MALLAVARAPU KASIVISWESWARA RAO versus THADIKONDA RAMULU FIRM AND ORS.

Citation: [2008] 8 S.C.R. 1210 · Decided: 16-05-2008 · Supreme Court of India · Bench: TARUN CHATTERJEE · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2008] 8 S.C.R. 1210 
M4~
' 
A 
MALLAVARAPU KASIVISWESWARA RAO 
_._ 
v. 
•
THADIKONDA RAMULU FIRM AND ORS. 
I 
(Civil Appeal No.5597 of 2001) 
B 
MAY 16, 2008 
(TARUN CHATTERJEE AND HARJIT SINGH BEDI, JJ.) 
.. 
Negotiable Instruments Act, 1881 - s. 118(a) - Presump-
tion as to consideration - Benefit of - Entitlement to - Appel-
c /ant borrowing money and lending to respondent firm - Ex-
ecution of promissory note by respondent - Suit for recovery 
of amount due under two pronotes - Suit decreed with regard 
to one pronote - Upheld by High Court - On appeal, Held: 
Execution of pronote was proved and respondent failed to dis-
D charge the initial burden of proving non-existence of consid-
.. 
eration either by direct evidence or by preponderance of prob-
abilities - Thus, appellant entitled to the benefit of presump-
tion u/s 118(a)- High Court not justified in not decreeing the 
suit of appellant since evidence by appellant inconsistent with 
E 
such presumption - Thus, suit to be decreed in entirety. 
Respondent no. 1 is a firm. It belongs to respondent 
no. 2 who is the managing partner and his sons' viz. re-
'i-
spondent no. 3 and 4. It was appellant's case that he bor-
rowed certain amounts from P and lent the same to the 
\r 
I 
F respondent firm. The respondent no.2 executed pronotes 
for the sum of Rs.4,72,000/- and Rs.2,15,000/- in favour of 
the appellant. However, the respondents did not pay the 
amount. Appellant filed suit for recovery of amounts due 
under pronotes of Rs.4,72,000/- and Rs.2,15,000/- against 
G respondents. Respondent no. 2 denied execution of 
~ 
pronote in favour of appellant and that the pronotes were 
. 
.. 
forged ones. The trial court partly decreed the suit for a 
sum of Rs.2,33,125 with interest@ 18% from date of suit 
till realization with regard to first pronote. However, it held 
H 
1210 
MALLAVARAPU KASIVISWESWARA RAO v. 
1211 
THADIKONDA RAMULU FIRM 
that the appellant was not entitled to recover amount un-
A 
der the other. pronote because it was not supported by 
consideration. High Court upheld the order. Hence the 
present appeal. 
The question which arose for consideration in this 
appeal was whether in the absence of any rebuttal by the B 
respondents to the fact that the promissory note was for 
consideration as required, which gave rise to the pre-
sumption u/s 118 of the Negotiable Instruments Act, 1881 
the courts below were justified in holding that decree 
could not be passed on the basis of such presumption C 
since the appellant had given evidence inconsistent with 
such presumption. 
Allowing the appeal, the Court 
HELD: 1.1. Section 118 of the Negotiable Instruments D 
Act, 1881 deals with presumptions as to negotiable instru-
ments. Under Section 11 B(a) of the Act, the court is obliged 
to presume, until the contrary is proved, that the promis-
sory note was made for consideration. That the initial 
burden in this regard lies on the defendant to prove the E 
non-existence of consideration by bringing on record 
such facts and circumstances which would lead the Court 
to believe the non-existence of the consideration either 
by direct evidence or by preponderance of probabilities 
showing that the existence of consideration was improb-
F 
able, doubtful or illegal. If the defendant is proved to have 
discharged the initial onus of proof showing that the ex-
istence of consideration was improbable or doubtful or 
the same was illegal, the onus would shift to the plaintiff 
who would be obliged to prove it as a matter of fact and G 
upon its failure to prove would disentitle him to the grant 
of relief on the basis of the negotiable instrument. If the 
defendant fails to discharge the initial onus of proof by 
showing the non-existence of the consideration, the plain-
tiff would invariably be held entitled to the benefit of pre-
H 
1212 
SUPREME COURT REPORTS 
[2008] 8 S.C.R. 
•
A surnption arising under Section 118(a) in his favour. [Paras 
... 
11, 12 and 13] [1219-A,8,C,D, 1220-F,G, 1221-A] 
2.1 The submission of the respondent that they had 
denied the very execution of the pronotes and referred 
B 
the same as forged both in the reply notice as also in the 
written statement cannot be accepted. It was a finding of 
the trial court, which was affirmed by the High Court in 
.... 
the impugned judgment that the pronotes were indeed 
' 
executed by the respondents. It was also a finding of the 
High Court that except in the reply notice issued by the 
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c re

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