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Kundan Lal and anr. Vs. Sahu Bhikhari Das-ishwar Das and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1929All254
AppellantKundan Lal and anr.
RespondentSahu Bhikhari Das-ishwar Das and anr.
Excerpt:
.....it to some third person. the suit, therefore, cannot necessarily fail because the hundis are not admissible in evidence, 12. it is, however, obvious that the plaintiffs are not entitled to fall back on the original indebtedness of the defendants to the bombay firm. it seems to us that the best documentary evidence which would have been much more satisfactory than the mere oral evidence has not come before the court owing to default on the part of both parties......consideration, viz: rs. 9,500 on account of the hundis. they also wrote a letter addressed to the bombay firm bhikari das hazari lal stating that they had paid to this firm in full whatever was found due to it by them, and acknowledging receipt of interest and profit. the receipt and the letter per se cannot be said to be inadmissible in evidence. they show that the arrangement between the parties was that the plaintiffs were to discharge the defendants' liability to the bombay firm and the defendants promised to pay this amount to the plaintiffs and in token thereof the hundis were executed. the whole of this arrangement cannot certainly be found in hundis which cannot contain the terms of such an agreement. there is no doubt that the plaintiffs can independently of the hundis prove.....
Judgment:

1. This is a defendants' appeal arising out of a suit for recovery of Rs. 9,000 and odd on the bas is of two hundis for Rs. 5,000 and 4,500 respectively, executed by the defendants Kundan Lal and Suraj Bhan in favour of the plaintiffs. The case as put forward in the plaint was that the defendants were partners of a firm styled Kundan Lal and Suraj Bhan carrying on business at Hapur, and they executed these hundis on 15th December 1922 on receipt of consideration and made them over to the plaintiffs; that these hundis were accepted by Kundan Lal, defendant 1 who was a proprietor of a firm styled Banwari Lal Kundan Lal on which these hundis were drawn; that the hundis were presented for payment and they were dishonoured. The defendants pleaded that the hundis were not properly cancelled and that the interest of 15 annas per cent. per mensem claimed in the plaint was excessive. They also denied the receipt of consideration, and pleaded that these hundis were executed merely as security for loss that might be incurred in certain gambling transactions. Suraj Bhan, defendant 2, further pleaded that no notice of dishonour had been given to him and he was not liable under the hundis. The Court below has held that the hundis were not properly cancelled and are not admissible in evidence. But it has allowed the plaintiffs to fall back on the original consideration and has decreed the claim against both the defendants, holding that there was no defect of want of notice of dishonour so far as Suraj Bhan was concerned.

2. These hundis were not on single stamp papers. Three stamps were used for one hundi and two for the other. There was no actual deficiency in the value of the stamps employed but these impressed stamps were pasted one upon the other leaving writing space only on the last stamp on which alone the hundis were written. The other stamps were merely pasted on to them and they were not in any way cancelled, nothing having been actually written on them. The Court below has held that, in view of the provisions of Section 13, Stamp Act, which requires that every instrument written upon paper stamped with an impressed stamp shall be Written in such 'manner that the stamp may appear on the face of the instrument and cannot be used or applied to any other instrument, the stamps were not properly cancelled. The finding of the Court below on this point has not been challenged before us. It must therefore be taken that the stamps used for the hundis were not properly cancelled and that these hundis therefore are not admissible in evidence.

3. It would be convenient to dispose of the plea of want of a notice of dishonour to Suraj Bhan at the outset. In the first place, as the hundis are not admissible in evidence, the claim on the basis of these hundis cannot be decreed, and, therefore, no plea as to want of a notice of dishonour really arises in the case. Furthermore Section 98, Sub-clause (e), Negotiable Instruments Act, makes it quite clear that no notice of dishonour is necessary to charge the drawers when the acceptor is also a drawer. The use of the singular 'drawer' followed by the plural 'drawers' in the section shows that if the accept or is one of the drawers both the drawers would be liable even though no notice of dishonour has been given. Kundan Lal who was one of the drawers was the acceptor, and therefore a notice of dishonour was not necessary even as regards Suraj Bhan.

4. The main question which has been argued before us is whether when the hundis are inadmissible in evidence the plaintiffs can fall back on the consideration alleged to have been paid by them. It is well settled that if a promissory note or a bill of exchange is executed in lieu of previously existing debts, and the document becomes inadmissible in evidence, the promisee can fall back on the original consideration and prove it. The learned advocate for the appellants, however, contends that when the consideration has passed on the bills of exchange themselves then the latter embody the contract between the parties and no other evidence can be given to prove such contract in view of the provisions of Section 91, Evidence Act.

5. The leading case on this point is Shaik Akbar v. Shaik Khan [1881] 7 Cal. 256 which has been followed, distinguished and discussed in numberous subsequent cases. Garth, C.J. did remark in that case that when a cause of action for money is once complete in itself and the debtor then gives a bill or note to the creditor for payment of the money the creditor may sue for the original consideration and may disregard the bill or note; but when the original cause of action is a bill or note itself and does not exist independently of it there is no cause of action for money lent otherwise than upon the note itself. That case was one where in consideration of A depositing money with B, the latter contracted by a promissory note to repay the amount with interest at a future date.

