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Ammalammal and ors. Vs. Gnanammal and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Case NumberLetters Patent Appeal No. 54 of 1949
Judge
Reported inAIR1954Mad473; (1953)2MLJ649
ActsContract Act, 1872 - Sections 38
AppellantAmmalammal and ors.
RespondentGnanammal and ors.
Appellant AdvocateS. Thyagaraja Iyer, Adv.
Respondent AdvocateT.R. Srinivasan, ;S. Gopalaratnam and ;V.S. Rangaswami Iyengar, Advs.
DispositionAppeal allowed
Cases ReferredBarber Maran v. Ramana Gounden
Excerpt:
contract - discharge of debt - section 38 of contract act, 1872 - promissory note executed in favour of two promisee - one of co-promisee died - whether payment to one promisee sufficient discharge - as per section 38 payment to one co-promisee under promissory note will constitute sufficient discharge of debt - debt discharged properly. - - a reading of the judgment as a whole clearly leads to the conclusion that it was based upon the language of section 38 of the contract act......representatives of the first defendant, raghava reddi, are the appellants. on 26th october 1933, raghava reddi executed a promissory note, ex. a, for a sum of rs. 1000 in favour of two persons, munuswaml reddi and his wife, rajammal. rajammal died sometime in july 1934, leaving behind a will, ex. c. l, dated 19th june 1934, whereby she bequeathed her interest in the promissory note to her sister, gnanammal. on 11th may 1936, raghava reddi sold under ex. e some lands to munuswami reddi in full satisfaction of the promissory note. ex. a. the sale was for a sum of rs. 1045 that being the amount due on the promissory note on that date. on 5th november 1938, gnanammal filed the present suit against raghava reddi to recover hall the amount due on the promissory note -- o. s. no. 150 of 1939.....
Judgment:

Venkatarama Aiyar, J.

1. The legal representatives of the first defendant, Raghava Reddi, are the appellants. On 26th October 1933, Raghava Reddi executed a promissory note, Ex. A, for a sum of Rs. 1000 in favour of two persons, Munuswaml Reddi and his wife, Rajammal. Rajammal died sometime in July 1934, leaving behind a Will, Ex. C. l, dated 19th June 1934, whereby she bequeathed her interest in the promissory note to her sister, Gnanammal. On 11th May 1936, Raghava Reddi sold under Ex. E some lands to Munuswami Reddi in full satisfaction of the promissory note. Ex. A. The sale was for a sum of Rs. 1045 that being the amount due on the promissory note on that date. On 5th November 1938, Gnanammal filed the present suit against Raghava Reddi to recover hall the amount due on the promissory note -- O. S. No. 150 of 1939 on the file of the District Munsif's Court, Chingleput. The allegations in the plaint are that Rajammal had advanced half the amount under the promissory note, Ex. A., and that the plaintiff had become entitled to it under her Will, Ex. C. Raghava Reddi contested the suit on several grounds. But, for the purposes of the present appeal, it will be sufficient to refer to one of them. He pleaded that by the execution of the sale deed. Ex. E, the promissory note, Ex. A, had become fully ischarged and that no suit was maintainable thereon.

The District Munsif of Chingleput agreed with this contention and dismissed the action. The plaintiff preferred an appeal, A. S. No. 196 of 1943 on the file of the Sub Court, Chingleput. The Subordinate Judge held that the sale deed, Ex. E, was not binding on Rajammal and that the plaintiff, as her legatee, was entitled to recover half the amount due under the note. He accordingly decreed the suit. Raghava Reddi having in the meantime died, his legal representatives preferred an appsal to this Court, S. A. No. 448 of 1946. This was heard by Panchapagesa Sastri J. He agreed with the Subordinate Judge that the sale deed was not binding on the half share of Rajammal and he accordingly dismissed the second appeal. It is against that decision that the present appeal has been brought under Clause 15 of the Letters Patent, the learned Judge having granted leave therefor.

2. The point for decision is whether the sale

deed, Ex. E, operates to discharge the liability under the promissory note, Ex. A, in full or only as regards the half share of Munuswami Reddi.

3. In -- 'Annapurnamma v. Akkayya', 36 Mad 544 (A), it has been held by a Full Bench of this court that one of several payees of a negotiable instrument can give a valid discharge of the entire debt without the concurrence of the other payees. Munuswami Reddi is one of the payees under the promissory note; Ex. A. and he was competent to grant a discharge of the entire debt, and that is what he purported to do when he took the sale deed, Ex. E, from Raghava Reddi for the full amount due on the promissory note on that day. Exhibit E, therefore, would under the decision in

