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Ambalal Purusottamdas and Co. Vs. Jawarlal Purusottam Dave and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKolkata High Court
Decided On
Case NumberSuit No. 886 of 1953
Judge
Reported inAIR1953Cal758,57CWN744
ActsConstitution of India - Article 14; ;Civil Procedre Code , 1908 - Order 37, Rule 2; ;Negotiable Instruments Act, 1861 - Sections 4 and 13
AppellantAmbalal Purusottamdas and Co.
RespondentJawarlal Purusottam Dave and ors.
Appellant AdvocateS.C. Deb, Adv.
Respondent AdvocateM.M. Sen, Adv.
Cases ReferredMercantile Bank of India Ltd. v. L.
Excerpt:
- .....rights to any particular legal procedure in civil cases or a particular kind of proof in civil suits, except in so far as they come within the ambit of article 14 of the constitution of india are not the express concern of the constitution in any of its articles, and should not be confusedwith the safeguards provided by the constitution for protection of life, liberty and property. article 14 of the constitution is the only relevant article which needs to be examined to test the argument that order 37, civil p.c. is unconstitutional. that article states one of the fundamental rights order the constitution. that fundamental right isequality before the law or the equal protection of the laws within the territory of india. reduced,therefore, in terms of conflict with this.....
Judgment:

P.B. Mukharji, J.

1. This is an application by the defendants for leave to appear and defend this suit which has been instituted by the plaintiff under Order 37, Civil P.C. The summons was taken out on 30-3-1953.

2. The suit is one for the recovery of a sum of Rs. 19,129-12-6 as principal and Rs. 500/- as interest due on a promissory note dated 17-4-1952.

3. Many interesting and important points have been raised in this application. The defendants contend first that Order 37, Civil P.C. is 'ultra vires' the Constitution and is against the principleof natural justice. The next point taken is that the promissory note in this case is not really a promissory note because it is endorsed on an account book of the plaintiff and also because the language is not really the language of the usual promissory note. On merits, however, there is very little defence except some agreement is pleaded in the presence of one Doyalal Dave No. 24/25, Rup Chand Roy Street, Calcutta, by which it is said that the. defendant firm would pay the sum of Rs. 16,129-12-6, by ten annual instalments. It is said that the defendants carry on business as membersof a joint Hindu family under the name and styleof Ram Sankar Purushottam Dave. There is nosupporting affidavit, however, of Doyalal Dave, and the reason given is that he is in his native place laid down with Typhoid.

4. The argument that Order 37, Civil P.C. isunconstitutional is based on the contention that the defendants have no right to be heard in these suits. It is argued then that this is against the principle of natural justice. It is also challenged on the ground that Order 37 dispenses with even the proof which an ordinary plaintiff litigant is required by Court to produce before even an ex parte decree is made in his favour. The complaint on this branch of the argument is against the provision where Order 37 Rule 2 (2) says thatIf no leave is taken within the period mentioned, the allegations in the plaint are deemed to be admitted. The unreasonableness of such a law ispointed out by emphasising the fact that no copyeven of the plaint, as in other suits, accompanies the summons in a suit under Order 37 which is served on the defendant. In this case it must be remembered that the summons is only endorsedwith the copy of the promissory note or any other negotiable instrument upon which the suit is filedstating the amount due on such note or instrument.

5. Rights to any particular legal procedure in civil cases or a particular kind of proof in civil suits, except in so far as they come within the ambit of Article 14 of the Constitution of India are not the express concern of the Constitution in any of its articles, and should not be confusedwith the safeguards provided by the Constitution for protection of life, liberty and property. Article 14 of the Constitution is the only relevant Article which needs to be examined to test the argument that Order 37, Civil P.C. is unconstitutional. That Article states one of the fundamental rights order the Constitution. That fundamental right isequality before the law or the equal protection of the laws within the territory of India. Reduced,therefore, in terms of conflict with this constitutional provision, the applicant's argument is recast in the following way.

6. Ordinarily, in a civil suit a defendant has a right to appear and defend without having to obtain any leave from the Court. He claims it as a matter of right to appear and defend himself. A discrimination is, therefore, said to be made in cases of suits under Order 37, Civil P.C. where such right is denied to the defendants in these suits because the law stipulates that such defendants must first obtain the leave of the Court to appear and defend. It is, therefore, said that his law of procedure creates inequality among defendants in different suits. It is also said on the very same ground that there is no equal protection of laws for the defendants in different suits. Some defendants get the right to defend, others do not. It is also said that no plaintiff in other suits is permitted to obtain a decree even ex parte against the defendant without proof of the facts alleged in the plaint, but a discrimination is made against a defendant in suits tinder Order 37, Civil P.C. where the allegations in the plaint are by law deemed to be admitted although the defendant not being served with a copy of the plaint along with the writ of summons as in other suits never gets an opportunity to see what is in the plaint, which the law asks him to admit.

7. The argument on the basis of inequality is further developed on the ground that suits on negotiable instrument filed in Courts other than those specified in Order 37 Rule 1 do not enjoy the privileged procedure. It is, therefore, said that there is discrimination between the courts with regard to the same class of suits on negotiable instruments.

8. In substance the argument that Order 37, Civil P.C. is ultra vires the Constitution being in breach of Article 14 thereof is reduced to the following propositions:

(1) No right to appear and defend without leave.

(2) Allegations in the plaint deemed to be admitted without proof.

(3) Difference between the same kind of suits in different courts.

9. It is argued that each one of the above grounds creates an unconstitutional discrimination.

10. Infringement of Article 14 of the Constitution occurs where similarly situated or similarly circumstanced individuals are treated differently by the same law. If the law creates a classification, which is reasonable and has a basis not capricious or arbitrary then such classification is not discrimination so as to be an infringement of Article 14 of the Constitution and, therefore, bad. That appears to be the ratio of the decisions of the Supreme Court in -- 'Charanjitlal v. Union of India', : [1950]1SCR869 (A) and the -- 'State of Bombay v. P.N. Balsara, AIR 1951 S.C. 318 (B). Analysing the argument addressed on the basis of discrimination, some important considerations arise. They may be briefly summarised to show how they do not infringe the Constitutional doctrine of equal protection of the laws or equality before the law under Article 14 of the Constitution.

11. It is true a difference is made between defendants in ordinary suits and defendants in suits based on negotiable instruments. There is good reason for this classification and for making difference in the treatment of defendants in these two classes of suits. Having regard to the law of negotiable instrument, specially of its presumptions in favour of consideration, it is, in my judgment, alegitimate provision of law to say that in any suit based on such instrument the defendant will not hare the same rights as an ordinary defendant where consideration has to be proved and not presumed, but that the defendant should come in the first instance and obtain the leave of the Court to defend such a suit. The idea behind this procedure is that the Court is given a chance to see whether there is any substantial and honest defence to the suit or whether it is merely a device to delay or prevent recovery of moneys due on negotiable instruments whose place and importance cannot be over-emphasised in law merchant. In obtaining leave the defendant normally has to show & satisfy the court that although it is a suit on negotiable instrument and although consideration is presumed, he has nevertheless a good defence and he should be allowed to defend. In a proper case where the Court is so satisfied, the defendant does get leave to defend. I am of the opinion, in this context, therefore, that the comparison between defendants in ordinary suits and defendants in suits on negotiable instruments is not a comparison between similarly circumstanced individuals. I am also of the opinion for the same reasons that the classification of suits based on negotiable instruments and those which are not, is not an unreasonable or baseless classification. I hold, therefore, that it is no discrimination on this ground.

12. The second step in the argument on discrimination is that between the different courts, that is to say between courts specified in Order 37 Rule 1 and other courts there is a discrimination. A good deal of the force of this argument is taken away by the fact that by recent adaptations and amendments Order 37 has been extended to many courts and in respect of this State the Calcutta Amendment No. 27206-G of 19-11-33 extends it even to the district courts in 24 Parganas. But nevertheless the argument is still relevant and requires consideration because even after adaptations and amendments this Order has not been made universally applicable to all courts in the land.