6. So far as this Court is concerned there are numerous eases which have laid down that even on failure of the bills of exchange the creditor can fall back on the original consideration. In Banarsi Prasad v. Fazal Ahmad [1906] 28 All. 298 the case of Shaik Akbar was followed and it was held that when a cause of action for money was once complete in itself and the debtor then gave a bill or note to the creditor, the latter could then sue for the original consideration even if the note was not cancelled. The learned Judges remarked that the plaintiff in that suit had stated the consideration of the note, viz: money borrowed by the defendant and alleged that the security was given to him for the loan by the making of the note in question. They accordingly held that it was open to the plaintiffs to give evidence aliunde to prove the consideration even though the note was not admissible in evidence Similarly in Srinath Das v. Angud Singh [1910] 7 A.L.J. 459 it was held that a creditor who has got a security for an advance of the money made by him may as a rule sue for the original consideration provided that he has not endorsed or lost or parted with the bill of exchange or promissory note which he may have under such circumstances as would render the debtor liable upon it to some third person. In that case both the father and the son had borrowed money from the plaintiff and the son alone who was a minor had given the promissory note for the amount.

7. In Ram Sorup v. Jasoda Kunwar [1912] 34 All. 158 the previous authorities were considered and the case of Shaek Akbar distinguished. The conclusion at which the Bench arrived was that where the plaintiff is able to prove the loan independently and without the assistance of a promissory note which not having been properly cancelled is inadmissible in evidence, he can-succeed. The argument that where the lending of money and taking of note was a simultaneous transaction and the parties all along contemplated that the loan should be secured by the giving and the receiving of note, the plaintiff must stand or fall by the claim based upon the promissory note and that if he is unable to give the note in evidence the whole suit fails, was not accepted. These cases proceed principally on the principles of equity, and do not expressly consider the provisions of Section 91, Evidence Act. In a later case, viz: Baijnath Das v. Salig Ravi [1912] 16 I.C. 33, the previous authorities were reconsidered at considerable length and the applicability of Section 91 was not overlooked. The learned Judges came to the conclusion that none of the previous cases laid down that where a promissory note, which is inadmissible in evidence, is taken in consideration of the money advanced, the plaintiff cannot sue for money had and received by the defendant for the plaintiffs use, and held that such a suit may be treated as a suit for money had and received, if the pleadings are properly framed without treating it as such a suit. On the other hand it cannot be doubted that the opinion of other High Courts has been somewhat different. We may only refer to Muthu Sastrigal v. Visvanatha Pandarasannadhi [1914] 88 Mad. 660 and Gurdas Mal Singh v. Iswar Das A.I.R. 1921 Lah. 217, where greater stress has been laid on the provisions of Section 91. We may also note that the case of Shaik Akbar was distinguished by the Calcutta High Court itself in Pramatha Nath Sandal v. Dwarka Nath Dey [1896] 23 Cal. 851.

8. It is true that in considering this point we cannot be solely guided by the equitable considerations which are given effect to in English cases. The express provisions of Section 91, Evidence Act, cannot be ignored. Under that section where the terms of a contract have been reduced to the form of a document, no evidence can be given in proof of the terms of such contract except the document itself or secondary evidence of its contents where it is admissible. If, therefore, the hundis are the embodiment of the whole contract between the parties and those hundis are not admissible in evidence and cannot be looked at for the purpose of finding out the terms of the contract, the plaintiffs cannot be allowed to adduce other evidence to prove the terms of such contract. It is conceivable that in special cases a bill-of-exchange or a promissory note may be the only document containing the terms of the contract between the parties, and in such a case if that document cannot be adduced in evidence the creditor may be prevented from recovering the amount. This is clear from illustration (c) to Section 91. On the other hand from the mere fact that a bill-of-exchange or hundi has been executed it does not necessarily follow that the whole of the contract between the parties has been reduced to the form of such a document. A hundi is principally a written promise to pay a fixed amount on or after a certain date. It does not necessarily contain all the terms of the agreement between the parties as a bond, for instance, would do. In many eases a promissory note or a hundi may merely be a written security taken for the loan. The promise to pay the amount may be only a part of the whole contract between the parties, in which case it cannot be said that contract has been reduced to the form of a hundi. In such cases it would be impossible to hold that the provisions of Section 91 would exclude evidence showing the terms of the whole contract which cannot be determined from the hundi alone.

