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K.Selvaraj Vs Thangavelu — Contract and Commercial Disputes | Madras HC (2024)

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Madras HC
2024
K.Selvaraj Vs ThangaveluK.Selvaraj v. Thangavelu

Allowed

K.Selvaraj v. Thangavelu

Madras HC18 Oct 2024SA/413/2020

Case brief

AI extract

What is this about?

The Appellant challenged the trial and appellate decrees in a suit for recovery of money based on a Promissory Note. The High Court held that while the signature was admitted, the plaintiff failed to prove passing of consideration and the scribe's existence. The presumption under Section 118 of the NI Act was not invoked due to discrepancies in signatures and lack of evidence on the loan transacti

What did the court decide?

Judgments and decrees of the Trial Court and First Appellate Court are set aside. The original suit is dismissed.

What the court decided

AI extract

Outcome

Judgments and decrees of the Trial Court and First Appellate Court are set aside. The original suit is dismissed.

Issue for consideration

Whether the plaintiff proved the execution of the Promissory Note and the passing of consideration?

Detailed headnote1 paragraphs

Second Appeal on付款9allowable where presumption under Section 118 NI Act fails due to inability to prove consideration or explain absence of scribe/witness despite signature admission. Defendant established probable forgery/ancestral nature of note via signature comparison; onus shifted back to plaintiff who failed to discharge it.

A compact analysis

This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.

A

2024:MHC:3592

S.A.No. 413 of 2020

IN THE HIGH COURT OF JUDICATURE AT MADRAS

JUDGMENT RESERVED ON : 23 / 09 / 2024

JUDGMENT PRONOUNCED ON : 18 / 10 / 2024

CORAM:

THE HONOURABLE MR. JUSTICE R. SAKTHIVEL

S.A.NO.413 OF 2020

AND

CMP NO.8523 OF 2020

K. Selvaraj …Appellant/Appellant/Defendant

Versus

V.Thangavelu ... Respondent/Respondent/Plaintiff

PRAYER: Second Appeal filed under Section 100 of the Code of Civil Procedure, 1908, praying to set aside the Judgment and Decree dated February 17, 2020 made in A.S.No.25 of 2016 on the file of the Additional District Judge, Namakkal District confirming the Judgment and Decree dated November 4, 2015 made in O.S.No.40 of 2011 on the file of Subordinate Court, Namakkal District.

For Appellant : Mr.R.Saseetharan For Respondent : Mr.S.Saravana Kumar for M/s.I.Abrar Md Abdullah

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J U D G M E N T

This Second Appeal has been filed praying to set aside the Judgment and Decree dated February 17, 2020, made in A.S.No.25 of 2016 on the file of the ‘Additional District Judge, Namakkal District’ (henceforth 'First Appellate Court'), whereby the Judgment and Decree dated November 4, 2015 made in O.S.No.40 of 2011 on the file of ‘Subordinate Court, Namakkal District’ (henceforth 'Trial Court') was confirmed.

The defendant who was unsuccessful before the Trial Court as well as the First Appellate Court has preferred this Second Appeal. For the sake of convenience, hereinafter, the parties herein will be denoted as per their array in the Original Suit.

Plaintiff's Case

The case of the plaintiff is that on August 11, 2008 the defendant borrowed a sum of Rs.1,50,000/- (Rupees One Lakh Fifty Thousand only) from the plaintiff for urgent family and business expenses by executing a Promissory Note. The defendant agreed to repay the loan

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amount together with interest at the rate of 12% per annum to the plaintiff. Despite repeated demands, the defendant did not repay the principal amount and the interest to the plaintiff. Hence, the plaintiff filed the Suit

for recovery of money with interest at the rate of 12% per annum.

Defendant's Case

The defendant filed Written Statement wherein it has been

averred that he never borrowed the said loan amount of Rs.1,50,000/- from the plaintiff as alleged in the Plaint. The alleged Promissory Note is a forged one. Both the plaintiff and the defendant were teachers well acquainted with each other. The plaintiff and the defendant were also partners in S.S. Finance and Umaiyal Finance. One Mr.Ashokan was working as Manager in S.S.Finance. In S.S.Finance, the defendant was allotted a chit amount in the year of 1996, for which, he executed two blank Promissory Notes, one having S.S.Finance firm’s name thereon while the other being a general one, and also affixed his thumb impression thereon, as per the rules and practices of the finance. However, the said S.S.Finance was dissolved before completion of the monthly chit. When S.S.Finance was dissolved, the plaintiff took the said general blank pro-

