Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

Lothamasu Sambasiva Rao Versus Thadwarthi Balakotiah

1972 (11) TMI 97 - ANDHRA PRADESH HIGH COURT

Civil Revn. Petn. Nos. 255, 577 of 1965, 1998 of 1966, 2234 of 1968 and 605 and 2130 of 1969 - Dated:- 14-11-1972 - A. Sambasiva Rao, S. Obul Reddi, Alladi Kuppuswami, K. Madhava Reddy, A.D.V. Reddy, P. Sriramulu, A.V. Krishna Rao and G. Venkatarama Sastri, JJ. For Appellant/Petitioner/Plaintiff: C.V. Deekshitulu, V. Jogayya Sarma, B.V. Subbarayudu, Satyanarayana, Jagannadha Rao, B. Anjaneyulu, M. Rajasekhara Reddy and P. Ramakrishna Raju, M. Jagannadha Rao, C. Trivikrama Rao, A. Krishnaiah For .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

p Act. 2. The necessity to refer the question to a larger Bench arose as a result of the view expressed by Gopal Rao Ekbote, J. ( as he then was ) in Mohd. Jamal Saheb v. Munnar Begum, MANU/AP/0086/1964MANU/AP/0086/1964 : AIR 1964 AP 188 , which does not accord with the ruling of the Full Bench of the Madras High Court in Perumal Chettiar v. Kamakshi Ammal, MANU/TN/0229/1938MANU/TN/0229/1938) ). The learned Judge, Gopal Rao Ekbote, held that the plaintiff can have his money back through the docu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uscurn Boid v. Prithichandlal, AIR 1918 PC 151 ) were not brought to the notice of the Full Bench ". Having regard to the fact that the High Courts of Allahabad, Bombay and some other High Courts have taken a view different from that expressed by the Full Bench of five Judges of the Madras High Court in MANU/TN/0229/1938MANU/TN/0229/1938 the question posed above was referred for consideration by a larger Bench. 3. It may be necessary at the outset to refer to the contentions put forth by th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he bar of Section 35 of the Stamp Act and Section 91 of the Evidence Act. It is further contended by him that there is no presumption, when the lending of the money and the execution of a promissory note are contemporaneous that the promissory note operates as a conditional payment or a collateral security so as to say that the real contract is different from what is embodied in the promissory note and thus bypass the provisions of Section 91 of the Evidence Act. 4. Mr. K. Jagannadha Rao appeari .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

quot; were not taken into consideration by the Full Bench. According to the learned counsel, there is no question of presumption of a conditional payment or collateral security where the money lending and the execution of the promissory note are part and parcel of the same transaction, in other words, contemporaneous or simultaneous and that being the case, the plaintiff is not entitled to set up a case independent of the note in view of the stringent provisions of Section 91 of the Evidence Act .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the respondent ( decree-holder ) contended that, even where lending of money and execution of the promissory note are contemporaneous and form part and parcel of the same transaction, the promissory thus taken operates only as a conditional discharge and not full or complete discharge of the loan and when the promissory note becomes in-admissible in evidence, the creditor will be entitled to fall back on the original demand. The learned counsel also, relying upon the language of Section 70 of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

led. 6. It is, therefore, necessary having regard to the contentions put forth by the learned counsel appearing for both sides and the view expressed by the learned single Judge, which is in conflict with the Full Bench's to frame the following questions for decision - 1. Whether a plaintiff can bring action for recovery of the amount advanced by him basing on the original consideration when the promissory note on foot of which action is brought is in-admissible in evidence under Section 35 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

concerned with the question under what circumstances the loan could be recovered apart from the promissory note, which is not duly stamped, when the execution of the promissory note is contemporaneous or simultaneous with the borrowing. There are no decisions of the Supreme Court so far which have any bearing on the questions raised. We, therefore, have necessarily to look to the decisions of the various High Courts and English Courts for answering the questions. The Courts in India have express .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n to the creditor to prove the loan and all its terms in the case of a contemporaneous transaction also, independently of the promissory note by letting in other evidence and Section 91 of the Evidence Act will not operate as a bar and action can also be maintained on the principle of money had and received under Section 70 of the Contract Act; and (3) which say that, even where the bar of Section 35 of the Stamp Act and Section 91 of the Evidence Act is there provided the promissory note does n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y be said, has not been consistent. While some of the decisions adopt the strict rule of the bar of Section 91 of the Evidence Act as stated by Chief Justice Garth in Sheikh Khan, ILR(1881) Cal 256, the other decisions show a marked departure from the strict rule enunciated by Garth, C.J. which we will refer to presently. 9. The earliest of the cases is the case of Golap Chund Marwaree v. Thakurani Mohokoom Kooaree. ILR (1878) Cal 314, where it was held that the plaintiff could fall back on the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

case for an indoors obviously cannot fall back on the original consideration between the maker and the payee. 10. The case of ILR (1881) Cal 256 has been followed as laying down the authoritative pronouncement in innumerable cases of the several High Courts (Including the Full Bench decision of the Madras High Court). That case came up before Sir. Richard Garth, C.J. and McDonell. J. On reference from the Judge of the Small Cause Court at Dacca. Garth C.J. speaking for the Court said: "When .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cases, the bill or note is said to be taken by the creditor on account of the debt, and if it is not paid at maturity, the creditor may disregard the bill or note and sue for the original consideration. But when the original cause of action is the bill or note itself and does not exist independently of it, as for instance when in consideration of A depositing money with B.B. contracts by a promissory note to repay with interest at six month's date, here there is no cause of action for money .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

.J. as not in conflict with the view he was taking and after referring to the above passage from Garth. C.J.'s judgment observed (at page 853) "But a reference to the earlier portion of the Judgment shows that such was not the meaning of the Chief Justice, and that when he spoke of a deposit he did not mean a loan as he then says where money is lent and a bill or note given for the loan which is not paid at maturity, the creditor may disregard the note and sue on the original considerat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

B/0181/1935 R.C.Mitter. J., sitting single, held that it is not necessary that there should be an independent express contract prior to the execution of such a promissory note and that the fact that the money has been lent implies a promise to repay it and the plaintiff in such a case has a cause of action on the implied promise, which is independent of the promissory note. The fact that the money has been lent according to the learned Judge gives a cause of action to the plaintiff which is inde .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion to recover the money had become complete before the execution of the promissory note, he would be entitled to sue and succeed on the original: but if he does not base his case in the plaint on the original consideration, he is out of Court because the promissory note is inadmissible in evidence being insufficiently stamped. In so holding he relied upon the decision of the Privy Council in Sadasuk Janki Das v. Sir Kishen Pershad, AIR 1918 PC 146 and followed the decision in Sheik Akbar v. Sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g reference to the earlier decision of his in MANU/WB/0067/1935MANU/WB/0067/1935 in his two later Judgments as to what led him to take a different view. 12. Chief Justice Jenkins of the Bombay High Court sitting with Justice Candy in Krishnaji Narayan Parkhi v. Rajamal Manikchand Marwari, ILR (1900) Bom 360 was dealing with a case of liability arising out of a hundi. There the plaintiff lent the defendant ₹ 675/- and at the same time took a hundi to secure its repayment. There was the admi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

The learned Chief Justice relied upon the decision in Chenbasapa v. Lakshman Ramachandra, ILR (1894) Bom 369. Where the distinction between cases in which the suit is brought solely on the note or hundi and cases in which there is and can be a claim to recover the original loan has been acknowledged. It may be pointed out that the learned Chief Justice was not considering the question under what circumstances when an action fails on a promissory note executed contemporaneously with the borrowing .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d to conflict with the provisions of Section 91, Illustration (b) of the Evidence Act . 14. We may now notice some of the leading cases of the Allahabad High Court, which reveal that the view expressed in Sirdarkuar v. Chandrawati, MANU/UP/0037/1882MANU/UP/0037/1882 : ILR (1882) All 330 ; Kundan Lal v. Sahu Bhikhari Das, MANU/UP/0211/1929MANU/UP/0211/1929; Nazir Khan v. Ram Mohan, MANU/UP/0289/1930MANU/UP/0289/1930 and Kunwar Bahadur v. Suraj Baksh, AIR 1932 Oudh 235 ( FB ) is no longer good law .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

#39;s case, ILR ( 1938 ) Mad 933 = ( MANU/TN/0229/1938MANU/TN/0229/1938 : AIR 1938 Mad 785) ( FB ) it may be useful to notice the leading cases of that Court : 15. In MANU/UP/0037/1882MANU/UP/0037/1882 : ILR (1882) All 330, a case arising in second appeal, it was expressed by Straight and Broadhurst, JJ. That in a case where the adjustment of accounts took place and the bond was made, it was intended to consolidate and secure the debt due from the defendant to the appellant, and the new contract .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Kenyon in the well-known case of (1800) 1 East 55 = 102 ER 22 in holding that even where the debt is inseparable from the promissory note, the debt could be proved notwithstanding the note is not admissible in evidence. The learned Judges in Banarsi Prasad v. Fazal Ahmad, MANU/UP/0133/1905MANU/UP/0133/1905 : ILR(1906) All 298, though purported to follow the case of ILR(1881) Cal 256 by saying that the law on the subject is clearly stated by Garth C. J., however swung to the opposite view by obs .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d and is held to be inadmissible in evidence, a suit filed on foot of such a note may be treated as a suit for money had and received if the pleadings are properly framed without treating it as such a suit. These decisions were considered by Sulaiman and Kendall, JJ., in MANU/UP/0211/1929MANU/UP/0211/1929 and the view expressed by the learned Judges was quoted and endorsed by Sir Lionel Leach, C. J. in Perumal Cettiar's case, MANU/TN/0229/1938MANU/TN/0229/1938) to the extent of the scope of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

undi and Section 91 does not exclude evidence showing the terms of the whole contract which cannot be determined from the hundi alone. But the view of the learned Judges in so far as the applicability of Section 70 of the Contract Act was not endorsed by the Full Bench as may be seen from the judgment of Justice Varadachariar. What was said in the case of a hundi which need not necessarily contain all the terms of the agreement between the parties was applied by the Madras Full Bench to a promis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

/1930 overruled the decisions in ILR (1912) AII158 and ILR (1906) AII 293 referred to supra and followed the decisions Parsotham Narain v. Taley Singh, ILR(1906) AII 178 and Sheikh Akbar v. Sheikh Khan. ILR(1882)Cal 256. As may be seen from the Judgment of Mukerji. J. Who spoke for the Full Bench he did not approve the view of Sulaiman and Kendall, JJ. In so far as invoking the aid of Section 70 of the same Court in Miyan Bux v. Mt. Bodhiya, AIR 1928 AII 371(SB). One of the learned Judges of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

asis of any obligation whether antecedent to or arising simultaneously with the execution of the promissory note was not called for. The view of the Full Bench as expressed by Mukherji J., that verbal negotiations leading upto an express contract in writing cannot be set up as an independent contract and are not admissible in evidence as provided by Section 91 and that where there is an express promise will not be inferred, was overruled by a Full Bench of five Judges in MANU/UP/0007/1943MANU/UP .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l evidence to prove the terms of the contract however is admissible. Srivastava, J., with whom Nazir Hassan, C. J. " generally agreed and Raza, J., agreed wholly, was not of the opinion that the fact of the advance of the loan or the amount of the loan cannot be regarded as one of the terms of the promissory note. " In that view he opined that " if it is not so, then the path of the plaintiff is clear. In the case of every loan there is a presumption of an implied contract to repa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s to be a promissory note which should constitute a contract between the maker and the payee. When the rate of interest, date of payment etc., could constitute terms of the promissory note, we fail to understand how it could be said that the amount on which interest is payable can be held to be not a term of the contract. 19. We may now notice the facts of the Full Bench case in MANU/UP/0007/1943MANU/UP/0007/1943. That was a case where the plaintiff is said to have lent a sum of ₹ 495 /- t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

laintiff, the matter was referred to a Full Bench of five Judges by a single Judge of that Court as he felt that the Full Bench decision in AIR 1921 All 183( FB ) required reconsideration. The learned Judge, Dar, J., expressed total disagreement with the view of the Full Bench of the Madras High Court and concurred with the statement of law by Sir Arthur Page, C. J. as contained in proposition No. 3 of his judgment in Maung Chit v. Roshan and Co., AIR 1934 Rang 339= ILR Rang 500 ( FB ). He, howe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce of all evidence the presumption is that it was given by way of a loan, and there is a further presumption that the promissory note was given in conditional payment of the loan. If by reason of the defect of stamp the promissory note is held inadmissible in evidence, it is open to the plaintiff to prove the loan and all its terms and to recover the loan irrespective and independently of the promissory note by giving other evidence including that furnished by a contemporaneous receipt if there .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ss any opinion on the question whether the money given under a promissory note which is inadmissible in evidence for insufficiency of stamp can be recovered under Section 70 of the Contract Act. Mathur, J. Who wrote a separate Judgment concurring with the view on the main question, however, expressed the opinion, differing from Sulaiman and Kendall, JJ., in MANU/UP/0211/1929MANU/UP/0211/1929, that Section 70 of the Contract Act does not contemplate the case of payment of money and it will be doi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s of the promissory note. In the words of Mathur, J. " As I look at the matter, I think that amount of the loan is certainly one of the terms of the contract as would be the manner or the time of its repayment. " He was also not prepared to agree with Srivastava, J. That " there is nothing in Section 91 to prevent the plaintiff from giving evidence to prove that at the time of the transaction the plaintiff paid a sum of ₹ 700 /- in cash to the defendant. ' The learned Ju .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Stamp Act. Mathur, J., in so coming to the conclusion sought support from what Sir Asutosh Mookerjee said in Ram Bahadur v. Dasuri Ram, ( 1913 ) 17 CLJ 399. "The learned vakil for the respondent has ingeniously suggested that as the instrument itself must be held inadmissible, there is no proof that the terms of the contract for payment of interest were reduced to writing. This argument is obviously fallacious. The written instrument may be looked at for the purpose of showing that the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rely a receipt containing the terms on which the amount was to be refunded. It was, therefore, said by Lord Atkin Being primarily a receipt, even if coupled with the promise to pay, it was not a promissory note. As the document did not record or purport to record all the terms of the contract between the parties and as there was nothing in the document explaining how the money came to be received the parties were not prevented from showing that it was paid by way of loan or deposit or for some o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he ruling of the Judicial Committee, therefore, does not lend support to his ( Mathur, J.'s ) view as sought to be made out by him and for the same reason we regret we are unable to endorse the view of that eminent Judge, Sir Asutosh Mookerjee. We are also unable to agree with him for reasons which we will state presently when we deal with the scope of Section 35 that the words " no instrument chargeable with duty shall be admitted in evidence for any purpose, " occurring in Sectio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

943 All 220 ( FB ) held that : .............. in the absence of the evidence to the contrary, the presumption is that it is as a conditional payment or as a collateral security only. Where it is in absolute payment or discharge of oral debt, the document alone can be used to prove the terms of the debt because in that case the debt has been reduced " to the form of a document and therefore Section 91 is no bar to the proof of the debt other than by production of the document. In Patna, as o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f to bring a suit on the original consideration of the handnote. That question was answered having regard to the facts of that case that the handnote was taken as a collateral security for the debt, for it was alleged in the plaint that, as collateral security for the two loans, plaintiff 2, defendants 1 and 2 and father of defendant 3 executed the handnote on 30th Magh 1342 in favour of the persons already named. In paragraph 15 of the plaint it was also said that the cause of action arose on 1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cause of action otherwise than upon the note itself on the presumption that it was given as a conditional discharge or collateral security. 22. The Nagpur High Court in Udaram Mangiram v. Laxman Marwari, MANU/NA/0093/1926MANU/NA/0093/1926 held that even though the promissory note becomes inadmissible in evidence for want of proper stamp, the creditor can fall back on the original transaction under Section 70 of the Contract Act treating the promissory note as non-existent and ask for refund of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xpressing divergent views, disagreed with the view expressed by the Full Bench of the Allahabad High Court in AIR 1943 AII 220 (FB) and held that, when the terms of the entire contract between the parties are reduced to the form of a promissory note and the advance of the loan and the execution of the promissory note are part of the same transaction, the provisions of Section 91 are a clear bar to any other evidence, except the promissory note and if the pronote is inadmissible in evidence, the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tract or that of the pronote not being a final accord or discharge of the date, so on and so forth." 24. The decision of the Mysore High Court in K. Anantharajaiah v. Shivaramaiah MANU/KA/0071/1968MANU/KA/0071/1968 does not render any assistance to the respondents. It was held by Gopivallabha Iyengar, J. That where a creditor lent a loan and had taken a receipt and a promissory note to evidence it, his claim for recovery of loan without producing the promissory note is not maintainable. But .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Sir Arthur Page C.J. That was a case where the creditor had lent two sums of ₹ 300/- and ₹ 100/- to the debtor and on each occasion when the loan was made, a promissory note was executed by the debtor. A suit was filed in the Small Cause Court of Mandolay on foot of the promissory note or in the alternative a like sum for money lent. The promissory notes were not duly stamped and they were held inadmissible in evidence under Section 35 of the Stamp Act. A decree was, however, passed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sideration of the "many Indian and English authorities on this question." 1. When a loan is contracted it is an implied term of the agreement that the loan shall be repaid (1913) 41 1nd App 142 (PC) 2. When a promissory note or a bill of exchange or indeed anything else, is given by the narrower to the lender in connection with the loan, either at the time when the loan is contracted or afterwards, the terms upon which it is given and taken is a question of fact and not of law, (1889) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

are enforceable; but the cause of action to recover the amount of the debt revives if the negotiable instrument is dishonoured or the rights thereunder are not enforceable. On the other hand the cause of action on the original consideration is extinguished when the amount due under the negotiable instrument is paid or if the lender by negotiating the instrument or by laches or otherwise has made the bill his own, and thus must be regarded as having accepted the negotiable instrument in accord a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the promissory note or other negotiable instrument is accepted as an accord and satisfaction of the original debt, the lender is restricted to his rights under the negotiable instrument, by which he must stand or fall in the one case the note or bill is itself the original consideration and in the other the original debt has been liquidated by the acceptance of the negotiable instrument." 5. "If it is agreed between the parties that the promissory note or other negotiable instrument .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the contract except the document itself, or secondary evidence of the contents of the document in cases in which secondary evidence thereof is admissible. It follows therefore that in such cases if the document which contains the whole of the terms of the agreement is not admissible in evidence a suit to recover the amount of the loan must fail because the plaintiff is not in a position to prove the debt." He, however, regarded the oft-quoted passage of Garth. C.J. in ILR (1881) Cal 256 a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rds proposition No. 3. I concurred in this judgment and subject to one qualification I still consider that it correctly states the law. The qualification which I would now make has reference to the statement that the giving of a negotiable instrument operates prima facie as a conditional payment of the debt. On further consideration I have come to the conclusion that this must depend on the facts of the particular case and that there is no presumption that the instrument has been given as condit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that presumption automatically arises in every case of a promissory note taken in lieu of money payment, though such presumption is rebuttable. Mr. C.N. Babu and Mr. K. Jagannadha Rao contend that such a presumption does not automatically arise and it depends upon the intention of the parties and the circumstances under which the instrument was executed and whether the promissory note contains all the terms of the contract or not. 27. Before considering the correctness or otherwise of what was e .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er it as waste paper and resort to his original demand. This distinction between a collateral security and conditional payment is this. In the case of a collateral security, the cause of action is not suspended, but whereas conditional payment suspends the cause of action. 28. In Halsbury's Laws of England, Third Edition, Vol. 8 at p. 212, it is said that where a negotiable instrument is given by a debtor to his creditor the question upon what terms it is given is one of the fact, depending .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l the decisions which accord with the view expressed in ILR(1885) Mad 94 and also the two of the cases in Gopala Padayachi v. Rajagopal Naidu, MANU/TN/0571/1926MANU/TN/0571/1926and Chinnayya Naidu v. Srinivasa Naidu, MANU/TN/0353/1934MANU/TN/0353/1934 : AIR 1935 Mad 206= ( 67 ALJ 912 ) which struck a different note were referred to in main judgment of Sir Lionel Leach, C. J., and in the judgment of Justice Varadachariar, Krishnasami v. Rangaswami, ILR (1884) Mad 112( which ) was a case of an imp .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e strength of ILR (1884) Mad 112, that the plaintiff may be permitted to prove the consideration which preceded the contract and that the suit may be regarded as one for the return of " money lent " to defendant. The learned Judges rejected that plea observing, " We cannot assent to such a doctrine and to do so would entirely nullify the provisions of Section 91 of the Evidence Act. They went on to add ; " It is a necessary condition to every written contract that the terms s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Section 91 operating as a bar stated in Pothireddy's case, ILR (1884)Mad 94, when the Full Bench said that even in the case of a contemporaneous transaction, if it could be shown that all the terms of the contract are not incorporated in the promissory note and a plea is found in the plaint to that effect so as to show that the promissory note was executed as a collateral security or conditional payment. Section 891 will not operate as a bar. The Full Bench no doubt did not make any differen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

no further evidence can be permitted in the face of the intention of the parties which has been completely expressed in the promissory note. In such a case, they also hold that the debt cannot be proved aliunde. It would no doubt appear prima facie that the rule viz., the bar of Section 91, laid down in Pothi Reddy's case, ( 1885-1887 ) ILR 10 Mad 94 is relaxed but Chief Justice Leach made it absolutely clear that Section 91 would operate as a bar if all the terms of the contract are embodi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ame day when he obtained the loan of ₹ 1,000 /- and promised to pay the same with interest in three instalments under the promissory note. There the memorandum which was held to be a promissory note, contained all the terms of the contract and it was not the case of the plaintiff there, as already pointed out, that it was executed as a collateral security or a conditional payment. The Full Bench, of course, has not stated in so many words what it meant by " all the terms of the contra .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tain terms regarding its having been as a collateral security or as a conditional payment, it would be open to the plaintiff to fall back on the original demand provided such a plea is based on the pleadings. 31. Sir Richard Couch, C. J., in Kedarnath v. Sham Lall, ( 1873 ) 11 APLR 405 at p. 412 was of the opinion that the promissory note is " the only repository and the appropriate evidence of the agreement ". But that strict principle enunciated by him no longer holds the field even .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sory note is executed simultaneously with the borrowing of the money, there is always a presumption that the promissory note was given by way of a conditional payment or as a collateral security and that the bar of Section 35 of the Stamp Act as to its inadmissibility owing to the defect in stamping or the bar of Section 91 of the Evidence Act will not preclude the plaintiff from falling back on the original demand. This view is based on the assumption that every loan contains an implied promise .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Full Bench of the Madras High Court. 32. As Sadasiva Iyer, J., pointed out in Muthusastrigal v. Viswanatha, ILR Mad 660 at p. 663 = ( AIR 1914 Mad 657(2) ). " To import the doctrines laid down in English cases about vague obligations to repay arising out of equity and not out of contract or about obligations which can be enforced if the plaintiff skilfully draws up his plaint as one on account of money had and received cancelling the real contract of loan which had been reduced to the form .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nsaction, still there exists always an implied promise to pay the loan notwithstanding the inadmissibility of the promissory note on account of the bar of Section 35 of the Stamp Act. What fails for determination is whether presumption as such that the promissory note was executed as a conditional payment or collateral security without further investigation or enquiry as to the intention of the parties at the time when they made the contract arises in the case of the contemporaneous transaction .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ff proved a distinct admission of the original debt made before the note was given. The facts of that case show that it was a case of an antecedent debt and therefore it was held that the plaintiff may prove his original debt. " 35. In Re Romer & Haslam, ( 1893 ) 2 QB 286 was also a case of a pre-existing debt for what has been held in that case that " the handing by a client to his solicitor of a negotiable security for the amount of his bill of costs, coupled with the giving of a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

itors to the clients and they were accompanied by cash account in which all payments on account were credited and showed a balance due to the solicitors. 36. In Halsbury's Laws of England, Third Edition, Vol. 8 at page 213, it is stated having regard to what is held in ( 1893 ) 2 QB 286 C. A. that the question whether a negotiable instrument has been accepted in absolute satisfaction or only as a conditional payment is one of fact and depends on the intention of the parties. That, in our vie .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n for which the promissory notes had been given. It was held by the Judicial Committee, on those facts, that although the claims in the two actions arose out of the same transaction, they were in respect of different causes of action, and that consequently, the second action was not brought contrary to Section 34 of the Ceylon Civil Procedure Code ( same as Order 2, Rule 2 of the Indian Code of Civil Procedure ) and could not be maintained. 38. Dargavarabu Sarrapu v. Rampratabu ILR(1902) 25 Mad .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he goods sold and delivered. Jambhu Chetty v. Palaniappa Chettiar ILR (1903) Mad 526, was a case where a suit was laid on the amount due on account of the goods sold and delivered and money lent. The defence was that the plaintiff was accepted hundis in discharge of the debt and was, in consequence, debarred from suing on the original consideration and that his remedy, if he had one, was on the hundis. What was held by the learned Judges, Benson and Bhasyam Ayyangar, JJ., is that it is a questio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d not was conditional discharge and therefore, the plaintiff, having accepted the hundis unconditionally, cannot fall back on the original debt. 39. What Benson and Sundaram Aiyar, JJ., said in Palaniappa Chetty v. Arunachellam Chetty, MANU/TN/0095/1911MANU/TN/0095/1911 is that the general presumption is that a Bill of exchange or hundi given for a debt operates only as a conditional discharge of the debt : that the execution of a formal for the amount covered by the bill of exchange or hundi is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

promissory note and hundi or bill of exchange is explained by Vradachariar, J., in these words : But where the borrower gives his own promissory note as part of the loan transaction, it seems to me artificial to treat that every ' promise to pay ' obtained in that note as amounting to a payment, and then to seek to import the theory of ' conditional ' payment. MANU/SC/0087/1954MANU/SC/0087/1954 : [1954] 25 ITR 259(SC) , was a case where an Income Tax assessee expressly requested .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1938 AC 380 observed at p. 433 : The position, therefore, is that in one view of the matter there was in the circumstances of this case, an implied agreement under which the cheques were accepted unconditionally as payment and on another view even if the cheques were taken conditionally the cheques not having been dishonoured but having been cashed, the payment related back to the dates of the receipt of the cheques and in law the dates of payments were the dates of the delivery of the cheques. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

negotiable instrument, such as a bill of exchange, promissory note or cheque, it is a question of fact depending on the intention of the parties, whether it is taken in absolute satisfaction of the debt, or only in conditional satisfaction. " To the same effect is what is stated by Byles in his book on Bills of Exchange ( Twenty-second Edition ) at page 392 : The word ' payment ' is not always used in its strict legal sense. A plea of payment by bill means in law that the bill has .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s cases of the court ( it is not necessary to notice all those cases here ) as also the English decisions on the point because some of the High Courts followed the English rule of ' best evidence ', held that the English authorities which were cited before them and the Indian decisions, which followed the English authorities, do not really bear on the objection arising under Section 91 of the Evidence Act. The reason, as rightly stated by the learned Chief Justice is that the English rul .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and overruled by the Full Bench. 42. We may here refer in brief to the decisions of the Punjab High Court, which has consistently taken the view which accords with the view taken in Pothi Reddy's case ILR (1885) Mad 94, and Sheik Akbar v. Sheikh Khan, ILR (1881) Cal 256. In Chanda Singh v. Amritsar Banking Co., AIR 1922 Lah 307, Chevis and Harison JJ., held that even in a case where the execution of the ' hundi ' had for certain reasons been postponed for sometime after the loan had .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ihal Chand v. Raghu Nath Singh, AIR 1934 Lah 606, where Shadi Lal, C. J. and Rangi Lal, J., went to the extent of holding that a decree cannot be passed on the basis of a promissory note which is inadmissible in evidence even if the defendant admits the liability on it. These decisions were referred to and followed by Khosla and Falshaw, JJ., in Amin Chand v. Firm Madho Rao Banwari Lal, MANU/PH/0141/1954MANU/PH/0141/1954. 43. Now let us examine whether the learned Judge, Gopal Rao Ekbote, J. had .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ser paid the entire amount of the purchase money and also obtained a sale certificate of payment. The purchaser received an order for possession but a third party being desirous of contesting the right of the Zamindar to make the sale, sued for reversal of the sale. A decree for reversal of the sale was passed and the suit was, therefore, brought by the purchaser to recover from the Zamindar the total amount of purchase money including interest. The Court of first instance dismissed the suit as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

inst all loss at the charge of the Zamindar at whose suit the sale may have been made ". It is with reference to that provision that it was observed : And so the Courts in that series of suits failed to apply the provision of Section 14 in a manner that would be conclusive as to the purchaser's right to be indemnified. How far the remedy provided by Section 14 in a purchaser's favour excludes all other remedies apart from any determination of an issue, is a question of some nicety. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

above facts has absolutely no bearing on the questions with which we are now concerned. The Privy Council based their conclusion on the express terms of Section 14 of the Regulation and were not expressing any views on the doctrine of " money had and received " generally, much less with reference to a claim under an unstamped promissory note. 45. In AIR 1918 PC 241, the Privy Council was concerned with entrustment of the property to an agent. A stranger had taken transfer of property .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ldane discussed the theory of " money had and received " under the Common Law of England and observed : The question in the present case, where an agent in accordance with whose instructions appellants had acted, intervened between the owner and the tort-feasor was as what was the effect and extent of such affirmance of contractual relation. Could the contractual relation be split up and only part of it be approbated while the rest was reprobated and could any obligation based on its c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ad its own laws. This decision can obviously have no application where an action is laid on an improperly-stamped promissory note, the effect of which is governed by statutory provisions. 46. AIR 1918 PC 146, which was relied upon in MANU/AP/0086/1964MANU/AP/0086/1964 : AIR 1964 AP 188 , is a case where it was held that it is contrary to established rules to contend that in an action on a bill of exchange or a promissory note against a person whose name properly appears as party to the instrumen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ary for an agent signing on behalf of a Principal. The observation that " it would of course have been open to the plaintiffs had they thought fit to have framed their case in an alternative form, and to have sued both of the hundis and, alternatively, upon the consideration " relied upon by the learned single Judge in, MANU/AP/0086/1964MANU/AP/0086/1964 : AIR 1964 AP 188 , was with reference to a hundi transaction. As already adverted to the difficulty created by Section 91 of the Evi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

J., he noticed Sadasuk Janki Das's case, AIR 1918 PC 146, and that is indicative of the fact that the learned Judges of the Full Bench were invited to the decisions or were aware of them. We are, therefore, of the opinion, with great respect to the learned Judge, Gopal Rao Ekbote, J. That there was no warrant to strike a different note from what is laid down by the Full Bench on the assumption that, if the two decisions in AIR 1918 PC 151 and AIR 1918 PC 241, were noticed by the learned Judg .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ge of the Full Bench did not consider the question whether the cause of action could be based on the doctrine of " money and received ", for the learned Judge, Gopal Rao Ekbote, J. To assume that the opinion of the Full Bench would have been different had they looked at those two decisions in AIR 1918 PC 151 and AIR 1918 PC 241. 48. Now it remains to be considered how far Section 70 of the Contract Act can be invoked for the purpose of recovering the loan on the theory of ' implied .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

; or " delivers anything " as to include " payment of money under promissory note " and in support thereof, relied upon three decisions of the Supreme Court in State of West Bengal v. B. K. Mondal and Sons, MANU/SC/0114/1961MANU/SC/0114/1961 : AIR 1962 SC 779 ; New Marine Coal Co. v. Union of India, MANU/SC/0051/1963MANU/SC/0051/1963 : [1964] 2 SCR 859 and Mulamchand v. State of Madhya Pradesh, MANU/SC/0009/1968MANU/SC/0009/1968 : [1968] 3 SCR 214 in addition to other decisio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

neficiary of what he did or delivered to him so as to entitle him to be compensated or to restore the " thing " so delivered or done. 50. Before referring to the cases of the Supreme Court, it may be necessary to refer to the other cases relied upon by the learned Counsel, Sri M. Jagannadha Rao. The case of a Royal Bank of Canada v. The King, 1913 AC 283, was an appeal from the judgment of the Supreme Court of Alberta. The main controversy was as to the validity of the statute ( Albert .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oney to New York to be applied in carrying out the particular scheme which was established by the statutes of 1909 and the Orders in Council, and by the contracts and mortgage of that year. The money claimed in the action was paid to the appellant-Bank as one of those designated to act in carrying out the scheme. The Bank received the money at its branch in New York, and its general manager then gave instructions from the head office in Montreal to the manager of one of its local branches, at Ed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n Montreal the money which they had advanced solely for a purpose which had ceased to exist. Their right was a civil right outside the province and the Legislature of the province could not legislate validly in derogation of that right. The statute was held to be beyond the powers of the Legislature of Alberta, inasmuch as what was sought to be enacted was neither confined to property and civil rights within the province nor directed solely to matters of merely local or private nature within it. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

13 Ch D 1 at p. 49, viz., " when money has been paid to borrowers in consideration of the undertaking of a scheme to be carried into effect subsequently to the payment and which has become abortive. " The principle in that case was sought to be stretched here beyond limits of what was stated there, to a case of promissory note too on the ground that whatever may be the reason which invalidated the promissory note, still the right to recover the money is not lost. There, it should be r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

province of Alberta could not validly legislate beyond its jurisdiction. 51. What Lord Mansfield said in Moses v. Macferlan, ( 1760 ) 97 ER 676, cannot also applied where there is a statutory prohibition under the Stamp Act and the Evidence Act. It is not necessary to refer to the facts of that case except to state what Lord Mansfield observed, for that decision was not later followed in Sinclair v. Brougham, 1914 AC 398. What Lord Mansfield said in that case is this : ( at p. 680 ): This kind .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rough imposition. ( express or implied ) or extortion, or oppression; or an undue advantage taken of the plaintiff's situation contrary to laws made for the protection of persons under those circumstances. In one word, the gist of this kind of action is, that the defendant upon the circumstances of the case, is obliged by the ties of the natural justice and equity to refund the money. " Lord Sumner, in 1914 AC 398 commented on what Lord Mansfield said in these terms ( at pp. 455, 456 ) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

w ( see Smith's Leading Cases, Notes to Marriot v. Hampton, ( 1797 ) 7 TR 269 = 2 Sm LC ( 11th Ed. ) 421) and this last mentioned case is one which illustrates the proposition that money is not thus recoverable in all cases where it is unconscientious for the defendant to retain it, for no one could doubt that Hampton's retention of the money in that case was very like sharp practice............. There is now no ground left for suggesting as a recognizable " equity " the right .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in, out of which some of the packages stored in the warehouse were stolen. The plaintiffs as bonded warehousemen were compelled by law at the demand of the Customs to pay the duties on those packages out of their own moneys. The defendants had refused to supply for that purpose. The plaintiffs laid an action in respect of the amount paid towards customs duty on the ground that as between themselves and the defendants, the defendants were primarily liable for the duties. It is on those facts that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ers the theory of an implied promise or of liability in quasi-contract pleaded by the learned counsel, Mr. M. Jagannadha rao. The decision in the Brook's Wharf case was an application of the principle that where A has been compelled by law to pay, or, being compellable by law has paid money which B was ultimately liable to pay, so that B obtains the benefit of the payment by the discharge of his liability then B is held indebted to A in that amount. The principle is a familiar instance of li .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is 'just and reasonable' except 'natural justice' in another guise? But I wish to add that (as I have tried to show elsewhere) this fiction of implied contract is really unnecessary in the law of quasi-contract at the present day. It did good service in the development of that department of the English system but at its best it was quite in adequate to explain intelligibly many of the decisions on quasi-contract and on the scope of elegantia juris we should be well rid of it nowa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ield thus ridiculed the doctrines propounded by the English Courts, the latest of them being the principle of ' just and reasonable . ' That doctrine of ' just and reasonable ' applied in English common law cannot be invoked in the teeth of the provisions of Section 35 of the Stamp Act and Section 91 of the Evidence Act or beyond the scope of Section 70 of the Contract Act. 55. The case of Fibrosa Spolka Akcyjna v. Fairbarin Lawson Combe Barbour Ltd., 1943 AC 32 was a case of fru .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

with the law of failure of consideration and the right to recover money on that ground it is generally speaking, not the promise which is referred to as the consideration, but its performance. As it was a case of frustration, the contract having become impossible of performance, Viscount Simon, in his judgment observed ( at p. 49 ) that : I can see no valid reason why the right to recover equally arise on frustration arising from supervening circumstances as it arises on frustration from destru .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n contract or in tort, and are now recognised to fall within a third category of the common law which has been quasi-contract or restitution. Mr. M. Jagannadha Rao also placed reliance on a passage in Anson's Law of Contract ( Twenty-third Edition ) at page 601 : " Where one person pays money to another in pursuance of an agreement which is ineffective, or which subsequently becomes so, he may recover from that other the money which he has paid ". Putting the case under the head of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n as better entitled, or on the ground that without such accountability the other would unjustly suffer loss. The law of quasi-contract exists to prove remedies in circumstances of this kind. " The three common law actions of a quasi-contractual nature as we get from page 590 of the same Volume are : (1) for money paid by the plaintiff to the defendant's use ; (2) for money had and received by the defendant to the plaintiff's use and (3) quantum meruit. It is under the first two hea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

0114/1961MANU/SC/0114/1961 : AIR 1962 SC 779 Gajendragadkar, J., ( as he then was ) said that ( at P. 786 ) : Three conditions must be satisfied before this Section can be invoked. The first condition is that a person should lawfully do something for another person or deliver something to him. The second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously and the third is that the person for whom something is done or to whom something is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted, the contractors completed the constructions and sent the bill, which was duly paid in July, 1944. But meanwhile on 7th April, 1944, the contractors were requested by the Sub-Divisional Officer of the Department to submit their estimate for the construction of a kutcha road, guard room, office, kitchen and room for clerks at Arambagh for the use of the Department of Civil Supplies. That was followed by the visit of the Additional Deputy Director of Civil Supplies, who instructed the contract .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ensation under Section 70 of the Contract Act is not made on the basis of a contract but on voluntary acceptance of a thing and there was no conflict between Section 70 of the Contract Act and Section 175(3) of the Government of India Act. In upholding the claim for compensation, Gajandragadkar, J., ( as he then was ) observed :- Where a claim for compensation is made by one person against another under Section 70, it is not on the basis of any subsisting contract between the parties ; it is on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ot authorised under Section 175(3) of the Government of India Act, or if the said officer was authorised to make the said request the request becomes inoperative because it was not followed up by a contract executed in the manner prescribed by Section 175(3) of the Government of India Act. In either case the thing has been delivered or the work has been done without a contract and that brings in Section 70. " The same learned Judge spoke for the Court in MANU/SC/0051/1963MANU/SC/0051/1963 : .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

learned Judge held that since the Government had received the benefit under an invalid or void contract, it is nevertheless bound to make good or recompense the person who lawfully did something for the Government by which the Government benefited having voluntarily accepted the benefit, that Mr. Jagannadha Rao seeks to contend that here too the contract evidenced by the promissory note has become invalid by reason of the absolute bar of Section 35 of the Stamp Act and as such the lender cannot .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

supra, observed : But if money is deposited and goods are supplied or if services are tendered in terms of the void contract. The provisions of Section 70 of the Indian contract Act may be applicable. In other words. If the conditions imposed by Section 70 of the Indian contract Act are satisfied then the provisions of that section can be invoked by the aggrieved party to the void contract. It is for the reason that in that case, the learned Judge said that money deposited is also recoverable by .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e the appellant had purchased a right to pluck, collect and remove the forest produce. Out of the forest produce only the tendu leaves crop was allowed to be enjoyed by the appellant on his depositing a sum ₹ 3,000 in the Government Treasury. The deposit was made by the appellant to save the tendu leaves crop from being sold to others by the Government. The case of the appellant was that he was entitled to the refund of the amount, as the right to collect tendu leaves had already been purc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

quot; and goods are supplied or if services are rendered in terms of the void contract. The provisions of Section 70 of the contract Act may be applicable and that the money deposited could be recovered under Section 70 when a contract becomes invalid or void. It is in that context that the expression "anything " was construed to include "money " deposited. There is nothing in what the Supreme Court said in the three cases cited above, as sought to be made out by Mr. M. Jagan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n between the three cases of the Supreme Court and an action based on foot of a promissory note where the bar of Section 35 of the Stamp Act operates is this : The recover of "any thing "under Section 70 is only by way of compensation or to restore the " thing so done or delivered ". What the promisor promises to pay under a promissory note is a certain sum of money and therefore the question of payment of compensation will not arise in view of the specific terms embodied in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t reads : No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence. Or shall be acted upon, registered or authenticated by any such person or by any public officer unless such instrument is duly Stamped: Provided that- (a) any such instrument not being an instrument chargeable with a duty not exceeding ten naya paise only, or a bill of exchange of promissory note, shall. Subject to all just ex .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f those documents which could be received in evidence on payment of deficit duty and penalty. 59. The expression "for any purpose" occurring in Section 35 was construed by the Madras High Court as early as in 1907 in Thaji Beebi V. Tirumalaiappa, (1907) 17 MLJ 308 and by the Allahabad High Court in Mt. Bibbo v. Gokaran Singh. MANU/UP/0038/1936MANU/UP/0038/1936 and later by the Privy council in Ram Rattan v. Parmanand. MANU/PR/0046/1945MANU/PR/0046/1945, and by this Court in Sanjeeva Re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

various High Courts by pointing out that the words "for any purpose" should be given their natural meaning and effect and would include a collateral purpose. In MANU/AP/0060/1972MANU/AP/0060/1972 : AIR 1972 AP 373 one of us (Obul Reddi, J.) held that there is a total and absolute bar as to the admission of an unstamped instrument whatever foreign or independent the purpose may be for which it is sought to be used unless there is compliance with the requirements of the provisos to Sect .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e invalid by reason of the constitutional provisions and hence an action could not be founded on those contracts which were not made in conformity with the requirements of the constitutional provisions. Here, the promissory note cannot be received in evidence and cannot be looked into for any purpose whatsoever, that is to say, no part of the document, be it a single sentence or a word can be received in evidence and to do so is to do violence to Section 35. Further as pointed out by Gajendragad .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ught to be recovered on the basis of the contract put in writing viz., the promissory note, which cannot at all be received in evidence and looked into for any purpose whatsoever even if it be for a collateral purpose ( see MANU/PR/0046/1945MANU/PR/0046/1945 ). 61. We may now read Section 91 of the Evidence Act to the extent material for our purpose : When the terms of a contract, or of a grant or of any other disposition of property, have been reduced to the form of a document, and in all cases .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ell established principle of the law of evidence that where written contracts exist they shall be produced as being the best evidence of their contents. It is an inflexible rule that whenever a contract is reduced into writing the terms of the contract should be proved only by what is contained in the contract which the parties made voluntarily. They should be " the repositories and memorials of truth ". Any other evidence is excluded from being used either as a substitute for such ins .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of title, observed : Although it is a well-established rule of equity that a deposit of a document of title without more, without writing, or without word of mouth will create in equity a charge upon the property referred to. I apprehend that that general rule will not apply where you have a deposit accompanied by an actual written charge. In that case you must refer to the terms of the written document and any implication that might be raised, supposing there were no documents, is put out of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y considered by the parties themselves as the only repository and the appropriate evidence of their agreement. To the same effect is what is held by Patanjali Sastri, J. ( as he then was ) in Rachpal Maharaj v. Bhagwandas, MANU/SC/0046/1950MANU/SC/0046/1950 : [1950]1SCR548 while dealing with the case of deposit of title deeds: ' if the parties choose to reduce the contract to writing, the implication is excluded by their express bargain, and the document will be the sole evidence of its term .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ds in pursuance of an earlier contract then the correctness of the recitals therein can be gone into without being inhibited by Sections 91 and 91 of the Evidence Act. " 63. In K. Bhavanarayana v. S. Venkataratnam, MANU/AP/0080/1971MANU/AP/0080/1971 : AIR 1971 AP 359 a Division Bench of this Court, to which one of us ( Obul Reddi, J. ) was a party, dealing with the admissibility of a document. Ex. A-7 evidencing the deposit of title deeds, observed : that if a document of this nature is not .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that could be looked into to ascertain the terms of the contract and that Section 91 of the Evidence Act prohibits any other evidence to prove or construe the contract reduced into writing. 65. Now let us consider whether Section 91 comes in the way of a promissory note which does not incorporate or embody all the terms of the contract. Section 91 refers to all kinds of contracts. A promissory note is a document which requires by law to be in writing. The prohibition of Section 91 is only with .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ut all such terms may not be embodied in the promissory note in which event, if the promissory note becomes inadmissible in evidence by reason of Section 91 its terms cannot be proved by other evidence, but not the other terms of the contract which do not find a place in the promissory note. That is to say, if the terms of the contract relating to execution of the promissory note as a conditional discharge or collateral security are not embodied in the promissory note, it cannot be said that whe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of his action on foot of the promissory note, he does not seek to prove the terms contained in the promissory note, but seeks to prove the terms of the contract which are not embodied in the promissory note. In that case, it cannot be said that the plaintiff is attempting to nullify the provisions of S. 91 or by-passing or circumventing those provisions, for then his action is not on foot of the promissory note, but on the basis of the alternative cause of action shown in the plaint viz., that t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sed for any other purpose whatsoever on account of the bar of Section 35 of the Stamp Act, becomes a ' worthless piece of paper ' in which event Section 91 will not come in the way, as the plea of conditional discharge or collateral security is not founded on the terms of the promissory note, but on the terms of the contract which do not find a place in the promissory note and that would put the case of the plaintiff beyond the reach of Section 91 of the Evidence Act. 66. Mr. M. Jagannad .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not by the party executing it, but by the party in whose favour it is executed. This doctrine only lays down that the Courts will refuse to enforce al illegal agreement at the instance of a person who is himself a party to an illegality or fraud. To apply the doctrine to the case of a promissory note, the defendant should be in a position to put the case under Sections 23 and 24 of the Contract Act which lay down what considerations are unlawful making the agreements void. We are unable to see .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

