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N. Narayanaswamy Vs. Madanlal - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKarnataka High Court
Decided On
Case NumberSecond Appeal No. 1337 of 1974
Judge
Reported inAIR1982Kant227; ILR1982KAR238
ActsNegotiable Instruments Act, 1881 - Sections 20, 80 and 87; Code of Civil Procedure (CPC), 1908 - Sections 100
AppellantN. Narayanaswamy
RespondentMadanlal
Appellant AdvocateG.V. Ramaiah, Adv.
Respondent AdvocateJ. Jestamal, Adv.
Excerpt:
- land acquisition act, 1894.[c.a. no. 1/1894]. section 28: [n.k. patil, j] statutory benefits executing court declining to grant statutory benefits held, the executing court is not competent to decide the redressal of the grievances. petitioners are to make necessary applications either before the l.a.o., or before the deputy commissioner. it is needless to clarify that the petitioners are entitled for rent or damages for use of the lands by the beneficiary or the competent authority. it is for the petitioners to establish that the possession of lands had been taken much earlier to the issue of preliminary notification. - the defendant in the course of his evidence has clearly stated in this regard thus ext. he has ignored that the defendant has clearly stated in his evidence that..........altered materially the pro note by inserting the figure '11' in the blank and as such the pronote was rendered void.4. the trial court raised the following issues as arising for consideration in the suit :(1) whether the defendant proves that no consideration has passed under the pro note? (2)whether the pro note was brought under the circumstances mentioned in para 2 of the written statement?(3)whether the plaintiff has tampered with the pronote and, hence the suit is not maintainable as alleged in para 6 of the written statement(4)whether the plaintiff is entitled to interest and if so, at what rate?(5)what is found due?(6)what order?(7) what decree?5. during hearing the plaintiff examined himself in support of the plaint averments and defendant examined himself and his wife......
Judgment:

1. This appeal by the defendant is directed against the judgment and decree dated 20-4-1977 passed by the 1st Additional Civil Judge, Bangalore, in R. A. No. 17 of 1974 on his file, dismissing the appeal on confirming the judgment and decree dated 4-8-1973 passed by, the 5th Additional First Munsiff, Bangalore in O.S. No. 207/72 on his file, decreeing the suit of the plaintiff for recovery of money under a pro note.

2. The plaintiff instituted a suit at 0. S. No. 207/72 on the file of the Munsiff on the averments that the defendant executed a pro note for valuable consideration on 28-1-1969 as per Ext. P. 1 for Rs. 2500/- agreeing to pay interest at 1 1/2% per mensem. It is further the case of the plaintiff that he received Rs. 600/-towards interest on 29-10-1970 and thereafter though he demanded the amount, he was not paid. Hence, he instituted suit for recovery of principal of Rs. 2500 and balance of interests of Rupees 750 and also the notice charges at Rs. 50.

3. The suit was resisted by the defendant by filing his written statement. He contended that the plaintiff and Shanthamma, wife of the defendant entered into an agreement to prepare and supply Uniform outfits to the Government Electric Factory as per tender and share the profits. The plaintiff required the defendant to execute a pro note as collateral security for the money advanced by him for the business. The business went on for some time. Accordingly the defendant executed a pro note only for collateral purpose. Hence, he denied the receipt of consideration. He further contended that in the printed form of pro note, the column 'interest' was left blank and subsequently the plaintiff altered materially the pro note by inserting the figure '11' in the blank and as such the pronote was rendered void.

4. The trial Court raised the following issues as arising for consideration in the suit :

(1) Whether the defendant proves that no consideration has passed under the pro note?

(2)Whether the pro note was brought under the circumstances mentioned in para 2 of the written statement?

(3)Whether the plaintiff has tampered with the pronote and, hence the suit is not maintainable as alleged in para 6 of the written statement

(4)Whether the plaintiff is entitled to interest and if so, at what rate?

(5)What is found due?

(6)What order?

(7) What decree?

5. During hearing the plaintiff examined himself in support of the plaint averments and defendant examined himself and his wife. The plaintiff got marked Ext. P-1 pro note and the defendant got marked Ext. D-1 agreement regarding supply of cloth.

6. The learned Munsiff appreciating the evidence on record answered issues 1, 2 and 3 in the negative. He answered issue No. 4 in the affirmative and held that the interest stipulated was 11/2% per mensem and in that view he decreed the suit of the plaintiff as prayed for.

7. Aggrieved by the said judgment and decree, the defendant went up in appeal before the learned Civil Judge, Bangalore in R.A. 17/74 as stated above. The learned Civil Judge, in the course of his judgment, raised the following points as arising for his consideration

(1) Whether the suit pronote is not supported by consideration?

(2) Whether the suit pronote is materially altered?

8. The learned Civil Judge, reassessing the evidence on record, held that the suit pronote was supported by consideration and the said pronote was not materially altered as alleged by the defendant and in that view he dismissed the appeal, confirming the judgment and decree of the trial Court.

9. Aggrieved by the said judgment and decree, the defendant has come up in the above second appeal before this Court.

10. The learned Advocate appearing for the appellant-defendant strenuously urged before me that the courts below were not justified in coming to the conclusion that the said pronote was not materially altered, He further submitted that the courts below ought to have held that no consideration flowed under the pronote as it was executed only by way of collateral security.

11. As against that, the learned counsel appearing for the respondent plaintiff in this appeal argued supporting the judgment and decree passed by the trial court and confirmed by the first appellate Court.

12. The points therefore, that arise for my consideration in this appeal are:

(1) Whether the courts below were justified in holding that there was no material alteration in the pronote?

(2) Whether courts below were justified in holding that the consideration did flow under the pronote?

13. Normally, this Court sitting in second appeal is not expected to reassess the evidence and to interfere with the findings of fact rendered by the courts below concurrently. But, when this court finds prima facie that the appreciation of evidence is perverse and the findings are not supported by materials on record, this Court has not only the power but also the duty to interfere with such findings.

14. I would first take up for consideration the point whether there is any material alteration in the pronote. Ext. P-1 is the pronote. By looking at the pronote which is in a printed form, it becomes obvious that the figure 11/2 inserted in the blank, was inserted subsequently with a different ink and in different handwriting. It is apparent on the face of the record and is clear to the naked eye. The defendant in the course of his evidence has clearly stated in this regard thus

'Ext. P-l' is in my handwriting. I had not mentioned the rate of interest in Ext P-1. The rate of interest has been written subsequently without my consent.'

It is elicited in the evidence of the plaintiff during cross-examination thus:

'I am a literate. It is true that the number '2' in Ext. P-1 (a) differs from number '2' mentioned in the rest of Ext. P-l.'

The learned Civil Judge has ignored this material piece of evidence and he has observed in this behalf in para 8 of the judgment thus:

'The defendant-appellant contends that the suit pronote is materially altered. It is his case that the interest was not mentioned in the pronote as the document was executed as a collateral security. It is elicited from the plaintiff that the figure '11/2' is in a different ink and the figure '2' is different from the figure '2' written in the promote. The defendant has not sworn that the plaintiff has inserted the figure '11/2' in the promote. If really the parties had agreed that no interest should be paid, the defendant who wrote the pronote would have mentioned in that pronote that the sum will not carry interest. The defendant has not done so.' Thus, according to the learned Civil Judge it was not sufficient if the interest column was left blank to infer that no interest was stipulated. He expected that the defendant should have written on the pronote that no interest was stipulated. He has ignored that the defendant has clearly stated in his evidence that he has not written anything about the interest and it was subsequently inserted. That being so, I have no hesitation to hold that it is apparent that the pronote is subsequently altered by inserting the figure '11/2' in the blank, The finding con currently given by the courts below that; there is no material alteration is perverse as it is recorded even without looking at, the pronote even with the bare eye. if if only the courts below had looked at the pro note carefully, it should have been clear to them that the figure '1 1/2' was subsequently inserted. I have no hesitation to hold that the alteration in the pronote is apparent on the face of the record and is also supported by the evidence on record and that the said alteration is effected without the consent of the promisor, when the document was in the custody of the promisee.

15. The next point for consideration would be the legal effect of such alteration. Section 87 of the Negotiable Instruments Act reads:

'Any material alteration of a negotiable instrument renders the same void as against anyone who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties.'

16. The learned Advocate appearing for the respondent-plaintiff in the appeal, however, submitted that any unsubstantial alteration would not be of any consequence and that it would not amount to material alteration contemplated under S, 87 of the Negotiable Instruments Act. In support of the proposition so advanced, he relied on a decision of the Supreme Court, in the case of M. S. Anirudhan v. Thomeo's Bank Ltd. : [1990]2SCR410 . It is no doubt true that a case of alteration in a Negotiable Instrument case came up for consideration before the Supreme Court in the aforesaid case. There can be no dispute that any unsubstantial alteration in the negotiable instrument would not amount to a material alteration. In fact, the Supreme Court has explained the development of law in this regard and his Lordship, Justice Hidayatullah in his concurring Judgment has observed in para 31 of the judgment thus :

'The leading case for a long time was Pigot's case, (1614) 11 Co Rep 26b where Lord Coke stated the doctrine as follows:

'These points were resolved:

When a lawful deed is raised, whereby it becomes void, the obligor may plead no est factum, and give the matter in evidence, because at the time of the plea pleaded, it is not his deed.'

