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T.N.S. Firm, Through One of Its Partners, T.N.S. Chockalingam Chettiar Vs. V.P.S. Muhammad HussaIn and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1933Mad756; (1933)65MLJ458
AppellantT.N.S. Firm, Through One of Its Partners, T.N.S. Chockalingam Chettiar
RespondentV.P.S. Muhammad HussaIn and ors.
Cases ReferredMidland Motor Showrooms v. Newman
Excerpt:
- - 5 and 8 satisfied the requirements of the rule of law according to which the mere filing of accounts is not enough. here i may observe that the argument about the various items addressed to us by the learned counsel for the defendants shows that they know a good deal about these items and practically this argument is conclusive of the genuineness of the various entries except as to one item entered on 17th february which runs thus 'omitted to be entered on the 3rd -rs. it is well established that by giving time is meant not merely forbearance to sue but entering into a binding engagement by which the creditor precludes himself from suing within a certain time. d-3 and d-7) and afterwards endorsed by the agent in the capacity of an agent in favour of the 2nd defendant, then endorsed.....ramesam, j.1. this is an appeal against the judgment of the subordinate judge of tuticorin dismissing the plaintiff's suit against defendants 2 to 9. the plaintiffs are two brothers chockalingam chettiar and subramaniam chettiar carrying on business under the name of t.n.s. firm in ceylon. the 1st defendant is a muhammadan merchant also carrying on business in colombo, the 2nd defendant is his brother-in-law and son of the 3rd defendant. the 3rd defendant died while the suit was pending and defendants 4 to 9 were brought on record as his legal representatives along with the 2nd defendant who was already on record. the suit was brought to recover a sum of rs. 15,895, consisting of rs. 12,767 principal and rs. 3,128 interest said to have been advanced by the plaintiffs to the 1st defendant.....
Judgment:

Ramesam, J.

1. This is an appeal against the judgment of the Subordinate Judge of Tuticorin dismissing the plaintiff's suit against defendants 2 to 9. The plaintiffs are two brothers Chockalingam Chettiar and Subramaniam Chettiar carrying on business under the name of T.N.S. Firm in Ceylon. The 1st defendant is a Muhammadan merchant also carrying on business in Colombo, the 2nd defendant is his brother-in-law and son of the 3rd defendant. The 3rd defendant died while the suit was pending and defendants 4 to 9 were brought on record as his legal representatives along with the 2nd defendant who was already on record. The suit was brought to recover a sum of Rs. 15,895, consisting of Rs. 12,767 principal and Rs. 3,128 interest said to have been advanced by the plaintiffs to the 1st defendant for the purpose of his business. The 2nd defendant was impleaded on the ground that he was a prior endorsee of certain bills given to the plaintiffs by the 1st defendant's agent as security. The 3rd defendant was impleaded on the ground that he gave a letter of guarantee, dated 28th November, 1922, holding himself responsible for the amounts advanced to the 1st defendant for the purpose of his trade. The amounts were advanced between January and May, 1923 and the suit was filed on 15th November, 1924. The Subordinate Judge granted a decree against the 1st defendant but dismissed the suit against the 2nd defendant and the other representatives of the 3rd defendant. The 1st defendant did not appear. The 2nd defendant pleaded (1) that he was a minor at the time of the suit transactions having been born in September, 1905, and (2) that he went to Ceylon for the purpose of sight-seeing at the end of 1922 and at the time of the delivery of the bills by the 1st defendant to the plaintiff, the plaintiff asked him fraudulently to affix his signature as a witness for the delivery of the bills and he must have signed accordingly but did not sign as a prior endorsee. The 3rd defendant pleaded 'This defendant has not given to the plaintiff either the guarantee note or letter spoken of in plaint paragraph 9. There was no need to give in that way. It appears that the 1st defendant and the plaintiff have made some fraudulent arrangements' (paragraph 5 of the written statement). 'Even if the guarantee note spoken of by the plaintiff is perhaps true, it appears that according to Ceylon law it is invalid. As it is in Ceylon that debit and credit transactions were carried on and the guarantee was utilised, that also is not valid' (paragraph 6 of the written statement). 'The plaintiff has not made a demand of this defendant either in person or by postal notice. And this defendant never delayed saying he would give' (paragraph 8 of the written statement). The defendants also put the plaintiffs to proof of all the items which made up the suit amount. On these pleadings on 14th January, 1925, five issues were framed. The second issue was 'Are the plaint dealings true'? The third issue related to the genuineness of the letter of guarantee, Ex. C. The fourth issue ran thus 'Is the letter not valid and enforceable?' Obviously this was raised on the plea of the 3rd defendant that it was not valid according to Ceylon law. Later, on 13th November, 1925, four more issues were framed. The sixth issue related to the minority of the 2nd defendant and the seventh issue to the point raised by him that he signed as a witness. The case was taken up for trial on 22nd January, 1926, three witnesses having been previously examined on commission in June, 1925. In the course of the examination of P.W. 5, one of the partners of the plaintiff-firm, the plaintiffs prayed for time and the trial was adjourned to the 2nd February on the plaintiffs paying the day costs. In the interval the plaintiffs were able to secure additional evidence to prove Ex. C, and the further trial was taken up on the 6th February and closed on the 24th February. The judgment was delivered on the 16th March. Neither the B Diary nor the Notes Paper shows that any further issues were framed as they should have done. But the judgment actually delivered shows that four more issues were framed numbered as 10 to 13. It is suggested that the points covered by these issues arose in the cross-examination of the plaintiffs' fifth witness and the points were argued and therefore the issues were framed as part of the judgment. In my opinion this is highly irregular. Issues ought to be framed then and there. However to meet the points now raised in issues 12 and 13 the plaintiffs prayed for permission to amend the plaint by a petition dated 30th January, 1926, and it was ordered on 16th March, 1926, which is the date of the judgment. In my opinion these two issues ought not to have been raised but however it is now immaterial. The tenth issue ought not to have been allowed to be raised at all. But so far as the eleventh issue is concerned, it is a pure question of law arising on the face of the plaintiffs' case and whatever delay there might be in raising the point it cannot be ignored and as it will turn in the sequel the plaintiffs' suit fails on this issue.

2. I will first take some of the points decided by the Subordinate Judge against the plaintiffs on which we are not able to agree with him. First he finds that the suit individual items were not properly proved. It is true that it has often been held that the mere filing of accounts and exhibiting them does not prove the various items in them without some more evidence. The accounts may corroborate the oral evidence and there must be the evidence of some person who knows the transactions personally and can swear to them. In the present case both the members of the plaintiff-firm have gone into the box as P.Ws. 5 and 8 and sworn to the suit transactions. P.W. 5 says:

The 1st defendant used to borrow money and purchase rice from plain tiff. The dealings are all entered on pages 31 and 53 of Ex. E-1.... All the transactions entered in the pages mentioned above are true. Ex. E-1 is day book corresponding to Ex. E.... On 1st May, 1923, the balance due by 1st defendant was Rs. 15,597 as entered on page 39 of Ex. E. On that day 1st defendant gave a cheque for Rs. 1,000.... On the same day 1st defendant paid Rs. 10 in cash.... What took place was the 1st defendant had a cheque for Rs. 1,879 and odd.... He returned the loan on 1st May, 1923, and it was duly entered in the account and the cheque was returned to 1st defendant. The balance of Rs. 15,597 shown on 1st May, 1923, was inclusive of the loan of Rs. 1,000 got on the pledge of the above cheque. After the re-payment of the loan of Rs. 1,000 the balance due by the 1st defendant was Rs. 14,587-3-3. As security for the above balance, the 1st defendant handed over to plaintiff 9 bank notes for Rs. 13,000 in all etc.

3. The witness gives a number of details in chief examination. To many transactions he speaks personally and he tendered himself for cross-examination. He was cross-examined very elaborately. With reference to one or two items he said that the other plaintiff knows more about the man who was conducting the suit. The other witness is P. W. 8. He also speaks to the account books and to the taking of bills (described as bank notes by witnesses - Exs. D-1 to D-7) and to their being dishonoured. He describes the practice relating to bank notes. He also refers to the protest through a Notary Public and to the notice of dishonour being given to the defendant. He was also elaborately cross-examined on the accounts and in respect of one item he made a mistake in cross-examination and had to correct himself in re-examination. This is not a case where the account books are merely filed by somebody who knows nothing about their contents and are exhibited by proof of the handwriting or some other kind of proof not touching the contents. In my opinion a reading of the depositions of P. Ws. 5 and 8 satisfied the requirements of the rule of law according to which the mere filing of accounts is not enough. Here I may observe that the argument about the various items addressed to us by the learned Counsel for the defendants shows that they know a good deal about these items and practically this argument is conclusive of the genuineness of the various entries except as to one item entered on 17th February which runs thus 'Omitted to be entered on the 3rd - Rs. 2,000'. P.W. 5 was not asked about this. P.W. 8 says:

I have no personal knowledge of the said entry or of the transaction to which it relates.

