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P.L.M. Palaniappa Chettiar Vs. S. Rajagopala Pandarathar and ors. - Court Judgment

LegalCrystal Citation
Subject Property
CourtChennai
Decided On
Reported inAIR1928Mad773
AppellantP.L.M. Palaniappa Chettiar
RespondentS. Rajagopala Pandarathar and ors.
Cases Referred and Sami Sah v. Parthasarathi Chetty
Excerpt:
.....so as to run in the ordinary form. 7. the further contention raised by the appellant is that the district judge has failed to appreciate the legal presumption in his favour in valuing the oral evidence. a, and his admission in it, that he had received full consideration, is very strong evidence against him. d shows clearly that it was not signed by defendant 1 as pointed out by the district judge. 15. in the well-known case shamu pattar v. therefore, if my view of the effect of the enactments quoted above is wrong, i am still not satisfied that ex. a is good as a mortgage. 3, the zamindar's agent, on the other hand, says that muthuswami chetti muthuvelu melavarayan, manickam chetti as well as another man were all present when the rajah executed it. a, it would be strong evidence in the..........a, executed by defendant 1, the zamindar of gandarvakottai, on 17th june 1917, for rs. 10,000. the district judge has refused a mortgage-decree, but has given a personal decree against defendant 1 for rs. 2,053-12-3 and interest. the plaintiff appeals and contends: firstly, that ex. a is a properly executed mortgage-deed and also that the whole of the consideration passed under that document and asks for a decree as prayed for in the plaint. defendants 3 and 4, who are the contesting respondents, are purchasers of one of the two villages mortgaged under ex. a, and they contend that the mortgage-deed is not valid as a mortgage and that no consideration passed. so far as the rs. 2,000 decreed is concerned, they do not contest it as it is payable only by defendant 1 and does not affect.....
Judgment:

Phillips, J.

1. The plaintiff, one Palaniappa Chetti, brings this suit on a mortgage-deed, Ex. A, executed by defendant 1, the Zamindar of Gandarvakottai, on 17th June 1917, for Rs. 10,000. The District Judge has refused a mortgage-decree, but has given a personal decree against defendant 1 for Rs. 2,053-12-3 and interest. The plaintiff appeals and contends: firstly, that Ex. A is a properly executed mortgage-deed and also that the whole of the consideration passed under that document and asks for a decree as prayed for in the plaint. Defendants 3 and 4, who are the contesting respondents, are purchasers of one of the two villages mortgaged under Ex. A, and they contend that the mortgage-deed is not valid as a mortgage and that no consideration passed. So far as the Rs. 2,000 decreed is concerned, they do not contest it as it is payable only by defendant 1 and does not affect their interests.

2. The most important point for consideration is whether Ex. A is a valid mortgage. The District Judge has found on the evidence that, although it purports to be attested by three witnesses, only one of these witnesses actually witnessed the execution; whereas he also states that there is evidence that defendant 1 acknowledged execution to one other witness, although he does not specifically state that he believes the evidence of this witness. Assuming that one witness actually witnessed the execution and that the execution was acknowledged to two witnesses, it was contended for the appellant that, under the Amending Act 27 of 1926, 10 of 1927 and 12 of 1927, the document was validly attested as a mortgage. It has been held by the Privy Council that an attesting witness must have actually witnessed the execution and that an acknowledgment made by the executant of execution is not sufficient. Accordingly, the legislature enacted Act 27 of 1926 which amended Section 3, T. P. Act as follows:

'Attested' in relation to the instrument means attested by two or more witnesses each of whom has seen the executant sign or affix his mark to the instrument...or has received from the executant a personal acknowledgment of his signature or mark.

3. If that Act had retrospective effect the attestation in the present case would be adequate, but it was held by a Full Bench in the Allahabad High Court in Girja Nandan Kalwar v. Hanuman Das Marwar : AIR1927All1 that Act 27 of 1926 had no retrospective effect and this was followed by a Bench of the Calcutta High Court in Nepra v. Sajer Pramanik : AIR1927Cal763 . The same point was considered by the Bombay High Court in Motilal v. Karambhai, : AIR1928Bom16 , but was not decided on the ground that Act 10 of 1927, which had been passed before the decision in that case, made the definition of 'attested' retrospective. The judgment is a very brief one and there is no discussion at all of the effect of Act 10 of 1927, it being remarked that the 1926 Act was merely a case of bad drafting which has now been amended by the 1927 Act so as to run in the ordinary form. A contrary view was held by a single Judge of this Court in Balaji Singh v. Gangamma A.I.R. 1927 Mad. 85. However, what we have now to consider is not Act 27 of 1926, but the latest Act 12 of 1927. Under Act 10 of 1927, Act 27 of 1926 was amended as follows:

In Section 2, in the definition of the word 'attested' after the word 'means' the words 'and shall be deemed always to have meant' shall be inserted.

4. This in terms gave the definition retrospective effect, and, had that amendment stood alone, there would have been no doubt whatever on the question. That amendment was, however, inserted in this Act in the middle of a large number of amendments relating to the military and air force and Section 4 of that Act was enacted at the same time which prescribes as follows:

This Act shall not effect the validity, invalidity, effect or consequences of anything already done, suffered, or any right, title, obligation or liability already acquired, accrued or incurred, or any remedy or proceeding in respect thereof, or any release or discharge of or from any debt, penalty, obligation, liability, claim or demand or any indemnity already granted, or the proof of any past act or thing.

5. This saving clause, which possibly was enacted with a view to saving the amendments in the Acts relating to the military and air force must also apply to the amendment of Section 3, T. P. Act, and consequently it would appear that after making the new definition retrospective the legislature determined that that should not affect the validity, invalidity,, effect or consequences of anything already done or suffered, or any proceeding in respect thereof. It would, therefore, seem to exclude any interference with any transaction already effected or any proceeding taken in connexion therewith Consequently, the mortgage-deed, which was executed in 1917, if not valid at that date, would not be validated by this Amending Act. This fact seems to have-been recognized by the legislature; for five months later Act 12 of 1927 was enacted which is a general repealing Act. and under which portions of over 100 Acts are repealed, and amongst these are Sections 3 and 4 of Act 10 of 1927. By repealing Section 4 of Act 10 of 1927 that Act would have its retrospective effect restored, but in Act 12 of 1927 the savings clause contained in Act 10 of 1927 is. repeated almost verbatim as follows:

This Act shall not affect the validity, invalidity, effect or consequences of anything already done or suffered, or any right, title, obligation or liability already acquired accrued or incurred or any remedy, or proceeding in respect thereof, or any release or discharge of or from any debt, penalty, obligation, liability, claim or demand or any indemnity already granted, or the proof of any past act or thing, and proceeds:

Nor shall the repeal by this Act of any enactment revive or restore any. jurisdiction, office custom, liability, right, title...not now existing or in force.

6. This saving clause, therefore, enacts that the repeal of Sections 3 and 4 of Act 10 of 1927, which would have apparently made that Act retrospective, is not to have that effect, for Act 12 of 1927 cannot revive or restore any right, title, etc. The effect, therefore, of this legislation would seem ,to be to provide that the new definition of 'attested' is not to have retrospective effect so as to prejudice any existing right or any act done in the past. If, therefore, Ex. A, the mortgage-deed, was not valid when executed for want of proper attestation the subsequent legislation will not make it valid. Whether it was the intention of the legislature to make the definition retrospective is not quite clear, but, at any rate, as I read the various enactments, the legislature has not succeeded in its purpose if it really meant to give retrospective effect to Act 27 of 1926. If this is so, Ex. A, being attested only by one witness who saw the execution, is not valid as a mortgage. The District Judge's finding of fact has been convassed on the evidence, but I see no reason to differ from his opinion of the evidence of P. Ws. 6, 7 and 8 who speak to the attestation. This point must, therefore, he found against the appellant.

