Skip to content


T.A. Umapathy and anr. Vs. T.A. Masilamani - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Case NumberAppeal No. 109 of 1980
Judge
Reported inAIR1987Mad156
ActsNegotiable Instruments Act, 1881 - Sections 4 and 48; Evidence Act, 1872 - Sections 21 and 101
AppellantT.A. Umapathy and anr.
RespondentT.A. Masilamani
Appellant AdvocateT.D. Vasu, Adv. for ;K. Doraiswami, ;P. Sathasivam, ;J. Ganesan and ;J.A.K. Jambukumar, Advs.
Respondent AdvocateV.C. Palaniswamy, Adv. for ;V.C. Palaniswamy, ;E. Padmanabhan and ;S. Vadivel, Advs.
Cases ReferredPannu Jeegania v. Dewi Prashad
Excerpt:
.....of amount has been assigned by executants in body of instrument it cannot be said that content of promissory note does not conform with definition under section 4 of act - once execution of instrument admitted thereafter burden of proof of passing off consideration lies entirely on promisor. - - the promisee, kandaswami gorunder, endorsed the promissory note to the plaintiff after receiving a sum of rs. as he knew full well that no suit could lie for defamation on the facts, the respondent allowed the said suit to be dismissed without costs. 3. in his reply statement, the respondent denied that kandaswami died even before the date of the assignment and stated that as a matter of fact, he died only subsequent to 14-8-1975 and that the appellants were well aware of this fact...........court. the respondent laid the suit for recovery of a sum of rs. 12,931/-due on exhibit a-9, the suit promissory note dated 12-2-1973 executed by the appellants-defendants in favour of one kandaswami gounder of peramampalayam for rs. 10,000/. exhibit a-1 is the endorsement of assignment dated 15-5-1975 made on the reverse of the promissory note by the said kandaswami gounder in favour of the respondent herein after receiving the consideration due under the promissory note. the case of the plaintiff-respondent was that the appellants borrowed rs. 10,000/- from the promisee, kandaswami gounder, on 12-2-1973, for their family necessity and for their lorry business expenses and executed the promissory note for the said sum agreeing to pay back the same with interest at 12 per cent per.....
Judgment:

1. This is an appeal by the defendants to the suit, O. S. No. 364 of 1975 on the file of the Subordinate Judge of Salem, filed by the respondent herein on a promissory note, which was decreed as prayed for by the trial Court. The respondent laid the suit for recovery of a sum of Rs. 12,931/-due on Exhibit A-9, the suit promissory note dated 12-2-1973 executed by the appellants-defendants in favour of one Kandaswami Gounder of Peramampalayam for Rs. 10,000/. Exhibit A-1 is the endorsement of assignment dated 15-5-1975 made on the reverse of the promissory note by the said Kandaswami Gounder in favour of the respondent herein after receiving the consideration due under the promissory note. The case of the plaintiff-respondent was that the appellants borrowed Rs. 10,000/- from the promisee, Kandaswami Gounder, on 12-2-1973, for their family necessity and for their lorry business expenses and executed the promissory note for the said sum agreeing to pay back the same with interest at 12 per cent per annum to the promisee or his order.

The appellants had not paid any amount towards the debt in spite of demands by the promisee. The promisee, Kandaswami Gorunder, endorsed the promissory note to the plaintiff after receiving a sum of Rs. 12,700/- towards principal and interest and the assignment of the pronote is Exhibit A-1. Even after the plaintiff-respondent informed the appellants of the assignment of the promissory note in his favour and demanded payment of the debt, the appellants did not pay any amount either towards the principal or towards the interest. The appellants are not agriculturists entitled to the benefits provided under Act IV of 1938. On the above allegations the respondent prayed for a decree for a sum of Rs. 12,931/- inclusive of interest till the date of the plaint.

2. The appellants filed written statement contending that they never borrowed a sum of Rs. 10,000/- from Kandaswami Gounder on 12-2-1973 for any family necessity or for any lorry business expenses. Only after perusing the plaint allegations, the appellants came to know that Kandaswami had advanced a sum of Rs. 10,000/- to them. One A. P. Kolandaivel was running a chit company under the name and style of A. P. K. Chit Funds at Tiruchengode. The first appellant, being a subscriber, had to pay a sum of Rs. 250/- per month for 24 months and the chit began on 17-11-1972. The chit was being auctioned every month.