4. He merely says that it was entered in the day book at the proper date. Except as to this item I must hold that all the other entries have been properly proved. Incidentally it may be observed that the Subordinate Judge has found all the transactions true as against the 1st defendant and has given the plaintiffs a complete decree as sued for as against him. But this decree has become futile as the 1st defendant became an insolvent some time before August, 1923. His schedule was filed in the Colombo Court in October, 1923. It is Ex. M. In it his assets and liabilities are shown and one of the liabilities is Rs. 12,577 and 20 cents (in Indian money 0-3-3, 100 cents - Re. 1) due to the plaintiff-firm. With the help of Ex. M the whole debt sued for must be found to be a true debt. The finding of the Subordinate Judge on issue 2 cannot therefore be accepted.

5. After finding that Ex. C, the guarantee note by the 3rd defendant was genuine, his Lordship proceeded:

6. I must now come to the fourth issue. As I already-observed this issue was originally framed with reference to the plea of the 3rd defendant that Ex. C was not valid according to Ceylon law. No such ground was made either in the Lower Court or before us. But it was contended both in the Lower Court and before us that Ex. C, which was a request to the plaintiffs to advance moneys to the 1st defendant up to a limit of Rs. 20,000 for his trade purpose, covers only a single item of Rs. 20,000 and does not amount to a continuing guarantee. On the face of it we think it is a continuing guarantee (see also Illustrations (a) and (b) as contrasted with Illustration (c) to Section 129 of the Contract Act). Therefore I am unable to agree with the finding of the Subordinate Judge on the fourth issue.

7. Another point was raised with reference to this issue, viz., that the letter expects a reply from the plaintiff-firm and as no such reply was given there is no acceptance of the letter of guarantee. As I said this point was not raised originally in the written statement and there is no justification for raising any later issue involving such a ground. On the facts as found above the conversation between the plaintiff-firm and the 3rd defendant in September, 1922, and the plaintiffs' willingness as expressed then to take a letter of guarantee from the 3rd defendant is the offer and the.3rd defendant's letter Ex. C is the acceptance. No further acceptance of the acceptance is necessary. The only thing that had got to be done was to act upon it and the plaintiffs began to act upon it by advancing moneys to the 1st defendant from January, 1923. If the 3rd defendant had any doubt in the matter he could easily have ascertained by writing a further letter enquiring whether his letter of guarantee was accepted. Presumably he must have known through the 1st defendant, his son-in-law, that the letter of guarantee was acted upon and that the plaintiff-firm was actually obliging his son-in-law by making advances and he must have been content with that state of things. I therefore think that there is nothing in this point. On the fourth issue I find that the letter was valid and enforceable.

8. The next question we have got to deal with is the point covered by the eleventh issue. As already observed, though this issue was framed late, still the point is one staring us in the face of the transaction and cannot be ignored. The point raised by the 3rd defendant is this. The plaintiffs gave time to the 1st defendant and therefore the surety is discharged. This rule of law is embodied in Section 135 of the Contract Act, a section no doubt based on the equitable doctrine of English law. It is well established that by giving time is meant not merely forbearance to sue but entering into a binding engagement by which the creditor precludes himself from suing within a certain time. Now to understand the point we have to consider the nature of the transactions between January and May. Some items in the accounts Ex. E show that amounts were advanced on bills handed over by the 1st defendant which were afterwards presented for being honoured. Five such bills were given on 28th January, 1923, which were afterwards honoured. Another set of five such bills were given on 14th February. They were also honoured. These items are cross-items in the account. There are other such cross-items which cancel each other and which do not form part of the suit amount. For instance, an item of Rs. 1,060 on 1st February, an item of Rs. 1,105 on 21st February and Rs. 268-12-0 on 22nd February. These three items have got cross-items for them. Omitting these and taking the remaining items the suit amount consists of advances either by cash or by cheque on the 30th January, 31st January, the unexplained item of February 17th and certain items on the 2nd, 3rd, 5th and 25th March and 19th April. As against these there is only a single debit of Rs. 20-12-0 on 14th April. The net result of these items came to Rs. 13,789-4-0 shown opposite to 24th April. The account shows the result of the transactions each day. The item shown against 28th April may be ignored as it was afterwards paid off. Thus on the 1st May, leaving aside the Rs. 1,000 on the 28th April, which was borrowed on the pledge of a cheque, the 1st defendant was indebted to the extent of Rs. 13,789-4-0. What happened on that day was that nine bills which were really accommodation bills drawn by the 1st defendant's agent in favour of the 1st defendant himself as if the 1st defendant himself is the creditor of the agent and in the case of two of them by constituents (Exs. D-3 and D-7) and afterwards endorsed by the agent in the capacity of an agent in favour of the 2nd defendant, then endorsed by the 2nd defendant and finally endorsed in favour of the plaintiffs were handed over to the plaintiff-firm. They were all to mature on various dates up to 26th June. They were negotiated in favour of the P. & O. Banking Corporation and the Imperial Bank. Now it is clear that the advances themselves were originally made without any security, that on the 1st May these bills were given as security and the result of accepting these bills was that the plaintiff-firm precluded themselves from suing until the maturity of the bills. When they were actually dishonoured on the respective dates no doubt the liability of the 1st defendant revived. The parties expected them to be honoured and so the plaintiffs' firm held its hands. Not only was security taken out but interest from the date of the advance up to the date of maturity of the bills was actually calculated along with the discounting charges and it was found to be Rs. 807-15-3. That was added to the debit making a total sum of Rs. 14,597-3-3. Towards the extra amount of Rs. 597-3-3 cash of Rs. 10 and a cheque for Rs. 587-3-3 (Ex. F) were given. This cheque also was dishonoured. It is therefore clear on the face of the transactions themselves that by the acceptance of these securities and the calculation of interest the plaintiffs bound themselves not to sue up to the dates of maturity of the bills. The matter was made very clear by the evidence of P.W. 5. In cross-examination he says:

The nine bank notes mentioned by me in chief examination for Rs. 13,000 were given about 1st May, 1923. There was no cash loan to 1st defendant on 1st May, 1923. The nine notes were given on account of the previous balance of Rs. 14,700 and odd. The plaintiff was demanding payment of the said balance of Rs. 14,700 and odd. The 1st defendant was not in a position to pay. He wanted time and with a view to give him time he gave the nine bank notes giving further time for payment. Time was given up to the dates mentioned in the several bank notes. Plaintiff levied vattam (discount) on the bank notes; also interest. The amount levied was Rs. 807-15-6.... The last of the bank notes was dishonoured on 28th June, 1923.... I used to demand payment of the balance from 1st defendant's agent after the notes were all dishonoured. He wanted time a second occasion. I gave him time several times.

9. Now it is clear that the granting of time on the 1st May when these nine notes were taken is dissimilar to the granting of time several times referred to in the last sentence of the deposition. When the witness says 'I gave him time several times' that was merely as a matter of grace. It did not amount to a binding contract and that sort of giving time does not discharge the surety. But what happened on the 1st May cannot be regarded in the same light. It is inconceivable that having taken these nine bills as additional security the plaintiff could have sued on them within the dates of maturity or could have sued on the original cause of action. It is true that the mere taking of additional security does not discharge the surety Overend & Co. v. Gurney Liquidators of Over end Gurney & Co. v. Liquidators of Oriental Financial Corporation (1874) 7 Eng. & Ir. A.C. 348. Along with the taking of additional security there must be an express or implied contract to give time.

10. In Samuell v. Howarth (1817) 3 Mer. 272 : 36 E.R. 105 it appears that according to the usage of the trade a certain credit was given to the debtor but the creditor thereafter renewed the bills which the debtor had previously accepted without any communication to the surety. It was held that the surety was discharged by the renewal of the bills.

11. In Combe v. Woolf (1832) 8 Bing. 156 : 131 E.R. 360 the defendant guaranteed payment of porter to be delivered by the plaintiff to a dealer. The custom of the trade was to give six months and then sometimes to take a bill at two months; but the plaintiff after the lapse of the two months after the six months took a bill for three months thus altogether giving 11 months instead of 8 months by the custom of the trade. It was held that the surety was discharged.

12. In the present case it cannot be said that the taking of the bills was a custom of the trade. All the suit items were items incurred without the accompaniment of any bill at all and the bills were afterwards given as security on the 1st May.

13. In Howell v. Jones (1834) 1 C.M. & R. 97 : 149 E.R. 1009 an account was opened by a banker in favour of C.B gave a letter of guarantee. It was part of the custom of trade to give acceptances occasionally for the balance. In February, 1828, the banker took an acceptance of the debtor at three months for one of the bills without communicating it to the surety. It was held that by the taking of acceptance and the giving of time the surety was discharged.

