1. This is a plaintiff's appeal against a decree of the Subordinate Judge of Agra. The plaintiff-appellant claimed from the defendant-respondent a sum of Rs. 5,350 as principal and interest due under a promissory note dated Kunwar Badi 7th, Sambat 1984 which corresponds to 17th September 1927. It was the plaintiff's case that upon this day the defendant executed a note in favour of the plaintiff for the sum of Rs. 4,200 which sum was to carry interest at the rate of annas 12 per cent. per mensem, that is Rs. 9 per cent per annum. The defendant-respondent admitted that on the day in question he executed the promissory note sued upon, but he alleged that he had not received the whole of the consideration stated upon the face of the note. According to the defendant a sum of Rs. 3,750 only was paid by the plaintiff and that the balance, in spite of repeated promises, was never paid. The defendant further alleged that eight months after the promissory note was executed, the rate of interest was reduced from the agreed sum of annas 12 per cent per mensem to a sum of annas 10 per cent per mensem.
2. Upon proceedings having been brought for the sum of Rs. 5,350, alleged to be due from the defendant, the defendant admitted that a sum of Rs. 4,600 was due by way of principal and interest and such sum was offered to the plaintiff by cheque but was refused. Further the defendant had requested the plaintiff not to bring the present suit and in due course the defendant paid into Court a sum of Rs. 4,600 alleging that that sum was sufficient to satisfy the plaintiff's claim. This sum was never taken out of Court by the plaintiff and it appears that no notice was ever sent to the plaintiff that such a sum had been deposited in Court. In para. 7 of the defendant's written statement permission is asked to deposit the amount which, according to the defendant, was actually due. This sum, viz., Rs. 4,600 was deposited in Court on 27th November 1930, but there is no document which shows that the plaintiff ever received any notice of such deposit. It is clear from the terms of O. XXIV, Rule 2, that notice must be given to the plaintiff through the Court at the instance of the defendant where money is paid into Court, but in this case such does not appear to have been done. The plaintiff not having received notice of this deposit did not take out the money in satisfaction wholly or in part of his claim and it is clear that no blame attaches to him for not dealing with the money which had been paid in. He appears to have been wholly unaware of the payment until the case was heard and the decree passed on 23rd December 1930.
3. The learned Subordinate Judge held in the first place that the sum stated on the face of the promissory note, viz, Rs. 4,200 had not been in fact advanced and that the sum actually lent to the defendant amounted to Rs. 3,750 only. Upon the issue directed to the amount of the consideration which actually passed, he rightly held that the onus, of showing that the sum stated on the face of the note was not in fact lent, rested upon the defendant. He, however, held that the defendant had discharged the onus and established that he had received a sum of Rs. 3,750 and not Rs. 4,200 as stated on the face of the note. The appellant has urged before us in this appeal that we should come to a contrary conclusion upon the evidence. We have considered the evidence which was placed before the learned Subordinate Judge and have come to the conclusion that the defendant did discharge the onus which the law cast upon him and did establish that he received a sum of Rs. 450 less than that stated in the note. The evidence of the defendant himself coupled with the evidence of Johri Lal, his munim, abundantly proves this. The defendant's books were produced in Court and the learned Subordinate Judge was perfectly satisfied that they were genuine and had been entered up in the ordinary course of business when this transaction took place in 1927. If the books were genuine, then it is clear that only the sums shown in those books were actually received by the defendant.
4. The defendant also called a Vakil, Pandit Behari Lal Sharma, who gave evidence corroborating that given by the defendant himself In our judgment this witness's evidence was not admissible. Negotiations were being conducted with a view to settlement, and that being so, we are bound to hold that these negotiations were being conducted without prejudice.' In such circumstances it is not open for one of the parties to give evidence of an admission made by another. If negotiations are to result in a settlement each side must give away a certain amount. If one of the parties offers to take something less than what he later claims he is legally entitled, such must not be used against him; otherwise persons could not make offers during negotiations with a view to a settlement. Further, it appears to us that this vakil was at the time of these negotiations acting on behalf of the plaintiff and conducting litigation for him and that being so he could not, by reason of Section 126, Evidence Act, give evidence as to communications made to him without the express consent of his client, viz., the plaintiff himself. In the present case the vakil gave evidence against his own client and clearly without the latter's consent. Even eliminating the evidence of this witness the evidence of the defendant himself and his munim, coupled with the books, does establish that the defendant received a lesser sum than that which appears on the face of the note.
5. The plaintiff in evidence swore positively that he had advanced the whole sum of Ks. 4,200, but it is to be observed that he produced no documentary evidence in support of his statement. He admitted that he kept books of account but alleged that he was unable to produce them in these proceedings. These books appear to have been brought on to the record of another case, but such record could have been summoned or extracts taken of the books in question and produced in this trial. There was no excuse for the plaintiff's failure to produce his books to support his oral testimony and that being so we are bound to hold that the defendant's version of this transaction is the correct and truthful one. Evidence was also called by the defendant to show that the rate of interest had been reduced by verbal agreement from annas 12 per cent, per mensem to annas 10 per cent per mensem eight months after the transaction and the learned Subordinate Judge accepted this evidence in preference to the evidence given by the plaintiff denying that such a reduction ever took place. It is unnecessary for us to consider this evidence in any detail because we are of opinion that the evidence tendered by the defendant is inadmissible by reason of the provisions of Section 92, Evidence Act.