7. The further contention raised by the appellant is that the District Judge has failed to appreciate the legal presumption in his favour in valuing the oral evidence. So far as defendant 1 is concerned, no doubt he is bound by his execution of Ex. A, and his admission in it, that he had received full consideration, is very strong evidence against him. The plaintiff, however, sought to prove liability under Ex. A not only against defendant 1, but against his minor son, defendant 2, and also against defendants 3 and 4, purchasers of a part of the mortgage property. They put the plaintiff to the proof or the truth, validity and bona fides, consideration, due attestation and binding character of the mortgage relied on in the plaint. As against them, therefore, it was incumbent on the plaintiff to prove that consideration passed. A major portion of the consideration consists of payments by the plaintiff on two promissory notes, Exs. D and B, executed on 7th January 1917 and 15th January 1917, respectively in, favour of Swaminathan Chetti, son of one Chidambaram Chetti. The appellant's vakil relies on the presumption under Section 118, Negotiable Instruments Act, as proof of the receipt of consideration. In the first place, the truth of these promissory notes is not admitted, and an examination of Ex. D shows clearly that it was not signed by defendant 1 as pointed out by the District Judge. Ex. B apparently bears defendant 1's signature, but there are various considerations in the document itself which tend to show that the document was not written up before that signature was affixed and that it is a very suspicious document. The circumstances of the case are also very peculiar. When Exs. D and B were executed, defendant 1 was a young man, aged 18, and he was heavily in debt and a large portion of his zamindari was under usufructuary mortgage to Chidambaram Chetti, father of Swaminathan Chetti, in whose favour the promissory, notes were executed. The recital of the consideration in Ex. B is admittedly false. This being so, it has been held that the burden of proving consideration is shifted on to the holder of the promissory notes: see Sundarammal v. Subramania Chettiar [1915] 29 M.L.J. 236, Sami Sah v. Parthasarathi Chetti 31 IND.CAS. 739, and Moti Gulabchand v. Md. Mahdi Tharia Topan [1896] 20 Bom. 367. In these cases the burden of proof was held to be shifted as against the maker of the notes himself and much stronger, therefore, would be the case when the consideration has to be proved against third parties.

8. The evidence on the question of consideration has been carefully examined by the District Judge and he has come to the conclusion that no consideration passed under these notes and that they are in fact forgeries. Mr. G. Krisnaswami Iyer, for the appellant, has not chosen to seriously canvass these findings, but has contented himself with relying on certain propositions of law. The first of these is that on the pleadings of defendants 2, 3 and 4 judgment should have been delivered for the amount of these notes. That argument was not put forward at the trial and entirely ignores the plea that the mortgage-deed had no consideration, for a part of the consideration was the amount due under these notes. He also relied on the presumption under Section 118, Negotiable Instruments Act, which, as I have pointed out above, does not help in this case. This being so, I think it is unnecessary to repeat the arguments of the District Judge in paras. 16 to 24 of his judgment, for, when once the burden of proof has been shifted, it is incumbent on the plaintiff to adduce some proof of the consideration. The plaintiff is a money-lender. He did not go into the box or produce any of his accounts. Swaminathan Chetti, who is said to have advanced the money under the notes, was at the time an undischarged bankrupt, as was his father, and it is difficult to understand how he had any money to advance at that time. In his case also no accounts have been produced. He has given varying accounts of the source of the money, describing it in one place as being his own separate money and in another as being money belonging to his wife. I entirely agree with the District Judge's conclusion as regards these promissory notes.

9. Another item of consideration is Rs. 44, said to have been paid under a decree against defendant 1. The decree-holder is not examined and there is no reason why the evidence of P.W. 4 should be taken as proving the payment of a decree amount by the plaintiff, as he did not see the decree or any other papers showing that the money was paid for the decree. The evidence as to this item was rightly rejected.

10. The only other item is the Rs. 2,053, spoken to by P.W. 6 as having been paid in satisfaction of his decree against defendant 1. That witness had to admit that the money was paid to him not by plaintiff but by Chidambaram Chetti, father of Swaminathan Chetti, P.W. 5. It is on that evidence that the District Judge has found that Ex. A was executed in plaintiff's name benami for Chidambaram Chetti. On this finding he should have dismissed the plaintiff's suit as he has found that the plaintiff paid no consideration at all and the plaintiff does not purport to sue as a benamidar; he has, however, given a decree against defendant 1 and no appeal has been filed against that portion of the decree. So far as that is concerned, it must be confirmed, but the District Judge is wrong in directing the amount to be paid over to the Official Assignee on the ground that Chidambaram Chetti was at the time of the transaction an undischarged insolvent. His insolvency was annulled before this case was tried and consequently the Official Assignee has now no interest in Chidambaram Chetti's property. The decree must, therefore, be confirmed except with reference to the directions that the money realized by the plaintiff shall only be paid out on his giving security that he will deposit the same with the Official Assignee, Madras, which must be deleted. In other respects the appeal is dismissed with costs of defendants 3 and 4.

11. Certain documents were refused in evidence by the District Judge under the provisions of Order 7, Rules 14 and 18, and it is sought in appeal to have them exhibited, the contention being that these documents were not documents in support of the plaint. As they were to be filed in order to prove the plaintiff's claim, it is difficult to understand the argument that they are not documents in support of the plaint. Accordingly they were rightly rejected by the District Judge.

