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Jayantilal Goel Vs. Zubeda Khanum - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAndhra Pradesh High Court
Decided On
Case NumberSecond Appeal No. 251 of 1980
Judge
Reported inAIR1986AP120
ActsNegotiable Instruments Act, 1881 - Sections 87; Evidence Act, 1872 - Sections 101 to 104; Code of Civil Procedure (CPC), 1908 - Sections 100; Indian Contract Act, 1872 - Sections 65
AppellantJayantilal Goel
RespondentZubeda Khanum
Appellant AdvocateMadhukar Ganu, Adv.
Respondent AdvocateOsman Saheed, Adv.
Excerpt:
.....contract act, 1872 - appeal filed against order decreeing recovery of sum based on pro-note - pro-note materially altered - as per section 87 material alteration renders instrument as void - held, sum cannot be recovered as pro-note is void and plea under section 65 not available to respondent. - - the appellate court, however, rejected the contention holding that it was for the defendant to establish the factum that the suit pro-note was materially altered and since he has failed to do so, the case of the plaintiff was held established and the appeal was dismissed. this too is well settled that the person, who is in the custody of the document subsequent to its execution, should there be any alteration, has to discharge the burden of establishing that it is not altered. ordinarily..........of such document, it was not done in consciousness. that apart, it is also averred that the pro-note is materially altered as the date has been later inserted. the further allegation was that she had no capacity to lend the money. for all these reasons, the suit be dismissed.the first court framed 2 issues, viz., :'(1) whether the defendant borrowed a sum of rs. 8,000/- from the plaintiff on 27-4-1974 and executed pro-note? (2) whether the suit pro-note is genuine, true and supported by consideration?' finding was in favour of the plaintiff on both the issues and so, the suit was decreed.3. in the appeal for the first time, a contention was raised stating that inasmuch is the pro-note is materially altered, it is hit by section 87 of the negotiable instruments act. therefore, the.....
Judgment:

1. Defendant is the appellant. He has come in this Second Appeal against a concurring judgment. The suit was for the recovery of a sum of Rs. 8,000/- under a pro-note. Ex. A. 1, which was said to be executed on 23-4-1974. The allegation was that the amount was said to be borrowed as a hand-loan and when it was refused to be paid, a legal notice was issued under Ex. A-3 dated 26-11-1976 but the same was said to be returned unserved, but the suit however was laid on 16-12-1976.

2. The defence in the written statement was that the plaintiff is a Tawaiff and the defendant, who is a man of affluence, was visiting regularly. There was no need or necessity for him to borrow the amount. Secondly, whenever he visited her house he was consuming liquor and when he was under the influence of intoxicant drinks, may be, his signature was obtained. So, even if there is any execution of such document, it was not done in consciousness. That apart, it is also averred that the pro-note is materially altered as the date has been later inserted. The further allegation was that she had no capacity to lend the money. For all these reasons, the suit be dismissed.

The first Court framed 2 issues, viz., :

'(1) Whether the defendant borrowed a sum of Rs. 8,000/- from the plaintiff on 27-4-1974 and executed pro-note?

(2) Whether the suit pro-note is genuine, true and supported by consideration?'

Finding was in favour of the plaintiff on both the issues and so, the suit was decreed.

3. In the appeal for the first time, a contention was raised stating that inasmuch is the pro-note is materially altered, it is hit by Section 87 of the Negotiable Instruments Act. Therefore, the instrument is void and unenforceable. The appellate Court, however, rejected the contention holding that it was for the defendant to establish the factum that the suit pro-note was materially altered and since he has failed to do so, the case of the plaintiff was held established and the appeal was dismissed.

4. In the Second Appeal, the contention of the learned counsel for the appellant is two fold - one is that the consideration under the pro-note cannot be said to have passed on, and if once it is so established, then it will be contrary to Section 118 of the Negotiable Instruments Act; the second is that the date on pro-note, Ex.A. 1 is inserted later to the execution of the instrument, putting it as 23-4-1974, and since the burden is on the plaintiff to establish that there is no material alteration in the instrument and inasmuch as that burden has not been discharged, it must be held that the instrument is void.

5. Now, before analysing the arguments, the relevant statutory provisions may be noticed. Sections 87 and 118 of the Negotiable Instruments Act, read as under :

'Sec. 87 : Any material alteration of a negotiable instrument renders the same void as against any one 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 : and any such alteration, if made by an indorsee, discharges his indorser from all liability to him in respect of the consideration thereof. The provisions of this Section are subject to those of Ss. 20, 49, 86 and 125.'

S. 118 : Until the contrary is proved, the following presumptions shall be made :--

(a) that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accented, indorsed, negotiated or transferred for consideration.

(B) that every negotiable instrument hearing a date was made or drawn on such date;

(c) that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;

(d) that every transfer of a negotiable instrument was made before its maturity;

(e) that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;

(f) that a lost promissory note, bill of exchange or cheque was duly stamped;

(g) that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument had been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.'

6. Now, a look at Ex. A. 1 pro-note itself makes it apparent that the date, which is in a different ink, that is, other than the ink that has been used for body of the pro-note, is a subsequent introduction into the document. This insertion also amounts to 'material alteration', as it takes in not only a case where certain thing which is already written has been altered or erased, but also a new insertion, (see A. Subba Reddy v. Neelapa Reddi, : AIR1966AP267 .

7. The second aspect, which is more crucial, is -- who should discharge the burden of proving that the document is materially altered. This too is well settled that the person, who is in the custody of the document subsequent to its execution, should there be any alteration, has to discharge the burden of establishing that it is not altered.

