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(Lal) Behari Lal Vs. Allahabad Bank, Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1929All664
Appellant(Lal) Behari Lal
RespondentAllahabad Bank, Ltd. and anr.
Excerpt:
- - on the other hand, the definition of surety in sections 12 and 126, contract act, is that a surety is a person who undertakes a liability which is conditional on the failure of another person to discharge his liability......cawnpore, awarding to the plaintiff-respondent, the allahabad. bank, ltd., the balance due on a (promissory note. it is admitted that this promissory note for rs. 25,000, dated 5th february 1923, was executed both by the defendant-appellant, l behari lal, and by the other defendant jagan nath. subsequently to the execution of this promissory note, jagan nath paid a sum of rs. 5,000 to the bank on 2nd august 1923, and after that date he disappeared; and on the application of the appellant insolvency proceedings were taken against jagan nath. the appellant has made a number of payments to the bank subsequently, and the present suit was instituted after these payments had been made by the appellant.2. the chief point argued before us on behalf of the appellant is that his liability was.....
Judgment:

1. This is an appeal by one of the defendants, L. Behari Lal, against the decree passed by the learned Subordinate Judge of Cawnpore, awarding to the plaintiff-respondent, the Allahabad. Bank, Ltd., the balance due on a (promissory note. It is admitted that this promissory note for Rs. 25,000, dated 5th February 1923, was executed both by the defendant-appellant, L Behari Lal, and by the other defendant Jagan Nath. Subsequently to the execution of this promissory note, Jagan Nath paid a sum of Rs. 5,000 to the Bank on 2nd August 1923, and after that date he disappeared; and on the application of the appellant insolvency proceedings were taken against Jagan Nath. The appellant has made a number of payments to the Bank subsequently, and the present suit was instituted after these payments had been made by the appellant.

2. The chief point argued before us on behalf of the appellant is that his liability was only that of a surety and not of a principal. If this proposition were conceded, it was argued for the appellant that the Bank had given time to Jagan Nath without the consent of the appellant and that, therefore, the appellant would be discharged from liability. The learned Counsel relied on the fact that the appellant had signed the promissory note and the receipt for Rs. 25,000 on 24th January 1923, and that it was not until 5th February 1923, that a period was fixed for the repayment of the loan in a letter (Ex. E) which was written by Jagan Nath alone to the Bank. That letter states that Rs. 5,000 would be repaid in six months, and the balance within one year from date. The case for the appellant now put forward is that the appellant was not aware of the period fixed in this letter, and, therefore, that the appellant intended that the loan should be payable on demand. We find, however, that this point has not been supported by any statement to that effect by the appellant in the evidence which he gave before the lower Court. Nor is there any evidence to that effect on the record. In fact, the appellant admits that on a date subsequent to 16th February 1925, he initialled the alteration of the date of the promissory note from 5th January, to 5th February, that is, 11 days subsequent to the letter of 5th February, and the natural presumption is that the appellant was fully aware of the period fixed for repayment in that letter. We may also refer to the fact that the promissory note states that interest is to be at 9 per cent per annum on the half-yearly rests. Accordingly it is clear that the promissory note contemplated that the loan would be for a period of more than one half year, and, therefore, the argument that the appellant was under the impression that the promissory note was only intended to be on demand is an unsound argument. We may also allude to the fact that in a letter, dated 23rd January 1923, Ex. G, the Allahabad Bank in Cawnpore wrote to the head office stating that the period for which the loan was required was 18 months. Subsequently the head office decided that the period of loan should not be more than one year. We consider that these facts could not have been hidden from the knowledge of the appellant; and the appellant has not given evidence that he was unaware of these facts.

3. We may also note that the case, as put forward in the written statement, is

that the plaintiffs Bank gave time to defendant 2, the principal debtor, without obtaining answering defendant's assent to it: para. 19 of the written statement.

4. Such a defence, based on Section 135, Contract Act, contemplates a subsequent contract between the creditor and the principal debtor, whereby the time originally fixed is subsequently extended. In the present case there was no subsequent contract between the creditor and defendant 2 by which the period was extended, and, therefore, Section 135, Contract Act, has no application. We next examine the question as to whether, under the circumstances of the present case, the appellant can be held to be a surety only. Reliance is placed on a passage in Ameer AH and Woodroffe's Evidence Act, Edn. 8, p. 626, in which it is stated, without any authority whatever, that evidence might be admissible to show that one of the several obligors of a bond or a bill-of-exchange was a surety only. Even in the text reference is not made to a promissory note, and the case of a bond or a bill-of-exchange may conceivably be different; but for the proposition as laid down in the text no authority whatever is produced.

5. Reference is also made to the ruling of a single Judge, reported in A.I.R. 1924 Rangoon, p. 360, in which it was held that where a promisee knew that one co-executant was a surety for another co-executant, evidence might be admitted to prove this fact. In this ruling the only question considered was the effect of Section 92, Evidence Act, and no question was raised as to the legal affect of a person signing a promissory note as an executant. We consider, therefore, that the ruling is no authority whatever for the legal effect of the action of the appellant in signing this promissory note as an executant. Under Section 4, Negotiable Instrument Act, a promissory note is an instrument in writing 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. The chief point about this definition is that the undertaking to pay must be unconditional. On the other hand, the definition of surety in Sections 12 and 126, Contract Act, is that a surety is a person who undertakes a liability which is conditional on the failure of another person to discharge his liability. There is, therefore, an essential antithesis between the legal position of a surety and that of the executant of a promissory note. We consider, therefore, that as the appellant executed this promissory note, he cannot be held in law to have the position of a surety. In this connexion we would also refer to Section 132, Contract Act, and to the illustration attached to it. That illustration is similar to the present case, and it is laid down that, where two persons jointly execute a promissory note, they are jointly liable on that promissory note in spite of the fact that they may have made a contract between themselves by which one of them only would be liable on default of the other. We consider that the decree of the lower Court is correct, and we dismiss this appeal with costs.


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