(Prayer in A.S.: Appeal Suit filed under Section 96 of CPC to set aside the judgment and decree dated 27.09.2019 made in O.S.No.23 of 2017 on the file of the III Additional District Judge, Kallakurichi, Villupuram District)

1. This First Appeal, under Section 96 CPC, is directed against the judgment and decree dated 27.09.2019 made in O.S. No.23 of 2017 on the file of the III Additional District Judge, Villupuram @ Kallakurichi, whereby the suit filed by the respondent / plaintiff for recovery of a sum of Rs.12,00,000/- with interest came to be decreed.

2. For the sake of convenience parties are referred to by their ranks as they stood before the courts below. The defendant in the suit is the appellant in this first appeal.

3. The plaintiff’s case is that the defendant borrowed Rs.12,00,000/- as hand loan on 18.08.2017 and, towards repayment, issued a cheque bearing No.291834 dated 18.08.2017 drawn on ICICI Bank, Kallakurichi Branch, from Account No.088705001582 maintained by him; when the cheque was presented through ICICI Bank, Kallakurichi on 19.08.2017, it was returned unpaid on 21.08.2017 with the endorsement “funds not sufficient”, and alleging that the defendant thereafter sought to evade repayment by alienating his properties and leaving the local limits, the plaintiff instituted the present suit for recovery of the said amount with interest and costs.

4. The defendant, in his written statement, denies the plaint averments in entirety, specifically disputing the alleged borrowing of Rs.12,00,000/- on 18.08.2017 and the issuance of the suit cheque, which he characterises as a fabricated instrument unsupported by consideration. He states that he was carrying on business under the name and style of “Sri Balaji Traders” as a wholesale merchant dealing in medicinal tubers, that the business suffered heavy losses, and that in the course of meeting business liabilities to farmers, signed blank cheques were issued to various persons for business purposes. According to him, the business was closed about four years prior to the suit, the bank account referred to in the plaint had remained inoperative for several years, and no accounts were maintained thereafter. He further alleges that the plaintiff, a close acquaintance who frequented the business premises, assisted him during occasions when farmers besieged the premises by filling up cheques for payment, and that several signed blank cheques had been entrusted to the plaintiff for such purpose, one of which has been misused and filled up for Rs.12,00,000/- to institute the present suit. The defendant also pleads that the suit is barred by limitation, material alteration of the cheque, absence of statutory notice, non-joinder of necessary parties, and alleges that the cause of action is not true and thus prayed for dismissal of the suit with exemplary costs.

5. On the plaintiff’s side, the plaintiff examined himself as PW1 and examined one Vasanthabala, stated to be an attesting witness to the transaction, as PW2, and marked Ex.A1, the cheque dated 18.08.2017 for Rs.12,00,000/-. On the defendant’s side, the defendant examined himself as DW1 and marked Ex.B1, a copy of a cheque dated 21.09.2015, and Ex.B2, a copy of a promissory note of the same date executed by third parties in favour of the plaintiff in a different transaction.

6. On the basis of the rival pleadings, the trial Court framed the following issues: whether the suit cheque is supported by any consideration; whether the defendant is liable to pay a sum of Rs.12,00,000/- with interest to the plaintiff; to what other relief is the plaintiff entitled.

7. The trial Court, on appreciation of the oral and documentary evidence, accepted the testimony of PW1 and PW2 and held that the plaintiff had proved advancement of Rs.12,00,000/- as hand loan on 18.08.2017 and issuance of Ex.A1 cheque by the defendant towards discharge of that liability, which was dishonoured for insufficiency of funds. It noted that while the defendant denied the loan and alleged misuse of a signed blank cheque, he admitted in cross-examination that he had handed over several signed cheques to the plaintiff and that, in relation to Ex.A1, he acted as proprietor of Sri Balaji Traders. Treating this as admission of execution, the Court invoked the presumption under Section 118 of the Negotiable Instruments Act and held that the defendant had failed to rebut the presumption of consideration. The plea of non-joinder was rejected on the ground that the concern was proprietary in nature and Section 69(2) of the Partnership Act had no application. The defence of material alteration was negatived for want of proof, the absence of a bank return memo was held not fatal as dishonour was pleaded and not specifically denied, and the lack of any contemporaneous complaint or action alleging misuse was found to weaken the defence. The trial Court accordingly held that the cheque was issued towards a legally enforceable debt, answered Issues 1 and 2 in favour of the plaintiff, and decreed the suit directing the defendant to pay Rs.12,00,000/- with interest at 9% per annum from the date of plaint till decree and 6% per annum thereafter, together with costs.

