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Dungarmull Kissenlal Vs. Sambhu Charan Pandey and anr. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtKolkata High Court
Decided On
Case NumberA.F.O.D. No. 107 of 1950
Judge
Reported inAIR1951Cal55
ActsEvidence Act, 1872 - Sections 92, 101 to 103; ;Negotiable Instruments Act, 1881 - Sections 9, 46, 69 and 118; ;Contract Act, 1872 - Section 2
AppellantDungarmull Kissenlal
RespondentSambhu Charan Pandey and anr.
Appellant AdvocateE.R. Meyer and ;B.K. Ghosh, Advs.
Respondent AdvocateS.C. Sen, Adv.
DispositionAppeal allowed
Cases ReferredMehr Bakhsh v. Hari Chand
Excerpt:
- harries, c.j.1. this is an appeal from a judgment & decree of bose j. sitting on the original side, dated 6-4-1950, by which he dismissed a suit for the recovery of money said to be due under a promissory note.2. the pltf. brought the suit giving rise to this appeal for the recovery of rs. 2057-8-0 being principal & interest due under a promissory note made by deft. 2 in favour of deft. 1 & endorsed by the latter in favour of the pltf. the suit was filed under order 37, civil p. c., on 8-7-1946. deft. 1 took no steps to defend the suit but deft. 2 applied for & obtained leave to defend the suit & the only matter before bose j. was as to whether deft. 2 as the maker of the note was liable to the pltf. to whom the note had been endorsed by deft. 1, the promisee.3. in the plaint the pltf......
Judgment:

Harries, C.J.

1. This is an appeal from a judgment & decree of Bose J. sitting on the Original Side, dated 6-4-1950, by which he dismissed a suit for the recovery of money said to be due under a promissory note.

2. The pltf. brought the suit giving rise to this appeal for the recovery of Rs. 2057-8-0 being principal & interest due under a promissory note made by deft. 2 in favour of deft. 1 & endorsed by the latter in favour of the pltf. The suit was filed under Order 37, Civil P. C., on 8-7-1946. Deft. 1 took no steps to defend the suit but deft. 2 applied for & obtained leave to defend the suit & the only matter before Bose J. was as to whether deft. 2 as the maker of the note was liable to the pltf. to whom the note had been endorsed by deft. 1, the promisee.

3. In the plaint the pltf. was described as a firm registered under the Partnership Act & as such was entitled to bring the suit in the name of the firm. In the plaint it is pleaded that deft. 2 executed the promissory note in favour of deft. 1 the note being said to be for Rs. 2,000 payable on demand & bearing interest at the rate of six per cent per annum. According to the plaint the note which was executed on 7-1-1946, was endorsed by the promisee deft. 1 in favour of the pltf. for valuable consideration on 2-4-1946. On 28-5-1946 it is said that the pltf. demanded payment from deft. 2 but the latter refused to pay & notice of dishonour was duly given. The amount due was said to be Rupees 2057-8-0, being Rs. 2,000 principal & Rs. 57-8-0 interest. The claim was therefore made against both the defts. for this sum.

4. In the written statement filed by deft. 2 the latter did not admit that the pltf. was a registered firm & further denied that there was any consideration for the making or for the endorsement of the note. It was further pleaded that the pltf. was not a holder in due course & that the promissory note was made on the condition that the amount thereof would only be payable to the promisee out of moneys if any received by the maker as his share of the profits of a firm known as B. Mukherjee & Co. in which the maker & others were interested & which was then being wound up & the accounts of which were being taken. It was pleaded that the accounts of that partnership firm had not been taken & therefore liability under the note had not yet arisen. The suit was therefore premature. It was pleaded that the pltf. was aware of the terms & conditions upon which this promissory note was executed & in the alternative of the fact that there was no consideration for the making of the promissory note. There was a denial that the pltf. gave any consideration for the endorsement of the promissory note in his favour. It was stated that the endorsement if any was obtained by the pltf. fraudulently & in collusion with the promisee with intent to cause injury to the maker thereof namely deft. 2. Want of presentment was not pleaded but it was pleaded that the plaint disclosed no cause of action. It was later contended that presentation was necessary & as it was not pleaded in the plaint the latter document disclosed on (no?) cause of action.

5. The following issues were framed by the learned Judge:

(1) Is the pltf. firm a registered firm?

(2) Was there consideration for the making or endorsement of the promissory note in suit ?

(3) Was the promissory note made on the terms & conditions as alleged in para. 4 of the written statement & had the pltf. notice thereof? Can such terms & conditions be proved or are they admissible in evidence ?

(4) Is the pltf. a holder in due course of the Promissory Note ?

(5) Does the plaint disclose any cause of action in the absence of pleadings as to presentment of the promissory note to the deft. 2 ?

(6) To what reliefs, if any, is the pltf. entitled ?

6. The learned Judge was satisfied that the pltf. firm was registered & that issue was decided in favour of the pltf. & no argument has been addressed to us upon that issue. He decided the other issues in favour of the deft. except that he held that the note was given for consideration.

7. It will be convenient to deal firstly with issue 3, namely, whether the promissory note was made on the terms & conditions alleged in para. 4 of the written statement & whether the pltf. had notice of such terms. The question must also be considered whether or not the deft, could adduce evidence to prove the terms & conditions alleged by reason of Section 92, Evidence Act.

