Skip to content


(Namburi) Venkata Krishtnayya Vs. Karnedan Kothari - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1935Mad643
Appellant(Namburi) Venkata Krishtnayya
RespondentKarnedan Kothari
Cases Referred and Radakissen Chamaria v. Durga Prasa Chamaria
Excerpt:
.....of the point under consideration so far as promissory notes are concerned, the indian legislature has not accapted the principle laid down in the well known english decisions......section 92, evidence act. in support of this position the learned counsel referred notably to two english decisions, an observation in the commentaries on the evidence act by woodroffe and ameer all and a decision of the rangoon high court. english cases referred to, namely, richard pooley v. willam thang harradue 119 er 1307 and 121 greenough v. maclekhand 121 er 162, support the appellant's contention on this point the law is thus stated in the edn. 10 of chalmers bills of exchange, p. 259, illustration 8, which is as follows:c is the holder of a joint and several note made' by b and x. x signed merely to accommodate b, and as surety for him. c knowing this, agrees for a consideration to give time to d, x is thereby discharged.5. it will appear from the english decisions that the.....
Judgment:

Madhavan Nair, J.

1. Defendant 2 is the appellant. The suit instituted by the plaintiff was for the, recovery of money due on a promissory note executed by defendants 1 and 2 in his favour. Defendant 2 contended that he executed the promissory note only as a surety to the knowledge of the plaintiff, that he was exonerated by the plaintiff from his liability, and that in any event by reason of the plaintiff's conduct he being a surety was deprived of the security against defendant 1 and was thereby discharged. We are not concerned in the second appeal with the plea of exoneration. On the remaining pleas the following issues were framed by the District Munsif.

1 (a) Whether defendant 2 is entitled to plead that he is only a surety to the knowledge of plaintiff? (b) If he is a surety, was he deprived of the security against defendant 1 by reason of the plaintiff's conduct, and is he discharged thereby? (c) Was there a valid contract of sale of defendant l's properties to plaintiff as alleged by defendant 2 and does it exonerate defendant 2 from all liability?

2. On all these issues the District Munsif recorded findings in favour of defendant 2 and dismissed the suit as against him. In appeal by the plaintiff the same points as decided by the District Munsif were set down as points for determination. The Subordinate Judge came to the conclusion that having regard to Section 92, Evidence Act, it was not open to defendant 2 to plead that he was only a ?surety and as the promissory note Ex. A, distinctly showed that both the defendants were equally liable, the lower Court's decree dismissing the suit as against defendant 2 was set aside and a, decree was given against him also. This second appeal has been filed by defendant 2 against that decree.

3. Under Section 4, Negotiable Instruments Act, the maker of a promissory note gives an unconditional undertaking to pay the sum of money mentioned in the note. Under 8. 124, Contract Act, a surety is a person who undertakes a liability which is conditional on the failure of another person to discharge the liability. There is thus an essential incompatability between the position of a surety and that of an executant of a promissory note. Section 92, Evidence Act, forbids proof in variation of the terms of the contract. There can be no doubt that if an executant of a promissory note is allowed to prove that he is a surety he is clearly varying the terms of the contract which he is forbidden to do by Section 92, Evidence Act. This position is not denied by the' appellant's learned Counsel. But what he says is this, that in proving that to the knowledge of the plaintiff he is only a surety and thereby invoking the necessary incidents of a suretyship contract as between himself and the plaintiff he is not in any way varying the terms of the contract as between himself and defendant 1 which is all according to him what he is prevented from doing by Section 92, Evidence Act. In support of this position the learned Counsel referred notably to two English decisions, an observation in the commentaries on the Evidence Act by Woodroffe and Ameer All and a decision of the Rangoon High Court. English cases referred to, namely, Richard Pooley v. Willam Thang Harradue 119 ER 1307 and 121 Greenough v. Maclekhand 121 ER 162, support the appellant's contention On this point the law is thus stated in the Edn. 10 of Chalmers Bills of Exchange, p. 259, Illustration 8, which is as follows:

C is the holder of a joint and several note made' by B and X. X signed merely to accommodate B, and as surety for him. C knowing this, agrees for a consideration to give time to D, X is thereby discharged.

5. It will appear from the English decisions that the liberty of proving contrary to the terms of the contract that he was only a surety on the ground that the plaintiff had the knowledge of it when he took the note was allowed to a joint executant of the promissory note upon equitable grounds and not on grounds allowable at common law. This is clearly pointed out by Williams, J., in 121 E E. 162 wherein he says after referring to the doctrine of equity and explaining the reasons for it that

a common law lawyer might feel difficulties in the way of arriving at such a doctrine,

6. It is argued by the respondents learned Counsel that the law of evidence in India is codified and that the provisions of 8. 92, Evidence Act, should be given effect to without allowing any equitable exceptions to the same. This contention is amply supported by authority. In Balkishen Das v. Leggun (1900) 22 All 149, their Lordships of the Privy Council observe as follows:

Their Lordships do not think that oral evidence of intention was admissible for the purpose of construing the deed or ascertaining the intention of the parties. By Section 92, Evidence Act, (Act 1 of 1872), no evidence of any oral agreement or statement can be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting, varying or adding to or subracting from its terms, subject to the exceptions contained in the several provisos. It was conceded that this case could not be brought within any of them. The cases in the English Courts of Chancery which were referred to by the learned Judges in the High Court have not, in the opinion of their Lordships, any application to the law of India as laid down in the Acts of the Indian Legislature. The cage must therefore be decided on a consideration of the contents of the documents themselves with such extrinsic evidence of surrounding circumstances as may be required in what manner the language of the document is related to existing facts.

7. Referring to these observations Benson and Bashyam Ayyangar, JJ., stated in Achuta Rama Raju v. Subbaruja (1902) 25 Mad 7, that

After this clear statement of the law by the highest Judicial Tribunal it is unnecessary for us to consider the decisions of the Court of Chancery and the decisions of this and of other High Courts in India based chiefly on the decisions of the Court of Chancery,

8. In this connection see also Dattoo v. Ramachandra (1906) 30 Bom 119. 'in these two judgments', the Privy Council say in Maung Kyin v. Ma Shwe 1917 PC 207,

the judgment of the Board, as pronounced by Lord Davey [reference is to Balkishen Das v. Leggun (1900) 22 All 149 J, has been rightly followed and applied.

9. It follows from these decisions that exceptions allowed by the Courts of Chancery in England to the rule' of law enacted in India under Section 92, Evidence Act, should not be given effect to in this country, If this is so, then the contention of the appellant, however much it is supported by the English decisions should not be accepted. The passage from Woodroffe and Amir Ali's commentaries to Section 92, Evidence Act, relied on by the appellant's learned Counsel is as follows:

Similarly one of the several obligors of a bond or Bill of Exchange would not be allowed in answer to the obligee's action on the joint instrument to maintain a plea that he was a surety only; except of course in a case where a money lender made advances on the security of a joint and separate note being well aware at the lime that one of its makers was a, surety only (The italics are mine; see 9th Edn. p. 652.):

10. No authority is given by learned authors in support of the statement which I have put in italics. This passage was accepted as laying down the correct law in Maung Sein v. Ma Saw 1924 Rang 360. But it has not been referred to in Maung Kogyi v. U Kyaw 1927 Rang 199, the latest decision of the Rangoon High Court, wherein it was held that oral evidence to show that one of the executants of a monetary bond to the knowledge of the money lender signed it only as a surety is not admissible. The question under consideration has already been dealt with in our Court in Narasimma v. Ramasami (1913) 18 IC 696. In that case defendant 2 contested his liability on the ground that, although he executed the note as a principal jointly with defendant 1, it was argued at the time of the execution that he should be regarded only as a surety for defendant 1 for whose sole benefit it was executed and he was released from liability inasmuch as the plaintiff gave time to defendant for payment.

11. From the judgment it would appear that the vakil for the appellant cited several English cases according to which a parol agreement as between the joint executants of a document that one of them should be liable only as a surety could be proved against the promisee if he assented to such an agreement or was aware of it. The learned Judges, Benson and Sundara Ayyar, JJ., overruled the contention with this observation: 'We cannot in India allow any equitable exceptions to the provisions of Section 92, Evidence Act'. This decision was applied in Sornalinga Mudali v. Pichai Naicken 1914 Mad 41. The learned Counsel for the respondent drew my attention to the following decisions of the Indian Courts all of which support him. See Abdul Hameed v. Allahabad Bank Ltd. 1933 Lah 965, Behari Lal v. Allahabad Bank 1929 All 664, Khumji Gajaji and Co. v. Damaji Korsey 1934 Bom 39 and Radakissen Chamaria v. Durga Prasa Chamaria 1932 Cal 328. It is not necessary to discuss these decisions in detail. It is sufficient to observe that all of them support his contention. Before I conclude I may refer to Section 132, Indian Contract Act, and the illustration to that section which runs as follows:

A and B make a joint and several promissory note to C.A makes it, in fact, as surety for B, and C knows this at the time when the note was made. The fact that A, to the knowledge of C, made the note as surety for B is no answer to a suit by C against A upon the note.

12. This illustration is precisely similar to the present case. With respect of the point under consideration so far as promissory notes are concerned, the Indian Legislature has not accapted the principle laid down in the well known English decisions. For the above rea sons I would hold rejecting the appellant's contention that it is not open to him to prove that between him and the plaintiff he is only a surety and that in conseguen3e by the conduct of the plaintiff towards defendant 1 his liability is discharged. The decree of the lower Court is confirmed and the second appeal is dismissed with costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //