1. This appeal by the plaintiff is directed against the judgment and decree of the learned Civil Judge, Aligarh, dismissing his claim against defendant No. 1, while decreeing it against defendant No. 2.
2. The suit giving rise to this appeal was filed by Sri Mathuni Prasad on the 31st of March 1951 against defendants Nos. 1 and 2 for the recovery of Rs. 18,100/- from them on the basis of a pronote executed by defendant No. 1 in favour of defendant No. 2. According to the plaintiff, defendant No. 2 endorsed that pronote in his favour for consideration and the plaintiff being thus the holder in due course of that pronote was entitled to recover the amount due on it from both the defendants.
3. The suit was contested by defendant No, 1, while it proceeded ex parte against defendant No. 2. The contesting defendant admitted the execution of the pronote, but denied consideration. He also denied the endorsement in favour of the plaintiff and the-payment of any consideration by him to defendant No. 2. The circumstances under which the pronote was alleged to have been executed by him might appropriately be stated in his own words :
'(4) (a). Khan Bahadur Mohd. Khalilul Rahman Khan Saheb gave an application under the Encumbered Estates Act for arrangements with respect to his--debts. Besides other debts he owed money in respect of profits to Mohd. Salimulla Khan, father of defendant No. 2 also. The special Judge, 1st grade passed a decree against him in respect of the debt of Saliniullah Khan and all the decrees in respect of the debts were sent to the Collector, Mathura for adjustment.
(b) By chance, the actual creditor and the judgment debtor aforesaid died. Defendant No. 2 became the sole heir of the creditor as his son and the contesting defendant and Bibi Umatul Hafiz Begum became the heirs of the judgment debtor as his own nephew and as his widow.
(c) The amount due under decree No. 2 of 1938 aforesaid which carried interest amounted to Rs. 58403/13/8 on 7-11-44. A private compromise was arrived at between the contesting defendant and defendant No. 2 with respect to the realization of the amount aforesaid and a deed of agreement, in accordance therewith was executed on 7-11-44 and registered, on the basis of which the defendant No. 2 was paid a sum of Rs. 38238-12-11 in cash after allowing credit for a sum of Rs. 1008-3-9 in respect of decrees relating to profits and a sum of Rs. 1050-13-0, as profits not decreed, which were due to defendant No. 1 and sister of defendant No. 1 and a sale was made of Mauzas Goeti, Sultimpur, Kanpur and Mirzapur, tahsil Kasganj, district Etah Mohal Karimullah Khan for a sum of Rs. 18100 and the sale consideration of Rs. 18100 was allowed as set off by defendant No. 2 to defendant No. 1.
(d) The said Mauzas formed the ancestral property of defendant No. 2, which Haji Mohd. Swaleli Khan Saheb deceased, brother of the contesting defendant, purchased at an auction sale. After his death, the contesting defendant and his sister inherited the said mauzas from Haji Sahab aforesaid. The contesting defendant is the lumbardar of the villages aforesaid with the exception of mauza Mirzapur. It was his (sic) desire to purchase back the shares sold by auction in the ancestral villages. Due to intimate relations defendant No. 1 agreed to make a sale of them to defendant No. 2 in accordance with the latter's desire. Their price was settled at Rs. 18100 and credit for the same was allowed. The villages aforesaid were also, however, subject to the charge of the debts due by Haji Mohd. Swaleh Khan in the case under the Encumbered Estates Act in charge of the Collector of Aligarh and the execution and completion of sale deed could not be effected without his permission.
5. All the four villages aforesaid were sold for Rs. 18100, the sale consideration whereof was paid by defendant No. 2 to defendant No. 1 by means of setting off the amount. But as it is according to law essential to show the sale consideration at the time of registration of a sale-deed, a pronote without consideration was executed in favour of defendant No. 2 to the extent of the sale, consideration of the villages aforesaid in order that defendant No. 2 might be able to show the payment of sale consideration at the time of registration of the sale deed. Accordingly, this fact was clearly agreed upon and mentioned in the agreement aforesaid that Abdul Makit Khan, defendant No. 2 would not be able to file a suit on the basis of the pronote aforesaid; nor would any amount be payable by the defendant in respect of the pronotes afore-said, nor would he be responsible for it in any way; except in case that the contesting defendant did not execute a sale deed in respect of the villages in favour of defendant No. 2 after permission for sale had been granted by the Collector of Aligarh or after they became free and were released by the Encumbered Department and freed from the charge the sale consideration of the villages aforesaid, paid by defendant No. 2 to defendant No. 1 by means of setting it off against the amount of the decree under the Encumbered Estates Act would be repayable to defendant No. 2 by means of the pronote aforesaid. The contesting defendant and his sister have always been and are ready to fulfil their part of the agreement i.e. execution and completion of the sale deed. But so far neither permission has been granted by the court of the Collector nor have the villages aforesaid been released by the Encumbered department Under the circumstances it was not possible for defendant No. 1 and his sister to execute a sale deed in respect of the property aforesaid. No right accrues to defendant No. 2 for repayment, of the sale consideration of the villages aforesaid.'
On these pleadings, the learned trial Judge framed the following issues :
1. Has the plaintiff got any causes of action for the suit? If so, against which of the defendants?
2. Is the pronote without consideration?
3. Has it been executed under the circumstances as alleged by the defendant No. 1? If so, can a suit be maintained on the pronote and is it negotiable?
4. Has any money become payable under the pronote?
5. Is the plaintiff a holder in due course?
6. Has it been validly endorsed and for consideration?
7. Is the plaintiff entitled to sue?
8. Has the defendant No. 2 committed breach of faith and contract? if so, what is its effect?
9. Is the defendant No. 1 entitled to get costs of the suit? If so, from whom?
10. To what relief, if any, the plaintiff is entitled?
4. On the main issue, namely issues Nos. 5 and 6 the learned trial judge held that the plaintiff was not a holder in due course, though he was a holder for consideration and as such entitled under section 59 of the Negotiable Instruments Act to all the rights of his transferor--i.e. respondent No. 2. On issue No. 2 he held that the pronote was for consideration. On issue No. 3 he held that as the plaintiff was aware that the amount under the pronote could not be realised till either the Collector refused sanction to defendant No. 1 to sell the villages concerned to defendant No. 2 or defendant No. 1 refused to sell them to defendant No. 2 after sanction to their sale was accorded by the Collector or they were released by the Encumbered Estates Department, and as none of these conditions bad been fulfilled by the date the suit was instituted, the same was premature against defendant No. 1. He, accordingly, dismissed the suit with costs against defendant No. 1 and decreed it against defendant No. 2 with pendente lite and future interest at the rate of 3% per annum simple and costs, including costs which were payable by the plaintiff to defendant No. 1. Defendant No. 2 submitted to the decree, but the plaintiff feeling dissatisfied has preferred the aforesaid appeal to this Court.
5. In order to properly appreciate the contentions of Sri Haider learned counsel for the appellant, one more fact, about which there is no dispute, requires mentioning viz. that the pronote in suit is a renewed pronote--the earlier one having been executed sometime in 1944. Having stated that fact we shall now indicate the contentions which Sri Haider convassed before us. His first contention was that the finding of the learned trial Judge that the plaintiff was not a holder in due course was erroneous. His second contention was that as the pronote in question was a renewed pronote the conditions to which the first pronote was subject, did not apply to it. His third contention was that even if the finding of the learned Judge regarding the first contention were correct the plaintiff was in any case now entitled to a decree against defendant No. 1 also in view of the subsequent change in law occasioned by the U. P. Zamindari Abolition and Land Reforms Act, as a result of which the suit could no longer be held premature against him. After hearing learned counsel for the parties, we are satisfied that while the first two contentions of the learned counsel for the appellant are without any substance, the third contention has force and this appeal must consequently succeed.
6. So far the first contention is concerned, it is, in our opinion more than sufficient for us to state that having regard to the plaintiit's admission that when he became the endorsee of the pronote in question, he was aware that the defendant No. 1 had refused to honour it, and to the unassailable finding of the learned trial Judge that at the time the plaintiff became the endorsee he was aware that there was some defect in the title of defendant No. 2 since he was forgoing a substantial part of the consideration viz. Rs. 3100 in his favour and the pronote carried ho interest, it was only proper for the appellant's learned counsel not to have pressed this contention with unnecessary tenacity. We accordingly uphold the learned trial Judge's finding in this regard.
7. The second contention can be disposed of very shortly. Under the agreement pleaded and established by defendant No. 1 no suit on the basis of the original pronote of 1944 or the pronote or pro notes obtained in renewal thereof, could be filed so long as one or more of the conditions specified in that agreement remained unfulfilled. The plaintiffs' right having been found to be confined to the rights of his transferor--viz. defendant No. 2 and the latter under the agreement being precluded from filing a suit till the fulfilment of one or more of those conditions, the plaintiff cannot get a higher right than him so far as this aspect of the matter is concerned. In this view of the matter, we consider it unnecessary to discuss the various authorities, including one of the Judicial Committee of the Privy Council, which were cited by Sri Haider before us. The second contention has also therefore to be repelled. We shall therefore, proceed to consider his third contention.
8. The judgment under appeal shows that the sole reason which weighed with the learned trial Judge for dismissing the suit against defendant No. 1 was that as none of the conditions precedent to the filing of a suit against the said defendant had been fulfilled, the suit against him was premature and hence liable to be dismissed. The suit, it may be recalled, was filed on the 31st of March 1951 and judgment was delivered therein on the 12th of February 1952. On the 1st of July 1952 the U. P. Zamindari Abolition and Land Reforms Act came into force and under Section 4 thereof all proprietary interests in 'estates'--as defined in that Act--became vested in the State of Uttar Pradesh and the erstwhile owners of those estates, known as intermediaries, were divested of all their rights and titles therein and only became entitled to compensation for the same.
It was, therefore, urged on behalf of the appellant that as under the arrangement, pleaded by defendant No. 1 himself, the amount under the pro-note in question was not recoverable till the fulfilment of one or more of the conditions of that agreement and as during the pendency of this appeal the said fulfilment had become impossible owing to Section 4 of the U. P. Zamindari Abolition and Land Reforms Act, the bar to the filing of the suit against defendant No. 1 no longer existed and this Court could, therefore, take this subsequent change in law into consideration and decree the suit against defendant No. 1 also. After hearing learned counsel for the parties, we are satisfied that this contention has force and this appeal must consequently succeed. We shall, therefore, proceed to record our reasons for coming to that conclusion.
9. Now, the powers of the appellate Court to take account of subsequent change in fact and in law in deciding an appeal is well established by a long series of decisions. It is unnecessary however to refer to more than two of them, viz. the Federal Court decision in Lachmeshwar Prasad v. Keshwar Lal and the Supreme Court's decision in Surinder Kumar v. Gian Chand, : 1SCR548 . In the Federal Court decision, Gwyer, C. J. quoted with approval the following observations of Chief Justice Hughes in Patterson v. State of Alabama, (19S5) 294 U S 800 to 607 :
'We have frequently held that in the exercise of our appellate jurisdiction we have power not only to correct error in the judgment under review but to make such disposition of the case as justice requires. And in determining what justice does require the Court is bound to consider any change either in fact or in law which has supervened since the judgment was entered ' and Varadachariar, J. the other learned Judge expressed the view that as an appeal is in the nature of a rehearing of the suit therefore an appellate Court in moulding the relief to be granted in appeal is entitled to take into account even facts and events which have come into existence since the decree appealed from was passed.