The first appellant bid the chit amount at the auction in the fourth month for Rs. 2,900/- and, as per custom and usage of the chit company, the inchoate instrument was taken from the first appellant with the second appellant as surety for him and a separate security bond was also taken. Even after the bidding, the first appellant was regularly paying to the stake-holder the monthly subscriptions of Rs. 250/- after deducting the kasar amount. He had paid up to 25-6-1975 and all payments were made and receipts were duly obtained. There are misunderstandings between the respondent and the appellants with respect to a house property and also regarding the pledging of certain jewels. The respondent and the appellants are entitled to a half share each in the house property.

There is also a criminal complaint lodged by the second defendant for the respondent not returning the pledged jewels even after receiving the money therefor. The respondent, in turn, has filed a suit against one Manikka Gurukkal for slander and defamation for the latter having given evidence in the criminal case in support of the second appellant. As he knew full well that no suit could lie for defamation on the facts, the respondent allowed the said suit to be dismissed without costs. The respondent also filed another suit against the second appellant in O. S. No. 837 of 1974 in the trial Court for slander and defamation for the latter having filed a criminal complaint against him with regard to the non-return of the pledged jewels.

The respondent also conspired with the said Kolandaivel and has introduced one Kandaswami, a fictitious person in the suit promissory note to give a colour of reality to the transaction and subsequently, he has purported to take an assignment of the said promissory note and has filed the suit as if he is a bona fide holder in due course. Had the respondent sent any notice of assignment or demanded payment from the appellants, they would certainly have come out with the real facts exposing the fraud played on them by the respondent. No notice was in fact sent by the respondent, either orally or in writing.

The appellants are entitled to the benefits under the Tamil Nadu Agriculturists Relief Act and other Ordinances. On the ground that the respondent had filed a vexatious suit against them, the appellants claimed that the suit should be dismissed with exemplary costs of Rs. 1,000/- to them. The appellants filed an additional written statement contending that the assignment of the promissory note is a fabrication. According to them, Kandaswami, the alleged original holder of the promissory note, died long prior to the date of the assignment and hence he could not have the instrument 15-5-1975. The respondent has managed to get the assignment by forging the signature of Kandaswami.

3. In his reply statement, the respondent denied that Kandaswami died even before the date of the assignment and stated that as a matter of fact, he died only subsequent to 14-8-1975 and that the appellants were well aware of this fact. He also denied the allegation that the assignment is a forgery.

4. In their further additional written statement, the appellants stated that they are not agriculturists and they are not paying any professional tax, but being indebted persons, they are entitled to the benefits of the Act. According to them, the aggregate annual rental value of the building in their possession is less than Rs. 2,400/-, and they are entitled to the benefits of the Tamil Nadu Debt Relief Act. This claim of the appellants was denied by the respondent in his further additional reply statement in which the respondent stated that the appellants are owning property in Tiruchengode municipal area and that the rental value of building is more than Rs. 1, 200/-.

5. On the above pleadings, the following issues were framed by the trial Court : -

1. Whether the suit pronote is true?

2. Whether the plaintiff is not a bona fide holder in due course? (as recast on 21-2-1979 by the trial Court).

3. Whether the signatures of the defendants on the suit pronote have been obtained in the circumstances set out in para 6 of the written statement?

4. Whether the defendants are agriculturists under Acts IV and X of 1938?

5. Whether the defendants are entitled to the exemplary costs as claimed? and

6. To what relief is the plaintiff entitled? Additional Issue framed on 14-11-1978 : -

1. Whether the assignment of the pronote is fabricated?

Additional Issue framed on 12-9-1979 : -

2. Whether the defendants are not entitled to the benefits of Indebted Persons Relief Act?

6. The respondent examined himself as P. W. 1 and one Perumal and Kaliappan as P. Ws. 2 and 3 in support of his case, and filed Exhibits A-1 to A-12. Exhibit A-9 is the suit promissory note and Exhibit A-1 is the endorsement of assignment on its reverse. Exhibits A-2 and A-3 are respectively the ledger and day-book maintained by the respondent. Exhibit A-4 is the extract from the death register relating to the death of the original holder Kandaswami. Exhibits A-5 and A-6 are extracts from the property tax demand register for the years 1976-77 to 1977-78 as well as 1975-76. Exhibit A-7 is the mortgage deed dated 22-3-1961 executed by T. A. Angamuthu, the second appellant, in favour of one Kunjan alias Arumugha Padayachi, Exhibit A-8 is the registered settlement deed dated 20-6-1969 executed by Chinnammal in favour of the second appellant and another. Exhibit A-10 is the income-tax demand notice issued by the IV Income-tax Officer, Circle-II, Salem, to the respondent. Exhibit A-11 is the copy of the accounts maintained by the respondent for the year ended 31-3-1976 and Exhibit A- 12 is a similar copy of accounts for the next financial year.

