TMI Blog1986 (12) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... r S. 118 would operate and the suit was liable to be decreed. For that reason, the Court relied upon a judgment of the Bombay High Court in Tar Mahamed v. Tyed Embrahim, AIR 1949 Bom 257. On the other hand in Maddam Lingaiah's case (supra) another Division Bench of this Court expressly dissented from the Bombay judgment and stated that they were doing so in view of the ruling of the Supreme Court in Kundanlal v. Custodian Evacuee Property, AIR 1961 SC 1316 and also referred to two earlier decisions of the Madras High Court in Narasamma v. Veeraju, AIR 1935 Mad 769 and Narayana Rao v. Venkatappayya, AIR 1937 Mad 182. In the Second unreported judgment in Ponna Satyavathi's case (supra) though the Bombay case was referred to it was not expressly dissented from. That is how the matter has come to the Full Bench. We have to decide which of the conflicting views is to be followed. 2. In the present case, the plaintiff pleaded that the defendant borrowed a sum of ₹ 10,000 under one promissory note dt. 1-8-1972 (Ex. A-1) and another sum of ₹ 5,000/- (Ex. A-3) on the same day under another promissory note. The plaintiff claimed likewise in the suit notice, Ex. A-5, dt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be decreed (sic) on the basis that the presumption under S. 118 still operates. Sri. E. V. Bhagiratha Rao contended that the view taken in Janaka Lakshmi's case is not correct and commended to us the view taken in Maddam Lingaiah's case, (supra). That is how the question above referred to has arisen. 3. Now, S. 118 of the Negotiable Instruments Act in so far as it is material for this discussion states that until the contrary is proved a presumption shall be made that every negotiable instrument was made or drawn for consideration and that every such instrument, when it has been accepted, endorsed, negotiated or transferred for consideration. 4. In Janaka Lakshmi's case, (supra) the learned Judges came to the conclusion that the appellant's case of her signatures being taken on blank papers was not true but, at the same time, it was established that the appellant was not in need of money and the plaintiff's case of cash consideration for the pronotes was not true. But the learned Judges Chinnappa Reddi, J. (as he then was) and A. D. V. Reddy, J. held following the Bombay ruling in Tar Mohammed's case, (AIR 1949 Bom 257) (supra) decided by Chagla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration. Now, if he has further to prove that the promissory note is not at all supported by any consideration whatsoever, what is the nature of the evidence he has to lead? Is he expected to imagine for himself all the conceivable types of consideration and then say that all such possibilities are ruled out? What exactly is the defendant to say in his chief examination for the purpose of proving that the promissory note is wholly without consideration? On these aspects, the Bombay ruling as well as Janaka Lakshmi's case do not throw any light. 8. Having regard to the practical difficulties we shall now consider the question from the standpoint of Ss. 3, 4 and 101 to 104 of the Evidence Act. This involves a discussion of what we mean by the words 'burden of proof', 'presumption of law', 'proved', 'disproved' or 'until' the contrary is proved.' 9. Now, there are two senses in which the words 'burden of proof' is used. One is the burden of proof arising as a matter of pleading and the other is the one which deals with the question as to who has first to prove a particular fact. The former is called the 'legal burd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved. 12. In the former case, the Court has an option to raise the presumption or not but in latter case, the Court must necessarily raise the presumption. If in the case where the Court has an option, it chooses to raise the presumption, the distinction between the two categories of presumption ceases and the fact is presumed, unless and until it is disproved. The provisions of S. 118 of the Negotiable Instruments Act direct that the Court shall presume 'until the contrary is proved'. 13. If the fact to be presumed is therefore presumed until the contrary is proved or until disproved', 'what is the meaning of these words' is the next question. In fact, this is the crux of the entire problem. If under S. 118 the Court is bound to presume consideration 'until the contrary is proved', does it mean, as held in Janaka Lakshmi's case, (supra) and the Bombay case that the defendant must prove with hundred per cent certainty that no consideration at all existed? Or is it permissible to establish the fact by a preponderance of probabilities? 14. Tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not agree that apart from the hundred per cent certainty prescribed by the first option the defendant has an option to prove the non-existence of consideration by a preponderance of probabilities by referring to the 'particular circumstances of the case'. The preponderance of probability in favour of the defendant's case may be even fifty one to forty nine (sic) and arising out of the entire circumstances of the case, the plaintiff's version in the promissory note, the case in the suit notice, his case at the trial, as also the plea of the defendant in the reply notice, written statement or at the trial as to the circumstances under which the pronote was executed without consideration. All of them can raise a preponderance of probabilities justifying a finding that there was 'no consideration.' 19. Wanchoo, C.J. in Heerachand v. Jeevraj, (FB) (supra) after referring to the definition of the words 'proved' and 'disproved' observed (at page 4 para 19). Applying this definition to the principle behind the presumption in S. 118(a) the principle comes to this. The Court shall presume a negotiable instrument to be for consideration unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accused was sufficient. After referring to the meaning of the words 'disproved' in the Evidence Ordinance (which is identical, word for word, with the meaning given to it in the Evidence Act) and to the words 'unless the contrary is proved' in S. 14 of the Prevention of Corruption Act, Lord Diplock observed : The requirement of the section is satisfied if and only if, after considering the matters before it the Court either believes that it (i.e. the corrupt motive) 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. The definition in the Evidence Ordinance does not attempt to spell out explicitly the degree of probability for which a prudent man ought to look before he acts on the supposition that a fact does not exist..... The Evidence Ordinance applies to Civil and Criminal proceedings alike..... The degree of probability.... depends upon the nature of the proceedings and what will be the consequence in those proceedings of a finding that a fact is 'proved' or 'disproved'. If that consequence will be the deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o shift the burden need not necessarily be direct evidence i.e. oral or documentary evidence or admissions made by the opposite party; it may comprise circumstantial evidence or presumption of law or fact . After referring to the provisions of S. 101 of the Evidence Act and to S. 118 of the Negotiable Instruments Act, the learned Judge stated that the legal burden initially rested on the plaintiff but where the execution of the promissory note is admitted, the evidential burden is initially shifted to the defendant and then, the defendant may adduce direct evidence to prove that the promissory note was not supported by consideration and, if he adduces 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 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.... The burden of proof may shift by presumptions of law or fact. On the facts of that case, when the creditor failed to produce his account books, the Supreme Court raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is therefore a fallacy to attribute (as do some Judges) an artificial force to a presumption, increasing for the Jury, the weight of facts, even when the opponent has come forward with some evidence to the contrary. and Wigmore explains with reference to an example that if death of a person not heard of for over seven years is in issue and the opponent produces some evidence to the satisfaction of the Court that the person had proclaimed earlier his intention to be away till a prosecution case for a crime was to become time barred, this satisfies the opponent's duty of producing evidence and removes the rule of law. 27. A similar statement of law, that on such rebuttal evidence being given, the 'evidential burden' created by the statute disappears and the plaintiff's legal burden on the pleadings revives, is contained in Cross on Evidence (3rd Edition page 105) and reads as follows : ......if such evidence is adduce, the legal burden comes into play and will be decisive of the existence or otherwise of the presumed fact. 28. A similar statement of law that at that stage the presumption of law 'disappears' is also contained in Corpus Jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that fact is upon him. It is very generally stated that, where the party who does not have the evidential burden, such as the plaintiff in this case, possesses positive and complete knowledge concerning the existence of fact which the party having the evidential burden, such as the defendant in this case, is called upon the negative or has peculiar knowledge or control of evidence as to such matters, the burden rests on him to produce the evidence, the negative averment being taken as true unless disproved by the party having such knowledge or control. The difficulty of proving a negative only relieves the party having the evidential burden from the necessity of creating a positive conviction entirely by his own evidence so that, when he produces such evidence as it is in his power to produce, its probative effect is enhanced by the silence of the opponent (Corpus Juris, Vol. 31, para 113). The third principle that has to be borne in mind is the one that when both parties have led evidence, the onus of proof loses all importance and becomes purely academic. Referring to this principle, the Supreme Court stated in Narayan v. Gopal, as follows : The burden of proof is of importa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal evidence is adduced and accepted by the Court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the plaintiff who has also the legal burden. Thereafter, the presumption under S. 118 does not again come to the plaintiff's rescue. Once both parties have adduced evidence, the Court has to consider the same and the burden of proof loses all its importance. 33. Before leaving the discussion on these aspects we would like to make it clear that merely because the plaintiff comes forward with a case different from the one mentioned in the promissory note it will not be correct to say that the presumption under S. 118 does not apply at all. In our view the presumption applies once the execution of the promissory note is accepted by the defendant but the circumstance that the plaintiff's case is at variance with the one contained in the promissory note or the notice can be relied upon by the defendant for the purpose of rebutting the presumption and shifting the evidential burden to the plaintiff who has also the legal burden. To the above extent, we agree with the view of the Bombay High Court in T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent as recited in the promissory note. The plaintiff recalled the defendant and suggested a new case that the promissory notes were executed in renewal of earlier notes. At all these stages, the presumption has to be applied under S. 118 but the defendant can rely on these facts and also on the circumstances that the plea of renewal of earlier promissory notes by virtue of the suit notes is contrary to the recitals in the suit pronotes, and that the same is not set out in the suit notice or in the plaint' nor was it suggested to the defendant before he was recalled. We are of the view that by relying on these pieces of direct and circumstantial evidence the defendant has successfully discharged the evidential burden initially lying on him by a preponderance of probabilities. From then on, the presumption under S. 118 'disappears' and becomes 'functus officio' and the 'evidential' burden' shifts to the plaintiff who has also the legal burden arising out of the pleading to prove consideration. On a consideration of the entire evidence we are of the view that the plaintiff has not discharged the 'legal burden'. He cannot at that stage once again ..... 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