8. In A. Subba Reddy v. Neelapa Reddi, : AIR1966AP267 (supra) this Court held :--

'The general rule in English law followed in India is that a party having custody or control of a document produced in evidence must explain the alteration. When the instrument on its production appears to have been altered, it is a general rule that the party offering it in evidence must explain its appearance, because every alteration in the case of a negotiable instrument renders it suspicious. It is only reasonable that the party claiming under it should be remove the suspicion.'

Further held :

'It must be remembered that it is not any and every alteration that avoids the instrument. To have that effect the alteration must be in a material particular. A material alteration can be brought about by change of date or time of drawing or of the place of payment or by change in the sum payable, etc., etc. It is thus evident that the date of a promissory note is a material portion of it, and any alteration of such date will naturally avoid the promissory note, unless, of course, as stated in the section, such an alteration is made with the consent of the other party, or is made to effectuate the common intention of the original parties. It is wrong to assume that the date of the promissory note is merely a description. It indicates the time when the promissory note was executed. In most cases the date is very material in calculating the date of the performance of the contract and more often fixing the period of limitation within which the plaintiff will have to institute the suit on the foot of such promissory note. It is immaterial whether the alteration is made in the date or month or year. Any such alteration being material must necessarily result in the avoidance of the promissory note.'

Also held :

'where an instrument appears to be materially altered the law naturally casts a heavy burden on the plaintiff to explain the alteration and show when it was made. Ordinarily the party who presents a negotiable instrument which is an essential part of his case in an apparently altered and suspicious state, must fail, from the mere infirmity or doubtful complexion of the instrument unless it can satisfactorily explain the existing state of the document...

The plaintiff in his deposition denies any correction. He has no explanation to offer in case it is found that the date appears to be materially altered. In the absence of any explanation on behalf of the plaintiff who seeks the enforcement of the document, it is obvious that the plaintiff must fail, as the onus was on him to show that the material alteration was made either with the consent of the parties or in order to effectuate the common intention of the parties.'

In Halsbury's Laws of England, 4th Edition, 4th Volume, at para 459 it is stated :

'Where an instrument, or if a bill the acceptance thereon, is materially altered without the assent of all the parties liable on it, the instrument is avoided as regards all the parties except any one who has himself made, authorised, or assented to the alteration, and those who have become parties to the instrument subsequent to the material alteration.'

In para 460, it is further stated :

'The following alterations are specifically declared to be material : any alteration of (1) the date : (2) the sum payable: (3) the time of payment: (4) the place of payment, or the addition of a place of payment where one is mentioned by the acceptor, without the acceptor's assent.'

9. In Verco Pvt. Ltd., v. Newandram Naraindas, : AIR1974Mad4 , it has been held that even a fresh insertion of the date or any other material particular, will constitute material alteration, within the meaning of S. 87 of the Negotiable Instruments Act. It is needless to multiply the case law on this point.

10. On the above conspectus and on the scrutiny of Ex. A. 1. I have no manner of doubt whatsoever to hold that the date '23-4-1974' has been inserted later and this has not been explained by the plaintiff. If that be so, the instrument must be held to be void.

11. In view of this, it is needless to consider as to whether consideration has passed on to the defendant. In fact, it is a question to fact. This Court will be chary to interfere with the concurrent findings of facts.

12. The learned counsel for the respondent sought to contend that, even if there is material alteration in the instrument. Ex. A. 1 and if on that score the instrument is held to be void, still it will be open to the plaintiff to rely on Ex. A. 2, which is a receipt executed by the defendant acknowledging the receipt of the sum of Rs. 8,000/- and recover the same. Reliance was placed on a Full Bench decision of this Court in L. Sambasiva Rao v. Balakotaiah, AIR 1973 Andh Pra 341 wherein it is held :--

'A plaintiff can lay an action for recovery of the amount advanced by him basing on the original cause of action where the suit negotiable instrument becomes inadmissible in evidence under S. 35 of the Stamp Act, provided there is an allegation in the plaint and proof in evidence about the fact that the promissory note did not incorporate all the terms of the contract of loan and that it was executed as a conditional payment or a collateral security. If the instrument embodies all the terms of the contract and the instrument is improperly stamped, no suit on the debt will lie. It will be barred by S. 91. Evidence Act and S. 35 of the Stamp Act. In such a case, where there is an express contract and the document is hit by the provisions of S. 35, Stamp Act and S. 91, Evidence Act, S. 70 of the Contract Act cannot be invoked on the theories of implied promise, money had and received, quasi-contract and just and reasonable or unjust enrichment or any other equitable doctrine.'

13. I apprehend the abovecited case is of no assistance whatsoever. On the contrary, in Rangaswami Reddi v. Doraiswami Reddy, : AIR1957Mad715 Rajamannar, C.J., speaking for the Division Bench held :

'Where the promissory note had become void on account of material alteration and the Court found passing of consideration and the execution of promissory note simultaneous, provisions of S. 65 of the Contract Act cannot be invoked.'

14. In this case, the only basis, on which the recovery of the sum is based, is the pro-note and there is no other alternative allegation. Therefore, when the pro-note was executed and the payment of the sum was said to be contemooraneous with the instrument, and, when once the instrument is held to be void on the ground that it is hit by S. 87 of the Negotiable Instruments Act, then the plea under S. 65 of the Contract Act is not available. So, the contention, which is misplaced and devoid of substance, is rejected. The order under appeal is set aside, while allowing the appeal without costs.

15. It may, however, be recorded that a memo has been filed by the learned counsel for the appellants which reads :--

'In the above manner, purely as a matter of concession and magnanimity of this appellant, the appellant hereby undertakes that he shall not recover the amounts so far paid to the respondent or her counsel under the interim orders in this matter.'

16. In fact, at the end of the arguments, an undertaking has been given by the learned counsel that the amounts so far paid either to the respondent. The amounts so far received by the respondent or her counsel need not be returned.

17. Appeal allowed.


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