Senanayake V. Wijeyesekere

1929.  Present: Dalton and Maartensz JJ.

SENANAYAKE v. WIJEYESEKERE.

364-D. C, Colombo, 26,952.

Promissory note-Claim against bank-Agreement to abandon claim- Consideration.

Plaintiff, who was the customer of a bank which had suspended payment, gave a cheque for the amount lying to his credit to the defendant, who was the managing director and largest shareholder of the bank, in return for a promissory note given by the latter.

Held, that there was sufficient consideration for the note.

PLAINTIFF sued the defendant to recover a sum of Rs. 611.99 due on a promissory note. The defendant was managing director of the Bank of Colombo. He was also the largest shareholder and the largest debtor. Plaintiff was a shareholder and customer of the bank. The bank suspended payment in June, 1921, when there was a sum of Rs. 468.68 lying to the credit of

plaintiff's account. Plaintiff's case was that the defendant told him that if he abandoned his claim on the bank, the defendant . would be personally liable for it. Thereupon in return for a cheque . for the balance of plaintiff's account, the defendant gave the promissory note sued upon. Defendant while admitting the making of the note, pleaded failure of consideration.

The learned District Judge gave judgment for the plaintiff.

N. E. Weerasooria, for defendant, appellant.

M. T. de S. Amarasekera (with Amarasinghe), for plaintiff, respondent.

July 25, 1929. DALTON J.-

Plaintiff is suing defendant for the sum of Rs. 611.99 made up of principal and interest, and further interest alleged to be due on a promissory note. Defendant admits the signing of the note, but pleads there has been a total failure of consideration. The note is dated November 20, 1922, and the amount is payable on December 28, 1927, at the Imperial Bank of India, Colombo. The defendant was managing director of the Bank of Colombo, Ltd. He was also apparently under the name of Wijeyasekera & Co., the agent and secretary of the bank. He was also, according to his evidence, the largest debtor to the bank and the largest shareholder. Plaintiff was a shareholder and customer of the bank. The bank suspended payment in June, 1921, at which time there was the sum of Rs. 468.49 to the credit of plaintiff's account. Defendant says there were 425 creditors at that time, of whom 300 were creditors for sums over Rs. 100, the bank being indebted in the sum of two or three lakhs of rupees when it suspended payment.

In 1922 the Registrar of Joint Stock Companies published a notice in the Gazette of September 1, 1922, that three months from August 30 the name of the bank would be struck off the register and the company would be dissolved unless cause be shown to the contrary. The evidence shows that defendant was very anxious to prevent this being done as he wished to restart the bank. It was obvious however that he could not open its doors without first coming to some arrangement with the bank's creditors. He accordingly circularized them, including plaintiff, with the object of coming to some arrangement with them. His idea seems to have been to postpone the creditors' claims by arrangement with them. He met plaintiff on November 20, just ten days before the Registrar's notice expired. What happened at that meeting is not agreed on. Plaintiff says defendant asked him to take no action in respect of the bank's indebtedness to him and told him that if he abandoned

his claim he (defendant) would be personally liable for it and give him a note for the sum payable with interest, in five years. In  return plaintiff was to give him a cheque for the balance to his (plaintiff's) account. This freed the bank from further liability to plaintiff, although he gave no other, writing abandoning his claim. It may well be, as defendant says, that the creditors as a whole were not prepared to spend further money on enforcing their claims against the bank. It is cl

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