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M. Annapurnamma [Legal Representative of M. Chelamarazu] Vs. U. Akkayya and Two ors. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtChennai
Decided On
Judge
Reported in(1913)ILR36Mad544
AppellantM. Annapurnamma [Legal Representative of M. Chelamarazu]
RespondentU. Akkayya and Two ors.
Cases ReferredWallace v. Kelsall
Excerpt:
.....several payees, validity of. - - if reliance can be placed on the provisions of section 165 that a delivery to one of several joint bailees is good as against all in support of the contention that our answer to the question should be in the affirmative, reliance can equally be placed on the provisions of section 44 that a release by one of several joint promisees does not discharge the others, in support of the contention that our answer should be in the negative; the section distinctly states that it is a joint claim and they must sue jointly. &.w 264, was decided in 1840 and was good law when the indian contract act was passed in 1872, the said act following the principles of the said english decision. 160, to still remain good law and was not;.....for non-performance. the last paragraph of the section provides that an offer to one of several joint-promisees has the same legal consequences as an offer to all of them. it provides in effect that all the joint-promisees get the benefit of the legal consequences, whatever those consequences may be, of an offer, or a tender, to one of them. the section does not deal with the legal consequences of an accepted tender, or of an accepted offer of performance, but with the legal consequences where a tender or offer has been made and the tender or offer has not been accepted. no doubt the last paragraph of the section is general and is not restricted to an offer which has not been accepted, but apparently the legislature were not contemplating the legal consequences of an offer which had.....
Judgment:

Charles Arnold White, C.J.

1. The question raised in the Order of Reference was considered by this Court in the judgment to which I was a party in the case of Ramasami v. Muniyandi : (1910)20MLJ709 . I adhere to the view expressed in that judgment. Section 38 of the Contract Act provides that, where the promisor has made an offer of performance and the offer has been refused, the promisor is not responsible for non-performance. The last paragraph of the section provides that an offer to one of several joint-promisees has the same legal consequences as an offer to all of them. It provides in effect that all the joint-promisees get the benefit of the legal consequences, whatever those consequences may be, of an offer, or a tender, to one of them. The section does not deal with the legal consequences of an accepted tender, or of an accepted offer of performance, but with the legal consequences where a tender or offer has been made and the tender or offer has not been accepted. No doubt the last paragraph of the section is general and is not restricted to an offer which has not been accepted, but apparently the Legislature were not contemplating the legal consequences of an offer which had been accepted but the legal consequences of an offer which has been refused. I do not think we can infer from this enactment that the Legislature intended to lay down by implication that the acceptance of payment by one of several promisees operated as a discharge of the claims of the others. On the other hand, as it seems to me now, Section 45, which deals with the devolution of rights, where a person has made a promise to two or more persons 'jointly', throws very little, if any, light on the question we have to decide. The section prescribes the way in which the rights are to devolve, but says nothing as to how these rights are affected by a transaction between the promisor and one of the promisees. For the purpose of prescribing the way in which the rights are to devolve, it, of course, assumes that these rights exist, but that is all. I do not think that much assistance can be derived from a consideration of the provisions of analogous sections of the Contract Act. If reliance can be placed on the provisions of Section 165 that a delivery to one of several joint bailees is good as against all in support of the contention that our answer to the question should be in the affirmative, reliance can equally be placed on the provisions of Section 44 that a release by one of several joint promisees does not discharge the others, in support of the contention that our answer should be in the negative; and the maxim expressio unius est exclusion alterius applies with equal force to any argument founded on either section. If we are unable to find an answer to the question within the four corners of the Contract Act, we have to look to the general law and to see whether the rule of law, as laid down in Wallace v. Kelsall (1840) 7 M. & W. 264 applies or whether the rule or rather the presumption of equity on which Steeds v. Steeds (1889) 22 Q.B.D. 537 was decided is to prevail.

2. I think the equitable presumption applies, and I do not think this presumption is negatived by the provisions of the Contract Act or rebutted by the facts stated in the Order of Reference.

3. As regards Sections 78 and 82 of the Negotiable Instruments Act, 1881, it seems to me that for the purposes of the question we have to decide the 'holder' of the instrument must be taken to be the three payees, and not one or two of them. I would answer the question which has been referred to us in the negative.

Sankaran Nair, J.

4. A promissory-note was executed by the first defendant in favour of the two plaintiffs who were minors and the second defendant who was not a minor. The suit was brought by the two plaintiffs more than three years after the promissory-note became payable. The question for decision is whether the suit is barred.

5. It was admitted in argument before the Divisional Bench that Section 7 of the Limitation Act did not apply to the case, because under the rulings of this Court it applies only where there is a sole plaintiff or where all the claimants were minors at the time the cause of action arose. Here the second defendant was admittedly not a minor and therefore that section does not apply. See Seshan v. Rajagopala I.L.R.(1890) Mad. 236. But it was argued that under Section 8 of the Limitation Act of 1877 (section 7 of Act IX of 1908) time ran against all the plaintiffs as the second defendant was competent to give a discharge for the satisfaction of the joint claim of himself and the plaintiffs without the concurrence of those two creditors and that therefore the suit was barred against these plaintiffs. There is a conflict of decisions on this point, and the question whether the second defendant was entitled to give a valid discharge of the entire debt without the concurrence of the two plaintiffs was accordingly referred to the Full Bench for decision. It is conceded that if the case Barber Maran v. Ramana Goundan I.L.R.(1897) Mad. 461 is rightly decided, then the plaintiffs' claim is barred. In that case it was held that a payment made to one of two persons jointly entitled under a mortgage bond, who was not an agent of the other, is a valid discharge of the entire debt, and the decision in Wallace v. Kelsall (1840) 7 M. &W.; 264 and Section 38 of the Indian Contract Act were referred to in support of that conclusion. The decision in Wallace v. Kelsall (1840) 7 M. & W. 264 was based upon two grounds. The first was that if after payment of the debt to one of the payees the others died and the only person surviving was the person who received the money he could not have sued for the debt. The second ground was that if the payee who received the debt was barred, he could not be allowed to recover by joining the others in an action to undo his own act. Let us see how far the arguments apply to the case before us. The first ground obviously does not apply because under Section 45 of the Contract Act, unless the contrary intention appears from the contract, the right to claim performance from the defendant rests, as between him and the payees, with them during their joint lives, and, after the death of any one of them, with the representative of such deceased person jointly with the survivor or survivors, i.e., if both the plaintiffs die, the right to claim the money does not survive solely to the benefit of the second defendant, but survives to the benefit of the second defendant and the representatives of the two plaintiffs. The first ground therefore has no application.

6. We have to consider whether the second ground applies. If the plaintiffs Nos. 1 and 2 are now entitled to recover their shares of the debt from the first defendant, then the second ground would not apply. If they are entitled to bring the suit against the first defendant to recover the entire debt on behalf of themselves and of the second defendant and for their joint benefit, and not their share only, then it is clear that the second ground would apply.

7. Now, it appears to me that under Section 45 of the Contract Act they are all bound to sue to recover the entire debt or, if any on a of them refuses to join as plaintiff, he is to be made a defendant and the suit must be for the recovery of the entire debt. The section distinctly states that it is a joint claim and they must sue jointly. This is made clear also in the case of promissory-notes by Sections 78 and 82 of the Negotiable Instruments Act. Section 78 prescribes that the debt should be paid to the holder of the promissory-note and Section 82, to the holder thereof, or in other words to all the payees. I am therefore unable to agree with the decisions which hold that in India each payee must be considered to be entitled to bring a separate suit for the recovery of his own share.

8. Section 38 of the Contract Act also supports the same view. It says that 'an offer to one of several joint promisees has the same legal consequences as an offer to all of them'; and under the first clause the promisor is not responsible for non-performance if his offer has not been accepted. It is difficult to impute an intention to the Legislature that the promisor was entitled to make the offer though the promisee was not entitled to accept it. It seems clear that if the promisor was entitled to offer payment to one of the promisees which the latter was entitled to accept, the promisor cannot be held to be liable to pay over again to the other promisees what he has already paid. The payment therefore must be treated as a complete discharge. The decision that one co-heir cannot give a discharge for the claim of the others does not apply to this case.

9. It is said that the authority of Wallace v. Kelsall (1840) 7 M. & W. 264 has been considerably shaken by later English decisions. It is unnecessary to enquire whether this is so or not as English decisions are not precedents which govern us, but are only referred to for the purpose of finding out the principle underlying those decisions and to explain the Indian Statutes which are usually framed with reference to those decisions. The cases cited are later than the Contract Act. It has also to be remembered that, while the English law as laid down in Wallace v. Kelsall (1840) 7 M. & W. 264 allowed one creditor to give a valid discharge, it did not generally allow him to sue alone. But the Roman law and those Continental systems which followed it allowed one creditor to sue alone for the entire debt. See Evans Pothies I, 144 II, 55 ss. The Contract Act therefore in allowing payment to be made to one creditor was in strict accordance with the Roman and the English law as then understood.

10. I am therefore of opinion that if payment of the debt had been made to the second defendant he was entitled to receive such payment and it would be a valid discharge as against the plaintiffs. I answer the question in the affirmative.

Sadasiva Ayyar, J.

11. The short question referred to the Full Bench in this case is whether one of three payees of a negotiable instrument can give a valid discharge of the entire debt without the concurrence of the other two payees. The learned Judges who referred this point themselves point out that no valid reason exists for any distinction between the claims under a mortgage bond and under a negotiable instrument, so far as the decision of the above question is concerned. I might go further and say that if in the case of a mortgage bond in favour of several joint mortgagees one joint mortgagee can give a valid discharge binding on the others, the right of a joint promisee under a negotiable instrument to give such a valid discharge must stand on even a higher footing, the exigencies of trade requiring even greater protection to be given to those liable under a promissory-note than to those liable under a mortgage bond [see Subba Narayana Vathiyar v. Ramasami Aiyar I.L.R.(1907) Mad. 88 and Konetti Naicker v. Jutu Gopalaiyar (1912) M.W.N.984.

12. There is the direct authority of the decision in Barber Maran v. Ramana Goundan (1897) 20 Mad. 461, laying down the proposition that payment to one joint promisee is valid as against all the promisees. No doubt there are obiter dicta in Jagat Tarini Dasi v. Nabagopal Chaki (1907) 34 Calc. 305, Hossainara Begam v. Rahimannessa Begam (1911) 38 Calc. 342 Ahinsa Bibi v. Abdul Kader Saheb I.L.R.(1902) Mad. 26Sitaram v. Shridhar (1903) 27 Bom. 292 and Sheik Ibrahim Tharagan v. Rama Aiyar (1912) 35 Mad. 685 which express doubts about the soundness of the conclusion in Barber Mayan v. Ramana Goundan (1897) 20 Mad. 461. But in all those cases, the real question was whether the several heirs or legal representatives of a promisee themselves become joint promisees within the meaning of Section 38 of the Contract Act, and it was held that they did not constitute in the eye of the law joint promisees so as to make the payment to one of them have the legal effect of payment to all. In Ahinsa Bibi v. Abdul Kader Saheb (1902) 25 Mad. itself, that learned Judge Sir V. Bhashyam Ayyangar admits that there might be a distinction between payment to one of several joint promisees under the original contract and payment to one of the several heirs of a promisee under the original contract. He says 'it may be that when money is advanced to one, by several persons jointly, each of them authorises the others, by implication, to act on his behalf, and a release or discharge therefore of the claim, by one, is binding upon the others'. I think that this rule is a sound rule as it gives the requisite safety to the promisor. 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. Section 38 of the Contract Act seems to be clear upon the point. The argument that Section 38 merely refers to an offer to one of several joint promisees and does not deal with the effect of a payment to one of several joint promisees seems to me, with the greatest respect, not to create any difficulty. Supposing that; an offer to one of several joint promisees to pay the money is accepted by him instead of being rejected by him, can the debtor who makes the offer withdraw from the offer on the ground that if he makes the payment it will not discharge him from liability to the others? What is the meaning of such an idle offer which, when accepted, does not consummate in payment? I think that an offer with the intention of not completing it by performance cannot be called an offer at all (see Clause 2 in Section 38 which says that the person making the offer must be 'able and willing there and then to do the whole of what he is bound by his promise to do' and must even give the promisee an opportunity of ascertaining the promisor's said readiness). The considerations put forward in Barber Maran v. Ramana Goundan (1897) 20 Mad. 461 and in the notes to Section 84 of the Transfer of Property Act by Shephard, J., seem to me to have much cogency. [See also critical note in (1911) 21 M.L.J. (Journal portion), pages 55 to 59]. Wallace v. Kelsall (1840) 7 M.&.W 264, was decided in 1840 and was good law when the Indian Contract Act was passed in 1872, the said Act following the principles of the said English decision. Section 165 of the Contract Act embodies the same principle for the protection of the obligor, viz., that the bailee's delivery of goods to one joint owner, out of the several joint bailors even without the consent of the others will release the bailee from his obligation. 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. In the case of a mortgage, the debtor may not be in such a great difficulty because there is a provision for tender through court in the Transfer of Property Act itself. (See Section 83.) As Shephard, J., points out, Wallace v. Kelsall (1840) 7 M.&.W 264, was stated in Powell v. Brodhurst (1901) 2 Ch. 160, to still remain good law and was not; intended to be over-ruled. Anyhow, Indian Courts are bound by the Indian Contract Act and even if the authority of Wallace v. Kelsall (1840) 7 M.&.W. 264 has been doubted by English Courts long after the Contract Act was passed in India, Indian Courts must, it seems to me, follow the rule of law laid down in that statute. The argument based on Section 45 of the Contract Act, viz., that all the joint promisees should join in claiming performance and on Sections 8, 51, 78 and 82 of the Negotiable Instruments Act which lead to the same conclusion, viz., that one joint promisee alone cannot compel the promisor to perform the promise without joining the other promisees, these provisions seem to me to have little relevancy to the decision of the question why the provisions made in Sections 38 and 165 of the Contract Act for the protection of the obligor, releasing him from further performance on his legally tendering (and paying as a necessary result if tender is accepted) to one of the several joint promisees, should not be given their full beneficial effect in favour of the obligor. The consideration whether it is not more equitable to treat joint promisees as joint and several promisees also seems to me to have not more force than the counteracting consideration whether it is equitable to make the debtor undergo the risk of inquiries as to the respective rights of the several promisees when he is ready to discharge the obligation in its entirety by payment to any of them, leaving them to decide their disputes among themselves. As Sir Bhashyam Ayyangar, J., put it, the law laid down in Section 38 of the Contract Act (and, I may add Section 165 also) seems to treat each joint promisee as a partner or agent of the other joint promisees to accept tender, and, of course, payment after tender is accepted. A payment to one should therefore be treated as having the legal effect of a payment to all. I would, therefore, answer the question referred to us in the affirmative.

Charles Arnold White, C.J.

13. Following the opinion of the Full Bench we reverse the decree of the lower Court and dismiss the suit as it is barred by limitation. The appellant is entitled to his costs throughout.


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