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A. Rangaswamy Vs. K. Govindaswamy Naidu and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Case NumberApp. No. 110 of 1957
Judge
Reported inAIR1961Mad434; (1961)2MLJ122
ActsNegotiable Instruments Act, 1881 - Sections 4
AppellantA. Rangaswamy
RespondentK. Govindaswamy Naidu and anr.
Appellant AdvocateS. Mohan Kumaramangalam, ;V. Ramaswami and ;R. Rajagopalan, Advs.
Respondent AdvocateN.R. Raghavachariar, Adv.
Cases ReferredIn Sibrcc v. Tripp
Excerpt:
.....to pay certain sum of money is indispensable statutory requisite without which no instrument in writing can be promissory note - what words would amount to unconditional undertaking to pay is matter of construction of language employed in any instrument - words fulfilling requirement of unconditional undertaking to pay if occurs in any instrument there would not be any difficulty in holding it to be promissory note subject to fulfillment of other requisites of statute - in present case words in instrument contains unconditional undertaking to pay as required by section 4 - instrument consequently was promissory note upon which plaintiff entitled to sue. - - on the same day srinivasalu naidu, in whose favour the aforesaid instrument was executed, endorsed the installment in..........to pay there can he no doubt. the second illustration however seems to show that the express words 'i promise' or 'i undertake' are unnecessary. the form of words is taken from an early english case, casborne v. dutton, salwyn n. p. 1lth edn. p. 401, where according to the learned author the court stated that the words 'to be paid' in the document there sued on amounted to a promise to pay; observing that the same words in a lease would amount to a covenant to pay rent. it does not appear to form a useful general illustration except in the case of a document in that particular form of words. their lordships prefer to decide this point on the broad ground that such a document as this is not and could not be intended to be brought within a definition relating to documents which are.....
Judgment:

Jagadisan, J.

1. On 25th December 1950 one Venkalaswami Naicker. a resident of Adikarapalayam, Tiruchen-gode taluk, Salem Dt. borrowed a sum of Rs. 9000 from A. V. Srinivasalu Naidu, a resident of Appa-nayakkanpatti, Palladam taluk, Coimbatore Dt. and executed an instrument styled as a promissory note with a stipulation to pay interest at 61/2 per cent per annum. On the same day Srinivasalu Naidu, in whose favour the aforesaid instrument was executed, endorsed the installment in favour of his brother-in-law Rangaswami Naidu for valid consideration. Venkataswami Naicker died in or about November 1954. He left behind as his heir his brother, Govindaswami Naidu.

Venkataswami Naicker is also supposed to have executed a testament bequeathing some of his properties to one Govindarajulu Naidu. Rangaswami, the endorsee referred to above filed the suit, O, S. No. 182 of 1955 on the file of the court of tile Subordinate Judge, Coimbatore, seeking to recover the principal sum of Rs. 9000 advanced by Srinivasalu Naidu to the late Venkataswami Naicker together with future interest from Govindaswami Naidu, brother of the lute Venkataswami, impleadcd as the first defendant in the action, and from Govindarajulu Naidu the legatee of the will by Venkataswami impleaded as the 2nd defendant.

The suit was instituted on 2-7-1955. The plaintiff pleaded that though the suit was laid beyond three years from the date of the borrowing it was in time as the original promisor and defendants 1 and 2 were all agriculturists entitled to the benefit of the Madras Ordinance V of 1933, Act V of 1954 and Act 1 of 1955.

2. Defendants 1 and 2 filed separate written statements in the suit. The first defendant pleaded that the late Venkataswami Naicker was his undivided brother and that the properties in his hands are all joint family properties of himself and his brother. He pleaded that the debt incurred by Venkataswami had been fully discharged by payment of cash of Rs. 5000 on or about 2-10-1951, and by delivery of two electric motors of 5 H. P. with pump set worth Rs. 3000 and by delivery of 10 sirens worth Rs. 3000. He denied that either Venkataswami or himself was an agriculturist with-in the meaning of the Ordinance and the Madras Acts V of 1954 and 1 of 1955, and contended that the suit was barred by limitation.

He also raised a further plea that the instrument executed by Venkataswami in favour of Sri-nivasalu Naidu was not a promissory note and was incapable of being negotiated and that therefore a the plaintiff claiming to be an endorsee was disentitled to sue. The written statement filed by the 2nd defendant raised substantially the same contention as those found in the written statement of the first defendant.

3. The learned Subordinate Judge of Coimbatore held that the plea of discharge put forward by the defendants was false. He found that Venkataswami Naicker and the first defendant were agriculturists within the meaning of the Ordinance and the two Madras enactments and that therefore the suit as against the first defendant was in time having regard to the period of exclusion for purposes of limitation found in the statutes. The 2nd defendant was found not to he an agriculturist within the meaning of Madras Act 1 of 1955, and the learned Subordinate Judge was therefore of opinion that the suit must in any event be out of time as against him.

The learned Subordinate Judge took the view that the instrument executed by Venkataswami Naicker in favour of Srinivasalu Naidu was not a promissory note as defined under the Negotiable Instruments Act, and that therefore there was no valid endorsement in favour of the plaintiff. On these findings, the plaintiff was non-suited. A separate set of costs in favour of each of the defendants was also awarded. This tippeal has been pet furred by the plaintiff. (His Lordship agreed (Paras 4 to 8) with the findings arrived at by the Subordinate Judge, except the last one, which he proceeded to consider:)

9. The next question that has to be considered is whether Ex. A. 1 dated 25-12-1950 executed by Venkataswami Naicker in favour of A. V. Sri-nivasalu Naidu is a promissory note as defined by Section 4 of the Negotiable Instruments Act. The pro- missory note is in Tamil and the relevant recitals therein have to be referred to. They arc as follows : (The recitals given in regional language are omitted.) The translation of the document into English made by the court is as follows:

'Promissory note executed on 25-12-1950 in favour of A, V. Srinivasalu Naidu .....by me Venkataswami Naicker..... For my urgent necessity the sum received this day in cash from you as loan is Rs. 9000. On demand, I promise to pay to you or order the sum of Rs. 9000 with interest at Rs. 0-8-4 per month per Rs. 100.

Sd. on four one anna revenue stamps M. K. Venkataswami.'

The tamil words 'Kodukka ullavan'' have been translated as 'I promise to pay'. The learned Subordinate Judge has taken the view that the words 'Kodukka ullavan' can only mean that the executant is liable to pay the amount. In this view of the matter he held that there was no undertaking to pay in Ex. A. 1 and that therefore one of the essential requirements of a promissory note as defined under the Act was not present. Section 4 of the Negotiable Instruments Act is as follows:

'A 'promissory note' is an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.'

An unconditional undertaking to pay a certain sum of money is an indispensable statutory requisite without which no instrument in writing can be a promissory note within the meaning of the Act. What words would amount to an unconditional undertaking to pay is really a matter of construction of the language employed in any instrument. Words like I promise to pay' or 'I do hereby undertake to pay' clearly fulfil the requirement of an unconditional undertaking to pay. When these words occur in any instrument there will not be any difficulty in holding it to be a promissory note if the other requisites of the statute are fulfilled.

Words merely acknowledging liability of the person signing the instrument to pay a certain sum of money or admitting an indebtedness on his part may not amount to an unconditional undertaking to pay even if it were possible to infer an implied promise to pay on the part of the person signing the instrument. If the words of the instrument are sufficiently plain to fasten an unconditional undertaking to pay by the executant even the absence of express words to that effect cannot deprive the instrument of its true character as a promissory note.

The description of the instrument as a promissory note, the language of the instrument taken as a whole, the circumstances under which the document came to he executed, the intention of the parties manifest from the face of the document and the surrounding circumstances have all a cumulative bearing on a proper construction of the instrument whether it is a promissory note or not

10. The learned Subordinate Judge relied, upon two decisions of this Court in holding that Ex. A. 1 is not a promissory note as defined by Section 4 of the Act. The first decision is that reported in Tirupathi Goundan v. Rama Reddi, ILR Mad 49. In that case a debtor signed and delivered io his creditor an unstamped document as follows:

'Tile account executed on ..... by .... to .....The amount which I have this day received from you in cash is Rs. 700. This sum I am bound to pay you. Therefore adding to this sum interest at 8 annas per cent per mensem, I am liable to pay. This is the account in this manner executed with my consent.'

The suit was laid to recover the money lent as evidenced by the document. The question was whether the document was a promissory note within the meaning of Section 4 of the Negotiable Instruments Act or A mere acknowledgment of liability falling tinder Article 1 of Schedule 1 of the General Stamp Act. A Division Bench of this Court consisting of Subramania Aiyar and BensOn JJ. observed thus:

'The only question is whether the words therein T am liable to pay' can be held to be an 'undertaking' to pay within the meaning of Section 4 of the Act. The construction depends on the actual words used rather than what their effect may be as regards the rights of the parties. Examining the document in this light, we are of opinion that the words do not amount to an undertaking to pay, but constitute only an acknowledgment of liability to pay-'

We do not know what the exact tamil equivalent of the words 'liable to pay' occurring in the document forming the subject-matter of the decision cited above. We regard the decision as once turning upon the language of the instrument which came to be considered by their Lordships. In the matter of interpretation of documents there cannot be any such tiling as a binding precedent as the language of no two instruments can exactly be the same.

11. The second case relied upon by the court below in support of its conclusion is the decision in Vaidianatha Chetti v. Tirumalai Reddiar, 1934 68 MLJ 315: AIR 1934 Mad 220 . The words of liability occurring in the document which was considered in that decision were 'Kodukka ullavan''.

Krishnan Pandalai J. followed the decision in ILR Mad 49 and construing the tamil words as meaning only an admission of liability held that the instrument in question was not a promissory note. At p. 316 (of Mad LJ) : (at pp. 220-21 of AIR) the learned judge observed as follows:

'On the first point as to what Ex. A really amounts to, the learned judge has referred to a decision in ILR Mad 49, where, as in this case, instead of the usual undertaking which should be contained in a promissory note 'I shall pay or 1 undertake to pay etc'., the words of liability were 'I am liable to pay', a Bench of this Court held that such an instrument does not contain any undertaking to pay and so held it was not a promissory note. No doubt, another Bench in Muthu Sastrigal v. Viswanatha Pandara Sannadhi, ILR Mad 680 ; AIR 1914 Mad 657 (2)), reserved their opinion about this case but neither they nor' any Bench has overruled it or dissented from it. Although, if I were competent, I would have my own views on the subject, I am bound by this decision.'

'In ILR Mad 660: AIR 1914 Mad 657 (2) ), Sadasiva Iyer J, expressed a doubt regarding the correctness of the decision in ILR Mad 49. In that case a Varthamanam teller was as follows:

'Amount of cash borrowed of you by me is Rs. 350. I shall in two weeks' time, retaining this sum of Rs. three hundred and fifty with interest thereon at the rate of rupee one per cent per month, get back this letter.'

A Division Bench consisting of Sadasiva Iycr and Spencer JJ. held that the varthamanam letter contained an unconditional undertaking to repay the borrowed money and was therefore a promissory note. Referring to ILR Mad 49, Sadasiva Iyer J. observed as follows:

'As regards ILR Mad 49, the language of the document in Question in that case was quite different and very vague. Even so, I wish (with the greatest respect to the Judges, who decided it) to be permitted to reserve my Opinion if a document similarly worded happens to come before me for interpretation.'

In Karuthappa Rowthan v. Moideen Sahib, ILR Mad 370, the instrument which came to be considered was as follows:

'Promissory note executed on ..... in favour of ..... by ..... in the matter of the purchase of piece-goods by me from your shop on the date, the sum found due by me as per patty (list) is Rs. 600 .....which I promise to pay you or to your order On demand with interest at 11/4 per cent. To this effect.....'

The Division Bench consisting of Suridara Aiyar and Phillips JJ. held that the instrument was a promissory note and not a mere recital of liability. Their Lordships observed thus:

'It is no doubt true that the question whether an instrument is a promissory note or not should be judged by the words used, and that the instrument must contain in words an unconditional undertaking to pay a sum of money, and it is not enough that the substantial effect of the instrument should be to make the executant liable to pay a sum of money ..... Several cases have been cited by the learned Advocate General, viz., ILR Mad 49, Govind v. Balwantrao ILR 22 Bom 986, Home v. Redfearn, 4 Bing. N. C. 433 and White v. North, 1849 3 Ex. 689, in support of his argument. But in all these cases there was no language of promise to pay a sum of money. There was an acknowledgment of receipt of money or of indebtedness and an admission that the executant was accountable to the other party.'

12. We shall now refer to two decisions of the Judicial Committee. The first is that in Md. Akbar Khan v. Attar Singh, ILR Lah 557; AIR 1936 PC 171 . Referring to the definition of a promissory note as contained in the Act the Judicial Committee observed thus:

'It is indeed doubtful whether a document can properly be styled a promissory note which does not contain an undertaking to pay, not merely an undertaking which has to be inferred from the words used. It is plain that the implied promise to pay arising from an acknowledgment of a debt will not suffice, for the third illustration indicates that an IOU is not a promissory note, though of the implied promise to pay there can he no doubt. The second illustration however seems to show that the express words 'I promise' or 'I undertake' are unnecessary. The form of words is taken from an early English case, Casborne v. Dutton, Salwyn N. P. 1lth Edn. p. 401, where according to the learned author the court stated that the words 'to be paid' in the document there sued on amounted to a promise to pay; observing that the same words in a lease would amount to a covenant to pay rent. It does not appear to form a useful general illustration except in the case of a document in that particular form of words. Their Lordships prefer to decide this point on the broad ground that such a document as this is not and could not be intended to be brought within a definition relating to documents which are to be negotiable instruments.'

13. The other decision of the Judicial Committee is that in Karam Chand v. Firm Mian Mir Abroad Aziz Ahmad, , Sir George Lowndes delivering the judgment of the Board observed thus at page 123:

'But since the judgment of the Judicial Commissioner' Court, a decision of this Board 63 Ind App 279: AIR 1936 PC 171 has made it clear that the shadow resting upon these exhibits throughout the case was unreal; that documents of this nature which were clearly never intended to be negotiable instruments at all are not promissory notes and are not therefore, for want of a stamp, inadmissible in evidence.'

14. In Sibrcc v. Tripp, (1846) 15 M & W 23, a Memorandum was to this effect: Memorandum--Mr. Sihree has this day deposited with me 500, on the sale of 10,300 31 per cent Spanish, to be returned on demand. 'James T. Tripp.' On this document being tendered in evidence stamped with an agreement stamp, it was objected for the defendant that it amounted to a promissory note, and required a stamp accordingly. The Lord Chief Baron overruled the objection, and received the paper in evidence. At page 29 Pollock C. B. stated the law thus;

'On consideration of the authorities cited, it appears to me that the memorandum did not amount to a promissory note. It is difficult to lay down a rule which shall be applicable to all cases; but it seems to me that a promissory note, whether referred to in the statute of Anne or in the text books, means something which the parties intend to be a promissory note. We cannot suppose that the legislature intended to prevent parties from making written contracts relating to the payment of money, other than hills and notes; and this appears to me to be merely an instrument recording the agreement of the parties in. respect of a certain deposit of money.....'

In S. A. No. 1540 of 1959, Balakrishna Aiyar J. construed the words 'Seluttha ullavan' in an instrument described as promissory note as an undertaking to pay in the context of the other words in it. With respect, we agree with that decision.

15. We are of opinion that the intention of the parties to Ex. A. 1 was to bring into existence a promissory note in respect of the transaction between them. In the context of the other words occurring in Ex. A. 1 the words 'Kodukka ullavan' can be translated as 'I promise to pay'. As pointed out already in English translation made by the court in the present instance adopts the phrase 'I promise to pay' as being equivalent to 'Kodukka ullavan' Ex. A. 1 in our opinion contains an unconditional undertaking to pay as required by Section 4 of the Negotiable Instruments Act, and that therefore it is a promissory note. The plaintiff was therefore a valid endorsee of the note and was entitled to sue upon it.

16. The judgment and decree of the Court below are set aside, and there will be a decree in favour of the plaintiff against the first defendant for recovery of the suit amount as prayed for with costs both here and in the court below. As the suit is barred by limitation against the second defendant, the judgment and decree of the court below dismissing the suit as against the second defendant will stand. The second defendant will not be entitled to any costs here or in the court below.


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