8. In the memorandum of appeal, the appellant contends that the trial Court erred in treating admission of signature or handing over of blank cheques as proof of execution of Ex.A1 for consideration; that the plaintiff failed to discharge the initial burden of proving the alleged hand loan of Rs.12,00,000/-, including the purpose of borrowing, source of funds and circumstances of payment; that the plaintiff did not establish his status as a holder in due course and examined no independent witness other than PW2; that the cheque return memo and bank endorsement were not produced; that Ex.A1 suffers from material alteration in date and year; that no statutory notice under Section 138 of the Negotiable Instruments Act was issued; that the trial Court failed to properly consider Exs.B1 and B2 and the defence of partnership business and misuse of blank cheques; that the suit is bad for nonjoinder of the firm Sri Balaji Traders; and that the proviso to Section 118 of the Negotiable Instruments Act, 1881 was not considered. On these grounds, the appellant seeks reversal of the judgment and decree and dismissal of the suit.

9. In the light of the pleadings, evidence and grounds of appeal, the following points arise for consideration in this Appeal Suit:

                     (i) Whether the suit promissory note supported by consideration?

                     (ii) Whether the suit filed as such is maintainable?

                     (iii) Whether the judgement and decree of the trial court is liable to be set aside?

Point No (i)

10. In the written statement, the defendant has pleaded that during a period when farmers had laid siege to his business premises, the plaintiff supported him by filling up cheques and issuing them to the farmers, and that for such purpose the defendant had handed over several signed blank cheques to the plaintiff. The defendant thus admits his signature on Ex.A1 as well as the voluntary delivery of a signed but incomplete instrument. Once such admission is made, Section 20 of the Negotiable Instruments Act is attracted. The delivery of an inchoate instrument, duly signed, carries with it authority to the person to whom it was handed over, to complete the instrument. The defendant has not produced any documentary or acceptable oral evidence to establish that the cheques were handed over for issuance to agriculturists or for any limited purpose. In the absence of proof of such restricted authority, the execution of Ex.A1 must be held to be executed in a valid manner.

11. Having held that Ex.A1 was executed in a lawful manner, the statutory presumption under Section 118(a) of the Negotiable Instruments Act arises that the cheque was issued for consideration. The defendant has not adduced any cogent or probable evidence to rebut this presumption. A mere plea that no consideration was received is insufficient in law. Accordingly, the presumption remains unrebutted, and Point No.(i) is answered in favour of the plaintiff.

Point No (ii)

12. The defendant has raised a contention that Sri Balaji Traders was a partnership firm and that the cheque in question was issued on behalf of the firm, and therefore, in the absence of impleadment of the firm, the suit is not maintainable.

13. On a perusal of Ex.A1, it is evident that the cheque was issued by the proprietor of Sri Balaji Traders. The plaintiff filed the suit against the proprietor Achuthan and the proprietary concern is not arrayed or shown as party to the suit. A proprietary concern has no independent legal existence apart from its proprietor.

14. While Order XXX Rule 10 CPC permits a suit to be instituted against a non-legal entity – a proprietary concern, carrying on business in a trade name, filing a suit against proprietary concern without the proprietor is fatal and suit against the proprietor without arraying the trade nameproprietary concern is not fatal, In the present case as well, the suit has been filed against the proprietor without arraying the proprietary concern and the same is not fatal. Accordingly, the suit is maintainable, and the objection as to non-joinder is untenable. The point is answered in favour of the plaintiff.

Point No (iii)

15. In view of the foregoing discussion, the judgment and decree of the trial Court O.S. No.23 of 2017 call for no interference and are accordingly confirmed. The appeal is liable to be dismissed, thus this point is answered

16. In the result, this AS 351 of 2021 is dismissed, confirming the judgment and decree dated 27.09.2019 in O.S. No.23 of 2017 on the file of the III Additional District Judge, Villupuram @ Kallakurichi with costs.