8. The promissory note was in these terms:

10A, Shibsankar Mullick Lane.

Calcutta,

7-1-1946.

Rs. 2,000.

On demand I promise to pay Sambhu Charan Pandey of No. 3, Barada Mitter Lane, Calcutta order at Calcutta the sum of rupees two thousand together with interest at the rate of 6 per annum for value received.

Sd. Bibhuti Bhusan Mukherjee.

7-1-46.

9. On the back of the promissory note appears this endorsement 'Please pay to Dungarmull Kishenlal or order,' & the signature underneath of Sambhu Charan Pandey & the date 2-4-46.

10. In para. 4 of the written statement the following plea was taken :

'The said promissory note was further made on the term & condition that the amount thereof would only be payable to the deft. Sambhu Charan Pandey out of the moneys received by this deft. if any as his share of the profits of a firm of the name of B. Mukherjee & Co. in which this deft. & certain other persons were patnrs. after the accounts of the said firm had been taken & adjusted between the said ptnrs. The said accounts have not yet been taken or adjusted in spite of the deft's. best efforts & no money in respect of this deft. said share of the profits of the firm of B. Mukherjee & Co, has yet been received by or paid to him or in fact ascertained.'

11. By this para, it is clear that deft. 2 pleaded that this note was given upon a condition, namely, that the maker thereof would only be liable under it if moneys were received by the maker as his share of the profits of a certain partnership firm & that such liability would only arise after the accounts had been taken & the profits ascertained. As the accounts had not been taken & the share of the profits had not been ascertained the maker of the note was not liable when the suit was instituted. In short the plea is that the suit was to say the least of it premature.

12. The learned Judge held that this note had been made & given to the promisee upon the terms alleged in para. 4 of the written statement. In his view no liability under the note could arise until the partnership accounts had been taken & the share of the profits, if any of the maker of the note had been ascertained. As no such accounts had yet been completed the learned Judge was of opinion that the suit must fail as it was premature.

13. The pltf.-applt. contended before us that the evidence did not establish that this note had been given upon the terms & conditions alleged. The pltf. contended that at most the arrangement between the parties merely postponed the time for actual payment. The note it was argued, created a liability to pay from the moment it was executed & that all that the arrangement between the parties amounted to was an agreement postponing the time for payment.

14. On 28-5-1946 the attorneys for deft. 2 wrote to deft. 1 & in this letter the terms of the arrangement between the parties were set out. The attorneys admit that deft. 1 performed valuable services in bringing about a settlement between deft. 2 & his patnrs. relating to the partnership business of Messrs. B. Mukherjee & Co. According to the letter it was agreed that for such services as well as previous services rendered to the firm of Messrs. B. Mukherjee & Co. with regard to procuring orders for the firm the attorney's client, namely, deft. 2 agreed to pay deft. 1 a sum of Rs. 2000 as remuneration. In short it is alleged that there was an agreement to pay an amount for services rendered without any condition whatsoever. This arrangement, it is said, was made in the month of December 1945. In the letter it is then said that either at the end of December 1945 or at the beginning of January 1946 deft. 1 wanted to be assured that the sum of Rs. 2000 which deft. 2 had promised to pay him would be paid & accordingly it is said that deft. 2 executed a promissory note for the sum of Rs. 2000 in favour of deft. 1. It is said that when this promissory note was executed it was orally agreed between the parties that the sum of Rs. 2000 would be actually paid to deft. 1 after the account of the firm of Messrs. B. Mukherjee & Co. was completed & deft. 2 had received his share of the profits thereof. It is to be observed that in this agreement, as set out in the letter all that is suggested is that the actual payment of the sum due under the note would be postponed until the accounts of the partnership had been taken & deft. 2 had received his share of the profits. It is not suggested that liability under the note would only attach when the partnership accounts had been taken & the amount of the profits, if any of deft. 2 had been ascertained.

15. It is then stated in the letter that deft. 1 had represented that he was in serious financial difficulty & that in consequence a sum of Rs. 625 had been paid by deft. 2 to deft. 1 'in part satisfaction of the said sum of Rs. 2000 only.'

16. The letter then goes on to state that the accounts of the firm of Messrs. B. Mukherjee & Co. had not been taken owing to the dilatory tactics of the managing patnr. & further that such adjustment of accounts was not likely to be completed without the intervention of the Ct. It is then stated that deft. 1 had sometime in March 1946, agreed to procure a loan of Rs. 5000 for deft. 2 & had been paid a sum of Rs. 125 as commission in advance. But deft. 1 had failed to secure any loan. The attorney, therefore, requested deft. 1 to return the promissory note for Rs. 2000 together with the sums of RS. 625 & Rs. 125 & the letter concludes with this statement :

'It is needless for me to say that my client will pay you that said sum of Rs. 2000 out of his share of profits of the said firm of Messrs. B. Mukherjee & Co. as & when he would receive the same.'

17. Strange to say on the same day, namely, 28-5-1946, the attorneys for the pltf. wrote to deft. 2 demanding the sum of Rs. 2000 with interest due on the promissory note executed by deft. 2 in favour of deft. 1 which had been endorsed in favour of the pltf.

