{"id":127879,"date":"2008-05-16T00:00:00","date_gmt":"2008-05-15T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/mallavarapu-kasivisweswara-rao-vs-thadikonda-ramulu-firm-ors-on-16-may-2008"},"modified":"2015-12-24T03:53:01","modified_gmt":"2015-12-23T22:23:01","slug":"mallavarapu-kasivisweswara-rao-vs-thadikonda-ramulu-firm-ors-on-16-may-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/mallavarapu-kasivisweswara-rao-vs-thadikonda-ramulu-firm-ors-on-16-may-2008","title":{"rendered":"Mallavarapu Kasivisweswara Rao vs Thadikonda Ramulu Firm & Ors on 16 May, 2008"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Mallavarapu Kasivisweswara Rao vs Thadikonda Ramulu Firm & Ors on 16 May, 2008<\/div>\n
Author: T Chatterjee<\/div>\n
Bench: Tarun Chatterjee, Harjit Singh Bedi<\/div>\n
                                                         REPORTABLE\n\n           IN THE SUPREME COURT OF INDIA\n            CIVIL APPELLATE JURISDICTION\n\n\n             CIVIL APPEAL NO.5597 of 2001\n\nMALLAVARAPU KASIVISWESWARA\nRAO                                           ..Appellant\n\n\nVERSUS\n\n\nTHADIKONDA RAMULU FIRM\nand Ors.                                   ..Respondents\n\n\n                      JUDGMENT\n<\/pre>\n
 TARUN CHATTERJEE,J.\n<\/p>\n
 1.   This appeal is directed against the final judgment and
\n      order dated 30th of July, 1999 passed by a Division
\n      Bench of the High Court of Judicature of Andhra
\n      Pradesh at Hyderabad in AS No. 721\/92 whereby the
\n      High Court had affirmed the judgment and decree dated
\n      5th of August, 1991 in OS No. 33\/87 of the 1st Court of
\n      the Additional Subordinate Judge, Kakinada, E.G.
\n      District, Andhra Pradesh decreeing the suit filed by the<\/p>\n
                                                            1<\/span>
\n     appellant in part for a sum of Rs. 2,33,125\/- with interest
\n     @ 18% from the date of the suit till realization.\n<\/p>\n
2.   The facts leading to the filing of this appeal as emerging
\n     from the case made out by the appellant in the plaint
\n     are as under.\n<\/p>\n
     The appellant is the son-in-law of respondent no.2. The
\nrespondent nos. 3 and 4 are the sons of respondent no. 2
\nwhile respondent no. 1 is the firm belonging to respondent
\nnos. 2 to 4 whose managing partner is respondent No.2. The
\nappellant   introduced   one   Pynda     Ramakumar       to       the
\nrespondents   who    agreed    to    advance   monies    to       the
\nrespondents on the understanding that the respondents would
\nrepay the amount while the appellant would execute pronotes
\nas surety. The appellant accordingly executed certain
\npronotes    whose    consideration    was   received     by       the
\nrespondents. As regards repayment, the respondents were
\nsending monies by drafts or otherwise in the name of one
\nNarayan Murthy, who was the clerk of the appellant, by
\ndepositing the same in his account. The appellant would
\nwithdraw such amount deposited in the clerk’s account by
\nencashing the TTs or Drafts which was then paid to Pynda
\nRamakumar who then got the endorsements signed by the
\nappellant. This continued for some time but when the
\nrespondents failed to repay the balance amount due to Pynda
\nRamakumar, he pressurized the appellant for payment of the
\nbalance amount due to him. The appellant made several<\/p>\n
                                                              2<\/span>
\ndemands to the respondents for payment of the amounts due
\nto Pynda Ramakumar but when the respondents could not
\npay the amounts, the respondent no. 2 as manager of the
\njoint family and also on behalf of the respondent No. 1 firm
\nexecuted two pronotes for sums of Rs. 2,15,000\/- and Rs.
