Madras High Court
Seethalakshmi Ammal vs T.P. Srinivasa Naicker on 9 December, 1992
Equivalent citations: (1993)1MLJ615
JUDGMENT Bellie, J.
1. The plaintiff Seethalakshmiammal is the appellant whose suit has been dismissed with costs.
2. The plaintiff filed the suit for recovery of a sum of Rs. 12,712.50 said to be due on a promissory note executed by the defendant Srinivasa Naicker. The plaintiffs case is that the defendant borrowed a sum of Rs. 15,000 from the plaintiff on 14.9.1964 and executed the suit promissory note Ex.A-1 agreeing to repay the said amount with interest at 12% per annum. The defendant paid a sum of Rs. 1,000 on 10.11.1966, a sum of Rs. 2,200 on 4.11.1969 and Rs. 1,000 on 3.1.1972 and made endorsements in his own handwriting on the reverse of the suit promissory note. Inspite of several demands by the plaintiffs the defendant has not paid the balance amount. Therefore the suit. The further case of the plaintiff is that since the defendant is an agriculturist he is entitled to the benefits of Tamil Nadu Debt Relief Act 4 of 1938 as amended by Act 8 of 1973 and therefore interest is claimed as per that Act.
3. The defendant resisted the suit contending that on 3.1.1972 he made a payment of Rs. 6,000 and made an endorsement thereof and not only Rs. 1,000 as alleged in the plaint, but on inspection of the promissory note the defendant found that 6,000 has been corrected into 1,000 and the portion covering the words "six thousand" has been torn off. Therefore the promissory note has been materially altered and therefore is hit by Section 87 of the Negotiable Instruments Act, and hence the suit is liable to be dismissed. It is further contended that the entire interest has been paid up to 3.1.1972 and as per the provisions of Act 4 of 1938 as amended by Act 8 of 1973 that amount is to be adjusted towards the principal and if > done so there would be no amount liable to be paid, and on this ground also the suit cannot stand.
4. The trial court on consideration of the evidence held that on 3.1.1972 the defendant as contended by him has paid a sum of Rs. 6,000 and not Rs. 1,000 only as is pleaded by the plaintiff and in the endorsement made therefor on the back of the promissory note the plaintiff has made alterations and this would amount to material alteration of the promissory note and hence it is hit by Section 87 of the Negotiable Instruments Act. The trial court further found that as contended by the defendant the entire interest amount has been paid up to 3.1.1972 and if that amount is adjusted towards the principal as provided under Act 4 of 1938 as amended by Act 8 of 1973 there would be no amount payable by the defendant. On these findings the trial court dismissed the suit.
5. Now in the appeal Mr. R.G. Rajan, learned Counsel appearing for the appellant-plaintiff contends that the finding of the trial court that on 3.1.1972 a sum of Rs. 6,000 was paid as contended by the defendant and not Rs. 1,000 as pleaded by the plaintiff is not correct, and that even if that finding is correct the further finding of the trial court that there is material alteration is erroneous. He also contended that the trial court is in error in holding that the defendant has paid the entire interest due on 3.1.1972. These are the points to be considered in the appeal.
6. Even from the very look at Ex.A-1 suit promissory note it is apparent that the defendant should have paid a sum of Rs. 6,000 on 3.1.1972 and made an endorsement thereof and that has been altered into Rs. 1,000 by the plaintiff. Besides the defendant (D.W.I) he has also examined one Thiruvenkatappa Naicker as D.W.2 who is admittedly an attestor to the disputed endorsement, and he has testified that the defendant did pay Rs. 6,000 on 3.1.1972 as found by the trial court he appears to be a well-to-do person and no reason whatsoever has been alleged by the plaintiff as to why he should give false evidence. Thus there is nothing to discredit his evidence.
