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1950 Supreme(Mad) 296

IN THE HIGH COURT OF JUDICATURE AT MADRAS
Mr. Justice Raghava Rao, J.
T.K. Shanmugasundara Mudaliar.
Versus
S.C. Sivalinga Mudaliar.
C.C.C.A.No. 55 of 1949.
Decided On : 03 October 1950

Advocates:
C. Narasimhachariar and M.E. Rajagopalachariar for Appellant.
U.S. Ramaswami Aiyar for Respondents.

Admissibility of defence taken in the suit on promissory note.

Headnote:Contract Act, 1872-Section 63 -Admissibility of agreement to remit in future pleaded in defence in a suit on promissory note.

Judgment.-This appeal arises out of a suit for the recovery of the amount due under a promissory note executed by the defendants in favour of the plaintiff on 2nd March, 1948, for Rs. 2,750 payable with interest at 9 per. cent per annum. The answer of the defendants was that although they had executed the promissory note it was unenforceable on account of an agreement in bar of the suit, which they detailed as follows in their written statement:

"(2) The plaintiff along with Rudrakoti Mudaliar, Kuppuswami Mudaliar and Arumuga Mudaliar are carrying on business in partnership under the name and style of Ganapathi Palaighat Company. They owned a casuarina tope planted on land belonging to the local temple. The first defendant is carrying on business in firewood in Madras and the second defendant is only working under him. In or about February, 1948, the plaintiff and his partners agreed to sell the tope to the first defendant for Rs. 7,750 with an advance of Rs. 500. At this time there was considerable dispute between the trustees of the temple and the villagers that land belonging to the temple was leased out for a nominal rent in the name of a son of one of the trustees and they sub-leased it to the plaintiff and his partners and made a huge secret profit; There were also control restrictions about the sale of firewood. In this state of things the plaintiff and his partners insisted on a separate agreement showing that the sale of the tope was for Rs. 2,000 only and two pronotes for Rs. 5,000 and Rs. 2,750 making it appear that the pronotes were executed for cash consideration borrowed for business. Accordingly the second defendant herein executed an agreement of sale of the tope in favour of Arumuga Mudaliar. Two pronotes, one for Rs. 5,000 dated 26th February 1948, and the suit pronote for Rs. 2,750, dated 3rd March, 1948, were also executed by the defendants, the former in favour of Rudrakoti Mudaliar and the latter in favour of the plaintiff herein It was then distinctly agreed and understood between the parties that in case these defendants sustained any loss owing to relaxation of control and other causes the plaintiff and his partners should remit Rs. 2,000 out of the sale price.

(3) Within a month or two after the sale all control restrictions were removed and the defendants sustained very heavy loss. The plaintiff and his partners in the presence of respectable panchayatdars reiterated the original agreement that they would forego Rs. 2,000 and receive the balance of Rs. 5,500 only. The defendants paid various amounts from time to time amounting to Rs. 5,000 and the pronote for Rs. 5,000 was returned to him on 2nd December, 1948. As regards the suit pronote the plaintiff agreed that on payment of Rs. 750 only he would discharge the suit pronote and return the same to the defendants. As the defendants could not make up the said sum immediately there was some delay. In the meanwhile at the instigation of others and for reasons not known the plaintiff sent a notice, dated nth November, 1948, demanding the full amount and before the defendants had time to reply the plaintiff has instituted this suit on 17th November, 1948

(4) These defendants submit that though there was a recital in the pronotes for interest it. was agreed between parties at the time of the execution of the pronotes that no interest should be charged and the terms will not be enforced. Rs. 5,000 was paid without interest and it was accepted."

The issue framed on the pleadings was: "whether the agreement pleaded is true and valid." As the suit was taken up for trial, there was a preliminary objection taken on behalf of the plaintiff that no proof of such agreement could be adduced by the defendants in bar of his suit. The objection found favour with the Judge below who accordingly decreed the suit as prayed for. It is contended in this appeal by Mr. Narasimhachariar that the view taken by the Court below is wrong.

Learned counsel places strong reliance on a rul

















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