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Govindlal Bhikulal Maheshwari and ors. Vs. Firm Thakurdas Bhallabhadas and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai High Court
Decided On
Case NumberFirst Appeal No. 19 of 1964
Judge
Reported inAIR1974Bom164; 1974MhLJ106
ActsIndian Contract Act, 1872 - Sections 38
AppellantGovindlal Bhikulal Maheshwari and ors.
RespondentFirm Thakurdas Bhallabhadas and ors.
Appellant AdvocateP.P. Deo and ;W.G. Deo, Advs.
Respondent AdvocateS.N. Kherdekar and ;J.P. Pendse, Advs.
Excerpt:
a) it was held that, where a promisor makes to a joint promisee an offer of performance of a promise which the joint promisees are entitled to enforce, the acceptance of the offer by one of the joint promisees will have the effect of treating the promise as having been performed in respect of all the joint promisees - it was further stated that, section 38 of the contract act, 1872, will not at all be attracted in a case where the question arises as to whether the payment made in the discharge of a liability to one of the joint promisees has the effect of discharging the promisor from the entire liability under the promise ; b) it was held that, in case of the joint promisees, the discharge given by one of the promisor does not bind others -therefore, in the instant case, where the.....chandurkar, j. 1. this is an appeal which was originally filed by the plaintiff against the judgment and decree of the joint civil judge. senior division, nagpur, dismissing his suit for recovery of rs. 35,281.78p. from the defendant no. 1 with interest at 6 per cent. per annum. admittedly, the defendant no. 1 had executed a chithi purporting to be a deposit receipt for rs. 51,000/- 0n 22-10-1956. this chithi was originally executed in the name of one balmukund who, according to the plaintiff, was the manager of the joint hindu family consisting of himself and balmunkund. the defendant no. 2 is the son of balmukund who dies sometime in february 1957, and the defendant no. 3 is the widow of deceased balmukund. the defendants nos.4 and 5 are the daughters of deceased balmukund. the.....
Judgment:

Chandurkar, J.

1. This is an appeal which was originally filed by the plaintiff against the judgment and decree of the joint Civil Judge. Senior Division, Nagpur, dismissing his suit for recovery of Rs. 35,281.78p. from the defendant no. 1 with interest at 6 per cent. Per annum. Admittedly, the defendant No. 1 had executed a chithi purporting to be a deposit receipt for Rs. 51,000/- 0n 22-10-1956. This chithi was originally executed in the name of one Balmukund who, according to the plaintiff, was the manager of the joint Hindu family consisting of himself and Balmunkund. The defendant No. 2 is the son of Balmukund who dies sometime in February 1957, and the defendant No. 3 is the widow of deceased Balmukund. The defendants Nos.4 and 5 are the daughters of deceased Balmukund. The defendants Nos 4 and 5 are the daughters of deceased Balmukund. On 19-1-1957, according to the plaintiff, the defendant No.1paid Rs. 20,000/- towards principal and Rs. 717/3/0 being the entire amount of interest due and executed a fresh chithi Ex. 41/7 for Rupees 31,000/- in the name of Balmukund. This transaction was renewed again by Ex. 41/14 which is a chithi executed by the defendant no.1 on 17-4-1957 for Rupees 31,500/- in the name of plaintiff Bhikulal and defendant No.2 Madan Mohan. Thereafter, the defendant No. 1 again renewed the chithi first by executing a chithi on 13-8-1957 for Rs. 32,000- and then on 10-2-1957 for Rs. 32,500/- Both these were also executed in the name of Bhikulal and Madan Mohan.

2. Now, the plaintiff's case is that on 5-4-1958 he sent Ex. 41/7 dated 9-4-1958 to the defendant No. 1 and he had also sent Rs. 12/8/0 by Money order with a request to the defendant No. 1 that he should execute a chithi for Rs. 33,000/- because inclusive of interest the dues came to Rs. 32,987/8/0. According to the plaintiff, he had sent Ex. 41/7 with an endorsement of discharge, but though the defendant No. 1 received the letter and the chithi on 7-4-1958 and also received the money Order on 9-4-1958, he neither sent any reply nor renewed the chithi and, therefore, by a registered letter dated 28-4-1958 the plaintiff asked the defendant No. 1 to send the renewed chithi to him. On 29-4-1958 the defendant No. 1 informed the plaintiff that he had already sent a renewed chithi for Rs. 33,000/- to the defendant No.2 at Nagpur, Later, by a letter dated 2-5-1958 the defendant No. 1 informed the plaintiff that he had fully discharged the liability under the chithi by payment of Rupees 23,250/4/0 to the defendant No. 2. The plaintiff did not accept the position that the defendant No. 1 had sent the chithi to the defendant No. 2 or that he had paid the amount due under the chithi to the defendant No. 2, and according to him, the defendant No. 1 being closely related to the defendant No. 2, they were colluding and any discharge given by the defendant No.2 to the defendant No.1 was not binding on the plaintiff. He, therefore, filed a suit to recover the amount of Rs. 35,281.78 from the defendant No.1, and alternatively from the defendant No. 2. It may be stated that after the death of Balmukund, according to the plaintiff, he and the defendant No.2 had expressed an unequivocal intention to separate and divide their properties, but each party blamed the other for not being able to partition the property. The plaintiff claimed that he was still the Karta of his branch of the family and as such was entitled to maintain the suit.

3. The defendant No. 1 in his written statement contended that though the original chithi was in the name of Balmukund alone, after the death of Balmukund, the chithi dated 17-4-1957 was executed in the joint names of Balmukund and Madan Mohan on the representation of the plaintiff that both of them were entitled to the said amount. He admitted the execution of the several chithi, but according to him, he having paid the entire amount due under the chithi to the defendant No.2 who had given a valid discharge to the defendant No. I, the plaintiff could not claim anything under the chithi from the defendant No.1. One of the defences raised by the defendant No. 1 was that the amount belonged to the firm Balmukund Bhikulal, and since the suit was brought in the name of the plaintiff himself, the suit as framed was not maintainable as the firm was not registered under Section 69 of the Partnership Act. According to the defendant No.1 even if the money was held to have belonged to the joint family firm, the said firm was managed first by Balmukund and then after him by the defendant No. 2, Balmukund's son, and the defendant No. 2 was, therefore, entitled to give a full discharge to the plaintiff. It was also pleaded that the payment having been made in good faith, the defendant No. 1 chithi. An additional defence was raised on the frond that the firm Bhikulal Madan Mohan had no money-lending licence and as such the suit did not lie for recovery of the money because the plaintiff was a moneylender and in any case he was not entitled to any costs or interest because the provisions relating to sending of yearly statements of accounts and maintenance of account of the loan in question were contravened by him.

4. The defendants Nos. 2 to 5 in a joint written statement contested in claim of the plaintiff that the defendant No. 2 had no right to receive the payment or give a discharge to the defendant No. 1 for the that the defendant No. 2 was colluding with the defendant No. 1 for the amount due from the firm. The allegation that the defendant No. 1 was denied. The case of the defendant No.2 was that the money belonged to deceased Balmukund he was entitle to receive the amount and give a valid discharge to the defendant No, 1, Accordingly to him the defendant No. 3 had authorised the defendant No. 2 to receive the amount on her behalf and the defendants Nos. 4 and 5 who are his sisters and relinquished their shares in the property left by deceased Balmukund in favour of the defendant No. 2 to 5 was that the the plaintiff had already filed a suit for partition in which the amount received by the defendant No. 2 from the defendant No. 1 could be adjusted when the accounts are taken. It was also contended that the amount due from the defendant No. 1 be longer to firm Balmukund Bhikulal Madan Mohan, and since it was the property of the firm, the suit filed by the plaintiff in his own name alone was not maintainable. According to the defendant No, 2, in his capacity as a partner of the firm Bhikulal Madan Mohan he was entitled to give a valid discharge. A practice was pleaded in the family of the plaintiff and the defendant concerned, according to which a junior member could accept payment and give a valid discharge of the debts due to the family.

5. On the evidence recorded by the trial court came to the conclusion that the chithi Exh. 47/17 was executed in favour of the plaintiff and the defendant No. 2 who constituted a joint family trading firm of the name Bhikulal Madan Mohan and that the suit was not barred under Section 69 of the Partnership Act as the joint family firm did not require registration. The trial Court accepted the case of the defendant No. 1 that he had paid the amount due under the chithi to the defendant No. 2 but it negatived the case of the defendant No. 1 that the defendant No. 2 was competent to give a discharge to the defendant No. 1 in respect of the entire debt under the chithi. Consequently. the trial court found that the plaintiff was entitled to recover half of the amount due under the chithi from the defendant No. 1. It negatived the defendant No. 1's case that he executed the chithi in favour of the plaintiff and the defendant No. 2 on a representation made by the plaintiff to him. The trial court held that the transaction in dispute was a money-lending transaction and that the suit was not maintainable on account of want of a registration certificate in favour of Bhikulal Madan Mohan. On the issue of jurisdiction which the defendants had raised on the ground that since the amount was payable and was deposited at Amravti, the Nagpur Court had no jurisdiction, the trial court held against the defendants. Having regard to the finding that the plaintiff and the defendant No. 2 did not hold a registration certificate in their names, or in the name of the firm Bhikulal Madan Mohan on the date of the firm Bhikulal Madan Mohan on the date of the transaction, the trial court dismissed the suit with costs. It may be stated that when the suit was tried by the trial court, only a certificate of registration in respect of the plaintiff alone was on record. The plaintiff has now filed this appeal changeling the dismissal of his suit by the trial court.

6. The plaintiff has in this court filed an application under Order 41, Rule 27 of the code of Civil Procedure with a prayer that the certificate of registration which evidences that the defendant No.2, was registered as a money-lender under section 11-B (1) of the C.P. and Berar Money-lenders Act, 1934, should be taken on record. In his application the plaintiff has averred that he had filed before the trial court four certificates, being Exs. 32/37-A, 32/37-B 32/37-C and 32/37-D covering the period from 10-11-1955 to March 1960, to show that Bhikulal Gopilal, i.e., plaintiff held a certificate of registration as required by the provisions of the Money-lenders Act. The first certificate dated 10-11-1955 Ex. 32/37-A is jointly in the name of Balmukund Jainarayan and Bhikulal Gopilal. According to the plaintiff the defendant No. 2 in fact held the necessary certificates under the Money-lenders Act but he did not produce them in the trial court obviously because he was colluding with the respondent No. 1 and because he desired to defeat the claim of the plaintiff with a view to keep the entire money to himself. The application further avers that the plaintiff could not produce these certificates because he was not aware of the registration of Madan Mohan as a money-lender as the plaintiff and the defendant No.2 were not carrying on any money-lending business jointly. This application was filed as far back as 26-4-1971 and this court had ordered on 14-6-1971 that the application would be considered at the time of the hearing of the appeal. No reply to this application has been filed on behalf of any of the defendants and the averments made in the application which is (are) supported by an affidavit have not been disputed . The trial court has dismissed the plaintiff's suit on the ground that the defendant No. 2 did not hold a registration certificate in his own name and that there was no certificate in the name of Bhikulal Madan Mohan. It appears to us that the defendant No. 2 did not deliberately produce the certificates of registration, and the documents which the plaintiff has now produced along with the application under Order 41, Rule 27. of the code of the Civil Procedure are necessary to enable us to give a proper decision of the case. Indeed, no serious objection has been taken on behalf of any of the defendants to taking the documents filed by the plaintiff on record. The trial court had relied on the authority of the decision in Wasudeo V. Ramchandrarao, 1958, Nag LJ 294 in which a view was taken that a suit to recover money advanced by a money-lender as defined in the C.P. and Berar Money-lenders Act and who did not hold a registration certificate on the date of the transaction cannot be instituted. This decision stands overruled by the decision of the Full Bench in Hajarimal V. Harinarayan, 1965 Mah LJ 797 in which the Full Bench has taken the view that the suit filed by a money-lender for recovery of a loan is not liable to be dismissed if the plaintiff does not hold a valid registration certificate issued under the money-lenders Act on the date of the transaction to which the suit relates, and that Section 11-H of the Money-lenders Act Contemplates that if the court finds that the plaintiff does not hold a valid registration certificate, it shall stay the suit for a reasonable time until a valid registration certificate is produce; and if no certificate is produced thereafter the court will not pass a decree in the plaintiff's favour. Having regard to the documents which are now produced, it is clear that this is not a case where the plaintiff and the defendant No. 2 did not have a certificate of registration on the date of suit and they need not, therefore, invoke the decision in Hajarimal's case. The transaction which is sought to be enforced by the plaintiff is dated 9-4-1958. On that date there was an effective certificate of registration Ex. 32/37-B in the name of the plaintiff. The suit was filed by the plaintiff was a registered money-lender as indicated by Ex. 32/37-C. The other person who had jointly lent money to the defendant No. 1 was the defendant No. 2 and he also held the necessary certificate of registration both on the date of suit. Since both the plaintiff and the defendant No. 2 held certificates of registration as money-lenders as contemplated by Section 11-B of the Money-lenders Act not only on the date of the transaction but also on the date of suit, the plaintiff's claim could not have been rejected on the ground on which it was rejected by the trial court. The finding given by the trial court that the suit was liable to be dismissed because the plaintiff did not hold a certificate of registration as required by Section 11-H of the C.P. and Berar Money-lenders Act is therefore, set aside.

7. On this finding the plaintiff was entitled to a decree in view of the earlier finding recorded by the trial court that the defendant No. 2 could not in law give a valid discharge to the defendant No. 1 in respect of the entire liability under the chithi. The learned Counsel appearing on behalf of the defendant No. 1, however, contended that though the plaintiff and the defendant No. 2 were joint promisees, nothing prevented the defendant No. 2 alone from receiving the entire amount due under the chithi and he was in law entitled to give a valid discharge to the defendant No. 1. The learned Counsel relied on the provisions of Section 38 of the Indian Contract Act and the Full Bench decision of the Madras High Court in Annapurnamma V. Akkayya ILR(1913) Mad 544 in which it was held, white, C.J., dissenting, that one of the several payees of a negotiable instrument can give a valid discharge of the entire debt without the concurrence of the other payees. Before we go to the authority on which reliance has been placed, it would be proper to refer to the provisions of sections 38 and 45 of the Indian Contract Act. According to the learned Counsel for the defendant No.1, Section 38 of the Contract Act clearly indicated that where there are several joint promises would be sufficient to discharge the promisor from the liability under the promise which was to be performed. Now, Section 38 is in the following wards :

'Where a promisor has made an offer of performance to the promisee, and the offer has not been accepted, the promissor is not responsible for non-performance, nor does he thereby lose his rights under the contract.

Every such offer must fulfil the following conditions:-

(1) it must be unconditional

(2) It must be made at a proper time and place, and under such circumstances that the person to whom it is made may have a reasonable opportunity of ascertaining that the person by whom it is made is able and willing there and then to do the whole of what he is bound by his promise to do;

(3) If the offer is an offer to deliver anything to the promisee the promisee must have a reasonable opportunity of seeing that the thing offered is the thing which the promise is bound by his promise to deliver.

