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D. Narasimhiah Vs. Lakshamma and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKarnataka High Court
Decided On
Case NumberRegular Appeal No. 267 of 1950-51
Judge
Reported inAIR1954Kant185; AIR1954Mys185
ActsNegotiable Instruments Act, 1881 - Sections 26 and 87
AppellantD. Narasimhiah
RespondentLakshamma and ors.
Appellant AdvocateM.R. Janardhan, Adv.
Respondent AdvocateF.M. Xavier, Adv.
Excerpt:
.....for recovery of money due under an on demand promissory note executed by the 1st respondent in favour of 10th respondent and endorsed by the latter to appellant. if as alleged by the 1st respondent the transaction was not intended to be effective unless 4th respondent was an executant, there would have been discussion about the matter and the creditor would not have failed to protest against 1st respondent taking away the money or would have at least attempted to obtain the signature of the 4th respondent who was present at the time......as material to have the effect mentioned. no case in which the deletion such as that in the suit pronote is deemed to be a material alteration has been cited by sri xavier, learned counsel for respondent 1. 'amritham pillai v. nanjah gounden', air 1914 mad 369 (1) (a) referred to is distinguishable as the document was found to be forged in that case. 'madam pillai v. athinarayana pillai', air 1925 mad 939 (b) and -- 'santhu mohideen pillai v. jamal md. jamaluddin' : air1928mad1092 are also not helpful to treat the deletion as a material alteration. in the first of these two devadoss j. observed that section 87 has no application to alterations made at the time of execution of the documents and granted a decree against the person who had executed the document though it was found.....
Judgment:

Venkataramaiya, J.

1. Appellant sued the Respondents for recovery of money due under an on demand promissory note executed by the 1st Respondent in favour of 10th Respondent and endorsed by the latter to appellant. Respondents 2 and 3 are children and Respondent 4 sister of the 1st Respondent. Respondents 5 to 9 are children of 4th Respondent. Appellant claimed to be a holder in due course and to be entitled to a decree against all the Respondents on the ground, money was advanced under the pronote for the benefit of Respondents 1 to 9 and payment was made to the 10th Respondent as consideration for the endorsement. The claim was contested by Respondents 1 to 9 and various pleas were out forward by them. Upholding these pleas the lower Court has dismissed the suit. Although the decree as a whole is challenged in the memorandum of appeal, Sri Janardhan learned Counsel for the appellant conceded that the dismissal of the suit against Respondents 2 to 9 was justified and sought for a decree only against the 1st Respondent.

2. The main reason for the dismissal of the suit against the 1st Respondent is that the 4th Respondent is not a Joint executant of the pro-note along with the 1st Respondent and that the deletion of words in the body of the instrument about 4th Respondent being an executant constitutes a material alteration under Section 87, Negotiable Instruments Act so as to render the Instrument void. The question whether want of execution by one can absolve the other who has executed the document is to be determined by ascertaining the intention of parties. If the understanding was that either both or neither of them should be liable and execution of the pronote by the 4th Respondent was a condition precedent to the obligation for payment by the 1st Respondent, it is a matter for proof. The evidence shows that the husband of the 10th Respondent wanted the pronote to be executed by both the sisters and the pronote was also written as if both would be executants. The consideration was said to the 1st Respondent and after she signed the pronote the 4th Respondent refused to sign it as no money was paid to her.

If as alleged by the 1st Respondent the transaction was not intended to be effective unless 4th Respondent was an executant, there would have been discussion about the matter and the creditor would not have failed to protest against 1st Respondent taking away the money or would have at least attempted to obtain the signature of the 4th Respondent who was present at the time. The fact that this was not done and it was considered sufficient to strike off the recital about 4th Respondent being a party to the instrument shows that 4th Respondent's execution though desired was not deemed vital for the purpose of the transaction. Respondent 1 appears to have been the person who applied for the loan and negotiated with the 10th Respondent's husband to obtain it as seen from the letter Exhibit IV. When payment was demanded by means of a notice sent by a lawyer, she kept silent and raised no objection. The amount is said to have been required for the expenses of the marriage of her daughter. In view of all this, it is difficult to hold that there was an agreement by which the non-execution of the 4th Respondent can be a ground on which 1st Respondent can escape liability.

3. The next question for consideration is whether the deletion of the words having reference to 4th Respondent being an executant of the pronote is a material alteration of the instrument so as to render it void. Section 87, Negotiable Instruments Act relied upon by the 1st Respondent's Counsel and lower Court to make out that the instrument is Invalid on account of the words being scored off does not specify expressly or by means of illustration the kind or category of alterations which are to be regarded as material to have the effect mentioned. No case in which the deletion such as that in the suit pronote is deemed to be a material alteration has been cited by Sri Xavier, learned counsel for Respondent 1. 'Amritham Pillai v. Nanjah Gounden', AIR 1914 Mad 369 (1) (A) referred to is distinguishable as the document was found to be forged in that case. 'Madam Pillai v. Athinarayana Pillai', AIR 1925 Mad 939 (B) and -- 'Santhu Mohideen Pillai v. Jamal Md. Jamaluddin' : AIR1928Mad1092 are also not helpful to treat the deletion as a material alteration. In the first of these two Devadoss J. observed that Section 87 has no application to alterations made at the time of execution of the documents and granted a decree against the person who had executed the document though it was found that the signature of the other was a forged one. Wallace J. took a contrary view in -- ' : AIR1928Mad1092 ' and dismissed the suit on account of the signature of one of the alleged executants being a forgery. This is not a case of any signature being forged or struck off but one of absence of signature and the effect of the two cannot be taken to be the same.

4. The test of an alteration being material or not is stated in -- 'Nathu Lal V. Mt. Gomti Kuar' thus:

'A material alteration is one which varies the rights, liabilities or legal position of the parties ascertained by the deed in its original state or otherwise varies the legal effect of the instrument as originally expressed or reduces to certainty some provision which was originally unascertained and as such void or may otherwise prejudice the party bound by the deed as originally executed.'

5. If this test is applied, it cannot be said that the right or liability of 1st Respondent is varied or that she is in any way prejudiced by reason of 4th Respondent not being an executant. If the latter had received the amount or the liability had to be apportioned between her and 1st Respondent, there may have been room for grievance. 1st Respondent admits that the entire' amount was paid to her and under the law her liability would have been no less than what it is, even if 4th Respondent had been an executant. Nor is it possible to hold that by reason of the recital about the 4th Respondent's execution being struck off there is a material alteration under Section 87, Negotiable Instrument Act so as to render the instruments void as in the first place the words were struck off immediately after the execution of the pronote by the 1st Respondent and 4th Respondent who was then present declined to affix her signature and secondly the rights or liabilities of Respondents 1 to 10 inter se are in no way altered by the words being scored off. It is unnecessary to consider whether the plaintiff is a holder in due course as he is entitled to succeed even if his rights are only those of the original promisee who is the 10th Respondent.

6. As regards the amount due, it has been found that though Rs. 3000/- are mentioned in the pronote and the receipt as the consideration, Rs. 180/- were not paid. The principal amount therefore is only Rs. 2820/-. Interest on this for the period relating to the claim is Rs. 356/-. A sum of Rs. 300/- is allowed as damages to Respondents on. account of the plaintiff having wrongfully got their properties attached before judgment. Deducting this, the total amount payable to the plaintiff is Rs. 2876/-.

7. In reversal of the decree of the lower Court there will be a decree in Appellant's favour for payment of this amount by the 1st Respondent. The dismissal of the suit against the other respondents is confirmed. As the claim was to some extent excessive in regard to the amount and persons liable for the same and the endorsement to the plaintiff of the instrument seems to have been effected for the purpose of the litigation, we direct the parties to bear their own costs throughout.

8. Order accordingly.


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