1. This is a special appeal by leave under Section 18 (2) of the Raiasthan High Court Ordinance 1949, against a decree of a learned single Judge of this Court dated 13th May, 1966 passed in S. B. Civil Second Appeal No. 748 of 1960. By this decree the learned single Judge accepted the appeal of the plaintiff-respondent Hiralal and reversed the iudgment and decree passed by the first appellate Court on 27th August 1960 against Himmatram defendant and restored the trial Court's decree against Jethmal defendent. The learned single Judge, however, maintained the dismissal of the suit against the defendant respondent Ratanlal.
2. The facts relevant for the disposal of the appeal may be stated at the outset.
3. The plaintiff respondent Hiralal instituted a suit for the recovery of Rs. 6,215/- in the Court of the District Judge, Jodhpur, against the three defendants, namelv. Ratanlal (respendent No. 2) Jethmal (appellant) and Himmatram (respondent No. 3). The suit was. however, transferred to the Court of Civil Judge. Jodhpur. The case as set out in the plaint is as follows:--
4. The plaintiff advanced monev to the defendant Himmatram for the purchase of a house from time to time. The money advanced totalled Rs. 8,000/-. The defendant Himmatram. however did not purchase the house. The plaintiff thereupon demanded the repayment of the monev lent to him. Himmatram informed him that he had invested the money in the Motor Exchange Company a partnership firm, in whose name and style the defendants Ratanlal and Jethmal carried on business as partners. The defendant Himmatram. however, executed a 'Rukka' in the sum of Rs. 8,000/- in favour of the plaintiff. The plaintiff subsequently requiring money for building a house demanded the repayment. The defendant Himmatram came forward with a case of repayment of Rs. 2,000/- The plaintiff denied having received Rs. 2,000/- The defendants Nos. 1 and 2 Ratanlal and Jethmal got involved in the controversyand proposed to the plaintiff that if the (plaintiff) abandoned his claim for the amount of Rs. 2,000/- and agreed not to file a suit against the defendant Himmatram they would Day Rs. 6,000/- to him. The plaintiff at the instance of the defendants Nos. 1 & 2 gave up the claim for Rs. 2,000/ and agreed to accept Rs. 6000/- from them (defendants Nos. 1 & 2). Particulars of the date and time in connection with this arrangement have not been given but it appears that this must have taken place sometime before 6th March. 1949. The plaintiff's further case is that on 6th March, 1949 he went to the defendants Nos. 1 & 2 for obtaining payment of Rs. 6,000/-.
The defendants Nos. 1 & 2 informed him that they could not arrange for the money. They, however, proposed to give to the plaintiff a post-dated cheque in the amount of Rs. 6,000/-, which was to be drawn from the joint account of the defendants Nos. 1 & 2 in the Jaipur Bank. The plaintiff having agreed, they gave him cheque No. 06319 dated 6-4-49 drawn by Jethmal. The plaintiff sent this cheque to his aeent but it was not honoured by the Jaipur Bank and consequently, the plaintiff's agent sent the cheque back to him. The plaintiff then served a telegraphic notice upon the defendants Nos. 1 ,& 2 and failing to get the amount, he filed a suit for Rs. 6,000/- by wav of principal and Rs. 215/- as interest. The plaintiff also impleaded Himmatram as defendant No. 3 although he did not state expressly that Himmatram continued to be liable under the original Rukka. He also did not state how Himmatram continued to be liable in respect of the plaintiff's agreement with the defendants Nos. 1 & 2 and the issue of the cheque by the defendant No. 2 Jethmal in his favour.
5. The defendants filed separate written statements. Ratanlal defendant denied that there was anv partnership business in the Motor Exchange Company between him and the defendant Jethmal or that there was any partnership business with the defendant Himmatram. He denied the averments made in the plaint and pleaded that he was not aware of anything that might have been done by the defendant No. 2 Jethmal. He admitted that there was ioint account of himself and Jethmal in the Jaipur Bank, but pleaded that he could not be held liable simply on that account. He alternatively pleaded that even if he be held as a partner of Jethmal defendant, he could not be held liable as Jethmal exceeded his powers as a partner. Jethmal defendant admitted his partnership with Ratanlal in the Motor Exchange Company. He further admitted having drawnthe cheque and handed over the same to the plaintiff but denied the plaintiff's case as to the circumstances in which the cheque was given to the plaintiff. He came forward with the counter version. According to him. the plaintiff had to send money to his agent and as he had no bank account, he approached the defendant No. 1 Ratanlal to give him a postdated cheque which he would send to his agent and that he would arrange for the amount and deposit it in the account of the defendant No. 1.