10. In the Supreme Court decision also the aforesaid observation of Chief Justice Hughes was quoted and given effect to. We shall state the facts of this case at some length as in our opinion the principles laid down therein are fully applicable to the present case. In that case what had happened was that the plaintiffs who claimed to be legatees under a registered will executed in their favour by their mother's father brought a suit for the recovery of a certain sum of money on the foot of a mortgage executed by the defendants in favour of the testator and which was bequeathed under the aforesaid will to the plaintiffs. The defendants inter alia pleaded that they had no knowledge of the alleged will and they denied that the appellants were the heirs and representatives of the mortgagee and therefore had no locus standi to sue. The trial court overruled the latter plea and decreed the suit. On appeal the High Court of Punjab reversed the decree of the trial court on the ground that as attestation of two witnesses was necessary to validate the will and as that requirement of law was not satisfied the appellants had no locus standi to maintain the suit.
The plaintiffs preferred an appeal to the Supreme Court, and, during its pendency there, they along with their mother obtained probate of the said will in their favour from the court of the District Judge. Thereafter they moved an application in the Supreme Court for the admission of the said probate as additional evidence and for impleading their mother as a party. Objection to its admission was taken on behalf of the defendants, inter alia on the grounds (1) that the said document was sought to be filed at a very late stage and (2) that its admission would have the effect of depriving the defendants of the valuable right which had come to vest in them because the claim had become time barred. Repelling both these objections, the Supreme Court, after quoting the aforesaid observation of Chief Justice Huges, observed :
'In our opinion the fact of the grant of the probate which has supervened since the decision under appeal was given and which has been placed before this Court must be taken into consideration in deciding this appeal. In that event the infirmity in the appellant's case due to the want of proper attestation of the will under Section 63(c) of the Indian Succession Act would be removed'.
11. Substitute the words 'coming into force of the U. P. Zamindari Abolition Act' in place of the words 'grant of the probate' and the words 'conditions of the agreement' in place of 'want of proper attestation of the will under Section 63(c) of the Indian Succession Act', and we have as close a parallel to the aforesaid Supreme Court Case as can be expected.
12. Before we pass on to the authorities relied upon by Svi Man Singh, we might take notice of two other cases on which reliance was placed by Sri Haider. They are Mst. Kalawati v. B. Ratan Chand : AIR1960All601 and Ramdayal v. Maji Devdiji . Both these cases go the whole length of supporting the proposition contended for by Sri Hyder. Indeed in the former case a Hindu wife was allowed in appeal to give up the original ground on which she had rested her case for maintenance and was allowed to base it upon a right which was created by an Act which came into force during the pendency of the appeal.
13. On behalf of defend ant-respondent No. 1 his learned counsel Sri Man Singh relied upon Mst. Anundmoyee Chowdhoorayan v. Sheeb Chander Roy, 9 Moo Ind App 287 (PC) and Ramanadan Chetti v. Pulikutti Servai, ILR 21 Mad 288 for the contrary proposition. No doubt in the former case there is a stray observation which appears to lend some countenance to Sri Man Singh's contention. But that observation, even if it is taken to apply to the question which we are called upon to consider in this case, is no longer binding on us in view of the aforesaid pronouncement of the Supreme Court to the contrary. Those decisions must, therefore, be held to have been impliedly overruled.
14. Sri Man Singh then argued that as in the plaint the relief against defendant No. 1 was claimed on the allegations (i. e. cause of action) that the plaintiff was the holder in due course of the pronote in question, he cannot be given any relief--not even the same relief--if its granting depends upon assertion and proof of allegations not set out in the plaint, unless the plaint is first amended and a fresh trial takes place on the new pleadings. According to Sri Man Singh if the plaintiff wanted any relief against defendant No. 1 on a ground other than that he was the holder in due course, such as on the ground that he was also entitled to all the rights of his transferor --j. e. defendant No. 2--against defendant No. 1 under Section 59 of the Negotiable Instruments Act, then that relief, assuming that he was able to substantiate it could be given to him only after he amended his plaint and a fresh trial took place on the amended pleadings. We agree with the legal proposition urged by Sri Man Singh, but the difficulty in our giving effect to it is that it does not apply to the facts of the present case, as in our opinion the granting of the relief under Section 59 of the Negotiable Instruments Act does not depend upon the assertion of any new fact or facts by the plaintiff and all this is necessary for him to do is to bring the subsequent change in law to the notice of the Court and submit that as a result thereof the relief against defendant No. 1 can no longer be withheld.