An offer to one of several joint promisees has the same legal consequences as an offer to all of them .'

Section 38 provides that where a promisor has made an offer of performance to the promisee and the offer has not been accepted, the promisor is not responsible for non-performance nor does he there by lose his rights under the contract. Then is lays down the conditions which every offer must fulfil. In the last part of the section it is provided that an offer to one of the several joint promisees has the same legal consequences as an offer to all of them. It is this part of the section it is provided that an offer to all of them. It is the part of the section on which heavy reliance is placed by the learned counsel for the defendant No. 1 and he contends that when the section provides that an offer to one of the several joint promises has the same legal consequence as an offer to all of them, it will also apply in a case where an offer had been accepted by one of the several joint promisees and this acceptance must be treated as an acceptance on behalf of all of them. Construing ht section in the manner in which the learned counsel wants it to be construed will amount to reading in the section words that are not there. The object of the section is to provide for the effect of a refusal by a promisee to accept an offer of performance made by the promisor. The first part of Section 38 and the last part of that section must be read together, and the section must be read only to provide for the consequences of the refusal of one of the joint promisees to accept the offer of permanence made by the promisor. In other words, the section provides only for the consequences of the rejection of an offer of performance and not for the consequences of the acceptance of the offer of performances by one of the joint promisees. It is not possible for us to read Section 38 as to mean that where a promisor makes to a joint promisee an offer of performance of a promise which the joint promisees are entitled to enforce, the acceptance of the offer by one of the joint promisees will have to effect of treating the promise as having been performed in respect of all the joint promisees. In our view, Section 38 will not at all be attracted in a case where a question arises as of a liability to one of the joint promises from the entire liability under the promise. The proper provision which would govern such a case is to be found in Section 45 of the Contract Act. That section provides as follows:

'When a person has made a promise to two or more persons jointly, then, unless a contrary intention appears from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and, after the death of any of them with the representatives of such deceased person jointly with the survivor or survivors, and, after the death of the last survivor, with the representatives of all jointly'.

Section 45 is really in two parts. In the first part it indicates as to with whom the right to claim performance rests in a case where a person has made a promise to two or more persons jointly. It provides that unless a contrary intention appears from the contract, the right to claim performance rests, as between the promisor and the joint promisees, with the joint promisees during their joint lives. In the second part, it lays down with whom the right to claim performance of a promise made to two or more persons jointly rests in case of the death of any of the joint promisees, and it provides that the right rests with the representative of the deceased promisee jointly with the survivor or survivors, and, after the death of the last survivor, with the representative of all jointly. In the instance case, we are not concerned with the latter part of S. 45. It is the first part of Section 45 that is attracted in the instant case. The promise made by the defendant No. 1 under the chithi, it is not disputed, is a joint promise made to the plaintiff and the defendant No. 2. There is nothing in Ex. 41/17 to indicate that any of the two promisees will alone be entitled to enforce the payment of that chithi. In the absence of any such indication, the right to enforce the payment rests jointly with the plaintiff and the defendant No. 2. The defendant No. 2 alone could not, therefore, claim the right to recover the entire amount due under the chithi. Section 45 itself does not deal with the question as to whether one of the joint promisees can give a discharge to the promisor on behalf of the other joint promisees. But since the right to enforce the performance of the promise rests with the plaintiff and the defendant No. 2 jointly, we must hold that the defendant No. 2 was not entitled to give a valid discharge to the defendant No. 1 in respect of the entire liability under the chithi in dispute.

8. The decision in Annapurnamma's case ILR (1913) Mad 544 no doubt supports the defendant No. 1 when it is contended on his behalf that the defendant No. 2 was entitled to give a discharge to him from the joint liability under the Chithi dated 9.4.1958. We are, however, unable to accept the majority view of the two learned Judges of the Madras High Court in the Full Bench decision relied upon on behalf of the defendant No. 1. The question which was posed for decision before the Full Bench in Annapurnamma's case was:

'Whether one of the three payees of a negotiable instrument can give a valid discharge of the entire debt without the concurrence of the other two payees?'

The promissory note in that case was executed by the first defendant in favour of the two plaintiffs who were then minors, and the second defendant who was not a minor. The suit was brought by the two plaintiff, was still a minor. The question was whether the suit was barred by limitation because it was contended on behalf of the first defendant that the second defendant was entitled to receive the amount due under the promissory note and give a full discharge of the entire debt without the concurrence of the two plaintiffs and time, therefore, ran against all the plaintiffs who were not accordingly entitled to any extension of time under Section 7 of the Limitation Act. Reliance was placed on an earlier decision of the Madras High Court in Barber Maran v. Ramana Gouden ILR 1897 20 Mad 461 in which it was held that a payment made to one of two persons jointly entitled under a mortgage bond, who was not an agent of the other, is a valid discharge of the entire debt. This decision was dissented form in Ramaswamy v. Muniyandi, : (1910)20MLJ709 , and in view of this fact, the question reproduced above was referred to the Full Bench. Two learned Judges, Sankaran Nair, J. and Sadasiva Ayyar, J., took the view that if the payment of the debt had been made to the second defendant he was entitled to receive such payment he was entitled to receive such payment and it would be a valid discharge as against the plaintiffs. The judgments of the learned Judges show that they took this view on a construction of Section 38 of the Contract Act. While, C.J., however, did not concur in the view taken by the two learned Judges and he referred to his own earlier view in 1910 20 M LJ 709. The learned Chief Justice, referred to Section 38, observed that the section did not deal with the legal consequences of an accepted tender, or of an accepted offer of performance, but with the legal consequences where a tender or offer has been made and the tender or offer has not been accepted. The learned Chief Justice then observed:

