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INTERNATIONAL MARINE ENGINEERING CO VERSUS UNITED WESTERN BANK LTD


Company & Directors' Information:- THE UNITED WESTERN BANK LIMITED [Amalgamated] CIN = U65110PN1936PLC002550

Company & Directors' Information:- WESTERN INDIA MARINE CORPORATION PRIVATE LIMITED [Active] CIN = U63012MH2008PTC180939

Company & Directors' Information:- UNITED (INDIA) INTERNATIONAL PVT LTD [Strike Off] CIN = U51109PB1986PTC006770

Company & Directors' Information:- WESTERN INTERNATIONAL PRIVATE LIMITED [Active] CIN = U24224MH2006PTC161808

Company & Directors' Information:- UNITED ENGINEERING COMPANY PVT LTD [Active] CIN = U34201WB1985PTC038966

Company & Directors' Information:- WESTERN MARINE PVT LTD [Strike Off] CIN = U99999DL1981PTC011985

Company & Directors' Information:- H. ENGINEERING MARINE COMPANY PRIVATE LIMITED [Active] CIN = U63032WB2000PTC090915

Company & Directors' Information:- WESTERN INDIA ENGINEERING CORPORATION PVT LTD [Strike Off] CIN = U74210MH1945PTC004569

Company & Directors' Information:- THE UNITED ENGINEERING CORPORATION PRIVATE LIMITED [Strike Off] CIN = U00349KA1946PTC000438

Company & Directors' Information:- MARINE INTERNATIONAL INDIA PRIVATE LIMITED [Active] CIN = U31900TZ2014PTC020831

Company & Directors' Information:- S. V. MARINE ENGINEERING PRIVATE LIMITED [Active] CIN = U29270GJ2016PTC091833

Company & Directors' Information:- THE WESTERN BANK OF INDIA LIMITED [Not available for efiling] CIN = U99999MH1934PTC002150

    No:

    Decided On, 08 April 1987

    At, High Court of Judicature at Bombay

    By, THE HONOURABLE MR. JUSTICE G.F. COUTO & THE HONOURABLE MR. JUSTICE KAMAT

    A.F. Diniz, L.V. Talavalikar, S.K. KAKODKAR, V.K. BODKE, ADVOCATES.



Judgment Text

KAMAT, J.


( 1 ) THIS first civil appeal is directed against the judgment and decree dated January 24, 1985, made in Special Civil Suit No. 54 of 1980-A by the Civil Judge S. D. , Panaji, whereby the suit instituted by the first respondent for recovery of money on three bills of exchange has been decreed.


( 2 ) THE first appellant is a partnership firm of which the second appellant is a partner. Two major contentions have been canvassed in support of the appeal by the present appellants. To appreciate these contentions, it may be necessary to set out the nature of the suit filed by the bank and the defence raised by the present appellants resisting that suit and denying their liability to pay anything towards the three bills of exchange in respect of which they were the acceptors.


( 3 ) SPECIAL Civil Suit No. 54 of 1980, filed by the first respondent bank is to the effect that defendant No. 3, now respondent No. 2 in the appeal, in the month of September, 1978, drew three bills of exchange payable at its Panaji branch. The first bill of exchange bore S. D. No. 1/78 in the sum of Rs. 12,750 payable after 45 days to the plaintiff's Panaji branch or its order against the supply of material made by defendant No. 3 as proprietor of Leo Traders, Panaji, to the first appellant against Bill No. 058, dated September 5, 1978. The second bill of exchange bearing s. D. No. 2/78 is for a sum of Rs. 17,890 payable after 60 days of date to the plaintiff's Panaji branch or its order against the supply of material made by defendant No. 3 as proprietor of Leo traders to appellant No. 1 against Bill No. 059 dated September 10, 1978, and the third bill of exchange which bore S. D. No. 3/78 is for a sum of Rs. 18,950 payable after 90 days of date to the plaintiff's branch at Panaji or its order against the supply of material made by said defendant no. 3 as the proprietor of Leo Traders to the first appellant against bill No. 060 dated September 15, 1978. All these bills drawn by original defendant No. 3 were duly accepted by the first appellant through its partner, the second appellant, and delivered to the plaintiff's branch at panaji. According to the bank, defendant No. 3 got discounted from the plaintiff's branch all the three bills of exchange and received the discounted value in the amount of Rs. 49,590 on the aforesaid three bills of exchange. on the respective maturity dates of the aforesaid three bills, they were presented for payment to the first appellant at their office at Vasco-da-Gama through the Punjab National Bank, Vaso-da-Gama but the same were dishonoured. That once all the three bills of exchange were dishonoured for payment by the first appellant, notices of dishonour were given as the money was not forthcoming even after some time was granted to the original defendant No. 3. The suit was instituted as a summary suit under order XXXVII of the Civil procedure Code for recovery of the consideration mentioned in all the three bills of exchange together with the cost of Rs.16.50 incurred along with cost of Rs. 55 towards the notice charges by the original plaintiff. The suit was laid for the recovery of that amount from appellants and defendant No. 3 jointly and severally. However, the present appellants obtained leave to defend the suit and that is how the appellants were permitted to contest the suit.


( 4 ) THE third defendant did not put in appearance in the said suit and the matter proceeded ex parte as against him. In the written statement filed by the present appellants, the appellants did not deny the execution of the bills of exchange by original defendant No. 3 nor their position as the acceptors of the same. But, however, their defence was that defendant No. 3 was known to them and they had some loan transactions and a sum of Rs. 94,328. 94 had been borrowed by defendant No. 3 from them. That somewhere in September, 1978, defendant No. 3 approached appellant No. 2 and stated that he wanted to raise a certain amount of money from the plaintiff back whose manager was known to him and the said manager is ready and willing to advance to him some money if some bills of exchange were prepared and made payable to the bank. It is the further case of the appellants that although the appellants never purchased any material from defendant No. 3, yet the bills of exchange as prepared by defendant No. 3 were accepted by them on the representation of defendant No. 3 who was suggested to do so by the manager of the bank with a view to accommodate defendant No. 3 to obtain money on that transaction. That the manager of the plaintiff bank at the relevant time was well aware of the fact that no consideration of whatsoever nature had passed between defendant No. 3 and the appellants and whatever acceptance was recorded by the appellant on the said bills of exchange was only a make-believe affair. The appellants also, on raising this defence, averred in para 5 of the written statement that defendant No. 3 never got discounted the value of any of the three bills of exchange from the plaintiff bank. On all these averments, the appellants denied their liability to pay on each of these bills of exchange with a further averment that the said instruments were not meant for negotiation but only to create some sort of documents in the possession of the plaintiff band to somehow shelter defendant No. 3 for some time in his hour of financial need.


( 5 ) BASED on the pleadings between the parties, as many as nine issues were framed. In support of the plaint allegations, the plaintiff bank examined their manager, Shri Dilip Deshpande. In support of the appellant's case, appellant No. 2 was examined. Based on the evidence produced, the trial court decreed the suit as prayed for holding that the bills of exchange had been duly accepted by the present appellants and that being so, according to the trial court, the consideration as mentioned in the said bills of exchange had passed in favour of the appellants and it is on this basis that the suit was decreed. As there was no stipulation for payments of interest in the bills of exchange, the claim for interest by the bank was negatived and interest at the rate of 6% was granted from the time the suit was instituted till date of payment.