12. C.M.P. 3440 of 1926, for admission of new documents is dismissed with costs.

Odgers, J.

13. This appeal is from a decree of the District Judge of West Tanjore wherein, in a suit by the plaintiff, one P. L. M. Palaniappa Chetti, against the Zamindar of Gandarvakottai and others, the plaintiff was granted a simple money decree for Rs. 2,000 odd with interest at 12 per cent per annum. Defendant 2 is the minor son of defendant 1. Defendants 3 and 4 are auction purchasers of the property in question alleged to have been mortgaged and are the contesting respondents in this appeal; defendant 5 is a lessee. Defendant 6 was given up by the plaintiff and struck out of the suit. The alleged mortgage in question was dated 17th June 1917 and was for Rs. 10,000, and is said to have been executed by defendant 1 to the plaintiff. It is not contended that any cash consideration passed and the learned Judge has correctly set out the items of consideration in para. 4 of his judgment. The only item that he has found proved is No. 2, payment of the decree in O.S. 116 of .1912. Defendants 3 and 4, who purchased the interest of the first and second in the village of Thurusipatti, in execution of a decree against them, in their written statement, put the plaintiff to proof of the truth, validity, bona fides, consideration, due attestation and binding character of the mortgage, and also to proof of the truth, necessity, validity and binding character of the several items of consideration. Defendant 1 pleaded inter alia that the promissory notes were fictitious and antedated and were taken by one Arunachala Chetti in the name of his son in order to make a case of antecedent debt. No money was paid. The head clerk of the Court, who acted as guardian ad litem of minor defendant 2, put the plaintiff to strict proof of the genuineness and binding nature of the morts gage and to proof that the decree debt-and previous promissory notes allege to have been discharged were, really true and binding on defendant 2. The District Judge found that Ex. A was invalid as a mortgage as it was not proved to have been attested by two witnesses as required by Section 59, T. P. Act. He also found that the item of consideration, namely Rs. 44, said to have been paid in satisfaction of a Small Cause Court decree, was not proved and that the two promissory notes, Exs. D and B, were unsupported by consideration and were antedated; also that Ex. D was a forgery and Ex. B was written on a paper with a previous signature.

14. We have listened to a long argument. It was contended that there is no necessity now for an attesting witness to have seen the executant sign. The words in Section 59, T.P. Act, as it stood prior to the explaining Act (27 of 1926) were

where the principal money secured is Rs. 100 or upwards, a mortgage can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses.

15. In the well-known case Shamu Pattar v. Abdul Kadir Ravuthan [1912] 35 Mad. 607, it has been held by the Privy Council that mere acknowledgment of the signature by the executant is not sufficient in India. This view prevailed from 1912 up to 1926 when the word 'attested' was explained by Act 27 of 1926 as meaning

attested by two or more witnesses each of whom has seen the executant or has received from the executant a personal acknowledgment of his signature or mark.

16. Devadoss, J., in Balaji Singh v. Gangammo A.I.R. 1927 Mad. 85, sitting alone, decided that this explanation was retrospective and applied to pending actions. The Bombay High Court in Motilal v. Kasambai : AIR1928Bom16 decided (without discussion) that Act i7 of 1926 is made retrospective by Act 10 of 1927, though the Full Bench of Allahabad in Girija Nandan Kalwar v. Hanuman Das Manoari : AIR1927All1 had by a majority decided to the contrary. This 'explanation' came of course a longtime after 1917, the date of Ex. A, but some difficulty has been caused by Act 10 of 1927 and Act 12 of 1927. These are both omnibus Acts. The former is stated to be an amending and repealing Act. Enactments in Schedule 1 are amended as specified and those in the second similarly repealed. The main object of the Act 1, as is apparent from a perusal of Schedule 1, was to include air-men within enactments relating to soldiers and sailors, but very unfortunately a reference to Section 2 of Act 27 1926 has been inserted in Sch 1. It runs as follows:

In Section 2, in the definition of the word, ' attested' after the word 'means' the words 'and shall be deemed always to have meant' shall be inserted.

17. The act contains a saving clause, Section 4, whereby

this Act shall not affect the validity, invalidity, effect or consequences of anything already done or suffered or any right, title, obligation or liability already acquired, accrued or any remedy or proceeding in respect thereof, or any release or discharge of or from any debt, penalty, obligation, liability, claim or demand or any indemnity, already granted or the proof of any past act or thing.