note without the company’s name printed on it, stating that the plaintiff

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S.A.No. 413 of 2020

joined S.S.Finance only on the insistence of the defendant, and assured that he would return the pro-note after collecting the amounts the debtors owed him. With no other choice, the defendant reluctantly agreed. The plaintiff, by using the said Promissory Note in a forged manner, filed the Suit for recovery of money against the defendant without giving any notice to the defendant. Starting in the year 2000, the defendant began using a signature different from the one found in Ex-A.1. Accordingly, he prayed to dismiss the suit.

Trial Court and First Appellate Court

At trial, on the side of the plaintiff, the plaintiff was

examined as P.W.1, and Ex-A.1 to Ex-A.3 were marked. On the side of the defendant, the defendant was examined as D.W.1, one Mathiyazhagan and one Natarajan were examined as D.W.2 and D.W.3 respectively, and ExB.1 was marked. Pay Acquittance Register relating to the years 1996 - 1997 was marked as Ex-X.1 and Pay Acquittance Register pertaining to the time period from April 2008 to December 2008 was marked as Ex-X.2.

After full trial, the Trial Court decreed the Suit by holding

that the defendant admitted the signature in Ex-A.1 - Promissory Note and

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hence, the onus is upon the defendant to prove his defence, but the defendant failed to do so. Feeling aggrieved with the Judgment and Decree of the Trial Court, the defendant preferred an appeal before the First Appellate Court. The First Appellate Court after hearing both sides, concurred with the aforesaid finding of the Trial Court and dismissed the appeal confirming the Judgment and Decree of the Trial Court.

Substantial Questions of Law

Feeling aggrieved with the concurrent findings of the First Appellate Court as well as the Trial Court, the defendant filed this Second

Appeal and the same was admitted on August 17, 2020 on the following substantial question of law:-

"Whether the Courts below are right in decreeing the suit without considering the effect of Ex.X1 and Ex.X2 and the evidence of DW2 and DW3, which are part of the records."

Arguments

Mr.R.Saseetharan , learned Counsel for the appellant /

defendant would argue that the plaintiff and the defendant were working as Government Teachers, residing in the same locality and well acquainted with each other. Further, the plaintiff and the defendant along with a few

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others were engaged in money lending business in the name and style of ‘S.S.Finance’, a Partnership firm, which among other things conducted unregistered chit funds as per its own rules and practices. If no one bits for a monthly chit, as per the rules and practices, a recipient was to be selected through draw of lots.

8.1. In such a draw of lots, the defendant won the chit in the year 1996 and received the corresponding chit amount. As per the rules and practices, the defendant handed over to the Managing Partner, two signed blank Promissory Notes, among which one alone had the name of ‘S.S.Finance’ printed on it and another was a general one. Later, when S.S.Finance was dissolved before the completion of that chit, the plaintiff obtained the said general blank Promissory Note with no name printed thereon (Ex-A.1) from the Managing Partner and later forged it to file the Suit. The defendant never borrowed a sum of Rs.1,50,000/- from the plaintiff and there was no necessity to do so. Despite denial of the execution of Ex-A.1 - Promissory Note, the plaintiff did not prove the passing of consideration. Both the Trial Court and the First Appellate Court miserably failed to appreciate the evidence available on record in the right perspective, especially Ex-X.1 and Ex-X.2. Accordingly, he prayed to allow the above Second Appeal.

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Per contra, Mr.S.Saravana Kumar , learned Counsel for the respondent / plaintiff would argue that the defendant admitted the signature found in Ex-A.1 - Promissory Note as his and hence, Ex-A.1 attracts the presumption under Section 118 of the Negotiable Instruments Act, 1881. The defendant failed to rebut the said presumption. Further, the defendant threatened the scribe & witness of Ex-A.1 preventing him from deposing before the Court. The Trial Court as well as the First Appellate Court after considering the entire facts and circumstances as well as the evidence available on record rightly concluded that the defendant borrowed a sum of Rs.1,50,000/- from the plaintiff. Accordingly, the Suit was decreed in favour of the plaintiff. There is no warrant to interfere with the concurrent findings. Accordingly, he prayed to dismiss the Second Appeal.