9. In the present case we find that on 15th December 1922 four documents were executed. Besides the two hundis referred to above the defendants executed a receipt which referred to the two hundis stating the amount of Rs. 9,500 for which they were drawn and the period of their maturity. It further contained an acknowledgment of the receipt of consideration, viz: Rs. 9,500 on account of the hundis. They also wrote a letter addressed to the Bombay firm Bhikari Das Hazari Lal stating that they had paid to this firm in full whatever was found due to it by them, and acknowledging receipt of interest and profit. The receipt and the letter per se cannot be said to be inadmissible in evidence. They ShOW that the arrangement between the parties was that the plaintiffs were to discharge the defendants' liability to the Bombay firm and the defendants promised to pay this amount to the plaintiffs and in token thereof the hundis were executed. The whole of this arrangement cannot certainly be found in hundis which cannot contain the terms of such an agreement. There is no doubt that the plaintiffs can independently of the hundis prove the passing of consideration, and they can also independently of them prove that the consideration was paid in pursuance of a contract between the parties which could not have been entered in the hundis. We therefore think that the receipt and the letter are admissible for the purpose of showing the whole arrangement between the parties, and do prima facie show that the receipt of consideration of Rs. 9,500 was admitted by the defendants, and there was a promise to repay the amount in consideration of the plaintiffs paying the same to the Bombay firm to which the defendants ware indebted.

10. That the hundis were not the documents embodying the whole of the contract between the parties but they were executed in token of the advance made by the plaintiffs is partially admitted by both the defendants, inasmuch as in their written statement they pleaded that the hundis were executed by way of security for the prospective losses in certain transactions. Suraj, Bhan, one of the defendants who was examined as a witness in this case, also stated that he was approached by Dal Chand of Bombay to clear off the Bombay account and that the hundis were written partly for the losses of the Bombay transaction and partly as security for the future transactions to be made by Kundan Lal.

11. We further think that even if the plaintiffs were not able to prove the whole contract by this additional evidence they could succeed if their suit were treated as one for recovery of the amount had and received or for compensation for the amount paid by them on behalf of the defendants to the creditor of the latter under. Section 70, Contract Act. The suit, therefore, cannot necessarily fail because the hundis are not admissible in evidence,

12. It is, however, obvious that the plaintiffs are not entitled to fall back on the original indebtedness of the defendants to the Bombay firm. No doubt the nature of the Bombay transactions, that is to say, whether they were of a wagering character or not, is wholly immaterial if the plaintiffs have discharged the defendants' liability. Admittedly the firms at Hapur and Bombay are different, and the plaintiffs as representing the Hapur firm are not entitled to recover the amount due to the Bombay firm. Nor can they be allowed to do so when many more defences might have been open to the defendants if the Bombay firm had sued. But if the plaintiffs can establish that they have paid off the Bombay firm and thereby discharged the defendants' liability at their request they will be entitled to recover the amount with interest to the extent that they have been out of pocket. But it is incumbent on them to establish that they have discharged such liability of the defendants.

13. In the Court below there was some dispute as regards the burden of proof. Initially the burden undoubtedly lay on the plaintiffs, because in the absence of the hundis no presumption of the passing of consideration could have been made in their favour but there were written admissions of the defendants which could have shifted the burden of proof. The plaintiffs, however, chose to lead evidence as to consideration also in the first instance without expressly reserving their right to produce rebutting evidence. After the close of the oral evidence an attempt was made to obtain permission of the Court to produce some rebutting evidence. This was refused. The defendants had also summoned the account books of the Bombay firm which has some partners common with the Hapur firm. Owing to some reason or other these account books did not arrive in time.

14. Dal Chand who is both a partner in the Bombay firm and the Hapur firm was present. The Court declined to allow the plaintiffs to produce Dal Chand merely as a witness, but was prepared to allow Dal Chand to be examined provided he was produced with the account books relating to the shop at Bombay. As the account books were not in Court Dal Chand was not examined. We further find that although Bhajan Lal, one of the partners in both the firms, was examined as a witness and he attempted to prove that debit and credit entries were duly made in respect of the amount advanced by the plaintiffs to the defendants which went to discharge the latter's liability to the Bombay firm, yet even the account books of the Hapur firm were not tendered in evidence although they were actually present in the Court room. Bhajan Lal the manager referred to the entries in the account books without those books being before the Court. It seems to us that the best documentary evidence which would have been much more satisfactory than the mere oral evidence has not come before the Court owing to default on the part of both parties. We further think that it is absolutely necessary to ascertain definitely whether the plaintiffs have actually discharged the defendant's liability to the Bombay firm or not. The plaint did not contain any express allegation as regards this matter because it was principally based on the two hundis. We accordingly think that before we finally dispose of the appeal it is necessary to have additional evidence and a fresh finding on the question of the extent to which the plaintiffs have discharged the defendant's liability to the Bombay firm in pursuance of the agreement which was entered into between the parties on 15th December 1922. We accordingly send down the above issue to the Court below for a finding and report, and direct that the account books of the Bombay firm, of the plaintiffs' firm at Hapur, and of the defendants' firm should be called for and formal evidence to prove the entries, if necessary, be taken. The parties will also be at liberty to produce Dal Chand, Kundan Lal and Suraj Bhan who were principally concerned in negotiating the contract. The finding should be returned within three months from this date.


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