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Chegamull Suganmull Sowcar by Agent Chunnilal Vs. V. Govindasawmy Chetty and ors. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in112Ind.Cas.491
AppellantChegamull Suganmull Sowcar by Agent Chunnilal
RespondentV. Govindasawmy Chetty and ors.
Cases ReferredAlwar Chetty v. Jagannatha Aiyar
Excerpt:
.....see how it can possibly be suggested that the plaintiff intended to abandon his claim against the estate of chengayya, far from doing this, he got lingayya to join in the execution of the notes of 1920. it is common ground that this man's signature was taken, because it was believed that he was the validly adopted son of chengayya and represented the latter's estate. the promissory notes of 1920 having failed to answer their purpose, in so far as the estate of chengayya is concerned, can the plaintiff not fall back upon his original cause of action? this attempt hopelessly failed. granting that the continuing of the business is a beneficial act, i fail to see why it should be held, that it is the duty of the widow to diminish her resources by withdrawing monies from a profitable venture..........to be decided is: is there any impediment in the way of the plaintiff obtaining a decree on the original notes?6. mr. rangaswami aiyangar for defendants nos. 4 and 5 contends, firstly, that section 41 of the contract act applies and that the plaintiff cannot recover the amount evidenced by the earlier promissory notes. section 41 runs thus: 'when a promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor.'7. this contention is obviously untenable. in the first place, lingayya cannot be regarded as 'a third person' within the meaning of this section. the plaintiff accepted the signature of lingayya, not on the footing that he was a stranger, but that he represented the estate of changayya. that was a mutual mistake, which.....
Judgment:

Venkatasubba Rao, J.

1. Several questions of law have been argued by Mr. Rangaswami Aiyangar; but I do not think that I need, on that account, reserve judgment. The case now comes up before me after report by the Commissioner, who has been appointed to enquire into certain matters, but I understand, that for the purpose of this judgment, it is unnecessary either to look into that report or to go through the pleadings. The facts, as stated from the Bar, may be briefly summarised. The plaintiff lent monies to a firm known as Govindaswami and Co. It originally consisted of two divided brothers, Govindaswami and Chengayya. The former had sons, who do not matter for the present, excepting one of them, Lingayya by name. During the continuance of the firm, Chengayya died in 1916, his widow Chinna Kannammal took her husband's place in the partnership and the business was continued in the same manner as before. She died on the 20th of April, 1920, having ten days before her death, adopted Lingayya as her son. The business of the firm was continued, it having been taken for granted that Lingayya represented Chengayya's estate in the partnership.

2. During the lifetime of Chengayya, the partnership executed two promissory notes in favour of the plaintiff. They ware both dated 8th of June, 1914, the first being for Rs. 5,000 and the second for Rs. 2,500. Title deeds relating to certain properties belonging to Chengayya were depasited with the plaintiff by way of creating an equitable mortgage. At the same time, the plaintiff took from the firm, two memoranda of deposit of title deeds signed by the partners. On the 19th of December, 1920, that is, after the death of Chinna Kannammal, fresh promissory notes were taken by the plaintiff for certain amounts. The sums due under the original two notes were included in them, and, as a matter of fact the fresh notes were intended to supersede the original two notes of of 1914. In 1921, another new promissory note came into existence, which was intended to serve as a renewal of one of the notes of 1920. The promissory notes of 192J and 1921 were signed by Govindaswami and Lingayya, the latter representing the estate of Chengayya.

3. The suit was brought on the note of 1920, which was not superseded, and on the note of 1921, and the plaintiff claimed that a sum of Rs. 60,000 odd was due to him.

4. After the death of Chengayya's widow, his daughters, defendants Nos. 4 and 5, filed a suit in this Court, impeaching the adoption of Lingayya. The suit was filed in February, 1921, and on the 31st August, 1922, a decree was made setting aside this adoption. The result of the decree is, to vest the property of Chengayya in his daughters, defendants Nos. 4 and 5.

5. The case has been argued before me on the footing that in the circumstances that have happened Chengayy's estate is not liable under the notes of 1920 and 1921. The plaintiff nays that he has been driven to fall back upon his original cause of action and sack to enforce his rights under the notes of 1914. The question to be decided is: is there any impediment in the way of the plaintiff obtaining a decree on the original notes?

6. Mr. Rangaswami Aiyangar for defendants Nos. 4 and 5 contends, firstly, that Section 41 of the Contract Act applies and that the plaintiff cannot recover the amount evidenced by the earlier promissory notes. Section 41 runs thus: 'When a promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor.'

