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N. M. Parthasarathi Vs. V. Dharmalingam and ors. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtChennai High Court
Decided On
Reported in(1976)1MLJ349
AppellantN. M. Parthasarathi
RespondentV. Dharmalingam and ors.
Cases ReferredUthaman Ghettiar v. Thiagaraja Pillai
Excerpt:
- .....may, 1968 for a sum and consideration of rs. 8,000. there is no dispute about the execution of the suit promissory note by the petitioner and defendants 2 and 3. the plaintiff, having come to court, has sought for a decree against all the executants on the face of the promissory note. various defences were raised, the notable defence amongst which is that the monies were not borrowed for purposes of the limited company in which the petitioner and defendants 2 and 3 were directors and that it benefited only the petitioner. it is not necessary to set out in detail the various defences. in the course of the trial, the first defendant, as co-promisor along with defendants 2 and 3, filed the present application under order 8-a of the civil procedure code, stating that in the event of a decree.....
Judgment:
ORDER

T. Ramaprasada Rao, J.

1. The first defendant in O.S. No. 91 of 1971 on the file of the Principal Subordinate Judge, Vellore, filed an application under Order 8-A and Rule 8 of the Civil Procedure Code, praying that a third party notice be issued to defendants 3 to 7 and thereafter, in the course of trial, the question of contribution by them to him on the basis of an alleged indemnity claimed by reason of the petitioner and defendants 3 to 7 being joint co-promisors in a negotiable instrument be decided. That application was dismissed. The short facts are as follows. The petitioner and defendants 2 and 3 (defendant 2 having died, defendants 4 to 7 have been brought on record as his legal representatives) were co-promisors in a promissory note--executed on 29th May, 1968 for a sum and consideration of Rs. 8,000. There is no dispute about the execution of the suit promissory note by the petitioner and defendants 2 and 3. The plaintiff, having come to Court, has sought for a decree against all the executants on the face of the promissory note. Various defences were raised, the notable defence amongst which is that the monies were not borrowed for purposes of the limited company in which the petitioner and defendants 2 and 3 were directors and that it benefited only the petitioner. It is not necessary to set out in detail the various defences. In the course of the trial, the first defendant, as co-promisor along with defendants 2 and 3, filed the present application under Order 8-A of the Civil Procedure Code, stating that in the event of a decree being passed in favour of the plaintiff as against all the defendants, he would be entitled to contribution from defendants 2 and 3, as their specific case is that they are not responsible, though they are executants of the suit promissory note, for the payment of the suit amount as they did not benefit by it and their case is that if at all the first defendant-petitioner was the sole beneficiary thereof. As I said, it is not necessary to pursue the defence or analyse the same any further. In the context of the specific plea taken, the first defendant filed the present application. The learned Judge was of the view that the application was misconceived and that it was intended to drag on the proceedings. From the judgment it is seen that no judgment of this Court was brought to the notice of the learned Subordinate Judge. Obviously, he was under the impression that Order 8-A would not apply to negotiable instruments.

2. In revision, Mr. Srinivasan, Learned Counsel for the petitioner contends that Order 8-A would enable the Court to issue a third party notice even in cases where the subject-matter of the action is a promissory note. He would rely upon the decisions of our Court in Uthaman Chettiar v. Thiaga raja Pillai (1955) M.W.N. 799 : 68 L.W. 810 : A.I.R. 1956 Mad. 155, that of Panchapakesa Ayyar, J., reported in Uthaman Ghettiar v. Thiagaraja Pillai (1955) M.W.N. 799 : 68 L.W. 810 : A.I.R. 1956 Mad. 155 and that of mine in Muniandi v. Selvarajan : (1968)2MLJ12 . The respondents are not represented by counsel. On the foot of the ratio of the above two decisions it is contended that the lower Court was wrong in having summarily rejected the prayer for the issue of the third party notice.

3. I am inclined to agree with the Learned Counsel. The words 'contribution' and 'indemnity' used in Order 8-A, Rule 1, Civil Procedure Code, have a special significance. Such indemnity or contribution need not necessarily arise from a contractual liability. If on the facts, justice or equity demands that one co-defendant is liable to contribute or indemnify the other defendants on record, then the Court would have jurisdiction to issue a third party notice. The mere circumstance that such action is based on a negotiable instrument would not make any difference. That it is not improper to issue such third party notices in actions based on promissory notes has been recognised as early as 1956 by Panchapakesa Ayyar, J., in Uthaman Ghettiar v. Thiagaraja Pillai (1955) M.W.N. 799 : 68 L.W. 810 : A.I.R. 1956 Mad. 155. Though he would generally observe that suits on promissory notes and negotiable instruments would stand on a different footing from other suits, yet he would say that there was some force in the contention that third party notices can be issued even in suits on promissory notes, and in fact he agreed with this contention. In the later decision of mine, after referring to the meaning of the words 'contribution' and 'indemnity' I expressed the view that a third party notice could be issued unless there is a contract to the contrary in the negotiable instrument itself so as to quantify the liability amongst the co-promisors at or about the time when a decree is passed. I have already expressed that the foundation on which contribution or indemnity is based need not always spring from a contract, but it might flow from justice or equity of the case. That being the situation, and in view of the attitude of defendants 2 and 3 that they are not liable for the suit claim and it is only the first defendant who has to bear the entirety of it, it is but natural that the petitioner has preferred an application under Order 8-A so that at the time of the passing of the decree in the suit, the liability inter se amongst the co-promisors could be quantified and ascertained. The best means of such ascertainment, while a decree is passed in the main action, is by invoking the third party procedure and settling the debatable issue even at that stage. It is not necessary, as the lower Court thought, that the petitioner should await and thereafter file an independent action to recover the suit amount as might be due from the other co-promisors. In this view of the matter, the order of the lower Court is without jurisdiction and it is, therefore, set aside. The civil revision petition is allowed. There will be no order as to costs.


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