TMI Blog1958 (3) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... from him. Jeevraj had no ready mone., He, therefore, gave this 'hundi' to Himmatmal and that the 'hundi' was-without consideration. He also disputed the allegation of the plaintiff that the 'hundi' was executed in Dhamli. His case was that it was executed in Soda-was and that the court of Sojat had no jurisdiction. 4. Four issues were framed by the Munsif in this connection which are these: 1. Did the plaintiff ask for a loan from the-defendant and in consequence the defendant gave this 'hundi' Ex. P. 1 to Himmatmal to enable him-to get the money? 2. Was the Hundi Ex. P. 1 executed at Dhamli and has the court jurisdiction to hear the suit? 3. Whether the 'hundi' was dishonoured by Keshrimal Mishrimal to whom it was addressed. 4. Is the plaintiff entitled to any relief? 5. The burden of proving the first issue was placed on the defendant. The defendant examined four witnesses in support of his case. The plaintiff examined six witnesses on his behalf. In his evidence the plaintiff definitely put forward the case that he had paid ₹ 450 in cash to Jeevraj when the 'hundi' Ex. P. 1 was executed. The Munsif, on a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such cases to hold that both parties having led their entire evidence the matter then rests upon such evidence and not upon presumption at all. 3. Is it a correct proposition of law to say that the presumption available under section 118 stands rebutted merely because one kind of consideration has been mentioned in the negotiable instrument but another kind of consideration is admitted by the plaintiff to have passed from him or appears to have flowed from him, and in such circumstances the burden to prove consideration is shifted to the plaintiff; or in such a case, the true rule of law still is that the burden continues to remain upon the defendant and it is for him to satisfv the court that no consideration had passed, and if he fails to discharge that burden, he should still fail. 9. I shall first deal with the three questions referred to the Full Bench for answer and then go on to consider the entire case. Let me begin with the first question. The question as framed is general, but I prefer to deal with it so far as the point raised therein which I confine to section 118(a) applies to the former State of Marwar from which this case comes. Before I actually take up the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts Act 1881 in terms cannot be held to apply to cases of 'hundis' arising in the former State of Bikaner, but the principles underlying those provisions must be held to be applicable as rules of equity, justice and good conscience or as being rules as are being observed generally in practice among the merchants in this country. It was also observed that the stringent or technical provisions of the Negotiable Instruments Act with respect to presentment or notice of dishonour cannot be called into operation in determining the liability in the ease of 'hundis' which came to be executed in a territory where there was no Act in force at the relevant time. But where such 'hundis' are in oriental language, the rights of the parties concerned with respect to these 'hundis' fall properly to be determined cnly on the basis of and in consonance with the principles underlying the Negotiable Instruments Act or in accordance with the general custom in vogue in dealing with such instruments among merchants in that part of the country. 12. It is clear, therefore, that even though the Act may not be in force in any particular area, the principles behind the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, in section 80 of the English Bills of Exchange Act. In Byles on Bills page 125 the rule is stated in the following terms : Consideration is presumed until the contrary appears or at least appears probable. In Halsbury's Laws of England, Third Edition, Volume 3 para 218 page 142, principles of negotiability are mentioned and presumption of consideration is one of them as will appear from the fcllowing : The outstanding characteristics common to bills, cheques and notes which found expression in the cases decided before 1882 (this is the date of the English Bills of Exchange Act) and are embodied in the codifying statute are (1) that in the case of such instruments a valuable consideration is presumed, so that there is no necessity to state it. 15. Presumption, therefore, as to consideration is the very ingredient of negotiability and in the case of a negotiable instrument, presumption as to consideration has to be made. I have therefore no difficulty in coming to the conclusion that there is a principle behind Section 118(a) of the Act and it is not a mere technical provision which cannot be looked into where the Act is not in force. 16. The next questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich I arrive is that in the former State of Mar-war, the principle behind Section 118(a) was applicable and that principle was that the Court shall presume a negotiable instrument to be for consideration, that is it shall regard the consideration as proved unless and until it is disproved. The word disproved is also defined in the Evidence Act us follows : ''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. 19. Applying this definition to the principle behind the presumption in Section 118(a) the principle comes to this. The Court shall presume a negotiable instrument to be for consideration unless and until after considering the matters before it, it either believes that consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the cicumstances of the particular case, to act upon the supposition that the consideration does not exist. I would, therefore, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I am of opinion that in such a case the Court must take the third step also namely whether on a consideration of all the matters before it, it is of opinion that consideration has been disproved and there is no question of the Court not taking this third step and decreeing the suit after taking only these two steps on the basis of the presumption of consideration. It must, as the Evidence Act stands and as the words shall presume and disproved are defined in it, take this final step. I would, therefore, say in answer to the second question that the correct