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K.K. Koran Vs. T. Tara Bai - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKerala High Court
Decided On
Case NumberSecond Appeal No. 1150 of 1954 (M)
Judge
Reported inAIR1958Ker124
ActsCode of Civil Procedure (CPC) , 1908 - Order 7, Rules 14 and 16; Negotiable Instruments Act, 1881 - Sections 43 and 81
AppellantK.K. Koran
RespondentT. Tara Bai
Appellant Advocate K. Kuttikrishna Menon and; V. Balakrishna Eradi, Advs.
Respondent Advocate V.P. Gopalan Nambiar and; P. Bhaskara Menon, Advs.
DispositionAppeal allowed
Excerpt:
.....by plaintiff sustainable - plaintiff claimed recovery of amount alleged to be due under promissory note - promissory note not filed along with plaint as it was lost - document on which suit based should be produced along with plaint - no proof that note sued on was lost - no indemnity offered by plaintiff against further claims on that instrument by other persons - promissory note not fully supported by consideration - suit liable to be dismissed. - - 922/1949 with the result that the consideration for the plaint promissory-note has failed. the conditions required by rule 16 of order vii of the code of civil procedure have also not been satisfied in the present case. ' the two essential conditions to be satisfied before the court can pass a decree as contemplated by rule 16 are: 3...........the allegation that the note is lost cannot stand. instead of instituting the suit as on a lost promissory-note, what the plaintiff should have done was to take the necessary steps to get back the note from her own son and then to sue upon it by producing the note also along with the plaint. in view of the admissions mado by the plaintiff as to the existence of the note, the present suit brought as on a lost note has only to be dismissed.3. on the second ground of failure of consideration also for the plaint promissory note, the defendant is entitled to succeed. the defendant's contcnion is that the promissory-note was executed towards part of the consideration payable under the sale deed ext a4 of the same date and that no cash consideration passed under the note. the defendant.....
Judgment:

Sankaran, J.

1. This is a second appeal by the defendant in O. S. No, 494/1951 on the file of theDistrict Munsiff's Court at Hosdrug, South Kanara. The plaintiff's claim in the suit is lor recovery of the principal amount of Rs. 1,200/- together with interest thereon, alleged to be due to her under a promissory-note executed by the defendant on 18-11-1948. The promissory-note was not filed along with the plaint, on the other hand, it was alleged by the plaintiff that the note was lost. Accordingly the suit was filed as on a lost negotiable instrument. The defendant, while admitting the execution of the promissory-note, resisted the suit mainly on two grounds. The first ground is thait no cash consideration passed under the note and that the note was executed towards part of the consideration due to the plaintiff under the sale deed Ext. A4 which was executed by the plaintiff in favour of the defendant on the same date. The second ground is that the allegation that the note was lost is false, that the note is deliberately withheld by the plaintiff because of the consciousness that its production will revea! the fact that it was executed under the circumstances stated by the defendant and that the suit in the present form is unsustainable. It was also contended by the defendant that the sale deed Ext. A4 was set aside by the decree in O. S. No. 922/1949 with the result that the consideration for the plaint promissory-note has failed. The trial court found that the plaint promissory-note is not fully supported by consideration and that the plaint allegation that the note is lost is not true. Accordingly, the suit was dismissed. The plaintiff preferred an appeal to the District Count of South Kanara. The learned District Judge came to the conclusion thait since the defendant has no case that the promissory-note is totally lacking in consideration, the plaintiff's claim on the basis . of the admitted note is to succeed, and thus the trial court's decree was reversed and the plaintiff was given a decree as prayed for. Hence this second appeal by the de-fendant.

2. I think that this second appeal has to succeed on both the grounds urged on behalf of the appellant. The first question is whether the suit as framed by the plaintiff without the production of the promissory note relied on by her, is sustainable. The normal rule is that the document on which the suit is based should be produced along with the plaint. The produc-tion of the basic document is thus insisted on to afford protection to the person liable under it against a similar claim in a subsequent suit brought by a party who might claim ts have legally acquired the rights under the document and produce it in support of his claim. The possibility of such risk is greater in the case of negotiable instruments which may change hands frequently by successive endorsements. Against the claim preferred by a holder in due course of such an instrument, the person liable under it may not be entitled to set up a plea that the amount due under the instrument has already been paid. Possession of the instrument by the holder in due course will be prima facie evidence of the liability not having been discharged. The Legislature has taken care to guard against such risks. The relevant provisions are these contained in Section 81 of the Negotiable Instruments Act and in Rule 16 of Order VII of Civil P. C. S. 81 of the Negotiable Instruments Actruns as follows:

'Any person liable to pay, and called upon by the holder thereof to pay, the amount due on a promissory note, bill of exchange or cheque is before payment entitled to have it shown, and is on payment entitled to have it delivered up to him, or, if the instrument is lost or cannot be produced, to be indemnified against any further claim thereon against him.'

The plaintiff in the present case who has claimed the money due under the plaint promissory-note stated to be lost has not made any offer to indemnify the defendant against any possible further claims based on that instrument. The conditions required by Rule 16 of Order VII of the Code of Civil Procedure have also not been satisfied in the present case. That rule is in the following terms;

'Where the suit is founded upon a negotiable instrument and it is proved that the instrument is lost, and an indemnity is given by the plaintiff, to the satisfaction of the Court, against the claims ot any other person upon such instrument, the Court may pass such decree as it would have passed if the plaintiff had produced the instrument in Court when the plaint v. as presented, and had at the same time delivered a copy of the instrument to be filed with the plaint.'

The two essential conditions to be satisfied before the court can pass a decree as contemplated by rule 16 are: (1) that it must be proved that the instrument sued upon is lost, and (2) that the plaintiff has offered to give indemnity to the satisfaction of the court against possible claims by any person upon the same instrument. In the Present case there is n,o proof that the note sued on is lost and no indemnity is offered by the plaintiff against further claims on that instrument by other persons. In support of the allegation tliat the promissory-note is lost there is only the interested evidence given by the plaintiff as P.W.1. But in ner cross-examination she had to admit that the note is not really lost. It has been brought out from her that the promissory-note is in the possession of her son and that on writing to him she gnt a reply that the note is with him. In the face of these statements, the allegation that the note is lost cannot stand. Instead of instituting the suit as on a lost promissory-note, what the plaintiff should have done was to take the necessary steps to get back the note from her own son and then to sue upon it by producing the note also along with the plaint. In view of the admissions mado by the plaintiff as to the existence of the note, the present suit brought as on a lost note has only to be dismissed.

3. On the second ground of failure of consideration also for the plaint promissory note, the defendant is entitled to succeed. The defendant's contcnion is that the promissory-note was executed towards part of the consideration payable under the sale deed Ext A4 of the same date and that no cash consideration passed under the note. The defendant as D. W. 1 has sworn in support of these contentions. D.W. 2, an independent witness, has also deposed to the same and he claims to have been present at the transaction and to have attested the promissory note. The evidence given, by the plaintiff as P.W. 1. also shows that the version given by D.Ws. 1 and 2 is the true version. The plain-tiff admits the plaint promissory note as also the sale deed Ext. A4 were executed on the same date and that both these documents were prepared at the residence of one Gopala Shenoi as stated by the defendant also. It has also come out in the evidence of P.W. l that she was in need of money at that time and hence it is not at all likely that the cash consideration received under the sale deed Ext. A4 would have been lent by her to the defendant by taking a promissory note. The probability is that the cash payment under the saje deed must have been utilised by her to meet her. own admitted necessities and that the promissory note must have been taken from the defendant towards part of the promised consideration which he had yet to pay towards the same transaction. This is the conclusion reached by both the lower courts also after a due consideration of the evidence on record and also the probabilities of the case. At the same time the lower courts appear to have taken the view that the two transactions are independent of each other and that the suit on the promissory-note is maintainable irrespective of any consideration as to what happened to the sale deed Ext. A4. This view is clearly erroneous. In view of the finding that the consideration for the promissory-note represents part of the consideration for the sale deed Ext. A-4, it is clear that the two transactions are intimately connected. It has come out in evidence that soon after the execution of Ext. A4 the suit O. S. 922/ 1949 was instituted by the brother of the plaintiff's husband to have the sale deed set aside. This suit was decreed and the sale deed was set aside. This fact is not disputed. The result of that suit is that the defendant bad to surrender possession of the property which had been conveyed to him by the plaintiff under the sale deed Ext. A4. Since tbe defendant has lost the property it is obvious that he is not liable to pay to the plaintiff the price agreed for the conveyance. Since the consideration for the plaint promissory-note represents part of the price for such a conveyance, it is clear that the consideration for the promissory-note has also failed. Such a plea is undoubtedly available to the defendant as against the plaintiff and it has to succeed by virtue of the provision contained in Section 43 of the Negotiable Instruments Act. That section states :

'A negotiable instrument made, drawn, accepted, indorsed or transferred without consideration, or for a consideration which fails, creates no obligation of payment between the parties to the transaction.....'

So far as the plaint promissory-note is concerned, the plaintiff and the defendant are the immediate parties to the transaction and even though there was consideration for the note at the time of its execution, there has been a subsequent failure of such consideration in its entirely with the avoidance of the sale deed Ext. A4 as per tbe decree in O. S. No. 922/1949. For this reason also the plaintiff's suit has to fail.

4. In the result this appeal is allowed and in reversal of the decree of the lower appellate court, the plaintiff's suit is dismissed with costs throughout.


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