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Narayanprasad Rai Gokulprasad Rai Vs. Ghanshyamlal Alias Shukhlal Jawarharlal Kurmi - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMadhya Pradesh High Court
Decided On
Case NumberLetters Patent Appeal No. 121 of 1958
Judge
Reported inAIR1961MP62
ActsNegotiable Instruments Act, 1887 - Sections 87
AppellantNarayanprasad Rai Gokulprasad Rai
RespondentGhanshyamlal Alias Shukhlal Jawarharlal Kurmi
Appellant AdvocateR.K. Pandey, Adv.
Respondent AdvocateB.L. Seth and ;S.L. Golcha, Advs.
DispositionAppeal dismissed
Cases ReferredIn Rangaswami Reddi v. Doraiswami Reddi
Excerpt:
- - this interpretation is obviously too narrow and is not justified by the wordings of section 87. 8. strong reliance was placed by shri r. baboo moodnarain singh, 9 moo ind app 1 (pc): it may be conceded that, in an ordinary case, the party who presents an instrument, which is an essential part of his case, in an apparently altered and suspicious state, must fail, from the mere infirmity or doubtful complexion of his proof, unless he can satisfactorily explain the existing state of the document......v. robert elliet, air 1925 oudh 486, which decides that a material alteration which renders a pro-note void does not discharge the maker from all liability.16. we may point out that the principle laid down in those two decisions has application only where the passing of the consideration and the execution of the pro-note are independent transactions. in rangaswami reddi v. doraiswami reddi, (s) air 1957 mad 715, it was held that where the passing of consideration and the execution of the pro-note was simultaneous, section 91 of the evidence act barred any evidence to prove the passing of the consideration. accordingly, it was held thatthe amount advanced could not be recovered insuch a case. 17. in the instant case, the plaintiff never based his claim on the original consideration. even.....
Judgment:

Shrivastava, J.

1. This Letters Patent appeal has been filed by the plaintiff against the judgment of a single Judge of this Court in Second Appeal No. 745 of 1955, decided on 8-7-1958.

2. The appellant had filed the suit out of which this appeal arises for recovery of Rs. 4000/- on the basis of a pro-note, dated 23-11-1946 Ex. P-l.. The plaintiff was a minor at the time of the execution of the pro-note, which was taken on his behalf by his father Gokul Prasad Rai. At the tune of filing of the suit also, the plaintiff was a minor and his father Gokul Prasad Rai acted as his next friend.

3. The defendant (respondent) admitted the execution of the pro-note, but stated that it was only for Rs. 400/- and this was the only amount which he had received as consideration. The defendant stated that the pro-note had been materially altered by changing the amount of Rs. 400/- to Rs. 4000/- and therefore the plaintiff was not entitled to sue for recovery of anything on the basis of the pro-note.

4. The trial Court and the first appeal Court found that the pro-note was for a consideration of only Rs. 400/- and it was materially altered by raising the amount to Rs. 4000/-, The trial Court decreed the suit for recovery of Rs. 400/- on the ground that the defendant had admitted the receipt of this amount. The lower appellate Court dismissed the whole claim holding that nothing could be recovered on the basis of the materially altered pro-note. The learned single Judge upheld the view taken by the lower appellate Court.

5. The finding that the pro-note had been altered by raising the amount from Rs. 400/- to Rs. 4000/- is a finding of fact which was binding in second appeal and cannot be challenged in this Letters Patent Appeal. The short question, therefore, which arises for decision in this appeal is whether on account of the alteration, which has been made in the pro-note, the appellant could not recover the amount of Rs. 400/- which was admitted by the defendant.

6. Shri R. K. Pandey for the appellant contends that although the alteration has been made in the pro-note as found by the Courts, there is nothing on record to show that the same was made either by the plaintiff or by his next friend. According to him, unless it is found that the plaintiff himself was responsible for the alteration, Section 87 of the Negotiable Instruments Act has no application. The plaintiff could, therefore, sue upon the altered pro-note.

7. Section 87 of the Negotiable Instruments Act is as follows:

'Any material alteration of a negotiable instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto. . .'

The plain meaning of this section, as it stands, is that if any material alteration is found in a negotiable instrument, the instrument itself becomes void and the party basing its claim upon it is precluded from claiming anything. This result follows irrespective of the fact whether the party concerned was responsible for the alteration or whether it was made by someone else without his consent or knowledge.

This interpretation of the provision is hard on the innocent holder of the instrument. On the other hand, Shri R. K. Pandey contends that Section 87 is attracted only if the alteration has been proved to have been made by the holder himself and this fact must be pleaded and proved by the defendant. He went to the length of saying that in the instant case even if the alteration had been made by the minor's next friend or guardian, it would not affect the claims of the minor. This interpretation is obviously too narrow and is not justified by the wordings of Section 87.