'No doubt the last paragraph of the section is general and is not restricted to an offer which has not been accepted, but apparently the Legislature were not contemplating the legal consequences of an offer which had been accepted but the legal consequences of an offer which had been refused. I do not think we can infer from this enactment that the Legislature intended to lay down by implication that the acceptance of payment by one of several promisees operated as a discharge of the claims of the others. On the other hand, as it seems to me now, Section 45, which deals with the devolution of rights, where a person has made a promise to two or more persons 'jointly', throws very little, if any, light on the question we have to decide. The section prescribes the way in which the rights are to devolve, but says nothing as to how these rights are affected by a transaction between the promisor and one of the promisees. For the purpose of prescribing the way in which the rights are to devolve, it, of course, assumes that these rights exist, but that is all. I do not think that much assistance can be derived from a consideration of the provisions of analogous sections of the Contract Act. ................. If we are unable to find an answer to the question within the four corners of the Contract Act, we have to look to the general law and to see whether the rule of law, as laid down in Wallace v. Kelsall (840) 56 RR 707 apples or whether the rule or rather the presumption of equity on which Studded v. Steeds (1889) 22 QBD 537 was decided is to prevail'.

In (1889) 22 QBD 537 it was held that according to equity joint creditors must, primafacie, be taken to be interested as tenants in common and not as joint tenants. Referring to this presumption, the learned Chief Justice held that this equitable presumption applied and that the presumption was not negatived by the provisions of the Contract Act or rebutted by the facts stated in the Order of Reference. he, therefore, answered the question referred to the Full Bench in the negative.

9. The decision in Wallace v. Kelsall (1840) 56 RR 707 on which the majority decision in Annapurnamma's case ILR (1913 ) Mad 544 was based does not appear to us to be good law in view of the two later decisions in (1889) 22 QBD 537 and Powell v. Brodhurst (1901) 2 Ch 160. In (1840) 56 RR 707 an action was brought by three plaintiffs for a joint demand and the defendant's plea of accord and satisfaction with one of the plaintiffs, by a part payment in cash and a set-off of a debt due from that one to the defendant was held good even without any authority from the other two plaintiffs to make the settlement. Later in (1889) 22 QBD 537, this view was dissented form. The question which was posed for decision in (1889) 22 QBD 537 was whether in respect of a bond given by C to A and B., accord and satisfaction made by C to A after the cause of action had arisen and accepted by A, is an answer to the claim of A and B. In that case, the plaintiffs had sued for a sum of money alleged to be due for principal and interest on a bond made in their favour by the two defendants. One of the defendants pleaded that he delivered to one of plaintiffs certain stock and goods which were given by him and accepted by the said plaintiff in satisfaction and discharge of the money due upon the bond. Wills, J., then addressed himself to the question as to 'what is the rule in equity with respect to payment to one of two co-obliges or co-creditor', and while answering the question observed:

'The reason why the defence is a good one at law is that the two creditors are treated as a having a joint interest in the debt, with its incident of survivorship, and the satisfaction to one of the parties of a joint demand due to himself and others put and end to the joint demand, and he cannot afterwards, by joining the other parties with him as plaintiffs, recover the debt; nor can a right of action be supposed to exist which, if it existed, might survive to the very person who had already received full value; Wallace v. Kersall (1840) 7 M.P 264.

In equity, however, it would appears as if the general rule with regard to money lent by two persons to a third was that they prima facie be regarded as tenants in common, and not as joint tenants, both of the debt and of any security held for it; Petty v. Styward, (1631) 1 Cas Abr 290; Rigdem v. vellier (1751) 2 Sen 252 cited in the notes to Lake v. Craddock 1 white & Tudor, 5th Ed. 208. Though they take a joint security, 'says Lord Alvanlely, M.R., 'each means to lend his own money and to take back his own': Morley v. Bird 91798) 3 Ves 628 . Where a mortgage debt has been paid to one of the mortgagees, accordingly, it was held that the land was not discharged, and that the concurrence of the other mortgagees was necessary to make a good title; Matson v. Dennis, (1864) 12 WR 926. This is on the ground that the debt is held by the two in common and not jointly, and the principle seems to us equally applicable whether the debt is secured by a mortgage or is merely the subject of personal contract'.