In this case the trial court found that both the pronotes--viz. the earlier pronote as also the later pronote, i. e. the pronote in suit--were for consideration. Had the trial court also found the plaintiff a holder in due course or had there been no impediment in the way of the filing of that suit against defendant No. 1 due to conditions of the agreement between him and defendant No. 1 there would have been in our opinion no difficulty in its decreeing the suit against defendant No. 1 as well on the same cause of action. Similarly, if there had been no provision like Section 59 in the Negotiable Instruments Act, giving the bare holder of a pronote a right, though a somewhat restricted right, against the drawer of that pro-note or if there had been a specific provision denying such a holder any kind of right against the drawer, then also there would have been no difficulty in dismissing the suit against defendant No. 1 on merits and on the same cause of action. It is only because the plaintiff is not a holder in due course that his right under Section 59, Negotiable Instruments Act is restricted to the rights which his transferor--i.e, defendant No. 2--may have against the drawer i.e. defendant No. 1. Since the transferor under his agreement with defendant No. 1 had no right to institute a suit on the basis of that pronote so long as at least one of the conditions was not satisfied, the plaintiff also could not bring the suit against defendant No. I, till the happening of one or other of those conditions.' Once the said conditions ceased to exist or became impossible of fulfilment the bar in the way of the plaintiff filing the suit against defendant No. 1 also ceased to exist.
In this connection it is significant to note that one of the pleas of defendant No. 1 himself was that the suit against him was premature. In other words defendant No. 1 also thought then that on the cause of action alleged by the plaintiff, the taking of that plea was necessary. Assuming therefore that the said conditions have, since judgment was given by the trial court, been fulfilled or their fulfilment has become impossible then we would be entitled as observed by Varadachariar, I. to mould the relief which is to be granted in the appeal in the light of the facts and events which have come into existence since the decree appealed from was passed. In such circumstances, it was not correct to say that when the appellate court moulds the relief it is granting a relief on a new cause of action. All that it does is to take notice of a subsequent change in fact, or/and, in law and to grant a relief in order to do complete justice between the parties and to avoid unnecessary multiplicity of litigation which does no good to any one. In this view of the matter the various decisions cited by Sri Man Singh, viz. Mohummud Zahoor Ali Khan v. Mt. Thakooranee Rutta Koer, 11 Moo. Ind. App. 468 (PC). Rangayya Naidu v. Basana Simon : AIR1926Mad594 and Gulzar Singh v. Kalyan Chand, ILR 15 All 399 in which the relief could not be moulded, because its moulding depended upon a different cause of action arc all distinguishable on facts and do not help defendant No. 1. But if it is contended that these decisions go further and also purport to lay down anything contrary to the aforesaid Supreme Court decision then to that extent they must be hold to have been impliedly overruled.
15. We shall now proceed to consider whether the passing of the U P. Zamindari Abolition and Land Reforms Act has had the effect of removing the bar which stood in the way of the plaintiff's tiling the aforesaid suit against defendant No. 1. The bar was that so long as the Collector did not refuse sanction for the sale of the villages in question by defendant No. 1 to defendant No. 2 or defendant No. 1 refused to execute a sale-deed in favour of defendant No. 2 after their sale was sanctioned by the Collector or they were released by the Encumbered Estates Department, defendant No. 2 would not be able to file a suit on the said pronote. The reason for introducing these conditions in the agreement are obvious from the paragraphs 4 (a) to (d) and 5 of the written statement which have been quoted earlier. Those paragraphs show that defendant No. 1 and his sister had to satisfy the liabilities of K. B. Mohammad Khalilul Rehman Khan to defendant No. 2 amounting to Rs. 58,403-13-8. This they did (1) by paying Rs. 38,238-12-11 in cash to defendant No. 2 and (2) by agreeing to convey their proprietary rights in mauzas Goeti Sultanpur, Kanpur and Mirzapur situate in Tehsil Kasganj in the district of Etah valued at Rs. 18,100/- to defendant No. 2.
As these villages were included in the properties of K. B. Mohammad Khalilul Rehman in the Encumbered Estate case they could not be sold till at least one of the conditions referred to earlier was fulfilled. Hence as an interim measure; it was arranged that defendant No. 1 would execute a pronote for Rs. 18,100/- in favour of defendant No. 2 and the latter would take possession and appropriate the profits, of those villages and defendant No. 1 would pay no interest on the pronote. As proprietary interest in these mauzas was agreed to be conveyed (vide the first sentence of paragraph 6 of the Written Statement) and as under Section 4 of the U. P. Zamindari Abolition and Land Reforms Act all proprietary rights in 'estates' including the mauzas in question, came to be vested in the State of U. P., none of the conditions remained possible of fulfilment from the 1st of July 1952. After that date neither the Collector could grant permission for the sale, nor the proprietary rights in the said mauzas could be released by the Encumbered Estates Department. Thus the only bar to the decreeing of the suit against defendant No. 1 has been removed on account of the subsequent change in law and consequently on the strength of the authorities cited above, we are bound to give effect to this change and to grant the plaintiff the relief to which be is entitled on that basis.
18. Sri Man Singh next contended that as under Section 23(d) of the U. P. Encumbered Estates Act (Amendment) Act, 1954, the transfers of sales of some proprietary rights were saved it was not right to say that all the conditions of the agreement bad become incapable of fulfilment. In our opinion this contention is not sound. No doubt Section 23 (d) referred to above, saves transfers or sales of proprietary rights made under Sections 31, 33 and 34 of the principal Act, but the sales and transfers referred to therein are sales and transfers made before the coming into force of the U. P. Zamindari Abolition and Land Reforms Act. They do not, and indeed cannot, refer to sales and transfers made after the 1st of July 1952, as such sales and transfers would be void under Section 4 of the U. P. 'Zamindari Abolition and Land Reforms Act. Since in the present case the Collector had not made any transfer or sale of proprietary rights in the villages concerned in accordance with Sections 31, 33 or 34 before the 1st of July 1952, the contention raised by Sri Man Singh has no application to the facts of this ease and must be repelled.
17. Lastly Sri Man Singh contended that as defendant No. 1 did not receive any consideration under the first pronote, he could not be made liable thereunder or under the renewed pronote. This contention is clearly based upon a misconception. It is true that no consideration in cash was paid. But on defendant No. 1's own showing the pronote was executed to satisfy the liability of K.B. Mohammad Khalilul Rehman Khan to defendant No. 2 amounting to Rs. 20,165/-/9 i. e. the difference between his debts totalling to Rs. 58,403-13-8 and the amount paid by defendant No. 1 and his sister viz. Rs. 38,238-12-4. It is therefore, not possible to say that the pronote in question was without consideration. The further argument that as defendant No. 2 has all along been in possession of those villages and has been enjoying its profits while defendant No. 1 has got nothing in lieu thereof is also not possessed of any merit, for the very obvious reason that if the former has enjoyed the profits, the latter has saved himself from the liability of paying interest on that amount during the subsistence of that agreement.
18. For all these reasons, we are of the opinion that this appeal has force. We, therefore, allow it and while maintaining the decree of the trial court against respondent No. 2, including the order as to costs, decree the suit against defendant No. 1 also. As the appeal has had to be decreed for no fault of defendant No. I we leave the parties to bear their costs of this appeal.