13. Universal application of the same procedure to all courts is not an unfailing requirement of the Constitutional principle of equality before the law or of equal protection of laws. The fact that Order 37, Civil P.C. does not apply to all Courts in the land does not ipso facto make it unconstitutional on that ground. To my mind the basic reason for holding this provision to be constitutional is that it is, in my opinion, still founded on a reasonable arid substantial classification which cannot be said to infringe this Constitutional principle of equality before the law. The courts in India are necessarily graded and with varying jurisdictions, powers and procedures. Not all procedures for trial and appeal are common to all the Courts. The different classes of Munsiffs' Courts, Subordinate Judges' Courts, District Judges' Courts and Presidency and Provincial Small Causes Courts are all examples of such reasonable and substantial and justifiable classifications. The procedure in the Small Causes Courts is in many ways different from the procedure in the High Courts and other courts of record. Again there are many procedures open to the High Court which are not open to the other courts in the land. It is indisputable that a rule of procedure laid down by the Statute comes as much within the purview of Article 14 of the Constitution as any rule of substantive law. But the whole question here is whether the procedural provision of Order 37, Civil P.C. is one such procedure which infringes the Consttutional guarantee of equality before the law or equal protection of the laws. In my opinion, it does not.

14. My reasons for that opinion are two-fold. First, Order 37, Civil P.C. is based on a reasonable and justifiable classification of Courts between those specified in Rule 1 of that Order and other courts. Comparison between one courts procedure with the procedure of another court is not ordinary a comparison between similarly circumstanced and similarly situated litigants. The importance of commercial cases in such courts can reasonably and substantially justify the summary procedure of Order 37. Secondly it does not come within the rule laid down by the Supreme Court in. the -- 'State of West Bengal v. Anwar Ali Sarkar', : 1952CriLJ510 (C). Order 37, Civil P.C. is open equally without discrimination to all litigants provided they or their causes of action are within the jurisdiction of the Courts specified in Rule 1 thereof. The executive or the State Government has no power to select either cases or litigants where Order 37 would apply. As Mukherjee J. points out in the Supreme Court in -- 'Anwar All Sarkar's case (C) at p. 91' of the Report already quoted

'for the difference in the treatment rests here solely on arbitrary selection by the State Government'

and again at p. 92 of that Report

'The fact that it (West Bengal Special Courts Act 10 of 1950) gives unrestrained power to the State Government to select in any way it likes the particular cases or offences which should go to a Special Tribunal and withdraw in such cases the protection which the accused normally enjoy under the criminal law of the country, & on the face of it discriminatory.'

Order 37 Civil P.C. does not come within the rule of 'arbitrary selection by the State Government'.

15. The next argument is that in these suits-the procedure under Order 37 is against the principle of natural justice. It is necessary to analyse this particular complaint against natural justice in the procedure laid down under Order 37 Civil P.C.

16. First it is said that the defendant is condemned unheard. I do not think that criticism is justified on the facts or in law. The defendant has, in a suit under Order 37, Civil P.C. the right to come to the Court and apply for leave to appear and defend. It is a right to come to the Court. He is not condemned unheard. True, it is not the unqualified right to defend as in other cases; but that is very far from saying that the defendant in this case is being condemned unheard. He has a right to apply for leave to appear and defend within a particular time. If he comes within that time and shows good cause, he almost always gets leave to defend. If he fails to satisfy the court, he is refused leave to appear and defend. But then he is heard before leave is refused.

