Madras High Court Bench Judge Teeka Raman held that it is not mandatory under the Negotiable Instruments Act 1881 to obtain both signature and thumbprint for a pro-note to be valid.
The court also held that where the defendant did not deny the execution of the pro note, the lower appellate court could not arouse suspicion regarding the execution of the note simply on the grounds that the thumbprint of the defendant had not been obtained.
“Once the signature found in the prosecution documents has been admitted, there is no need or need for the plaintiff to give an explanation for not obtaining the thumbprint in the prosecution promissory note. There is no such law to obtain the thumbprint in the Prosecution Promissory Note, especially when the execution and delivery of Ex.A1 through Ex.A3 was not in dispute.. .There is no mandatory provision under the Negotiable Instruments Act that both signature and thump impression must be obtained for a pro note…“
In the present case, the original plaintiff, the appellant here, had filed a complaint against the respondent for the recovery of the money of Rs.1,00,000 each borrowed by him and for which three promissory notes were issued to the plaintiff for consideration. After issuing a pre-trial notice, the plaintiff filed an action to recover the claim of Rs. 4,59,000 with subsequent interest.
The defendant, the respondent hereto, admitted the signing of the promissory notes. However, he argued that the promissory notes had been executed as security for the borrowed loan and that the due loan had been settled by the execution of a deed of sale dated 12.11.1999 in the name of the applicant’s wife. It is further alleged that the lawsuit’s promissory notes were not backed by counterparty and that the blank promissory notes were filled for the purpose of filing the lawsuit in 2004.
The trial court considered the statutory presumption under Section 118 of the Negotiable Instruments Act and the power of the holder to timely fulfill the promissory notes under Section 20 of the Act and found ordered the prosecution in favor of the plaintiff.
On appeal, the lower appellate court neither considered the admissions made in the pleadings and evidence, nor took note of the legal presumptions in favor of the plaintiff, and allowed the appeal finding that the fingerprint of the defendant’s thumb had not been obtained and that the signature in each of the promissory notes is different from each other as compared to the naked eye.
The High Court was of the view that where there was no dispute over the execution of the documents, there was no reason for the court to compare those documents with the naked eye as if the defendant had denied execution.
It is not necessary for the applicant to give an explanation for not having obtained a thumbprint because the execution of the document has already been admitted and moreover, there is no law to obtain the thumbprint of the thumb in the suit promissory note, he said.
“When there was no dispute as to the execution of Ex.A1 to Ex.A3, the first Court of Appeal should not have compared the prosecution documents with the naked eye, as if the defendant had denied enforcement and therefore, on the basis of the above evidence both oral and documentary pleaded and evidence on the plaintiff’s side, I conclude that under section 4 of the Indian Evidence Act, whenever it is provided by law that the Court must presume a fact, it must record that fact as proven unless and until it is disproved. Applying the said definitions of “proven” or “disproved” under Section 5 of the Indian Evidence Act to the principle underlying Section 118(a) of the Negotiable Instruments Act, the Court shall presume that Ex.A1 to Ex.A3 have been taken into consideration.
The court also said that where there is a legal presumption in favor of the plaintiff under section 118 of the Negotiable Instruments Act, the onus is on the defendant to prove otherwise. The defendant cannot simply rebut the presumption by a mere explanation, but only by evidence. The court was of the view that the defendant’s evidence was not sufficient to discharge this burden of proof and that the lower appeal court’s approach was wrong.
The court therefore allowed the appeal and set aside the order of the lower appeal court.
Case title: R Barathbaran (deceased) and others against R. Nallathambi
Case no: SA No.: 142 of 2012
Quote: 2022 LiveLaw (Mad) 211
Counsel for the Appellant: Mr. N Manokaran
Counsel for the Respondent: MC Prakasam