'36 Mad 544 (A)', operate to extinguish the debt under Ex. A in full and the present suit would not be maintainable. Panchapagesa Sastri J. held that the decision in -- '36 Mad 544 (A)', was not applicable to the facts of this case. He was of the opinion that that decision was based on the view that where there are several promisees they are agents of one another and that they have, only as such agents, power to granta discharge of the debt in full, that when one ofthem dies the agency ceases and that, thereafter,the power becomes incapable of exercise. :In this view, he held that as Rajammal haddied fn 1934, the sal by Munuswami Reddi underEx. E on 11th May 1936 would operate as a discharge only of the interest of Munuswami Reddiunder the promissory note and not that of Rajammal and that accordingly the plaintiff was entitled as legatee of Rajammal to maintain this actionThis conclusion is obviously based on the observations of Sadasiva Aiyar J. occurring at page 552:'As Sir Bhashyam Aiyangar J. put it, the lawlaid down in Section 38 of the Contract Act (and, Imay add Section 165 also) seems to treat each Jointpromisee as a partner or agent of the otherjoint promisees to accept a tender, and, ofcourse, payment after tender Is accepted. A payment to one should therefore be treated as having the legal effect of payment to all.'We have considered the position carefully and weare unable, with great respect, to agree with thelearned Judge that the decision in -- '36 Mad 544(A)', rests on any theory that co-promisees areagents of one another. This will be clear whenregard is had to the facts of that case. There, apromissory note was executed in favour of threepersons, two of whom were minors and one wasa major, and the question raised was whetherthe major payee could grant a discharge so asto bind the minor payees. It was held that hecould. It is impossible to explain this decisionon any theory of agency, because under Section 183 ofthe Contract Act there is no question of a minoremploying an agent. In the whole of the judgement of Sankaran Nair J. there is nothing saidabout the relationship of agency among co-promisees. On the other hand, the decision is founded on the language of Section 38 of the Contract Act,which enacts that an offer to one of several Jointpromisees has the same legal consequence as anoffer to all of them. The learned Judge also relieson the decision in -- 'Wallace v. Kelsall1, (1840) 7 M & W 264 (B), where the facts were that therewere three promisees and a payment was madeto one of them & in an action on the debt, a pleathat by reason of the payment to one of the promisees there was accord and satisfaction was heldto be valid.

Even the observations of Sadasiva Aiyar J. on which obviously the learned Judge founded his views were not, when read along with the other passages in his Judgment, capable of the interpretation which the learned Judge has put upon them. Sadasiva Aiyar J. refers to the inconvenience that would result if it were to be held that a debtor could not obtain a discharge of his debt unless it be by a payment to all the promisees, and observed,

'Supposing that the several Joint promisees quarrel with one another and refuse to join in receiving the money, how is the debtor to make a tender to them jointly in order to prevent interest running, or to bring them together to one place In order to put the money before all of them.'

Then he refers to Section 38 of the Contract Act and holds that if an order to one of several joint pro-misees is valid, a payment to one of them must also be valid. Reference is then made to the decision in -- 'Barber Maran v. Ramana Gounden', 20 Mad 461 (C), where it had been held that a payment to one of two co-mortgagees operated to discharge the mortgage altogether and that such payment was binding on his co-mortgagees. (1840). 7 M & W 264 (B), is next referred to and it is observed that that was the law in England at the time when the Contract Act was passed. Then follows a passage which would appear to conclude the matter. The learned Judge observes:

'In fact the debtor owing money to several joint promisees, a few of whom may die and a few of whom would be minors, would feel the greatest difficulty in discharging his obligation if he should not be allowed to make a bona fide payment to one of 'them.'

So that according to the learned Judge, if one of the co-promisees died, a 'bona fide' payment made to one surviving co-promisee would be valid. In the face of this statement of the law, it is difficult to read in the observations occurring at page 552 the proposition that one promisee stands in the relationship of agent to his co-promisee, and that on the death of the latter, his authority to grant a full discharge ceases. A reading of the judgment as a whole clearly leads to the conclusion that it was based upon the language of Section 38 Of the Contract Act. In 20 Mad 461 (C), which was followed in 36 Mad 644 (A), it was expressly found that the co-mortgagee who had received the amount was not authorised to act as agent on behalf of the other co-mortgagee. In our opinion, therefore, a payment to a payee under a promissory note will have the effect of discharging the debtor from his liability under the promissory note, notwithstanding that one of the co-promisees had died, and in that view, the decision in 36 Mad 544 (A), will apply to the facts of this case.

4. A contention was sought to be raised by Mr. T. R. Srinivasan on behalf of the respondents that Raghava Reddi had knowledge of the claim made by Gnanammal and that therefore the payment would not be binding on her. Reliance was placed on the decision in -- 'Arunachalam Chet-tiar v. Ramaswami lyer' : AIR1928Mad933 . What was held there was that while a promisee has got the right to bind his co-promisee by accepting payment of the debt he has no authority to relinquish any portion of it and such relinquishment would not be binding upon the co-promisees. In this case, the District Munsif finds that the property was sold for a proper price, that it was put into the possession of Munuswami Reddi and that the latter even dealt with it. It is difficult on these facts to appreciate the charge that in discharging Ex. A by executing the sale deed, Ex. E, Raghava Reddi was not acting 'bona fide'. We hold that the sale, Ex. E, dated 11th May 1936 in favour of Munuswami Reddi, who is one of the payees mentioned in the promissory note, Ex. A. would operate to extinguish the liability of Raghava Reddi under Ex. A, and that the present suit is in consequence not maintainable.

5. In this view, it becomes unnecessary to deal with the other questions which were considered by the courts below.

6. In the result the appeal will be allowed and the suit dismissed with costs throughout.


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