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Narayan Mahadeo Durve Vs. Moti Pannaji - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case Number First Appeal No. 229 of 1929
Judge
Reported inAIR1935Bom225; (1935)37BOMLR215; 159Ind.Cas.492
AppellantNarayan Mahadeo Durve
RespondentMoti Pannaji
DispositionAppeal dismissed
Excerpt:
.....on the promissory notes passed by their father, and the -defendants passed a fresh promissory note to plaintiffs. the plaintiffs returned the old promissory notes to defendants. after some time, plaintiffs wrote to defendants intimating that as no payment had been made to them, they had terminated the agreement and would proceed to execute the decrees. eventually, however, the plaintiffs sued the defendants on the promissory note passed by them. the defendants contended that there was failure of consideration for the agreement inasmuch as plaintiffs did not execute an assignment in writing of their decrees, and that the plaintiffs' letter terminated the contract :-;(1) that there was no failure of consideration of the agreement, for the plaintiffs had observed the two conditions..........in action.11. in substance what it says is that because defendants had not paid on the promissory note, the plaintiffs would enforce their rights under the decree-in fact that they were falling back on their original cause of action, which they had agreed to waive, because of a breach of contract by the defendants, which empowers the senders to put an end to the said agreement, which they accordingly do.12. mr. coyajee for plaintiffs has suggested that in bombay lawyers' letters are drafted by solicitors' clerks, and have no importance, but this suggestion begs the question which is one under the indian contract act.13. it is clear that as regards the defendants, the contract was executed, for they had agreed to furnish a promissory note for rs. 4,500 which they had done. it is true.....
Judgment:

Murphy, J.

1. The plaintiffs sued the defendants on a promissory note for Rs. 4,500 executed on August 12, 1925. Execution was admitted, but agricultural status and lack of consideration was pleaded by the defendants. The learned Subordinate Judge held that consideration was proved, and gave the plaintiffs a decree for the amount claimed, and the appeal contests the correctness of this decision.

2. The facts are really all admitted. Defendants' father and separated brother had executed two promissory notes, jointly, one in favour of plaintiffs' firm and the other in that of a second firm named Chimanlal. The creditors sued on the notes in the High Court and ultimately got decrees for Rs. 7,143 and Rs. 2,380 respectively. Defendants' father had died pendente lite : defendants had been made parties as his legal representatives ; and had pleaded they were agriculturists and that the High Court had no jurisdiction ; and the two suits against them had been withdrawn with leave to bring fresh ones in the proper Court.

3. After this, as the decree-holders were threatening to execute against the defendants' separated brother, who was paralysed, the defendants came to a compromise. They executed a promissory note for Rs. 4,500 and in return for this sum, which represented about half the value of the two decrees, the plaintiffs undertook to make over the two decrees to them. As the creditor in the second decree refused a settlement except on a cash payment, the plaintiffs paid him Rs. 1,000 and he was thus satisfied. The defendants' father's promissory note was returned to the defendants.

4. The next step to take was that on payment of the Rs. 4,500 the decree-holder firm in its own right in respect of one decree and as a purchaser from Chimanlal in the other should either convey its interest in the decrees to the defendants by assignment in writing, or certify satisfaction to the Court under Order XXI, Rule 3. But neither of those alternatives was adopted. A draft copy of the decree for the smaller amount was endorsed by the decree-holder as satisfied, and a receipt for the promissory note was got from the defendants, and matters rested there till December 10, 1926, when the plaintiffs, Moti Pannaji & Co., through their solicitors addressed a letter to the defendants in which the agreement to purchase the two decrees in suits Nos 85 and 3037 of 1924 was recited, and it was stated that 'Since you have not paid the said sum our clients have put; an end to the said agreement and will now proceed to execute the said decrees against the judgment-debtors therein, without further intimation which please note.' Nothing was, however, done by the decree-holders until they filed this suit on the promissory note on the last day of limitation.

5. The learned Subordinate Judge has held that the defendants are agriculturists, really as he seems to have been well aware, on practically no evidence, for the defendants are both practising pleaders, and there is only the word of one of them that his agricultural income exceeds his professional one, and even he was not allowed to be fully cross-examined : for on the adjournment of his cross-examination to another date he failed to appear and the case was gone on with, in spite of the other side's application. We think the learned Subordinate Judge's procedure here was wrong and that on the evidence he should have held against the defendants on the issue as to status, and we find they are not agriculturists, but this makes no real difference.

6. Under Section 118 of the Negotiable Instruments Act the presumption is, when execution is admitted, that consideration has been furnished, and it lies on him who asserts the contrary to prove it.

7. There is no doubt here as to what the agreement was, for it is admitted by defendant No. 1 :-

The arrangement was and the consideration of my promissory note was that plaintiff and the other man Chimanlal were not to execute the decrees of the High Court and transfer them to me and they were not to file suits for the original promissory notes of my father as they were preparing to do...

8. The appellants have made a serious point of the failure of the plaintiffs to execute an assignment in writing of the decrees, but we think this was not a substantial point, for in the same deposition the defendant has said :-

In order to extinguish the liability under the decree against my brother who was then an invalid with something like paralysis, we consented to the arrangement mentioned above which was proposed by the plaintiff. We did not intend after purchasing these decrees to execute them against our brother. We would have got the decrees satisfied, i.e., we would have realised them from the income of our brother's estate after defraying his expenses. But all the same we would have remained liable to plaintiff under our promissory note.

9. It seems clear on these admissions that there was not originally any intention to have the decrees formally assigned, for they were not going to be executed and that such an assignment was not of the essence of the agreement, which in substance was that the plaintiffs should refrain from bringing a suit against the defendants as their father's legal representatives and heirs, and abstain from execution proceedings on the decrees, and since both these conditions have in fact been carried out, we think that there was no failure of consideration. We agree as to this with the learned Subordinate Judge.

10.The next question is the effect of the plaintiffs' letter of December 10, 1926, quoted above. The learned Subordinate Judge has met this point by saying it was in the nature of a threat of legal action which some solicitors are fond of indulging in, and that it was an empty threat which could not be put, or was not put, in action.

11. In substance what it says is that because defendants had not paid on the promissory note, the plaintiffs would enforce their rights under the decree-in fact that they were falling back on their original cause of action, which they had agreed to waive, because of a breach of contract by the defendants, which empowers the senders to put an end to the said agreement, which they accordingly do.

12. Mr. Coyajee for plaintiffs has suggested that in Bombay lawyers' letters are drafted by solicitors' clerks, and have no importance, but this suggestion begs the question which is one under the Indian Contract Act.

13. It is clear that as regards the defendants, the contract was executed, for they had agreed to furnish a promissory note for Rs. 4,500 which they had done. It is true that the note promises payment on demand, which does not appear to have been made in this case, but plaintiffs' remedy for non-payment was to sue on the instrument and not to rescind the original contract. As regards plaintiffs, so long as execution of the two decrees was still within limitation and no formal assignments of them had been made, the contract was still executory and they were not, it seems to us, in a position to avoid it under Section 62 without the other side's consent; nor were they promisees, to take advantage of Section 63 : nor was the contract voidable under Section 64.

14. The notice was, therefore, really no more than a notice of demand for payment of the sum due under the note, claiming a right to a legal remedy which in fact was not available to the plaintiffs in case the notice was ignored. Actually the threat the notice contained was never carried out, and we do not think, nor can we find any authority for holding, that it put an end to the contract and absolved the defendants from their liability under the promissory note.

15. There is no other point in the appeal. We confirm the lower Court's decree and dismiss this appeal with costs.


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