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Veerasami Pillai Vs. V.S.T.N. Chidambaram Chettiar and ors. - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1926Mad894; 92Ind.Cas.819
AppellantVeerasami Pillai
RespondentV.S.T.N. Chidambaram Chettiar and ors.
principal and agent - misconduct of agent--promissory note obtained by agent from debtor--suit on note by principal, dismissal of, on ground of forgery--original claim barred--suit for damages caused by agent forging note--note void as contravening section 26 of paper currency act (ii of 1910), effect of--suit against agent, maintainability of. - conduted in his absence by an agent at palni. during most of the material time in the suit that agent was the 4th defendant. a debt had been incurred by the 1st and 2nd defendants in the suit to his predecessor-in-agency and two promissory-notes had been given, exs. a and a-1, dated the 12th. january 1912 and 29th january 1912. those promissory notes were for rs. 900 and 100 respectively. after the 4th defendant had taken up his position as agent in succession to the other man, a very curious transaction took place. the 1st defendant, on the 4th october 1913, executed a sale deed transferring a certain piece of property to his mother-in-law for an expressed consideration of rs. 2,000 ; and three days later, on the, 7th october, the same piece of property was mortgaged by the.....

Coutts-Trotter, C.J.

1. This case, has been in a state of confusion from the outset and it is only at the very last moment of it that our attention is drawn to a point that I am not sure we did find for ourselves and which would have rendered about two-thirds of the argument unnecessary. I do not blame the Bars they had to pick out the facts from a tangled mess of documents and oral evidence. The judgment of the learned Judge is so confused that it is almost impossible to discover what he did find and what he did not. However in the view we take of this case, it is unnecessary to scrutinize the findings of fact of the learned Judge, because, to all intents and purposes, we may accept them. The facts are quite simple. The plaintiff is a Natttukottai Chetti who lives somewhere in the Ramnad District and has a branch business conduted in his absence by an agent at Palni. During most of the material time in the suit that agent was the 4th defendant. A debt had been incurred by the 1st and 2nd defendants in the suit to his predecessor-in-agency and two promissory-notes had been given, Exs. A and A-1, dated the 12th. January 1912 and 29th January 1912. Those promissory notes were for Rs. 900 and 100 respectively. After the 4th defendant had taken up his position as agent in succession to the other man, a very curious transaction took place. The 1st defendant, on the 4th October 1913, executed a sale deed transferring a certain piece of property to his mother-in-law for an expressed consideration of Rs. 2,000 ; and three days later, on the, 7th October, the same piece of property was mortgaged by the mother-in-law to the plaintiff through the agent, the transaction being carried out on the spot by the agent. The consideration for the mortgage was expressed to be the discharging of the debts evidenced on the promissory notes and a fresh advance of Rs. 403 which, according to the evidence, was actually made. The position apparently was that the original debtor, the 1st defendant (because the 2nd defendant is only a member of the family brought in under Hindu Law) was 4 well-to-do man and there would be no difficulty in getting the money. The position of the old woman was that, beyond this little bit of property, which came to her from the 1st defendant in circumstances that are not beyond suspicion, she had nothing else in the world and apparently her husband was as impecunious as she was. Undoubtedly the transaction was one which the principal would be very likely to look at with very great suspicion ; and, accordingly, when the principal, as, in due course of time he did, visted Palni, he took his agent very much to task for exchanging a good security against a very solvent man for a very risky mortgage on a piece of land entirely problematical in value and said to be of much less value than a reasonably safe margin would demand. So there we have the agent at this stage treated as guilty of a breach of duty ; and it may be that, had he then and there sued his agent for neglect and breach of duty, he would have been able to prove that the property was not worth as much as the debt, and he would have got damages from the agent for his taking Ex. B instead of preserving the liability on Exs. A and A (1). But that cause of action is gone and hopelessly time-barred.

2. There is another suggested cause of action and that is a very curious one. When the 4th defendant was taken to task for releasing the 1st and 2nd defendants he said:

O; that is all right. They quite acknowledge their liability continues and to show you that that is so, I will gat you a fresh promissory-note executed by the 1st defendant.

3. That he did and that promissory note figures in the case as Ex. H. Exhibit H has had a touring existence in various law Courts and the last pronouncement upon it was by the learned Subordinate Judge in this case who pronounded it to be a forgery, the theory being that the agent being frightened because of his misdeeds in regard to Exs. A and A-1 and B being found out sought to appease his principal by forging a promissory-note purporting to be executed by the original debtor the 1st, defendant. The Subordinate Judge went into the matter at enormous length, but he entirely overlooked the point which cropped up at the end of the hearing here which renders the cause of action in our view untenable. The cause of action is this:

You represented to me that 1 was in possession of a new document on which I can sue you, the 1st and 2nd defendant, without, recourse at all to the old promissory-notes.

4. And thereupon, he says, he brought a suit on Ex. H and was damnifide owing to being lulled into security by the false representation that Ex. H was a genuine document, forewent his remedy on Exs. A and A-1 and let them be time barred.

5. It is obvious that, if he provod his case at all, he would have been able to say in these proceedings on Exs. A and.A-1.

It is quite true that these things look on the face of the transactions between the parties to be merged in Ex. B and to be gone but I am not in a position to show that Ex. B was a fraud and in that therefore, the original liability on the promissory note, Exs. A and A-1, was never truth andin fact extinguished.

6. We will assume that it is right. Speaking for myself, I think it would have been right, but there is one trifling flaw and it is this : By Section 26 of the Paper Currency Act of 1910,

No person in British India should draw, accept, make or issue any bill of exchange hundi, promissory-note or engagement for the payment of money payable to bearer on demand

with certain exceptions ; and the effect of the section is to make such instruments absolutely illegal. Now, what is the position There are decisions of this Court which, while formally settling the principle that such instruments are illegal, nevertheless point out that in certain cases the payee of the promissory-note can nevertheless bring proceedings on the original consideration. Some of them say that the promissory note may be relied upon as evidentiary of the original debt and consideration. It is unnecessary to discuss that matter here, because I do not think it arises in this case ; but I should like to guard myself from being understood to say that I assent to that view of the law without further consideration and direct argument about it. But here, what was the position If the plaintiff could have, said:

You, by your representations about the genuineness of this note prevented me from suing on the consideration.

then there might be a great deal to be said but he has not said that. The note is payable to a named payee or bearer ; and the contention at one time put forward was that that was not the mischief that it was intended to be hit by the Act. But there are several decisions of this Court which clearly decide otherwise; and, indeed, speaking with respect, I do not see how any Court could decide otherwise when it has really looked with any care at the statute, what did the plaintiff do who, we have assumed, has been misled by the defendant's misrepresentations about the note He did not come before the Court and say.

This is a promissory-note bad on the face of it and illegal, but it has a perfectly good consideration behind it and I ask you to let me sue you on that debt. I put in a plaint purporting to sue on it and I ask you to let me sue on the promissory-notes merely as evidence of the debt.

7. He brought a suit entirely framed on these promissory-notes and nothing else and the District Munsif decided against him on the ground that the notes were vitiated by the provisions of the Act. During the trial I suppose the District Munsif must have given him some intimation of what was in his mind. At the trial he did not ask for an amendment of the plaint and he did not apparently amend, or was at any, rate allowed to amend, only when the, case came on in appeal. The only conclusion is that, assuming the plaintiff to have been misled by the false representation made to him, assuming that the defendant acted with a fraudulent intent and knew that the representations he was making were false, the chain of causation breaks down. It was not those representations that brought the plaintiff's case ill luck, but it was the fact that he took an instrument which the law Presumes him to know to be bad on the face of it instead of his old remedy, and that, having that instrument; he stuck to it as his sheet anchor and did not attempt to revive the original consideration. I may add that he would have been no better off on the finding of the learned Judge if in addition to suing on the promissory note, Ex. H, he had added an alternative claim on the consideration for that note for the simple reason that the learned Judge in this case-and it looks very much as, if he was right-has found a fact that this promissory-note, Ex. H, was forged. Therefore the only thing on which he could possibly have sued was the original consideration of the two old promissory-notes, Exs. A and A (1), and it was never suggested from first to last of this trial that it was any representation of the 4th defendant that prevented him from doing that. In my opinion this appeal must be allowed but, in view of the revelations of the 4th defendant's conduct, and, I may add, in view of the fact that the real point in the case was never taken until it had progressed several hours, we should not allow any costs.

Krishnan, J.

8. In this case the facts have been very clearly and fully set out in the judgment just delivered by the learned Chief Justice and it is unnecessary to state them again.

9. The 4th defendant is sued by the plaintiff on the ground that by giving him a forged note, Ex. H., he induced him to bring a suit on that note and as it was forged, he failed on the note and incurred the costs of that litigation Unnecessarily and further that he was misled into giving up his claim under Exs. A and A (1) for the time being till that claim became barred by limitation. He contends before us, therefore, that on the finding that Ex. H is a forgery he is entitled to get from his agent, the 4th defendant, damages calculated partly on the costs of the litigation in which he failed and partly on the loss he suffered by not being able to claim against the 1st and 2nd defendants the amount due under the notes Exs. A and A-1. The principal difficulty in his way is that Ex. H was not a document on which he could have based any action at all as it is a document rendered illegal by Section 26 of the Paper Currency Act. Even if it had been a genuine document, a suit on that document must have failed. That being so it cannot be said that the loss of that litigation was due to the action of, the 4th defendant, in forging the note The plaintiff should have seen when he got Ex. H that, whether it be a genuine or a false one, it was not a document on which he could have maintained a suit, and, if he brought one, it was due to his own fault and I do not see how Under the circumstances he could turn round and say that he lost his litigation on account of the action of the 4th defendant and that he should be made liable for the costs. It is contended before us that, even if we treat Ex. H as a document on which no action could have been brought, still if it had been a genuine document he could have asked the suit to be converted into one on the original cause of action, namely, the loans for which Exs. A and A (1) were given and got relief against the 1st and 2nd defendants. The answer to it is that if he had taken proper care to see what his rights were he could have in the very first instance, instead of suing on Ex. H, brought the action as he might have then done on the original loans for which Exs. A and A (1) were taken ; Exs. A and A (1) themselves were promissory-notes which are hit at by Section 26 of the Paper Currency Act and hence could not have been sued upon. If any loss occurred to the plaintiff, it is clearly, therefore, due to his own neglect in not seeing what his rights were under the documents which are in question here. So far as any claim could be based upon the defendant's action in taking Ex. B in super session of Exs. A and A-l and a sum of money advanced at the time Ex. B was executed, that claim is now barred by limitation ; and no suit could be maintained by the plaintiff on any cause of action based upon the misconduct of the 4th defendant in taking Ex. B. It is only if he can sustain his present action on a ground based upon Ex. H that he has got any claim at all. As I have already stated I do not think that he is entitled to base any claim on Ex. H for the reasons I have already stated. That being so, it is clear that this action as against his agent, the 4th defendant, fails. The 4th defendant's appeal must, therefore, be allowed and I agree to the order proposed by the learned Chief Justice. The suit is dismissed as against the 4th defendant.

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