Defendant successfully rebuts Section 118 presumption in dishonoured cheque case due to plaintiff's contradictory evidence

The Madras HC allowed the defendant's appeal against a trial court decree for money based on a dishonoured cheque. While Section 118 of the Negotiable Instruments Act creates a strong presumption supporting negotiable instruments, this presumption was successfully rebutted. The plaintiff failed to produce documents proving the alleged lending of Rs. 23 lakhs, had no bank account, was not an income tax assessee, and made false claims about his mother's financial capacity. Despite the defendant's failure to lodge a police complaint or reply to legal notice, the plaintiff's contradictory cross-examination testimony destroyed the statutory presumption. The trial court's judgment and decree were set aside.

---

---

Issues:
Challenge to the decree for money granted in a suit based on a dishonored cheque.

Analysis:
The plaintiff claimed that the defendant borrowed Rs. 23 lakhs and issued a post-dated cheque, which was dishonored. The defendant denied borrowing any money and alleged that the plaintiff, with the help of a local politician, took documents, including the cheque, by force. The Trial Court framed issues related to the loan, consideration for the cheque, and entitlement to recovery.

The Trial Court relied on the presumption under Section 118 of the Negotiable Instruments Act and granted a decree in favor of the plaintiff. The defendant argued that the plaintiff's evidence did not prove the borrowal, citing the Supreme Court's judgment in Bharat Barrel & Drum Manufacturing Company case. The defendant's cross-examination raised doubts about the plaintiff's financial capacity to lend the amount claimed.

The Court examined the evidence and concluded that the plaintiff's own testimony contradicted his claims of having the funds to lend. Despite the defendant's conduct and failure to reply to the legal notice, the plaintiff's lack of concrete evidence regarding the loan transaction weakened the presumption under Section 118. The Court found the presumption rebutted by the plaintiff's evidence.

Based on the analysis, the Court disagreed with the Trial Court's decree and set it aside, allowing the appeal with costs and dismissing the suit. The judgment highlighted the importance of concrete evidence to support claims in cases involving negotiable instruments and emphasized the need to rebut legal presumptions with factual evidence.

---