The Madras High Court bench of Justice Teeka Raman has held that it is not mandatory under the Negotiable Instruments Act 1881 to obtain both signature and thumb impression for a pro-note to be valid.
The court also opined that when the defendant had not denied the execution of the pro-note, the lower appellate court could not raise suspicion with regard to the execution of the note merely on the ground that the thumb impression of the defendant was not obtained.
"Once the signature found in the suit documents have been admitted, there is no need or necessity for the plaintiff to give explanation for not obtaining the thumb impression in the suit promissory note. There is no such law to get the thumb impression in the suit promissory note, particularly, when the execution and issuance of Ex.A1 to Ex.A3 were not in dispute...There is no mandatory provision under the Negotiable Instruments Act that both the signature and thump impression has to be obtained for a pro-note..."
In the instant case, the original plaintiff, the appellant herein, had filed a suit against the respondent for recovery of money of Rs.1,00,000 each borrowed by him and for which three promissory notes were issued in favour of the plaintiff for consideration. After issuing a pre-suit notice, the plaintiff filed the suit for recovery of the suit claim of Rs. 4,59,000 along with subsequent interest.
The defendant, the respondent herein, admitted the execution of the promissory notes. However, he raised a plea that the promissory notes were executed towards security for the loan borrowed and that the loan due was settled by way of execution of a sale deed, dated 12.11.1999 in the name of the plaintiff's wife. It is further alleged that the suit promissory notes were not supported by consideration and the blank promissory notes were filled up for the purpose of filing the suit in the year 2004.
The trial court considered the statutory presumption under Section 118 of the Negotiable Instruments Act and the authority of the holder in due course to fill up the promissory notes under Section 20 of the Act and decreed the suit in favour of the plaintiff.
On appeal, the lower appellate court neither considered the admissions made in the pleadings and evidence nor took note of the statutory presumptions in favour of the plaintiff, and allowed the appeal holding that the thumb impression of the defendant was not obtained and that the signature in each of the promissory notes is different from each other on comparison by a naked eye.
The High Court was of the opinion that when there was no dispute with respect to the execution of the documents, there was no reason for the court to compare these documents with the naked eye as if, the defendant had denied the execution.
There is no necessity for the plaintiff to give an explanation as to not obtaining a thumb impression as the execution of the document was already admitted and moreover, there is no such law to get the thumb impression in the suit promissory note, it said.
"When there was no dispute as to the execution of Ex.A1 to Ex.A3, the first Appellate Court ought not to have compared the suit documents by naked eye, as if, the defendant has denied execution and therefore, based upon the above evidence both in oral and documentary pleaded and evidence of the plaintiff side, I find that in terms of Section 4 of the Indian Evidence Act, whenever it is provided by the Act that the Court shall presume a fact, it shall record such fact as proved unless and until it is disproved. Applying the said definitions of "proved" or " disproved" under Section 5 of the Indian Evidence Act to the principle behind Section 118 (a) of the Negotiable Instruments Act, the Court shall presume that Ex.A1 to Ex.A3 were supported by consideration."
The court also stated that when there is a statutory presumption is favour of the plaintiff under Section 118 of the Negotiable Instruments Act, the burden is on the defendant to prove otherwise. The defendant cannot merely rebut the presumption by a bare explanation but only by proof. The court was of the opinion that the evidence of the defendant was not sufficient to discharge this onus of proof and that the approach of the lower appellate court in condemnable.
The court thus allowed the appeal and set aside the order of the lower appellate court.
Case Title: R Barathbaran (died) and others v. R. Nallathambi
Case No: S.A No: 142 of 2012
Citation: 2022 LiveLaw (Mad) 211
Counsel for the Appellant: Mr. N Manokaran