AITHAPPA M.BHANDARY v. P.K.MOHAMMAD

dated cheque was claimed to have been delivered to the plaintiff by the defendant on 1.12.1995 in repayment of the loan availed of by the defendant. The plaintiff also claimed interest @ 15% per annum.

2. The defendant contended that he had only borrowed an amount of Rs.30,000/- from the plaintiff for the purpose of construction of his residential house and that too on 20.09.1994. He claimed pledge of original title deeds with respect to two of his properties, respectively having an extent of 65 cents and 50 cents. Having made regular payments towards the principal and interest, totalling Rs.45,000/-, the defendant approached the plaintiff to close the account. On the plaintiff's refusal, there was a mediation A.S.No.633 of 1998 - 2 - on 20.06.1995, in which the plaintiff agreed to settle the loan finally for Rs.5,000/-. The defendant, on the same day on instruction of the plaintiff, opened an account in the Kasargod District Co-operative Bank, Uppala Branch and handed over a blank signed cheque. The mediation, as per the consistent version of the defendant, in the written statement as also before Court, was in the presence of two named persons, being Shivappa and Prabhakaran and that too at the residence of the plaintiff.

3. The plaintiff was examined as P.W.1 and the defendant as D.W.1, marking respectively Exhibits A1 to A6 and Exhibits B1 to B3. The stop memo issued by the defendant to the Manager of the Bank, Uppala Branch was marked as Exhibit X1. The Court below, on an appreciation of the evidence, found that the signature having been admitted by the defendant, the burden was entirely on the defendant to disprove the claim of the plaintiff and, in turn, prove his own version. On an examination of Exhibit B1, an encumbrance certificate, it was found that the property having 65 cents which the defendant is alleged to have pledged with the plaintiff was in fact sold on 26.8.1995 itself, i.e., before the date in the cheque and the date on which the delivery of the A.S.No.633 of 1998 - 3 - cheque was alleged in the plaint. Exhibit B2 Ration Card was relied upon by the Court to find that the defendant is a coolie and not a contractor as alleged by the plaintiff. Exhibit B3 is the passbook of the account, which the defendant claims to have opened on the instruction of the plaintiff and in which Exhibit A1 cheque was issued. The Court below found that the passbook bears evidence of the mediation that took place on 20.06.1995. The plaintiff's statement that he had, in fact, loaned an amount of Rs.2,20,000/- and the additional Rs.5,000/- was towards interest; was highlighted by the trial Court as a material departure from the plaint. The trial Court then went on to labour on the source of the plaintiff and the probable fact that the plaintiff was carrying on money lending business without a valid licence. On the finding that these aspects probabilise the case of the defendant, the suit was decreed only for an amount of Rs.5,000/- with interest at 6% per annum.

4. The suit, undoubtedly, is based on the negotiable instrument, Exhibit A1, the issuance of which is admitted. The Negotiable Instruments Act provides for a presumption under Section 118, which acts with full force in the instant case. The A.S.No.633 of 1998 - 4 - major thrust of the counsel for the respondent-defendant, before us, was that Exhibit A1 cheque though admittedly executed by the defendant, was executed as a blank instrument. We have gone through the entire evidence adduced in the case and has also examined Exhibit A1 cheque.

5. Much emphasis has been laid in the course of arguments regarding the deposition of P.W.1 in cross examination. P.W.1 admits that the cheque was issued from his house and that it was signed in front of him. But, however, also says that the amount, date and payee's name were not written before him. It is pertinent that he also says that he is not aware as to who wrote the amount and denies the specific question that a blank cheque was issued to him. The answers given by him to specific questions put on cross examination cannot be taken out of context to call it an admission by the plaintiff. At best it could only be inferred that the already filled up cheque was signed in front of the plaintiff.

6. Is the evidence recorded in the case or the probabilities emanating therefrom sufficient to rebut the presumption available under Section 118 of the Negotiable Instruments Act? A.S.No.633 of 1998 - 5 -

7. The learned counsel for the defendant would place reliance on a Division Bench decision of this court reported in Velayudhan v. Velayudhan [2001 (1) KLT 392] to contend that mere putting of signature does not amount to admission of the execution of the document and that even if signature is admitted, on the denial of execution as also of consideration, the burden of proof is on the plaintiff. We notice that the above proposition of law has been laid down in a case where the presumption under Section 114 of the Indian Evidence Act, 1872 was urged in support of a claim for specific performance based on an agreement. In the instant case, the presumption from which support is drawn is a mandatory presumption under Section 118 of the Negotiable Instruments Act. In both instances, the fact of execution and consideration are to be pleaded and proved by sufficient evidence. The words used in Section 114 of the Evidence Act is “may presume” while Section 118 of the Negotiable Instruments Act mandates that “presumptions shall be made”. Whether it be “may” or “shall”, the presumptions raised in both the cases are rebuttable as distinguished from “conclusive proof”, which leads to an irrebuttable presumption. Referring to Section 4 of the Evidence A.S.No.633 of 1998 - 6 - Act, the Hon'ble Supreme Court has held so in Kumar Exports v. Sharma Carpets [(2009) 2 SCC 513]: “Section 4 of the Evidence Act inter alia defines the words “may presume” and “shall presume” as follows: 'May presume'.- Whenever it is provided by this 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: 'Shall presume'.- Whenever it is directed by this Act that the court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved: In the former case, the court has an option to raise the presumption or not, but in the latter case, the court must necessarily raise the presumption. If in a case the court has an option to raise the presumption and raises the presumption, the distinction between the two categories of presumptions ceases and the fact is presumed, unless and until it is disproved”. Hence, while Section 114 of the Indian Evidence Act does not oblige the Court to raise a presumption, Section 118 of the Negotiable Instruments Act makes it obligatory on the Court to raise the presumption when the factual basis leading to the A.S.No.633 of 1998 - 7 - presumption has been established. The presumption available under Section 114 of the Evidence Act and Section 118 of the Negotiable Instruments Act has been succinctly distinguished in Dhanvantrai Balwantrai Desai v. State of Maharashtra [AIR 1964 SC 575] in the oft-quoted paragraph: “The burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under Section 114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The words 'unless the contrary is proved' which occur in this provision make it clear that the presumption has to be rebutted by 'proof'; and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted”.

