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Kandaswamy Gounder Vs. K.P. Sivasubramania Iyer - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtChennai High Court
Decided On
Case NumberCivil Revn. Petn. No. 763 of 1961
Judge
Reported inAIR1963Mad16
ActsContract Act, 1872 - Sections 62
AppellantKandaswamy Gounder
RespondentK.P. Sivasubramania Iyer
Appellant AdvocateN. Natarajan and ;K. Ramachandran, Advs.
Respondent AdvocateS. Mohan, Adv.
DispositionPetition dismissed
Cases ReferredPalaniappa Chetty v. Arunachalam Chetty
Excerpt:
.....for the past six years, commencing from the year 1956. he failed to pay the rent and executed a promissory note ex. the amounts covered by these two promissory notes represented arrears of rent due till the end of fasli year 1958-59. the petitioner failed to discharge these promissory notes, and, of course, did not pay any rent to the respondent. enunciated the proposition of law in these terms in in re, romer and haslam (1393) 2 qb 286 :it is perfectly well known law, which is acted upon in every form of merchantile business, that the giving of a negotiable security by a debtor to his creditor operatesas a conditional payment only and not as a satisfaction of the debt, unless the parties agree so to treat it. arunachalam chetty, 21 mlj 432. the rule is thus set out quits precisely in..........for the past six years, commencing from the year 1956. he failed to pay the rent and executed a promissory note ex. a-2 for a sum of rs. 1100 in favour of the respondent. he also executed another promissory note ex. a-3 for a sum of rs. 450 for further arrears of rent due by him. the amounts covered by these two promissory notes represented arrears of rent due till the end of fasli year 1958-59. the petitioner failed to discharge these promissory notes, and, of course, did not pay any rent to the respondent. the latter, therefore, filed an application for eviction in c. t. p. a. no. 28 of 1960 on the file of the assistant collector, dindigul, charging the petitioner with default in the matter of payment of rent. the respondent claimed that another sum of rs. 300 was also due by the.....
Judgment:

Jagadisan, J.

1. This is a civil revision petition by a cultivating tenant as defined under Madras Act 25 of 1955, who has been directed to be evicted by the Assistant Collector, Ohindigul, at the instance of his landlord.

2. The facts are quite simple. The petitioner is a lessee, holding agricultural lands under the respondent, the owner of the properties, agreeing to pay rent at a stipulated rate. It is not disputed that the petitioner has been the lessee for the past six years, commencing from the year 1956. He failed to pay the rent and executed a promissory note Ex. A-2 for a sum of Rs. 1100 in favour of the respondent. He also executed another promissory note Ex. A-3 for a sum of Rs. 450 for further arrears of rent due by him. The amounts covered by these two promissory notes represented arrears of rent due till the end of fasli year 1958-59. The petitioner failed to discharge these promissory notes, and, of course, did not pay any rent to the respondent. The latter, therefore, filed an application for eviction in C. T. P. A. No. 28 of 1960 on the file of the Assistant Collector, Dindigul, charging the petitioner with default in the matter of payment of rent. The respondent claimed that another sum of Rs. 300 was also due by the petitioner for improvements effected on the lands by installation of a pump-set, in respect of which it was alleged that the petitioner agreed to bear the expenses.

The petitioner admitted the execution of the two promissory notes and also the non-payment of rent by dim but he claimed to have incurred expenses for fencing the cocoanut trees on the land, for constructing a bund and for other improvements alleged to have been effected by him on the land. The dispute between the parties raised the question as to what was the state of account between them regarding the improvements on the lands. But undisputed fact remained, viz., that, as a cultivating tenant, the petitioner was due to pay arrears of rent and that the promissory notes were not discharged. The Assistant Collector of Dindigul held that the settlement of accounts between the parties regarding the improvements and other incidental things, which arose out of the tenancy relationship, might be settled in a civil court, but that the petitioner, being admittedly a defaulter in the matter of payment of the stipulated rent, was liable to be evicted. The contention raised on behalf of the petitioner before him that the execution of the promissory notes operated as a discharge of his obligation as a tenant was repelled.

3. Before me, the only question that is argued by learned counsel for the petitioner is that the two promissory notes brought about the extinction of the petitioner's obligations to pay rent, and that, if that be the position, the finding of the court below that he is in arrears of rent, cannot be supported. Now what is the effect of taking a bill of exchange or a promissory note on account of a pre-existing debt? Does it operate as an absolute discharge of the debt or only as a conditional payment; keeping the debt in suspended animation till it is dishonoured by non-payments? The answer is that it all depends upon the intention of the parties. The intention need not be expressed on the instrument itself, but can be gathered from the circumstances attending the transaction. Lord Ehser M. R. enunciated the proposition of law in these terms in In re, Romer and Haslam (1393) 2 QB 286 :

'It is perfectly well known law, which is acted upon in every form of merchantile business, that the giving of a negotiable security by a debtor to his creditor operatesas a conditional payment only and not as a satisfaction of the debt, unless the parties agree so to treat it.' It is open to a person to take a bill or note from his debtor in discharge and in satisfaction of the debt. In such an event, the rights and obligations of the parties would be governed by the negotiable instrument and the creditor can only sue upon the instrument and cannot fall back on the debt that gave rise to the instrument or revert to the original cause of action. Ordinarily, in the absence of a contract that the bill or note should, operate as discharge of the debt, it does not have that effect. A promise to pay is not a payment, and seldom does a creditor accept a mere promise to make a future payment as satisfaction of an existing debt. The general rule is that the taking of a bill or a note would operate only as a conditional payment. Where a negotiable instrument is taken in lieu of a money payment, the presumption is that the parties intend it to be a conditional discharge only : see Palaniappa Chetty v. Arunachalam Chetty, 21 MLJ 432. The rule is thus set out quits precisely in Sir William Anson's Law of Contract at p. 316: 'Their position, then, is this: A, having certain rights against X, has agreed to take a negotiable instrument instead of immediate payment or immediate enforcement of his right of action; so far, X has satisfied A's claim. But, if the bill be dishonoured at maturity, the consideration for A's promise has wholly failed and his original rights are restored to him. The agreement is 'defeasible upon condition subsequent; the payment by X which is the consideration for promise by A is not absolute but may turn out to be, in fact, no payment at all'

In the present case, except the fact that the two promissory notes were executed for arrears of rent due by the petitioner, there is no evidence to show that the respondent accepted these promissory notes in full satisfaction of the tenancy obligations of the petitioner. The petitioner cannot, therefore, contend that he must be deemed to have paid the rent and that the respondent should only sue him on the promissory notes. I accept the finding of the court below that the petitioner is in arrears of rent. It follows that We petitioner has been rightly evicted from his holdings.

4. The civil revision petition fails and is dismissed with costs.


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