all affix the proper stamp on the promissory note. It only says that the defendant shall bear the expense of providing the proper stamp. That distinction should be borne in mind. The promisee can always recover the expense initially incurred by him from the executant of the promissory note. The action brought on a promissory note fails not on account of any illegality attached to it as laid down in Section 23 or 24 of the Contract Act, but because of Section 35 of the Stamp Act, which makes it & .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on against a Hindu father, the executant of the promissory note, fails on account of the bar of Section 35 of the Stamp Act and Section 91 of the Evidence Act then there is no question of proceeding against the sons of recovery of the debt invoking the personal law. The liability of the sons to pay the father's debt arises not because the promissory note is duly stamped but on account of the personal law in respect of such a debt contracted by a Hindu father, so long as that debt is not tain .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the view, as expressed by the Full Bench is correct and that Section 70 of the Contract Act cannot be invoked on the theories of implied promise, money had and received, quasi-contract and just and reasonable or unjust enrichment or any other equitable doctrine. We cannot, therefore, endorse the view expressed by Gopal Rao Ekbote. J. in Mohammad Jamal Saheb's case, MANU/AP/0086/1964MANU/AP/0086/1964 : AIR 1964 AP 188 that "on the basis of the theory of ' money had and received ' .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ubjecting him to such penalty as the Legislature may deem fit to impose. Such an amendment in our view, would not only bring about uniformity in the law in the various States, but also avoid unnecessary litigation and save quite a lot of judicial time. 70. We therefore, send back the civil revision petitions for disposal by a single Judge. Alladi Kuppuswami, J. 71. The question which has been referred to the Full Bench is as follows : Whether a plaintiff can lay action for recovery of the amount .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ible, in evidence under Section 35 of the Stamp Act, and if so, under what circumstances ? 2. If the promissory note is inadmissible in evidence whether action can be maintained for recovery of the amount either on the theory of " money had and received " or under the provisions of Section 70 of the Contract Act. For nearly a hundred years, the Courts in India have been struggling with the question whether a plaintiff is without any remedy if a promissory note executed in his favour is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ecisions as none of these decisions are binding upon us. Of course, we have derived considerable light from the reasoning contained in some of those decisions and we are indebted to the advocates on both sides for the able manner in which their respective cases were presented. As the decisions have been discussed in detail in the judgments of my learned brothers Obul Reddi and Venkataramasastry, JJ. I have considered the matter mainly in the light of first principles. 72. The three provisions of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in sum of money only to, or to the order of a certain person or to the bearer of the instrument. " Section 35 of the Stamp Act in so far as it is relevant for the purpose of this reference is in these terms :- "No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any public officer, unless such instrument is duly stamped ; P .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f exceeds five rupees, of a sum equal to ten times such duty or portion. It is seen at once that a promissory note does not come under the proviso and is covered by the main Section. 73. The relevant portion of Section 91 of the Evidence Act is in the following terms : When the terms of the contract, or of a grant of any other disposition of property, have been reduced to the form of a document no evidence shall be given in roof of the terms of such contract, grant or other disposition of the pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is to be given only by the document itself and no evidence except the document shall be given in proof of the terms. But in this case as the promissory note is unstamped or insufficiently stamped, it shall not be admitted in evidence for any purpose, nor shall it be acted upon. The combined effect of S. 91 of the Evidence Act and Section 35 of the Stamp Act would therefore be, in the case of unstamped or insufficiently stamped promissory note which contains the terms of the contract, that the p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e promissory note contains the terms of the contract. All that is required to satisfy the definition of a promissory note is that there must be an unconditional undertaking to pay a certain sum only to, or to the order of, a certain person or to the bearer of the instrument. There may be other terms of the contract between the parties, which may not find a place in the promissory note but still if the conditions mentioned in Section 4 of the Negotiable Instruments Act are satisfied it will be a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

/-. No other terms of the contract are mentioned, for example, the rate of interest, or when the amount is to be paid and so on. Even so it is a valid promissory note. On the other hand a promissory note may also contain all the terms of the contract. The question whether a promissory note contains all the terms of the contract between the parties or not is a question of fact and has to be decided on the evidence in the case. There is no presumption either that it contains all the terms or that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

missory note. 76. In this connection it is necessary to bear in mind that a promissory note may be executed in different circumstances. (a) A person may incur a debt in the first instance and subsequently execute a promissory note promising to pay the amount due by him. For example, a promisor may purchase certain goods from the promisee and become indebted to him for the sale price and later on at the instance of the promisee execute a promissory note for the value of the goods purchased by him .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

may be separated in point of time, for instance, the amount may be borrowed in the morning and the promissory note executed in the evening, but the true position is that they form part of the same transaction, the mere fact that they are separated by some interval of time would not really make a difference. 77. In cases coming under (a) it may be the intention of the parties that the previous debt is discharged by the execution of the promissory note and the promissory note alone should hence-f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

35 of the Stamp Act for any purpose the suit must fail. 78. On the other hand, the intention of the parties may be that it is regarded only as a conditional payment of the antecedent debt, or is taken by way of collateral security for the debt. In either case, the original contract is not in any way affected and if for any reason the promissory note cannot be enforced, the plaintiff is entitled to fall back on the original contract. In the first case the payment being conditional ceases to be a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on, namely, the advancing of the loan by the promisee, or incurring of the debt by the promisor. The observation of Leach C. J. In MANU/TN/0229/1938MANU/TN/0229/1938 : AIR 1938 Mad 785 ( FB ) at p. 786, that where a negotiable instrument is executed in respect of an antecedent debt the creditor may sue on the debt and ignore the note would be applicable only to this class of cases and not the first where the debt is completely discharged and the promissory note is intended to substitute the debt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he form of a promissory note, or whether it was intended merely to be a conditional payment or by way of collateral security and that has to be decided with reference to the evidence in each case. 80. It was sought to be argued by Sri M. Jagannadha Rao that in every case of a promissory note there is always an implied promise to pay, apart from what is contained in the promissory note and therefore, it must be taken that a promissory note must always be regarded as conditional payment or execute .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ere is no presumption either way and in each case it has to be considered on the evidence on record whether the promissory note was executed only by way of conditional payment or by way of collateral security or whether it embodies all the terms of the contract. 81. A further question which arises is this- Suppose the promissory note is not executed by way of conditional payment or as collateral security, but it turns out that it does not contain all the terms of the contract, would it still be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ence other than the promissory note ? It was sought to be contended that it is only in cases where the promissory note is executed by way of conditional payment or by way of collateral security that a suit would lie on the original cause of action and the following passage in MANU/TN/0229/1938MANU/TN/0229/1938 : AIR 1938 Mad 785 ( FB ) Supra, was relied on for this purpose. If the promissory note embodies all the terms of the contract and the instrument is improperly stamped, no suit on the debt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

conditional payment. Whether a suit lies on the debt apart from the instrument therefore depends on the circumstances under which the instrument was executed. I an however, of the view that this passage does not lend support to the argument that the plaintiff can sue on the debt only in cases where the promissory note was executed by way of conditional payment or by way of collateral security. These are only two of the instances referred to, where the promissory note does not embody all the ter .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sory note embodied the whole of the terms of the contract between the parties. The case should therefore be remanded to the trial court for further consideration and decision in the light of this judgment. While I agree with the conclusions of the Full Bench of the Madras High Court in MANU/TN/0229/1938MANU/TN/0229/1938 (FB ) (Supra) on this part of the case. I would like to make it clear that my understanding of the decision is that the plaintiff has a right to fall back on the original conside .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

admitted in evidence for any purpose, it was suggested that it could not be looked into even for the purpose of finding out whether it contained all the terms of the contract or not. It is true that the Privy Council has decided in MANU/PR/0046/1945MANU/PR/0046/1945 that the expression " for any purpose " should be given its natural meaning and the document cannot be admitted in evidence for any collateral purpose. This decision has been uniformly followed by all the courts in India i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rm of writing. Unless we look into that writing, one cannot say if the terms of the contract have been reduced to writing or not. If one has to close ones eyes to the terms of the promissory note, because it is unstamped, then it is impossible to ascertain whether it contains all the terms of the contract or not. The oral evidence or other evidence has to be placed side by side with the document and only then can it be found out whether all terms of the contract are contained in the document. 83 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hought fit to have framed their case in an alternative form, and to have sued both on the hundis and alternatively upon the consideration . But as they found that the plaint did not embrace both these forms of relief and was confined to an action brought upon the hundies themselves, the sole question for decision was whether upon the form of the hundi the first respondent was properly included as a defendant to the suit and proceeded to consider that question. This decision cannot be taken as an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der the theory of " money had and received. " 85. In MANU/SC/0114/1961MANU/SC/0114/1961 : AIR 1962 SC 779 , it was observed, quoting the judgment of the Privy Council in Ramanandi Kuer v. Kaalawati Kuer, 55 Ind App 18= ( AIR 1928 PC 2 ) that where there is a positive enactment of the Indian Legislature the proper course is to examine the language of that statute and to ascertain its proper meaning uninfluenced by any consideration derived from the previous state of the law or of the En .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

thing for another person or delivers anything to him, not intending to do so gratuitously and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of , or to restore, the thing so done or delivered. It is doubtful whether this provision is applicable to a case where the act is done by one person all the express request of another. In this case, the amount was paid to the promiser at his express request on his executing a promissory note. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. 87. No evidence other than the promissory note is admissible to prove that the amount of the loan was received by the promisor, as the amount of the loan is one of the terms of the contract. He cannot prove the same by the production of the promissory note as it is not admissible for any purpose under Section 35 of the Stamp Act ; with the result there is no evidence before the Court as to the amount of the loan received by the defendant. If, on the other hand the promissory note does not cont .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

arriving at the above conclusion in view of certain decisions of the Supreme Court which were relied on this connection. In MANU/SC/0114/1961MANU/SC/0114/1961 : AIR 1962 SC 779 ( Supra ) the Supreme Court had to consider a case where a contract was void by reason of its not being in conformity with Section 175 (3)of the Government of India Act . But the party to the contract had done some works and one of the questions was whether if the contract was invalid his claim for compensation for the wo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nsation it would in substance amount to treating the invalid contract as being valid. This argument was rejected by the Supreme Court which observed the claim for compensation was based not upon the delivery of the goods or doing of any work. But acceptance and enjoyment of the said goods or said work and hence by awarding compensation under Section 79 the contravention of Sec. 175 (3) is not condoned. For the same reason it was submitted that by holding that the plaintiff is entitled to return .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dentical. As has been observed already in the case before the Supreme Court the work was done only under a contract which was void under Section 175 (3) of the Government of India Act. The contract was no doubt not enforceable. But there was nothing preventing the petitioner from proving the fact that he performed the work or that the defendant derived benefit or advantage and claiming compensation on that basis. In the present case. However, the plaintiff is precluded from proving the fact of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xpressed by Varadachariar J in MANU/TN/0229/1938MANU/TN/0229/1938 : AIR 1938 Mad 785 (FB) (Suprs) that "Sec 70 of the Contract Act is scarcely appropriate to a case of money lent to the defendant and there is no possibility in such a case or event a contemplation of the "thing delivered." Being restored which obviously means in specie; and lending money to the defendant cannot be described". This is the view of Vaaradachariar H. Only and cannot in any sense be regarded as the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as paid in pursuance of a contract and the contract was ultimately found unenforceable as it was contrary to Sec. 175 of the Government of India Act. It was held that the plaintiff would be entitled to a refund of the amount though in the particular case they held that he was not entitled to such refund having regard to the evidence in that case. The expression "thing:" used in Sec. 70 is of general import and I am unable to see any valid reason why it should not take within its purvie .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

inted out that the two decisions of the Privy Council in AIR 1918 P. C. 241 and AIR 1918 P.C. 151. Where not brought to the notice of Varadachariar J. Gopal Rao Ekbote. J. Observed that from these cases it is clear that an action analogous to that for money had and received can be maintained without resort to any theory of implied contract and the plaintiff would be justified in asking his money back from the defendant although the suit promissory note is inadmissible in evidence on the theory o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the parties it is only with reference to the second question that Gopal Rao Ekbote, J. took the view that the plaintiff is entitled to claim his money back also on the theory to money had and received. 92. AIR 1918 PC 241 (Supra) was a case from Ceylon. After referring to (1760) 2 Burr. 1005 and (1914)A. C. 398 their Lordships of the Privy Council observed that they where reluctant to deal with the question on the footing of money had and received. As they were of the opinion that the appeal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ff's use they said in view of the course the suit had taken and of the attitude of both sides they ought to deal with the face on the assumption that the suit would come within Art 97 of the Limitation Act. In this case also. No light is thrown on the question for consideration. I do not think that a reference to the above decisions of the Privy Council would have affected the result of the decision of the Full Bench in MANU/TN/0229/1938MANU/TN/0229/1938 : AIR 1938 Mad 785 (FB) supra. 93. In .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the interpretation and scope of that judgment. 94. The plaintiff will not be entitled to claim compensation under Section 70 of the Contract Act if the promissory note is inadmissible in evidence under section 35 of the stamp Act. Here again I am in agreement with the conclusion of the majority though for some what different reasons which have been set out by me A.D.V. Reddy, J. 95. The controversy that arises out of the question referred to us centres solely round the problem of proof relating .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ons on the claims for debts due under negotiable instruments unstamped. Or inadequantely or insufficiently stamped. As in this case we are concerned only with promissory notes. I will confine my remarks to promissory notes. Promissory notes are of three kinds: 1. promissory notes executed to evidence antecedent debts. Debts incurred anterior in point of time to the execution of the promissory note ; 2. Promissory notes executed as a result of an agreement of arrangement between the parties as a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

In the second of the categories, where a promissory note is executed either after the incurring of the debt or even simultaneously with the lending on a specific understanding or agreement that the promissory note is only to serve as a collateral security or as a conditional payment, it is well settled that if the promissory note cannot be proved by reason of the provisions of Section 35 of the Stamp Act and Section 91 of the Evidence Act, the claimant can fall back on the original debt and the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

teral security or a conditional payment. 97. What we are concerned with is the third category of promissory notes. Where the lending is under a promissory note. Where the lending and the note form part and parcel of the same transaction and the entire contract is contained wholly in the promissory note. In such a case apart form the promissory note and the terms contained therein, there is no other transaction to evidence the debt and other transaction cannot be proved by reason of the provision .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bt, in every loan there is an implied promise to pay. If the loan fails for want of proof, the implied promise goes with it. The benefit had and received under Section 70 of the Contract Act, even if it should include a benefit by way of payment of money also should be proved that when the proof suffer from the infirmity of being hit by the provisions of Section 35 of the Stamp Act and Section 91 of the Evidence Act, there can be no claim based on it. Recognising such claims on the ground of imp .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

98. The reference to the instruction embodying or not embodying all the terms of the contract in the judgment of Leach. C.J. in MANU/TN/0229/1938MANU/TN/0229/1938 had led to the contention that in case of the instrument does not contain all the terms of the contract, the promisee will be entitled to sue on the original consideration. A scrutiny of the Judgment shows that the above observations were made only in relation to the category of instruments that were executed as collateral securities o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

an be proved and where an instrument has been given as collateral security or by way of conditional security or by the way of conditional payment a suit on the debt will lie. The fact that the execution of the promissory note is contemporaneous with the borrowing cannot exclude the possibility of the instrument having been given as collateral security or by way of conditional payment. Whether a suit lies on the debt apart from the instrument therefore depends on the circumstances under which the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e instrument contains any of the terms with regard to which such oral evidence is adduced to exclude it if it offends the provisions of Section 91 of the Evidence Act. These are the two occasions when the Court has to took into the instrument and they are purely procedural. 100. If the promissory not is inadmissible under Section 35 of the Stamp Act and the terms cannot be proved by other evidence as per the provisions of Section 91 of the Evidence Act, in the first of the categories detailed ab .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nstitute a promissory note and any other evidence with regard to a term. i.e. for instance like interest though left out can be of no consequence as the promissory note itself of debt under it cannot be otherwise proved. Where the promissory note contains all the essential terms , the names of the promisor, the promisee, the unconditional undertaking to pay the consideration etc., and if the pronote is note by Section 91 of the Evidence Act even if it did not contain all the terms. The passing o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s defective, can be looked into. It is permissible to the party to prove other circumstances by leading evidence to show that the promissory note was executed as a collateral security or as a conditional payment but if those terms are contained in the document itself, they will also be hit by the provisions of Act 91 of the Evidence Act . However, if the document that purports to be a promissory note becomes inadmissible as a promissory note the terms contained in it relating to its being execut .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

my learned brother Obul Reddi. J. That the judgment of the Full Bench in MANU/TN/0229/1938MANU/TN/0229/1938) : lays down the correct law and that no claim can also be based under Section 70 of the Contract Act if the instrument on which a claim is based is hit by the provisions of Section 35 of the Stamp Act and Section 91 of the Evidence Act. G. Venkatarama Sastri, J. 104 . I agree with the judgment just delivered by my learned brother Obul Reddi. J on behalf of the Bench. But having regard to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tiable Instruments Act 1881, means a promissory note, bill of exchange or cheque payable either to order or bearer. An instrument according to Section 2 (14) of the Indian Stamp Act, includes every document by which any right or liability is or purports to be created, transferred, limited, extended extinguished or recorded. It is an inclusive definition. There is no doubt that a Negotiable Instrument is an instrument coming within the ambit of this definition. An instrument of the nature of a Ne .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s duly stamped. Provided that : (a) any such instrument not being an instrument chargeable with a duty not exceeding ten naya paise only, or a bill of exchange or promissory note shall subject to all just exceptions be admitted in evidence on payment of the duty with which the same is chargeable or in the case of an instrument insufficiently stamped of the amount required to make up such duty together with a penalty of five rupees or when ten times the amount of the proper duty or deficient port .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ny purpose' should be given their natural meaning and effect and would include a collateral purpose. Hence such an instrument would be inadmissible in evidence whether it is intended to use it as the basis of a claim or for a collateral purpose. There is a difference between a document which is not duly stamped and a document which is not registered. The proviso to Section 49 of the Registration Act makes an unregistered document receivable in evidence of a contract in a suit for specific pe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

principle underlying this prohibition appears to be that promissory notes and bills of exchange are commercial instruments, which are put into circulation in large numbers in the commercial world and as the claims on them would be mostly settled out of court, severe penalties should attach to non-stamping them, or understanding them in order that there may be wholesome check on any tendency to defraud the public Revenue. 107. Failure to stamp a Negotiable Instrument properly does not affect the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ract of loan, which are embodied in the promissory note can be proved only by the production of the promissory note itself, according to Section 91 of the Evidence Act, which enacts the best evidence rule. If the unstamped or improperly stamped promissory note becomes inadmissible in evidence 'for any purpose' on account of the prohibition contained in Section 35 of the Stamp Act then is there any method by which such terms of the contract could be proved? There is the question which we .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ave put into writings And the reason is that the writing " is tacitly considered by the parties themselves as the only repository and the appropriate evidence, of their agreement". Following this decision the Privy Council upheld, in ILR Cal 338 = MANU/PR/0062/1922MANU/PR/0062/1922 : AIR 1923 PC 50 the objection that oral evidence was not admissible as the memorandum therein constituted the contract between the parties and that Section 91 was a bar. The aforesaid two cases have again b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of loan except what is embodied in the promissory note. 111. This leads us to the question as to the admissibility of other evidence relating to the debt or original consideration apart from and dehors the promissory note. In the case of a promissory note executed in discharge of an antecedent debt arising out of goods sold or mutual dealings in account or on account of liability incurred prior to and not contemporaneous with the lending of money which is evidenced by the promissory note there a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e execution of the promissory note. The stricter view was that the promissory note represents all the terms of the contract and when the said note becomes inadmissible in evidence the suit should fail altogether. The liberal view was based upon the principles that a promissory note is only a conditional payment or conditional discharge of the debt and when the promissory note becomes inadmissible the suspension of the remedy on the note is removed and therefore the debt as such can be proved. So .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e does not embody all the terms of the contract though no suit on the debt would lie, yet evidence can be let into prove the true nature of the transaction and if the promissory note has been given as a collateral security or by way of conditional payment, a suit is held to lie on the debt. These cases recognise the principle that the fact that the loan and the note are contemporaneous is not conclusive of the non-existence of an obligation apart from the note itself and permit only such evidenc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

round that it was inadmissible in evidence and observed: This instrument clearly comes within these words (of the Stamp Act) and the plaintiff cannot make use of that part of it which states the deposit of the money and say from the deposit there arose a contract on the part of the defendant to repay it because here the parties have made an express contract which has been put in writing. The plaintiff cannot resort to any implied contract; if he recovers at all, it must be on the contract actual .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n a cause of action for money is once complete in itself whether for goods sold or for money lend or for any other claim, and the debtor then gives a bill or note to the creditor for payment of the money at future time the creditor if the bill or note is not paid at maturity may always as a rule, sue for the original consideration provided that he has not endorsed or lost or parted with the bill or note under such circumstances as to make the debtor liable upon it to some third person. In such c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y lent or otherwise than upon the note itself because the deposit is made upon the terms contained in the note and no other. In such a case the note is the only contract between the parties and if for want of a proper stamp or some other reason the note is not admissible in evidence the creditor must lose his money. 115. I shall now deal with the development of case law in the various high Courts on this topic and indicate the divergence of opinion and the scope for reconciliation, if any. 116. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

; Sundarayyar J.J. 462 by Sadasivayyar and Spencer J.J. in Muthu Sastrigal v. Viswanatha Pandara Sannadhi. MANU/TN/0433/1924MANU/TN/0433/1924 by Pillay and Anantakrishnayyar JJ. Gura Sahu v. Krishnamma MANU/TN/0214/1932MANU/TN/0214/1932 by Anantakrishnayyar J. In Alimane Sahiba v. Subbarayudu, MANU/TN/0036/1932MANU/TN/0036/1932 by Pandalai J. In Chandra Sekaran v. Srinivasa MANU/TN/0236/1932MANU/TN/0236/1932 by Varadacheri and Burn JJ and in Chockalingam Chettiar v. Palaniappa Chettiar MANU/TN/0 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ith regard to antecedent debts, the position is that the original debt can be sued upon irrespective of the subsequent document or promissory note and the better opinion with regard to contemporaneous loans and promissory note is the consideration for the loan the debt cannot be proved aliunde. That view in my opinion is clearly the correct view in view of Section 91 Evidence Act". My view, therefore is that in all cases courts must be guided by what appears on the face of the promissory no .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

FB). This Full Bench upheld the correctness of the decision in ILR (1887) Mad 94and overruled the two decisions in Gopala Padavachi v. Rajagopala Naidu. MANU/TN/0571/1926MANU/TN/0571/1926and Chinnayya v. Srinivasa, MANU/TN/0353/1934MANU/TN/0353/1934which struck a different note. Sir Lionel Leach C.J. expressed the opinion of the Full Bench in the following words: In my opinion the law may be shortly stated in this way. If the promissory note embodies all the terms of the contract and the instrum .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

arned Chief Justice approved five out of six propositions laid down by Page C.N. in the Full Bench decision ....... in ILR Rang 500= (AIR 1934 Rang 389) but disagreed with the 3rd proposition which ran as follows: (3) The giving of a negotiable security by a debtor to his creditor operates prima facie "as a conditional payment only and not as a satisfaction of the debt, unless the parties so regard it. 119. After further consideration Leach C.J. observed in regard to this proposition that i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

urt was concerned and has been uniformly followed eversince. The plaintiff therefore in a suit upon a promissory note which is improperly stamped is at liberty to prove the true nature of the transaction. If he is able to establish that the instrument was given as a collateral security or as a conditional payment the suit on the debt can be proved, without any bar under Section 91. Evidence Act. 121. The case in Calcutta High Court reveal an approval as well as disapproval of the view expressed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nguished on the ground that deposit was not meant to be a loan. The case in (1913) 17 CLJ 399permitted a suit if the debt did not merge in the promissory note. Though a similar view was held in Sudhir Chandra Das v. Govinda Chandra Roy, ILR Cal 538 = (AIR 1918 Cal 688) it related to a Hundi, wherein the borrowing is complete before a direction is given by a hundi to a third party to pay. The suit was on an account between a principal and agent, in Ramendra Mohan v. Keshab Chandra, MANU/WB/0030/1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ise in the case of money lent. D.N.Mitter J., held the suit to lie as there was also a claim on the debt in the plaint in Bhushan Chandra v. Kanai Lal, MANU/WB/0007/1937MANU/WB/0007/1937) Nasim Ali and Biswas JJ. Also relied upon an implied promise in Iswar Sridhar Jick v. Jahorlal, MANU/WB/0019/1944MANU/WB/0019/1944) but it can be seen from the facts that there was no stamp infirmity and so the question of Section 91. Evidence Act did not arise. The decision of Derbyshire C.J., and Mukherjee J. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ff cannot set up a case independent of the note in view of Section 91 and cannot prove orally the terms of the contract in MANU/UP/0289/1930MANU/UP/0289/1930. But this view was not accepted in the Full Bench in MANU/UP/0007/1943MANU/UP/0007/1943 wherein it was held that other evidence to prove the terms of the contract independently of the pronote is admissible that a pronote cannot be said to contain all the terms of the contract of loan and therefore the contract of loan could be proved indepe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

all back on the independent cause of action to recover the loan because there is no cause of action independent of and apart from the promissory note. They explained the Full Bench in Sheonath Prasad v. Sarjoo Nonia, MANU/UP/0007/1943MANU/UP/0007/1943 in Kanhai Lal v. Brij Nanda. MANU/UP/0200/1952MANU/UP/0200/1952 : AIR 1952 All 509 it was held by Raghubir Dayal J. (As he then was ) in the case of a promissory not executed in the following manner:- I have at this time borrowed ₹ 300/- half .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

/UP/0007/1943 and yet the refusal of the trial Court to prove the loan transaction was upheld. If according to the Full Bench the contract of loan could be proved this decision strikes a different note. 123. But in MANU/UP/0260/1953MANU/UP/0260/1953 : AIR 1953 All 535 it was held that the promissory note was held to be a collateral security and a suit on the basis of original loan was held maintainable and Section 91 was no bar. 124. Though Section 91 was held to be a bar for proof about origina .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e of action independent of the hundi and as the hundi was inadmissible for want of a proper stamp Section 91 was a bar to letting in secondary evidence. A similar view was held in AIR 1927 Lah 89 and in AIR 1934 Lah 606. In MANU/PH/0141/1954MANU/PH/0141/1954, after a review of some of the cases the same view was reiterated. 126. In ILR (1900) Bom 360 the Bombay High Court followed the decision in (1930) 34 CWN 554 and held that there was an implied contract in every loan which can be proved. In .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

put J.C.'s Court held that a suit would be on the debt, In Ananda Namdeo v. Pundalik Tukaram MANU/NA/0288/1936MANU/NA/0288/1936 : AIR 1936 Nag 225. It was held by Stone C.J. and Niyogi J. At page 227 as follows:- In every case it becomes a question of fact whether the promissory note was intended to constitute the contract or serve some collateral purpose. In the former case Section 91, Evidence Act would preclude proof of the contract otherwise than by the document itself. If it is inadmiss .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

liunde. 128. This view was followed in Lalchand v. Pyare Dasarath, MANU/MP/0072/1971MANU/MP/0072/1971 : AIR 1971 MP 245 , where it was held: It was next contended that the trial Court also erred in holding that the plaintiff could not be allowed to proved the loan except by producing the pronote. We have briefly stated the case set up in the plaint. The contract of loan was not contemporaneous with the pronote. The contract pleaded contained terms relating to the pledge of diamond and payment of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the promissory note. In these circumstances, the original contract of loan could be proved apart from the promissory note and the Court below clearly erred in not permitting the plaintiff to prove the original contract (See MANU/NA/0288/1936MANU/NA/0288/1936 : AIR 1936 Nag 225). 129. In Gour Chandra v. Garib Kar, MANU/OR/0058/1957MANU/OR/0058/1957 : AIR 1957 Ori 212 the Orissa High Court held that a promissory note is a conditional payment but if there is an agreement that the loan would not .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