6. That section provides that when the terms of a contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to Section 91 of the Act, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives-in-interest, for the purpose of contradicting, varying, adding to, or subtracting from its terms. There is however a proviso to this section, viz., provison, which allows the existence of any distinct subsequent oral agreement to rescind or modify any such contract, grant or disposition of property, to be proved except in cases in which such contract, grant or disposition of property is by law required to be in writing, or has been registered according to the law in force for the time being as to the registration of documents. It is contended by the appellant that a promissory note is a contract or matter required by law to be reduced to the form of a document. Section 4, Negotiable Instruments Act, defines a promissory note as an instrument in writing not being a bank note or a currency note containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. From this section it is clear that a promissory note is an instrument which must be in writing. Section 79, Negotiable Instruments Act, provides that when interest at a specified rate is expressly made payable on a promissory note or bill of exchange, interest shall be calculated at the rate specified, on the amount of the principal money due thereon, from the date of the instrument, until tender or realisation of such amount, or until such date after the institution of a suit to recover such amount as the Court directs.
7. Section 80 of the same Act provides that where the note is silent as to interest the principal sum shall carry interest at the rate of 6 per cent. In other words, if the parties are content with interest at the rate of 6 per cent, no reference to interest need be made in the note, but where a different rate of interest is agreed to be recoverable, such must appear on the face of the document and thus the agreement as to interest becomes part of the instrument. In our judgment, where the agreed rate of interest is stated in the promissory note it forms part of the contract between the parties and that contract being a promissory note is, as we have stated, one which is required by law to be in writing. Any variation therefore of the terms relating to such interest is a variation of a contract required by law to be in writing and that being so such variation must be in writing by reason of Section 92, Evidence Act, and proviso 4 thereto. In the present case the defendant's allegation is that an oral agreement was made between the parties reducing the rate of interest, but for the reasons we have given, we are bound to hold that evidence of such oral agreement is inadmissible by reason of the provisions of the Evidence Act to which we have referred.
8. No point was taken by the appellant, and rightly, upon the admissibility of the evidence showing that the amount of the loan was in fact less than the sum shown on the face of the note. It is always open to one of the parties to show that he has not received the sum actually stated to have been lent and such evidence is expressly rendered admissible by reason of proviso 1, Section 92, Evidence Act. We therefore hold that only a sum of Rs. 3,750, was advanced by the plaintiff to the defendant, but we hold that no legal agreement to vary the rate of interest was ever entered into between the parties. The date of the promissory note was 17th September 1927, and in our judgment the plaintiff is entitled to interest at the rate of annas 12 per cent per mensem or 9 per cent per annum from that date to the date of the decree, viz., 23rd December 1930. It has been contended by the defendant that the plaintiff should not have interest upon Rs. 4,600, from the date upon which that sum was deposited in Court; but for the reasons we have previously given, this deposit was never notified to the plaintiff, and that being so, he was never given an opportunity of taking such sum out of Court in full or part satisfaction of his claim. In our view the plaintiff is entitled to interest at the full rate until the date of the decree.
9. The learned Subordinate Judge accepted the defendant's evidence that he had offered to pay the plaintiff Rs. 4,600 before action was brought and that he had actually sent a cheque for that amount. That sum was based upon a rate of interest of annas 10 per cent per mensem and not the agreed rate of annas 12 per cent per mensem, and that being so, the plaintiff was fully entitled to refuse the cheque tendered as it was tendered in full satisfaction of the claim. In our judgment, the plaintiff at the date of hearing was entitled to recover from the defendant the principal sum advanced, viz., Rs. 3,750 and interest at annas 12 per cent per mensem up to the date of hearing. The parties have agreed that this sum amounts to Rs. 4,835, and in our judgment a decree should have been given to the plaintiff for the sum with proportionate costs.
10. It is clear from the terms of the order passed by the learned Subordinate Judge that the deposit of Rs. 4,600, which had been made by the defendant was brought on that day to the plaintiff's notice. It was open to the plaintiff on 23rd December 1930, and indeed upon any day thereafter, to take out this sum of Rs. 4,600 in part satisfaction of his claim, but this he did not do. His failure to take this sum in part satisfaction does, in our view, prevent him from claiming further interest on the same, and that being so, we direct that interest on the decretal amount of Rs. 4,853, should not run, but that the plaintiff should only receive interest upon a sum of Rs. 253, from 23rd December 1930, onwards. This sum represents the difference between the amount which the plaintiff actually recovered and the amount which was deposit in Court, and we direct that interest on this sum should be paid until date of payment at the rate of 6 per cent per annum. The result therefore is that the plaintiff has succeeded substantially in this appeal. The decree of the Court below gave him only Rs. 4,600, whereas we have given him a sum of Rs. 4,853, together with certain interest. Further the plaintiff was directed to pay the defendant's costs, whereas in our judgment the decree should have been in his favour for the amount previously stated with proportionate costs.
11. The result therefore is that this appeal is allowed with proportionate costs and the decree of the trial Court varied as follows: The plaintiff's claim is decreed for Rs. 4,853, with interest at the rate of 6 per cent, per annum on a sum of Rs. 253, only from 23rd December 1930, until payment. The plaintiff is given his proportionate costs in the trial Court. The plaintiff is entitled to be paid the sum of Rs. 4,600, deposited in Court in part satisfaction of the decretal amount.