8. Strong reliance was placed by Shri R. K. Pandey on the decision in Krushnacharana v. Gouro-chandro, AIR 1940 Mad 62 and the connected Letters Patent Appeal in that case reported in Gouro-chandrao v. Krushnacharana, ILR (1941) Mad 295: -- (AIR 1941 Mad 383). The plaintiff in that case was the adopted minor son of Borojo Padhi, who had the d soon after the execution of the pro-note on which the suit was based. Some alterations had been made in that pro-note. In the suit, the minor was represented by his adoptive mother. It appeared that the changes had been made by the natural father of the minor plaintiff. In that context, it was observed that as there was no suggestion that the alterations were made by the minor or his adoptive modier, he could not be held responsible for the same and the suit was tenable in spite of the alterations. This view was upheld in the Letters Patent appeal.

9. The principle underlying Section 87 of the Negotiable Instruments Act is based upon the Common Law rule which prevailed in England and was subsequently incorporated in Section 64 of the Bills of Exchange Act. The development of the rule has been-discussed in some detail in Pachkodi v. Krishnaji ILR (1946) Nag 796: (AIR 1947 Nag 145). The leading case on the point is the Pigot's case (1614) 77 ER 1177 in which it was held that when a deed is altered in a point material, by the plaintiff himself or by any stranger, without the privity of the obligee,, that deed thereby becomes void. This principle was later extended to negotiable instruments in Master v. Miller, (1791) 1 Sm LC 780. The rule was very strictly interpreted against the person who produced the deed and was made applicable not only where the alteration was made by him but

'also where it is made by any other whomsoever; for the person who has the custody of the instrument is bound to preserve it in its integrity, and if altered by himself or by a stranger it would be avoided against the party bound thereby'.

The harshness of this interpretation was realised in Hong Kong and Shanghai Banking Corporation v. Lo Lee Shi, 1928 AC 181: (AIR 1928 PC 116). Interpreting Section 64 of the Bills of Exchange Act, their. Lordships observed that the rule applied only to alterations effected by the will of the person by whom or under whose directions they were made and that it did not apply to a change due to an accident. The Division Bench in Gourochandro v. Krushnacharana, ILR (1941) Mad 295: (AIR 1941 Mad 383) (supra) referred to the Hong Kong and Shanghai Banking. Corporation case 1928 AC 181: (AIR 1928 PC 116) and concluded:

'If a material alteration which is the result of an accident does not bring the instrument within the mischief of the section, surely the same must apply where a material alteration has been made by a meddlesome or maliciously minded stranger without the consent of the holder of the instrument and without any fraud or negligence on his part'.

This is the final conclusion which must be deduced from the original and appeal decisions read together.

10. We do not see anything in these observations to justify the narrow meaning which Shri R. K. Pandey puts upon the decision. By these observations, the plaintiff was being only protected from the acts or 'a meddlesome or maliciously minded stranger' who had acted without his consent. If the change had been made by the next friend of the minor, the minor would certainly be bound by it; or if the change had been brought about by anyone with the consent of the minor or his guardian or even as a result of the negligence of the plaintiff, the same effect would follow.

11. In our opinion, the correct interpretation of Section 87 of the Negotiable Instruments Act is that the alteration which has the effect of making the instrument void should have been brought about by the plaintiff or by anyone with the consent or on account of his negligence. If the alteration is brought about by an accident, or by some stranger who came in possession of the instrument in an unauthorized manner, then the instrument would not be rendered void.

12. Shri R. K. Pandey contended that it was necessary for the defendant to plead that the alteration was brought about by the plaintiff himself or by someone with his consent. In the absence of such pleadings, no relief should be granted to the defendant on the ground that the instrument has been materially altered. We find that the law on the point is just the contrary as would appear from the following passage occurring in Bhashyam's Negotiable Instruments Act (Tenth Edn., 1956) at p. 452:

'Where the instrument appears to be altered, it is incumbent upon the plaintiff (i.e., the holder) to show that the alteration is not improperly made, and the presumption in the case of negotiable instruments is that the alteration was made subsequent to the issue of the instrument; while in the case of deeds, etc., the presumption is the other way. Where a bill appears to have been altered, or there are marks of erasure on it, the party seeking to enforce the instrument is bound to give evidence that it is not avoided thereby.'

The burden of pleading or proving how the alteration came in the instrument is thus on the plaintiff. In Pitamber Manik Jee v. Motee Chund, 1 Moo Ind App 420 (PC), the following observations were made regarding the burden of proof in such cases:

'If a plaintiff produces a bond in this country or any other instrument, which appears to have been altered, the Court will not receive it, or act upon it, till it is most satisfactorily proved by all the subscribing witnesses at the least, and other evidence, that that alteration was made antecedently to the signature'.

The obvious implication of these observations is that if no such proof is forthcoming, the alteration shall be presumed to have been made after the instrument was executed. To the same effect is the following passage in Mst. Khoob Conwur v. Baboo Moodnarain Singh, 9 Moo Ind App 1 (PC):

'It may be conceded that, in an ordinary case, the party who presents an instrument, which is an essential part of his case, in an apparently altered and suspicious state, must fail, from the mere infirmity or doubtful complexion of his proof, unless he can satisfactorily explain the existing state of the document.'

Although their Lordships held that the presumption may be rebutted by the appearance of the document itself, but the principle laid down obviously is that be who produces an altered document must prove bow the alteration was made.

13. The same view has been consistently taken by this Court. In Kanhayalal v. Sitfiram, 20 Nag LR 76: (AIR 1924 Nag 250), it was held that a material alteration made by, or with the consent of, one party, but without the consent of the other party, makes the instrument void and disentitles the party responsible for the alteration from enforcing it. The Court observed in that case that where the plaintiff relies upon an altered or suspicious instrument 'the law casts a heavy onus on him to explain the alteration and to show when it was made'. The following observations from Halsbury's Laws of England, Vol. 10, Sections 764 and 765, at p. 431, were relied upon:

'An alteration made while the instrument is in the custody of one party, although not made with his knowledge or consent, has the same effect in avoiding the instrument as if made by him, on the principle that he who has the custody of an instrument made for his benefit is bound to preserve it in its original state.'

In Pachkodi's case, ILR (1946) Nag 796: (AIR 1947 Nag 145) (supra), the same view has been taken regarding the burden of proof by observing that:

'These documents were in his possession and were produced from his custody. He had to explain when and how the alteration was made.'

14. We have no doubt that the burden of proving how the alterations were made in the document, lies on the plaintiff and in the absence of any proof, it should be presumed that they were made by him or by his next friend, who was in custody of the document. The view which we have taken does not go against the Madras decisions relied upon by the appellant. Although the single Judge had stated his conclusion somewhat widely, the Division Bench definitely concluded that the instrument would be saved from becoming void only if the material alteration was made by a stranger without the consent of the holder.

In that case, the natural father, who was Sus-pected to have made the changes, was a stranger inasmuch as the pro-note was in favour of the adoptive father and the adoptive mother was acting as the legal guardian. In the instant case, the pro-note has all along been in the custody of the minor plaintiff's father, who also acted as the next friend of the minor when the suit was filed. Under these circumstances, according to the statement of law quoted from the Halsbury's Laws of England in paragraph 13 above, the presumption that the alteration was made by the plaintiff's father or by someone with his consent had to be rebutted by the plaintiff.

15. The last contention on behalf of the appellant is that it was open to the plaintiff to fall back upon the original consideration of the pro-note; and as the receipt of Rs. 400/- was admitted by the defendant, the claim should have been decreed to that extent. Reliance is placed on Tapi-ram v. Jugal Kishore, 21 Nag LR 169: (AIR 1926 Nag 209), which lays down that the principle rendering a materially altered instrument void does not apply to a case where the altered instrument is not the foundation of the plaintiff's case, and also on Zulfiqar Ahmad v. Robert Elliet, AIR 1925 Oudh 486, which decides that a material alteration which renders a pro-note void does not discharge the maker from all liability.

16. We may point out that the principle laid down in those two decisions has application only where the passing of the consideration and the execution of the pro-note are independent transactions. In Rangaswami Reddi v. Doraiswami Reddi, (S) AIR 1957 Mad 715, it was held that where the passing of consideration and the execution of the pro-note was simultaneous, Section 91 of the Evidence Act barred any evidence to prove the passing of the consideration. Accordingly, it was held thatthe amount advanced could not be recovered insuch a case.

17. In the instant case, the plaintiff never based his claim on the original consideration. Even after the plea regarding the material alteration in the pro-note was taken, the plaintiff did not amend his plaint claiming the amount on the basis of the advance of the loan in the alternative. The passing of the consideration and the execution of the pro-note formed one transaction. Accordingly, when the pro-note became void on account of the material alteration, the plaintiff could not fall back upon the original consideration and claim a refund of the amount.

18. So far as the admission of the defendant regarding receipt of Rs. 400/- is concerned, it is incorrect to say that he had admitted the claim to that extent. All that he had pleaded was that although the amount had been received, it could not be recovered on the basis of the pro-note which was materially altered and became void under Section 87 of the Negotiable Instruments Act. The plea of the defendant hardly amounted to an admission of the claim.

19. In the result, the appeal is dismissed withcosts.


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