Pleas essential for applicability.

This Second Appeal involves a question of some interest, with regard to the applicability of the exception or proviso enacted as the last part of section 28 of the Negotiable Instruments Act, 1881. The brief facts are as follows:

The suit was instituted by the plaintiff (respondent) in the Court of the learned Subordinate Judge of Dindigul for recovery of a sum of Rs. 5,000 on a promissory note executed on 9th February, 1953, by the defendant in favour of the plaintiff. The plaintiff further alleged that the suit was in time, for a sum of Rs. 250 had been paid and endorsed on the instrument on 5th January, 1956. I may immediately state that the case of the plaintiff presents no difficulty, ex facie, for it is not disputed that the, promissory note was executed, and that it was supported by consideration in the shape of a loan advanced by the plaintiff.

The very important question is whether the defendant (appellant) did or did not take the plea which would entitle him to invoke the benefit of the principle enacted as the last part of section 28 of the Negotiable Instruments Act. I might immediately state that the learned District Judge differed from the trial Court in the First Appeal, and came to the conclusion that the defendant (appellant) could not raise this plea at all, as the necessary averments had not been made at the trial. Since this is the single cardinal issue upon which the entire appeal turns, I think it is important to extract and set forth the observations of the learned District Judge in the First Appeal. They occur in paragraph 116 of his Judgment and are as follows:

“ .... the learned counsel for the defendant refers to section 28 of the Negotiable Instruments Act and argues that the defendant was induced to sign the suit promissory note upon the belief that the plaintiff will hold only the company liable. It must however be pointed out that there is no such express plea taken in the written statement filed by the defendant and no evidence to show that the plaintiff induced the defendant to sign the promissory note upon the belief that the principal alone, that is, the company would be held liable.”

In other words, the learned District Judge was clearly of the view that the plea itself could not be taken because, essentially, it was a plea of fact. The necessary averments were not advanced, the issue was not raised and the matter cannot be therefore agitated in that form. Incidentally the learned District Judge also expressed his opinion that there was no evidence in support of the plea.

I shall come to the question of the existence of evidence in support of the plea a little later. For the moment I shall deal with the first of the grounds assigned by the learned District Judge for reversing the judgment and decree of the learned Subordinate Judge who held that the plea was substantiated, and granted a decree not against the defendant (appellant) in person, but only in his capacity as a Director of Sarvodaya Pictures Co., Ltd. This ground, as I have earlier emphasised was that the question being essentially one of fact, the necessary averments had not been advanced, and the necessary issue was not there. The learned District Judge seems to be totally mistaken in this view. Even in the summary of the pleadings to be found in paragraph 2 of the judgment of the learned Subordinate Judge at the trial, the following pleas are ascribed to the defendant:

“ So, Sarvodaya Pictures alone is liable to pay Rs. 4,500 to the knowledge of the plaintiff.That is the understanding between the parties. So there cannot be any personal liability as regards Rs.4,500.”

I have carefully scrutinised the Tamil text of paragraph of the written statement and find that it is even more explicit. There are definite averments that , as far as the sum of Rs . 4,500 is concerned (which is alone the subject-matter of the present contest in the Second Appeal), this sum was advanced as a loan by the plaintiff on the definite understandi