1999 (10) TMI 761 - HC - Indian Laws

Trial Court Error: High Court Decrees Suit with Costs. Failure to Apply Legal Principles.

The High Court set aside the trial court's decree, decreeing the suits with costs. The trial court's failure to apply correct legal principles regarding ... - Issues Involved:1. Execution and validity of promissory notes.2. Presumption under Sections 118 and 121 of the Negotiable Instruments Act.3. Defense of blank stamp papers.4. Revisional jurisdiction of the High Court.5. Burden of proof and presumption under the Evidence Act.6. Authority under Section 20 of the Negotiable Instruments Act.Detailed Analysis:1. Execution and Validity of Promissory Notes:The trial court dismissed the suits filed by the plaintiffs based on promissory notes, concluding that the plaintiffs failed to prove the execution of the promissory notes and the necessity for the defendants to prove that no consideration passed under the promissory notes. The defendants contended that their signatures were taken on blank stamp papers for changing the khatha of lands, which led to the rejection of the suits.2. Presumption under Sections 118 and 121 of the Negotiable Instruments Act:The counsel for the petitioner argued that once the execution of the promissory note is admitted, the presumption under Sections 118 and 121 regarding the passing of consideration and the capacity of the plaintiff should apply. The trial court did not properly consider these presumptions, treating the promissory notes as suspicious documents and questioning the capacity of the person lending the loan.3. Defense of Blank Stamp Papers:The trial court accepted the defendants' defense that their thumb impressions and signatures were taken on blank stamp papers. However, the High Court referred to Section 20 of the Negotiable Instruments Act, which provides that signing a blank or incomplete negotiable instrument gives prima facie authority to the holder to complete it. The High Court emphasized that even if the promissory note was blank, the holder has the authority to complete it, making the defense of blank papers invalid.4. Revisional Jurisdiction of the High Court:The High Court's revisional jurisdiction is confined to questions of jurisdiction and does not extend to re-examining or re-assessing the evidence on record. However, it can interfere when there is a jurisdictional error or an error apparent on the face of the record. The High Court found that the trial court misunderstood the law and committed an error apparent on the face of the record by not following the principles of law regarding promissory notes.5. Burden of Proof and Presumption under the Evidence Act:The High Court cited precedents indicating that when a person admits their signature on a document, a presumption arises that they executed the document. If they claim the signature was taken on a blank paper, they must prove it. The trial court failed to apply this principle correctly, leading to an erroneous dismissal of the suits.6. Authority under Section 20 of the Negotiable Instruments Act:Section 20 of the Negotiable Instruments Act allows the holder of a signed but incomplete negotiable instrument to complete it. The High Court noted that the trial court did not consider this provision, which supports the validity of the promissory notes even if they were initially blank. The authority implied by a signature on a blank instrument is extensive, binding the signatory to the completed instrument.Conclusion:The High Court set aside the decree of the trial court, allowing the civil revision petitions and decreeing the suits with costs. The trial court's failure to apply the correct legal principles regarding the execution and presumption of promissory notes, as well as the authority under Section 20 of the Negotiable Instruments Act, constituted an error apparent on the face of the record, warranting interference by the High Court.