The defendant No. 1 was related to the plaintiff and, therefore, he accepted the proposal of the plaintiff. As the defendant No. 2 was carrying on business of partnership with the defendent No. 1 he Save a cheque in the ioint account under instructions from the defendant No. 1. The defendant No. 3 Himmatram admitted to have received advances amounting to Rs. 8,000/- but denied having invested the monev in the Motor Exchange Company. He pleaded that the amount of Rs. 2,000/- had been paid to the plaintiff and that the claim for that amount was not abandoned. He also denied that the defendants Nos. 1 and 2 undertook to pay Rs. 6,000/-. He supported the version of the defendant No. 2 in connection with the drawing of the cheque by Jethmal defendant No. 2. He also pleaded that the plaint did not disclose cause of action against him. He further prayed that in case a decree is passed against him. it should be made payable by instalments. The trial Court framed the following issues:--
'1. Whether Ratanlal defendant Not Is liable to pav the amount entered in the cheaue which was the basis of thesuit?
2. Is the plaintiff entitled to interest and. if so. to what extent?'
3. Is the cheaue (which forms the basis of the suit) without consideration?
4. Is defendant No. 3 not in a position to pay the amount in one instalment and is it necessary to fix instalments that reason for the payment of the decree.
The trial Judge held that Himmatram defendant stood discharged as a result of what took place between the parties on 6-3-49. He. however, passed a decree for Rs. 6,000/- against Ratanlal and Jethmal holding that the cheque was for consideration and Ratanlal was liable on the basis of the cheque signed by the defendant No. 2 Jethmal as the defendants Nos. 1 & 2 Ratanlal and Jethmal were partners and the cheaue was given in the joint account by the defendant No. 2Jethmal to the plaintiff in the presence of the defendant No. 1 Ratanlal. The trial Judge also referred to the reply sent by Ratanlal to the telegraphic notice in which Ratanlal admitted having handed over the cheque to the plaintiff on behalf of the partnership firm.
6. The defendant No. 2 Jethmal did not file an appeal. The defendant No. 1. Ratanlal. however, preferred an appeal in the Court of the District Judge. Jodhpur and the plaintiff filed cross-objection regarding interest and costs. The lower appellate court did not agree with the finding of the trial Court that there was a novation of contract and held that a finding of novation could not be possibly arrived at and gave the following reasons in support of its conclusion:
1. That no plea of novation was taken in the plaint.
2. That the question of novation is a question of fact but no issue was framed about it.
3. That the plaintiff filed an application on 4-8-51 under Order 6 Rule 7 CPC to amend the plaint by the addition of plea that the cause of action arose on December 28. 1947 and April 6. 1949 and in this manner sought to base his claim on the original rukka Ex. P. 3.
Thus he not only did not plead novation but stoutly resisted such a plea. The lower appellate Court also repelled the plaintiff's case that the giving of a cheque should be treated as resulting into a contract of guarantee. He. therefore, allowed the appeal and dismissed the suit not only against Ratanlal but also against Jethmal. Acting under Order 41 Rule 33 CPC he decreed the suit against Himmatram. Hiralal's cross oblections were dismissed. Hiralal then filed second appeal in this Court. The learned single Judge referred to the plaint allegations that the defendants Nos. 1 & 2 had agreed to pay Rs 6,000/- to the plaintiff if he relinquished his claim for Rs. 2,000/- from his claim for Rs. 8,000/- against Himmatram and also did not sue him and that it was in pursuance of such an agreement that the cheque (Ex. P. 1) was handed over to the plaintiff on 6-3-49. The learned Single Judge also referred to the defendants' contention that, according to the accounts Ex. P. W. 5/1. the amount of Rs. 2,000/-has alreadv been paid by Himmatram to the plaintiff even before the original rukka. The learned single Judge did not go into the controversy relating to the alleged relinquishment of claim for Rs. 2,000/- but observed that 'vet it cannot be denied that Himmatram was liable to pay at least Rs. 6,000/- to the plaintiff.' The learned single Judge then noticed anumber of cases namely. Fullerton v. Provincial Bank of Ireland 1903 AC 309 Srinivasa Raghava Aivangar v. K. R. Ranganatha Aivangar 36 Mad LJ 618 = (AIR 1919 Mad 528) and Oliver v. Davis 1949-2 All ER 353 and deduced the following principle:--
'Forbearance to sue is a question of fact to be decided on the evidence on the record and circumstances of a case may sometimes furnish surer ground for holding in favour of the plaintiff.'
He distinguished Oliver's case. 1949-2 All ER 353 on facts and observed as follows:--
'In the circumstances of the present case, it was at the instance of Jethmal and Ratanlal that the plaintiff had forborne sue the defendant or had at least forborne to sue defendant Himmatram till the date of honouring the cheque arrived.'
The learned Judge then dealt with the controversy 'whether the plaintiff had agreed not to sue Himmatram for ever which, in other words, amounts to saving whether he discharged Himmatram altogether from liability as soon as he received the cheque from Jethmal'. and after scrutinising evidence on record recorded a conclusion in these words:--
'I find that the plaintiff while adducing evidence had taken the attitude that Himmatram stood discharged of his old liability and it was not only merely a temporary forbearance which was promised to him. This is also the stand taken by the learned counsel for the plaintiff-appellant in this Court. In this view of the matter Section 62 of the Indian Contract Act which relates to novation of contract need not therefore be discussed at length.'
Then remarking that the observation of the lower appellate Court 'that novation is not consistent with the original debtor remaining liable in anv form is true only to the extent that no liability can be attached to the original debtor under the old contract, the learned lower appellate Court eventually held that so far as Jethmal is concerned, the cheque being with consideration, he cannot be exonerated. Considering the case of Ratanlal. the learned single Judge treating the suit as based upon cheque a negotiable instrument examined at leangth the provisions of the Partnership Act governing the firms liability for acts done by the partners in their capacity as implied agents and the special Provisions of the Negotiable Instruments Act, particularly Section 27, and stated the Principle as follows:--
'When a suit has been filed on the basis of a negotiable instrument, the rights and liabilities of the parties are governed by the special provisions of the Negotiable Instruments Act and if any ofthe Provisions of the Partnership Act or Contract Act are in conflict, the provi-sions contained in the Negotiable Instruments Act must prevail. What Section 27 of that Act says is that if a duly authorised agent has acted in the name of the Principal, the Principal is liable on the instrument; it must be plain that the agent was acting in the name of the Principal',
The learned Judge then noticed a number of cases in support of this proposition and eventually observed.
'Thus, when a suit is based only on the Negotiable Instruments Act. it is the instrument only which can be looked into for determining the rights and liabilities of the parties'
The learned Judge expressed his reluctance to treat the reference to the ioint account as sufficient to hold that 'on the face of it Ex, P/l was made by Jethmal defendant on behalf of the firm.' Observing further that the contents of the instrument must show that the agent has signed for the principal he refused to consider the circumstances of the case and evidence on record to establish that Jethmal had made the cheque on behalf of the firm, and in doing so. relied upon a number of cases. In the end. the learned Judge concluded.
'As a result of the aforesaid discussion, I am of the opinion that no liability is cast on Ratanlal on the basis of the cheque.'
Examining the case of Himmatram. the learned Judge held that the lower appellate Court could not have decreed the suit against Himnoatram without examining the plea that his liability was extinguished simply on the statement made by him under Order X. Rule 1 CPC.' The learned Judge therefore, accepted the plaintiff's appeal, set aside the decree against Himmatram and granted decree against Jethmal and maintained the dismissal of the suit against Ratanlal. Jethmal has filed the present appeal.
7. We have heard Mr. Hastimal for the appellant. Mr. Hastimal prayed alternatively that a decree should at any rate be passed against Ratanlal. Also we heard Mr. H, C. Jain for Ratanlal. We did not call upon Mr. Rule C. Jain who appeared for the plaintiff-respondent.