14. The cases are all collected in Rowlatt's Principal and Surety, pp. 249 and 250.

15. In Goldfarb v. Bartlett and Kremer (1920) 1 K.B. 639 a bill was drawn in August 11 by two partners B and K and accepted by a French Company and endorsed to the plaintiffs on August 21. The bill became due on October 11 but before that date another bill was given by B to the plaintiffs dated October 1 and payable on October 31. B asked the plaintiffs not to present the bill of August 11 for payment. It was held by McCardie, J. that K was discharged by the taking of the second bill. The learned Judge observed:

The effect of the plaintiffs renewing the bill of August 11, in my opinion, was that the plaintiffs by necessary implication gave time to the defendant Bartlett in respect of the payment of the bill of August 11.

16. Here one must notice that K though he may be in the position of a surety under the English law would not be in the position of a surety under the Indian law but only in the position of a principal debtor. But apart from this distinction the case is authority for the discharge of the surety by the taking of a fresh bill which involves the creditor waiting for a longer time. The cases cited by Mr. K. Rajah Aiyar, viz., Bell v. Banks (1841) 3 M. & G. 258 : 133 E.R. 1140 and Twopenny v. Young (1824) 3 B. & C. 208 : 107 E.R. 711, are cases of mere taking of additional security without involving the giving of time. The case of Pring v. Clarkson (1822) 1 B. & C. 14 : 107 E.R. 6 is a decision on the facts it being held that the bill was taken as merely collateral security, which cannot be held to be the case here.

17. In Midland Motor Showrooms v. Newman (1929) 2 K.B. 256 the principal fell in arrears and in February a friend offered a cheque for 20. The creditor accepted the cheque and stipulated that the rest of the arrears should be paid within one month. It was held that there was giving of time and the surety was discharged.

18. The facts like those of Midland Motor Showrooms v. Newman (1929) 2 K.B. 256 show that the law of guarantee is a very rigid law and the smallest kindness on the part of the creditors may involve in their being caught in the trap by the discharge of the surety.

19. In Kali Prasanna Roy v. Ambica Char an Bose (1872) 9 Beng. L.R. 261 Markby, J. observes to the same effect at page 274 where he refers to the serious consequences of the ignorance of the law on the subject. The last case is also authority for the position that acceptance of interest in advance amounts to giving of time.

20. In the present case it has been contended that the calculation of interest up to the dates of maturity amounts to giving of time. However it is unnecessary to consider this aspect of the case. In my opinion the surety is discharged by the acceptance of the bills.

21. I therefore hold that the legal representatives of the 3rd defendant are not liable.

22. As to the 2nd defendant the Subordinate Judge finds that he was a minor at the date of the transaction and I agree with him. The burden no doubt is upon him but there is the evidence of D. Ws. 3 and 6. D.W. 3 is no doubt subject to the comment that he has given false evidence on the question of the 3rd defendant going to Colombo but D.W. 6 is not subject to any such comment though it is true in cross-examination he is not able to give the ages of his own children. He is an old man of 82 and his children must have been born to him long before the 2nd defendant and his failure to give their ages need not be a ground for discrediting him. I do not attach much weight to the circumstance mentioned by the Subordinate Judge, namely, that after the 2nd defendant's endorsement on the Bank notes 1st defendant's agent has again endorsed them. It is suggested that this was due to the consciousness that the 2nd defendant was a minor. There is another explanation for it. The last holder from whom the plaintiffs take the Bank notes as security should be the 1st defendant. That may be the reason why his agent's endorsement occurs after the 2nd defendant's endorsement. On the whole, though with some hesitation, I accept the finding of the Subordinate Judge that the 2nd defendant was a minor.

23. Apart from his minority the 2nd defendant would not be exempt from liability because so far as he is concerned his liability arises by reason of the bills and therefore there can be no extension of time by reason of the plaintiffs accepting them.