5 a suit was held not to lie. The learned Judge followed the decision in Chinnappa Pillai v. M.R.Muthuraman Chettiar. (1911) 9 Mad L.T.281. In Dhaneswar v. Ramrup MANU/BH/0007/1928MANU/BH/0007/1928 the conflict between these two views was noticed by a Bench which ultimately preferred to follow the principle of an implied promise in every promissory note as laid down in ILR (1896) Cal 851. In Abdul Md Khan v. Mahananda , this view was held to be correct by another Bench of the same Court. In Domo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tract to repay. In MANU/BH/0126/1950MANU/BH/0126/1950 : AIR 1950 Pat 493 Ramaswami & S.Prasad JJ. Preferred to lay down the law that a promissory note may be given as conditional payment of collateral security in which case a suit on the debt would lie and that the question depends on each case on the intention of the parties. This accords more with the Madras views. 131. In Raghavan v. Varaithu (1962) 2 KLR 1, it was held that if the suit was filed on the basis of a promissory note no decre .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ie. 134. In Dhondi Emki v. Hazari Vittal AIR 1952 Hyd 137. Saidatali Khan J. Followed the decision in Sadasukh Jankidas v. Sir Kishen Pershad AIR 1918 PC 146 ; Sarafalli v. Maha Sukhbhai MANU/MH/0067/1933MANU/MH/0067/1933 and Hazi Syed Shah v. Bachi Rajappa, 35 DeccanL.R. 368 and held that if there is a distinct and separate transaction and the promissory note was given as a collateral security, then separate transaction can be proved, and to that effect an amendment also can be allowed, whether .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ference that it was executed as a collateral security or conditional payment. Though the learned Judge refers for another purpose to decisions in S. Krishner v. Meenakshi Iyer, MANU/TN/0065/1933MANU/TN/0065/1933 : AIR 1933 Mad 781. Venkanna v. Parasuram MANU/TN/0192/1929MANU/TN/0192/1929 : AIR 1929 Mad 522 he follows AIR 1918 PC 146, and holds that a promissory note is only a conditional payment. It does not appear that the Full Bench decision in MANU/TN/0229/1938MANU/TN/0229/1938 : AIR 1938 Mad .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dered in this case also. 136. In the case before the Full Bench decision in AIR 1934 Rang 389 : ILR 12 Rang 500 the suit was based upon the promissory note or in the alternative for money lent. Page C. J. who spoke for the Full Bench laid down six propositions which, except for the third one, were accepted by the Madras Full Bench in MANU/TN/0229/1938MANU/TN/0229/1938 says Page C. J., at page 391 :- I apprehended that the same principles apply as between borrower and lender and that when a promi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in ILR (1881 ) Cal 256 the learned Judge says at page 392: I confess that I do not understand why in the above cases so much significance should have been held to attach to the handing over of the promissory note and the money being part of the same transaction ; and I am of opinion, with all respect, that the fallacy that lies within the above proposition of law is that it does not appear to have been appreciated in those cases that it is not the time when but the terms upon which, the loan wa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the loan was made. Evidence is admissible regarding those terms without any inhibition under Section 91 Evidence Act. But for the view that there is a presumption that promissory note is prima facie conditional payment, this view accords with Madras view. The Madras Full Bench also laid down that the terms or the true nature of the transaction may be proved. 137. In Naraindas v. Jassomal AIR 1921 Sind 80 it was held as follows :- The question whether a loan was given and taken, can in certain c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Madras was laid down : 139. In Chandulal v. Baboolal AIR 1952 MP 45, Mehta, J., held that where a cause of action for money lent is once complete in itself whether for goods sold or money lent or for any other claim and the debtor then gives a promissory note to the creditor for the payment of money at a future time the creditor may, if the money is not paid on the maturity of the pronote fall back on the original consideration. This is in accordance with the 1st proposition laid down in IL .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ently of the pronote. Says the learned Judge at page 147 :- Now where the contract is contained wholly in the pronote, it is clear from the provisions of Section 91, Evidence Act and Illustration (b) thereto that the plaintiff will be precluded from proving the debt alinude; in the present case even in the amended plaint the suit is framed on the pronote with the more addition of the fact that plaintiff advanced the money and obtained a receipt therefore ; the plaint states that defendant got fr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in respect of liability for the principal, for the pronote, if admissible would undoubtedly afford a cause of action for both principal and interest. Assuming that the money actually changed hands before the execution of the pronote, the implied contract for repayment would be reduced to writing in the form of the pronote which must then deemed to have been regarded by the parties as the repository of their agreement, and therefore the only evidence thereof under Section 91 Evidence Act. For thi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e, J. ( as he then was ) held that the plaintiff can succeed on a non-contractual basis, viz., for money had and received. To that extent the Full Bench view was not followed. 143. In AIR 1966 J. & K. 127 it has been held by Fazl Ali and Janki Nath Bhat JJ. After review of the case law when the terms of the entire contract between the parties are reduced to the form of a promissory note where it is a contemporaneous lending. Section 91 is a clear bar to any other evidence and the whole suit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, Allahabad, Oudh, Bombay, Hyderabad, Tripura, Rangoon and Madhya Bharat, is based either more upon the theory of an implied promise in every contemporaneous loan or upon the presumption that a promissory note is only a conditional payment in the case of every loan transaction. This conflict it, appears to me, is irreconcilable at the present moment and it is only an authoritative pronouncement by their Lordships of the Supreme Court that can set at rest or give a quietus to this age-long contro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fect. If the loan transaction is merely oral no difficulty arises in regard to its proof as any amount of oral evidence can be adduced without any legal bar. The difficulty arises only when such a loan transaction is reduced to the form of a writing or a document like a promissory note. In all such cases Section 91 lays down the best evidence rule namely that no evidence shall be given in proof of the terms of such contract or of such matter except the document itself or secondary evidence of it .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ent for following such evidence to be let in when the original admittedly chargeable with duty was not stamped or insufficiently stamped, would be tantamount to the document being acted upon by the person having by law or authority to receive evidence. Proviso (a) is only applicable when the original instrument is actually before the Court of law and the deficiency in stamp with penalty is paid by the party seeking to rely upon the document. Clearly secondary evidence either by way of oral evide .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t by which any right or liability is, or purports to be created transferred limited extended, extinguished or recorded. There is no scope for inclusion of a copy of a document as an instrument for the purpose of the Stamp Act. 147. Again at page 1077 it is said :- A we have expressed our view already that Section 35 imposed a bar on the reception of any, but the original instrument and forbade the reception of secondary evidence. 148. There can be no doubt that term of the loan or borrowing is t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing and once it takes the form of writing both get merged in the document. One cannot be separated from the other as both mean the same thing. If the express promise cannot be proved on account of a legal bar the implied promise contained in that writing cannot also to be proved as the legal bar would equally apply to such proof. By permitting proof of such an implied promise in case of promissory notes executed for contemporaneous borrowing the law enacted in Section 91 would in my opinion be c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

roved on the basis of an implied promise. The law laid down by this Privy Council decision was also recently approved by their Lordships of the Supreme Court in a decision in MANU/SC/0602/1971MANU/SC/0602/1971 : AIR 1971 SC 1613. 150. Regarding the theory that a promissory note is a conditional payment, though it may happen in many cases, it cannot be decided as a matter of presumption in every case. It is a matter of allegation in the plaint and proof in each and every case. In the case of a si .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

very idea of a loan or borrowing indicates that the borrower is in need of money which he could not secure otherwise than by borrowing it on that day from the lender and the lender may take the pronote as evidence or a voucher for it. But in some cases it may be open to them to agree that the promissory note may be treated as a conditional payment of the debt involved in the borrowing so that in case the promissory note becomes in- admissible in evidence the creditor or lender may fall back upon .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

each C. J. and Varadachariar J. In the Full Bench decision in MANU/TN/0229/1938MANU/TN/0229/1938 appears to me to lay down the law correctly. Thus in a case where all the terms of the contract of a loan are not incorporated in the promissory note, the true nature of the transaction may be proved, if there is an alternation and proof about it, and where on such proof it is established that the promissory note was executed as a conditional payment or a collateral security, the claim can be decreed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eory of ' money had and received ' is quite inappropriate and unwarranted in such cases. ( Vide ILR 38 Mad 660 : (AIR 1914 Mad 657). 152. As regards the applicability of Section 70 of the Contract Act to cases of this type it may be noted that Section 70 which appears in Chapter V of the Contract Act relates to certain relations resembling those created by contract and which are not contracts by themselves. It deals with certain obligation imposed by law on the parties concerned and not .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ordships then was ) in N. Kanaka Rao v. Venkata Ramalinga Reddy, MANU/AP/0155/1966MANU/AP/0155/1966 : AIR 1966 AP 297 that Section 70 cannot be pressed into service and no relief can be granted on the basis of a quantum meruit where there is an express contract. His Lordship has cited the relevant case law and elaborately discussed the question in that decision. Thus where there is an express contract and that contract is not admissible in evidence for any purpose, as in this case. Section 70 ca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

some thing done by the party to the other. It was a case where the plaintiff constructed the warehouse in excess of the stipulated valid contract. The plaintiff could not have compelled the defendant to accept it but since the defendant accepted it and used it, the illustration (a) to Section 70 was held to apply to that case. Their Lordships also negatived the argument that by decreeing the suit claim Section 175 (3) of the Government of India Act was violated by the following words : Once it .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1968MANU/SC/0009/1968 : [1968]3SCR214 also as a result of the contravention of the mandatory provisions of law the contracts therein became nullified and void and it was recognised therein that there was no contract in existence. It was made clear that the juristic basis of obligation was not founded upon any contract or tort but upon the third category of law, namely, quasi contract or restitution. As in the present case before the Full Bench, the existence of the contract or its validity canno .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

be followed in these cases as well. My answer therefore to the question posed before this Full Bench is that plaintiff can lay any action for recovery of the amount advanced by him basing on the original cause of action, where the suit negotiable instrument becomes inadmissible on account Section 35 of the Stamp Act, provided that there is an allegation in the plaint and proof in evidence about the fact that the promissory note did not incorporate all the terms of the contract of loan and that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

defendant borrowed from the plaintiff a sum of ₹ 1,000 /- on 21-11-1960 and contemporaneously executed a hand letter in favour of the plaintiff . Since it was only a hand letter it was not stamped. The hand letter indicates that the defendant agreed to pay a sum of ₹ 1,000 /- with interest at 12 % per annum on demand. The interest was, however, claimed in the suit only in accordance with the provisions of the Madras Act IV of 1938. 158. Though the lower Court noticed the decision of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

w. 160. Now, the Full Bench consisting of seven Judges upheld the view expressed in AIR 1938 Mad 785 ( FB ) and held that Section 70 of the Contract Act cannot be invoked on the theories of implied promise, money had and received, quasi-contract and just and reasonable or unjust enrichment or any other equitable doctrine. It further expressed its disagreement with the views taken by Gopala Rao Ekbote J. in Moahamad Jamal Saheb's case, MANU/AP/0086/1964MANU/AP/0086/1964 : AIR 1964 AP 188 . 16 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

intainability of a suit on an unstamped or insufficiently stamped document in C. R. P. No. 255/65 and batch dated 3rd October, 1972. The Full Bench of seven Judges affirmed the decision of the Full Bench of the Madras High Court in AIR 1938 Mad 785 (FB ) and held that Section 70 of the Contract Act cannot be invoked on the theories of implied promise, money had and received, quasi-contract and just and reasonable etc., and did not endorse the view expressed by Gopalrao Ekbote, J. in MANU/AP/0086 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s no discussion and no finding that the execution of the Hundi, though contemporaneous with the incurring of the debt, was quite apart from the actual contract of debt. In the absence of any such finding this revision by the defendant should be allowed in the light of the Full Bench decision in C. R. P. No. 255/65 and batch dated 3-10-1972. 164. The revision petition is thus allowed. But in view of the finding that the defendant had actually received the money I direct the parties to bear their .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Then plaintiff amended the plaint to the effect that the debt was incurred in the morning with a promise that it would be returned by the evening, but when the defendant could not keep his word he executed the promissory note. Therefore, the incurring of the debt and the execution of the promissory note were not simultaneous and in fact , the latter was taken as a collateral security. As a finding of fact, on a consideration of the evidence, the lower Court found this part of the plaintiff' .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. In view of the fact that the defendant had received the money. I direct the parties to bear their own costs. C. R. P. No. 2234 of 1968. 169. This is yet another case which comes up before me after the decision of the Full Bench in C. R. P. No. 255 of 1965 and batch dated 3rd October, 1972. This is a plaintiff's revision petition. The lower Court found, as a fact, that the defendant had borrowed the sum of ₹ 290 /- from the plaintiff. It also held that the execution of the promissory .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

revision. But in view of the fact that the defendant-respondent had been found to have actually received the money. I direct the parties to bear their own costs. C. R. P. No. 605 of 1969. 171. This revision petition is also coming up before me after the Full Bench expressed the opinion in C. R. P. No. 255 of 1965 and batch dated 3rd October, 1972 affirming the view of the Full Bench of the Madras High Court in MANU/TN/0229/1938MANU/TN/0229/1938. 172. This is a plaintiff's revision petition. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e promissory note is insufficiently stamped and it is contemporaneous with the incurring of the debt. So, following the opinion of the Full Bench dated 3rd Oct. 1972 in C. R. P. No. 255/65 and batch. I dismiss the plaintiff's revision petition. But, in the circumstances of the case I direct the parties to bear their own costs. C. R. P. No. 2130 of 1969. 173. This is a revision petition by the second defendant. 174. The Small Cause Suit was filed by the plaintiff on the foot of a promissory n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

te was marked as an exhibit and received in evidence without any objection. It was duly endorsed by the presiding officer as required by the Civil Procedure Code. Thus, it became an exhibit and part of the record. It was only during the cross-examination of P. W. 1 that the insufficiency of the stamp on the promissory note was noticed and then objection was raised as to the maintainability of the suit on such promissory note. The lower Court found that the first defendant died, in fact, receive .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version