position in a case of this kind is that where both parties have led their entire evidence, the matter certainly rests on such evidence. It would, however not be correct to say that it does not rest upon presumption at all, for the Court cannot forget the presumption. It will always remember the presumption and judge the evidence in the light of the presumption, that is, it must come to the conclusion that the consideration has been disproved. In order to arrive at that conclusion, it will have to consider all the matters before it and then decide whether it believes that consideration does not exist or considers its non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the word disproved in Section 3 of the Evidence Act. I would therefore dismiss the appeal, but in the circumstances leave the parties to bear their own costs throughout. Jagat Naeayan, J. 23-24. I respectfully agree with my Lord the Chief Justice both in respect of the manner in which the questions referred to us should be answered and the manner in which the appeal should be disposed of. I.N. Modi, J. 25. I have had the advantage of perusing the judgment of my Lord the Chief Justice in this appeal which has come before this Full Bench on reference from a single Judge. As a few questions of general importance are involved in this appeal, and as the findings to which I have felt persuaded to come unfortunately do not coincide with those of my Lord on some of the points raised in the appeal or as to the final conclusion thereof, it has become necessary for me to state my conclusions separately together with the reasons therefor. 26. The facts in so far as they are material and which have culminated in the present reference may be shortly stated as follows. It would be convenient to refer to the appellant as plaintiff and the respondents as defendant for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is necessary at this stage briefly to point but what were the difficulties which made it necessary for this appeal being referred to the full bench. The main reason was whether the presumption as to consideration embodied in Section 118(a) of the Negotiable Instruments Act was attracted into application in the circumstances of this case. I may state at once that the Negotiable Instruments Act as such was not in force in the former State of Jodhpur either at the time the Hundi in suit was executed or when the present suit was brought. There were, however, a number of decisions of the Chief Court of the former State of Jodhpur which unmistakably lead to the inference that the principles underlying the Negotiable Instruments Act were time and again held to be applicable in that State, as it then was. These decisions have been referred to in the judgment of my Lord the Chief Justice and are 1938 Mar LR 91(2) (C); 1938 Mar LR 132 (D); 1940 Mar LR 76 (E) and 1947 Mar LR 94 (F). On the strength of these decisions, I have no doubt that if this case had come up before the Chief Court or later the High Court of the former State of Jodhpur, that court would not have had any hesitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence of the defendant in the judgment of the court of first appeal. In such circumstances I was (and am) definitely of the opinion that the judgment of that court was entirely vitiated and robbed of much of the value that would have otherwise attached to it as a final court of fact, and I felt constrained to go into that evidence independently of what the first court of appeal had said about it. On an independent appraisal of that evidence, I clearly formed the opinion and to this opinion I still adhere, for reasons which I shall have occasion to mention at some length presently, that the defendant's version that the Hundi had been executed by him by way of a loan to the plaintiff was quite false and no reliance could possibly be placed on it. I must further mention here that even so I was also not impressed with the veracity of the plaintiff's evidence to the effect that the defendant had executed the Hundi in suit for a cash loan of ₹ 450/- and formed the opinion that the plaintiff's evidence in support of that story could not be accepted at its face value. 33. It was in these circumstances that a somewhat difficult situation arose, and it became a ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t both parties having led their entire evidence the matter then rests upon such evidence and not upon presumption at all. (3) Is it a correct proposition of law to say that ths presumption available under Section 118 stands rebutted merely because one kind of consideration has been mentioned in the negotiable instrument but another kind of consideration is admitted by the plaintiff to have passed from him or appears to have flowed from him and in such circumstances the burden to prove consideration is shifted to the plaintiff; or in such a case, the true rule of law still is that the burden continues to remain upon the defendant and it is for him to satisfy the court that no consideration had passed, and if he fails to discharge that burden, he should still fail. 34. Now before I address myself to the aforesaid questions, I should like to dispose of a preliminary objection which was forcefully raised before the Full Bench by learned counsel for the defendant. That objection, put briefly, was that both courts below had held that the Hundi was without consideration and that this finding was binding upon the High Court, that is as much on the single Judge as also upon the Full B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Ram v. Rulia, AIR 1921 Lah 128 (J), Rangavva v. Seshappa, AIR 1927 Bom 228 (K), and Pandurang v. Tukaram, AIR 1934 Nag 253 (L). Lastly, there is a judgment of their Lordships of the Privy Council reported in the same volume from which learned counsel for the defendant has cited certain cases in support of his contention and that judgment appears at page 13 (W. C, Macdonald v. Fred Latimer, AIR 1929 PC 13) (M). Their Lordships made the following observation in dealing with the appeal before them which in my opinion concludes the matter: Their Lordships would further observe that all the courts below seem to have thrown the onus upon the appellant of proving that the properties he claimed were his own instead of placing it as it should be upon the plaintiff. 'It therefore appears to their Lordships that there is no question of tact so found that can be binding upon the appellate court on a second appeal,' and that it is necessary for them to consider what is the true position . (The underlining here in ' ' is mine). The principle of the aforesaid decision fully applies to this case and concludes the preliminary objection as untenable. I have, therefore, no he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lies on him; but if the plaintiff pleads a consideration different from that which is mentioned in the document sued upon, then the burden still rests upon the plaintiff to prove the consideration pleaded by him. Now, it may be accepted at once that all the provisions of the Negotiable Instruments Act cannot be bodily applied where the Act is not in force, as many of such provisions do not embody any principle at all but are technical rules, or matters of mere procedure. It would, therefore, have to be decided with respect to each such provision when it is sought to be applied to a particular case, where the Negotiable Instruments Act was not in force as to whether the provision sought to be applied embodies a principle, and if so, what that principle precisely is. This is what was said by the bench in AIR 1956 Raj 129 (B), to which I was a party, in connection with a suit which arose from the former State of Bikaner, where also the Negotiable Instruments Act was not in force. The question which mainly arose for decision in that case was whether a notice of dishonour to an endorser under Section 35 of the Negotiable Instruments Act by an endorsee was a requirement of princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the present appeal whether the interpretation put upon it by the learned Judges in AIR 1949 Bom 257 (G), is correct or not; but even without entering into that controversy, I am disposed to hold the view that it may be safely postulated that this clause embodies not, in any real sense, a merely technical provision but a far reaching principle and the principle embodied in the section in so far as it is material for the purposes of this appeal is that a negotiable instrument shall be presumed or deemed to have been made for consideration. The reason is not far to seek and is this. The one fundamental characteristic of instruments (for which provision has been made in the Act under consideration) is that such instruments are negotiable. In other words, they admit of being passed on from hand to hand like cash, and this is preeminently true of Hundis. The Legislature has obviously enacted this provision in the general interests of trade and traders. It is well-known that the Indian Negotiable Instruments Act is broadly speaking based upon the principles of English law, and under that law also^ a negotiable instrument is deemed to be for consideration. The relevant portion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 118 where the Negotiable Instruments Act is not in force is that such a presumption may be raised and not that it shall or must be raised. I am definitely of the opinion that this submission cannot be accepted. The acceptance of such a view would place negotiable instruments on the same level as ordinary documents. Such a course would, to my mind, be an unwarranted infliction upon traders in this part of Rajasthan in relation to Hundis executed before 1949, when the Negotiable Instruments Act was first brought into force in the former Jodhpur State. Besides the adoption of this view would be clearly ruinous to the interests of trade and traders and would throw unnecessary confusion into the commercial circles. I may also add that such an answer would be entirely contrary to the tenor or decisions given by the highest Court in the former State of Marwar having regard to its decisions given over a number of years with, reference to several other sections of the Negotiable Instruments Act. 39. My answer, therefore, to the first question is that the rule as to consideration enacted in Clause (a) of Section 118 is essentially a matter of principle, and it is not a technic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a witness. 43. The next witness D.W. Meghraj's evidence is, in my opinion, no better. He doubtless supports the story of the advance of a loan to the appellant by means of the Hundi. He is, however, the husband of defendant Jeevraj's own sister, a relationship which he seems to have been prepared not to disclose in his examination-in-chief and which he was compelled to admit in his cross-examination. I am not surprised therefore if this witness was prepared to support the defendant who is his brother-in-law in whatever the latter said. This witness was also asked whether he knew that there were any earlier dealings between the plaintiff and the defendant, and he deposed that he did not know. This witness also said that the main reason why Jeevraj gave the Hundi on Kesrimal at Chikjajur was that the defendant's brother Hemraj was in service at the shop of Kesrimal -- a story which the defendant Jeevraj does not himself propound. 44. The only other witness on the point is the defendant Jeevraj himself. He is the main witness in the case, and if his story does not inspire confidence, the rest of the evidence, in my opinion, cart-not improve his case, and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion that the defendant's story that he had executed the Hundi Ex. P-l by way of advancing a loan to the plaintiff is patently false and cannot be believed for a moment. 46. Now, if the matter had rested at this, this case would not have offered any serious difficulty in its decision, and the plaintiff would be clearly entitled to succecd on the ground that the defendant had failed to discharge me burden which lay upon him to disprove consideration. A good deal of confusion bas been created in the present case because the plaintiffs also led evidence to show that a cash considera tion of ₹ 450/- had been advanced to the defendant in lieu of which the lattei bad executed the Hundi.. Both plaintiffs Himmatmal and Hirachand exa-mined themselves, and they also produced P.W. 1: Chandmal, P.W. 2 Lumbaram and P.W. 6 Ganesh, This evidence has not been believed by the two Courts below, and having been taken through it myself, I am not prepared to hold that this evidence can be taken at its face value. The plaintiff's evidence is briefly as follows. 47. P.W. 1 Chandmal deposed that Jeevraj had executed the Hundi Ex P-l at Dhamli (where the plaintiff lived) in his pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The reply of Himmatmal was that defendant Jeevraj's brother Hemraj was in service at that shop; and we have it from the defendant Jeevraj himself that he was a partner of the firm Kesrimal Misrimal. This witness stated that when he gave the money, Chandmal and Jeevraj were present. The name of Hirachand was not mentioned among those present nor did Himmatmal say that money had been sent for from Ganesh through Heerachand and that Ganesh had paid it. In these circumstances I am not prepared to hold that the plaintiffs have succeeded in establishing the story that a cash payment had been paid to the defendant at the time the Hundi was executed by the defendant. 50. This is the gist of evidence of either party. The question arises: what is the legal effect of it: 51. Now let us look at the second question because having analysed the evidence of both parties, we should be in a proper position to appreciate this question, and if I may say so, with respect, we should be better prepared to answer it. I have already held above that there is a principle underlying Section 118(a) of the Negotiable Instruments Act and further that the presumption of consideration is not a discre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the final result in such a case, and I am of opinion that there must be a decree in favour of the defendant and the plaintiff must fail. Another type of case arises where the evidence of the defendant is weak and the plaintiff has either led no evidence or his evidence discloses nothing against him. There need, in my opinion, be no trouble as to this type of case either, and there must be a decree against the defendant. There is, however, a third category of cases where the evidence led by the defendant is untrustworthy and the plaintiff has also led evidence in support of consideration and that evidence also inspires little belief. It is this type of case which presents considerable difficulty and the case before me falls precisely within this category. 55. Now, my lord the Chief Justice has laid down that in every case the court must come to the conclusion on a consideration of the evidence of both the parties whether consideration has been disproved or not, and that a court cannot and should not deal with the evidence. in two water-tight compartments first saying that the evidence of the maker of the negotiable instrument as to failure of consideration is untrustworth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he had executed it by way of a loan to the plaintiff. It is not the defendant's case that he had got any khata executed by the plaintiff for this loan or that he took any receipt for this loan from the plaintiff. The story of loan to my mind is patently false, and, if I may say so, utterly absurd. The matter, however, did not rest at that. And, stupidly enough, the plaintiff also led evidence to show that he had advanced cash money to the defendant for which the Hundi was executed by the defendant. This story also does not inspire any belief and cannot be accepted at its face value. If I may venture to express my own opinion in this connection (I am not unconscious that it is possible to condemn this as a pure conjecture but even so I maintain it is a conjecture which errs on the side of justice rather than otherwise) it seems to me that this Hundi was executed not for cash given by the plaintiff but in lieu of past liabilities owing by the defendant to the plaintiff. Again, that this reading of the situation is not simple imagination on my part will be apparent from the deposition of the defendant himself in which a question appears to have been put to him wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Judge must in any event find either that consideration has been disproved or that it has not been. That such a class of cases has arisen or would still arise in the various High Courts cannot be disputed. I am of opinion that in this class of cases where there is little to choose between the evidence produced on either side or that the Court cannot arrive at such a conclusion one way or the other, it is inevitable that the question of onus probandi must play a dominating roie and must be held to be decisive of the fate of the case. 57. My answer to the second question is, therefore, this. As a rule, a court should arrive at a conclusion one way or the other as to whether the consideration underlying a negotiable instrument has been disproved or not by a cumulative examination of the entire evidence of both the parties. But it is not possible to lay down a rigid and inflexible, formula in this regard and exceptional cases are possible where a court cannot strike a just or positive conclusion between the evidence of one party and the other, or considers that the evidence of both the parties is evenly balanced, or, again, that there is little to choose between their evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Be that as it may, I find it very difficult for myself to hold that a party upon whom the burden of disproving consideration lay should be or can be held to have discharged the heavy burden which rested on him even though the story which he sought to prove is found to be utterly impossible of belief. In arriving at this conclusion I am fully alive to the consideration that the plaintiff's evidence also does not inspire belief. Even putting the matter in another way, I maintain from a perusal of the entire evidence on the record that the only conclusion to which I am able to come is that there is not much to choose between the evidence led on cither side in the case and, therefore, I do not find myself in a position to predicate with any approach to reasonable probability that there was absence of consideration in the present case and in any case I find it very difficult for me to hold that the defendant has successfully disproved consideration the burden of which lay heavily on him. In this state of affairs the circumstance that it was on the defendant that the burden to disprove consideration rested must receive its due importance, and in the net effect he must fail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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