Jagannadha Rao, J. - (1.)This reference to a Full Bench has been made on the ground that there is a conflict between Division Bench judgments, viz. M. Janaka Lakshmi v. Madhava Rao, AIR 1973 Andh Pra 103 rendered by Chinnappa Reddi, J. (as he then was) and A. D. V. Reddy, J. on the one hand and Maddam Lingaiah v. Hasan CCCA Nos. 95 and 96 of 1969 dt. 22-9-1972 rendered by M. Krishna Rao J. and M. Ramchandra Raju J. and Ponna Satyavathi v. Pamu Surya Rao L. P. A. 158 of 1977 dt. 26-12-1978 rendered by Kuppuswami J. (as he then was) and P. A. Choudary J. on the other hand. The point arises in the context of the presumption under S. 118 of the Negotiable Instruments Act, 1881. In Janaka Lakshmis case (AIR 1973 Andh Pra 103) (supra) the Court disbelieved the defendants plea as to the circumstances under which the promissory note was executed without consideration and the Court also disbelieved the plaintiffs story; but, even so, the Court held that even if the versions of both sides were not true, still the presumption under S. 118 would operate and the suit was liable to be decreed. For that reason, the Court relied upon a judgment of the Bombay High Court in Tar Mahamed v. Tyed Embrahim, AIR 1949 Bom 257. On the other hand in Maddam Lingaiahs case (supra) another Division Bench of this Court expressly dissented from the Bombay judgment and stated that they were doing so in view of the ruling of the Supreme Court in Kundanlal v. Custodian Evacuee Property, AIR 1961 SC 1316 and also referred to two earlier decisions of the Madras High Court in Narasamma v. Veeraju, AIR 1935 Mad 769 and Narayana Rao v. Venkatappayya, AIR 1937 Mad 182. In the Second unreported judgment in Ponna Satyavathis case (supra) though the Bombay case was referred to it was not expressly dissented from. That is how the matter has come to the Full Bench. We have to decide which of the conflicting views is to be followed.
(2.)In the present case, the plaintiff pleaded that the defendant borrowed a sum of Rs. 10,000 under one promissory note dt. 1-8-1972 (Ex. A-1) and another sum of Rs. 5,000.00 (Ex. A-3) on the same day under another promissory note. The plaintiff claimed likewise in the suit notice, Ex. A-5, dt. 10-10-1973 claiming the above sums and another sum of Rs. 1,500.00 said to have been borrowed earlier. The defence was that no amounts were borrowed as stated above but that the plaintiff was a pauper and had no means to lend the amounts. It was further contended that the plaintiff and defendant were close friends having joint business, that the defendant was the financial investor and plaintiff was paid monthly remuneration, that the plaintiffs parents did not approve of the job and therefore the plaintiff represented to his parents that his monies were invested with the defendant and that therefore the plaintiff obtained these promissory notes from the defendant. These notes were not supported by any consideration. The same story was stated in the reply notice. Ex. A-6 dt. 14-11-1973. The defendant produced his witnesses in the first instance. After D. W. 1 (defendants) cross-examination was over, the plaintiff recalled him and suggested a case of the suit pronotes being renewals of earlier notes, which was denied. Thereafter the plaintiff admitted in his evidence as P. W. 3 that Exs. A-1 and A-3 were not supported by cash consideration but were renewals for Exs. A-9 dt. 1-1-1970 (Rs. 10,000) and Ex. A-7 dt. 26-3-1969 (for Rs. 5000.00). The trial Court rejected the plaintiffs case of cash consideration for Exs. A-1 and A-3 and also rejected the defendants plea and Ex. A-1 and A-3 were nominally executed. But, it accepted the plaintiffs evidence that Exs. A-9 and A-7 notes were renewals of Exs. A-1 and A-3 respectively (sic). In this appeal, we have come to the conclusion that the plaintiff having admitted that no cash was paid under Exs. A-1 and A-3 and the case regarding renewals not having been set up by the plaintiff either in the suit notice. Ex. A-5 dt. 10-10-1973 or in the plaint or presented in the initial cross-examination of the defendant, the evidence that Exs. A-1 and A-3 were renewals of Exs. A-9 and A-7 is to be rejected. We agree with the view of the trial Court that the defendants case as to the circumstances under which Exs. A-1 and A-3 were executed, was equally not true. Thus the respective pleas of the plaintiff and defendant are rejected. But the counsel for defendant-respondent Sri V. R. Mohan Rao contended relying upon Janaka Lakshmis case, (AIR 1973 Andh Pra 103) (supra) and other cases that the suit is still liable to be decreed (sic) on the basis that the presumption under S. 118 still operates. Sri. E. V. Bhagiratha Rao contended that the view taken in Janaka Lakshmis case is not correct and commended to us the view taken in Maddam Lingaiahs case, (supra). That is how the question above referred to has arisen.
(3.)Now, S. 118 of the Negotiable Instruments Act in so far as it is material for this discussion states that "until the contrary is proved" a presumption shall be made that every negotiable instrument was made or drawn for consideration and that every such instrument, when it has been accepted, endorsed, negotiated or transferred for consideration.