7. To the naked eye it is clear that the figure 1,000 in the endorsement must bean alteration for some other figure and that could be 6,000. The portion containing the words of the amount paid has been torn off. The reason given by the plaintiffs husband as P. W. 1 is that his grand-daughter pulled off that portion. Even if that is true, as rightly said by the trial court the plaintiff could have preserved that portion torn off and shown to the defendant and he could have obtained another endorsement. That he has not done. His plea that the torn off portion were in bits is unbelievable. And even then nothing prevented the plaintiff from informing the defendant of the same. Therefore I quite agree with the finding of the learned trial court that on 3.1.1972 the defendant has paid a sum of Rs. 6,000 and made an endorsement to that effect.
8. There is no doubt that this endorsement has been an alteration by the plaintiff without the consent and knowledge of the defendant. Then the question is whether this amounts to material alteration so as to attract Section 87 of the Negotiable Instruments Act. A reading of Section 87 of the Negotiable Instruments Act would show that to attract that section the material alteration must be of the Negotiable Instrument. The question is whether the endorsement which has been altered, is negotiable instrument. I am of the view that an endorsement of repayment on the promissory note cannot be said to be a negotiable instrument. A Negotiable Instrument had already come into being with the execution of it by the defendant. That is the body of the promissory note containing the names of the parties and the terms before any endorsement of repayment is made thereon. Such endorsement only relates to repayments and not to any terms of the promissory note as such. Therefore by no stretch of reasoning an endorsement of repayment made on the promissory note can be said to be a negotiable instrument or a party thereof.
9. Here it may be useful to refer to a decision by V.S. Malimath, J., as he then was of Mysore High Court in Shivalingappa v. P.B. Puttappa A.I.R. 1971 Mys. 273. The learned Judge has said:
The endorsement which is alleged to have been made on the backside of the pronote does not form part of the negotiable instrument. It is an independent transaction, unconnected with the negotiable instrument in question. The alleged endorsement could as well have been made on an independent piece of paper and not on the back side of the pronote. Merely because an endorsement has been made on the back side of the pronote, it does not become part of the pronote. As the endorsement in question is not a part of the negotiable instrument, any alteration in the said endorsement does not attract the penal provisions of Section 87 of the Indian Negotiable Instruments Act.
I entirely agree with this judgment. It appears this judgment has been quoted before the trial Judge, but he was not prepared to rely on it stating that what is stated there is only an obiter.
10. Instead the trial court seems to have relief on a Judgment of this Court in Knishna Charana Padhi v. Gourochandro Dyano Sumantto . But in that case there was an alteration in the date of promissory note itself and also in the endorsement. Therefore that decision will not help to decide the point whether the alteration made in the endorsement amounts to material alteration or not. Hence it follows that there is no material alteration of the promissory note.
11. On the question whether the defendant has paid the entire interest due till 3.1.1972 a reading of the endorsement dated 3.1.1972 in my view would clearly mean that the entire interest amount due till then has been paid. The relevant words are:
This would only mean that the entire interest due till that date has been paid. Mr. R.G. Rajan would however argue that this would only mean that 'apart from the amount paid towards interest till that date' and not that the 'entire amount of interest due till that date has been paid". I am not able to accept this contention. When interest is due on the promissory note and the promisor pays any amount the promisee will adjust that amount paid only towards interest due first and he will not adjust that amount towards principal. Hence I agree with the trial court that the interest due till 3.1.1972 has been paid.
12. Then the further question arises, even if the entire, interest due till 3.1.1972 has been paid, will it be sufficient to wipe off the entire amount due under the promissory note as per the provisions of Tamil Nadu Debt Relief Act 4 of 1938 as amended by Act 8 of 1973. In this connection the learned Counsel appearing for the respondent-defendant submitted a calculation memo as per which the will be a balance amount of Rs. 2,700 due. This appears to be correct.
13. In the result, therefore, the appeal is allowed in part, and there will be decree for a sum of Rs. 2,700 with subsequent interest at 6 1/2% per annum from 1.3.1972 to 31.12.1972 and thereafter at 6% per annum till date of payment. There will be no order as to costs throughout.