10. This case was further referred to in (1901) 2 Ch 160 (cit. sup.) in which Farwel, J., observed:

'If a mortgagor chooses to pay otherwise than in strict accordance with the terms of his contract he does so at his own risk. The proviso for redemption in a mortgage to several is never expressed to take effect on payment to the mortgagees or either of them, but to the mortgagees or the survivor of them; and if a mortgagor pays to one, although such payment may be a good discharge in law, yet the matter is at large when he comes into equity, and the Court takes into consideration all the facts of the case, and ascertain whether the payees was beneficially entitled to the whole or to a part only, or whether he was a trustee with the other mortgagees, and treats the payment as good in whole, or in part, or altogether bad accordingly'.

11. It thus appears to us as observed by Bhashyam Ayyangar, J., in Ahinsa Bibi v. Abdul Kadar Saheb, ILR (1902) Mad 26 that the authority of the decision in ILR (1897) Mad 461 (cir sup.) which was approved by the two Court of Chancery in (1901) 2 Ch 160 In our view, there is a marked difference between the Indian law and the English law so far as it deals with joint debtors or joint creditors. Under the English law, the release of one of the debtors has the effect of releasing his co-debtors; see In re E.W.A., A Debtor (1901) 2 KB 642 and Jenkins v. Jenkins (1928) 2 KB 501. In (1928) 2 KB 501 Talbot, J., put the principle thus: The debtee's discharge of one joint and several debtor is a discharge of all'. Under the Indian Contract Act, however, the position is entirely different as would be seen from Section 44 of that Act, which provides that where two or more persons have made a joint promise, a release of one of such joint promises by promisee does not discharge the other joint promisor or joint promises; neither does it free the joint promisors so released form responsibility to the other joint promisor or promisors. The rule of survivorship is not recognised under the Indian Contract Act as is clear from the provisions of Section 42 and 44. So far as the Indian law is concerned, the position is that in the case of a debt held by two joint creditors, the presumption is that they hold the debt as tenants in common and not as joint tenants and payment by the debtor to one of the joint creditors will not amount to a full discharged of the debtor in respect of the entire liability . With respect, we concur in the view taken by White, C, J., in his dissenting judgment in Annapurnamma's case ILR (1913) 36 Mad 544.

12. The conflict between the view of the learned Chief Justice and the two other learned Chief Judges was later noticed in several decisions of other High Court, and the minority view of the learned Chief Justice has been accepted as laying down the correct law in several divisions. The correctness of the view taken by the two learned Judges of the Full Bench was itself doubted in later divisions of the same High Court. In ponnusami v. Thyagaraja AIR 1917 Mad 269 a question arose whether a discharge given by the co-mortgages of the plaintiffs on payment of the entire sum due to them was a good discharge, or whether it could only operate on so much of the debt as is beneficially due to his co-mortgages. The plaintiff contended that it was not a good discharge so far as he was concerned but could only operate on so much of the debt as was beneficially due to his co-mortgages, and reliance was placed on (1889) 22 QBD 537 and ((1901) 2 Ch D 160. Courts-Trotters, J., delivering the judgment of the Divisions Bench, observed with reference to these authorities;

'If matters stood there, in the face of these authorities that argument would carry very great weight'.

Referring to the decision of the Full Bench which was sought to be distinguished on the ground that the analogy was not complete between payees of negotiable instruments and co-mortgages, the learned Judge observed:

'That is really quite unarguable. It was the decision in (1910) 5 Ind Cas 343 that called for the reference. that was a decision in a case of co-mortgages. The referring Judges in ILR (1913) Mad 544 expressed their inability to see any distinction, and the learned Chief Justice based his dissent on the very case of Rameswamy v. Muniandy Servai, (1910) 5 Ind Cas 343. We, in this Court, are bound by the decision of the Full Bench, whatever our own views on the subject may be. Speaking for myself, I desire to say no more than this, that I think it is desirable that on some further occasion the whole matter should be reconsidered by the Privy Council, especially in view of the very careful judgment of the High Court of Calcutta in Hussainara Begum v. Rahmannessa Begum, ILR (2909) Cal 342, which is contrary to the decision of the Madras Full Bench. In this Court, the matter must be regarded as concluded'.

13. In a later case, a reference to the above observations of Courts-Trotter J. was made in Ankalamma v. Chenchayya ILR 41 mad 637 :AIR 1918 Mad 29 where a Division Bench of the Madras High Court observed:

'Courts-Trotter J., in (1916) 3 Mad LW 22 : AIR 1917 Mad 269 seems to doubt the correctness of the Full Bench decision in ILR(1913) Mad 544. If the question for decision were whether the payment made to one of the co-promises would amount to a discharge of the bond, it might become necessary to refer the matter to a Full bench, having regard to the fact that two cases in Calcutta, in which the question was fully argued and elaborately considered, took a different view; and to the fact that Courts-Trotter, J., is of the opinion that the decision is opposed to the current of authorities in England. We refer to (1911) ILR 38 Cal 342 and Umes Chandra Banerjee v. Dinabandhu Mahanti (1915) 29 Ind Cas 956 : AIR 1915 Cal 528'.

