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Anant Krishna Modak Vs. Sarasvatibai Padmanabh Shetti - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMumbai
Decided On
Case NumberSecond Appeal No. 502 of 1926
Judge
Reported inAIR1928Bom316; (1928)30BOMLR709
AppellantAnant Krishna Modak
RespondentSarasvatibai Padmanabh Shetti
DispositionAppeal allowed
Excerpt:
.....1200 from the goldsmith and his two cousins (defendants nos. 2 and 3). in a suit on the promissory note, the defendants pleaded want of consideration: -;(1) that the plaintiff's forbearance to sue for his gold and money, i even though not for a definite or particular time, was a good consideration' for the promissory note:;alliance bank v. broom (1864) 2 dr. & s. 289 and fuller ton v. provincial bank of ireland (1903) a.c. 309, 313 followed;;(2) that defendants nos. 2 and 3 were liable, for consideration paid to one of several joint promissors was legally sufficient to support the promise of all the joint promissors :;sornalinga mudali v. pachai naickan (1913) i.l.r. 38 mad. 680 and fanindra narain boy v. kacheman bibi (1917) i.l.r. 45 cal. 774 followed. - - here the defendant's.....baker, j.1. the plaintiff in this case sued the defendants on a promissory note dated august 20, 1920, for rs. 1,200. the note was passed under the following circumstances : the plaintiff had given rs. 800 and some gold to padmanabh, the husband of defendant no. 1, who was a goldsmith, in order that he might prepare certain ornaments. padmanabh did not make the ornaments, and consequently, some three weeks later, the plaintiff obtained the suit promissory note which is signed by padmanabh and defendants nos. 2 and 3 who are said to be his cousins. subsequently, padmanabh died and the plaintiff brought the present suit against defendant no. 1, who is padmanabh's widow, and defendants nos. 8 and 3 in the court of the subordinate judge of honavar.2. the execution of the promissory note was.....
Judgment:

Baker, J.

1. The plaintiff in this case sued the defendants on a promissory note dated August 20, 1920, for Rs. 1,200. The note was passed under the following circumstances : The plaintiff had given Rs. 800 and some gold to Padmanabh, the husband of defendant No. 1, who was a goldsmith, in order that he might prepare certain ornaments. Padmanabh did not make the ornaments, and consequently, some three weeks later, the plaintiff obtained the suit promissory note which is signed by Padmanabh and defendants Nos. 2 and 3 who are said to be his cousins. Subsequently, Padmanabh died and the plaintiff brought the present suit against defendant No. 1, who is Padmanabh's widow, and defendants Nos. 8 and 3 in the Court of the Subordinate Judge of Honavar.

2. The execution of the promissory note was and is admitted, and an issue about consideration was raised in the first Court and it was found that there was consideration, The defendants raised the plea of coercion but that has now been given up. The first Court, therefore, passed a decree a for Rs. 1,572 with costs and future interest at six per cent, to be recovered from the estate of the deceased Padmanabh in the hands of defendant No. 1 and from defendants Nos. 2 and 3. The suit as against defendant No. 4 was dismissed.

3. Defendant No. 1, who is the widow of Padmanabh, did appeal against this decree, but defendants Nos. 2 and 3 did. In Baker J. appeal the question of consideration was raised, and the District Judge of Kanara held in a lengthy judgment that the promissory note was void for want of consideration. He, therefore, set aside the judgment of the first Court and dismissed the suit altogether although defendant No. 1 had not appealed against the decree.

4. The plaintiff makes this second appeal to this Court. Although the facts are very simple, the case involves an important point of law.

5. As regards the first contention which has been raised by the learned pleader for the appellant that the issue of consideration ought not to have been argued in appeal because it was admitted in the lower Court, I think on reading the judgment of the first Court that the Subordinate Judge, in paragraph 2 on page 9 of his judgment (printed paper-book), was under the impression that the suit promissory note was based on a consideration consisting in the advance of money and gold to Padmanabh, for he says :-

'It is not a case in which the note was passed without consideration. It is proved beyond doubt that the first defendant's husband received consideration. It is also conceded by defendants Nos. 2 and 3'a pleader in his argument.

6. The promissory note, however, is not based on the consideration evidenced by the original handing over of cash and gold to Padmanabh, and the plaintiff's case is not based on that consideration. The question is whether there was any consideration for the promissory note which was passed by Padmanabh and defendants Nos. 2 and 3 about three weeks or a month after the original transaction. The learned Judge of the lower appellate Court has held that the consideration for the promissory note was the plaintiff's forbearance to sue and that is not sufficient to constitute consideration. He says :-

To constitute consideration, it would be necessary that the plaintiff should have promised not to sue immediately. In the present case, nothing is promised by the plaintiff', and to adopt the words used in a similar case by the Bombay High Court, ' the note being payable on demand, there is not merely no evidence of such an agreement, but the note itself imports the contrary.

7. This is a statement from the case of Rustomji Ardesir Davar v. Ratanji Rustamji Wadia (1870) 7 B.H.C. 9 where it was held that a promissory note, payable on demand; given for interest due on a mortgage-deed, with interest on such interest, cannot be enforced by suit, there being no consideration for the making of such a I note. That case was held to be distinguishable from the case of Alliance Bank v. Broom (1864) 2 D.& S. 282 to which I would presently refer, and in that case, not only was there no evidence of any agreement suspending the remedy for the existing debt until the note was due, but it was held that the note itself imported the contrary.

8. The promissory note in the present case has been translated by the learned District Judge at page 1 of the print, and it runs as follows : After reciting that cash and gold had been given to Padmanabh for purposes which he did not perform, the note goes on Rs. 1,200 became due to you in respect of the same, and you pressed for the amount. As it is not possible just now to pay off the amount, we three persons have passed this promissory note to you.' It has been held that a request to forbear suing or other proceedings, not specifying any length of time, is understood to be a request for forbearance for a reasonable time, This is one of the class of cases in which the defendant has requested the plaintiff to forbear the enforcement of a claim against him and has offered a new promise in return, and the plaintiff, without any express acceptance of the defendant's terms, has in fact forborne for an appreciable time. Here the defendant's offer to pay or give security, as the case may be, is accepted by the performance of its conditions, and that performance is a good consideration for the defendant's promise. The leading case on the point is that of Alliance Bank v. Broom (1864) 2 Dr. & S. 289 where a customer being called on by bankers to give security for money due from him on a loan-account agreed by letter to give security, and a bill which had been filed to enforce such agreement was demurred to, on the ground that the agreement was without consideration. It was held that the forbearance of the bank to enforce payment of the existing debt, in - consequence of the agreement, was a sufficient consideration to support it. It has been noted above that this case was expressly distinguished from the case of Rust amji Ardesir Davar v. Ratanji Rustamji Wadia (1870) 7 B.H.C. 9. referred to above. Otherwise this is a leading case on this class of cases. Another case of the same character is Fullerton v. Provincial Bank of Ireland (1903) A.C. 309 That was a case where a customer of a bank in Ireland having over drawn his account and being pressed by the bank undertook by letter to deposit a title deed of an Irish estate as security for his overdraft. He deposited the title-deed with the bank, who did not register the charge. The customer afterwards mortgaged the estate to the appellants, who registered their charge without notice of the prior charge. The question of the priority of the two in cumbrances arose and it was contended in the House of Lords that there was no stipulation for forbearance for any definite time. It was held at page 313;

In such a ease as this it is not necessary that there should be an arrangement for forbearance for any definite or particular time. It is quite enough if ( you can infer from the surrounding circumstances that there was an implied request for forbearance for a time, and that forbearance for a reasonable time was in fact extended to the person who asked for it.

9. That proposition was held to be established by the case of Alliance Bank v. Broom referred to above and the various other cases which are quoted in the judgment of Lord Macnaghten.

10. There can be no doubt, therefore, that it is not necessary that there should be an arrangement for forbearance for any definite or particular time, and this answers the argument for the respondents that as the promissory note was payable on demand, under Section 92 of the Indian Evidence Act, it cannot be held that by entering into this transaction with the promise, the promisors obtained any advantage, since they were liable to be sued at any time by the plaintiff Now, the surrounding circumstances of this case are quite sufficient to warrant the Court in inferring that there must have been a request for forbearance for a time, and that forbearance for a reasonable time was extended to the person who asked for it. The very words of the promissory note, which I have already given, show that the promissory note was passed because the defendants were unable to pay the money then, and there would have been no object in passing the promissory note if the money was to be demanded from them immediately by virtue of the note being expressed to be payable on demand. As a matter of fact, the plaintiff did not sue on that promissory note for nearly three years from the date of its execution. So far, therefore, as regards the consideration for the promissory note, I am of opinion that there was sufficient consideration for it in the form of the promise of the plaintiff not to take any action on it.

11. Then, as regards the liability of defendants Nos. 2 and 3, who were not themselves directly concerned in the original transaction with Padmanabh, the learned Judge of the lower appellate Court has relied on the case of Sornalinga, Mudali v. Pachai Naiokan (1913) I.L.R. 38 Mad. 680 which holds that the consideration paid to anyone of several joint promisors is legally sufficient to support the promise of all the joint promisors, There is also the case of Fanindra Narain Roy v. Kacheman Bibi I.L.R (1917) Cal. 774 which is very similar to the present case Where A executed a mortgage in favour of X in 1884, and in consideration of X not enforcing the same and, in substitution there for, A along with B, C and D executed a fresh mortgage in 1893, if favour of X, and on X suing to enforce the later mortgage the Court of first instance dismissed the suit on the ground that there was no legal consideration, it was held that the mortgage of 1893, which replaced that of 1884, was for legal consideration, and it was held further that it was not necessary that the promisor should benefit by the consideration: it was sufficient if the promise did some act from which a third person was benefited, and which he would not have done but for the promise. At page 778, the facts, which are closely akin to the present case are set out as follows, Their Lordships say:-

Here, we have, in 1884, a mortgage by Sadauin favour of the plaintiff. The plaintiff was entitled to enforce the security as against Sadan. He was asked to accept in lieu of that security a fresh bond executed in 1893 by Sadan along with three other persons, viz., Edu, Badaruddin and Lakhu, The promise by Edu, Badaruddin and lakhu to be bound by the mortgage, plainly formed a good consideration for the abstinence of the mortgagee to sue Sadan upon the first bond. The respondents have, however, argued that a consideration is not lawful unless it benefits the promisor. There is no foundation for this contention. Valuable consideration has been defined as some right,; interest, profit or benefit, accruing to one party or some forbearance, detriment, loss or responsibility given, suffered, undertaken by the other at his request. It is not necessary that the promisor should benefit by the consideration; it is sufficient if the promisee does some act from which a third person is benefited and which he would not have done but for the promise.

12. Now, in the present case, the plaintiff was entitled to sue Padmanabb. for damages or possibly in a criminal Court for not returning him the gold and cash which had been entrusted to him for a specific purpose. In consideration of this promissory note passed by Padmanabh and by defendants Nos. 2 and 3, the plaintiff has forborne suing Padmanabh on his original cause of action. This was a benefit to Padmanabh, and it may be taken that, the plaintiff would not have abstained but for the promise entered into by defendants Nos. 2 and 3. in these circumstances I am of opinion that the finding of the lower appellate Court is wrong, and that there was a consideration for the promissory note by which defendants Nos. 2 and 8 are bound as well as the estate of Padmanabh who is now dead.

13. The main case on which the learned District Judge has relied is Nanak Ram v. Mehin Lal I.L.R (1877) All. 487. It is a case where money was advanced on a bond, and a separate surety bond was passed by another person at a later date, and it was held that there was no consideration for the surety bond as the payment, which been the consideration for the original bond, had been made to the debtor before the surety-bond. But in that case, it is clear from the judgment of Spankie J., at p. 407, that the creditor did not promise to do anything, and did not do anything, for the benefit of the principal debtor, whereby there was a consideration for the surety's giving the guarantee. The ease is, therefore, distinguishable from the present case.

14. I am, therefore, of opinion that the appeal should be allowed, the decree of the lower appellate Court should be set aside and the decree of the first Court restored with costs throughout.

Patkar, J.

15. I agree.


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