( 6 ) THE two contentions raised now are : (1) That the plaintiff-bank is not the holder in due course and, therefore, is not entitled to sue and ; and (2) that it is not proved by legal evidence that the three bills of exchange were discounted and that the amounts shown therein had been paid to original defendant No. 3


( 7 ) SHRI Kakodkar, learned counsel for the appellants, after taking us through the pleadings and more particularly the written statement where the stand of defendant No. 3 had been that these three bills of exchange were in reality not meant for any negotiation and were created only to give some sort of financial relief and accommodation to defendant No. 3 and that too with the connivance of the then manager of the bank, relied upon the evidence of P. W. 1, Dilip deshpande. Before, however, coming to the evidence, learned counsel for the appellants mentions that at the relevant time, admittedly, P. W. 1 had not been the manager of the bank and there was some other manager who had never been examined in the case. In so far as reference to the evidence of P. W. 1 is concerned, he invites our attention to several statements made by this witness and for the purpose of better appreciation of the appellants' case, we will refer to them in greater detail. In his cross-examination, P. W. 1 mentions that at the time the suit transactions had taken place, he was not at the Panaji branch and, therefore, whatever he deposed is not from his personal knowledge but from the records of the bank. At another place, he admits that none of the three bills of exchange bears the dates of the drawal and/or date of payment referred thereto in respect of the supply of machinery. At another place, he states that he was informed by the previous manager that defendant No. 3 was in financial need when these bills of exchange were presented for payment and, therefore, the said defendant was again asked to presented the same for payment. A little further he states that whatever deposition he has made in the court is on the basis of the account book entries and further that he does not know if the previous manager of the bank was knowing that the bills were without consideration, for there was no supply of material to the appellants from defendant No. 3 as mentioned in those bills and that he does not know if those bills were got prepared by the then manager only as a stop-gap arrangement. For that matter, he also mentioned that he is not aware whether these bills of exchange were prepared at the instance of the then manager so as to create documents is possession of the bank for advancing money to defendant No. 3 and further that he was not aware whether the then manager had agreed to remain content by mere production of such instruments and therefore not even insist upon copies of invoices of the transaction of the purported sale. Once having referred to the evidence of P. W. 1, learned counsel for the appellants, now urges that the then manager of the bank having entered into collusion with original defendant No. 3, these three fictitious bills of exchange were created but in reality there was no supply of goods and what is more this fact was known to the then manager and further that it was never agreed that the three bills of exchange were to be discounted or negotiated and this being the position according to him, based on the quality of the evidence tendered in due course and as no consideration had passed, therefore, it is not open to the bank to institute the suit and thereby recover from the appellants whatever amount was shown in these three bills of exchange.


( 8 ) THE appellants did not rest there and a few more considerations are relied upon by them to suggest that the story as pleaded by the appellants is liable to be accepted having regard to such considerations. In that, it is pointed out that apart from the fact that there is no date of the drawal on the aforementioned three bills, the suit itself has been filed after inordinate delay and this according to learned counsel is not a simple event of filing the suit late, but it does suggest that the bank in reality knew that the appellants were innocent and the original defendant No. 3 had taken advantage of the situation and he had been the real beneficiary of that transaction and it is in that view of the matter that the suit was delayed and for that matter it is next pointed out that even a lawyer's notice before the institution of the suit was given as late as August 21, 1979.


( 9 ) IT is true that the appellants had accepted these bills of exchange on September 21, 1978, and despite the fact that they were dishonoured once they were presented through the Punjab national Bank, Vaso-da-gama Branch, after the maturity dates mentioned therein, the lawyer's notice was given as late as August 21, 1979, and the suit was instituted yet later in February, 1980. It is equally true that the three bills of exchange which are exhibits P-2, P-3 and P-4 are undated in so far as the drawal is concerned nor were they accompanied by a copy of the invoice of the sale of goods by defendant No. 3 to the appellants and all the three transactions covered a short span of a few days and yet they were accepted on one single day, namely, Mr. Kakodkar, now relying upon sections 8 and 9 of the Negotiable Instruments Act, urges that the bank does not become a holder in due course.


( 10 ) SECTION 8 of the Negotiable Instruments Act defines "holder" to be the holder of a promissory note, bill of exchange or cheque to be a person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. Section 9 which defines "holder in due course" means any person who for a consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof if payable to order before the amount mentioned in it becomes payable and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. Mr. Kakodkar lays stress on the last part of the definition of "holder in due course" to suggest that when the then manager of the plaintiff bank knew the background of the execution of the three instruments and once he knew that in reality no consideration passed, then the bank became aware of such defect and, therefore, the bank does not become a holder in due course and is not entitled to sue the appellants for recovery of money on these three bills of exchange.


( 11 ) SEVERAL points have been urged on behalf of the bank by their counsel, Shri L. V. Talaulikar, to show how these three bills of exchange were drawn by defendant No. 3 and how they were accepted by the present appellants. He mentions that once these documents were delivered to the bank after due acceptance and the bank having been shown as the payee thereof, the, according to him, irrespective of whatever may be the pleadings and other facts shown by the appellants by virtue of section 9 of the Negotiable Instruments Act, the bank is a holder in due course and entitled to sue the drawer and the acceptor. Before, however, we address ourselves to these questions, we will take up the other contention on behalf of the appellants, as in our view, the material to eb discussed in connection with these two contentions is very much common and it would be, therefore, advantageous for the disposal of this appeal to take up and deal with the two contentions together.


( 12 ) IN so far as the second contention of counsel for the appellants if concerned, it is their case that there is no legal evidence adduced by the plaintiff-bank that these three bills co exchange were discounted and that whatever consideration is shown therein has been paid to defendant no. 3. Elaborating this proposition, Mr. Kakodkar, placing reliance on section 34 of the evidence Act, mentions that mere production of an extract of the entries from the ledger book does not by itself prove that the real transaction has taken place or the money has passed from the bank. According to him, there is nothing on record to show that the bank in reality paid a sum of Rs.49,590 to defendant No. 3 and in any event exhibit P-12 does not prove anything.


( 13 ) BEFORE we come to the details of the various points raised in relation to exhibit P-12 and several other matters connected therewith, we may in the first instance refer to this document exhibit P-12. Exhibit P-12 is an extract which, according to P. W. 1, refers to various entries of debit and credit of some independent account of defendant No. 3 known as cash credit account being account No. 14 of Leo Traders. There are innumerable entries in this extract, but what is relevant according to learned counsel for the bank is the entry made on September 21, 1978, whereby Rs. 49,590 is shown to be deposited in that account of Leo Traders and in the column for particulars, reference is made to bill S. D. No. 3/78, 1/78 and 2/78. Now, the grievance of Mr. Kakodkar is that a mere entry shown in the extract does not reveal that the actual payment has been made and, therefore, mere book-keeping entries, which are merely paper entries, cannot by themselves prove any transactions. He further mentions that this extract itself is no evidence having regard to section 34 of the Evidence Act.


( 14 ) SECTION 34 of the Evidence Act reads : Entries in books of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability.


( 15 ) ON an analysis of this section, Shri Kakodkar says that three things are required to be done, firstly, that the original books of account are required to be produced in court and that is what is postulated by section 34 of the Evidence Act. Secondly, it is required to be proved in evidence that whatever books are produced had been kept in the regular course of business and, lastly, he mentions that each and every entry must be proved as evidence of the transaction having taken place between the parties. In the light of this and referring to the case in hand, he mentions that the bank did not produce the ledger books before the court nor is there a whisper that the bank keeps books in the regular course of business nor is the extract produced extracted from the books of ledger maintained in the regular course of business, and what is still worse, according to him, is that there is not even a reference made by P. W. 1 to the entry on September 21, 1978, in relation to the figure of Rs. 49,590. He, therefore, says that there is no foundation whatever laid by the plaintiff-bank tha the bank ever at all paid any money in respect of these three bills of exchange which it was clearly incumbent upon the bank to have proved and that having not been done, the bank is not entitled to recover any money on the aforesaid bills of exchange and, therefore, the plaintiff's suit as far as the appellants are concerned ought to be dismissed.


( 16 ) AS against this and the controversy raised by the appellants, Mr. Talaulikar, learned counsel for the bank, rests his case on very many sections of the Negotiable Instruments Act and more particularly the statutory presumption available to the bank under section 118. He relies on section 32, 35, 41, 48, 51, 53 and 110. Section 32 deals with the liability of the maker and acceptor of a bill. Section 35 speaks of the liability of the indorser and section 41 speaks about the liability of the acceptor of a bill of exchange already indorsed and who cannot be relieved from liability by reason of such indorsement being forged, if he had known or had reason to believe the indorsement to be forged when he accepted them. In so far as section 47 is concerned, it speaks that the bill of exchange is negotiable by delivery thereof and section 48 says that the bill of exchange is negotibale by the holder by indorsement and delivery thereof. While section 51 says as to who may negotiate, section 53 speaks of the holder deriving title from the holder in due course. In so far as section 110 is concerned, it may be noticed that it comes in the Chapter on Special Rules of Evidence and speaks of the statutory presumption. Section 110 makes the statutory presumption complete in respect of consideration, once the negotiable instrument was made or drawn for consideration as mentioned therein and that every such instrument when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration; (b) speaks of the date; (c) speaks of the time of acceptance; (d) speaks as to the time of transfer; (e) as to the order of indorsement; (f) as to stamp and (g) says that the holder is a holder in due course. In addition, Mr. Talaulikar also relied upon two more sections of this Act and they are 78 and 82. So far as section 78 is concerned, it says that subject to the provisions of section 82, clause (c), payment of the amount due on a promissory note, bill of exchange or cheque must, in order to discharge the maker or acceptor, be made to the holder of the instrument. And section 82 speaks of the discharge from liability of the maker, acceptor, or indorser respectively of a negotiable instrument firstly by cancellation, secondly by release and thirdly by payment.


( 17 ) THEN, relying upon the pleadings, the various statements made in the plaint, the three bills of exchange (exhibits p-2, P-3 and P- 4) and the ledger extract (exhibit P-12), Mr. Talaulikar contends that there is no escape for the appellants inasmuch as they accepted the three bills of exchange on September 21, 1978, and once they accepted these bills, they are bound to pay to the bank whatever amount is shown on these three bills. He further urges that whatever be the case that is set up by the appellants, once they accept the fact of accepting these bills by the very many provisions of the Negotiable Instruments Act read with the statutory presumption as contained in section 118, they are bound by their action as acceptors and they cannot resile from the said transaction saying that the said bills were fictitiously made or that the then band manager knew that the bills were not meant for being negotiated. In any event, he further mentions that the appellants have failed to prove their case that no consideration had ever passed in respect of these three bills and if at all it was incumbent upon them to have examined defendant No. 3 and that having not been done, according to him, the bank's suit has been rightly decreed and the grievances of the appellants cannot be entertained presently. He further urges that once the defendants have not denied being the acceptors of the three bills of exchange, there is no burden of proof ever cast on the plaintiff- bank and the entire burden shifted on the appellants and that burden they were never able to discharge and, therefore, they are liable to pay to the bank. In other words, Mr. Talaulikar contends that in so far as the bank is concerned, mere production of exhibits P-2, P-3 and P-4 is sufficient and the unequivocal stand of the appellants that they accepted them is enough for a decree in favour of the bank. If it is the case of the appellants, urges Shri Talaulikar, that the said bills were wanting in consideration, it was for the appellants to have proved to the hilt but according to him whatever evidence was adduced by appellant No. 2 is, firstly, not acceptable and, secondly, not sufficient for the purpose of upsetting the decree made in favour of the bank.