7. This contention is obviously untenable. In the first place, Lingayya cannot be regarded as 'a third person' within the meaning of this section. The plaintiff accepted the signature of Lingayya, not on the footing that he was a stranger, but that he represented the estate of Changayya. That was a mutual mistake, which vitiated the transaction and which frustrated the intention of the parties. There is another answer to this contention. The section does not say that the original obligation comes to an end, merely because the promisee accepts from a stranger a fresh promise in the place of the old one. Much more than a bare promise is necessary under the section. What it contemplates is actually performance of the original promise. According to the section, performance by a stranger, accepted by the promisee, produces the result of discharging the promisor, although the latter has neither authorised nor ratified the act of the third party. There is not much authority on the point, but the view I have taken, receives support from the opinion expressed in the two standard works on the subject. (Shephard and Cunningham's Commentaries and Pollock and Mullah's Contract Act).

8. The law as enacted in Section 41 has been adopted from the Roman Law and is a departure from the early English Law on the point. In England, a payment by a third party without the authority of the debtor was held inoperative to discharge the latter. In Cook v. Lister (1863) 13 C.B. (N.S.) 543 : 32 L.J.C.P. 121 : 7 L.T. 712 : 9 Jur. (N.S.) 823 : 11 W.R. 369 : 143 E.R. 215 : 134 R.R. 642 Willes, J., assailed this doctrine and the Indian rule was presumably, based on the view of that learned Judge. Modern English opinion seams, however, to agree with the Indian Law as contained in Section 41.

9. Leak on Contracts, 7th Edition, p. 685, Hira Chand Punamchand v. Temple (1911) 2 K.B. 330 : 80 L.J.K.B. 1155 : 105 L.T. 277 : 55 S.J. 519 : 27 T.L.R. 430. This is only of historical interest, but my c point is, that what is required by the section, is actual performance and not a substituted promise. Referring to this section their Lordships of the Judicial Committee observe thus in Har Chandi Lal v. Sheoraj Singh : (1917)19BOMLR444 .

10. 'It (Section 41) applies only where a contract has been in fact performed by some person other than the person bound thereby.'

11. In the case before me, there has been no payment under the promissory note of 1920 and 1921, and it cannot, therefore, be said that the original obligation has become extinguished.

12. It has next been contended for defendants Nos. 4 and 5 that there has been a novation under Section 62 of the Contract Act and that the promissory notes of 1914 cannot, therefore, be enforced. The argument is put in this way: By the plaintiff takingh fresh notes in 1920 from Govindaswami the surviving partner, he indicated an intention to waive his rights against the original partners of the firm. The notes of 1914 were executed by both the partners and it is argued that a new contract was substituted in 1920, by which the right against the original contractors was relinquished and the liability of the surviving partner alone accepted in its place. Assuming for a moment that a novation under Section 62 can be made without, every party to the original contract being a party to the new contract, I fail to see how it can possibly be suggested that the plaintiff intended to abandon his claim against the estate of Chengayya, Far from doing this, he got Lingayya to join in the execution of the notes of 1920. It is common ground that this man's signature was taken, because it was believed that he was the validly adopted son of Chengayya and represented the latter's estate. The argument based, therefore, on Section 62 must be rejected.

13. The question, therefore, resolves itself into this: The promissory notes of 1920 having failed to answer their purpose, in so far as the estate of Chengayya is concerned, can the plaintiff not fall back upon his original cause of action? There is nothing in my opinion which prevents the plaintiff from exercising his right under the earlier notes. The liability of Chengayya's estate, as I have shown, has not become extinguished. Why then, should the plaintiff be deprived of his right to recover the money due from that estate? This case resembles Har Chandi Lal v. Sheraj Singh : (1917)19BOMLR444 to which I have already referred, which is a direct authority on the point. As the intention of the parties was entirely frustrated by the fact that the notes of 1920 are held not binding on the heirs of Chengayya, it follows that the rights of the plaintiff under the original notes are subsisting. My decision on this point is against the defendants.

14. The next question is, is the claim on the notes of 1914 barred by limitation?

15. The following dates are material. The promissory notes, as I have said, were executed in 1914. The suit was filed in 1922.

16. The plaintiffs rely upon two endorsements of payment dated the 6th of June, 1917, and the 31st March, 1920. Chinna Kannammal signed the first endorsement: Govindaswami alone signed the second. Mr. Eangaswami Aiyangar contends generally, that a Hindu widow is not competent to keep the debt of her husband alive. He relies upon Soni Ram v. Kanhaiya Lal : (1913)15BOMLR489 . for this position. Their Lordships held on the facts of that case that a Hindu female's acknowledgment did not keep alive the mortgagor's right to redeem. It is contended that this decision establishes that a Hindu widow can in no circumstances make an acknowledgment so as to attract the provisions of Section 19. It is unnecessary to decide whether this case can be treated as an authority for the proposition so broadly stated. Probably, the case does not go so far and the words at the top of page 235 Page of 35 A.-[Ed.] 'who s could be deemed to have admitted for j the benefit of mortgagee's estate' lend, some support to this view. As Mayne points out in his Hindu Law, the propriety of the widow's act must be tested by those principles by which, her dealings with her husband's property are ordinarily judged: Mayne, 9th Edition, Para. 633. It is unnecessary to pursue this point further. Soni Ram v. Kanhaiya Lal : (1913)15BOMLR489 is a case dealing with acknowledgment under Section 19 the present case deals with payment under Section 20. Their Lordships construed the words 'some person through whom he derives title or liability' occurring in Section 19. There are no such words in Section 20 and this makes all the difference. I do not, therefore, regard the Privy Council case as an authority for the proposition that a widow cannot keep a debt of her husband alive by making payments under Section 20. If the widow acts prudently, why should her act not be binding on the reversioner? Is it more advantageous that she should drive the creditor to a suit and waste the estate by incurring costs or allowing her husband's property to be attached and sold?

17. There is yet another argument open to the plaintiff. The learned Judge who heard the case gave a finding, when he passed the preliminary decree that the partnership business continued by Chinnakannammal after her husband's death was beneficial to the estate and that the reversioners are not entitled to repudiate liability. If the continuing of the business is a proper act, how can one hold that it is improper on her part to make a payment in the ordinary course, which may have the effect of keeping a debt alive? The learned Vakil for the defendants tried to prove by oral evidence that it would have been more prudent for the widow to have paid the debt in full than to have made a part payment. This attempt hopelessly failed. Granting that the continuing of the business is a beneficial act, I fail to see why it should be held, that it is the duty of the widow to diminish her resources by withdrawing monies from a profitable venture and paying a creditor who is willing to wait.

18. Then remains the question. Does the endorsement of Govindaswami stand on a footing different from her own endorsement? I think not. These two were partners on the date the second endorsement was made. It has been held that an acknowledgment or a payment by a partner without special authority is binding upon the other partner, Pandiri Veeranna v. Grandhi Veerabhadraswami : (1918)34MLJ373 . Under Section 81, a partner ipso facto has no authority to acknowledge or to make a part payment; but if he has general authority to contract debts or make payments, he has implied authority to keep the debt alive and it is unnecessary to make out special authority. This is the effect of the case to which I have referred. I, therefore, hold that the plaintiff's claim based on the notes of 1914 is not barred by limitation.

19. There remains only one further point. Was a valid equitable mortgage created in favour of the plaintiff? The memoranda to which I have referred contain the following clauses:

With reference to the promissory note...this day executed...we hereby deposit with you the title-deeds...with intend to create and hereby create an equitable mortgage.

20. These memoranda require registration and are inadmissible in evidence and the transaction is not valid as a mortgage. See my recent judgments in Ramakrishna Doss Chandrathna Doss v. Kesavalu Chetty : (1927)53MLJ179 and in Alwar Chetty v. Jagannatha Aiyar 108 Ind. Cas. 291 : 54 M.L.J. 109 : 27 L.W. 633.

21. In the result, I pass a decree against defendants Nos. 4 and 5 against the assets of Ghengayya in their hands for Rs. 11,682-5-0 with interest thereon at 6 per cent, per annum. So far as defendants Nos. 1 and 2 are concerned, the correctness of the Commissioner's finding is not attacked and I pass a decree against them for Rs. 69,121-5-0 with interest at 6 per cent, from this date.

22. There is no other matter, I am told which I need consider on the Commissioner's report.

23. Now I must deal with the costs of the suit. As between the plaintiff and defendants Nos. 4 and 5, I make no order as to costs. Though the plaintiff has failed to a large extent, the contest before me mainly has been in regard to the amount for which I have passed a decree. On the whole, I think, the best order is the one 1 have made.

24. The plaintiff shall get his costs of the suit as well as the reference, from defendants Nos. 1 and 2. Mr. Pattabhirama Aiyangar, the guardian of defendants Nos. 4 and 5 may pay himself out of the estate in his hands Rs. 1,200 which I fix as his costs of the suit and reference. He may pay Mr. Kamanujachari, the original guardian adlitem, Rs. 150. This is in addition to Rs. 100 already paid to him.

25. I am asken to fix the costs of the Commissioner, Mr. Seshagiri Rao, at Rs. 900 and I accordingly do so. A half of this sum shall be paid by the plaintiff and a half by defendants Nos. 4 and 5. On the latter's behalf Mr. Pattabhirama Aiyangar may make the payment from and out of the estate.


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