Discussion

This Court has considered both sides’ submissions and perused the records in light of the Substantial Question of Law.

The plaintiff and the defendant were both working as

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Government Teachers and were well acquainted with each other. While they were in service, both were running a money lending business in the name of ‘S.S.Finance’. P.W.1 in his evidence has admitted that he was a Partner therein.

The plaintiff’s case is that the defendant borrowed a sum of Rs.1,50,000/- from him by executing Ex-A.1 - Promissory Note. The defendant’s case is that he never borrowed the said amount and never executed Ex-A.1 - Promissory Note in favour of the plaintiff. The defence taken by the defendant is that the plaintiff forged the Promissory Note which the defendant had originally given to the Managing Partner of S.S.Finance for the purpose of chit transaction as stated in the Written Statement. Further defence is that, since the year 2000, the defendant has been using a different signature from the one found in Ex-A.1- Promissory Note; that Ex-X.1 and Ex-X.2 would vouch for the same; that the signature contained in Ex-A.1 is that followed by the defendant before the year 2000 and hence, Ex-A.1 was made before the year 2000 and not in the year 2008 at the time of allegedly borrowing money from the plaintiff. In short, the defendant's further defence is that if the defendant had really executed Ex-A.1 in 2008, the Promissory Note would have borne the signature found in Ex-X.2; however, the signature in Ex-A.1 matches the one in Ex-

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X.1.

Since the defendant has admitted his signature in Ex-A.1 - Promissory Note, the plaintiff has discharged the initial burden on him and the onus shifted onto the defendant to prove his defence. The defendant attempts to prove his defence through Ex-X.1 and Ex-X.2. Ex-X.1 is the Pay Acquittance Register pertaining to the years 1996 - 1997. Ex-X.2 is the Pay Acquittance Register pertaining to the time period from April 2008 to December 2008. Ex-X.1 was marked through D.W.2 - Mathiyazhagan who is a teacher at the Union Middle School while Ex-X.2 was marked through Natrajan, who is the Head Master of Kadapalli Union Middle School.

This Court has perused Ex-X.1 and Ex-X.2 and compared the signatures found therein with the one found in Ex-A.1 by juxtaposing them. The signature found in Ex-A.1 – Promissory Note matches with the signature found in Ex-X.1 and appears to have been made contemporaneously. It does not match the signature found in Ex-X.2. ExX.2, when coupled with Ex-X.1, would suggest that the defendant has changed his earlier signature found in Ex-A.1 sometime before April 2008.

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Further, the defendant produced Ex-B.1 - Minute Book of his money lending business, pertaining to the years 1994 to 1995. Ex-B.1 contains defendant’s signature on multiple pages. Those signatures match and appears to be contemporaneous with the one found in Ex-A.1Promissory Note. To be noted, the plaintiff, who admits that he is also a partner at S.S.Finance, would have had several opportunities to have observed the signatures of the defendant found in Ex-B.1.

The aforesaid facts makes the defendant’s defence that Ex-A.1 was made before the year 2000 and not in the year 2008 and that the plaintiff has forged the Promissory Note given to S.S.Finance for the purpose of chit transaction, a probable one. Thus, the defendant has prima facie established his defence and hence the onus now shifts onto the plaintiff to prove the execution of Ex-A.1 - Promissory Note and pursuant passing of consideration.

In Ex-A.1 - Promissory Note, one Kaaliannan has signed as scribe cum witness. Despite the denial of execution of Ex-A.1 as well as the passing of consideration by the defendant, the plaintiff has not examined the said scribe cum witness. The reason attributed by the plaintiff's side for the same is not satisfactory. The plaintiff’s side has

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stated that the defendant threatened the scribe cum witness of Ex-A.1 which is why, he refused to come forward to depose before the Court. The contention of the plaintiff deserves to be rejected for the reason that the plaintiff could have summoned the scribe cum attestor through Court. If the summons were not obeyed the plaintiff could have taken coercive steps against the said scribe cum witness through Court. The plaintiff has miserably failed to take any such steps. Further, there is not even an iota of evidence on record to suggest, let alone prove the passing of consideration.

