Andhra Pradesh High Court
Judges : C.KONDAIAH
THAMMA PEDA THATAYYA - Appellant
Versus
BHAGWANDAS ATMASINGH - Respondent
Decided On : 08-28-68
CONTRACT - Continuing Guarantee - Burden of Proof - Fraud, Misrepresentation or Undue Influence - Unconscionable Bargain - Public Policy - Enforceability - Interpretation of Ex. A-1 - Legal Principles.
Fact of the Case:
The appellant, the 6th defendant, appealed against the judgment of the subordinate Judge, Vijayawada, granting a decree against him along with the other defendants for the recovery of Rs. 10,845/- on the basis of a letter of guarantee executed on 31-1-1962 by him along with the defendant Nos. 2 and 5. The plaintiff, a banker and money-lender, had lent a sum of Rs. 10,000/- to the 2nd defendant, on the strength of two letters of continuing guarantee executed by the defendant Nos. 2 to 5 on 30-10-1962 and the defendant Nos. 2, 5 and 6 on 31-1-1962 respectively. The appellant contended that he was not a partner of the 1st defendant-firm, that he was unaware of the terms and recitals of Ex. A-1, that he had signed it believing the representations that it was a letter of guarantee for his own borrowing, and that the amount borrowed under Exs. B-4 and B-5 had been discharged by him on 26-4-1962.
Finding of the Court:
The Court held that the defendant Nos. 2 to 5 were the partners of the 1st defendant-firm and the appellant had no connection with it, that the hundies Exs. A-10 to A-12 were true and supported by consideration, that Ex. A-1 was not vitiated by any fraud, coercion or misrepresentation, and that the contract under Ex. A-1 was not an unconscionable or catching bargain. The Court decreed the suit.
Issues: 1) Whether the appellant, ignorant of English intended knowingly to execute Ex. A-1 as a letter of continuing guarantee for the borrowals of the 2nd defendant? 2) whether the transaction under Ex. A-1 is vitiated by fraud, missrepresentation or undue influence? 3) whether the contract under Ex. A-1 is an unconseionable or catching bargain and cannot be enforced in a court of law?
Ratio Decidendi: 1) The onus lies on the plaintiff to prove that the appellant, who is ignorant of English language, know the contents and import of Ex. A-1. 2) Where a contracting party who cannot read a written document read over to him and the contract differs from that pretended to be read, the signature on the document is of no force because he never intended to sign and therefore, in contemplation of law, did not sign, the contract to which his name is appended. 3) The mind of the signor must accompany the signature; in other words, the executant must intend to sign the document. 4) If it is not established that the document was read over and the contents of it properly explained and interpreted to the executant in the language known to him, it must be held that he never intended to sign the document, and hence, in the eye of law, there is no signature and the contents of the document are not proved to have been intended by the executant knowingly or willingly, nor binding on him. 5) The terms of Ex. A-1 are of wide import resulting in pernicious consequences. The terms are so unconscionable and inequitable that no ordinary reasonable prudent man, knowing fully the real import and consequences that arise out of ex. A-1, would agree to and willingly sign the same. 6) The plaintiff, who is trad ing by these unfair dealings, should not be rendered any assistance by any Court of law to enforce such an unconscionable and unjust transaction, to enable him to make unlawful and unfair advantage to himself, to the detriement of the other contracting party.
Final Decision: The appeal was allowed with costs in this Court and in the Court below, payable by the plaintiff.
( 1 ) THIS appeal by the 6th defendant is directed against the judgment of the subordinate Judge, Vijayawada, granting a decree against him along with the other defendants for the recovery of Rs. 10,845/- on the basis of a letter of guarantee executed on 31-1-1962 by him along with the defendant Nos. 2 and 5. It is averred in the plaint that on 5-7-1962, the 2nd defendant, for and on behalf of the 1st defendant-firm, of which the defendant Nos. 2 to 6 are the partners, borrowed from the plaintiff a banker and money-lender at vijayawada, a sum of Rs. 10,000/- under Exs. A-10 to A-12 hundies, payable by 3-10-1962, on the strength of the two letters on continuing guarantee exs. A-9 and A-1 executed by the defendant Nos. 2 to 5 on 30-10-1962 and the defendant Nos. 2, 5 and 6 on 31-1-1962 respectively and also executed another letter Ex. A-13 acknowledging the receipt of Rs. 10,000/- and agreeing to pay interest at the rate of 18% per annum from the due date. The plaintiff had to pay the amount to the Indian Bank and take the hundies, as the difcndants failed to honour the same. There was no reply from the defendant Nos. 1 to 5 to the telegraphic notice Ex:a-2 issued by the plaintiff, but the 6th defendant has replied under Ex. A-3 denying his liability; and the suit is filed on 14-3-1963 against all the defendants for the recovery of Rs. 10,845/- as there was no reply from the appellant also for the suit notice Ex. A-4, dated 2-2-1963. The defendant Nos. 1,3,4, and 5 remained exparate and the 2nd defendant filed a memo on 19-8-1963 submitting to a decree. The appellant the only contesting defendant, filed his written statement contending inter alia that he is a resident of and co-owner of a rice mill at srikakulam and was the managing partner of Sri Subrahmanyeswara Rice mills New Contractors Company, Masulipatam, in which the defendant Nos. 2 and 5 have each one anna share,that he was not a partner of the 1st defendantfirm, that when he approached the plaintiff for a loan for his partnership business at Masulipatam, through the 2nd defendant, accompained by the 5th defendant, it was represented to him that it was the practice of the plaintiff to obtain a contemporaneous letter from all the parties admitting their liability to be surety for the loan borrowed, that himself and the defendant Nos. 2 and 5 who were present there, signed the unstamped English printed form ex. A-1 with blanks therein, on 31. 1-1962 and borrowed a sum of Rs. 10,000/- undcr the iundies Exs. B-4 and B-5, that Ex,a-1, which is in English unknown to him, was neither read over nor explained to him and that he was unaware of the terms and recitals but subscribed his signature believing the representations, that the amount borrowed under Exs. B-4 and B-5 had been discharged by him on 26-4-1962 and hence, he is not liable to the amount now sought to be reco- vered on the strength of Ex. A-1. The trial Court held that the defendant Nos. 2 to 5 are the partners of the 1st defendant-firm and the 6th defendant has no connection with it, that the hundies Exs. A-10 to A-12 are true and supported by consideration, that ex. A-1 was not vitiated by any fraud,coercion or misrepresentation as the same has been executed by the defendant Nos. 2, 5 and 6 with eyes wide open and in they must have known that it is the nature of a letter of continuing guarantee, and decreed the suit. Hence, this appeal. The points that arise for determination are: 1) Whether the appellant, ignorant of English intended knowingly to execute Ex. A-1 as a letter of continuing guarantee for the borrowals of the 2nd defendant? 2) whether the transaction under Ex. A-1 is vitiated by fraud, missrepresentation or undue influence? 3) whether the contract under Ex. A-1 is an unconseionable or catching bargain and cannot be enforced in a court of law? with regard to the first point, it has to be considered on whom the onus lies to prove the contents of Ex. A-1 being known to the appellant.
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