18. On 31-5-1946 the attorneys for deft. 2 replied to the letter of 28-5-1946 written by the pltf.'s attorneys. In this letter it is stated that the note for Rs. 2000 was not given for valuable consideration. The attorneys also asked the pltf.'s. attorneys as to the nature of consideration given by the pltf. when the note was endorsed in their favour. It is to be noticed that in the earlier letter of 28-5-1946 it was admitted that the note was given for valuable consideration, namely, as remuneration for services rendered.

19. If the issue had to be decided on the correspondence I would have no hesitation in holding that the oral agreement between defts. 1 and 2 merely related to time for payment of what was due on the note: in short it related to the discharge of the liability under the note & not to the existence of liability under the note.

20. The parties, however, gave evidence & it will be necessary to consider this evidence. The onus of establishing this agreement clearly rested on deft. 2 but it is to be observed that the pltf. first gave evidence.

[Then after discussing evidence his Lordship proceeded:]

21-22. The learned Judge was of opinion that when this note was executed by deft. 2 in favour of deft. 1 there was an oral agreement postponing the existence of the liability under the note. In his view, the agreement was to the effect that no liability under the note would arise until the partnership accounts had been taken & the share of deft. 2, if any, in the profits ascertained or paid to him.

23. In my view the evidence does not establish such an agreement. The first version of the agreement given by deft. 2 made it clear that liability under the note was not to be conditional upon the ascertainment of the amount of profits on taking the partnership account. Deft. 2 admitted liability & agreed to pay. The promissory note was merely executed because he was not in a position to pay immediately. Further that is the version of the arrangement given by the attorney of deft. 2 in. the letter of 28-5-1946. In face of the earlier statement of deft. 2 & the statements contained in this letter I find it impossible to accept the later version of deft. 2 that liability under this note was conditional upon the ascertainment of profits on taking the account of the partnership firm of Messrs. B. Mukherjee & Co. For these reasons, I am unable, therefore, to agree with the finding of the learned Judge & I would hold that the agreement at most was only an agreement postponing the time of payment & did not affect the immediate liability which arose on execution of the note.

24. It was contended on behalf of the pltf.-applt. that evidence relating to the agreement alleged was inadmissible. But the learned Judge ruled that such evidence was admissible by reason of proviso 3 to Section 92, Evidence Act. The learned Judge pointed out that it was clear from Section 46, Negotiable Instruments Act, that as between parties to the note & any holder of the instrument other than a holder in due course, it could be shown that a negotiable instrument was delivered conditionally or for a special purpose only. But he rightly pointed out that Section 46, Negotiable Instruments Act & Section 92, Evidence Act should be read together. If the agreement alleged by deft. 2 amounted to postponing liability under the note until the performance of the condition then evidence of such agreement would, I think, be admissible under proviso 3 to Section 92, Evidence Act. If on the other band the agreement only amounted to an arrangement for payment & did not affect the liability under the note then evidence of such agreement could not be given as it would be evidence of an agreement contrary to the agreement of the parties as evidenced by the note itself. It is to be observed that in the note it is stated that the sum was payable on demand and any agreement postponing payment would be in direct conflict with the terms of the note.

25. Whether parties to a note payable on demand can enter into an oral agreement contrary to the terms of the contract contained in the note was considered by Sale J. of this Ct. in the case of Ramjibun Serowgy v. Oghore Nath, 25 Cal. 401: (2 C. W. N. 188). In that case the promissory note was payable on demand. But it was pleaded that the note was executed on the following terms:

'That in the year 1895 a settlement of accounts was come to between the pltf. & the deft. & it was thereupon agreed between them that the said hundis should be can celled & that the deft. should pay the pltf. the sum of Rs. 4000 in cash & give him a promissory note for the sum of Rs. 7000 in full discharge of all his claims against the deft. in respect of the said hundis & of all other claims against the deft, up to that & it was farther agreed between the pltf. & the deft. that the pltf. should not bring any suit to enforce payment of the said promissory note until the deft.'s share in the compensation money awarded in the Land Acquisition Case No. 181 of 1892 in the Ct. of the Dist. J. of 24 Parganas should be received by him.'

26. The question which the learned Judge had to decide was whether evidence in proof of this alleged contemporaneous oral agreement was admissible having regard to the terms of Section 92 evidence Act. The learned Judge held that such evidence was not admissible. At p. 403 he observed :

'The oral agreement which is set up in the 4th para. of the written statement & which is sought to be proved for the purpose of limiting the deft's. liability under the promissory note must it seems to me be read in one of two ways. Either it must be read in the literal sense of the words as constituting an undertaking on the part of the pltf. not to enforce the note by suit until the happening of a certain event, or else it must be read as meaning that the legal obligation of payment was to be postponed to or made conditional upon the happening of a certain event. In whichever sense the words are read the agreement appears to me to have the effect of varying the terms of the contract as contained in the promissory note & I think the result is the same whether the section be read in the light of the English cases which have been cited or whether it be construed apart from those authorities. Upon the promissory note the engagement is an absolute engagement to pay on demand. The deft. seeks to set up a contemporaneous oral agreement the effect of which is to qualify or restrict that engagement.'

Later the learned Judge observed :

'I do not think that it was intended by proviso 3 (Section 92, Evidence Act) to permit the terms of a written contract to be varied by a contemporaneous oral agreement, but having regard to the illustrations (b) & (j), I think the proper meaning of proviso 3 is that a contemporaneous oral agreement to the effect that a written contract was to be of no force or effect at all & that it was to impose no obligation at all until the happening of a certain event, may be proved.'

27. This case decided by Sale J. was referred to with approval by Lord Wright in the case of Rowland Ady v. Administrator General of Burma, . In that case their Lordships of the P. C. laid down that it was necessary to distinguish a collateral agreement which altered the legal effect of an instrument from an agreement that an instrument should not be an effective instrument until some condition was fulfilled or to put it in another form it was necessary to distinguish an agreement in defeasance of a contract from an agreement suspending the coming into force of the contract contained in the promissory note. Their Lordships of the P. C held that where a promissory note was by its express terms payable on demand, that is, at once, the obligation under the note attached immediately. A collateral oral agreement not to make demand until certain specified condition was fulfilled had the intention & effect of suspending the coming into force of that obligation which was the contract contained in the promissory note. Such an oral agreement constituted a condition precedent to the attaching of the obligation & was within the terms of proviso 3 to Section 92.

28. On the facts of the case their Lordships of the P. C. held that by the terms of the oral agreement no liability under the note could arise until the happening of an event. That being so, the case fell within proviso 3 to Section 92, Evidence Act. Their Lordships, however, made it clear that unless the agreement had the effect of making the liability conditional upon the happening of an event proof of an oral agreement at variance with the terms of the note would not be permitted. At p. 202 Lord Wright observed:

'A case like the present is to be distinguished from that dealt with in Ramjibun v. Oghore Nath, 25 Cal. 401 : (2 C. W. N. 188) on which the promissory note though absolute in its terms was said to be subject to an oral agreement providing that it was not to be enforceable by suit until the happening of a particular event. Sale J. in rejecting this evidence expressed his opinion that the proper meaning of proviso 3 was that the contemporaneous oral agreement to be admissible must be to the effect that a written contract was to be of no force at all & was to constitute no obligation until the happening of a certain event. This description in their Lordships' judgment applies to the present case. To the same effect Page J. in Walter Mitchell v. A. K. Tennent, 52 Cal. 677 : (A.I.R. (12) 1926 Cal. 1007) held that the collateral agreement alleged in that case constituted a condition precedent to the attachment of any obligation under the cheques in question so that they remained inoperative until the condition was fulfilled.'

29. A similar view to that taken by Sale J. was taken by a Bench of the Bombay H. C. in Vishnu Ramchandra v. Ganesh Krishna, I. L. R. 45 Bom. 1155 : (A.I.R. (8) 1921 Bom. 449) in which it was held that in a suit on a promissory note payable on demand no evidence could be allowed to prove a contemporaneous oral agreement whereby the pltf. was said to have agreed that he would not present the note until he had discharged certain incumbrances on a property he had sold to a third party. Such an agreement could not be brought within the terms of proviso 3 to Section 92, Evidence Act.

30. Holding as I do that a contemporaneous oral agreement alleged in para. 4 of the written statement in the present case merely postponed the time for payment & did not make the liability of the maker of the note conditional upon the results of the partnership account, I am bound to bold that the evidence adduced as to this condition was inadmissible & was, therefore, wrongly admitted by the learned Judge. The note, therefore, must be regarded as a note payable on demand at Calcutta.

31. Even if the evidence tendered to establish this agreement was admissible nevertheless the deft. 2 could not rely upon such, agreement as against the pltf. As I have already stated Section 46, Negotiable Instruments Act, would make an agreement rendering liability conditional on the happening of an event binding between the parties to the note & any holder of the instrument other than a holder in due course. But in my view the pltf. in this case was a holder in due course & had no notice of this alleged agreement. It was contended that the pltf. was not a holder in due course. But in my view he was such a holder & I shall consider this point later. Being a holder in due course he would not be bound by the terms of any such agreement unless he had knowledge of it when the note was endorsed to him.

32. As I have already stated it was put to the pltf's witness that he had knowledge of this arrangement when the note was endorsed. But the witness denied any such knowledge. The learned Judge, however, held that he had knowledge & clearly the onus was upon the deft. 2 if the pltf. was a holder in due course. Deft. 2 gave no direct evidence that the pltf. had knowledge. According to his evidence the arrangement pleaded in para. 4 of the written statement was made between deft. 2 & deft. 1 in the presence of Sumermull Chowdhury & Sisir Kumar Mitra & there is no suggestion at all that the pltf. was present. However Sumermull was a relation of the pltf. & the learned Judge appears to have assumed that because Sumermull knew of the arrangement he must have informed the pltf. The pltf. admitted that he had taken the note from deft. 1 & paid the latter Rs. 2000 on the suggestion of Sumermull & from that fact the learned Judge seems to have assumed that the pltf. must have known of the agreement. It appears to me that from those facts it would not be inferred that the pltf. must have been aware of the agreement. If he was a holder in due course the deft. would have to prove that the pltf. knew of the agreement & it would not be sufficient for the Ct. to suspect that he must have known. Suspicion is not proof. It is true that the Ct. might hold that the pltf. knew of the agreement though no direct evidence that the pltf. had been told of such an agreement was forthcoming. If circumstances were established from which it could be inferred that the pltf. must have known of the agreement then the Ct. could hold that he did know. However, I do not think that any Ct. would hold that the pltf. must have known of this agreement merely from the fact that Sumermull Chowdhury knew of it & that the pltf. had paid a sum of money for this note to deft. 1 at the instigation of Sumermull. It might be that Sumermull wished deft. 1 to have the Rs. 2000 & he might well have suppressed this agreement in order to induce the pltf. to take the note & advance the sum plaintiff knew (sic). But it appears to me that it was not established that the pltf. was aware of this condition when he paid Rs. 2000 to deft. 1 & accepted the note endorsed in his favour. That being so, it appears to me that even if the alleged oral agreement was as alleged by deft. 2 it could not be defence to the pltf's claim as the latter was a holder in due course.

