interest is modified. The interest pendente lite on the principal amount of Rs.50,000/- from the date of suit [05.6.2003] till this date [08.01.2010] is reduced to 9% p.a. and future interest is payable at the rate of 6% p.a. on the principal amount of Rs.50,000/- from this date till realisation. In the circumstances of the case, there is no order as to costs in the Second Appeal.
bbr
To
1. The Principal Subordinate Judge,
Mayiladuthurai
2. The Principal District Court,
Nagapattinam
No comments:
Post a Comment