( 18 ) IN support of his contention, Mr. Talaulikr relies upon the decision of Kundan Lal Rallaram v. Custodian, Evancuee Property, Bombay, AIR 1961 SC 1316. This authority is on altogether different facts but, however, lays down the parameters of section 118 of the Negotiable instruments Act, in that it was that section 118 of the Negotiable Instrument Act, is a special rule of evidence applicable to any negotiable instrument and that the presumption is one of law and that the court shall presume, inter alia, that the negotiable instrument or the endorsement was made or endorsed for consideration. In effect, it throuws the burden of proof of failure of consideration on the maker of the note or the endorser, as the case may be. But, however, dealing with the phrase "burden of proof", it mentions that that phrase 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 unchaged during the entire trial, whereas the latter is not constant but shifts as soon as a party adduces sufficient evidence to raise a presumption in his favour. This authority no doubt mentions, as rightly pointed out by Mr. Kakodkar, that the evidence required to shift the burden need not necessarily be direct evidence, that is, oral or documentary evidence or admission made by the opposite party, but it may comprise circumstantial evidence or presumptions of law or fact. Next is the decision, it again speaks of statutory presumption of consideration under section 118 of the negotiable Instruments Act unless that presumption is rebutted by a promisor. The next reference is to the decision in Tarmahomed Haji Abdul Rehman v. Tyeb Ebrahim Bharamchari [1951] 49 BLR 219. In this case the Division Bench of this court while endorsing the view taken by the learned single judge held that it was not necessary for the plaintiff to prove any consideration and further that the presumption under section 118 continues in all its rigour. Having regard to the facts of that case, this authority further points out that it is one thing to say that the plaintiff has failed to prove a particular consideration for the three hundis ; it is an entirely different thing to say that it was proved that there was no consideration at all for the three hundis. Referring to the decision in Madhya Bharat Khai Sangh v. Bal Kishen Kapoor, AIR 1979 All 253, according to learned counsel for the bank, it clearly lays down who is the holder in due course. Relying on para 14 of this authority, according to Mr. Talaulikar, the definition of the expression "holder in due course" as given in section 9 concludes the matter. In para 14 of this authority, the legal position as emerging has been mentioned to be that if the hundi is payable to order, then the payee or the endorsee is the holder in due course.


( 19 ) ALL this has been shown to us by counsel for the bank to urge that from the evidence on record and having regard to the accepted position of the appellants in so far as exhibits P-2, P- 3 and P-4 are concerned which are duly accepted on September 21, 1978, by the first appellant through their partner appellant No. 2, there is a clear presumption under section 118 of the negotiable Instruments Act that the bank is a holder in due course and that the consideration in respect of the three bills of exchange has passed in favour of defendant No. 3 and the appellants being acceptors are bound to pay to the bank the amounts shown therein.


( 20 ) COMING back to the case of the appellants, it may be mentioned that Shri Kakodkar says that from the disclosure made in the written statement by the appellants that in the matter of transaction of these three bills of exchange, the then manager had been involved and in view of the averments made in the written statement that these three bills of exchange were drawn not for the purpose of negotiating but only for creating evidence to enable the bank to somehow grant financial relief to defendant No. 3, according to him, the bank to have examined the then manager and that having not been done, the court ought to draw an adverse inference against the bank and once this is done, according to him, the appellants must succeed in their defence and that way the bank's suit is liable to be dismissed. Mr. Kakodkar is otherwise justified in this submission, but however the facts of this particular case do not lend support. In that it must be noticed that there is no averment on behalf of the appellants in the written statement that there was any representation made by the then manager on behalf of the bank that these three bills of exchange are required to be made for namesake and only to give financial assistance to defendant No. 3. All that the appellants mentioned in their written statement is that it is defendant No. 3 who told them that there had been that type of talk between him and the then manager. Once the appellants have restricted their case only to the representation made by defendant No. 3, we are not able to accept what is urged before us by Shri Kakodkar that it was incumbent upon the bank to have examined the then manager in this case. We, therefore, fully agree with Shri Talaulikar, learned counsel for the bank that non-examination of the then manager cannot give any scope for drawing any adverse inference against the bank or weaken its case in any manner.


( 21 ) WE are also unable to agree with what is urged before us that the bank is not the holder in due course for the simple reason that having regard to the very many provisions and more particularly to section 118 of the Negotiable Instruments Act, it is clear to us that the appellants have accepted the three bills of exchange on September 21, 1978, and the same is duly signed on behalf of appellant No. 1 by appellant No. 2. The amount has been duly shown in each and every bill of exchange and once this position is accepted, the statutory presumption is available to hold that the consideration has passed. The only question to be seen is whether the appellants have been able to rebut the statutory presumption and have proved that in reality no consideration has passed. Here, the only evidence adduced on behalf of the appellants is the evidence of D. W. 1, Shri Rajesh Agarwal, who is appellant No. 2. In his evidence he says that he knows D. 3, Prabhakar Digambar Joshi, who was dealing in stationery and general merchandise. He also says that he had some loan transactions with him for a sum of Rs. 94,000 odd and that in September, 1978, he requested him to sign the bills of exchange as acceptor to be delivered to the plaintiff-bank as he wanted a further loan from the bank but he does not dispute the acceptance of these bills of exchange. It is not known on what basis D. W. 1 says that the bank manager knew that no goods in reality were sold to him by defendant No. 3 as he does not involve the bank manager in whatever transaction he had with D. 3. When questions were put to him in cross-examination with regard to the loan transactions and the transaction in relation to the three bills of exchange, he mentioned that there was no special relation between him and defendant no. 3. It is not understood as to how appellant No. 2 having already parted with a loan of over Rs.94,000 to defendant No. 3 should embark upon accepting further liability of the three bills of exchange on September 21, 1978, based merely on the representation of defendant No. 3 mentioning clearly therein the number of the invoice, etc. In the context of his statement that he had no special relationship with defendant No. 3, the evidence of appellant No. 2 becomes doubtful. It is not even the case of the appellants that while giving the loan or accepting the three bills of exchange in question, any security or guarantee was sought. The trial court has also observed in its judgment that the appellant is a businessman and knows English as he deposed before the trial court in English. Having regard to all these factors, it is impossible to accept the evidence adduced by appellant No. 3 to disclaim the liability in respect of these three bills of exchange on which they were sued. At any rate, we will have to accept that consideration had passed and that whatever evidence was adduced by the appellants is not sufficient to rebut the presumption of consideration.


( 22 ) WE will now, however, come to the question of the legal evidence in respect of discounting. We have already dealt with this subject and there is some justification for learned counsel to contend that strictly speaking there is no legal evidence to suggest that the bills were discounted and the amount was paid having regard to section 34 of the Evidence Act. There is nothing on record to suggest that the ledger books were brought before the court and apart from merely tendering exhibit P-12, there is no statement made by the manager, Dilip Deshpande, (P. W. 1)that the various entries in the exhibit are reflected in the ledger books in possession of the bank and which ledger books are kept in the regular course of business. To a considerable extent, Mr. Kakodkar is right in saying that the three aspects required to be proved in relation to exhibit P-12 have not been done by the bank. In support of his contention, he has firstly relied upon the decision of Beni v. Bisan Dayal, AIR 1925 Nag 445, which clearly mentions that mere entries in books of accounts are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to made evidence against himself by what he chosses to write in his own books behind the back of third parties and there must be independent evidence of the transaction to which the entries relate. This is to suggest that for strict requirement under section 34 of the Evidence Act to fasten the liability based on entries in books of account, something more is required to be proved by way of independent evidence as it may be open for any plaintiff to go on manufacturing entries in the books of account and that way inflate the claims. He next invited our attention and in answer to the contention raised by Shri Talaulikar on the decision of V. K. Abraham v. N. K. Abraham, AIR 1978 Mad 56. Dealing with section 34 of the Evidence Act and while referring to several authorities, it has been laid down that the original entries alone under section 34 of the Evidence Act would not be sufficient to charge any person with liability and that no person can be charged with liability on basis of mere entries. In this case, mention has been made to the decision in Chandradhar Goswami v. Gauhati Bank Ltd., air 1967 SC 1058. Mr. Kakodkar places reliance on para 6 at page 1060 on the passage : "therefore, where the entries are not admitted, it is the duty of the bank if it relies on such entries, to charge any person with liability, to produce evidence in support of the entries to show that the money was advanced as indicated therein and thereafter the entries would be of use as corroborative evidence. But no person can be charged with liability on the basis of mere entries, whether the entries produced are the original entries or copies under section 4 of the Bankers' books Evidence Act. "