33. I shall now deal with issue 2 as to whether there was consideration for the making & endorsement of the note in question. It seems to me quite clear from the evidence of deft. 2 & from the terms of the letter of deft. 2's attorney, dated 28-5-1946 that this note was executed for consideration. Deft. l had performed useful services for deft. 2 & for the firm of which deft. 2 was a patnr. The note was given in consideration of those services. The performing of services can be consideration for such a note & it was not seriously suggested that the note was without consideration. It is true that in a later letter dated 31-5-1946 the attorney for deft. 2 suggested that the note was not for valuable consideration. But having regard to the evidence it must be held that deft. 1 gave consideration for the note & that was the view of the learned Judge.

34. The learned Judge, however, held that the pltf. gave no consideration to deft. 1 when the note was endorsed by the latter.

35. I think it is clear that the onus of proving want of consideration rested on the deft. Section 118, Negotiable Instruments Act, provides that until the contrary is proved the following presumptions shall be made:

'(a) that every negotiable instrument was made or drawn for consideration & that every such instrument when it has been accepted, indorsed, negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration,'

36. The presumption, therefore, was in favour of the pltfs. & this presumption would have to be rebutted by deft. 2. The learned Judge held that the presumption had been rebutted. But in my view there was no material upon which he could so hold.

37. The pltfs witness in evidence stated that he paid a sum of Rs. 2000 to Sambhu Charan Pandey for this note. He stated that the transaction had been brought about by Sumermull Chowdhury to whom he was related. Sumermull Chowdhury & deft. 2 were friendly & the pltf. stated hat he advanced the money to deft. 1 at Sumermull's request & recommendation. The pltf. admitted that he knew very little about deft. 1 but Sumermull had told him that deft. 1 was an honest person to whom money could be safely advanced.

38. The learned Judge was not prepared to accept the pltf's evidence & came to the conclusion that no money could have been paid by the pltf. firm to deft. 1. The pltf's witness, however, produced the firm's books & the book showed that a sum of Rs. 2000 had been paid to deft. 1 on the day the note was executed. The pltf's witness was asked questions as to the denomination of the notes which he paid to Sambhu Charan Pandey. But he was unable to give the denomination. From this the learned Judge inferred that his evidence could not possibly be true. It is to be observed that the learned Judge does not in terms hold that the books produced were forgeries. But I think that is implied in his finding.

39. It was common ground that in the year 1946 the pltf. had lent deft. 2 a sum of Rs. 5000 & he was questioned in cross-examination about this transaction. He was asked how the money was lent & he stated that his books would show. The books were referred to & the books showed that a sum of Rs. 5000 had been advanced to deft. 2 in cash & this loan was admitted by deft. 2. In short the only attempt made by deft. 2 to question these books showed that the books were properly kept & accurate. That being so, it is somewhat difficult to understand how the learned Judge could reject the entry relating to the payment of Rs. 2000 to deft. 1 as recorded in the books.

40. The books were admitted in evidence & were on the record & we have examined them. It was not suggested that there was anything suspicious on the face of these books. They appear to have been properly kept & the entry relating to the payment of Rs. 2000 to deft. 1 appears not at the bottom of a page where possibly it could have been interpolated later, but it appears at the head of a page where it could not have been interpolated. Of course the whole of the book may have been forged. But as I have said the books were certainly accurate with regard to the advance of Rs. 5000 to deft. 2. I do not think that the learned Judge was entitled to reject these books as forgeries merely because he was not satisfied that the pltf. had made sufficient enquiries about the financial stability of deft. 1 & further could not remember the denomination of the notes handed over to deft. 1.

41. It must be remembered that the pltf. was giving evidence four years or so after the transaction & it would not be strange that he could not remember the denomination of the notes & that he could not give any detailed particulars of the transaction without reference to his books. Further it appears to -me that if Sumermull Chowdhury recommended this loan the pltf. might well have advanced the money to detf. 1. He was related to Sumermull Chowdhury & apparently relied upon his judgment in other transactions, if his evidence is to be believed. Further it is quite clear that Sumermull Chowdhury was a friend of deft. 1 because it is the evidence of deft. 2 that Sumermull Chowdhury was present when the arrangement was made between deft. 2 & deft. 1 relating to the payment of the note. The pltf. might well have accepted the assurance of Sumermull Chowdhury & advanced this money. The note was endorsed to him & the money was recoverable not only from deft. 1 but from deft. 2 the maker of the note. The onus as I have said for showing that there was no consideration for this note rested on deft. 2. Even if the evidence of the pltf. was not accepted that in itself would not discharge the onus. The onus could be discharged by proof of circumstances from which it could be inferred that there was no consideration. But no such circumstances were established from which such an inference would inevitably have to be drawn. Deft. 2 could of course give no direct evidence & all that can be said is that the learned Judge appears to have thought that the evidence of the pltf's witness corroborated by his books could not be accepted. I do not think that in such circumstances the learned Judge could possibly hold that there was no consideration for this note. Deft. 2 in my view did not discharge the onus which the law placed upon him & further I can see no grounds for rejecting the pltf's testimony that he paid Rs. 2000 for this note as his evidence is corroborated by his books of account which were strictly proved. As I have said there is nothing suspicious in these books & when they were tested in cross-examination they were found to be strictly accurate in that they correctly recorded an advance of Rupees 5000 to deft. 2 himself.