18. About five months after viz., 8th September 1927 by Act 12 of 1927 this Act was as to Sections 3 and 4 thereof, and Schedule 2 repealed. This new repealing Act, however, contains a similar savings clause, Section 3, to which is added a clause

nor shall the repeal by this Act of any enactment revive or restore any jurisdiction; office, custom, liability, right, title not now existing or in force.

19. The effect of this seems to me to leave matters exactly where they were, i.e., that, in spite of the retrospective effect given by the explanation, the invalidity of anything already done is unaffected, i. e., that an instrument invalid under the Transfer of Property Act is invalid still.

20. The argument addressed to us is based on the supposition that the evidence establishes that one witness saw the zamindar actually execute Ex. A and another took an acknowledgment from him. I am not prepared to say that this is so. Therefore, if my view of the effect of the enactments quoted above is wrong, I am still not satisfied that Ex. A is good as a mortgage. My reasons are as follows: P.W. 1 says he was not present when defendant 1 signed the mortgage and this witness did not see him sign it. At the same time he says that Manickam Chetti and Muthuvelu Melavarayam were present when he attested Ex. A. P.W. 2 purports to have been present when the zamindar signed. He says that Muthuvelu Melavarayan, Ramaswami Iyer and Muthuswami Chetti were present when he signed the document. He also says that Muthuswami was present when he, the witness, attested the document. P.W.3, the zamindar's agent, on the other hand, says that Muthuswami Chetti Muthuvelu Melavarayan, Manickam Chetti as well as another man were all present when the Rajah executed it. There is thus a direct conflict of evidence among these three witnesses, none of them persons of any particular standing. P.W. 3, the defendants' agent, seems to have ranged himself against the zamindar because he was requested to return the power-of-attorney he held from him. As regards the promissory notes it has been strenuously contended that the execution of Ex. B has been proved by P. Ws. 1, 3 and 5 and Ex. D by P. Ws. 3 and 5 and that, therefore, the plaintiff is entitled to rely on the legal presumption contained in Section 118, Negotiable Instruments Act, Much stress was also laid on the fact that a car was actually purchased by the zamindar in Madras as pleaded in Ex. H, a written statement in the Small Cause suit.

21. There is very little in this. It is very likely true, as the District Judge points out, that it has been used to give verisimilitude to the plaintiff's story. Further, it is said that there is an admission in Ex. A of execution of the promissory notes and were the plaintiff proceeding against the executant of Ex. A, it would be strong evidence in the plaintiff's favour. Apart from one's strong disinclination in a case of this sort to found on a bare legal presumption, I am clearly of opinion that by the facts of this case these presumptions have been displaced and that the onus has been shifted to the plaintiff to make out that full consideration has been paid as alleged: see Sundarammal alias Sow bhagyammal v. Subramania Chetti [1915] 29 M.L.J. 236 and Sami Sah v. Parthasarathi Chetty 31 IND.CAS. 739. The zamindar, when he is alleged to have executed these promissory notes, was about 18 1/2 years old. Arunachala Chetti and his son Swaminathan (the payee of the promissory notes) were adjudicated insolvents in 1918, though this insolvency was annulled in 1921. There is no evidence forthcoming as to how these considerable sums of money could have been supplied by Swaminathan and his father, I do not think it is necessary to go through the findings of the learned District Judge in detail which lead him to the conclusion that the consideration for these promissory notes is fictitious. For instance, they both recite an obviously false purpose-' food expenses and the purchase of stores'-and Ex. D appears to me to be a patent fabrication and there can be no doubt, on a comparison of the signature with the admitted genuine signature, that it is not that of the zamindar. As to Ex. B the signature is no doubt authentic, but circumstances in the appearance of the note suggest grave suspicion almost amounting to certainty that the writing has been filled in after the signature was taken. The conclusion as to the promissory notes-have been summed up by the learned District Judge in para. 25 of his judgment and it is sufficient to say that I find no reason to disagree with them. As my learned brother points out, the suits should have been dismissed. Defendant, however, has not appealed. In the result therefore, the decree of the lower Court must be confirmed and the appeal dismissed. There was, however, no reason for the order made by the learned District Judge as to the deposit of the money realized on the decree with the Official Assignee, Madras, since it is admitted that the insolvency has been long ago annulled. With that modification and under the circumstances stated the appeal is dismissed with costs. I agree with the order on the petition C.M.P. 3440 of 1926 for admission of documents.


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