The Division Bench, however, found that question need not be considered in the case before them because the question before the Bench was whether a payment made to a junior member of a Hindu family during the lifetime of its manager in whose favour the bond was executed would discharge the promissory from his liability under the bond and it was held that the promisor was not discharged. The view taken by White, C. J., was followed by the Calcutta High Court in ILR (1911) Cal 342 in which the Calcutta High Court took the view that the proposition laid down in ILR (1897) 20 Mad 461 which was expressly approved by the Full bench of the Madras High Court that where there are several persons who on the face of the instrument of mortgage are joint creditors, payment to one of them is a good discharge as against all, was too broadly formulated. The Calcutta High Court observed that when a claim is on a money bond to two or more obligees, the presumption at equity is that the obligees are tenants in common, and not joint tenants of the debt, with the consequence that the discharge by one obligee cannot be set up as a defence as against the other obligee suing for his share of the debt.

14. We may also refer to some decisions of the other High Courts which have followed the view taken by White C.J. The Patna High Court in Benamali Satpathi v. Talua Ramhari, 55 Ind Cas 841 AIR 1920 Pat 464 held that where property is mortgaged to a person who subsequently dies leaving two or more heir jointly entitled to his estate payment made by the mortgagor of the amount due on the mortgage to one of those heirs without the concurrence of the rest does not amount to a valid discharge of the mortgage. Referring to the decision of the Madras High Court in : (1897)7MLJ269 , the Patna High Court observed that except the solitary decision in : (1897)7MLJ269 , the trend of the decisions has been in favour of the view that a release given by one of the co-mortgages is not a discharge of the entire mortgages, much less a release given by one of the her is of a deceased mortgagee, as in the case which was being dealt with by the Division Bench. After referring to the decision in (1864) 12 WR 926 in which it was held that where a mortgage debt has been paid to one of the mortgagees, the land was not discharged and the concurrence of the other mortgagees was necessary to make a good title on the ground that the debt is held by two in common and not jointly, it was pointed out that this principle would be applicable in a case where the debt was secured by a mortgage or was the subject of personal contract.

15. We may also refer to a Full bench decision of the Punjab Chief Court in Mathra Das v. Nizam : AIR 1917 Lah 443. It considers the decision in Barber Maran's case which was subsequently approved by the Full Bench in Annapuramma's case ILR (1913) Mad 544 . In Mathra Das's case the Punjab Chief court was dealing with a suit for possession which was dismissed by the courts below on the ground that Musammat Lachmi as one of the joint promisees was competent to give a discharge which would bind her co-promises, Cases in favour of and against the proposition that one of the joint co-mortgages were considered in the referring order. Construing Section 38 of the Contract Act the Full Bench observed that section did not strictly speaking cover the facts of the case before them and they further observed:

'We adopt the view and the reasoning set forth by the learned Chief Justice in 91913) 19 Ind Cas 12 : ILR 36 Mad 544 which view was acted upon in a later (sic.) Madras judgment reported as (1910) 5 Ind Cas 343 : 20 Mad LJ 709.

We have carefully considered the opposite view adopted by the other Judges who were parties to Annapuramma's case Akkayya, 1913 19 Ind Cas 12 : ILR 36 Mad 544.

They appear to have been influenced by the following considerations:

'It is difficult to impute an intention to the legislature that the promisor was entitled to make to offer though the promisee was not entitled to accept it and, therefore, the promissor cannot be held liable to pay over again to the other promisees what he has already paid'. The conclusion is certainly, we suggest with all deference, not justified by Section 38 of the Contract Act and it does not follows that because A is entitled to take a certain step in regard to one person, the right of other persons not concurring in that step are affected thereby. Again, 'the debtor owing money to several joint promisees .............. would feel the greatest difficulty in discharging his obligation it he should not be allowed to make a bona fide payment to any one of them'.

What difficulty there would be in such a case is not insuperable; after all, complex transactions involve some difficulty and Section 38 of the Contract Act has been devised to relieve the debtor in the case contemplated of any loss that might accrue to him by the refusal of his creditors to give him a joint discharge.

In any case it is not for us to guess at the intention of the Legislature in a case of which it has not specifically provided, and with all deference we must hold that the majority decision in ILR (1913) Mad 544 : 19 Ind Cas 12 constituted an unwarrantable extension of the law'.

The Full Bench consequently held that Section 38 of the Contract Act did not deal with the case of an offer accepted by one of several joint promisees, but considered only the case of such an offer which has been rejected. This decision of the Full Bench of the Punjab Chief Court was later followed in Mr. Malan v. Tara Singh AIR 1922 Lah 64 where shadi Lal J. observed that the balance of the authority was, however, in favour of the view that the payment to one of the mortgagees did not preclude the other co-mortgages from enforcing their security.

16. A similar view has also been taken by the Allahabad High Court in Shyam Lal v. Jagannath : AIR1937All527 where discussing the scope of Section 38 of the Contract Act, it was observed that Section 38 of the Contract Act was no authority for the proposition that payment to one of several co-promises operates as a valid discharge or is tantamount to payment to all of them, and the decision in Annapuramma's case ILR (1913) Mad 544: 19 Ind Cas 12 expressly dissented from.

17. The desisting judgment of White C.J. was also followed by a Division Bench of the Nagpur High Court in Mahadevsingh v. Balmukund ILR (1947) Nag 553, where the Division Bench observed that the correct rule has been enunciated by White C.J. in his dissenting judgment in ILR (1913) Mad 544 : 19 Ind Cas 12 and the presumption of equity that creditors are tenants in common is applicable in the absence of a contract to the contrary.

