1. The Plaintiff seeks to recover a sum of Rs.1,71,20,256/- along with interest at the rate of 24% per annum from the date of filing of the suit until realization thereof.

2. The Plaintiff states that her father was the late V.B.Venkataraman. The Defendant was a tenant of the Plaintiff's father. The Defendant ran a school under the name and style of Padma Srinivasan Memorial Vidyalaya Matriculation School. In connection with making improvements to the school, the Defendant borrowed money from the Plaintiff's father from time to time. According to the Plaintiff, the Defendant borrowed money from her father on eleven different dates between 18.01.1997 and 20.12.2002. While borrowing a sum of Rs.50,000/-, the Defendant executed a registered mortgage (Ex.P1) dated 28.01.1997 in respect of a property situated at No.8, Bhavani Nagar, Lakshmipuram, No.34, Madhavaram Village. The Plaintiff states that the Defendant acknowledged the loan availed of by him in multiple tranches, as set out above, by executing a document (Ex.P3) dated 09.02.2002, whereby he acknowledged the receipt of a sum of Rs.4,65,000/. Subsequently, the Defendant also executed a sale agreement (Ex.P2) dated 03.08.2001 in respect of the mortgaged property and borrowed a further sum of Rs.3,85,000/-.

3. Between 08.02.2002 and 30.10.2003, the Plaintiff states that the Defendant borrowed further sums. In the aggregate, it is stated that a total sum of Rs.29,62,000/- was borrowed as on 30.10.2003. In relation thereto, it is stated that the Defendant executed four promissory notes. The Plaintiff refers to promissory notes dated 19.09.2002, 20.10.2002 and 20.12.2002, respectively, for sums of Rs.32,000/-, Rs.20,000/- and Rs.20,000/-, respectively. Eventually, it is stated that a promissory note dated 30.11.2015 was executed by the Defendant acknowledging receipt of a sum of Rs.1,45,12,735/-, and promising to repay the said sum with interest at 24% per annum from the date of execution of the promissory note. Based on such promissory note, the present suit was filed by limiting the interest claim to 6% per annum from 30.11.2015 to 28.11.2018. Thus, the Plaintiff seeks a decree for a sum of Rs.1,71,20,256/-.

4. Upon service of summons, the Defendant entered appearance through counsel. However, the Defendant did not file the written statement within time. Instead, the Defendant filed an application to reject the plaint. The said application was rejected by order dated 19.08.2021. Subsequently, by order dated 10.11.2021, this Court rejected the request of the Defendant to file the written statement by citing the case of SCG Contracts (India) Private Limited v. K.S. Chamankar Infrastructure (P) Limited, 2019) 12 SCC 210 [LQ/SC/2019/256 ;] ">(2019) 12 SCC 210 [LQ/SC/2019/256 ;] [LQ/SC/2019/256 ;] ">2019) 12 SCC 210 [LQ/SC/2019/256 ;] ">(2019) 12 SCC 210 [LQ/SC/2019/256 ;] [LQ/SC/2019/256 ;] [LQ/SC/2019/256 ;] ">2019) 12 SCC 210 [LQ/SC/2019/256 ;] ">(2019) 12 SCC 210 [LQ/SC/2019/256 ;] [LQ/SC/2019/256 ;] ">2019) 12 SCC 210 [LQ/SC/2019/256 ;] ">(2019) 12 SCC 210 [LQ/SC/2019/256 ;] [LQ/SC/2019/256 ;] [LQ/SC/2019/256 ;] [LQ/SC/2019/256 ;] and recording that the Defendant had forfeited the right to file a written statement. By the same order, the Court framed the following issues:

(1) Whether the Plaintiff is entitled to recover money from the Defendant on the basis of the pro-note executed by the Defendant dated 30.11.2015?

(2) For what other relief is the Plaintiff entitled to?

5. The Court further referred the matter to the learned Additional Master No.IV for the limited purpose of marking documents by recording that oral evidence is unnecessary. Pursuant thereto, the Plaintiff exhibited 16 documents which were marked as Exs.P1 to P16. Oral arguments were advanced on behalf of the Plaintiff by Mr. R.Ramanlaal, learned counsel, and on behalf of the Defendant by Mr. G. Thangavel, learned counsel.

6. In the course of oral arguments, the Plaintiff contended that she is entitled to the benefit of the statutory presumption under Section 118 of the Negotiable Instruments Act, 1881 (The NI Act). The Plaintiff emphasized that Section 118 of the NI Act makes it mandatory for the Court to presume that every negotiable instrument was made or drawn for consideration. The Plaintiff also pointed out that Section 118 also provides for a presumption as to the date of execution thereof. By drawing reference to Ex.P13 (the Suit Promissory Note), the Plaintiff contended that the Defendant executed the Suit Promissory Note on 30.11.2015 for a sum of Rs.1,45,12,735/-. The Plaintiff contended that the statutory presumptions under Section 118 of the NI Act would hold until and unless the Defendant successfully rebuts the presumption by adducing evidence. In this case, the Defendant did not adduce evidence.

7. The Plaintiff also referred to the antecedent documents to establish that Ex.P13 is supported by consideration even de hors the statutory presumption. Towards such end, the Plaintiff referred to the letter of undertaking dated 09.12.2002 (Ex.P3) which records the receipt of a sum of Rs.4,15,000/- by the Defendant from the Plaintiff's father. The Plaintiff also referred to the letter confirming the deposit of title documents with the intention of creating an equitable mortgage over the relevant property (Ex.P4) and earlier promissory notes such as the promissory notes dated 19.09.2002 (Ex.P5) and 20.10.2002 (Ex.P7), the letter of undertaking dated 31.10.2002(Ex.P8), the promissory note dated 20.12.2012 (Ex.P9) and the letter dated 30.11.2015 (Ex.P12) to the Plaintiff from the Defendant. With reference to Ex.P12, the Plaintiff stated that the Defendant requested for title documents which had been handed over to the Plaintiff in relation to a loan applied for by the Defendant from Reliance Capital Limited. The promissory note was executed on the same date. This communication records that the property documents pertaining to Plot No.8, Bhavani Nagar, Lakshmipuram, Kolathur, Chennai – 600 099 would be returned after verification.

8. According to the Plaintiff, if the loan had been discharged as contended by the Defendant, the Defendant would not have agreed to return the title documents after verification by Reliance Capital Limited. For all these reasons, the Plaintiff contended that the execution of the promissory note was proved and the consideration specified therein flows from amounts borrowed by the Defendant and reflected in the documents referred to above.

9. These contentions were refuted by the Defendant. The Defendant expressly denied execution of Ex.P13. The Defendant asserted that the signature on Ex.P13 is not the signature of the Defendant. In order to substantiate this contention, the Defendant referred to Ex.P8, Ex.P9 and Ex.P12 and stated that he was in the habit and practice of writing his name in capitals beneath his signature. By drawing reference to Ex.P12, the Defendant pointed out that both Ex.P12 and Ex.P13 were executed on the same date. While Ex.P12 contains the name of the Defendant in capital letters beneath his signature, Ex.P13 does not. Therefore, the Defendant contended that the Plaintiff has failed to establish the execution of Ex.P13 by the Defendant. The Defendant also referred to the sale agreement of 03.08.2001(Ex.P2) and pointed out that the sale agreement does not contain the signature of the Plaintiff's father although he is one of the parties thereto. By drawing reference to the endorsements made on Ex.P3, the Defendant pointed out that a sum of Rs.3,65,000/- was paid between 24.05.2008 and 12.05.2014 towards discharge of the loan taken from the Plaintiff's father. The Defendant next referred to the reply statement of the Defendant herein in the earlier suit, namely, O.S.No.36 of 2016. With specific reference to paragraphs 10 and 12 of the said reply statement, the Defendant pointed out that the execution of the promissory note dated 10.03.2002 was expressly denied in paragraph 10. With reference to paragraph 12 thereof, the Defendant pointed out that the execution of promissory notes dated 09.02.2012 and 31.02.2002 were also denied. The Defendant further submitted with reference to paragraph 12 thereof that the execution of the Suit Promissory Note (Ex.P13) was denied in the said paragraph 12. In fact, the Defendant pointed that it was stated therein that the Suit Promissory Note was created to avoid the bar of limitation.

10. In support of these contentions, the Defendant referred to and relied upon the following judgments:

(i) Bharat Barrel and Drum Mfg.Co. v. Amin Chand Pyarelal 1999(1) CTC 497(Bharat Barrel), wherein, at paragraph 11, the Hon'ble Supreme Court dealt with the presumption under Section 118 of the NI Act and held that the presumption would cease to operate once the defendant showed either by direct or circumstantial evidence or by use of the other presumptions of law or fact that the promissory note was not supported by consideration.

(ii) Reverend Mother Marykutty v. Reni C.Kottaram and another (2013) 1 SCC 327 [LQ/SC/2012/923] , wherein, at paragraph 13, the Hon'ble Supreme Court referred to the judgment in Bharat Barrel and concluded that the presumption under Section 118 of the NI Act had been duly rebutted by the defendant therein.

(iii) M.S.Narayana Menon Alias Mani v. State of Kerala and Another (2006) 6 SCC 39 [LQ/SC/2006/547] , wherein, at paragraphs 27 to 30, the Hon'ble Supreme Court considered the implications of Sections 118 and 139 of the NI Act, including the purport of the expressions 'proved' and 'disproved' as per Section 3 of the Indian Evidence Act, 1872 (the Evidence Act).

11. By way of rejoinder, the Plaintiff pointed out that several admitted signatures of the Defendant are on record. For instance, the signatures on Ex.P12, Ex.P9 and Ex.P8 are admitted. Therefore, by applying Section 73 of the Evidence Act, the Court may compare the signature of the Defendant on Ex.P13 by testing the said disputed signature against the admitted signature on the other exhibits referred to above. On this issue, the Plaintiff relied upon the judgment of this Court in Ponnambalam v. Dhanalakshmi, 2020 SCC OnLine Mad, 18388, wherein, at paragraphs 10 to 18, this Court referred to Section 73 of the Evidence Act, which permits the Court to compare signatures.

12. Upon consideration of these contentions, the issue to be decided is whether the Plaintiff is entitled to the suit claim on the basis of Ex.P13. The Suit Promissory Note indicates that the consideration is a sum of Rs.1,45,12,735/-. Since it is a promissory note, it qualifies as a negotiable instrument in terms of the NI Act. As contended by the Plaintiff, if execution is proved, the Plaintiff is entitled to the presumption under Section 118 of the NI Act. Consequently, the first question is whether the Plaintiff has proved execution of the Suit Promissory Note. By referring to the reply statement filed in O.S.No.36 of 2016, the Defendant contended that the execution of the promissory note was denied by the Defendant. On the contrary, the Plaintiff submitted that several admitted signatures of the Plaintiff and Defendant are on record and that Section 73 of the Evidence Act may be applied for purposes of comparison. Section 73 of the Evidence Act is as under:

''73. Comparison of signature, writing or seal with others admitted or proved.—

In order to ascertain whether a signature, writing or seal is that of the person by whom it purports to have been written or made, any signature, writing, or seal admitted or proved to the satisfaction of the Court to have been written or made by that person may be compared with the one which is to be proved, although that signature, writing, or seal has not been produced or proved for any other purpose.

The Court may direct any person present in Court to write any words or figures for the purpose of enabling the Court to compare the words or figures so written with any words or figures alleged to have been written by such person.''

13. On examining Section 73, it is evident that it specifies one of the methods of proving a document. In order to invoke Section 73, admitted signatures of the person concerned should be available. In this case, the Defendant admits the signatures on Ex.P8, Ex.P9 and Ex.P12. On account of the availability of documents bearing the admitted signature of the Defendant, it is possible to compare such admitted signatures with the disputed signature. Upon undertaking such comparison, the disputed signature on Ex.P13 tallies with the admitted signatures on visual examination with the naked eye. The Defendant denies the signature largely on the basis that the name of the signatory/Defendant is not written in capital letters beneath the disputed signature on Ex.P13. Merely because the name of the executant has not been written beneath the signature, the genuineness of the signature cannot be questioned. In any event, the law and the remaining evidence should be considered before drawing a definitive conclusion.

14. Section 118 of the NI Act is as follows:

''118. Presumptions as to negotiable instruments. — Until the contrary is proved, the following presumptions shall be made:—

(a) of consideration — that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;

(b) as to date — that every negotiable instrument bearing a date was made or drawn on such date;

(c) as to time of acceptance —that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;

(d) as to time of transfer —that every transfer of a negotiable instrument was made before its maturity;

(e) as to order of indorsements —that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;

(f) as to stamps —that a lost promissory note, bill of exchange or cheque was duly stamped;

(g) that holder is a holder in due course —that the holder of a negotiable instrument is a holder in due course: Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.'

15. On perusal thereof, it is clear that it requires certain presumptions to be drawn by the Court. These presumptions are, inter alia, that the negotiable instrument was drawn for consideration and that it was drawn on the date that the negotiable instrument bears. Since it is a “shall presume” and not a “may presume” provision, there is no discretion with regard to the drawing of such presumptions. However, the presumptions are rebuttable. In order to rebut the presumptions, the judgments cited at the bar instruct that it is necessary that the evidence on record leads to the inference that the existence of consideration is so improbable that a prudent man would not draw the conclusion that the negotiable instrument is supported by consideration. In this connection, the judgments cited by the Defendant may be referred to. In Bharat Barrel, the Hon'ble Supreme Court referred to the judgment of the Full Bench of the Rajasthan High Court in Heerachand v. Jeevrai and another, AIR 1959 Raj. 1 [LQ/RajHC/1958/91] . In such judgment, the Full Bench of the Rajasthan High Court formulated three principles with regard to rebutting the presumption under Section 118. The first principle is that the Court would not demand a very high standard of proof from the Defendant who has to discharge the burden of proving the negative. The second principle is that the Plaintiff should adduce evidence if all the relevant facts are within the plaintiff's knowledge. The third principle is that once both parties have led evidence, the onus of proof loses all importance. Based on these principles, the Full Bench concluded that it is sufficient if the Defendant shows that the preponderance of probabilities is in favour of drawing the conclusion that the negotiable instrument is not supported by consideration. After considering the judgment of the Full Bench and other relevant judgments, the Hon'ble Supreme Court held as under in paragraph 14:

''14.Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would dis-entitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the nonexistence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as existence of negative evidence is neither possible nor contemplated and even if led is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption the defendant has to bring on record such facts and circumstances, upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist. We find ourselves in the close proximity of the view expressed by the Full Benches of the Rajasthan High Court and Andhra Pradesh High Court in this regard.''

From the above judgment, it is clear that the test is whether the Defendant has established that the Suit Promissory Note was not supported by consideration or that the non-existence of consideration is so probable that a prudent man would, under the circumstances of the case, act on the basis that there is no consideration. In other words, the Defendant should discharge the burden of disproving the existence of consideration.

16. For such purpose, it is necessary to turn to the documents antecedent to the Suit Promissory Note. Since the letter of undertaking dated 09.12.2012(Ex.P3) is an admitted document, it is an appropriate exhibit to begin the inquiry with. This document is executed by the Defendant in favour of the Plaintiff's father. It records that the Defendant borrowed an aggregate sum of Rs.4,15,000/- on various dates between 18.01.1997 and 08.02.2002. It also records that the Defendant borrowed a sum of Rs.50,000/- on 28.01.1997 by mortgaging an immovable property. Thus, the document clearly evidences the receipt of the sum of Rs.4,65,000/- by the Defendant. The document also bears endorsements with regard to payments made by the Defendant. Such endorsements indicate repayments between 24.05.2008 and 12.05.2014 of an aggregate sum of Rs.3,65,000/-. On the basis of this document, the only inference that can be drawn is that the sum of Rs.4,65,000/- was not repaid in full even as of 19.06.2015, which is the date specified beneath the endorsements on the document. The letter of undertaking dated 31.10.2002, which is also an admitted document, should be examined next. This letter evidences that the Defendant borrowed a sum of Rs.95,000/- from the Plaintiff's father and issued two cheques in relation thereto. The next admitted document is the promissory note dated 20.12.2002 (Ex.P9), which reflects that the Defendant borrowed a sum of Rs.50,000/-. The last document to be considered is the letter dated 30.11.2015 from the Defendant to the Plaintiff. By this document, the Defendant called upon the Plaintiff to hand over the title documents for the property bearing Plot No.8, Bhavani Nagar, Lakshmipuram, Kolathur, Chennai -99, including the registered mortgage document in respect thereof, so as to enable the Defendant to submit the same for verification to Reliance Capital Limited in connection with a loan for which the Defendant had applied. This document is dated 30.11.2015. It expressly records that these documents would be returned to the Plaintiff after verification. From these documents, it is clear that the Defendant had not discharged the liability to the Plaintiff in full as on 30.11.2015. While it is not possible to ascertain from the documents on record, if the Suit Promissory Note is disregarded, as to whether the Defendant owed the Plaintiff a sum of Rs.1,45,12,735/- on the date of execution of Ex.P13, the evidence on record discloses that the loan had not been discharged in full, and that some amounts were outstanding as on 30.11.2015 from the Defendant to the Plaintiff.

17. In view of the above evidence and the inferences therefrom, it cannot be concluded that the existence of consideration for the Suit Promissory Note is improbable. In effect, the Defendant has failed to disprove the existence of consideration in the manner required by reading Section 3 of the Evidence Act and Section 118 of the NI Act along with the interpretations thereof by the Hon'ble Supreme Court. Once it is concluded that the existence of consideration is not improbable, it should be concluded that the Defendant has failed to effectively rebut the presumption. For such reason, the Plaintiff is entitled to succeed.

18. The Plaintiff has claimed a sum of Rs.1,71,20,256/- by calculating interest on Rs.1,45,12,735/- at 6% per annum from the date of the Suit Promissory Note until the date of the plaint. Interest has been claimed at 6% per annum although the Suit Promissory Note specifies that interest would be payable at 24% per annum. As indicated earlier, the Plaintiff is entitled to this sum. Although the Plaintiff has claimed interest at 24% per annum on Rs.1,71,20,256/- from the date of plaint until the date of realization, by taking into account the prevailing interest rates, the Plaintiff is entitled to interest at 9% per annum from the date of plaint until the date of realization. As regards costs, the Plaintiff has paid a sum of Rs.1,74,750/- as court fee. Consequently, on the loser pays principle, the Plaintiff shall be entitled to a sum of Rs.3,00,000/- as costs, which shall include the court fee, lawyer's fee and other expenses.

19. In the result, the suit is decreed by directing the Defendant to pay the Plaintiff a sum of Rs.1,71,20,256/- with interest thereon at 9% per annum from the date of plaint till the date of realization. The Defendant is also directed to pay the plaintiff a sum of Rs.3,00,000/- as costs, including court fees, lawyer's fees and other expenses.