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1972 Supreme(Mad) 809

Madras High Court
ISMAIL
Verco Private Ltd., Padi - Appellant
Versus
Newandram Naraindas - Respondent
Decided On : 12/21/1972

Advocates:
John and Das, for Appellants; C. Vasudevan, for Respondents.

A material alteration of a negotiable instrument renders it inoperative unless it was made in order to carry out the common intention of the original parties.

Headnote:

NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 87 - MATERIAL ALTERATION OF PROMISSORY NOTE - EFFECT - COMMON INTENTION OF PARTIES - EVIDENCE.

Fact of the Case:

Plaintiff sued defendants for recovery of a sum of Rs. 4216/- on the basis of a promissory note executed by the second defendant on behalf of the first defendant. The defendants contended that the promissory note had been materially altered by the plaintiff by inserting the rate of interest, and therefore it was inoperative and no suit could be instituted thereon.

Finding of the Court:

The court held that the promissory note had been materially altered and was therefore inoperative. The court also held that the plaintiff had not established that there was a common intention between the parties to pay interest at the rate mentioned in the promissory note, and therefore the last portion of Section 87 of the Negotiable Instruments Act, which provides that a material alteration of a negotiable instrument does not render it void if it was made in order to carry out the common intention of the original parties, did not apply.

Issues: Whether the promissory note had been materially altered.

Ratio Decidendi: The court held that the promissory note had been materially altered by the plaintiff by inserting the rate of interest, and therefore it was inoperative. The court also held that the plaintiff had not established that there was a common intention between the parties to pay interest at the rate mentioned in the promissory note, and therefore the last portion of Section 87 of the Negotiable Instruments Act, which provides that a material alteration of a negotiable instrument does not render it void if it was made in order to carry out the common intention of the original parties, did not apply.

Final Decision: The appeal was allowed, the judgment and decree of the lower appellate court were set aside, and the judgment and decree of the trial court were restored.

JUDGEMENT :- Defendants 1 and 3 to 5 in O. S. No. 106 of 1967, on the file of the VIII Asst. Judge, City Civil Court, Madras, who succeeded before the trial Judge, but lost before the appellate Judge, are the appellants herein, the suit was instituted by the first respondent herein for the recovery of a sum of Rs. 4216/- on the basis of Ex. A.2, the promissory note, said to have been executed by the second defendant on behalf of the first defendant as its managing director. The suit has been filed under Order XXXVII, Rule 2, C.P. Code. The plaint avers that the plaintiff, the first respondent herein, advanced a sum of Rs. 10,000 under the promissory note Ex. A.2, with interest thereon at 1.80 per cent, per mensem and that in respect of the said promissory note, the first defendant has paid to the plaintiff only Rs. 6000 and failed to pay the balance. In paragraph 6 of the plaint it is stated that the defendants are liable to pay the balance of Rs. 4,000 and a sum of Rs. 216 by way of interest from 9-9-1966 till the date of suit. Hence the suit was instituted for the recovery of a sum of Rs. 4216. The defendants put forward various defences. One such defence which was put forward with reference to Ex. A.2 promissory note was that it had been materially altered by the plaintiff and consequently it was inoperative and no suit could be instituted thereon. The material alteration is said to be the insertion of the rate of interest in the document. The first respondent gave evidence as P.W. 1 and he admitted that after the promissory note was executed, ha inserted the rate of interest at Rs. 1-80 per cent, per month, that the figure 1.80 and the word 'month' occurring in Ex. A.2 were written by him while the other portions of the document were written by the second defendant and that this writing by P.W. 1 was subsequent to the execution of the document. It was on this basis, it was contended on behalf of the defendants that the promissory note was materially altered and so it could not be sued upon. Relying upon the decision of this Court in Seth Tulsidas Lalchand v. Rajagopal, 1967-2 Mad LJ 66, the learned trial Judge dismissed the suit. As against the dismissal, the first respondent herein preferred an appeal and the learned I Additional Judge, City Civil Court, Madras on 29-7-1969, allowed the appeal and decreed the suit as prayed for. Hence the present second appeal by defendants 1 and 3 to 6.

2. On the admitted fact that the first respondent inserted the rate of interest and the word month, after the document was executed by the second defendant, it is clear that the promissory note has been materially altered. Similar were the facts before Alagiriswami, J. in the case referred to above and the learned Judge following an earlier judgement of Srinivasan, J. in C. R. P. 1544 of 1957, held that the promissory note so altered was inoperative and therefore could not be sued upon. Consequently, in my opinion, the judgement of Alagiriswami, J. referred to above directly applies to the facts of this case and therefore the suit instituted by the respondent herein was liable to be dismissed, as was done rightly by the learned trial Judge.

3. Mr. Vasudevan, the learned counsel for the first respondent, contends before me that there is a distinguishing feature which was not present in the case before Alagiriswami, J. This distinguishing feature is that P.W. 1 had stated in his evidence that the parties had previously agreed to pay interest at the rate mentioned above and since the same was not carried out by the second defendant he, (the plaintiff) filled up the rate of interest in the document Ex. A.2, and therefore under Section 87 of the Negotiable Instruments Act, the promissory note could not be said to have become inoperative so as to prevent the first respondent from suing thereon Section 87 of the Negotiable Instruments Act, so far as is relevant, is as follows

"Any material alteration of a negotiable instrument renders the same void




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