18. We might also refer to the decision of the Mysore High Court in Subraraya Setty & Sons v. Falani Chetty & sons AIR 1952 Mys 64 and the decision of this Court in Sitaram v. Sridhar ILR (1903) 27 Bom 292 where, though it was not found necessary to decide the correctness of the decision in ILR(1897) 20 Mad 461 (cit sup.) which had necessitated the reference to the Full Bench of the Madras High Court, this Court doubted the correctness of that decision. It was observed at page 294:

'So far as this Madras decision proceeds upon the English law, its correctness may well be doubted, having regard to the decision of Farwell, J., in 1901 2 Ch 160'.

It will thus appear that the dissenting judgment of White, C.J., has been held to lay down the correct law by several High Courts in India.

19. In the view which we have taken we are, therefore, unable to disturb the finding given by the trail Court that the alleged payment of the entire dues due under the chithi Ex. 41/17 to the defendant No. 2 did not give the defendant No. 1 a full discharge of the liability under the chithi Exhibit 41/17 and, therefore, the plaintiff was entitled to recover half of the amount due under the chithi from the defendant No. 1.

20. It was then contended by Mr. Kherdekar on behalf of the appellant that the plaintiff has already filed a partition suit against the defendant No. 2 and the amount due under the chithi Ex. 41/17 has already been shown as an asset of the joint family, and since the plaintiff has a right to receive his share in the amount received by the defendant No. 2 under the chithi Ex. 41/17, the plaintiff could not have filed a separate suit against the defendant No. 1 for the recovery of his dues. We might mention that neither the plaint in the said suit for patron nor any other documents to show that the amount due under the chithi has been included as an asset in the said suit are on record. Assuming, however, that the said amount is included as a part of the joint family assets in the partition suit, we fail to see how the defendant No. 1 can resist the suit filed by the plaintiff. The defendant No. 1 is admittedly not a party to the partition suit. In the view which we have taken, the plaintiff is entailed to enforce the liability in respect of his half share due under the chithi independently against the defendant No. 1. The plaintiff was not bound to make any claim against the defendant No. 2 because the defendant No. 2 did not stand discharged in respect of the liability which he owed to the plaintiff. The inclusion of the debt due under the chithi in the assets of the joint family in the partition suit is, therefore entirely irrelevant except for the limited purpose that the plaintiff will not be entitled to claim the same amount form the defendant No. 2 since he has been found entitled to that amount in the present suit. It appears to us that the amount due under the chithi Ex. 41/17 was included in the assets of the joint family in the partition suit by ways of abundant caution, so that the plaintiff could safeguard himself in case him claim against the defendant No. 1 was rejected in the instant suit and then he would be entitled to claim his half share from the defendant No. 2 This, however, did not preclude the plaintiff from filing an independent suit against the defendant No. 1 for which the cause of action is the chithi itself and not the recovery of the amount by the defendant No. 2.

21. The plaintiff has also claimed interest on the amount due format the defendant No. 1 from the date of suit. We see no reason why the plaintiff should be deprived of the interest after the date of suit in view of the fact that it has now been found that the defendant No. 1 did not stand fully discharged in respect of the liability which he owned to the plaintiff. The defendant No. 1 has admitted in paragraph 8 of his written statement that the amount of the chithi dated 17.4.1957 carried interest at 6 anns per month and that the further chithi dated 13.8.1957 and 10.12.1957 were also executed on the same terms as before. The plaintiff has sued on the basis of the chithi dated 10.12.1957 because, according to him, it was that chithi which was not discharged and that he had not received the chithi dated 9.4.1958. On the basis of the chithi dated 10.12.1957 he had claimed Rs. 33,000/- as being due on 6.4.1958 inclusive of interest of Rs. 487/8/0 from 10.12.1957 to 6.4.1958 on Rs. 32,500/- and Rs. 12/8/0 paid in cash by money order dated 5.4.1958. In the plaint he has calculated interest from 6.4.1958 to 19.10.1959 at the same old rate of 6 annas per cent per month which comes to Rupees 2,281/2/0, adding 66 paise on account of notice charges. The total claim made was Rs. 32,281.78 P. in the view which we have taken the plaintiff is entitled to half the amount due under the chithi and he was, therefore, entitled to a decree for Rupees 17,640.60 P. He will also be entitled to future interest on Rs. 16,250/- at 6 per cent, per annum from the date of suit till realization.

22. The result, therefore, is that the appeal is allowed. The cross-objection filed by the defendant No. 1 - respondent No. 1 is rejected. Though the cross-objection raised several grounds, the only grounds argued on behalf of the defendant No. 1 were those which we have discussed above. No arguments were advanced before us with regard to the cross-objection filed on behalf of the respondents Nos. 2 to 5. That cross-objection is also rejected. The plaintiff will get his costs of the suit and the appeal from the defendant No. 1 There will be no order as to costs of the defendant in the suit and in this appeal as well as in the cross-objection.

23. Appeal allowed.


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