( 23 ) MR. Kakodkar points out that apart from merely producing on record exhibit P-12, there is no whisper that they are reflected in the ledgers mentained by the bank in the ordinary course of business. He mentions that even the so called relevant entry is not proved inasmuch as

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nothing has been said in that connection and lays his hand on the decision in Dadarao v. State of Maharashtra, AIR 1974 SC 388. Factually, Mr. Kakodkar is right in saying that in so far as the requirement of section 24 is concerned, there is a failure on the part of the bank and there is no reference to the entry for the figure Rs. 49,590 as against the date September 21, 1978. Before, however, we conclude the matter, in all fairness to Mr. Kakodkar, we may make reference to some more authorities in support of his contention that the rebuttal of the presumption available to the holder of negotiable instruments under section 118 need not be a rebuttal based on direct evidence and it can be even based on indirect evidence or may be even based on presumptions of law and of fact. It may even rest on the case of the very holder of the instrument. In this connection, he refers to the decisions in Chandan Lal Joura v. Amin Chand Mohan Lal. AIR 1960 Punj 500, Kundan Lal Rallaram v. Custodian, Evacuee Property, AIR 1961 SC 1316 and Dadarao v. State of Maharashtra, AIR 1974 SC 388. ( 24 ) MR. Talaulikar, learned counsel for the bank, however, urges that section 34 of the Evidence act has no application to this case as the suit is not based on accounts and the suit is entirely based on three bills of exchange and once the presumption is available, whatever evidence is produced from the extract of the banker's ledger cannot be said to be governed under section 34 of the Evidence Act. It is true that the suit is filed based on three bills of exchange, but, however, we fail to make any distinction that section 34 will have no application to such suit and that section will have application only to suits based on accounts. ( 25 ) THE fact remains that the present suit is filed by the plaintiff-bank based on three negotiable instruments. In its ordinary course of business, the bank is expected to maintain ledgers and books of accounts and viewed thus, whatever extract is tendered by the bank is liable to be accepted, unless diputed. It is true that in the pleadings, the appellants raised the plea that there was no discounting done and, therefore, the liability cannot be fastened on them. But, however, when the extract of accounts, namely, exhibit P-12 was produced by P. W. 1, Dilip Deshpande, the same was not challenged nor any objection was taken for its production. It may be argued that mere production without objection does not give any evidentiary value to that document, but then it must be seen that in the cross-examination, no question is put in relation to this entry in that extract although on behalf of the appellants, several entries from the account of Leo Traders were put to PW-1 in his cross- examination. At any rate, we find that the entry of Rs. 49,590 as against the date of September 21, 1978, clearly speaks of S. D. No. 1/78, S. D. No. 2/78 and S. D. No. 3/78 which is clearly in reference to the three bills of exchange. This entry in exhibit P-12 taken together with exbihits P-2, P-3 and P-4, i.e., three bills of exchange are, therefore, beyond any challenge. We accept the same coupled with the presumption available to the bank under section 118 which continues in all its rigour against the appellants. Even in the absence of exhibit P-12, the suit is liable to be decreed on the strength of exhibits P-2, P-3 and P-4 alone once the appellants admitted that they were the acceptors thereof. ( 26 ) MR. Kakodkar has no doubt rendered yeoman services to his client to wriggle them out from this transaction. Apart from recording his efforts, we are unable to accept any of the contentions raised. (27) THE appeal is dismissed. The appellants to pay costs.
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