Case Note & Summary
The present appeal arises from a money decree passed by the City Civil Court, Mumbai in Summary Suit No.6980 of 2004. The appellants, who were the original defendants, challenged the decree dated 4th July 2016. The respondent, Shehnaz Sani, filed the suit claiming that the defendants had borrowed a sum of Rs. 5,00,000 from her and executed a promissory note and a cheque for the same amount. The cheque was dishonoured upon presentation. The defendants denied the borrowing and contended that the cheque was given as a security for some other transaction and that the suit was barred by limitation. The trial court decreed the suit in favour of the plaintiff. The High Court examined the evidence and found that the plaintiff failed to prove that the cheque was issued for discharge of an existing debt. The court noted that the promissory note was dated 1st January 2001 and the suit was filed in 2004, beyond the three-year limitation period. The court held that the plaintiff's case was based on a time-barred debt and that the presumption under Section 139 of the Negotiable Instruments Act was rebutted by the defendants. The court allowed the appeal, set aside the decree, and dismissed the suit with no order as to costs.
Headnote
A) Civil Procedure - Summary Suit - Order 37 CPC - Burden of Proof - In a summary suit for recovery of money based on a dishonoured cheque, the plaintiff must prove that the cheque was issued for a debt or liability. The mere fact of issuance and dishonour does not shift the burden to the defendant if the defendant denies liability and raises a plausible defence. (Paras 10-15) B) Negotiable Instruments Act, 1881 - Section 138 - Presumption under Section 139 - The presumption under Section 139 of the Negotiable Instruments Act that the cheque was issued for consideration is rebuttable. The defendant can rebut it by showing that the cheque was not for an existing debt, especially when the plaintiff's own case shows the debt was time-barred. (Paras 16-20) C) Limitation Act, 1963 - Article 35 or 36 - Suit on Promissory Note - A suit on a promissory note must be filed within three years from the date of execution. If the note is payable on demand, limitation runs from the date of execution. A suit filed after three years is barred by limitation, and the plaintiff cannot rely on the cheque to extend limitation. (Paras 21-25) D) Evidence Act, 1872 - Section 114 - Presumption of Consideration - The presumption of consideration under Section 114 of the Evidence Act is rebuttable. In the absence of proof of consideration, the plaintiff cannot succeed. The court must examine the evidence to see if the defendant has rebutted the presumption. (Paras 26-30)
Issue of Consideration
Whether the plaintiff proved that the cheque was issued for discharge of an existing debt and whether the suit was barred by limitation.
Final Decision
The appeal is allowed. The impugned judgment and decree dated 4th July 2016 passed by the City Civil Court, Mumbai in Summary Suit No.6980 of 2004 is set aside. The suit is dismissed. No order as to costs.
Law Points
- Burden of proof in summary suit
- presumption under Negotiable Instruments Act
- 1881
- limitation for suit on promissory note
- consideration for negotiable instrument
- discharge of debt