\n4,72,000\/- being Ex.A-20 and Ex.A-21 respectively and a
\nKhararnama    in   favour   of   the   appellant   whereby       the
\nrespondent No. 1 agreed to repay amounts with interest at
\nRs. 2.50 ps. and Rs. 1.50 ps. respectively per annum. After
\nexecution of such pronotes, when, despite several demands,
\nthe respondents did not pay the amounts, a notice dated 3rd
\nof October, 1986 was issued to them by the appellant stating
\nthat the pronotes and khararnama were executed by
\nrespondent no. 1 in favour of the appellant which may be
\ndischarged. The respondents vide letters dated 16th of
\nOctober, 1986 and 20th of October, 1986 replied to the notice
\nwherein they did not specifically deny the execution of the
\npronotes and the Khararnama but referred to the allegations
\nmade in such notice as false and vague.\n<\/p>\n
3.   In the backdrop of the above mentioned facts, in 1987,
\n     the appellant, therefore, filed O.S. No. 33\/1987 in the
\n     1st Court of the Additional Subordinate Judge, Kakinada
\n     for recovery of the amounts due under the pronotes of
\n     Rs. 4,72,000\/- and Rs. 2,15,000\/- with interest and
\n     costs. The respondent No. 2 contested the suit by filing
\n     written statement on his own behalf and also on behalf<\/p>\n
                                                             3<\/span>
\n     of the respondent No. 1 firm denying any execution of
\n     the pronotes in favour of the appellant and further
\n     stating that the pronotes were forged by the appellant
\n     with the assistance of his brother-in-law and the Clerk. It
\n     was further alleged that the appellant bore a grudge
\n     against the respondents and was involved in many
\n     criminal cases and since he was not looking after his
\n     wife and children properly, the respondents had opened
\n     an account in the name of Narayanmurthy and were
\n     sending monies regularly in that account for the
\n     maintenance of the appellants’ family and therefore, it
\n     was alleged that no money was ever borrowed from the
\n     said Pynda Ramakumar, whom the respondent no.2 did
\n     not know, through the appellant for the respondent No.
\n     1 firm. It was also alleged by the respondent no. 2 that
\n     the respondent no. 1 firm was not carrying on any
\n     business and in fact, all its branches were closed and
\n     the respondent Nos.        2 to 4 were partitioned in the
\n     year 1980.\n<\/p>\n
4.   The respondent nos. 3 and 4 also filed separate written
\n     statements contending, inter alia, that they had not
\n     signed any pronotes and the scribe of the pronotes in
\n     question was the clerk of the appellant and the Attester
\n     was his brother-in-law.   They also contended that they
\n     were not aware of the alleged borrowing by the
\n     respondent no.2 for the respondent no. 1 firm from the<\/p>\n
                                                          4<\/span>
\n     said Pynda Ramakumar or the appellant and in fact, the
\n     pronotes in question did not show that the amounts so
\n     borrowed were for the business of the respondent no.1
\n     firm. It was further alleged in the written statement filed
\n     by the respondent Nos. 3 and 4 that the pronotes were
\n     fabricated on account of family disputes between the
\n     appellant and the respondent No. 2 and that they had
\n     no necessity to borrow any amount from some other
\n     person. Infact, Pynda Ramakumar was a friend and an
\n     associate of the appellant.           Even otherwise, the
\n     pronotes were not binding on them as no amounts were
\n     borrowed for the benefit of the firm and they were not
\n     signatories to the said pronotes. It was further the case
\n     of the respondent Nos. 3 and 4 that there was no joint
\n     family because the properties of the respondents were
\n     partitioned in the year 1980 and, therefore, the
\n     respondent no. 2 had no right or authority to borrow
\n     debts for the firm on their behalf.      Accordingly,       all
\n     the respondents prayed for dismissal of the suit filed by
\n     the appellant.\n<\/p>\n
5.   On the basis of the pleadings of the parties, the
\n     following issues were framed by the trial court for
\n     consideration: –\n<\/p>\n
     a)          Whether the two suit pronotes
\n                 dated 29.08.86 and 29.08.1986<\/p>\n
                                                             5<\/span>
\n                 are true, valid and binding on
\n                 the defendants?\n<\/p>\n
     b)          Whether the plaintiff is entitled
\n                 to recover the suit amount with
\n                 subsequent interest and costs
\n                 thereon?\n<\/p>\n
     c)          Whether          the    2nd     defendant
\n                 executed the suit pronotes in
\n                 the capacity of Manager of the
\n                 joint family of the defendants 2
\n                 to    4     so     as    to     bind    the
\n                 defendants 3 and 4?\n<\/p>\n
     d)          Whether the defendant No. 2<\/span><\/p>\n
                 executed          pronotes       as     the
\n                 Managing Partner of D.1 firm so
\n                 as to bind its partners 3 and 4?\n<\/p>\n
     e)          To what relief?\n<\/p>\n
6.   As noted herein earlier, by the judgment dated 5th of
\n     August,   1991,       the    1st    Court    of    the    Additional
\n     Subordinate Judge, Kakinada decreed the suit of the
\n     appellant in part for a sum of Rs. 2,33,125\/- with
\n     proportionate costs and subsequent interest @ 18 %
\n     p.a. from the date of suit till realization holding the same
\n     to be a commercial transaction(Ex.A-20). As regards
\n     recovery of the amount due under the other pronote
\n     Ex.A-21, the trial court held that the appellant was not<\/p>\n
                                                                   6<\/span>
\n     entitled to recover the same because the said pronote
\n     was not supported by consideration and accordingly, the
\n     rest of the claim of the appellant was dismissed with
\n     proportionate costs. Feeling aggrieved by the said
\n     judgment of the trial court, both the appellant and the
\n     respondents filed two appeals before the High Court of
\n     Andhra Pradesh at Hyderabad being A.S. NO. 721\/87
\n     and 1872\/92 respectively. By the impugned judgment of
\n     the High Court dated 30th of July, 1999, both these
\n     appeals were dismissed. The appellant has filed this
\n     special leave petition before us against the aforesaid
\n     judgment of the High court passed in A.S. No. 721\/87.\n<\/p>\n
7.   We have heard the learned counsel for the parties and
\n     examined the judgment of the High Court as well as the
\n     trial Court and other materials on record including the
\n     oral and documentary evidence. The only question that
\n     needs to be decided in this appeal is whether in the
\n     absence of any rebuttal by the respondents to the fact
\n     that the promissory note was for consideration as
\n     required, which gave rise to the presumption under
\n     Section 118 of the Negotiable Instruments Act, the
\n     courts below were justified in holding that since the
\n     appellant had given evidence inconsistent with such
\n     presumption, no decree could be passed on the basis of
\n     such presumption.\n<\/p>\n
                                                       7<\/span><\/p>\n
8.   The learned counsel for the appellant contended before
\n     us that the trial court had found that the existence of
\n     both the pronotes was proved by evidence and the
\n     materials on record. The learned counsel for the
\n     appellant accordingly contended that although it was
\n     never the defence of the respondents that the pronotes
\n     were not supported by consideration, nevertheless, the
\n     trial court had held that since the appellant had failed to
\n     prove that he had borrowed those amounts from Pynda
\n     Ramakumar and lent the same to the respondent firm,
\n     the pronote Ex.A-21 could not be believed. The learned
\n     counsel for the appellant, therefore, vehemently argued
\n     that the conclusion reached by the trial court and the
\n     High Court to the effect that since the evidence adduced
\n     by the appellant was inconsistent with the presumption,
\n     in the absence of any evidence by the respondent to
\n     rebut   the   presumption    about     the   pronote,    such
\n     conclusion was contrary to law. The learned counsel for
\n     the appellant, while elaborating her argument further
\n     also contended before us that once the execution of the
\n     pronote Ex.A-21 was proved, the presumption under
\n     Section 118 of the Negotiable Instruments Act came
\n     into play and after such presumption, the initial burden
\n     was on the respondents to prove the non-existence of
\n     the consideration by adducing direct evidence or by
\n     preponderance     of   probabilities   showing    that       the
\n     existence of such consideration          was improbable,<\/p>\n
                                                              8<\/span>
\n      doubtful or illegal and since they had failed to discharge
\n      such initial burden, the appellant was entitled to the
\n      benefit of the presumption that the pronote was for
\n      consideration. In this regard, the learned counsel for the
\n      appellant strongly relied on a decision of this court in
\n      Bharat Barrel & Drum Company Vs. Amin Chand
\n      Payrelal [(1993) 3 SCC 35].\n<\/p>\n
9.    These submissions of the learned counsel for the
\nappellant were contested by the learned counsel appearing
\non behalf of the respondents. The learned counsel appearing
\non behalf of the respondents have contended that the
\nappellant is not entitled to the benefit of presumption under
\nSection 118 of the Negotiable Instruments Act and that the
\nimpugned judgment of the High Court was passed after
\nconsidering the evidence in extenso to hold that the pronote
\nEx. A-21 was not supported by any consideration. The
\nlearned counsel for the respondents further submitted that the
\npresumption under Section 118 is rebuttable and that the
\nrespondents had all along denied the execution of the
\npronotes.\n<\/p>\n
10.   Having heard the learned counsel for the parties, we are
\nof the view that this appeal deserves to be allowed for the
\nreasons set out hereinafter.\n<\/p>\n
                                                          9<\/span><\/p>\n
11.    Section 118 of the Negotiable Instruments Act deals
\nwith presumptions as to negotiable instruments. One of such
\npresumptions appearing in Section 118(a), with which we
\nwould be concerned in this appeal is reproduced as under:-
\n“that every negotiable instrument was made or drawn for
\nconsideration, and that every such instrument, when it has
\nbeen accepted, endorsed, negotiated or transferred, was
\naccepted,     endorsed,     negotiated     or   transferred         for
\nconsideration.”\n<\/p>\n
12.    Under Section 118(a) of the Negotiable Instruments Act,
\nthe court is obliged to presume, until the contrary is proved,
\nthat the promissory note was made for consideration. It is also
\na settled position that the initial burden in this regard lies on
\nthe defendant to prove the non-existence of consideration by
\nbringing on record such facts and circumstances which would
\nlead   the   Court   to   believe   the   non-existence   of    the
\nconsideration either by direct evidence or by preponderance
\nof probabilities showing that the existence of consideration
\nwas improbable, doubtful or illegal.         In this connection,
\nreference may be made to a decision of this Court in the case
\nof Bharat Barrel & Drum Manufacturing Company Vs. Amin
\nChand Payrelal [supra]. In paragraph 12 of the said decision,
\nthis court observed as under: –\n<\/p>\n
       “Upon consideration of various judgments
\n       as noted hereinabove, the position of law
\n       which emerges is that once execution of<\/p>\n
                                                               10<\/span>
\nthe promissory note is admitted, the
\npresumption under Section 118(a) would
\narise that it is supported by a
\nconsideration. Such a presumption is
\nrebuttable. The defendant can prove the
\nnon-existence of a consideration by
\nraising a probable defence. If the
\ndefendant is proved to have discharged
\nthe initial onus of proof showing that the
\nexistence       of     consideration     was
\nimprobable or doubtful or the same was
\nillegal, the onus would shift to the plaintiff
\nwho will be obliged to prove it as a matter
\nof fact and upon its failure to prove would
\ndisentitle him to the grant of relief on the
\nbasis of the negotiable instrument. The
\nburden upon the defendant of proving the
\nnon-existence of the consideration can be
\neither direct or by bringing on record the
\npreponderance        of   probabilities    by
\nreference to the circumstances upon
\nwhich he relies. In such an event, the
\nplaintiff is entitled under law to rely upon
\nall the evidence led in the case including
\nthat of the plaintiff as well. In case, where
\nthe defendant fails to discharge the initial
\nonus of proof by showing the non-\n<\/p><\/blockquote>\n
existence of the consideration, the plaintiff
\nwould invariably be held entitled to the
\nbenefit of presumption arising under
\nSection 118(a) in his favour. The court may
\nnot insist upon the defendant to disprove
\nthe existence of consideration by leading
\ndirect evidence as the existence of
\nnegative evidence is neither possible nor
\ncontemplated and even if led, is to be seen
\nwith a doubt. The bare denial of the
\npassing of the consideration apparently
\ndoes not appear to be any defence.\n<\/p>\n
Something which is probable has to be<\/p>\n
                                                 11<\/span>
\n     brought on record for getting the benefit
\n     of shifting the onus of proving to the
\n     plaintiff. To disprove the presumption, the
\n     defendant has to bring on record such
\n     facts       and     circumstances         upon
\n     consideration of which the court may
\n     either believe that the consideration did
\n     not exist or its non-existence was so
\n     probable that a prudent man would, under
\n     the circumstances of the case, shall act
\n     upon the plea that it did not exist……”\n<\/p>\n
13.From the above decision of this court, it is pellucid that if
\n   the defendant is proved to have discharged the initial onus
\n   of proof showing that the existence of consideration was
\n   improbable or doubtful or the same was illegal, the onus
\n   would shift to the plaintiff who would be obliged to prove it
\n   as a matter of fact and upon its failure to prove would
\n   disentitle him to the grant of relief on the basis of the
\n   negotiable instrument. It is also discernible from the above
\n   decision that if the defendant fails to discharge the initial
\n   onus of proof by showing the non-existence of the
\n   consideration, the plaintiff would invariably be held entitled