7. The appellants examined themselves as D. Ws. 1 and 2 and one Ganesan and Kadirvel as D. Ws. 3 and 4 in support of their case and filed Ex. B 1, the hand pass-book issued by the A. P. K. Chit Funds of Tiruchengode to the first appellant, Exhibit B-2, proceedings of the said Chit Funds dated 20-1-1973, Exhibit B-3 series, receipts issued by the Chit Funds to the first appellant, Exhibits B-4 and B-5, which are respectively copies of the plaint in O. S. No.179 of 1975 on the file of the District Munsifs Court, Sankari at Salem, and O. S. No. 837 of 1974 on the file of the trial Court, Exhibit B-6, certified copy of the judgment in O. S. No. 837 of 1974, Exhibit B-7, registered mortgage deed for Rs. 30,000/- executed by Kandaswami Gounder in favour of one T. S. Nalliappa Goundar and others, Exhibit B-8, mortgage deed for Rs. 15,500/- dated 28-6-1974 executed between the same parties, and Exhibit B-9, a receipt for Rs. 5,000/- issued by one Vethambal in favour of the second appellant.

8. The trial Court accepted the case of the respondent and decreed the suit as prayed for. Hence the first appeal.

9. Mr. T. D. Vasu, learned counsel for the appellants, contends that the contents of the promissory note, Exhibit A-9, show that the instrument is not a promissory note as per the definition of 'promissory note' as contemplated under S. 4, Negotiable Instruments Act, (Central Act 26 of 1881) and that the very existence of the reasons for which the amount had been borrowed having been incorporated in the contents of the instrument shows that the contents do not conform to the legal definition of a promissory note. Learned counsel further contends that the witnesses examined on behalf of the appellants, especially D. Ws. 1 and 2, who are no other than the executants of the promissory note, have deposed that they had not received the amount mentioned in Exhibit A-9, viz., Rs. 10,000/-. He further contends that merely on the ground of the endorsement of assignment, Ex. A-1, the respondent cannot institute a suit and successfully get a decree in his favour as prayed for. In other words, learned counsel stresses the point that the trial Court had not properly appreciated the evidence, oral and documentary, in the case, and as such the judgment and decree granted in favour of the respondent is liable to be reversed in appeal.

10. Mr. V. C. Palaniswami, learned counsel for the respondent, on the other hand, would contend that it is not as if the appellants had put their signatures on stamps affixed to the suit promissory note (Exhibit A-9) on the reverse of which there is an endorsement of assignment (Exhibit A- 1) on the basis of which the suit has been laid, but it is significant to note that Exhibit A-9 contained also the left thumb impressions of both the appellants, which will go to show that they did receive the consideration that passed under the promissory note. Learned Counsel for the respondent further submits that merely on the ground that the purpose for which the amount was borrowed had been incorporated in the instrument, it does not in any way take away the legal character of the instrument as a pronote. In the instant case, though it is stated in Ex. A-9 that it was for the purposes of family necessity and for lorry business expenses that the amount had been borrowid, yet, by the said reason having been incorporated in the body of the instrument, it does not, in any way, pull down the legal consequences of a promissory note, nor does it snatch away the legal characteristics of a promissory note.

11. The point that arises for consideration in the appeal is whether the consideration recited in the instrument passed under it to the appellants, from the original promisee, Kandaswami Gounder, who has assigned the promote under Exhibit A- 1 to the respondent herein.