Moreover, the plaintiff as P.W.1 in his cross-examination has deposed that he lent money as hand loan without interest. However, the same is contrary to the recitals of Ex-A.1 - Promissory Note as well as the Suit Plaint. Further, he has deposed that only he and the defendant were present when the alleged hand loan transaction took place; and that he does not know in which school the defendant was working at the time of the alleged hand loan transaction. Notably, even in his chief evidence, the plaintiff has not deposed about the presence of the said scribe cum witness or anyone else during the alleged hand loan transaction. The inconsistent stand taken by the plaintiff, undermines and creates suspicion in the plaintiff’s case. For ready reference, relevant extract from the crossexamination of P.W.1 is hereunder:

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“ehd; Mrphpauhf ,Ue;J Xa;t[ bgw;Wtpl;nld;. ehd; gzp Xa;t[ bgw;w gpwF ve;j bjhHpYk; bra;atpy;iy. ehd; 2006 tUlk; Xa;t[ bgw;nwd;. ehd; 95k; tUlk; efuhl;rp cah;epiyg;gs;sp nfhl;il ehkf;fy;ypy; gzpapy; ,Ue;njd;. gpujpthjp vd;dplk; ifkhw;whf gzk; th';fpdhh;. mij jpUk;g brYj;jhjjhy; ehd; tHf;F jhf;fy; bra;Js;nsd;. gzk; th';fp 3 khjj;jpy; jUtjhf Twpdhh;. Mdhy; jutpy;iy. ehd; ,Jtiuf;Fk; fld; bfhLj;jJk; ,y;iy. th';fpaJk; ,y;iy. gpujpthjpf;F ifkhw;whf jhd; gzk; bfhLj;njd;. tl;oapy;yhky; ehd; ifkhw;whf bfhLj;njd;. Fwpg;gpl;l ehl;fSf;Fs; bfhLj;Jtpl;lhy; tl;o fpilahJ. mjw;FgpwF bfhLj;jhy; tl;o cz;L. gpujpthjp 3 khjj;jpw;Fs; gzj;ij je;jpUe;jhy; flDf;F tl;o nfl;L ,Uf;f khl;nld;. ehd; fld; bfhLf;Fk;nghJ tl;o gw;wp ngrpf;bfhz;nlhkh vd;why; bfL njjpf;F gpwF 1. 2 khj';fs; jtwpdhy; tl;o tR{ypf;fg;gLk; vd;W ngrg;gl;lJ. ifkhw;W fld; th';Fk;nghJ flDWjp rPl;L bfhLj;jhh;. mjpnya[k; ehd; jw;nghJ brhd;d thrfk; jhd; cs;sJ. ehd; nkw;brhd;d thrf';fs; th.rh.M.1y; fhzg;gltpy;iy. th.rh.M.1I fhspaz;zd; jhd; vGjpdhh;. gzk; th';Fk;nghJ gzj;ij juhtpl;lhy; ePjpkd;wj;jpy; tHf;F jhf;fy; bra;ntd; vd;W ehd; brhy;ytpy;iy. ehd; gzpapy; ,Uf;Fk;nghJ 95k; tUlk; epjpepWtdj;jpy; g';Fjhuuhf ,Ue;njdh vd;why; me;j tUlk; ,Uf;ftpy;iy. Mdhy; 20 tUl';fshf

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S.A.No. 413 of 2020

epjpepWtdj;jpy; ,Ue;njd;. v!;.v!;.epjpepWtdj;jpd; . . . . . . g';Fjhuuhf ,Ue;njd; . . . .

fld; bfhLf;Fk;nghJ eh';fs; ,Uth;kl;Lk;jhd; ,Ue;njhk;. gpujpthjp vd;dplk; nfl;Fk;nghJ +.1/50/000 jhd; nfl ; lhh;. ehd; bfhLj;jJk; +.1/50/000/-jhd;. ehd; fld;bfhLj;jjhf brhy;Yk; njjpapy; ve;j gs;spapy; gzpapy; gpujpthjp ,Ue;jhh; vd;W bjhpahJ. th.rh.M.1y; vGjpatnu jhd; rhl;rpahf ifbaGj;J nghl;Ls;shh;. v!;.v!;.epjpepWtdj;ij Fwpj;J eltof;if bjhpa[kh vd;why; vdf;F KGtJk; bjhpahJ. me;j epjpepWtdj;jpd; eltof;iffis gpujpthjpna ftdpj;J te;jhh;.

ePjpkd;w nfs;tp : v!;.v!;.epjpepWtdj;jpy; gpujpthjp g';Fjhuuh ,Ue;jhuh

gjpy; : v!;.v!;.epjpepWtdj;jpd; KG eph;thfKk; gpujpthjpaplk;jhd; ,Ue;jJ. ehDk; gpujpthjpa[k; vj;jid epjpepWtd';fspy; g';Fjhuuhf ,Ue;njhk; vd;why; v!;.v!;.epjpepWtdj;jpy; kl;Lk; jhd; g';Fjhuuhf ,Ue;njhk;. ehd; g';Fjhuuhf ,Ue;j epjpepWtdj;jpd; bgah; v!;.v!;.2 my;yJ v!;.v.ah vd;W nfl;lhy; rhpahf epahgfkpy;iy. vd;dplk; fhl;lg;gLk; g[j;jfk; v!;.v!;.2 epWtj;jpd; kpdpg[f; vd;why; rhpjhd;. mjpy; cs;s gf;fk; 6 gp.th.rh/M-1 MFk;. mjpy; 7tJ g';Fjhuuhf 6k; gf;fj;jpy; fhl;lg;gl;Ls;s bgah; vd; bgah; jhd;. mjpy; 1tJ g';Fjhuuhf fhl;lg;gl;oUf;Fk; egh; gpujpthjp vd;why; rhpjhd ;/ . . ”

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Hence, this Court is of the view that the plaintiff has not proved the execution of Ex-A.1 and pursuant passing of consideration. The defendant’s admission that the signature in Ex-A.1 is his has to be seen along with his defence. When neither the execution of the Promissory Note nor the passing of consideration has been proved, given the defence taken by the defendant, the mere fact that the defendant admitted his signature in Ex-A.1 is not sufficient to invoke the presumption under Section 118 of the Negotiable Instruments Act, 1881.

In view of the foregoing discussion, this Court is of the view that the Trial Court as well as the First Appellate Court failed to consider the relationship between the plaintiff and the defendant, other facts and circumstances of the case as well as the evidence available on record in the right perspective. The substantial question of law is answered accordingly in favour of the appellant / defendant and against the respondent/plaintiff.

Result:

In the result, this Second Appeal is allowed. The Judgment and Decree dated February 17, 2020 made in A.S.No.25 of 2016

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on the file of the learned Additional District Judge, Namakkal District as well as the Judgment and Decree dated November 4, 2015 made in O.S.No.40 of 2011 on the file of learned Subordinate Judge, Namakkal District, are hereby set aside. The Suit in O.S.No.40 of 2011 on the file of learned Subordinate Judge, Namakkal District, is hereby dismissed. The amount, if any, deposited by the appellant pursuant to the interim Order passed by this Court in CMP No.8523 of 2020 dated August 17, 2020 shall be refunded to the appellant. Considering the facts and circumstances of the case, there shall be no order as to costs. Consequently, connected Civil Miscellaneous Petition is closed.

18 / 10 / 2024

Index : Yes Internet : Yes Neutral Citation : Yes Speaking Order MSM/TK

To

1.The Additional District Judge Namakkal District.

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2.The Subordinate Judge Namakkal District.

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R. SAKTHIVEL, J.

MSM/TK

Pre-Delivery Judgment made in S.A.NO.413 OF 2020

18 / 10 / 2024

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Issues for consideration

1 issue framed by the court

AI extract

1.
Whether the plaintiff proved the execution of the Promissory Note and the passing of consideration?

Statutes considered

2 provisions across 2 enactments

AI extract

Code of Civil Procedure, 1908100
Negotiable Instruments Act, 1881118

Parties & counsel

AI extract

appellant
K. Selvaraj
respondent
V. Thangavelu

Coram

AI extract

R. SAKTHIVEL

Case details

As recorded by the court registry

Court: Madras HC
Decided on: 18 Oct 2024 · October
Registered: 13 Aug 2020
Case no.: SA/413/2020
CNR: HCMA010708492020
Topic: Contract and Commercial Disputes
Bench: R.sakthivel
Disposal: ALLOWED

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Cite this judgement

K.Selvaraj v. Thangavelu, SA/413/2020 (MAD), decided on 18 October 2024.

The Madras High Court publishes no neutral citation for this judgement — cite it by case number and date of decision.

Statutes2

Code of Civil Procedure, 1908100
Negotiable Instruments Act, 1881118

View all statutes

Bench / Coram

R. SAKTHIVEL

Parties & counsel