8. Arguing with reference to Issue No. 3 of the point of absence of consideration for cheaue. Mr. Hastimal contended that there was no valid novation of the contract extinguishing Himmatram's liability under the old contract evidenced by 'Rukka' dated 28-12-1947. He inthis connection, emphasised the plaintiff's claim. It was also contended that the finding of the learned District Judge that there was no novation was a finding of fact and was binding in second appeal and the learned single Judge was not justified in interfering with the finding of the learned District Judge.
9. We have given our careful consideration to the submissions and are unable to accept them. We must at once state that the only finding of facts are that Ratanlal and Jethmal agreed to give a post-dated cheque and gave a cheaue in consideration of the plaintiff Hiralal's forbearance to sue Himmatram and discharging him from liability. (We need not express any opinion in connection with Hiralal's agreement to relinquish claim to! the extent of Rs. 2,000/-). This finding of fact is binding but the further question whether the facts found resulted in novation of contract is not a pure question of fact but is a mixed question of law and fact, and there was nothing to prevent the learned Single Judge from examining this question in second appeal and reaching his own conclusion. We are also of the opinion that the conclusion reached by him that there was a novation of the contract cannot be taken exception to and, we are in complete agreement with this conclusion. An analysis of the plaint shows' that sometime before 6/3/49 the defendants Nos. 1 & 2 proposed to the plaintiff that he should give up his claim for Rs. 2,000/- and should forbear to sue Himmatram and that in consideration of thLs they agreed to pay Rs. 6,000/~. The plaintiff agreed and the contract was completed. Later on, on 6/3/49. in pursuance of this' contract, the plaintiff approached defendants Nos. 1 & 2 and on that occasion they agreed to give him the cheque. On these facts there can be no doubt that a contract was created between the plaintiff and defendants Nos. 1 & 2 in consequences of which Himmatram's liability was discharged. It is true that the plaintiff in his suit impleaded Himmatram as defendant along with defendants Nos. 1 & 2. But this subsequent conduct of the plaintiff cannot have any relevance and bearing on the nature of the initial contract entered into by him with the defendants Nos. 1 & 2. In a case of completed contract the plaintiff could not be permitted uni-laterally to invalidate or alter the contract and to revive the liability which had I once been extinguished.
Before the learned single Judge the counsel for the plaintiff candidly stated that in fact the arrangement which was arrived at the time of the taking of the cheque was that the plaintiff had givenComplete discharge to Himmatram in receipt of his liability of Rs. 6,000/-. He has also stated that the evidence produced by the plaintiff also supported that conclusion. He. however, explained that the plaintiff either through ignorance of his legal rights or through foolishness sued Himmatram and persisted in obtaining Borne relief against him. The learned counsel also contended that he might have taken in view that after the cheque was dishonoured the liability of Himmatram revived. Approving the argument of the counsel for the plaintiff, the learned Judge rightly remarked that the lower appellate court took a more grave view of the attitude of the plaintiff and 'has laid too much emphasis on these circumstances which cannot be taken to be of such consequence as to refuse the plaintiff a decree against defendants Nos. 1 & 2 if he is otherwise entitled to get it on the true appreciation of the nature of the con-'tract.'
We are in entire agreement with the view taken by the learned single Judge, that there was valid novation of contract under which the defendants Nos. 1 & 2 took liability of Himmatram'.s debt due to the plaintiff. In this view of the matter, there could be no question of the contract being one of guarantee. The' learned counsel made some arguments in this behalf but these arguments need not be noticed.
10. Another line of reasoning adopted by Mr. Hastimal to repudiate Jethmal's liability was that the arrangement between the plaintiff neither resulted in a case of novation nor in a case of surety but resulted in a conditional contract creating mutual reciprocal promises. Under the contract, the plaintiff had made a promise not to sue Himmatram. As he did not keep up his promise and sued Himmatram he could not sue the defendants Nos. 1 & 2. Reliance was placed in this connection upon Royal Bank of Canada v. Joseph Salvatori (AIR 1927 PC 272). In that case a contract of guarantee provided.
'In consideration of the Royal Bank of Canada, agreeing to continue to deal with Antoni Brothers, herein referred to as the business as a Bank the undersigned hereby jointly and severally guarantee payment to the Bank of the liabilities which the customer has incurred or is under or may incur or be under the Bank, whether arising from dealing between the Bank and the customer or from other dealings by which the Bank may become in any manner whatsoever a creditor of the customer. The Bank failed to perform their covenant in that thev did not continue to deal with the firm as their cus-tomer in the way of their business as aBank.'
On these facts it was held.
'that the guatantor also was not bound to perform that covenant by reason of this failure of the Bank.'
The facts of this case are distinguishable and the principles of this case cannot apply to the facts of the present case. The contract between the plaintiff and the defendants Nos. 1 & 2 properly construed amounts to this that the defendants Nos. 1 & 2 took liability for Himmatram's debt and that Himmatram's liability was discharged. It will not be proper to treat the arrangement between defendants Nos. 1 & 2 as implying that the plaintiff undertook a reciprocal promise to do something in future. In consideration of the plaintiff discharging the liability of Himmatram the defendant became liable to the plantiff. The subsequent conduct of the plaintiff at the best is only an attempt to disregard the legal implication of the contract but cannot be treated as a failure to perform a reciprocal promise. The contention in this behalf is negatived.)
11. Next, it was contended that the consideration for the promise of the defendants Nos. 1 & 2 to pay Rs. 6,000/-to the plaintiff and the giving of a cheque in pursuance thereof was in lieu of the plaintiff's agreement to forbear to sue Himmatram. As the plaintiff subsequently sued Himmatram it brought about a failure of consideration and consequently. the plaintiff cannot enforce liability under the agreement and the cheque against defendants Nos. 1 & 2. This argument is also equally untenable. It cannot be denied that in spite of his initial demand of repayment from Himmatram he did not sue him but agreed to accept Rs. 6,000/-from defendants Nos. 1 & 2. He also obtained a postdated cheque from them. The cheque being dishonoured, he served notice on defendants Nos. 1 & 2 and thereafter sued them. It is true that while sujng them he also impleaded the defendant Himmatram. There was a completed contract between the plaintiff and the defendants Nos. 1 & 2 under which Himmatram's liability was extinguished. The impleading of Himmatram in the suit against defendants Nos. 1 & 2 cannot bring about a failure of consideration so far as the defendants Nos. 1 & 2 are concerned.
12. No other argument was made on this aspect of the case.
13 In the alternative. Mr. Hastimal argued that if he is held liable under the arrangement made between the plaintiff and defendants Nos. 1 & 2 the defendant Ratanlal should also be held liable and that the decree of the learned singleJudge be modified and a decree be passed against Ratanlal also in order to do complete iustice to the parties. He relied upon the provisions of Order 41 Rule 33 C. P. C.Arguing on merits, he contended that the learned single Judge exonerated Ratanlal on wrong assumption that the plaintiff's suit was based merely upon a cheque. It was contended that thp plaintiff's suit was not based upon the cheque but was based upon an oral agreement entered into between the plaintiff and the defendants Nos. 1 & 2. He invited our attention to paras 4 and 5 of the plaint to show that the plaintiff referred to an oral argeement between the plaintiff and defendants Nos. 1 & 2 under which defendants Nos. 1 & 2 undertook liability for payment of Rs. 6,000/- to them. In para 5. the plaintiff stated having approached the defendants Nos. 1 & 2 to obtain payment of' Rs. 6000/- in pursuance of an agreement referred to in para 4. It was vehemently contended that in the face of these averments it was hardly proper to hold that the suit was based upon the checiue a negotiable instrument.
14. In answer. Mr. Jain referred to para 8 of the plaint wherein it was stated that the cause of action arosp on 6-4-49 He also emphasised that the plaintiff claimed interest with effect from 6-4-49.
15. We have considered the submissions made on either side. According to Order 7 Rule 1 C. P. C. the plaint is required to contain vide clause (el the facts constituting the cause of action and when it arose. What is the proper cause of action, must depend upon the entirety of facts mentioned in the plaint and a mere inaccuracy in mentioning the date when the cause of action arose cannot be overemphasised in isolation of context. A plaintiff need not be considered bound by the statement regarding the date of accrual of the cause of action. This may be determined or inferred from the facts stated. On a careful analysis of the allegations in the plaint we have no doubt that the plaintiff's suit is based upon an oral agreement between the plaintiff and the defendants Nos. 1 & 2. under which the defendants Nos. 1 & 2 undertook liability for Himmatram for the debt due to the plaintiff and got Himmatram's liability discharged. The delivery of the cheque was a later act in pursuance of the undertaking. This is abundantly clear from the averments made in the plaint.
It is true that an issue as to the absence of consideration was framed only in connection with the cheque but it is clear from the record that the parties were aware of the real controversy touching the agreement between, the plaintiffand defendants Nos. 1 & 2 and the giving of the cheque in pursuance thereof. Evidence has been led and findings recorded with regard to the agreement. In these circumstances, we are of the opinion the the plaintiff's suit is not based merely upon cheque. The learned single Judge discussed the law and stated the principle in connection with the firm's liability for a negotiable instrument issued by a partner in a case brought on the basis of the negotiable instrument. We have no quarrel with the view of law taken by him. The suit, however, having not been treated by as being based upon checiue but the agreement the original cause of action, the principles of law laid down by the single Judge have no bearing in the present case.
16. Taking up the question whether the defendant Jethmal can press for a ioint decree asainst Ratanlal to do complete iustice between the parties, Mr. Jain contended that the Power under Order 41 Rule 33 C. P. C. is in derogation of the general principle that a party cannot avoid a decree against him without filing an appeal or cross obiection. it must be exercised with care and caution. It was also urged by him that the power conferred by this rule will be confined' to those cases where as a result of interference in favour of the appellant further interference with the decree of the lower Court is rendered necessary in order to adiust rights of the parties according to -justice* equity and good conscience.
17. We do not find force in the submission of Mr. Jain. We need only refer to two cases in support of our view namely, Isri Prasad Singh v. Jaffat Prasad Singh. AIR 1937 Pat 628 and Muniappa v. Dr. C. A. Ramasetty. AIR 1961 Mvs 166. While Isri Prasad Singh's case generally supports a liberal view in resortinff to Order 41 Rule 33 C. P. C. in Muniappa's case the facts are similar to the facts of the present case. In that case, the Court of first instance dismissed the suit against defendant No. 1 but gave the plaintiff decree which he wanted against defendant No. 2. Although the plaintiff did not appeal from that part of the decree by which his suit against defendant No. 1 was dismissed, defendant 2 preferred an appeal from the decree made against him. The lower appellate Court affirmed the decree made against defendant 2 and in the exercise of its powers under Rule 33 of Order XLI of the Code of Civil Procedure it also made decree against defendant 1. The defendant 1 preferred a second appeal in the Mysore High Court. The High Court dismissing the appeal, observed as follows:
'It is clear from the language of Order 41 Rule 33 that if the appellate Court considers that in a particular case, a decree ought to have been made, but has not been made it has clearly the power to make that decree which has not been made by the Court, whose decision is under appeal. If the circumstances of the Case and the interest of iustice demand the variation of the decree in that wav. it is clear that the appellate Court has the power to do so.
Such variation may be necessarv for the purpose of dismissing a suit against persons against whom decrees have been made but which have not been appealed against. Likewise, variation may be necessarv in order to make a decree against a person aeainst whom none has been made but the interest of iustice requires that it should be so made.'
We have considered the facts and the circumstances of the case in the light of the above principle. The facts found which are unchallengeable, are that both the defendants Nos. 1 & 2 entered into an agreement with the plaintiff, that a cheque made by Jethmal to be drawn in the joint account of the defendants Nos. I & 2 was given to the plaintiff in the presence of the defendant No. 1 and that the defendant No. 1 admitted having given the cheque in his notice given in reply to the plaintiff's telegraphic notice. The defendant Jethmal's case is that the plaintiff was related to the defendant Katanlal and that he gave the chcaue under instructions from Ratanlal. In these circumstances, it will hardlv be in the interest of iustice that the defendant Jethmal alone should be held responsible under the agreement between the plaintiff and the defendants Nos. 1 & 2. In the interest of complete iustice to the parties, it is necessarv that both thp defendants should be liable for the plaintiff's debt and for that purpose, the suit deserves to be decreed against both of them.
18. Accordingly, we dismiss the defendant's appeal but exercising powers under Order 41' Rule 33 C. P. C. direct that the plaintiff's suit should also stand decreed against defendant Ratanlal. The decree of the learned single Judse is modified and the decree of the trial Court passed against both the defendants is restored.
19. However in the circumstances of the case, we leave the parties to bear their own costs in this Court.