12. Even at the outset it has to be mentioned that the definition of a 'promissory note' as per the provisions of the Negotiable Instruments Act (Central Act 26 of 1881) contemplates that a promissory note is an instrument by which the person who executes the same undertakes to pay on demand the amount mentioned therein which he has received as consideration, to the person named in the instrument or to his order. Bearing in mind this definition of a 'promissory note', this Court finds that Exhibit A-9 does conform to the said definition contemplated under S. 4 of the Act. Merely because a superfluous reason for the borrowing of the amount has been assigned by the executants in the body of the instrument, it cannot be held that the contents of Exhibit A-9 do not conform to the definition under S. 4 of the Act and, therefore, no legal demand could be made by the assignee by virtue of the promissory note.

It is common ground that the promisors have admitted execution of the promissory note. It is only the receipt of consideration by the appellants that is denied by both of them, going into the witness-box. The respondent, who has got the assignment of the promissory note for consideration by virtue of Exhibit A-1 from the promisee, swears to the passing of the consideration. Even at the outset, it has to be observed that the mere non-examination of the promisee under the promissory note has not resulted in any discomfort being experienced in the assessment of the evidence of the respondent when he has deposed about the passing of the consideration under the promissory note.

Nothing material has been elicited in his cross-examination as P. W. 1, so as to discredit his testimony on this aspect of the case. It is more on the appreciation of the oral evidence that the fact of passing of consideration lies in the instant case. In doing so, the trial court, which had the benefit of seeing the witnesses in the box who gave evidence on both sides, has chosen to believe the evidence of P. W. 1, the respondent, together with the contents of the documents relied on by him regarding passing of consideration. On a careful consideration and scrutiny of the entire evidence, both oral and documentary, in the case, this Court is certainly of the opinion that the respondent-plaintiff has proved beyond all reasonable doubt the passing of consideration under Exhibit A-9 and has successfully established his case which has not been shaken in any way by the appellants.

13. Learned counsel for the appellants took me meticulously through the evidence, oral and documentary, and strenuously contended that the trial Court had not assigned any reason for rejecting the oral evidence that had been tendered by the appellants, which evidence it has discarded without assigning any reason whatsoever. This Court is unable to uphold this contention. The reasons offered by the trial Court for rejecting the evidence of the appellants need not be repeated. It is enough to observe that when once execution of the instrument is admitted, thereafter the burden of proof of passing of consideration lies entirely on the shoulders of the promisors, which burden has not been discharged by them as per the provisions of the Evidence Act. This is patent on a perusal of the evidence in the case.

As a matter of fact, the very fact that they had affixed their thumb impressions in the promissory note, has not been disclosed by them at any stage, but the fact remains that the promissory note bears the thumb impressions of the appellants, on the right hand side of the document. What is more, the scribe of Exhibit A-9 had been examined as a witness on behalf of the respondent, whose evidence is specific relating to the passing of the consideration under the promissory note. So far as the endorsement of assignment, Exhibit A- 1, is concerned, we do not find any infirmity. As a matter of fact, two witnesses of Thiruchengode have attested the assignment in favour of the respondent. Exhibit A-1 assignment reads as follows : -

One Perumal had written the assignment on the reverse of Exhibit A-9 and the assignment is marked as Exhibit A-1, through P. W. 1. We therefore find that Exhibit A-1 his been proved and the assignment also has been proved by the respondent establishing that consideration passed from him to the original holder under the assignment.

14. Learned counsel for the appellants also placed before me the decision of the Madhya Pradesh High Court reported in Pannu Jeegania v. Dewi Prashad, : AIR1963MP15 for the following proposition : In suits on bonds, it is the clear duty of the Court to analyse the evidence to find out: (i) whether execution is proved; (ii) if it is whether the defendant did not receive the consideration as purports to have passed according to the recital in the document and (iii) in case the answer to the second question is in the negative, whether the plaintiff is entitled to any relief, and where in a suit on a bond on the basis of cash consideration, the defendant, while admitting execution, denies cash consideration and the Court holds that no cash consideration passed, in the absence of pleading or proof that any other sum was really due to the plaintiff, no decree can be passed in his favour. Even by applying the ratio of this decision, we find that the contents of both Exhibit A-9 promissory note and Exhibit A- 1 assignment in the case on hand are supported by consideration. There is adequate evidence available on record for upholding the case of the respondent.

15. Under the above circumstances, the judgment of the Court below decreeing the suit as prayed for is correct and in accordance with law. I find no merit in the appeal and the same is dismissed with costs.

16. Appeal dismissed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //