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Vishnu Ramchandra Joshi Vs. Ganesh Krishna Sathe - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberSecond Appeal No. 483 of 1920
Judge
Reported inAIR1921Bom449; (1921)23BOMLR488
AppellantVishnu Ramchandra Joshi
RespondentGanesh Krishna Sathe
DispositionAppeal dismissed
Excerpt:
.....92, proviso 3-promissory note- payable on demand-suit on the note-defence of contemporaneous oral agreement that the note teas not to be enforced unless encumbrance, on property sold to a stranger was discharged-defence not permissible.;in a suit on a promissory-note payable on demand, it is not open to the defendant to plead by way of defence a contemporaneous oral agreement whereby the plaintiff has agreed that he will not present the note, although it is payable on demand, until he has discharged certain incumbrances on the property he has sold to a stranger. - - clearly the defendant made himself liable for a portion of the purchase price of the property sold by the plaintiff by passing the promissory-note in question for rs. 5. those remarks apply equally well to the case..........on demand in favour of the plaintiff, can be allowed to lead evidence to prove a contemporaneous oral agreement whereby the plaintiff is said to have agreed that he would not present the note, although it was payable on demand, until he had discharged certain incumbrances on the property he had sold to the defendant's brother-in-law. unless such an agreement can be brought within the terms of proviso 3 to section 92 of the indian evidence act, it is quite clear that no evidence can be led to prove it. at first sight it would seem beyond dispute that any oral agreement that a promissory-note payable on demand should only be payable at a future date, or on the happening of a future event, would be inconsistent with the terms of the written contract, and, therefore, inadmissible under.....
Judgment:

Norman Macleod, Kt., C.J.

1. The plaintiff sued on a promissory-note dated the 21st May 1919 for Rs. 600, and for Rs. 3 as interest and for costs and further interest. The defendant admitted having passed the promissory-note, but contended that it was passed in consideration of a part of the price of certain lands sold by the plaintiff to one Narayan Vithal on whose behalf the defendant had taken a havala for Rs. 600, and that the defendant was ready to pay the same if the plaintiff discharged the burden resting on the property sold. An issue was raised whether the defendant was entitled to insist that before the amount of the promissory-note could be recovered the plaintiff should discharge the incumbrance on the property sold by him to a third party.

2. The trial Judge held that the defendant's contention was obviously unsustainable, and passed a decree for the amount claimed.

3. In first appeal this decision was confirmed, and the question V before us is whether the defendant having passed a promissory note on demand in favour of the plaintiff, can be allowed to lead evidence to prove a contemporaneous oral agreement whereby the plaintiff is said to have agreed that he would not present the note, although it was payable on demand, until he had discharged certain incumbrances on the property he had sold to the defendant's brother-in-law. Unless such an agreement can be brought within the terms of proviso 3 to Section 92 of the Indian Evidence Act, it is quite clear that no evidence can be led to prove it. At first sight it would seem beyond dispute that any oral agreement that a promissory-note payable on demand should only be payable at a future date, or on the happening of a future event, would be inconsistent with the terms of the written contract, and, therefore, inadmissible under Section 92.

4. But the appellant contends that under the oral agreement, which he seeks to prove, there was no contract at all between the parties until the plaintiff had paid off the incumbrance referred to. But that is not a correct interpretation of what is said to have passed between the plaintiff and the defendant. Clearly the defendant made himself liable for a portion of the purchase price of the property sold by the plaintiff by passing the promissory-note in question for Rs. 600. Therefore he admitted his liability to that extent. What he seeks now to prove is that his liability was to be postponed until the plaintiff discharged the incumbrances which otherwise would have had to be discharged by the purchaser in question. Therefore the defendant is not seeking to prove an agreement which I provides that there would be no contractual relations at all between the contracting parties until a certain event had happened. This question came before the High Court of Calcutta in Ramjibun Serowgy v. Oghore Nath Chatterjee I.L.R (1897) Cal. 401. There the defendant gave the plaintiff a promissory-note for Ea. 7,000 in full discharge of his debts and all other claims of the plaintiff against him up to that time. It was further agreed, according to the defendant's case, that the plaintiff should not bring any suit on the promissory-note until the defendant's share in certain compensation money had been received by him. Mr. Justice Sale in giving judgment said :

Under the promissory-note the engagement is an absolute engagement to pay on demand. The defendant seeks to set up a contemporaneous oral agreement, the effect of which is to qualify or restrict that engagement. The case of Moseley v. Hanford (1830) 10 B. & C. 729. is clear authority to the effect than in England the evidence of such an oral agreement would be inadmissible.... There are numerous other English authorities to the same effect to which I need not refer, inasmuch as the argument for the defendant is not so much that under the English law the evidence is admissible, but that proviso 3 to Section 92 of the (Indian) Evidence Act has the effect of altering the English law.... Now, in the present instance, the oral agreement sought to be proved does not provide that the promissory-note was to have no force or effect until the happening of the particular event mentioned, but it purports to provide that the promise to pay on demand, though absolute in its terms, was not to be enforceable by suit until the happening of that event, or, in other words, that the legal obligation to perform the promise was to be postponed.

5. Those remarks apply equally well to the case before us. It is not suggested that this promissory-note was to have no force or effect at all until the plaintiff paid off the incumbrance. It merely provided that the promise to pay on demand was not to be enforced by suit until those iucumbrances were paid off. Illustration (j) shows very clearly what sort of an agreement can be proved under proviso 3. A and B make a contract in writing to take effect upon the happening of a certain contingency. The writing is left with B, who sues A upon it: A may show the circumstances under which it was delivered. In such a case, therefore, there would be no contract at all until the happening of the contingency mentioned in the oral agreement.

6. There is another reason in ray opinion which would prevent such an agreement as the defendant relies upon being proved. Speaking for myself, such an agreement postponing the right of a holder of a promissory-note payable on demand to sue for the amount would be void as against public policy, since the written document and the contemporaneous oral agreement would amount together to an agreement which would require a higher stamp than the stamp payable on a promissory-note on demand. If such an oral agreement could be proved, then there could be nothing to prevent parties to a contract of this description entering into their contract by means of a document bearing a; one-anna stamp, when as a matter of fact the contract ought to be stamped as a bill of exchange. So whichever point of view you look at the question, it seems perfectly clear that such an : oral agreement as this cannot be allowed to be proved against a written document. It is certainly, in my opinion, absolutely inconsistent with the terms of the document. It does not purport to prevent the obligation under the written contract arising, it merely postpones the enforcement of the obligation. And, thirdly, it is obviously a contract which would have the effect of defeating the Stamp Law. In my opinion the appeal should be dismissed with costs.

Shah, J.

7. I agree that the oral agreement sought to be set up by the defendant is not covered by proviso 3 to Section 92 of the Indian Evidence Act, for the reasons stated by the Chief Justice in the judgment just delivered.

8. It is not necessary for the purpose of this case to express, and I do not express, any opinion, as to whether such an agreement, if otherwise provable, is opposed to public policy. The evidence of the oral agreement sought to be set up by the defendant is not admissible; and on that ground I concur in the order proposed.


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