24. But there is also another ground on which it is contended that the 2nd defendant is not liable. According to the law of Ceylon the age of majority is 21 and although he may be 18, a major according to the Indian law, the question arises whether he is not exempt from liability on account of his minority under the Ceylon law. The rule with reference to this is Exception 1 to Rule 158 of Dicey's Conflict of Laws, 4th Edition, p. 599. And though at one time the preponderance of authority was in favour of applying the law of domicile as regards the capacity to enter into contracts vide Cooper v. Cooper (1888) 13 A.C. 88 still as to ordinary mercantile contracts the preponderance now seems to be the other way. Dicey stated the exception in the earlier edition with the word 'Probably' but the word is now omitted. The very early decision of Lord Eldon in Male v. Roberts (1800) 3 Esp. 163 : 170 E.R. 574 and the decision of Creswell, J. in Simonin v. Mallac (1860) 29 L.J. Mat. 97 : 164 E.R. 917 are not touched by the language of the Court of Appeal in Sottomayer v. De Barros (1897) 5 P.D. 94 as explained by Sir J. Hannen. The latest decision seems to be M'Feetridge v. Stewarts, Lim. (1913) Scotch Cas. 733 but unfortunately the case is not available. Following the rule as stated in Dicey I think the 2nd defendant is not liable under the law of Ceylon. The position seems to be assumed in In re Soltykoff Ex parte Margrett (1891) 1 Q.B. 413. On this ground also the 2nd defendant is not liable.

25. The result is the appeal must be dismissed. As all the defendants raised many untenable pleas and as the ground on which the 3rd defendant's legal representatives succeed was not raised in the original written statement I disallow the costs of the defendants in the Court below but in appeal they are entitled to their costs.

Cornish, J.

26. I agree. I think that Ex. C was intended by the 3rd defendant to guarantee a series of transactions between plaintiff-firm and the 1st defendant and was not to be confined to a single credit. Ex. C is expressed to guarantee for purposes of 1st defendant's trade 'credit and debit transactions to the extent of Rs. 20,000' and in the covering letter the 3rd defendant requests plaintiff to have regular dealings with the 1st defendant. If necessary for the construction of the document the Court may look at the surrounding circumstances, 'not for the purpose of altering the terms of the guarantee by words of mouth passing at the time, but as part of the conduct of the parties, in order to determine what was the scope and object of the intended guarantee' : Heffield v. Meadows (1869) 4 C.P. 595. The evidence of the circumstances in which Ex. C came to be given shows that it was intended as a continuing guarantee. The plaintiff had been approached by 1st defendant to advance him moneys for extending his business transactions, and the guarantee was for advances to be made thenceforward for those purposes. The Subordinate Judge has discovered reasons for holding Ex. C to be a forgery. They are quite inadequate, in my judgment, to displace the evidence in favour of its genuineness. If genuine, Ex. C will bind the 3rd defendant unless he has in some way been discharged of his liability.

27. A surety is discharged if, without his assent, the creditor binds himself by agreement with the principal debtor to give him time. And, with reference to the discharge of a surety, 'giving time means the putting it out of the power of the creditor to sue during the extended time': per Maule, J. in Bell v. Batiks (1841) 3 Man. & 258 : 133 E.R. 1140. It appears that advances on the strength of the guarantee began in January. By May a balance of Rs. 13,000 odd was found due by the 1st defendant. This indebtedness was not covered by security. The plaintiff demanded payment. The 1st defendant asked for time and gave plaintiff bills payable at a future date as security. Time was accordingly given by plaintiff to the 1st defendant up to the dates of the bills. Interest was charged, and in due course the bills were presented for payment and dishonoured. These facts are deposed to by P.W. 5. The evidence of this witness leaves no doubt that in consideration of the bills given by the 1st defendant the plaintiff agreed to suspend his right to recover payment during the currency of the bilis. That sufficed to discharge the 3rd defendant: Midland Motor Showrooms v. Newman (1929) 2 K.B. 256. A different complexion would have been put upon the case if it had been shown that the bills were given by 1st defendant to the plaintiff as part of the original agreement. But this is not the plaintiff's case in the pleadings or upon the evidence. P.W. 5 describes the course of dealings when 1st defendant did give security, but he does not depose that it was the practice for 1st defendant to give security for advances. In fact, it appears from the accounts that except for the bills given in respect of the first Rs. 5,000 advanced, no cover was given for the subsequent advances.

28. With regard to the 2nd defendant, I think the evidence of D.W. 6 that he was born in September or October, 1905, should be accepted. That would make 2nd defendant under 18 years of age in April, 1923, the date of his indorsement of the bills. So that he would be a minor under the Ceylon Ordinance and likewise by the law of British India; and he would not be liable upon indorsements made during minority: In re Soltykoff (1891) 1 Q.B. 413.

29. The result is that plaintiffs' appeal must be dismissed with costs. But I think that the circumstances of the 3rd defendant succeeding on a defence which he did not raise and failing on the defences which he did raise, and that the conduct of the 2nd defendant in making in his written statement an unfounded charge of fraud against the plaintiff, are sufficient grounds for depriving these defendants of their costs in the trial Court.


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