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P. Aiya Pillai Vs. Ar.A. Shenbaga Nadar and P.V.P. Valasubramania Nadar Through One of Its Partners V. Rajendran - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Case NumberAppeal No. 77 of 1960
Judge
Reported inAIR1964Mad45
ActsNegotiable Instruments Act, 1881 - Sections 45; Sale of Goods Act, 1930 - Sections 59
AppellantP. Aiya Pillai
RespondentAr.A. Shenbaga Nadar and P.V.P. Valasubramania Nadar Through One of Its Partners V. Rajendran
Appellant AdvocateAlladi Subramanian, Adv.
Respondent AdvocateA. Shahmugavel, ;Jayalakshmi Shanmugavel and ;V.K. Kumaraswami, Advs.
DispositionAppeal dismissed
Cases Referred and Tye v. Gwynne
Excerpt:
.....contract with defendant - suit for recovery of money by plaintiff - defendant raised plea of partial failure of consideration - partial failure of consideration not permissible except in case where failure of consideration in terms of money can be ascertained without any collateral enquiry - defendant failed to prove partial failure of consideration - suit for recovery of money decreed. - - 3. the main point which was raised in the lower court and urged on behalf of the appellant in the appeal was that the plaintiffs undertook to fit up a new parkins diesel engine, that the plaintiffs fitted the lorry with some duplicate engine, that the defendant was obliged to sell the lorry for a very low price, far below that which it would have fetched if fitted with a new perkins diesel..........a defence, as now raised by the defendant.6. in this case the defence at the most amounts to a partial failure of consideration, which is not ascertainable in terms of money without further collateral enquiry. section 45 of the negotiable instruments act is as follows :'where a part of the consideration for which a person signed a promissory note, bill of exchange or cheque, though not consisting of money, is ascertainable in money without collateral enquiry, and there has been a failure of that part, the sum which a holder standing in immediate relation with such signer is entitled to receive from him is proportionally reduced.'from this it will be dear that a plea of partial failure of consideration is not permissible except in a case in which the failure of consideration in terms.....
Judgment:

Ramamurti, J.

1. The defendant in O.S. No. 4 of 1958 on the file of the Sub Court, Madurai, is the appellant. The respondents filed the aforesaid Suit seeking to recover a sum of Rs. 10699-44 alleging that the defendant, the appellant herein, placed an order on 28-1-1957, with the plaintiffs-firm for fitting Parkins Diesel Engine to a lorry MDR. 2593 and also for building a body to the said lorry at a cost of Rs. 11000, that the defendant paid Rs. 500 as advance, that as per the order, the plaintiffs fitted the' Parkins Diesel Engine to the lorry and also built a body as ordered and delivered the lorry in or about 16-3-1957, that as the defendant did not have sufficient money to pay, he executed a promissory note, Ex. A.2, in favour of the plaintiffs on 26-3-1957, agreeing to pay 12 per cent interest, and that after giving credit for a sum of Rs. 718-11 which stood to the defendant's credit in respect of transactions of purchase of spare parts, tools, diesel oil etc., from the plaintiffs, the amount sued for represented the balance due from the defendant.

2. The defendant resisted the suit raising all kinds of frivolous and untenable defences all of which were rightly overruled and a decree was passed in favour of the plaintiff as prayed for.

3. The main point which was raised in the lower court and urged on behalf of the appellant in the appeal was that the plaintiffs undertook to fit up a new Parkins Diesel Engine, that the plaintiffs fitted the lorry with some duplicate engine, that the defendant was obliged to sell the lorry for a very low price, far below that which it would have fetched if fitted with a new Perkins Diesel Engine as promised by the plaintiffs, and that there has been consequently a failure of consideration under the suit promissory note. The learned Subordinate Judge after a consideration of the oral and documentary evidence came to the conclusion that the plaintiffs have performed their part of the contract as contained in the order, Ex. A. 1, and that the plaintiffs never undertook to fit in. an imported new Perkins Diesel Engine, but that on the other hand, they had purchased the necessary parts and assembled the same, fitted them upto the lorry, that the defendant himself has accepted the lorry with the engine so fixed without any objection, and that later on, he has also sold the lorry.

4. We have heard the arguments of the learned counsel and after a study of the record we are clearly of the opinion that this is a frivolous appeal and that the learned Subordinate Judge has come to the correct conclusion. It is obvious that if really the defendant had felt any grievance he would have raised objections then and there and would not have executed the suit promissory note. The defendant took delivery of the lorry, used it and had also actually sold it away. It is only later on, when the plaintiff issued a notice, Fix. A. 13 calling upon the defendant to pay the amount duo under the promissory note that in his reply, Ex. A. 14, the defendant raised this untenable plea. V. W. 1. who is one of the partners of the firm, has given evidence. He is a very respectable 'witness. He is a Engineering Graduate of the Madras University and has undergone training in Perkins factory in England and also in automobiles in America. Even though his evidence is interested, foe is amply supported by the documentary evidence. The learned Subordinate Judge was naturally impressed with the evidence given by this witness. We entirely agree with the view of the learned Subordinate Judge.

5. There is one other vital aspect of the. matter which operates as a complete bar to the maintainability of such a defence, as now raised by the defendant.

6. In this case the defence at the most amounts to a partial failure of consideration, which is not ascertainable in terms of money without further collateral enquiry. Section 45 of the Negotiable Instruments Act is as follows :

'Where a part of the consideration for which a person signed a promissory note, bill of exchange or cheque, though not consisting of money, is ascertainable in money without collateral enquiry, and there has been a failure of that part, the sum which a holder standing in immediate relation with such signer is entitled to receive from him is proportionally reduced.'

From this it will be dear that a plea of partial failure of consideration is not permissible except in a case in which the failure of consideration in terms of money can be ascertained without any collateral enquiry. It is rather unfortunate that this objection was not raised in this form in the Court below.

7. in England also the position is exactly the same and a plea of partial failure of consideration in a suit on a negotiable instrument was held inadmissible where the partial failure of consideration cannot be determined in terms of money without further collateral enquiry. In Warwick v. Nairn, (1855) 102 RR 818 : 10 Ex. 762 a similar question arose. In that case the defendant purchased certain goods from the plaintiffs and drew a bill of exchange for .313 12 Section 9 d. In a suit by the plaintiff, the vendor of the goods on the bill of exchange, the defendant contended that at the time of the sale, the plaintiff promised the defendant that the goods should be of a certain quality, that he bought the goods and accepted the bill on the faith of the plaintiff's promise, that the goods delivered were not of the quality specified but of an inferior quality, that they were of the value of 108-15sh-3d and no more, and that except for the said sum the defendant was not liable for the balance on the ground that there was a partial failure of consideration. It was held that it was not permissible for the defendant to raise such a plea.

8. The same view was taken in Day v. Nix, (1824) 9 Moor 159 : 27 R.R. 708. As the head note of the case clearly brings out the principle, it is enough to set out the same;

'A partial failure of consideration for a promissory note, constitutes no ground of defence if. the quantum to be deducted on that account is matter not of definite computation, but of unliquidated damages, as, where a note was given for the plaintiffs' disclosing to the defendant on improvement in certain machinery, which turned out to be less beneficial than was anticipated by the parties. '

9. In Trickey v. Larene, (1840) 6 M. & W. 278 : 151 ER 414, the plaintiff entered into an agreement with the defendants to do some carpentry work for . 63, received 43, in cash and a bill drawn by the plaintiff and accepted by the defendant for the balance. In a suit on such a bill it was held it was not competent to the defendant to plead that the plaintiffs did not perform some portion of the work and that even the work that was done was done in an unworkmanlike manner. It was held that such a plea was not open to the defendant.

10. In Glennie v. Imri, (1839) 3 Y & C. .Ex. 436 : 160 ER 773 and Tye v. Gwynne, (1809) 2 Camp 346 it was held that in a suit by the vendor on certain bills drawn by the vendee for the agreed price of the goods it was not open to the vendees to plead that the goods supplied were of inferior quality and therefore there has been a partial failure of consideration. In all these cases it was held that a plea of partial failure of consideration is open only if the same was ascertainable in terms of money.

11. In Benjamin on Sales, 8th Edn. the matter is dealt with at pages 980 to 984. The rights and remedies of the buyer after delivery of the good? Under Section 53 of the English Sale of Goods Act, corresponding to Section 59 of the Indian Sale of Goods Act are discussed at pages 984 to 994. After referring to the cases in which the buyer was allowed to set off his claim for damages for breach of warranty in diminution or extinction of the price whore the transaction is not evidenced by a negotiable instrument, the learned author sums up the legal position at page 994 when the sale transaction is evidenced by a negotiable instrument:

'The buyer's right to insist on a reduction of price on a breach of warranty cannot be made available if he has given a negotiable security for the price, and the action be brought on the security. He is driven in such a case to a cross-action or counter claim as his only remedy. The law does not permit an unliquidated and uncertain claims to be set up in defence against the liquidated demand represented by a bill or note. But he may set up in defence a total failure of consideration as where a condition of quality of description has not been performed.'

12. In Byles on Bills, 21st Edn. at page 151, the learned author states thus :

'Where a defendant can insist on a total want of consideration as a defence he may also set up its partial failure or absence as an answer pro tanto, provided that the sum to be deducted be an ascertained and liquidated amount.'

13. In view of the above clear statement of the law, we are clearly of the opinion that it. is not competent to the defendant to raise this defence of partial failure of consideration which necessarily involves a collateral enquiry, especially when the contract in this case is indivisible and of a composite character, consisting of a contract for the sale of the Perkins Diesel Engine as well as for work to be done and services to be rendered such as building of a body and fitting the engine to the lorry etc. If the defendant had raised a proper plea of a set off after paying the requisite Court-fee, the position might have been different; but this, the defendant has not done, with the result that the plaintiffs' suit has to be necessarily decreed.

14. There are no merits in this appeal and the same is dismissed with costs.


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