Shahid Karim, J:- This is an appeal under section 96 of Code of Civil Procedure, 1908 (CPC) against the judgment and decree dated 10.04.2010 passed by the Addl. District Judge, Burewala. By the said judgment and decree, the suit of the respondent/plaintiff was decreed.
2. The case as put forth in the plaint was that the respondent/plaintiff was the owner of Messrs Bilal Corporation and was a shareholder to the extent of 25% in Basra Brothers Cotton & Ginning Factory and Oil Mills, Dewan Sahib Road, Burewala as well. It was averred in the plaint that the audit of the accounts of Basra Brothers could not be held between the years 1998 to 2005. The defendant, it was alleged, was employed in Basra Brothers Cotton Factory since the year 1998 as Accountant.
For the purpose of business transactions, the signed cheque-book of the respondent/plaintiff and the other shareholders was kept in the possession and custody of the appellant/defendant and this was on account of the trust that the owners reposed in the appellant/defendant. The respondent/plaintiff, it was alleged, insisted upon the audit of the accounts of the Factory to take place yet the shareholders holding the shares to the extent of 75% deliberately avoided the audit to be conducted. When the respondent/plaintiff inquired regarding his account it transpired that the appellant/defendant had, on various occasions, used the signed cheques which were in his possession and in this regard had utilized an amount of Rs.30,00,000/-. The respondent/plaintiff approached the appellant/ defendant and demanded the reimbursement of the said amount, however, the appellant/defendant pleaded that no proceedings be initiated against him and as consideration for the amount which had been siphoned off a cheque No.41995703 of an amount of Rs.30,00,000/- dated 15.12.2005, drawn at A/c No.4855-0, UBL Central Branch, Burewala was executed and handed over to the respondent/plaintiff. On 27.12.2005, the cheque was presented for encashment. However, vide memo of even date, the cheque was returned on the ground that the account contained insufficient balance. The cheque was again presented on 05.01.2006 but once again it was returned.
3. The precise defence taken by the appellant/defendant was a denial as regards possession of the cheque-book with him which was allegedly used by him to siphon off Rs.30,00,000/-. However, the appellant in the succeeding paragraphs of the written statement goes on to narrate a justification for the issuance of the cheque in dispute. He retorted that the respondent had certain disputes with his business partners and in this regard he asked the appellant to open an account (which in fact was opened by the respondent on his own on behalf of the appellant). Subsequently, two cheques were got executed and signed by the respondent from the appellant. One of the cheque was handed over to Nawab Khan son of Muhammad Sharif. As regards the second cheque, it was stated in the written statement that by forgery the said cheque has now been used in the instant suit for the recovery of the alleged amount of Rs.30,00,000/-. It was denied that any amount had been used or taken out of the account belonging to the respondent. In short, the stance of the appellant was that the cheque had been procured by forgery and undue influence and was inoperative and void against the appellant.
4. The following issued were struck by the trial court: i. Whether the defendant had owed an amount of Rs.30,00,000/- to the plaintiff and had issued cheque No.41995703 dated 15.12.2005 drawn on a/c. No.4855-0, UBL Central Branch, Burewala but that was dishonoured due to insufficient balance so; the plaintiff is entitled to recover the suit amount from the defendant, as prayed for? OPP. ii. Whether the plaintiff has got no cause of action to bring this suit? OPD. iii. Whether the plaintiff has got no locus standi to file the suit? OPD. iv. Whether the plaintiff has come to the court with unclean hands and is not entitled to get any relief from the court? OPD. v. Whether the suit is false and fictitious and the defendant is entitled to recover special costs u/s. 35-A, CPC? If so, to what extent? OPD. vi. Relief.
5. The learned counsel for the appellant has relied upon the provisions of Order VIII, Rule 5 CPC to submit that the trial court was not bound to the admissions made by the appellant and ought to have, by relying upon the said provisions, required the production of independent corroborative evidence. He submits that despite the execution having been admitted, the onus to prove consideration was upon the respondent which has gone abegging and has not been brought home by the reliable and cogent evidence. According to him, two witnesses were produced in support of the plaint, however, the evidence led by the respondent was beyond the pleadings and a new case was set up which offends the settled proposition that no evidence beyond the pleadings can be led. He has again emphasized on the plea that an admission merely and on its own cannot be relied upon and the trial court ought to have looked for other evidence as corroboration instead of merely relying upon the admission. The learned counsel further submitted that the initial burden to prove that the amounts had been embezzled and siphoned off by the appellant, was on the respondent which burden was not discharged and, therefore, the necessary corollary was that the consideration for the cheque was not proved. According to him, therefore, the burden had not shifted to the appellant since it had not been discharged by the respondent.
6. The learned counsel for the respondent, on the other hand, has contended that section 118 of the Negotiable Instrument Act, 1881 (Act) is applicable and under the said provision, presumption is attached to a negotiable instrument. He has taken us through the application for leave to defend, the written statement and the evidence of the appellant in support of the proposition that the defence of the appellant has been wavering and inconsistent. He has referred to the statements of the witnesses produced by the appellant in order to demonstrate that the said witnesses have, in fact, corroborated the stance of the respondent/plaintiff.
7. The issue No.1 is the primary and pivotal issue and the trial court has rendered its finding on the said issue elaborately and by taking into account the pleadings of the parties as well as the evidence produced by them.
8. The respondent/plaintiff appeared as PW.1. He reiterated the stance taken in the plaint. It was specifically stated in the statement of the PW.1 that the appellant/defendant was responsible for the sale/purchase of petroleum goods for Bilal Oil Mills. After the audit of accounts of Bilal Oil Mills had been conducted, it transpired that the appellant had siphoned off certain sum of money and had used it for his own purpose by diverting the funds to his own account. It was under these circumstances that the appellant in lieu of the said payment having been diverted to his personal account, agreed to the execution of the cheque which is the subject matter of the instant proceedings. The cheque, according to PW.1, was presented to the bank by his son thrice but was dishonoured and returned by the bank on account of insufficient funds. In this regard, the cheque was exhibited as Ex.P.1, the bank slips as Ex.P.2, Ex.P.3 and Ex.P.4. The statement of PW.2 is also supportive of the statement of the respondent/plaintiff PW.1 and substantiates the stance taken by the respondent/plaintiff. No major contradictions have been pointed out by the learned counsel for the appellant/defendant in this regard.
Although it has been alleged by the learned counsel for the appellant that the said witnesses appearing as PW.1 and PW.2 have improved upon their stance taken in the plaint, yet we have not found that to be so and, in fact, the evidence which has been led is in consonance with the stance taken in the plaint.
9. Contra evidence was led by the appellant/defendant. He appeared as DW.1 himself. It is very interesting to note that the appellant/defendant has taken a different stance at each stage of the proceedings. In the application for leave to defend, the appellant denied outrightly the execution of any cheque amounting to Rs.30,00,000/- in favour of the respondent/plaintiff. However, in paragraph 3, he put forth a defence and narrated certain events during the course of which he admitted the execution of the said cheque. In the written statement, the appellant does not deny the execution of the impugned cheque. He rather puts forth a justification and the reasons which necessitated and compelled him to execute the said cheque as also the events which preceded the execution. Appearing as DW.1, there is a substantial improvement made in the averments made in the application for leave to defend as also in the written statement. The appellant in the cross examination admitted that the deposition made by him in the examination in chief was an improvement upon the defence taken in the application for leave to defend as well as the written statement and the said fact has not been mentioned in those documents. DW.2 denied that the respondent/plaintiff had asked him to open an account in the name of the appellant/defendant and that he was not a witness to the account opening form. It is evident from the narration made above that stance taken by the appellant has not been consistent and he has stated different versions at different stages of the trial. This casts a serious doubt on the credibility of the appellant as also on the defence taken by him in the written statement.
10. The facts, as alleged by the learned counsel for the appellant, are rather complicated and present intricate issues of law, however, upon closer analysis, the proposition is simple and revolves around the applicability of section 118 of the Act. For facility of reference, section 118 of the Act is reproduced as under: ""118. Presumptions as to negotiable instruments Until the contrary is proved, the following presumption shall be made:-
(a) of consideration-that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;
(b) as to date-that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance-that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
(d) as to time of transfer-that every transfer of a negotiable instrument was made before its maturity;
(e) as to order of endorsements-that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stamps-that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course-that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument has been contained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him."
11. Upon a reading of section 118 of the Act, it follows ineluctably that there is an initial presumption that a negotiable instrument is made, drawn, accepted or endorsed for consideration. Although the presumption is rebuttable yet the onus is on the person denying consideration to allege and prove the same. Therefore, the rules of evidence as regards negotiable instrument are encapsulated in section 118 of the Act and, therefore, where the execution of the negotiable instrument was admitted, the burden of proof of non payment of consideration would lie on the executant. This is an established principle of law vouched by respectable authority and a plethora of judgments handed down by the superior courts over the years.
12. It is admitted on all hands in the instant case that the execution of the cheque in dispute is not denied by the appellant/defendant. Thus, the presumption as to consideration was attached to the said cheque by virtue of section 118 of the Act. It was, therefore, upon the appellant to rebut that presumption. The plea taken by the learned counsel for the appellant that since the consideration had not been proved, the suit must fail, is contrary to the settled principles of law. Since the presumption was attached to the cheque as regards consideration, the onus lay upon the appellant to prove that the cheque was without consideration. This onus, we are afraid, has not been discharged by the appellant. In Muhammad Aziz ur Rehman v. Liaqat Ali (2007 SCM R 1820) the Supreme Court of Pakistan had the following observations to make with regard to section 118 of the Act: "6. The appellant denied the execution of promissory note or receipt in his written statement but in the cross-examination admitted that the pro note and the receipt were executed by him as a guarantee for business with respondent. According to section 118 of the Act, until the contrary is proved, the presumption shall be made that every negotiable instrument was made or drawn for consideration. The appellant has not been able to establish on record through independent and cogent evidence that consideration of the promissory note has not been received by him.
7. This Court in the case of Muhammad Boota v. Faiz Ahmed 1979 SCM R 465 while dealing with identical case observed as under:-- "Under section 118 of the Negotiable Instruments Act, it had devolved on the defendant to prove that the promissory note thus executed by him was without consideration. Apart from the cogent and consistent evidence led by the plaintiff to prove the payment of Rs.10,000 in cash by the plaintiff to the defendant as loan, the later has miserably failed to discharge the onus of this issue resting on him."
8. Similarly, in the case of Haji Karim and another v. Zakir Abdullah 1973 SCM R 100 this Court held that:-- "Under section 118 of the Negotiable Instruments Act, 1881, there is an initial presumption that a negotiable instrument is made, drawn, accepted or endorsed for consideration. Although this presumption is a rebuttable presumption, yet the onus is on the person denying consideration to allege and prove the same."
10. (sic) In view of above discussion, we are of the view that burden of proof of non payment of consideration where execution of a negotiable instrument was admitted would be upon executant of document in which appellant/defendant has failed. Moreover, learned counsel for the appellant has failed to point out any illegality, misreading or non-reading in the impugned warranting interference by this Court which is accordingly maintained. The appeal being devoid of any substance stands dismissed with no order as to costs."
13. Likewise, in Muhammad Arshad and another v. Citibank NA Lahore (2006 SCM R 1347) the following observations of the Supreme Court are pertinent: "...Section 118 of Negotiable Instrument Act, provides that presumptions are attached to negotiable instruments, which, inter alia includes that negotiable instrument was made or drawn for consideration and that every instrument bearing date was made or drawn on such date."
14. 2009 CLC 584 and 2004 M LD 951 simply follow upon the law laid down by the Supreme Court of Pakistan and referred to in the judgments above.
15. The learned counsel for the appellant/defendant has referred to the following judgments, in support of the appeal, reported as: i. Abdul Qayyum v. Haji Badri Zaman, etc (2008 AC 156) ii. Raja Zubair v. Chaudhry Mohabit (2007 AC 1097). iii. Nasir Ahmad v. Pakland Cement Limited (2001 CLC 1156) iv. National Bank of Pakistan v. Messrs M. Ismail Thakur & Sons Ltd. (1988 CLC 700). v. Syed Ali Hussain Naqvi v. Ali Sher Naqvi (2005 CLC 1751). vi. Jam Abdul Hameed Shahid v. Liaqat Ali (2004 AC 648).
However, these judgments are authorities for their own facts and do not apply to the facts of the instant case. It is, therefore, not necessary to individually refer to these judgments.
16. The trial court has, by analysing the entire evidence adduced pro and contra by the parties, rightly come to the conclusion that the respondent/plaintiff had brought home his claim owing to the fact that the execution of the cheque was admitted and thus a presumption was attached.
That presumption was not patently rebutted by the appellant and thus, the findings of the trial court are valid and are affirmed.
17. In view of the above, the instant appeal is without merit and is, therefore, dismissed.