'Secondly, it was resolved, that when any deed is altered in a point material, by the plaintiff himself, or by any stranger, without the privity of the obligee, be it by interlineation, addition, raising, or by drawing of a pen through a line or through the midst of any material word, that the deed thereby becomes void So if the obligee himself alters the deed by any of the said ways, although it is in words not material, yet the deed is void but if a stranger, with out his privity, alters the deed by any of the said ways in any point of material, it shall not avoid the deed.'

'The passage is also to be found in an article 'Discharge of Contracts by Alteration' by Williston in 18 Harvard Law Review, p. 105. The strictness of this rule was tempered in subsequent cases and was departed from in Aldous v. Cornwell, (1868) 3 QB 573 where Lush J.(speaking for Cockburn, C. J., Blackburn J., and himself), after referring to numerous authorities, observed:-

'This being the state of the authorities, we think we are not bound by the doctrine of Pigot's case (1614) 11 Co Rep 26b or the authority cited for it; and not being bound, we are certainly not disposed to lay it down as a rule of law that the addition of words which cannot possibly prejudice anyone, destroys the validity of the note. It seems to us repugnant to justice and common sense to hold that the maker of a promissory note is discharged from his obligation to pay it because the holder has put in writing on the note what the law would have supplied if the words had not been written.' Thus the Supreme Court has explained that it is not any unsubstantial alteration that becomes a material alteration but only such alterations as would adversely affect the interests of the other side can be called material alteration. In fact the words, 'material alteration' have been explained by the Privy Council in the case of Natural v. Mt. Gomuti Kumar (AIRI 1940 PC 160) 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

(vide para 8)

17. The High Court of Madras, following the above observation has held in the case of Verco Private Ltd., Padi V. Newandram Naraindas, : AIR1974Mad4 , that alteration in the rates of interest or rates of exchange are material alterations as they have all effect on amount due and payable under the instrument. It was held in that case that a stipulation to pay interest interpolated, was a material alteration.

18. The learned Advocate appearing for the respondent-plaintiff further argued that when the column for interest was left blank it became an incomplete document and under S. 20 of the Negotiable Instruments Act, it was open to the Promisee to complete it. He invited my attention to S. 20 of the Negotiable Instruments Act which reads:

'Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity, in which he signed the same, to any holder in due course for such amount Provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid there under.

In the present case, however, the pro note cannot be said to be incomplete for the simple reason that S. 80 of the Negotiable Instruments Act specifically provides for rates of interest where it is not specifically stipulated in the instruments itself. S. 80 reads:

'When no rate of interest is specified in the instrument, interest on the amount due thereon shall (notwithstanding any agreement relating to interest between any parties, to the instrument) be calculated at the rate of six per cent per annum, from the date of which the same ought to have been paid by the party charged, until tender or realization of the amount due thereon, or until such date after the institution of a suit to recover such amount as the court directs.'

Hence, it is obvious that there was no liberty left in the promisee under S. 20 of the Act to fill up the gap by introducing rate of interest, as in the present case, at '11/2' per mensem.' The view that I am taking finds full support in the decision rendered in Seth Tulsidoss Lalchand v. G. Rajagopal, (1967 (2) Mad LJ 66) wherein it is laid down that S. 80 of the Negotiable Instruments Act provides that where a promissory note does not express the rate of interest payable thereon, six percent interest shall be payable and therefore any alteration of the instrument by inserting the rate of interest would amount to a material alteration. Hence, where in a promissory note executed, the rate of interest was left blank and it was filled up later without the consent of the promisor, it will be a material alteration invalidating the instrument. A promissory note which does not mention the rate of interest cannot be said to be an incomplete, instrument enabling the promisee to fill up the same so as to complete the instrument within the meaning of S. 20 of the Act. Hence, I am constrained to hold that there is no substance in the submission made before me that it was open to the promisee to insert the rate of interest in the pronote Ext. P-1 when it was left blank by the promisor at the time of execution.

19. In the result, I am constrained to hold that there is material alteration in the pronote Ext. P-1 effected by the promisee when the document was in his custody without the consent of the promisor and as such under S. 87 of the Negotiable Instruments Act the promissory note becomes void. In the view I have taken it is not necessary for me to consider the other aspect whether the instrument executed was merely by way of collateral security and without valuable consideration.

20. In the result, the appeal is allowed with costs throughout. The judgments and decrees of the courts below are hereby set aside and the suit of the plaintiff is dismissed.

21. Appeal allowed.


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