\n   to the benefit of presumption arising under Section 118(a)
\n   in his favour.\n<\/p>\n
14.Keeping the aforesaid in mind, let us now see if the
\n   respondents in this case had discharged the initial burden,
\n   which lay on them to prove that the pronote being Ex.A-21
\n   was not supported by consideration.\n<\/p>\n
                                                           12<\/span><\/p>\n
15.   The learned counsel for the appellant, as noted herein
\nearlier, contended that the respondents had neither taken the
\nplea that there was no consideration for the pronote Ex.A-21,
\neither in the reply notice or in the written statement, nor had
\nthey adduced any evidence to prove the non-existence of the
\nconsideration. The learned counsel for the respondents,
\nhowever, contended that the respondents had denied the very
\nexecution of the pronotes and referred the same as forged
\nboth in the reply notice as also in the written statement. We
\nare unable to accept the contentions of the learned counsel
\nfor the respondents. In the written statements, the plea of the
\nrespondents was that on the face of the pronotes, no cash
\nwas paid by the appellant and therefore, the respondents
\nwere not liable to pay the amount because the pronotes were
\nforged. It was a finding of the trial court, which was affirmed
\nby the High Court in the impugned judgment that the pronotes
\nwere indeed executed by the respondents. It was also a
\nfinding of the High Court that except in the reply notice issued
\nby the respondents, nowhere had they stated that the
\nconsideration had not passed. It is also an admitted position
\nthat the findings of the two courts below was that the
\nexecution   of   the   pronotes   having   been   proved,    the
\npresumption under Section 118(a) must come into play and
\nthe appellant must be entitled to a decree in the absence of
\nevidence to the contrary. Having said this, the High Court
\nproceeded to observe that if there was evidence inconsistent<\/p>\n
                                                            13<\/span>
\nwith the presumption under Section 118(a) of the Act, the
\ncourt would not be in a position to pass a decree in favour of
\nthe appellant on the basis of the presumption and therefore,
\nproceeded to examine the evidence of the appellant in
\nextenso. In view of the decision of this Court in Bharat Barrel
\n& Drum Manufacturing Company Vs. Amin Chand Payrelal
\n[supra] and also in view of the findings arrived at by the
\nCourts below, we are of the view that since the initial burden
\non the respondents to show that the pronote being Ex.A-21
\nwas not supported by any consideration was not discharged
\nby them, the High Court was not justified in not decreeing the
\nsuit of the appellant in respect of the amount covered by the
\npro-note Ex.A-21. It is an admitted position that the finding as
\nto the execution of the pronotes had become final. Also, we
\nare of the view that the respondents had not discharged the
\ninitial burden of proving the non-existence of consideration
\neither by direct evidence or by preponderance of probabilities.
\nThe mere denial, if there be any, by the respondents that no
\nconsideration had passed would not have been sufficient and
\nsomething probable had to be brought on record to prove the
\nnon-existence of consideration. In this view of the matter, we
\nare, therefore, of the view that once the execution of the
\npronote has been proved, the appellant would be entitled to
\nthe benefit of the presumption under Section 118(a) of the
\nNegotiable Instruments Act because the respondents had
\nfailed to discharge the initial burden and therefore, the High
\nCourt was in error in appreciating the evidence of the<\/p>\n
                                                          14<\/span>
\nappellant to come to the conclusion that since such evidence
\nwas inconsistent with the pronote being Ex.A-21, the
\nappellant could not be given the benefit of the presumption.\n<\/p>\n
16.   For the foregoing reasons, the appeal is allowed and
\nthe judgments of the courts below are, therefore, modified to
\nthe extent that the suit of the appellant must stand decreed in
\nits entirety. There will be no order as to costs.\n<\/p>\n
                                        ………………………….J.<\/p>\n
\n                                        [TARUN CHATTERJEE]\n\n\n\n\nNew Delhi ;                                    .......................\n........J.\nMay 16, 2008                             [HARJIT SINGH BEDI]\n\n\n\n\n                                                                  15<\/span>\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Mallavarapu Kasivisweswara Rao vs Thadikonda Ramulu Firm & Ors on 16 May, 2008 Author: T Chatterjee Bench: Tarun Chatterjee, Harjit Singh Bedi REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.5597 of 2001 MALLAVARAPU KASIVISWESWARA RAO ..Appellant VERSUS THADIKONDA RAMULU FIRM and Ors. ..Respondents JUDGMENT TARUN CHATTERJEE,J. 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