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(Bhavanasi) Rangappa and anr. Vs. (Kamisetti) Venkataswami - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtChennai
Decided On
Reported inAIR1936Mad334
Appellant(Bhavanasi) Rangappa and anr.
Respondent(Kamisetti) Venkataswami
Cases ReferredBarclay v. Gooch
Excerpt:
- - the decision is, if i may say so, perfectly intelligible, because the sale price represents money due from the purchaser to the vendor. it is very doubtful if this case can be regarded as good law in the light of later authorities. but even assuming it to be good law, it does not follow that the executant of the, promissory note may not also have a remedy by way of indemnity......defendant, it was arranged that on behalf of the defendant the present plaintiffs should execute a promissory note for rs. 850 in favour of subramaniam. a promissory note was accordingly executed by the plaintiffs to subramaniam on 24th march 1926. i am willing to accept in a general way the story of the defendant that the idea at the time was that the defendant should send money to the plaintiffs as soon as the defendant went to his village. though certain other particulars pleaded as part of this agreement are found against by the courts below, the lower appellate court has come to the conclusion that the arrangement between the defendant and the plaintiffs must have been that the defendant should send plaintiffs money as soon as he reached home. but i am not on this ground able to.....
Judgment:

Varadachariar, J.

1. The main point for decision in this second appeal is a question of limitation and that turns upon the true legal effect of certain transactions which took place between the parties and one Subramaniam on 23rd and 24th March 1926. The defendant had purchased some land from Subramaniam and owed him money in that connection. There was a suit, O.S. No. 588 of 1924,. arising out of that sale and it was compromised on 23rd March 1926 by Ex. A. It is sufficient to say that under the compromise the defendant and another agreed to pay a sum of Rs. 850 to Subramaniam; but as they had no money to pay on that date and Subramaniam was not prepared to accept a promise from the defendant, it was arranged that on behalf of the defendant the present plaintiffs should execute a promissory note for Rs. 850 in favour of Subramaniam. A promissory note was accordingly executed by the plaintiffs to Subramaniam on 24th March 1926. I am willing to accept in a general way the story of the defendant that the idea at the time was that the defendant should send money to the plaintiffs as soon as the defendant went to his village. Though certain other particulars pleaded as part of this agreement are found against by the Courts below, the lower appellate Court has come to the conclusion that the arrangement between the defendant and the plaintiffs must have been that the defendant should send plaintiffs money as soon as he reached home. But I am not on this ground able to agree with the learned Subordinate Judge that the cause of action for a suit by the plaintiffs against the defendant accrued on the date of the promissory note itself.

2. There is some confusion in the argument in para. 10 of the lower appellate Court's judgment. A promissory note is no doubt ordinarily payable immediately, but that is so as between the parties to the promissory note, not as between the plaintiffs and the present defendant. That is why the attempt on the part of the defendant was to bring the case under Article 65, Limitation Act, by suggesting that the cause of action arose a few days after the date of the promissory note, because money should have been paid by the defendant to the plaintiffs within those few days. The trial Court held that the suit was governed by Article 61, Limitation Act. This no doubt is a possible view and is justified by the fact that in Girraj Singh v. Mulchand (1907) 29 All 627, the Allahabad High Court dealing with somewhat similar circumstances, left it open whether a suit of this kind will be governed by Article 61 or Article 83. But as I understand the transaction between the parties, the position was that as between Subramaniam and the defendant, Subramaniam released the defendant from liability, in consideration of the plaintiffs executing the promissory note for the amount due by the defendant to Subramaniam. In such circumstance it would not be correct to describe the present case as one of money payable to the plaintiffs for money paid for the defendant. I would prefer to hold in accordance with the observations of the Privy Council in National Bank of Upper India v. Bansidhar 1929 57 IA 1, that as between Subramaniam and the plaintiff, the plaintiffs became the principal debtor but that as between the plaintiffs and the defendant, the defendant remained the person ultimately liable for the discharge of the debt. The arrangement that the defendant should send money immediately to the plaintiffs merely amounts to this: that the defendant should put plaintiffs in funds to meet the pro-note claim.

3. I am not able to agree with Mr. Narasimhachariar that the relationship between the plaintiffs and the defendant is that of creditor and debtor and that the plaintiffs became absolutely entitled to the money whether he paid Subramaniam or not or was sued by Subramaniam or not. Whether plaintiffs are to be treated as-having entered into the transaction as an agent of the defendant or at the request of the defendant, the position will be that the defendant should put plaintiffs in funds to pay off Subramaniam and in default of doing so, should be held bound to indemnify the plaintiffs, if ever the plaintiffs should be compelled to pay. In this view Article 83 will be the proper article applicable to the suit. As the promissory note amount was admittedly paid off only on 7th October 1931 this suit is in time.

4. On behalf of the respondent, Mr. Narasimhachariar drew my attention to the case in Dorasinga Tevar v. Arunachalam Chetti (1900) 23 Mad 441 and to certain observations in Komu Kutti v. Kumara Menon 1919 35 MLJ 692. In those cases the Court had to construe a written agreement between the parties and all that was held was that where a purchaser of property from one who is indebted to others agrees out of the sale price to pay off the debts due from the vendor to the others, the contract between the purchaser and the vendor is not merely one of indemnity, but is an absolute contract to pay; that therefore the vendor is entitled to sue the purchaser for the consideration even though the creditors might not have sued the vendor. The decision is, if I may say so, perfectly intelligible, because the sale price represents money due from the purchaser to the vendor. The only result of the direction or arrangement to apply that amount in discharge of debts due to others by the vendor is that that amount is retained in the hands of the purchaser as an agent for the vendor to disburse it in accordance with the vendor's directions. So long as the person in such a position does not enter into direct relations with the creditors so as to undertake a personal liability on himself, these directions are countermandable, so that the purchase money may resume its character of money payable by the purchaser to the vendor. Decisions of that kind bear no analogy to the present case. I must also point out that even the decision in Dorasinga Tevar v. Arunachalam Chetti (1900) 23 Mad 441 does not lay down that the vendor's only remedy was to sue for payment of money on the basis of the original debt, and that the vendor will not also be entitled to a further remedy by way of indemnity in the event of his having been compelled by his own creditor to pay. Reliance was placed by Mr. Narasimhachariar on the decision in Barclay v. Gooch 170 ER 459 to the effect that from the time a person executes a promissory note to another in discharge of a debt payable to that other by a third person, the executant may sue that third person for the amount of the promissory note. It is very doubtful if this case can be regarded as good law in the light of later authorities. But even assuming it to be good law, it does not follow that the executant of the, promissory note may not also have a remedy by way of indemnity. I would, therefore, set aside the decree of the lower appellate Court which is based only on the plea of limitation. (The remaining portion of the judgment is not necessary for purposes of this report.)


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