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1993 Supreme(Mad) 223

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE MISHRA & THE HONOURABLE MR. JUSTICE S.M. ALI MOHAMED
Seshmal Bafna
Versus
P.C. Subramanian & Others
O.S.A. No. 73 of 1984
Decided On :Decided on : 13-04-1993

Advocates Appeared:
For the Appellant:Surana & Surana, G.V.S. Iyer, Advocates.
For the Respondents:N.S. Varadachari, N.C. Ramesh, Advocate.

Headnote:

NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 20 - PROMISSORY NOTE - FILLING UP OF BLANKS - MATERIAL ALTERATION - MAINTAINABILITY OF SUIT - Where a person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder.

Fact of the Case:

Plaintiff filed a suit on a promissory note which had unfilled entries as to the date of the promissory note and the name of the promisee. The plaintiff obtained the court's permission and completed the instrument by filling in the blanks. The trial court found that the suit was not maintainable as the promissory note was not valid in law. The plaintiff appealed to the High Court.

Finding of the Court:

The High Court held that the suit was maintainable. The court held that the plaintiff had the authority to fill in the blanks in the promissory note and that the subsequent filling up of the blanks did not cure the defect in the suit. The court also held that the trial court erred in disposing of the suit on a preliminary issue without taking into account the evidence adduced by the parties.

Issues: 1. Whether the suit was maintainable? 2. Whether the promissory note was vitiated by material alteration?

Ratio Decidendi: 1. The Negotiable Instruments Act, 1881, Section 20, gives prima facie authority to the holder of a promissory note to make or complete the instrument. 2. Filling up the blanks in a promissory note is not a material alteration that would render the instrument void.

Final Decision: The appeal was allowed, the impugned judgment was set aside, and the matter was remitted back to the trial court for disposal of the suit in accordance with law.

Judgment :-

MISHRA, J.

1. Plaintiff/appellant has preferred this appeal under Clause 15 of the Letters Patent of this Court, against judgment by a learned single Judge under which he has held that a promissory note said to have been executed by defendants 1 and 2 who are father and son in his favour on 25.11.1976 for a sum of Rs. 70,000/- is not valid in law. According to the plaintiff/appellant, the date of the promissory note and the name of the promisee were not filled up in the promissory note and the defendants had authorised the plaintiff to fill up those particulars himself. Accordingly, the plaintiff filed the suit without filling those particulars but sought permission of the Court and after such permission filled up those particulars and re-filed the original promissory note. According to the plaintiff/appellant when the defendants failed to pay the interest due under the promissory note for two months, he pressed for the same and the third defendant viz. the wife of the first defendant executed a letter of guarantee on 1.2.1977 for repayment of the loan. Learned single Judge has noted in his order.

“All the three defendants executed the letter of guarantee in favour of the plaintiff acknowledging the liability under the promissory note. Thus, the defendants 1 and 2 as principal borrowers and the 3rd defendant as guarantor are jointly and severally liable for the suit claim.”

In the common written statement, defendants 1 and 2 denied the borrowing but said that they had signed a blank promissory note and given it to the plaintiff. They pleaded that the plaintiff had several concerns in different names as partners and second defendant had dealing with the plaintiffs various concerns and he (plaintiff) habitually took blank promissory notes from the borrowers and in particular took the signatures of defendants 1 and 2 in blank promissory notes mentioning the figure of Rs. 70,000/- and the year 1971 and another blank promissory note for a similar sum in 1973. According to them, neither the date nor the name of the promisee was mentioned in the said promissory note, and they had duly settled the amounts due under the dealing with the plaintiffs concern but the plaintiff did not return the promissory notes. According to them, the letter of guarantee was signed only on a blank paper. The defendants came forward with an additional written statement that the promissory note was vitiated by material alteration and that the suit was liable to be dismissed, since the unfilled paper that had been filed with the plaint was not a promissory note on the date of the filing of the suit.

2. The trial court originally framed four issues and on the filing of the additional written statement, two additional issues, viz., (1) Is the suit liable to be dismissed for reasons set out in the additional written statement? and (2) Whether the suit promissory note is vitiated by material alteration, Learned judges who framed the issues and the additional issues respectively were not to hear the suit. It came up for hearing before T.N. Singaravelu, J., who has entered into the case saying:

“This is an unusual suit filed by the plaintiff on a blank promissory note without the date of the promissory note and the name of the promisee. However, even when the name of the promisee is not found in the negotiable instrument, the plaintiff has chosen to file the suit on the promissory note in his own name. In other words, it is very important to note that the suit is not based on the original cause of action but only on the promissory note purporting to bear the date 23.11.1976. It is strenuously contended on behalf of the defendants that the suit on a blank promissory note without the particulars of date and the promisee, is not a negotiable instrument in the eye of law, and therefore, the suit itself is not maintainable. Therefore these points covered by the additional issues were taken as preliminary issues at the time of trial.”


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