Skip to content


Lal Behari Lal Vs. the Allahabad Bank Ltd. Cawnpore and Jagannath - Court Judgment

LegalCrystal Citation
CourtAllahabad
Decided On
Judge
Reported in122Ind.Cas.602
AppellantLal Behari Lal
RespondentThe Allahabad Bank Ltd. Cawnpore and Jagannath
Cases ReferredMaung Sein v. Ma Sa
Excerpt:
negotiable instruments act (xxvi of 1881), section 4 - evidence act (x of 1872), section 92--plea that executant of promissory note, is only surety for co-executant, validity of--contract act (ix of 1372), section 135--subsequent contract extending time, necessity of. - - on the other hand, the definition of surety in sections 124 and 126 of the indian 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......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 the 5th of 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 the 2nd of 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.....
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 the 5th of 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 the 2nd of 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 the 24th of January, 1923, and that it was not until the 5th of February, 1923, that a period was fixed for the re-payment 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 re-paid in six mouths, and the balance whithin 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 the 16th of February, 1923, he initialled the alteration of the date of the promissory note from the 5th of January to the 5th of February, that is, eleven days sub sequent to the letter of the 5th February, and the natural presumption is that the appellant was fully aware of the period fixed for re-payment in that letter.

3. We may also refer to the fact that the promissory notes state that interest is to be at 9 per cent, par 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 the 23rd of January, 1923, Ex G the Allahabad Bank in Uawnpore 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.

4. We may also note that the case, as put forward in the written statement, is 'that the plaintiff Bank gave time to defendant No. 2, the principal debtor, without obtaining answering defendant's assent to it.' (para. 19 of the written statement). Such a defence, based on Section 135 of the 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 No. 2 by which the period was extended, and, therefore, Section 135 of the Contract Act has no application.

5. 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 Ali and Woodroffe's 'Evidence Act, 8th Edition, page 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.

6. Reference is also made to the ruling of a single Judge, reported in Maung Sein v. Ma Sa 82 Ind. Cas. 816 : A.I.R. 1924 Rang. 360 : 3 Bur.L.J. 112 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 of the Evidence Act, and no question was raised as to the legal effect 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 s 4 of the Negotiable Instrument Act, as 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 124 and 126 of the Indian 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 connection we would also refer to Section 132 of the Indian 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.

7. We consider that the decree of the lower Courtis correct, and we dismiss this appeal with costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //