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K.K. Rm. Muthayee Achi (Died) and anr. Vs. A.K. Rm. S. Rm. Sabbiah Chettiar and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Case NumberA. No. 180 of 1947
Judge
Reported inAIR1951Mad903; (1951)1MLJ573
ActsContract Act, 1872 - Sections 25 and 25(3)
AppellantK.K. Rm. Muthayee Achi (Died) and anr.
RespondentA.K. Rm. S. Rm. Sabbiah Chettiar and anr.
Appellant AdvocateR. Gopalaswami Ayyergar, Adv.
Respondent AdvocateC.S. Venkatachariar, ;D. Ramaswami Ayyangar and ;Ramanathan Chettiar, Advs.
DispositionAppeal dismissed
Cases ReferredApparao v. Suryaprakasa Rao
Excerpt:
.....act, 1872 - appeal against judgment and decree in recovery suit - person agreed to execute promissory note for entire amount found due on looking into accounts - amount due under accounts agreed without any dispute by both parties whose accounts looked into - promissory note for amount due plus rs. 1000 advanced on that date executed - transaction not for settlement of accounts but for ascertainment of money due by looking into accounts before executing promissory note for that amount - amounts correctly ascertained without least dispute on either side - suit filed only after stipulated payment of rs. 3000 not made within time fixed - held, decree granted by lower court for entire balance justified. - - it is too subtle a distinction to apply to a case, like this, concerning..........out of the consideration covered by it, namely, the first three items in ex. p. 2 (a), was at that time barred by limitation, & that, therefore, inclusion of this rs. 4,000 in this promissory note without such consciousness of the debt being barred to that extent, or intention to promise to pay such barred debt, would mean that the debt to this extent at least should have been disallowed by the lower court as not supported by consideration. prima facie, & if the matter had not been covered by decisions, we might have been inclined to agree that there is considerable force in this argument, & that section 25(3), contract act, could reasonably be interpreted in the way mr. r. gopalaswami aiyangar wanted. that was also the view taken by miller j. in ramaswami v. kuppuswami, 20 m. l. j. 656......
Judgment:

Panchapakesa Ayyar, J.

1. This is an appeal against the judgment & decree of the Subordinate Judge of Devakottai in N. S. No. 65 of 1945. That was a suit for recovering Rs. 13,013-14-11, the balance of principal, after giving credit to Rs. 930-8-0 paid on 14-11-1944, & Rs. 556-13-4, the interest due on the promissory note, Ex. P. 1, executed by the deft, on 8-11-1944 for Rs. 13,710, the amount found due on taking of accounts on 8-11-1944, in respect of the dealings between the pltf. Subbayya Chettiar, & the deft's deceased son, Ramanathan Chettiar, & for Rs. 1,000 paid in cash on the date of the promissory note. The defence was that there was no settlement of accounts or taking of accounts on 8-11-1944, that Rs. 1,000 in cash was not paid on that day, that the deft. did not execute Ex. P. 1 with the knowledge that it was a promissory note, & that her signature was obtained to Ex. P. 1 on the fraudulent representation that it was a document for taking a boy in adoption for her deceased son, Ramanathan Chettiar. It was also alleged that the deft's grandson, Ramanathan, was threatened by the pltf. & his friends & pangalis with an adoption to the deceased, Ramanathan thereby depriving him & his brother, Shanmugam, of their expected reversion to the estate of the deft's son, Ramanathan & that the deft's grandson, Ramanathan, therefore, obliged the pltf. in bringing into existence the promissory note, Ex. P. 1, & getting it signed by the deft., Muthayee Achi, the mother of the deceased Eamanathan. The learned Subordinate Judge, after discussing the entire evidence, found that the suit promiasory note was true & was executed by the deft. Muthayee Achi, with full knowledge of its contents. He foand also that the accounts were looked into & settled on 8-11-1944 before the execution of the promissory note, Ex. P. 1, as urged by the deft. & that the suit promissory note was fully supported by consideration. He also held that the deft's. contentionthat the endorsement of payment of Rs. 930-8-0 on EX. P. 1 was not true, valid or binding on the deft. was not sustainable, & that this payment & endorsement were true & that limitation would not operate even if this payment did not exist. In the result, he granted the pltf. a decree as prayed for, but only as against the assets of the deceased Ramanatha in the hands of the deft. as the evidence let in by the pltf. himself showed that all the consideration under Ex. P. 1 represented only the debts of the deceased Ramanatha, & so, should be recovered only from his assets inthe hands of the deft. The deft. died, pending the appeal, & one of her grandsons, Shanmugham, has been brought on record as her legal representative, the other grandson, Ramanathan Chetti, being added as resp. 2 the 1st resp. being the pltf.

We have perused the entire records & heard the learned counsel on both sides. Mr. R. Gopalaswami Aiyangar, the learned counsel for the appellant, raised three main contentions. The first was that the lower Court was wrong in brushing aside the question of the truth or otherwise of the settlement of accounts on 8-11-1944in all its details simply because a promissorynote, Ex. P. 1, was executed, & the suit was basedon it, & that it should have gone into the whole matter on the basis of a settlement of accounts & given its findings item by item. We cannot agree. [His Lordship then considered the evidence and proceeded thus:] Both sides differed only about the rate of interest & the instalments. The pltf. stood out for a higher rate of interest; but, on the advice of the big men, he agreed to take 6 per cent. simple interest per annum. He also agreed finally, on the advice of the big men, to take Rs. 930-8-0 within a week, & RS. 3,000 before the end of Thai (13-2-1945) & the balance conveniently, proportionately with the other creditors. It was also agreed that in case Rs. 930-8-0 & Rs. 3,000 were not paid within the time fixed, the pltf. was free to proceed to recover the entire balance due to him under Ex. P. 1 without reference to the instalments fixed. It is admitted that the Rs. 3,000 was not paid before the end of Thai, that is, before 13-2-1945, & this suit was filed on 1-8-1945 for recovering the entire balance, only after that date had elapsed. We see, therefore, no point inthis argument. When a person agrees to execute a promissory note for the entire amount found due on looking into the accounts & the amount due under the accounts is agreed to without any dispute by both parties, both of whose accounts have been looked into, & a promissory note for the amount due plus Rs. 1,000 advanced on that date is executed, the transaction is really not one of settlement of accounts, but of ascertainment of the money due, by looking into the accounts, before executing a promissory note for that amount. So, the lower Court naturally did not discuss the amounts due under the accounts item by item, but found that both the accounts werelooked into and the amounts correctly ascertained without the least dispute on either side and that Rs. 1,000 was also paid in cash to the defendant for being paid, in sums of Rs. 500 each, to two other creditors.

3. The next contention of Mr. R. Gopalaswami Aiyangar was that even though the lower Court held that the deft. executed the promissory note, Ex. P. 1, with a full knowledge of its contents & that she had not executed it as an authority or consent for an adoption, still it was not proved that the deft. was aware, when she executed Ex. P. 1, that Rs. 4,000 out of the consideration covered by it, namely, the first three items in Ex. P. 2 (a), was at that time barred by limitation, & that, therefore, inclusion of this Rs. 4,000 in this promissory note without such consciousness of the debt being barred to that extent, or intention to promise to pay such barred debt, would mean that the debt to this extent at least should have been disallowed by the lower Court as not supported by consideration. Prima facie, & if the matter had not been covered by decisions, we might have been inclined to agree that there is considerable force in this argument, & that Section 25(3), Contract Act, could reasonably be interpreted in the way Mr. R. Gopalaswami Aiyangar wanted. That was also the view taken by Miller J. in Ramaswami v. Kuppuswami, 20 M. L. J. 656. Hesays,

'There is nothing to show that the debtor recognised that the debt was irrecoverable & still promised to pay it, & the promise to which Section 25 refers seems to me to be a promise to pay despite the consciousness that the debt is barred.'

But, unfortunately for the appellant, two Benches of this Court have held to the contrary. In Apparao v. Suryanarayana, 23 Mad. 94, Boddam & Moore JJ. have held as follows :

'The section does not require that the document should contain a promise to pay a sum of money in consideration of a debt which is barred nor that it should show that the promisor knew that it was barred--for the words used in the section show that it is the debt & not a sum of money in consideration of the barred debt that the promisor should refer to, & there is nothing whatever in the section to indicate that the promisor should do more than promise to pay a debt of which the creditor might have enforced payment but for the law of limitation of suits. The words are not 'promise to pay a sum of money in consideration of a debt,' nor does the section refer to the knowledge of the promisor. Every man is supposed to know the law & in this case the promisor has mentioned the years for which the rent was in arrear & must be supposed to have known the law of limitation, so that, even if that were a necessity in this case, the promisor must be taken to have known that the debt referred to was barred to some extent at all events.'

In Ganapathi v. Munisami, 33 Mad. 159, a Bench of this Court, consisting of Benson Offg. C. J. & Sankaran Nair J. has held that a promise to pay under Section 25, Contract Act, will be enforced if the real consideration is shown to be a barred debt, though no reference is made in the document to such debt, & no knowledge of the debtor that the debt is barred proved before the promise is made.There are also decisions of the Calcutta & Bombay High Courts to the same effect, & it is unnecessary to refer to them as we are bound by the two Bench decisions of this Court referred to above, which have taken a contrary view from that of Miller J. in Ramasami v. Kuppuswami, 20 M.L.J. 656. We must, therefore, hold that the fact that the deft. was not conscious when she executed Ex. P. 1 that Rs. 4,000 out of the consideration thereunder represented a debt which was time barred, & did not promise to pay that debt knowing it to be a time-barred debt. will not make any difference to her liability. Mr. R. Gopalaswami Aiyangar then relied on the obiter in Apparao v. Suryaprakasa Rao, 23 Mad. 94, and urged that the deft. should at least have named the year of those time-barred debts to show that she must have been conscious when she promised to pay those debts that theywere barred by limitation as every person is supposed to know the law. We cannot agree. It is too subtle a distinction to apply to a case, like this, concerning country rustics. When the deft. asked the big men to ascertain the entire liability of her deceased son, Ramanatha, to the pltf. by looking into the accounts, so that she might execute a promissory note for the entire liabilityso ascertained & the Rs. 1,000 intended to be borrowed in cash that day, without stating thatonly debts which were not barred by time shouldbe included within the scope of looking into the accounts she naturally promised to pay every bit of true debt included in the accounts & the promissory note even though it might be time-barred. The evidence in this case, fortunately, shows that the debt of Rs. 4,000 objected to by Mr. R. Gopalaswami Aiyangar must have been true, though time-barred. It is no use saying that the deft. who is a woman not able to look into the accounts,delegated the function of looking into the accounts to others, & that they did not specifically warn her that there were time-barred debts of Rs. 4,000 due by Ramanatha & that she had a right not to promise to pay those debts. The whole question of these time-barred debts to theextent of Rs. 4,000 has only been raised before us, & not in the lower Court.

4. The third contention of Mr. R. Gopalaswami Aiyangar was that the evidence of P. W. 4showed that when the promissory note was executed, the understanding was that Rs. 930-8-0 was to be paid in a week, & Rs. 3,000 before the end of the next Thai, & that the balance was to be paidconveniently proportionately with the other creditors out of the assets of the deceased Ramanatha as & when his outstandings were realised by her, & that, therefore, the lower Court's decree, as on a promissory note, without any reference to thoseconditions, was not sustainable. We cannot agree. This was not a defence set up in the written statement, any more than the contention regarding the alleged barred debts, P. W. 4's evidencestands alone, & may even be incomplete. Thespecific allegation in the plaint regarding the understanding on 8-11-1944, the date of Ex. P. 1, that if either Rs. 930-8-0 or RS. 3,000 was not paid by the time fixed, the pltf. was free to take steps be recover the entire balance due under Ex. P. 1 without reference to the instalments or periods. That plea was not specifically traversed & denied in the written statement, & must, therefore, be taken to be the true arrangement, (specially as some P. Ws. also spoke to it. As the suit was filed only after the stipulated payment of Rs. 3,000 was not made within the time fixed, it is obvious that the lower Court committed no error in granting a decree at once for the entire balance, as it did.

5. In the result, this appeal deserves to be, & is hereby dismissed with costs.

6. (This appeal having been posted for orders on 8-9-1950, the Court made the following order) : After the disposal of the appeal it was represented to us that resp. 2 who was one of the legal representatives of the appellant, was not served. We issued notice to resp. 2 who was served but remained ex parte. We do not see any reason to change our view. We confirm our previous judgment.


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