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1966 Supreme(Ker) 60

Judges : M.S.MENON,P.GOVINDA NAIR
APPUKUTTAN PANICKER - Appellant
Versus
ANTHAPPA CHETTIAR - Respondent
Case No : A. S. No. 322 of 1963
Decided On : 02/25/1966
Advocates Appeared :
V. K. K. Menon; P. Subramonian Potti; S. A. Nagendran; For Appellants S. Easwara Iyer; L. G. Potti; C. S. Rajan; For 1st Respondent

The main legal point established is the joint and several liability of the appellants under the promissory note, as well as the principle that the release of one joint promisor will not absolve the others.

Headnote:

Promissory Note - Liability of Appellants - Indian Contract Act, Negotiable Instruments Act, Evidence Act - S.139, S.135, S.133, S.37, S.92, S.44 - Ext. P-1, Ext. D-1 - Novation of Contract - Joint and Several Liability - Interpretation of Agreement

Fact of the Case:

Defendants 2 and 3 appealed a decree based on a promissory note, arguing they were only sureties and there was a novation of the contract. The court below held them liable, but it was unclear if they were only sureties.

Finding of the Court:

The court found that the appellants were jointly and severally liable under the promissory note, and there was no novation of the contract. The court also held that the release of one joint promisor would not absolve the others.

Issues: The issues were whether the appellants were only sureties, whether there was a novation of the contract, and the effect of Ext. P-1 on the promissory note.

Ratio Decidendi: The court relied on the Indian Contract Act, Negotiable Instruments Act, and Evidence Act to interpret the agreement and establish the joint and several liability of the appellants. It emphasized that the release of one joint promisor would not absolve the others.

Final Decision: The appeal was dismissed, and the court held the appellants liable under the promissory note.

Judgment :-

1. This is an appeal by defendants 2 and 3 from a decree passed in the suit based on a promissory note, Ext. P-2, dated 10th March, 1955 executed by the appellants as well as the 1st defendant in favour of the 1st respondent the plaintiff. The only question arising for determination in this appeal is whether the appellants can be held liable on the note.

2. It is urged that they were only sureties and further that there has been a novation of the contract embodied in Ext. P-2 promissory note by the execution of the agreement Ext. P-1, dated 1st June 1955 between the 1st respondent and the 1st defendant. The court below held dealing with issues 5 and 6 framed in the case that there has been no novation. It also held that defendants 2 and 3 are liable. It is not clear from the finding entered on issues 1 and 2 whether the court below came to the conclusion that defendants 2 and 3 are only sureties.

3. The arguments before us centred mainly under two heads. Firstly, it was urged that defendants 2 and 3 were only sureties and that in view of the fact that the securities available to the appellants were impaired by the execution of Ext, P-1, the appellants have been released from their obligations by virtue of S.139 of the Indian Contract Act. It was also urged that in any view of the matter Ext. P-1 spelt a granting of time to the principal debtor and therefore the appellants have been released on the principle embodied in S.135 of the Indian Contract Act. Reference was also made to S.133 of the Contract Act. The second contention was that by virtue of Ext. P-1 there has been an alteration of the agreement contained in the promissory note Ext. P-1 and it was not open to the creditor the plaintiff to rely on the promissory note thereafter.

4. It is clear that the appellants being joint executants of the promissory note had undertaken unconditionally to discharge the obligations under the note, and therefore will be jointly and severally liable with the 1st defendant to discharge the liability under the note. This is of course subject to S.37 of the Negotiable Instruments Act, which makes the liability of a maker subject to contract to the contrary. Since the contract embodied in the promissory note is in writing, S.92 of the Evidence Act is attracted and any alteration of the agreement embodied in the promissory note can only be by another written agreement. The question therefore is whether there is any such agreement.

5. Reliance has been placed on Ext. D-1 for this purpose by the appellant. This is an agreement between the 1st defendant on the one hand and defendants 2 and 3 on the other. The plaintiff is not a party to this agreement. The fact that the plaintiff was aware of or was even present when this agreement was entered into between the 1st defendant on the one hand and defendants 2 and 3 on the other cannot bind him nor can it alter the position of the liabilities arising out of the note, Ext. P-2. The position seems to us. to be clear and our attention has not been invited to any decision which casts any doubt on what is stated above. We may refer to two decisions on the point as well. The first of these is in K. R. V. Vellian Chetty v. Woomidy Yiramah XXIX Indian Cases 760. The relevant passage runs thus:

"The judgment must be based on facts duly proved, Evidence Act, S.165. The parties had reduced their contract to a written document and under S.37, Negotiable Instruments Act, were principal debtors in the absence of a contract to the contrary. According to the note each promised to pay jointly or severally. It was on the note that the suit was brought and under S.92 of the Evidence Act it was impossible to travel outside it.

No evidence to contradict the note being admissible by virtue of Evidence Act, S.92, the learned judge cannot base his judgment on such."

6. The other ruling is in Behari Lal v. Allahabad Bank Ltd., Cawnpore and another AIR. 1929 Allahabad 664 where it has been pointed out that the terms of







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