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Madras High Court
V. RAMASWAMI,RATNAM
PL.CT.SP.Subramaniam Chettiar - Appellant
Versus
Muthiah Chettiar (died) - Respondent
Decided On : 11/20/1983
LIMITATION ACT, 1908 - SECTION 19 - ACKNOWLEDGMENT OF LIABILITY - ENDORSEMENT ON PROMISSORY NOTE - EFFECT - SUIT ON ORIGINAL PROMISSORY NOTE - MAINTAINABILITY.
Fact of the Case:
The plaintiff filed a suit for the recovery of a sum due under two promissory notes. The defendant executed a fresh promissory note for the total amount due under the original notes, with interest, and endorsements were made on the original notes stating that they were discharged by the execution of the fresh note. The plaintiff assigned the fresh note to a third party, who filed a suit on it but later withdrew the suit with permission to file a fresh suit. The plaintiff then filed the present suit on the original notes, contending that the endorsements amounted to an acknowledgment of liability and that the suit was therefore within the limitation period.
Finding of the Court:
The court held that the endorsements on the original notes amounted to an acknowledgment of a subsisting liability and the substitution of a new security for the same, and that therefore the suit was within the limitation period. The court also held that the plaintiff was entitled to rely on the original notes even though he had purported to assign the fresh note, as the fresh note was invalid due to insufficient stamping.
Issues: 1. Whether the endorsements on the original notes amounted to an acknowledgment of liability. 2. Whether the plaintiff was entitled to rely on the original notes even though he had purported to assign the fresh note.
Ratio Decidendi: 1. The court relied on the decisions in Venkkalanka Kondamma v. Kasaneedi Venkatarayadu and Pandit Salig Ram v. Radhay Shiam to hold that the endorsements on the original notes amounted to an acknowledgment of liability. 2. The court held that the plaintiff was entitled to rely on the original notes even though he had purported to assign the fresh note, as the fresh note was invalid due to insufficient stamping.
Final Decision: The court dismissed the appeal and upheld the judgment and decree of the lower court.
JUDGMENT :- The defendant is the appellant. The suit was filed by the plaintiff-respondent for the recovery of a sum of Rs. 24655 due under two promissory notes dated 25-6-1969 Ex. A-1 and 2-9-1969 Exhibit A-2. A sum of Rs. 1000 was paid towards the promissory note dated 25-6-1969 and an endorsement was made on 24-11-1969. On 7-4-1972, he executed a fresh promissory note for a sum of Rs. 18,750, which the total amount due under Exs. A-1 and A-2, with interest up till that date. On the same day, identical endorsements were made in Exs. A-1 and A-2 to the effect that by execution of the promissory note dated 7-4-1972 the amount due under the promissory note has been discharged. Subsequently, the plaintiff herein assigned the promissory note dated 7-4-1972, in favour of one Muthukaruppan Chettiar. The assignee filed O. S. 34 of 1973 for the recovery of the amount due under the note dated 7-4-1972. It appears the defendant contended in the suit that Muthukaruppan was not a bona fide holder in due course, that the suit was premature since one year thavanai was fixed for payment that, that the promissory note was an instrument payable otherwise than on demand and not a negotiable instrument and that it is also inadmissible in evidence as it was insufficiently stamped. On such a plea taken by the defendant the assignee filed I. A. 446 1974 for permission to withdraw the suit with liberty to file a fresh suit on the same cause of action. The petition was ordered 30-7-1974, by which the Court permitted plaintiff to withdraw the suit with liberty to file a fresh suit on tine same subject-matter. However, it appears that Muthukaruppan did not file a suit, that on the other hand obtained the consideration paid from the plaintiff herein and. handed over the invalid promissory note dated 7-4-1972. Thereafter, the plaintiff filed this suit on the original promissory note, Ex. A-1 dated 25-6-1969 and Ex. A-2 ,dated 2-9-1969 and pleaded that the endorsements made on 7-4-1972, on those promissory notes amounted to an acknowledgment of liability and that the suit filed within three years from 7-4-1972, is not barred by limitation. The learned Subordinate Judge, who tried the suit. accepted this contention and held that the endorsement on Exs. A-1 and A-2 dated 7-4-1972 amounted to an acknowledgment of a subsisting liability or outstanding debt on that date and the substitution of a new security for the same and that therefore the suit was in time.
2. The learned counsel for the appellant raised two main contentions: The first contention was that since Exhibits A-1 and A-2 are superseded by the execution of a fresh promissory note dated 7-4-1972, the present suit on the basis of the original two promissory notes is not maintainable. In this connection, he also relied on the fact that the assignee of the promissory note dated 7-4-1972, filed O. S. 34 of 1973 on the file of the learned Subordinate Judge of Pudukottai, and withdrew the same with permission to file, a fresh suit on the same cause of action. According to the learned counsel, in view of the filing of the suit and its withdrawal, with liberty to file a fresh suit only a fresh suit on the basis of the promissory note dated 7-4-1972 could be filed. We are unable to agree with this contention. As already stated, the plea in the earlier suit by the defendant was that the promissory note dated 7-4-1972, was insufficiently stamped and it was also an instrument payable otherwise than on demand and as such it was invalid and inadmissible in evidence. This plea of the defendant was correct and we find that the promissory note dated 7-4-1972. was invalid as it had been insufficiently stamped. It is a well settled proposition that in the case of an insufficiently stamped promissory note, it is open to the promisee to rely on the original cause of action and claim the recovery of the amount. It was therefore not necessary for the plaintiff to rely on the invalid promissory note dated 7-4-19
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