42. The learned Judge came to the conclusion: that the pltf. was not a holder in due course as he had given no consideration for this note when it was endorsed to him. I have already held that the pltf. gave consideration for the note or that it must be presumed that he did & further that he had no notice of the agreement pleaded in para. of the written statement.

43. Mr. Sen on behalf of deft. 2, however, contended that in spite of these findings it could not be held that the pltf. was a holder in due course. That term is defined in Section 9, Negotiable Instruments Act, in these words :

''Holder in due course' means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof if [payable to order] before the amount mentioned in it became payable, & without having sufficient cause to believe that any defeat existed in the title of the person from whom he derived his title.'

44. The endorsement on the note read: 'Please pay to Dungarmull Kishenlal or order.' Mr. Sen contended that as a result of the definition the pltf. could not be a holder in due course because he became an endorsee after the amount mentioned in the note had become payable. The note is payable on demand & liability on such a note arises immediately & the amount becomes payable immediately the note is executed. Proof of demand is not necessary & therefore Mr. Sen contended that having become an endorsee of this note after the amount mentioned in it had become payable he could not be a holder in due course.

45. If we accede to this argument then no endorsee of a promissory note payable on demand can ever be a holder in due course. If the definition is construed literally that might be so. But it has been held in this Ct. & elsewhere that a note payable on demand can be endorsed to a person who will be a holder in due course until demand is made for payment of the sum due under the note. In fact it has been held that even if a demand has been made an endorsee may yet be a holder in due course if he was unaware of the fact of such a demand.

46. It was also suggested by Mr. Sen that the pltf. had sufficient cause to believe that deft. 1 who endorsed the note had no title. He pointed out that according to Indian law the endorsee must exercise due diligence when accepting an endorsement of this kind. We are satisfied that the pltf. did not pay a sum of Rs. 2000 until he was satisfied by the assurance of his relative Sumermull Chowdhury that the deft. was an honest man to whom money could be safely advanced. That being so, I do not think that it can be possibly argued that the pltf. was not a holder in due course by reason of the fact that the note was endorsed to him after the amount stated had become payable or on the ground that he had sufficient cause to believe that there was a defect in the title of deft. 1.

47. It was contended before the trial Ct. & again urged before us that the plaint disclosed no cause of action because presentment of the note had not been pleaded. It was urged that on the face of it the note was payable at a specific place & therefore the presentment of the note had to be proved before a suit would be brought.

48. The note recorded a promise to pay deft. 1 or order at Calcutta & that, it is said, is a note payable at a specific place & therefore must be presented for payment at that place by reason of Section 69, Negotiable Instruments Act. Section 69, Negotiable Instruments Act, is in these terms:

'A promissory note or bill of exchange made, drawn or accepted, payable at a specified place, must, in order to charge the maker or drawer thereof, be presented for payment at that place.'

49. If this note was payable at a specified place presentation for payment at that place is a condition precedent & such would have to be pleaded & proved. There was no pleading of presentment & there was no proof.

50. The learned Judge was of opinion that this was a note payable at a specified place & as there was no pleading or proof of presentation the plaint disclosed no cause of action.

51. The pltf. however, contended that the note was not payable at a specified place. He urged that Calcutta, huge city with a population of between four & six million, could never be regarded as a specified place & so to regard it would reduce presentation to an absurdity.

52. Section 69 lays down that where a promissory note is made payable at a specified place the note must be presented for payment at that place That presupposes that the place is defined with sufficient particularity to enable the holder of the note to go to that place & to present it for payment. If the city of Calcutta be a specified place how could the holder of a note who did not know much about the maker or drawer of it, ever hope to be able to present it? In India certain names are extremely common & finding a small businessman of the name for example of Agarwalla in Burrabazar would be practically an impossibility, Looking for such a person in a comparatively small business area of the city would be very much like looking for a pin in the proverbial haystack. Searching out such a person in this huge city would frequently present an utterly impossible task.

53. Did the Legislature when it enacted Section 69, Negotiable Instruments Act, have in contemplation a large town or city or some defined area or did it have in mind some place described with such particularity as would enable the holder of a note to go to such a place & present it In my view the phrase 'specified place' cannot be used to cover a town or a city. But it is a phrase intended to mean a place so described as would enable the holder of a note to go to it with a reasonable certainty of being able to find the drawer of the note to present the note to him. Where the note is payable in a large city, it appears to me that presentation to the maker or drawer might be utterly impossible & therefore it could never be the intention of the Legislature that a large city or town or area should be regarded as a specified place.

54. The English word 'place' bears a very large number of meanings. Any defined area is a place & indeed an area might be a place where the boundaries are ill-defined. It is quite correct to describe a valley as a beautiful place or a cold place, though the precise limits of such a valley may not be well defined. Any beauty spot may be described as a beautiful place though the limits of such a spot may be ill-defined. A town or city can also be described as a place & so can any residence. The word 'place' is used commonly in English to denote a country residence. A person may be said to have a place in the country & there the 'place' means a country house. The word has a very large number of meanings & therefore it is very difficult to state what meaning was in the mind of the Legislature. The word 'place,' however, is qualified with the word 'specified' & that suggests a place that can be ascertained with certainty. The city of Calcutta of course is a place which can be ascertained but the whole purpose of the section was to ensure presentment of the bill to the maker. That being so, it appears to me that no place is a specified place within the meaning of Section 69, Negotiable Instruments Act, unless the place is so described as to enable the holder of a note with reasonable certainty to go to that place & be able to find or search out the make or drawer of the note & present it to him for payment.

55. In the English Statute the words used are 'particular place.' But there is a somewhat surprising want of authority in England as to the precise meaning of the phrase.

56. Payable at Calcutta means at most payable somewhere or anywhere in the city. A note payable somewhere or anywhere in a large town or area cannot truly be said to be payable at a specified place.

57. In India there is a conflict of authority as to the meaning of the phrase 'specified place.' There appears to be only one decision of this Ct. & that is a decision of a single Judge in the case of Shankar Lal v. Narayan Chandra, 47 C.W.N. 658. In that case McNair J. held that an instrument made payable at Calcutta must be presented for payment in order to make the maker liable thereon as it was an instrument payable at a specified place requiring presentment under Section 69, Negotiable Instruments Act. This decision of course is not binding upon us. But the learned Judge followed a Bench decision of the Lahore H. C. & held that a note payable at Calcutta was a note payable at a specified place.

58. The Lahore Bench decision is Mohammad Ismail Maula Baksh v. Abdul Majid, I. L. R. (1937) 18 Lah. 580: (A. I. R. (24) 1937 Lah. 259). In that case a promissory note was payable on demand at Lyallpur which was a town of considerable importance & size in the Punjab. The Bench held that a city, town or village at large might be taken to be a specified place within the meaning of Sections 64 & 69, Negotiable Instruments Act but presentment of the promissory note there would only be necessary or reasonably possible if the maker had a residence or place of business there or was found to be personally present there. The maker of the note in that case did not reside at Lyallpur nor had he a place of business there nor was he actually present at Lyallpur on 8-10-1931 when a notice of demand was sent by post by the pltf. addressed to the deft. at the house of his sister at Lyallpur. In those circumstances the Bench held that though presentment was necessary by reason of Section 69 it was impossible in the circumstances & therefore proof of presentment could be dispensed with. It is to be observed that single Judges of the Lahore H. C. had taken a different view. In the case of Mehr Baksh v. Hari Chand, A. I. R. (22) 1935 Lah. 623 : (160 I. C. 536), Beckett J. had held that if there is to be presentment in the ordinary Sense of the word there must be some quite definite place where the holder of the note can attend with a reasonable chance of finding the maker of the note. In other words, the place specified for payment must be equivalent to what would be called in ordinary language an address which would enable the maker to be found by the exercise of reasonable diligence provided that the holder himself chooses to attend at the place named for payment. Whether the place named for payment in a negotiable instrument constitutes a specified place for this purpose must be a question to be decided according to the circumstances of each case.

59. The Bench in the case of Mohammads Ismail Maula Bakhsh v. Abdul Majid Khan, I. L. R. (1937) 18 Lah. 580: (A. I. R. (24) 1937 Lah. 259) dissented from the view of Beckett J.

60. In an earlier case Shiv Nath v. Bishambar Das, A.I.R. (22) 1935 Lah 153: (36 Cr. L. J. 217), Abdul Rashid J. had held that presentment of a promissory note payable at Lahore was not necessary. But he rested his decision on a different ground. This single Judge decision was also overruled by the Bench decision to which I have made reference.

61. The question which we have to consider is whether the Bench decision of Lahore should be followed. It is of course not binding on us, but the opinion of the distinguished Judges who decided that case is entitled to very great respect. In my view, however, the decision should not be followed. The learned Judges appears to have been impressed by the rule applicable in U. S. A. That rule is stated in these terms:

'Where a bill or note merely designates a particular city at large as the place of payment, without naming any particular place therein the paper should be presented in such city at the residence or place of business of the maker if he has any or upon him personally, if he can be found but if he has no residence or place of business there & is not found after the exercise of reasonable deligence having the paper in such city on the day it becomes due is a sufficient presentment.'

62. It is to be observed that the Indian Act makes provision for presentation of instruments which are not payable at a specified place. Section 70 provides :

'A promissory note or bill of exchange not made payable as mentioned in Sections 68 & 69 must be presented for payment at the place of business (if any) or at the usual residence of the maker, drawee or acceptor thereof as the case may be.'

