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Pl. Ct. Sp. Subramaniam Chettiar Vs. Muthiah Chettiar (Died) and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Case NumberApp. No. 636 of 1977
Judge
Reported inAIR1984Mad215; (1983)IIMLJ426
ActsIndian Contract Act, 1872 - Sections 62; Limitation Act, 1963 - Sections 18
AppellantPl. Ct. Sp. Subramaniam Chettiar
RespondentMuthiah Chettiar (Died) and ors.
Appellant AdvocateA.R. Lakshmanan, Adv.
Respondent AdvocateK.N. Balsubramaniam, ;T. Dhanyakumar, ;T.R. Rajagopalan and ;T.R. Rujaraman, Advs.
Cases ReferredPandit Salig Ram v. Radhay Shiam.
Excerpt:
- - it is a well settled proposition that in the case of an insufficiently stamped promissory note it is open to the promise to relay on the original cause of action and claim the recovery of the amount. the head note of the judgment which brings the ratio of the judgment clearly reads as follows- where defendant borrows money from the plaintiff on the security of promissory notes and later the promissory note is renewed by another promissory note which is found to be inadmissible in evidence being insufficiently stamped, the plaintiff cad 'fall back on the original promissory note and succeed in his claim provided the terms of contract are to be found in the older promissory note and subsequent pronote cart be used as an acknowledgment......in the decision pandit salig ram v. radhay shiam. : air1931all560 the endorsement on the suit promissory note was to the following effect -' on the 7th of november 1925 in lieu of the promissory note a second promissory note of the amount of rs. 1350 has been executed and. this promissory note has become void'on the question whether this amounted to an acknowledgment of liability the court held that it did, amount to an acknowledgment of liability. the head note of the judgment which brings the ratio of the judgment clearly reads as follows-'where defendant borrows money from the plaintiff on the security of promissory notes and later the promissory note is renewed by another promissory note which is found to be inadmissible in evidence being insufficiently stamped, the.....
Judgment:

1. The defendant is the appellant. The suit was filed by the plaintiff respondent for the recovery of a sum of Rs. 24655 due under two promissory notes dated 25-6-1969 Ex. A-1 and 2-9-1969 Exhibit A-2. A sum of Rs.1000 was paid towards the promissory note dated 25-6-1969 and an endorsement was made on 24-11-1969. On 7-4-1972, he executed a fresh promissory note for a sum of Rs. 18,750/-. Which was the total amount due under Exs. A-1 and A-2 with interest up till that date, on the same day identical endorsement were made in Exs. A-1and A-2 to the effect that by execution of the promissory note dated 7-4-1972 the amount due under the promissory note has been discharged. Subsequently the plaintiff herein assigned the promissory note dated 7-4-1972, in favour of one Muthukaruppan chettair. The assigned filed O.S 34 of 1973 for the recovery of the amount due under the note dated 7-4-1972. It appears that the defendant contented in the suit that Muthukaruppan was not a bona fide holder in due course that the suit was premature since one year thavanai was fixed for payment, that the promissory note was an instrument payable otherwise that on demand and not a negotiable instrument and that it is also inadmissible in evidence as it was insufficiently stamped. On such a plea taken by the defendant the assignee filed 1.A 446 of 1974 for permission to withdraw the suit with liberty to file a fresh suit on the same course of action. The petition was ordered on 30-7-1974 by which the Court permitted the plaintiff to withdraw the suit with liberty to file a fresh suit on the same subject matter. However, it appears that Muthukaruppan did ant file a suit, that on the other hand obtained the consideration -paid from die plaintiff herein and handed over the invalid promissory note dated 7-4-1972. Thereafter the plaintiff filed this suit on the original promissory note- Ex A-1 dated 25-6-1969 and Ex. A-2 dated 2-9-1969 and pleaded that the endorsements made on, 7-4-1972, on those promissory notes amounted to an acknowledgment of liability and that the suit filed within three years from 7-4-1972, is not barred by limitation. The learned Subordinate Judge who tried, the suit, accepted this contention and held that the endorsement on Exs. A-1 and A-2 dated 7-4-1972 amounted, to an acknowledgment of a subsisting liability or outstanding debt on that date and the substitution of a new security for the same and that therefore the suit was in time.

2. The learned counsel for the, appellant raised two main contentions : The first contention was that since Exhibits A-1 and A-Z are superseded by the execution of a fresh promissory note dated 7-4-1972 the present suit on the basis of the original two promissory note is not maintainable. In this connection he also relied on the fact that the assignee of the promissory note dated 7-4-1972, filed 0. S .34 of 1973 on the file of the learned Subordinate Judge Pudukottai, and withdraw the same with permission to file a fresh suit on the same cause of action. According to the learned counsel in view of the filing of the suit and its withdrawal, with liberty to file a fresh suit only a fresh suit on the basis, of the promissory note dated 7-4-1972 could be filed. As already stated the plea in the earlier suit by the defendant was that the promissory note dated 7-4-1972 was invalid as it had been insufficiently stamped. It is a well settled proposition that in the case of an insufficiently stamped promissory note it is open to the promise to relay on the original cause of action and claim the recovery of the amount. It was therefore not necessary for the plaintiff to relay on the invalid promissory note dated 7-4-1972 and he could file the suit on the original promissory notes Exs. A-1 and Exs.A-2 it the suit is otherwise in time. The fact that be purposed to assign an invalid Promissory note and again got it back from the assignee after paying the money does not in any way affect the right of the plaintiff to recover the money under the original promissory notes. Therefore, there is no substance in this contention of the learned counsel.

3. The second contention of the learned, counsel is that the endorsements made on 7-4-1972 on the original promissory notes Exs. A-1 and A-2 do not amount to an acknowledgment of liability and in fact it amounts to an endorsement of discharge and that therefore will not save the suit from the bar of limitation. We have already noted that in the endorsements it was stated that the promissory note is discharged by the execution of fresh promissory note on that date. Similar endorsements came up for consideration in this Court in an earlier decision. Vakkalanka Kondamma v. Kasaneedi Venkatarayadu. : AIR1939Mad34 . In that case the plaintiff filed a suit for enforcement of a promissory note dated 9tb August 1929. which was executed by the first defendant in renewal of an earlier note dated 11th August. 1926. But, owing to insufficient stamps on the renewed promissory note it became inadmissible in evidence and therefore the plaintiff applied for an amendment of the plaint seeking permission to base his cause of action on the earlier note which had been cancelled and superseded by the later note. While considering the question whether the endorsement made on the original promissory note cancelling and superseding the original note amounted to an acknowledgment of liability to save the period of limitation this Court following the decision of the Allahabad High Court in Pandit, Salig Ram v. Radhay Shiam. : AIR1931All560 held that the meaning of the endorsement was that there was a subsisting debt though a new security was being substituted and that therefore the endorsement of cancellation on the previous note amounted to a valid acknowledgment of liability. In the decision Pandit Salig Ram v. Radhay Shiam. : AIR1931All560 the endorsement on the suit promissory note was to the following effect -

' On the 7th of November 1925 in lieu of the promissory note a second promissory note of the amount of Rs. 1350 has been executed and. this promissory note has become void'

On the question whether this amounted to an acknowledgment of liability the Court held that it did, amount to an acknowledgment of liability. The head note of the judgment which brings the ratio of the judgment clearly reads as follows-

'Where defendant borrows money from the plaintiff on the security of promissory notes and later the promissory note is renewed by another promissory note which is found to be inadmissible in evidence being insufficiently stamped, the plaintiff cad 'fall back on the original promissory note and succeed in his claim provided the terms of contract are to be found in the older promissory note and subsequent pronote cart be used as an acknowledgment.'

These two decisions are clear authority for the proposition that the endorsements on Exs. A-1 and A-2 would amount to an acknowledgment of a subsisting liability and the substitution of a new security for the same and that therefore it would save the suit from the bar of limitation. The Judgment and decree of the lower Court are therefore correct and do not call for any interference. The appeal accordingly fails and it is dismissed. There will be no order as to costs.

4. Appeal dismissed.


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