K.P.O. MOIDEENKUTTY HAJEE versus PAPPU MANJOORAN AND ANR.

Citation: [1996] 2 S.C.R. 227 · Decided: 06-02-1996 · Supreme Court of India · Bench: K. RAMASWAMY, B.L. HANSARIA, G.B. PATTANAIK · Disposal: Dismissed
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Judgment (excerpt)

K.P.O. MOIDEENKUTTY HAJEE 
A 
v. 
P APPU MANJOORAN AND ANR. 
FEBRUARY 6, 1996 
[K. RAMASWAMY, B.L. HANSARIA AND G.B. PATTANAIK, JJ.) 
B 
Negotiable InstTUments Act, 1881: 
Section 118--Special Rules of evidence-Presumption as to negotiable 
instruments regarding passing of consideration-When suit is based on C 
promissory note and promissory note is proved to have been executed the 
· provision raises a presumption that the promissory note was made for con-
sideration unless the contrary isproved-Court to examine the evidence and 
consider whether the suit as pleaded in the plaint is established and the suit 
is to be decreed or dismissed accordingly. 
D 
Kundan Lal Rallaram v. Custodian, Evacuee Property, Bombay, AIR 
(1961) SC 1316; U. Ponnappa Moothan Sons, Pa/ghat v. Catholic Syrian 
Bank Ltd. & Ors., (1991) 1 SCC 113; Indian Bank v. K Nataraja Pillai & 
Anr., (1993) 1 SCC 493; G. Ramatulasamma v. K. Gowaraiah, (1984) 2 
Andhra Law Times 333 and Y.M. Prasad and Anr. v. The Sanathnagar Wire E 
Products & Ors., (1987) 2 Andhra Law. Times 947, relied on. 
CIVIL APPELLATE rulUSDICTION: Civil Appeal No. 3651 of 
1996. 
From the Judgment and Order dated 12.6.90 of the Kerala High 
Court in AS. No. 372 of 1982. 
S. Siva Subramaniam and T.T. Kunhikannan for the Appellants. 
T.G.N. Nair for the Respondents. 
The following Order of the Court was delivered : 
Impleadment allowed. 
Leave granted. 
F 
G 
We have heard the counsel on both sides. The appellant-defendant H 
227 
228 
SUPREME COURT REPORTS 
(1996] 2 S.C.R. 
A 
is assailing the concurrent findings of the High Court in AS. No. 372/83, 
dated 12.6.1990 and the Civil Court in O.S. No. 67/81, dated 12.10.1981 that 
though promissory note, Ex. Al, dated October 28, 1978 executed for a 
sum of Rs. 1.5. lakhs recites cash consideration, since the consideration, as 
pleaded in the plaint, namely, an additional land of 3 acre and 44 cents 
B 
bearing survey no. 8/1A2 and a building was delivered, in addition to 10 
acres of land delivered under agreement of sale dated July 21, 1978, Ex. 
B 1, the consideration for Ex. Al has been proved; and the suit for recovery 
of the amount on the basis of Ex. Al is valid in law. 
The facts in support thereof are that the first respondent as a general 
C power of attorney had entered into an agreement of sale, Ex. Bl, to sell 35 
acres of land for a total consideration of Rs. 10 lakhs. In furtherance 
thereof, on paying Rs. 4 lakhs as part consideration, 10 acres of land was 
put in possession of the appellant. On the appellant requiring additional 
land and as he did not have cash with him, had executed promissory note, 
Ex. Al, for a sum of Rs. 1.50 lakhs and in furtherance thereof possession 
D of three acres and forty four cents of land and building was given to the 
appellant. It is not necessary for us to proceed further in this matter 
relating to Ex. Bl for the reason that Ex. Bl has fallen through and the 
contract has not been completed. 
E 
F 
Chapter VIII of the Negotiable Instruments Act, 1881 (for short the 
'Act') provides special rules of evidence. Section 118 draws presumption 
as to the negotiable instruments. "until the contrary is proved", under clause 
(a) presumption shall be made of consideration that every negotiable 
instr.ument was made or drawn for consideration, and that every such 
instrument when it has been accepted, endorsed, negotiated or transferred, 
was accepted endorsed, negotiated or transferred for consideration. 
This Court in Kundan Lal Rallaram v. Custodian, Evacuee Property, 
Bombay, AIR (1961) SC 1316, speaking through K. Subba Rao, J. (as he 
then was) considering the scope of the presumtpion had laid down the law 
G thus: 
"Section 118 lays down a special rule of evidence applicable to 
negotiable instruments. The presumption is one of law and there-
under a court shall presume, inter alia, that the negotiable instru-
ment or the endorsement was made or endorsed for consideration. 
H 
In effect it throws the burden of proof of failure of consideration 
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KP.O. MOIDEENKUTfY HAJEE v. P APPU MANJOORAN 
229 
on the maker of the note or the endorser, as the case may be. The A 
phrase "burden of proof" has two meanings - One, the burden of 
proof as a matter of law and pleading and the other the burden 
of establishing a case; the former is fixed as a question of law on 
the basis of the pleadings and is unchanged during the entire trial 
whereas the latter is 'not constant but shifted as soon as
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