Mere knowledge would not free the agent from personal liability.

SRINIVASAN J.

The defendant is the appellant. The suit is on a promissory note dated September 19, 1972, executed by the defendant in favour of the plaintiff for a sum of Rs. 5, 000. According to the plaintiff, the defendant paid a sum of Rs. 1, 000 and made an endorsement on March 15, 1975. It is stated in the plaint that while making the endorsement, the defendant added the words "for Devi Talkies (P) Ltd." above his signature and the words "managing director" below the same. It is stated that the plaintiff did not notice the mistake immediately and as the endorsement was made by the defendant himself, he was personally bound. The suit was filed on March 15, 1978. The defendant stated as follows in the written statement : The defendant was the managing director of Devi Talkies (P) Ltd., which owned a cinema theatre called Devi Talkies. The previous managing director filed a suit against the company and the board of directors for an injunction restraining them from interfering with his management. The suit was dismissed and an appeal met with the same fate. A receiver was in management during the pendency of the suit and the appeal. There was a second appeal in the High Court and the receiver was continued by interim orders. The High Court suggested a lease of the theatre. The directors decided to take the lease in the name of the defendant for the benefit of the company and deposited the lease amount of Rs. 13, 000 per annum. The directors by name Soundararaja Iyengar and Parthasarathy Iyengar paid Rs. 5, 000 each and a shareholder by name Srinivasan paid Rs. 3, 000. Parthasarathy Iyengar obtained a promissory note from the defendant for Rs. 5, 000 in the name of his wife Rangammal, while Soundararaja Iyengar obtained another promissory note in the name of his daughter, the plaintiff. Thus, the amounts were not borrowed by the defendant for his personal use. No consideration passed under the promissory notes. After the disposal of the second appeal, the board of directors passed a resolution on July 25, 1973, to treat the lessee's management as company management from the inception. The payment made towards the promissory note was made by the company and on behalf of the company. The amount payable to Srinivasan, the shareholder, was paid from out of the funds of the company on March 5, 1975. Thus, the company alone was liable to pay the amount and the defendant could not be made liable in his individual capacity. The defendant was entitled to the benefits of debt relief legislation of Tamil Nadu. The suit is barred by limitation as the endorsement will not save the suit.The trial court held that the defendant obtained the amount under the promissory note in his personal and individual capacity and the endorsement made by him under exhibit A-2 saved the suit from the bar of limitation. But the trial court dismissed the suit holding that it was premature in view of the provisions of the Tamil Nadu Act (40 of 1978).

On appeal by the plaintiff, the learned District Judge, Tiruchirapalli, confirmed the findings of the trial court as regards the personal liability of the defendant and the question of limitation. The lower appellate court held that the suit was not premature and in any event, the Tamil Nadu Act (40 of 1978) having expired, relief could be granted to the plaintiff. A plea was raised by the defendant that the entire debt stood wiped out by the provisions of the Tamil Nadu Act (13 of 1980). That plea was negatived by the appellate judge as he found on facts that the defendant did not satisfy the definition of "debtor" found in the Act. Consequently, the lower appellate court granted a decree in favour of the plaintiff as prayed for by her.

In this second appeal it is vehemently argued by learned counsel for the appellant that it is only the company which is liable for the payment of the amount due under the promissory note and the defendant is in no way responsible therefor, Secondly, it is contended that th