Plaintiff's Claim Supported by Presumptions Under Negotiable Instruments Act, Despite Defendant's Absence
In a recent judgment, the Madras High Court, Madurai Bench, comprising Justices G.R. Swaminathan and R. Poornima, has set aside a lower court's decision and ruled in favor of the appellant, P. Palanikumar, in a civil suit for the recovery of money based on a promissory note. The appeal was filed against the decision of the IV Additional District Judge, Madurai, which had dismissed the appellant's suit for recovery of Rs. 31,54,167 along with interest at 12% per annum.
The case revolved around a promissory note executed by the respondent, R. Selvi, who had approached the appellant for a loan to meet family expenses and discharge sundry debts. The appellant claimed to have advanced Rs. 25,00,000 in cash to the respondent on June 5, 2015, against a promissory note and a deposit of the original sale deed of the respondent's property. However, the respondent failed to repay the amount, prompting the appellant to file a suit for recovery.
The trial court had dismissed the suit on the grounds that the appellant failed to prove his financial capacity to lend the amount. Notably, the respondent did not file a written statement or cross-examine the appellant, remaining ex-parte throughout the proceedings. The trial court's decision was challenged on the grounds that it failed to appreciate the presumption of consideration in favor of the appellant under Section 118 of the Negotiable Instruments Act, 1881.
In its judgment, the High Court criticized the trial court for not exercising its power under Section 165 of the Indian Evidence Act, 1872, to pose questions and clarify doubts regarding the appellant's financial capacity. It emphasized that the presumption of consideration under Section 118 was not rebutted by the respondent, who did not deny the execution of the promissory note or the receipt of money in her reply notice.
Furthermore, the High Court noted that the transaction's breach of Section 269SS of the Income Tax Act, 1961, did not render it illegal or unenforceable. The Court also pointed out the absence of a specific denial from the respondent, which under the rule of non-traverse, implied an admission of the appellant's claim.
The judgment highlights the importance of legal presumptions under the Negotiable Instruments Act and the responsibilities of trial courts in ex-parte cases. The High Court decreed in favor of the appellant, allowing the suit as prayed for, and directed the respondent to satisfy the decree, following which the original title document could be reclaimed.
Bottom line:-
Suit for recovery of money based on promissory note - Defendant's failure to file written statement or cross-examine plaintiff - Court's adverse finding against plaintiff on financial capacity without evidence considered perverse - Presumption under Section 118 of Negotiable Instruments Act in favor of plaintiff upheld.
Statutory provision(s):
- Civil Procedure Code, 1908, Order 8, Rule 5
- Negotiable Instruments Act, 1881, Section 118
- Evidence Act, 1872, Section 165
- Income Tax Act, 1961, Section 269SS
- Civil Procedure Code, 1908, Order 10, Rules 2 and 3
P. Palanikumar v. R. Selvi, (Madras)(Madurai Bench)(DB) : Law Finder Doc id # 2926569