17. It is then said that although the copy of the plaint is not served with the Writ of Summons in these classes of suits, the defendant is expressly said to be admitting the plaint which he has never seen or with which he has never been served. This is said to be insensible law and against the principles of natural justice because a man cannot be said to admit something which he has never known or seen. This argument has a right of plausibility about it. But the fact remains that although the plaint is not served, the promissory note or the negotiable instrument itself is endorsed on the Summons and the whole claim under Order 37 is and can only be a claim on the promissory note for principal and interest with costs and nothing more. In other words, what Order 37, Civil P.C.does is to provide an expeditious and summary procedure to recover moneys due on negotiable instruments, and it is the policy of the legislature that such suits should have specially expeditious and summary procedure. In fact, the provision in the law that the allegations in the plaint u:e deemed to be admitted, does not work any hardship at all. The reason is that the substantive law of Negotiable Instruments Act provides in clearest terms that the consideration is to be presumed in such cases and it is for the defendant to come and prove the contrary that there was no consideration. When the summons in such suit with the negotiable instrument endorsed thereon is served on the defendant, he is at once apprised of the negotiable instrument on which suit is brought and that it is charged against him that he has failed to honour the instrument. If the defendant wants either to say that he did not execute the same, or the execution was under circumstances which invalidates the instrument or that there are other facts which destroy his liability on such instrument, he has only to state them in his application for leave to appear and defend, and if he satisfactorily does it, he is certain to get the leave.

18. For these reasons I hold that Order 37, Civil P.C. is not unconstitutional and that it does not infringe Article 14 of the Constitution. I am also of the opinion for reasons I have just stated that Order 37, Civil P.C. is not against any principles of natural justice and is not an unreasonable law within any constitutional prohibition.

19. The next argument advanced on behalf of the applicant is that this is not a promissory note and as such invocation of Order 37, Civil P.C. is improper and unjustified. Now in order to appreciate this particular point, it is essential that (he promissory note on which the suit is brought is set out in full.

20. The promissory note is in these terms:

'We two brothers on behalf of Messrs. Pranshankar Pursuttom Dave of 8/3/4, Harrison Road, Calcutta (shop address) and of Nadiad Dt. Kaira (Gujrat) (Residential address) declares hereby Messrs. Ambalal Purshottamdas & Co. of 1, Rup Chand Street, Calcutta as our creditor for the amount mentioned below on d/- 17-8-52 (Gujarati Sambat 2008 Shrawan Wadi 12 Sunday) Cr ....... ........ Dr. ...... ...... ...... ...... ....

We the undersigned promise to pay the amount of Rs. 16129/12/6 (Rupees sixteen thousand one hundred twenty nine annas twelve and pies six only -- on demand and we as well as our successors are bound herewith to fulfil your dues whenever and wherever you or your successors ask or demand the said sum. We are giving you this in writing wholeheartedly and willingly as promissory note.

For Pranshanker P. Dave. Sd/- (1) Jawaharlal Purshottam Dave 4 as.

Revenue Stamp

(2) Shankerlal Or Prabha Shanker Purushottam Dave on

d/- 17-8-52.'

Now this document is said not to be a promissory note or at any rate a negotiable instrument so as to attract the summary procedure laid down in Order 37 of the Code. The argument is that it is a document in the shape of an acknowledgment with an agreement to pay. The reasons for the argument that it is not negotiable instrument may, briefly, be summarised. First, it is said that the noteis not addressed to bearer or order but is said to be 'you or your successors ask or demand. Secondly it is argued that the entry is in a book oi account signed by the debtor and is in the form of a debit entry. Therefore, there can be no negotiation from hand to hand to endorsement, and it is also said in this connection that there was no delivery in the sense understood in relation to negotiable instruments.

21. In support of this contention reliance is placed on Section 4, Negotiable Instruments Act, which defines a promissory note as an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument, and on Section 13, Negotiable Instruments Act, that defines a negotiable instrument as meaning a promissory note-payable either to order or to bearer. The fact that the promissory note is written out on a page in the book of account does not, in my opinion, make it illegal or any the less a promissory note. It is quite true that it cannot be negotiated by delivery specially because here on the reverse side of this book of account other writings appear, so that the possibility of even tearing away the page has also to be ruled out. The note here, therefore, cannot pass from hand to hand. But that can at best mean that it is not negotiable by delivery from hand to hand. But there are negotiable instruments which are made expressly not negotiable, I see nothing in the Negotiable Instruments Act to make even a promissory note not negotiable by express terms or by necessary implication. The words 'you or your successor' can only mean this that there is no unlimited negotiation permitted of this promissory note. The word 'Successor' does, in my view, however, raise a great difficulty because the name is not specified as to who the successor is and secondly, it is not said to be according to the order of 'you'. Now if a document in order to entitle a person to the money specified therein requires proof of succession, then I do not think it can be construed, as a negotiable instrument. It appears to me that on a construction of this note the payee is not certain. In the first instance there are no words here which say unequivocally that the defendants promise to pay to the plaintiff. In the first part of the writing there is only a promise to pay, without specifying the payee, In the second half of the note the words used are 'We as well as our successors are bound herewith to fulfil your dues whenever and wherever you or your successors ask or demand the said sum.' In my view these words on a proper construction do not satisfy the test of the certainty of the payee of the promissory note. Therefore writ under Order 37 was not available for this instrument. I am not unmindful of the fact that the borrower has described the writing to be a promissory note. But his description will not make an instrument a promissory note if it fails to satisfy the statutory requirements in Section 4 and Section 13, Negotiable Instruments Act. In this connection courts will do well to remember the wholesome caution uttered by Lord Atkin in -- 'Mahomed Akbcr Khan v. Attar Singh', AIR 1938 P.C. 171 at p. 174 (D) 'Serious embarrassment would be caused in commerce if negotiable net were cast too wide.' Obviously the parties knew in this case what a promissory note was and they deliberately chose not to execute it either in the usual form or in the usual language. Both the manner and the method: adopted were unusual and I do not see why the usual summary procedure for actions on negotiable instruments will be rendered open to the plaintiff.

22. The question here is important from the point of view of Order 37, Civil P.C. The chapter beading of that order is 'Summary Procedure on Negotiable Instruments.' It has been argued before me that because of this heading Order 37 should not be made applicable to an instrument which though negotiable in character, is expressly made non-negotiable by specific terms. It is difficult to accept that argument, and I am not convinced that such an argument is sound. Rule 2 of Order 37, Civil P.C. provides that all suits upon bills of exchange, promissory notes or hundis may, in case the plaintiff desires to proceed hereunder, be instituted by presenting a plaint in the form prescribed. That seems to make the procedure available to all suits on promissory notes. It is not said there that the promissory note or the bill of exchange or hundi has to be negotiable. Therefore, if the promissory note or bill of exchange is there, Order 37 should apply even though such, promissory note or bill of exchange is non-negotiable.

23. But the more fundamental question remains. Is it at all a promissory note within the meaning of Rule 2 in Order 37, Civil P.C.? It is an unconditional promise to pay. The maker is certain; the sum is certain. But, in my opinion, the payee is not certain. That being so the writing on the Account Book does not, in my view, satisfy one of the basic tests of a promissory note under Section 4, Negotiable Instruments Act, which insists that the payee or the bearer must be certain. Here it is neither. An instrument made payable to a Bank 'their successors or assigns or order' is not one payable to a certain person and was held not to be a promissory note in -- 'Mercantile Bank of India Ltd. v. L. D'Silva,' . AIR 1928 Bom 436 (E). That was a case of Municipal debentures where Marten C. J. held one such Debenture not to be negotiable instrument because it was payable to 'successors or assigns or order' 'at p. 440 of the Report. Lord Atkin in -- 'AIR 1936 P.C. 171 (D)', observed that it was necessary to be careful test we introduce 'usual visitors in the accustomed circles of negotiable papers'. The present one sued upon, is certainly very unusual. I will, therefore, not visit the defendant with the restrictions of an Order 37 suit. As the suit is instituted under Order 37 I will certainly give him leave to appear, defend and put him on the same level as a defendant in any other suit. Fresh service of writ of summons is waived by defendant and the plaintiff will furnish him with a copy of the plaint by next Wednesday.

24. As the defence on merits does not impress me at this stage I will expedite the hearing of the suit.

25. There will be an order granting leave to the applicant to appear and defend the suit and to file the written statement within one week from the date of the supply of the copy of the plaint. Cross order for discovery within a fortnight from thereafter, inspection within a week following and the suit, will appear as a short cause on my prospective list on the last Friday in July next. The costs of this application will abide the result of the suit. Certified for counsel.


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