8. It has to be noticed that there is no material evidence available in the instant case to rebut the presumption. The defendant, right from the reply notice, admitted the issuance of a A.S.No.633 of 1998 - 8 - cheque and that too for valid consideration. The defence is that only Rs.5,000/- was due and that a blank signed cheque was issued. In the written statement as also in the witness box, D.W.1 has a case of mediation that occurred in the plaintiff's house, pursuant to which the cheque was executed. The mediation, as pleaded by the defendant, was in the presence of two named persons. In the box the defendant also speaks of another person present at that time. The specific case of the defendant thus is that these three persons, i.e., Shivappa, Prabhakaran and Aboobacker, were present at the time of the execution of the cheque and that they had cautioned him from issuing a blank cheque. But, none were examined to prove the mediation or the execution of a blank instrument and the coercion exerted by the plaintiff so to do.

9. We are surprised at the finding of the Court below that Exhibit B3 passbook proves the mediation having been taken place on 20.06.1995. Exhibit B3 is a passbook issued by the Bank showing only one entry, i.e., the initial deposit of Rs.250/- on

20.06.1995. We are unable to comprehend how the mere date on the passbook would evidence the mediation spoken to by the defendant or probabilise the case of the defendant that only A.S.No.633 of 1998 - 9 - Rs.5,000/- was due to the plaintiff. Assuming the defence to be true, the defendant admits that there was due an amount of Rs.5,000/- to the plaintiff, in repayment of which the cheque was issued. The issuance of a stop memo to the Bank on 29.12.1995, Exhibit X1, claiming that the cheque book issued in the captioned account and signed by the account holder has been lost is to be examined in the context of the above admission. We specifically notice that no cheque numbers have been shown in Exhibit X1 and the loss reported is of the entire cheque book. If there is a shred of truth in the story set up by the defendant, then there is no reason why he should have stopped the encashment of the cheque issued by him. Admittedly there was an amount of Rs.5,000/- to be paid to the plaintiff and the defendant too agreed to it on mediation. Without any provocation or knowledge of more money being claimed by the plaintiff, it is the contention of the defendant that a stop memo has been issued. The fact that a stop memo was issued reinforces the probability of the defendant having executed Exhibit A1 negotiable instrument in the form it has been presented to the Bank and Exhibit B3 passbook conclusively proves that the balance available was only Rs.250/- while, even as per the A.S.No.633 of 1998 - 10 - defendant's admission, Rs.5,000/- was payable to the plaintiff.

10. Exhibit B1 certificate, the trial court found, shows that the property had been sold before the loan was availed. The said fact is not at all relevant. The suit is one based on a negotiable instrument and the plaintiff does not claim any pledge or mortgage. True, the plaintiff, in his deposition, speaks of a pledge of title deeds. However, even if the title deeds were handed over to the plaintiff, the sale of the property would not have been known to the plaintiff. The plaintiff also speaks of a number of transactions with the defendant. In any event, it has also come out in evidence that the sale evidenced by Exhibit B1 is by the defendant to his own wife. Exhibit B2 also has absolutely no relevance, since the social status or even the financial condition of the defendant is not in question and the fact in dispute is only the execution of a negotiable instrument. The trial Court's labours to discredit the plaintiff and his status also falls flat. The learned Judge while doubting the source and capacity of the plaintiff to raise the money, in the same breath finds that the plaintiff is a person who has initiated legal proceedings against a number of persons for return of money. The finding of the Court below that A.S.No.633 of 1998 - 11 - the case of the defendant is probable, is without any basis or evidence. Having found that the defendant has to disprove the plaintiff's case by virtue of the presumption available under Section 118 of the Negotiable Instruments Act and prove beyond reasonable doubt his own version, the court below would meander within the laborious but still feeble defence set up by the defendant to enter a finding of probabilities. The finding of the court below, in our opinion, is totally without any basis. The rebuttal attempted by the defendant is not supported by any evidence. It is to be conceded that it is not necessary for the defendant to conclusively establish the rebuttal to displace the presumption. But in the instant case it cannot be gainsaid that any reasonable or probable rebuttal emanates from the defence set up by the defendant.

11. On a consideration of the totality of facts and circumstances as is discernible from the evidence recorded in the case, we are of the opinion that the trial court misdirected itself in accepting the defence set up in the above case as a more probable one. The defendant has thoroughly failed to displace the presumption available under Section 118 of the Negotiable Instruments Act. The execution and issuance of negotiable A.S.No.633 of 1998 - 12 - instrument, viz., Exhibit A1 cheque, cannot at all be doubted. The appellant-plaintiff, hence, is entitled for a decree for realization of the entire amounts covered by Exhibit A1 cheque. In the result, this appeal is allowed, setting aside the decree and judgment of the court below and a decree is passed allowing the appellant-plaintiff to recover an amount of Rs.2,25,000/- (Rupees two lakhs and twenty five thousand only) with interest thereon at the rate of 15% per annum from the date of receipt of Exhibit A4 notice, being 25.01.1996, till date of suit and thereafter at the rate of 6% per annum till realization, from the defendant and his assets. The appellant-plaintiff is awarded proportionate costs throughout. Sd/- Thottathil B.Radhakrishnan Judge Sd/- K.Vinod Chandran Judge. vku/- - true copy -