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1939 Supreme(Nagpur) 59

HIGH COURT OF NAGPUR
MAHADEO TUKARAM MAHAJAN – Appellant
Versus
RAMCHANDRA DEOYYA YELAMI – Respondent
Decided on : 29-09-1939

Important Points

The main legal point established in the judgment is the interpretation of the validity of an insufficiently stamped promissory note as an acknowledgment of debt and the admissibility of a separate contemporaneous agreement to repay.

Subject

Civil Law - Limitation Act

Headnote

Limitation - Promissory Note - Contemporaneous Agreement - [Limitation Act, 1963, Section 3, Indian Stamp Act, 1899, Section 35] - The court discussed the validity of an insufficiently stamped promissory note as an acknowledgment of debt and the admissibility of a separate contemporaneous agreement to repay. The court held that the promissory note could not operate as an acknowledgment and that a separate contemporaneous agreement could be proved, citing relevant case law. The suit was found to be within time based on the alternative cause of action apart from the promissory note itself.

Fact of the Case:

The plaintiff sued the defendant for a sum due which had been lent. The defendant resisted the suit on the ground that the claim was barred by limitation.

Finding of the Court:

The trial Court allowed the amendment to the plaint, and judgment was given in the plaintiff's favor. The lower Appellate Court agreed with the trial Court's decision. The second appeal affirmed the findings of the lower Courts and dismissed the appeal with costs.

Issues: The issues included the validity of an insufficiently stamped promissory note as an acknowledgment of debt, the admissibility of a separate contemporaneous agreement to repay, and the question of limitation regarding the amendment to the plaint.

Ratio Decidendi: The court held that the promissory note could not operate as an acknowledgment and that a separate contemporaneous agreement could be proved. The suit was found to be within time based on the alternative cause of action apart from the promissory note itself.

Final Decision: The appeal was dismissed with costs.

JUDGMENT

1. This is a second appeal by the defendant, the plaintiff having succeeded in both the Courts below. The suit was for a sum due which had been lent to the defendant. It is not disputed that the amount had been lent and the money received, and a plea which was raised that old accounts should be opened was later withdrawn and the sum claimed not disputed. The only ground on which the suit was resisted was that the claim was barred by limitation. Transactions have been going on between the parties for some time, and it is admitted that in December 1930 and June 1931 promissory notes were executed and also some cash passed. A further promissory note was executed on 19th January 1933. This, however, was executed on an insufficient stamp, and the plaint was not filed until 13th January 1936. The plaint stated that consequently the promissory note executed in January 1933 would not be a valid document as a promissory note, but the plaintiff claimed that he was entitled to claim the amount found due on that date independent of the promissory note. The defendant insisted that the claim was time-barred as it was based on the promissory notes of 1930 and 1931 and there was no direct acknowledgment within that time. The plaintiff then asked to be allowed to amend the plaint by pleading explicitly his cause of action apart from the promissory note itself. This application was put in on 8th April 1936, more than three years after the infructuous promissory note and indeed more than three years after the contemporaneous agreement on which the plaintiff relied.

2. The trial Court allowed the amendment subject to an objection on the question of limitation by the other side. The plaint was not actually amended, but nevertheless judgment was given in the plaintiff's favour by the same Judge who had recorded the pleadings and was in charge throughout, and it is clear therefore that the trial Court decided that the application for amendment was not barred by limitation. In addition to this question there were two other points for consideration before the trial Court. One was whether the insufficiently stamped promissory note could be used as an acknowledgment of liability for the debt. This was held in the negative on the authority in Govinda v. Haribhau, 1933 AIR(Nag) 391. The other point, which was whether a separate contemporaneous agreement to pay could be proved despite the fact of the existence of a. document, was held in the plaintiff's favour. In appeal no question was raised as to the correctness of the decision in the Court below that the infructuous promissory note could not operate as an acknowledgment. On the other points the lower Appellate Court agreed with the trial Court except that it did not consider the trial Court correct in stating that the claim to sue on an independent promise could be seen in para. 1 of the plaint, but held that the rule that the promise could be proved independently on failure of the operation of the promissory note was so well known that it was unnecessary to cite authorities.

3. In second appeal a good deal of time has been taken up by an attack by the learned Counsel for the appellant on the proposition that an invalid promissory note could be used as an acknowledgment, if sufficiently stamped for that purpose. The findings of both the Courts below were in the appellant's favour on this point, and I am at a loss to understand why the learned Counsel should have supported them. This has naturally invoked reference to rulings to the contrary on behalf of the respondent. I shall not refer to this question as it is not necessary for a decision of the appeal, which can be decided on exactly the same grounds as in the lower Appellate Court where it was held tacitly that such document could not operate as an acknowledgment or be used for any purpose whatever. It is contended on the next point that the decision of the Courts below has left it open to this Court to decide the question whether the plainti



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