Law: Code Of Civil Procedure, 1908.

Section: 118

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The core questions requiring determination are as under: (i) Whether the Trial Court was justified in discarding the forensic report regarding the signatures on the cheque, and in holding that the presumption of correctness under Section 118 of the Act stood rebutted? (ii) Whether the Court can inquire into the existence/probability of the underlying transaction with reference to the financial capacity of the lender of amount for which a negotiable instrument is executed? Held that the forensic report with regard to the signatures on the cheque opined only to the extent that they were "probably" of the respondent. At this juncture, it is imperative to note that whenever a forensic comparison is undertaken, whether it pertains to signatures or to thumb impressions, the evidentiary value of the expert's report essentially depends on the degree of certainty expressed therein. If the expert opines in terms of "probably," or in terms of expressions like "may be," "appears to be," the clarity of the impression is doubtful, such opinion cannot be treated as a conclusive proof. The element of probability diminishes its decisiveness, and in such cases corroboration from other independent evidence and surrounding circumstances becomes indispensable before any adverse finding can be drawn against a party. The argument of learned counsel for the appellant that financial capacity of a plaintiff in suit for recovery under Order XXXVII, CPC, is irrelevant, is also misconceived. Where the issuance of a cheque by a borrower or taking of a loan is admitted, the financial capacity of the lender may not assume much significance. However, in cases where liability is denied and the lender has also failed to furnish details of the alleged transaction, it becomes essential to scrutinize and establish the lender's financial capacity in order to assess the plausibility of the claim. The appellant/plaintiff's case had to stand on its own legs, as he cannot be allowed to unjustly enrich himself, simply on account of the presumption of correctness albeit rebuttable attached to a negotiable instrument, which otherwise stood neutralized after grant of leave to defend. The non-existence of the consideration on account of lack of financial capacity was so probable in the present case that a person of ordinary prudence cannot believe that in the year 2006, the appellant could have a hefty amount of Rs.20,000,000/- lying in cash at his home.

SUMMARY OF JUDGMENT 

Case Background

• The appellant filed a summary suit under Order XXXVII CPC seeking recovery of Rs. 20,000,000 allegedly given in cash as a loan to the respondent. 
• The respondent denied the loan and alleged the cheque was stolen.
• Leave to defend was granted → suit converted into a regular civil suit.
• After full evidence, the Trial Court dismissed the suit, and the present appeal challenged that dismissal.

Key Issues Before the Court

• Whether the Trial Court was justified in discarding the forensic report and holding that the presumption under Section 118 of the Negotiable Instruments Act, 1881 was rebutted.
• Whether courts can examine the financial capacity of the lender when evaluating the existence/probability of the underlying transaction.

Court’s Findings

1. Forensic Report Was Inconclusive

• The forensic expert opined that the signatures on the cheque were "probably" those of the respondent.
• Words like “probably,” “may be,” or “appears to be” indicate uncertainty.
• Such opinions cannot constitute conclusive proof and must be corroborated.

Additional factors: