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Sesharal Bajna Vs. V.C. Subramanian - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Case NumberC.S. No. 125 of 1980
Judge
Reported inAIR1983Mad368
ActsNegotiable Instruments Act, 1881 - Sections 7, 13 and 20
AppellantSesharal Bajna
RespondentV.C. Subramanian
Appellant AdvocateP.S. Surana and ;G.V.S. Iyer, Advs.
Respondent AdvocateN.S. Varadachari and ;N.C. Ramesh, Advs.
Cases ReferredM. P. R. M. Irulandi Mudaliar v. Syed Ibrahim
Excerpt:
.....instruments act, 1881 - suit for recovery of rs. 120400 - facts revealed plaintiff had taken blank promissory notes from defendants and filed suit without filling date under authority given to them under section 20 - such alteration affects contract and no decree can be passed on such instrument which had no legal existence on date of filing suit - suit based on invalid instrument liable to be dismissed. - - therefore the plaintiff has filed the suit without filling those particulars and has filed the original promissory note as it was executed by the defendants 1 and 2. 3. when the executants failed to pay the interest due under the promissory note for two months, the plaintiff pressed for the same and thereupon the third defendant, namely, the wife of the first defendant,..........statement?the following additional issue was framed by maheswaran j. on 16-2-1983-'whether the suit promissory note is vitiated by material alteration?'this is an unusual suit filed by the plaintiff on a blank promissory note without the date of the promissory note and the name of the promisee. however, even when the name of the promisee is not found in the negotiable instrument, the plaintiff has chosen to file the suit on the promissory note in his own name. in other words, it is very important to note that the suit is not based on the original cause of action, but only on the promissory note purporting to bear the date 25-11-1976. it is strenously contended on behalf of the defendants that suit on a blank promissory note without the particulars of date and the promisee is not a.....
Judgment:

1. Suit on a promissory note to recover a sum of Rs. 1,20,400/- from the defendants.

2. The plaintiff's case is as follows :

Defendants 1 and 2. who are father and son, executed a promissory note in favour of the plaintiff on 25-11-1976 for a sum of Rs. 70,000 agreeing to repay the sum with interest at 24 per cent per annum. The date of the promissory note and the name of the promisee were not filled up in the promissory note and the defendants authorised the plaintiff to fill up those particulars himself. Therefore the plaintiff has filed the suit without filling those particulars and has filed the original promissory note as it was executed by the defendants 1 and 2.

3. When the executants failed to pay the interest due under the promissory note for two months, the plaintiff pressed for the same and thereupon the third defendant, namely, the wife of the first defendant, executed a letter of guarantee on 1-2-1977, for repayment of the same. All the three defendants executed the letter of guarantee in favour of the plaintiff acknowledging the liability under the promissory note. Thus, the defendants 1 and 2 as principal borrowers and the third defendant as guarantor are jointly and severally liable for the suit claim. No amount was paid in spite of lawyer's notice. Hence the suit.

4. The defendants 1 and 3 filed a common written statement as follows: Defendants 1 and 2 did not borrow any amount from the plaintiff on 25-11-1976, but they signed a blank promissory note and gave it to the plaintiff. The plaintiff has several concerns in different names as partner, and the second defendant had dealings with the plaintiff's various concerns and he (plaintiff) habitually takes blank promissory notes from the borrowers. In particular the plaintiff took the signature of defendants 1 and 2 in blank promissory note mentioning the figure of Rs. 70,000 and the year 1971 and another blank promissory note for a similar sum in 1973. Neither the date nor the name of the promisee was mentioned in the said promissory note. The defendants have fully settled the amounts due under the dealings with the plaintiff's concerns, but the plaintiff did not return the promissory notes. Even the letter of guarantee was signed only on a blank paper. The defendants then contended on the additional written statement that the promissory note is vitiated by material alteration and that the suit itself is liable to be dismissed since it was not a promissory note on the date of the filing of the suit.

5. The following issues were framed for trial by Shanmukham J. on

30-8-1982:

1. Did defendants 1 and 2 borrow Rupees 70,000 and execute a promissory note for the said sum?

2. Was the guarantee dated 1-2-1977 executed by the third defendant or was the blank form filled up by the plaintiff?

3. Is the suit barred by limitation?

4. To what relief is the plaintiff entitled?

The following additional issue was framed by Shanmukham J. on 9-11-1982-

Is the suit liable to be dismissed for reasons set out in the additional written statement?

The following additional issue was framed by Maheswaran J. on 16-2-1983-

'Whether the suit promissory note is vitiated by material alteration?'

This is an unusual suit filed by the plaintiff on a blank promissory note without the date of the promissory note and the name of the promisee. However, even when the name of the promisee is not found in the negotiable instrument, the plaintiff has chosen to file the suit on the promissory note in his own name. In other words, it is very important to note that the suit is not based on the original cause of action, but only on the promissory note purporting to bear the date 25-11-1976. It is strenously contended on behalf of the defendants that suit on a blank promissory note without the particulars of date and the promisee is not a negotiable instrument in the eye of law, and, therefore, the suit itself is not maintainable. Therefore, these points covered by the additional issues were taken as preliminary issues at the time of trial.

Additional Issues 1 and 2: A few facts may be state for appreciating the points in controversy. Defendants 1 and 2 namely father and son executed a promissory note for a sum of Rs. 70,000 Admittedly, the name of the promisee and the date of promissory note were left blank. The first notice of demand (Ex. P-4) by the plaintiff was issued through his lawyer on 23-3-1979. In this notice, there is no mention of any blanks in the promissory note. On the other hand, the lawyer's notice reads that the defendants 1 and 2 executed the promissory note on 25-11-1976 in favour of the plaintiff. There was no response and this suit was filed on 2-2-1980 on the blank promissory note, i.e., without filling in the material particulars, namely, the date and name of the promisse. The defendants filed a written statement contending that the claim is barred by limitation, that they never borrowed any money from the plaintiff on 25-11-1976 and that the suit laid on the incomplete promissory note is not maintainable. Two years and nine months after the filing of the suit the plaintiff filed application No. 4350 of 1982, praying for permission of the court to allow the plaintiff to fill up the blanks in the incomplete promissory note. The application was hotly contested and Maheswaran J. in his order dated 21-1-1983, allowed the application and permitted the plaintiff to fill the name of the payee and the date in the promissory note without prejudice to the contentions of the defendants with regard the limitation, material alteration, the validity of the instrument etc. Accordingly, the plaintiff has filled up the blanks and the suit was taken up for trial. The plaintiff was examined as P.W. 1 and he has given evidence in respect of the averments in the plaint. At this stage, learned counsel for the defendants requested the court to take these two additional issues as preliminary points and it is in this context these additional issues are taken up for consideration.

6. Section 13 of the Negotiable Instruments Act defines a negotiable instrument. S. 87 deals with material alteration on a negotiable instrument and it runs thus-

'Any material alteration of a negotiable instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto unless it was made in order to carry out the common intention of the original parties :'

Section 20 deals with inchoate stamped instruments. Learned counsel for the plaintiff relies upon S. 20 of the Act and argues that it gives prima facie authority to the holder to complete the negotiable instrument and that this position was accepted by Maheswaran J. in Appln. No. 4350 of 1982 granting permission to fill up the blanks. I may at once state that the permission granted by the court in the said application is clearly without prejudice to the contentions of the defendants regarding all points of dispute. Therefore, the permission granted by the court does not cure the defect in the instrument and it is certainly open to the defendants to contend that the instrument was not valid on the date of the filing of the suit on 2-2-1980.

7. Therefore, the more important point for consideration is, whether the plaintiff is entitled to fill up the blanks long after filing of the suit. I have carefully considered this argument and I am of opinion that until the drawee's name is inserted before the filing of the suit the instrument is not a promissory note in the eye of law. In other words, unless the plaintiff or the holder exercised the authority under S. 20 of the Act and until it is filled up, it does not import a contract with him and he cannot recover the amount on the instrument. The English law on this subject is that the instrument must be filled up within a reasonable time and strictly in accordance with the authority given. When the holder does not exercise the authority in filing up the blanks, he cannot of course derive no benefit from it. The American decisions go to the extent of holding that his act is an utter nullity and no advantage can accrue to him even to the extent of the authority given to him. In Griffiths v. Dalton, 1940 2 KB 264, it has been held that 'the prima facie authority to fill in the date given by S. 20 of the Bills of Exchange Act, 1882, to the person in possession of the cheque, must, at common law, be exercised within a reasonable time', in M. N. P. L. Firm v. Kirman Gyan, (1912) 17 Ind Cas 916 the Lower Burma Chief Court held that 'a payee can fill in a blank inchoate instrument and sue on it himself after filling it or endorse it to someone: but no decree can be passed on a blank instrument not containing the name of the payee.' In Brijbhusan Pande v. Ramjanam Kuer, AIR 1932 Pat 314, a single Judge has held that where the instrument does not mention the name of the payee at all, no decree can be passed on such instrument. It is, of course, stated therein that the payee can fill in the blank instrument and unless he does so, he is not entitled to bring a suit and obtain a decree. In Ramaswami Reddi v. K. Doraiswami Reddi : AIR1957Mad715 , a Division Bench of our High Court held that the remedy of the promise is to file a suit on the original cause of action and that he can treat the promissory note as a security or voucher.

8. As against this, learned counsel for the plaintiff cited before me the ruling of our High Court reported in M. P. R. M. Irulandi Mudaliar v. Syed Ibrahim : AIR1962Mad326 , wherein Ramachandra Iyer Officiating Chief Justice, ( as he then was) held that 'where a suit was filed on a duly stamped promissory note in which blank space was left for filling the name of the payee without filling in the payee's name, the promissory note can be returned to the plaintiff for filling in his name as payee, and that the person to whom such a promissory note is given has prima facie the authority to fill the payee's name'. But the same decision says that it will not preclude the defendant from raising the contention that the promissory note is inadmissable in evidence. Further, that was a case where the name of the promisee alone was left blank. But, in the instant case on hand even the date of the instrument was left blank.

9. Bearing these principles of decided cases in mind, let us construe this instrument. The plaintiff who claims to be the promissee had not filled up the name of the promisee or the date of the promissory note within a reasonable time. It may be recalled that the instrument is dated 25-11-1976, and the suit was filed on 2-2-1980 relying upon a letter of acknowledgment. Even after the filing of the suit, the plaintiff waited for two years and nine months after the written statement and the additional written statement were filed. By no stretch of imagination can it be said that plaintiff exercised the statutory authority under S. 20 of the Negotiable Instruments Act within a reasonable time. In as much as he has filed the suit on the promissory note with the name of the promissee and the date of the promissory note left blank, the instrument is not valid in law. Therefore, the plaintiff has to be non-suited since he has not even cared to file the suit on the original cause of action. Thus, even if it is held that there is no material alteration in the promissory note, the instrument itself is invalid and no suit can be filed on the promissory note even without the date of the instrument which seriously prejudices the defendants with reference to the law of limitation, etc., Further, the plaintiff appears to be a professional money lender and he has been keeping the blank instrument with him for several years, and such a transaction, even if the defendants have signed their names in the incomplete promissory note, should not be upheld on grounds of public policy also. It is not as if the instrument is a bill of exchange, and it is gathered from the evidence that he gets signatures of the drawers on blank promissory notes and then uses them to his advantage whenever required. Thus, the sanctity of the promissory note is lost and such a shady transaction cannot be upheld by a court of law.

10. The evidence of P. W. 1 also fortifies my conclusion on this aspect. P. W. 1 is the plaintiff and he is a partner of Uttam Prabhat Industries comprising of six partners. The first defendant is doing the same business in stainless steel with the plaintiff-firm. Admittedly, P.W. 1 used to finance the first defendant by advancing moneys for commission and interest. P. W. 1 used to finance the first defendant by advancing moneys for commission and interest. P. W. 1 further conceded that he used to advance moneys in the name of the other partners of the firm also. P. W. 1 is admittedly an income-tax and wealth tax assessee and he has conceded that the suit sum advanced to the defendant will be reflected in his income-tax returns, but he has not chosen to produce the same. Be that as it may, he has not even produced his account books to show on what date he advanced the sum of Rs. 70,000 to the defendants 1 and 2. He has stated in the same breath that he does not have any accounts for his individual transactions, and therefore, the account books will not reflect this transaction on the promissory note. He has also not produced his firm's accounts. While so, it is understandable as to on what basis he says that he advanced the sum on 25-11-1976. On the other hand, in cross-examination, P. W. 1 stated that he saw the promissory note in court with the date, and therefore, he says that he advanced it on that date. Of course, it was urged on behalf of the plaintiff that the defendants have given a guarantee letter on 1-2-1977 and from that he infers the date of the promissory note when he is said to have lent money. But these acknowledgment letters Exs. P-2 and P-3 are also assailed by the defendants who have stated that the plaintiff, who is a professional money-lender, has obtained their signatures in various blank forms and letterheads and used them in this case. A perusal of Exs. P-2 and P-3 would show that there is force in the contention of the defendants. The typing and rubber stamp seals are adjusted to the signatures. Be that as it may, the more important point is, the date of the promissory note itself is blank and the subsequent filling, though with the permission of the court, will amount to material alteration. Obviously, the permission was granted without prejudice to the contentions of the defendants. Therefore, there is force in the contention of the defendants that they were having dealings with the plaintiff-firm who were also dealing in the same stainless steel goods business and so, the plaintiff or his partners have taken blank promissory notes from the defendants and filed the suit without even filling up the date under the authority given to them under S. 20 of the Negotiable Instruments Act. Now, the position is the alteration affects the very contract itself and no decree can be passed on such an instrument which had no legal existence on the date of the filing of the suit.

11. The result is, both these issues are answered against the plaintiff and consequently the instrument is not valid in law and the suit based on it has to be and is hereby dismissed. I direct each party to bear his or her own costs.

12. Suit dismissed.


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