63. The American rule which the learned Judges of the Lahore H. C. have applied to India would require a promissory not made payable at a specified place to be presented for payment at the place of business, if any of the maker or at his residence. In fact the requirements would be very similar whether the promissory note was made payable at a specified place or not. The only difference would be that if it was made payable at a specified place the holder of the note would be required to go to that place even if the maker or drawer had no place of business or residence there & look for him when the note became due--a task which might well be hopeless. It appears to me that in framing Section 69, Negotiable Instruments Act the Legislature intended something different from Section 70. Where no place is specified for payment then there should be presentment at the maker's place of business or his usual residence. However where a specified place is mentioned which of course may be neither the place of business nor the residence of the maker then it must be presented at that place. For example the maker of a note may have business premises in Chowringhee & may reside in Circular Road. However, if he makes a note payable at the Imperial Bank, Strand Road, Calcutta, then such a note could not be presented at his business premises in Chowringhee or his residence in Circular Road. It would have to be presented at the Imperial Bank, Strand Road. It is such a place as the Imperial Bank, Strand Road, that the Legislature contemplated when they used the phrase 'payable at a specified place.' It is a place which might be his business address or might be his residence but it might be some other place. It must, however, be a place which is described with such particularity as would enable the holder of the note to go to that place & search out the maker of the note if he were present. In my view the Bench decision of the Lahore H. C. should not be followed & the correct interpretation of this phrase was that given by Beckett J. in the case of Mehr Bakhsh v. Hari Chand, A. I. R. (22) 1935 Lah. 623 : (160 I. C. 536) which I have cited. Any other construction would render it necessary for the holder of a note to come to the city, with frequently no hope whatsoever of being able to find the maker of the note & to present it for payment. The Bench at Lahore had to admit that if a city be a specified place within Section 69 presentation might frequently become impossible & would, therefore, have to be dispensed with, I find it difficult to believe that such a possibility was in the mind of the Legislature when the phrase 'specified place' was used.

64. It was contended in the alternative that this note was made payable at the maker's residence or place of business as an address appears at the top of the paper upon which the promise is written. This address, however, forms no part of the contract. The promise is to pay at Calcutta not at the address. Unless this address forms part of the contract the place of payment is anywhere in Calcutta. In England it has been frequently held that an address appearing under a maker's signature does not form part of the contract & I think no distinction can be drawn if it appears at the top of a document. If such an address formed part of the contract what would be the effect of giving a Calcutta address on the top of the note & making it payable at Allahabad. The note would be payable at Allahabad & there would be no conflict as the address formed no part of the contract.

65. That being so I hold that the learned Judge was wrong in holding that this note was payable at a specified place & as presentment was not pleaded the plaint disclosed no cause of action. Even if it had been pleaded there was no proof of presentment. But even so the suit could not be dismissed on that ground as in my view the note which was payable on demand was not a note payable at a specified place & presentment was therefore unnecessary & did not require either pleading or proof.

66. It was contended in the Ct. below that even if the note was payable at a specified place the deft. 2 could not rely on want of presentation by reason of the provisions of Section 76, Clauses (c) & (d). That section provides:

'No presentment for payment is necessary, & the instrument is dishonoured at the due date for presentment in any of the following cases :

* * * *

(c) as against any party if, after maturity with know-ledge that the instrument has not been presented --he makes a part payment on account of the amount due on the instrument.

* * *

(d) as against the drawer if the drawer could not suffer damage from the want of such presentment.'

67. That there was part payment to deft. 1, I think admits of no doubt whatsoever though the learned Judge was of opinion that it was not quite clear from the evidence of deft. 2 that he bad paid Rs. 625 as part payment towards the promissory note. It seems to me on a fair reading of the evidence of deft. 2 that he admitted that the sum was paid in part payment & it is to be observed that the attorney of deft. 2 actually alleges in the letter of 28-5-1946 that it was paid in part satisfaction of the sum of Rs. 2000 which was secured by the note.

68. The part payment was not pleaded. But of course the payment was not made to the pltf. & he might well have known nothing about it. It appears to me that if presentation was necessary the detf. could not rely on want of presentation when his attorney had admitted in correspondence before the suit that there had been a payment in part satisfaction. I think the deft, also had clearly admitted in the evidence that he had received the sum of Rs. 625 in part satisfaction of his dues under the note. If it was necessary we should have been prepared to give the deft. leave to amend & plead this payment. But, in my view, as the note was not made payable at a specified place the pltf. need not rely upon this payment in answer to the plea of non-presentation. Of course if the pltf. had to rely upon this part payment he would have had to give the deft. credit for the payment in the suit.

69. As it is unnecessary for him to rely upon this part payment I do not think that the deft. can claim the benefit of it as against the pltf. because there is nothing to suggest that the pltf. knew of this part payment on the date of the endorsement. The amount of the part payment is not endorsed on the note & there is nothing on the face of the note to suggest that anything had been paid & that the note was anything else but a note for the full amount appearing on the face of it. That being so, it appears to me that the pltf. Is entitled in this case to claim the full amount due on the note & in my judgment the Ct. below was wrong in dismissing the suit.

70. In the result, therefore, this appeal must be allowed. The decree of the lower Ct. is set aside & the pltf's. suit must be decreed for the amount claimed with costs. The pltf's will be entitled to pendente lite interest at the rate of six per cent, up to the date of the decree & interest thereafter on the decretal amount at the rate of six per cent, until the date of payment. The pltf. is entitled to withdraw the sum of Rs. 1713-11-10 lying with the solicitor of the defts, under orders of the Ct.

Banerjee, J.

71. I agree.


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