Patna High Court
Mahabir Prasad Mawandia vs Satyanarain Kotriwala on 21 December, 1961
Equivalent citations: AIR1963PAT131, AIR 1963 PATNA 131
JUDGMENT Anant Singh, J.
1. This appeal is by defendant No. 2, son of defendant No. 1, against whom the suit was dismissed.
2. The suit was filed by the plaintiff for recovery of Rs. 7496/-, besides interests and costs as per accounts given in schedules 1, 2 and 3 at the foot of the plaint. The principal amount was claimed by the plaintiff as rent in respect of a building situate on two municipal holdings in the town of Bhagalpur.
3. The facts of the case, as disclosed in the plaint, are to the following effect. The appellant was defendant No. 2. He is the son of defendant No. 1, who died during the pendency of the appeal in this Court. They were both members of a joint Hindu family governed by the Mitakshara School of Hindu Law. They decided to run a hospital for women in the name of "Narayani Matri Seva Sadan", and for its location, took from the plaintiff his building on a monthly rental of Rs. 150/- with effect from the 1st August 1946, agreeing to pay interest at the rate of Re. 1/- per cent per month in case of default in payment of rent
4. The rent for the building remained unpaid from the 1st April 1951, when on the 1st October 1953, the appellant approached the plaintiff and offered to pay the arrears which, by then, had come to Rs. 4500/-, in six monthly instalments of Rs. 1000/- commencing from the 1st April 1954, with interest at nine annas per cent per month, in case of default, and in token of the agreement, he also executed a memorandum. Ext. 3, dated 1-10-53. The appellant on the 2nd Apri1 1954, gave to the plaintiff a cheque for Rs. 1000/- drawn on the Central Bank of India Ltd., and endorsed the payment in his own pen on the same day on the back of the memorandum. The plaintiff encashed the cheque, when Rs. 3500/- remained due towards the aforesaid memorandum for Rs. 4500/-. Nothing was paid towards that amount thereafter,
5. The defendants continued in occupation of the building till the 30th April 1955, having paid rent for three months only from the 1st October 1953, up to which the arrears had been included in the memorandum referred to above. The rent, apart from the one included in the memorandum, remained due from the 1st January 1954 till 30th April 1955.
6. The electric charges and excess water tax in respect of the building were payable by the defendants. They did not pay the same, which the plaintiff had to pay on their account.
7. The amount due with interest under the memorandum has been mentioned in Schedule 1, being Rs. 3500/- as principal and Rs. 826/14/- as interest at the rate of nine annas per cent per month; the amount due on account of rent from 1-1-54 to 30-4-55 with interest has been mentioned in Schedule 2, being Rs. 2400/- as principal and Rs. 539/7/9 as interest at the rate of one per cent per month, and the amount due for electric charge and excess water tax has been mentioned in schedule 3, being Rs. 229/10/3. The total, for all, came to Rs. 7496/- which, it was alleged, the defendants did not pay in spite of repeated demands, which necessitated the filing of the suit on the 1st April 1957.
8. A joint written statement was filed on behalf of both the defendants, denying, m general, the averments made in the plaint. The plaintiff's allegation that the house was taken on rent by the defendants for their own purpose was altogether denied. It was contended that the house was taken on rent from the plaintiff for the purpose of running "Narayani Matri Seva Sadan", which was a public chant-able institution of which the appellant happened to be only the Honorary Secretary, fie had nothing to do with it in his personal capacity. The institution was being managed by a committee consisting of several members including the then District Magistrate of Bhagalpur, Sri Harihar Prasad Singh, who was the President, and Sri B.N. Jha, the then Minister of the Local Self-Government, who was a patron. The building was taken on rent by the members of the committee, and this appellant had only accompanied those members, when it had been taken on rent. It was denied that the defendants were tenants in respect of the building. The real tenant was "Narayani Matri Seva Sadan", managed by the committee.
As regards the memorandum acknowledging the arrears, it is said that this appellant had executed it in his capacity as the Secretary of the institution, and not in his personal capacity. The recitals thereunder to the contrary were made by the appellant under the undue influence of Sri Banarsi Lall and Sri Lakhi Prasad. The endorsement on the back of the memorandum, alleged to have been made by the appellant was completely denied. It was further contended that the tenancy came to an end in the month of April 1953, when the plaintiff took possession of the house on the abolition of the institution. As regards the alleged payment of Rs. 450/-towards the rent for three months from 1-10-53 to 31-12-53, it was said that the same had been paid towards the dues under the memorandum. The charges for electricity and excess water tax were denied, having been included in the rent itself. The suit was said to be bad against the defendants in absence of the members of the committee of the institution, and it was further contended that defendant No. 1 was an unnecessary party, having nothing to do with the institution. There was also a plea of limitation taken.
9. A number of issues were framed. The suit was dismissed against defendant No. 1 complecery, since he was not at all found to be a tenant in respect of the building. The appellant alone has been found to be a tenant in his personal capacity in respect of the building. The suit has been decreed for the major part of the claim. A sum of Rs. 300/-only has, however, been disallowed as timebarred from Schedule 2, and Rs. 6/- has been found unfounded in the claim under Schedule 3 of the plaint. The suit has been decreed for the balance of the amount under the three schedules.
10. The appellant has since filed this appeal repudiating the entire decree against him in his personal capacity.
11. It was conceded by learned Counsel, Mr. Jagadish Chandra Sinha, on behalf of the respondent that the decree for interest under Schedule 2, being Rs. 539/7/9, in absence of any agreement, was untenable, and that the claim for the same would not be pressed.
12. The controversy relates to the balance of the decree only. The main contention that was raised by learned Counsel, Mr. A.B.N. Sinha, for the appellant is that the appellant cannot be personally liable for any part of the claim, because the tenant in respect of the building was not the appellant, but the 'Narayani Matri Seva Sadan", which was a public institution from its very inception, and the same was being managed by a committee consisting of various members.
13. As to the amount, said to have been acknowledged by the appellant under the memorandum, Ext. 3, it is contended that, not being stamped, the document is inadmissible in evidence for any purpose, and that, in any event, the acknowledgment by the appellant was in his capacity a9 the Secretary of the "Narayani Matri Seva Sadan", and not in his personal capacity. Besides, the alleged endorsement, Ext. 13, dated the 2nd Apri1 1954, on the back of it, said to have been made by the appellant in his own pen, being a forgery, would not save the limitation of three years in respect of the claim made on its basis.
14. The decree for the claim under Schedule 3 is repudiated on the ground that the electricity charges and excess water tax were included in the rent itself, and were not separately payable.
15. The first point for consideration in this appeal is whether the appellant is personally liable for any part of the decree. The answer to this question will depend on, who was the tenant in respect of the building in question.
16. The plaintiff-respondent's case is that the appellant was a tenant, no matter he took the building for the purpose of running a charitable hospital for the benefit of the public. The appellant was for all purposes the propretor of the institution. He was holding all the assets, and was responsible for all the liability incurred for the institution. The further case of the plaintiff is that at the time the appellant wanted the building, the hospital in question was not even in existence, and there was no any committee ever appointed to run the institution. It was always being managed by the appellant alone.
17. The evidence of the plaintiff (P. W. 6) is that both this appellant and his father went to him for taking his house on rent. The plaintiff then did not agree to let it out. After that, this appellant along with his Munims saw him again. The plaintiff turned down the proposal even on that occasion, it was thereafter that the appellant went to the plaintiff with Champalal Jain (P. W. 1) and Bihari Lal Shah (P. W. 3). They all requested him to let out the house to the appellant for six months, when he agreed to do so. The appellant thereafter opened "Narayani Matri Seva Sadan" hospital in the house.
18. The evidence of Champalal Jain (P. W. 1) is, more or less, to the same effect. He has, however, added that when he along with the appellant and Bihari Lal Shah (P. W. 3) saw the plaintiff, he requested the latter to let out the house to the appellant, as he had to open a maternity hospital. He has also added that the hospial belonged to the appellant personally, and it was not a public institution. The evidence of Bihari Lal Shah (P. W. 3) is that he was approached by the appellant to request the plaintiff to let out his house on rent. The plaintiff was not willing to let out the house, but it was on his pressure and that of Champa Lal that the plaintiff let out the house to the appellant. His further evidence is that the house was taken by the appellant for starting "Narayani Matri Seva Sadan", which was a private hospital, and not a public institution.
19. As admitted by the appellant himself in his evidence, he had no enmity either with Champalal or with Bihari Lal, and, therefore, there is no reason to disbelieve their evidence.
20. The fact is not denied by the appellant, rather it is admitted that he had negotiated with the plaintiff and taken his house on rent. But his case is that he had taken it on behalf of the ''Narayani Matri Seva Sadan" as the Secretary of the Managing Committee, and not in his personal capacity. It is denied that he was the proprietor of it, or that he had the sole management of it so as to make him liable for the liabilities of the institution. In support of his case, reliance has been placed on the same evidence of P. Ws. 1, 3, and 6, who have said that the plaintiff did not agree at first to let out the house to the appellant >until he had been pressed by P. Ws. 1 and 3.
It was contended by learned Counsel for the appellant that the plaintiff would not accept the appellant as his tenant until he was approached by P. Ws. 1 and 3, who were public workers. It was on their assurance that because the house was required for running a public charitable hospital that the plaintiff agreed to let out the house. No such conclusion can reasonably be inferred from the evidence of the aforesaid P. Ws. 1, 3 and 6. The idea of starting a hospital for women was conceived by the appellant and his father, and for the purpose of locating it, the plaintiff was approached to let Cut his house. The plaintiff let out his house not until he was influenced by P. Ws. 1 and 3. The onus is entirely upon the appellant to establish that it was the institution "Narayani Matri Seva Sadan" on whose behalf the plaintiff's building had been taken on rent, and that the defendant-appellant was only acting on behalf of the institution, and was not personally liable for the rent.
21. There is no documentary evidence that the "Narayani Matri Seva Sadan" had come into existence, or any scheme had already been drawn up for its creation and its management by the public or a body of the public, on the date or at the time the house was taken on rent by the appellant from the plaintiff-respondent. The appellant, however, deposed that the people of the town having felt the necessity of a maternity house had approached him and his father for getting one such house started. His father contributed a large amount for its start. There was a public meeting, and a committee was formed for starting a maternity house. The appellant was elected as the Secretary of the committee. The committee further nominated the appellant's father as the founder of the institution, and gave him powers to manage the affairs of the maternity house. His father used to pass the bills etc. of the institution. Champa Lal (P. W. 1) and Bihari Lal (P. W. 3) and the appellant, besides one Babulal Mesaria went to Lakhi Prasad and Banarsi Lal Kothoriwalas for the bouse.
The appellant, however, gave no idea as to the time and date of the constitution of the alleged committee, whether it was before or after the plaintiff's house had been taken on rent. No paper was filed to show the constitution of the committee, much less the date and time of it. A printed notice, marked 'Y' for identification, was, however, brought on the record by the appellant. This also does not refer to the constitution of any committee nominated or appointed for managing the institution. It bears no date. It was only an advertisement on behalf of the "Narayani Matri Seva Sadan" saying that the public of Bhagalpur should take the advantage of the hospital. It is obvious, therefore that this notice was circulated after the hospital had been established.
22. All the other documents brought on the record either on behalf of the appellant or on behalf of the plaintiff are of dates long after the establishment of the "Narayani Matri Seva Sadan", and they give no indication whatsoever of the existence of the institution as a public institution to be managed by anybody of the public prior to the letting out of the building. The appellant himself, at a later stage in his cross-examination, seems to have been constrained to admit that a provisional committee was formed after taking the house on rent. The evidence, as it is, leads to the only conclusion that the idea of starting the institution, of course, for the benefit of the public, was conceived by the appellant and his father, and the house of the plaintiff was taken on rent by the appellant in his personal capacity. There was no public institution to be managed by anybody of the public at the time the house was taken on rent by the appellant, and, therefore, there was no question of his taking the house on rent from the plaintiff in his capacity as the representative of the institution.
The institution not being in existence at the time, there is no question of its being represented by any one, it was the appellant, who had taken the house on rent from the plaintiff, and he must be liable for it, unless there was any novation of the contract thereafter. But no such novation has been pleaded on behalf of the appellant. I shall, however, return to the question of novation hereafter .
23. The initial tenant was undoubtedly the appellant. It seems, however, that during 1948-49 some rent receipts had been issued on the plaintiff's behalf in respect of the building in the name of the hospital. The house was Jet out to the defendant-appellant from the 1st of August 1946. The rent receipts, Exts. B to B/6, were admittedly granted by the plaintiff's manager, M.P. Kotriwal (P. W. 12), and Ext. B/7 was written in the pen of Radhashyam, the plaintiff's munim. These rent receipts were granted on the plaintiff's behalf during 1948-49. They all related to holding No. 108, situate in Ward No. 3, the same holding being in question. In all these receipts, the name of the tenant was either "Matri Seva Sadan Hospital" or "Sri Narayani Matri Seva Sadan Hospital", both being the same.
24. Again on the 9th July 1952, the plaintiff had filed an application, Ext. F, before the House Controller for eviction from the building in question of the appellant's father, since deceased, "as the founder", and this appellant "as Secretary to Sri Narayani Matri Seva Sadan Hospital".
25. On the basis of the aforesaid rent receipts, Exts. B to B/7, and the application, Ext. F, it has been argued by learned Counsel for the appellant that the plaintiff, at least at some subsequent stage, treated the "Narayani Matri Seva Sadan" as the tenant in respect of the building, and wanted eviction therefrom of the appellant as the Secretary, and of his father, as the founder of the institution. On this basis, it has been argued that in case the initial tenancy was not in favour of the "Seva Sadan", it was so treated at the subsequent stage by the plaintiff himself.
Learned Counsel for the appellant has, thus, at the time of argument, pleaded novation of the contract. It may, however, be mentioned that novation was not pleaded either in the written statement, or in the evidence adduced on behalf of the appellant. If it had been pleaded at the appropriate time, the plaintiff might have been able to explain the circumstances how the rent receipts in the name of Narayani Matri Seva Sadan or Matri Seva Sadan came to be granted, and how the defendant was described in the application (Ext. F) as the Secretary and his father as the founder of the institution. The plea of novation, if allowed to be raised at this stage, will cause great prejudice to the plaintiff, and, therefore, it cannot be allowed. Besides, if novation of the contract by substitution of "Matri Seva Sadan" as tenant for the appellant fails in the sense that it becomes unenforceable against the substituted tenant, namely, Matri Seva Sadan, the original contract against the maker, namely, the appellant, would revive". In support of this proposition of law, reference may be made to the case of Laxman Waman v. Balmukund Jainarain, AIR 1954 Nag 142. The authorities on the subject have been reviewed in the aforesaid case in paragraph 29 of the judgment at page 147.
26. Novation implies substitution of a new contract, which must be valid and enforceable. If, however, the substituted contract suffers from any legal flaw like want of registration etc. on account of which it becomes unenforceable, the original contract remains and cannot be extinguished. The rights of the parties will be governed in such a case by the old contract. The decision in the case of Vishram Arjun v. Irukulla Shankariah, (S) AIR 1957 Andh-Pra 784 may be referred to in this connection.
27. The substituted contract, if any, by "Matri Seva Sadan" for want of its being a legal entity, as I shall show hereafter, is not enforceable against the aforesaid institution, and, therefore, the rights of the parties will be determined by the original contract which was entered into by the appellant.
28. The appellant's plea that he had entered into the contract on behalf of the Matri Seva Sadan, factually is not true, except that at the time of the contract, he had indicated that he was taking the house on rent for the purpose of starting a hospital for women. The principal was unknown at the time, not having come into existence. He had, thus, entered into the contract on behalf of an undisclosed principal. He would, therefore, be personally liable under the contract. But even supposing that the principal was disclosed, not being registered under the Societies Registration Act, it was not a legal body, and, therefore, it could not be sued. Thus, even if the principal was disclosed at the time the appellant took the house on rent, he is still personally liable, being covered under Exceptions (2) and (3) to Section 230 of the Contract Act. If promoters of any company entered into any contract on behalf of such company not yet incorporated, such promoters would be personally liable for the obligation they create under any contract with any one, for the simple reason that the principal has no legal existence. Not even any subsequent ratification by the company, when it comes into existence, can relieve the personal liability of the agent who made the contract on behalf of the company before its coming into existence.
29. Next, I will consider the question if "Narayani Matri Seva Sadan" or "Matri Seva Sadan" was at all a legal entity. The fact was no longer disputed that this institution was meant for the benefit of the public at large, and the benefits from it were not confined only to the appellant and the members of his family. There is an admission by the plaintiff's own witnesses like P. Ws. 1 and 3 that the members of the public used to be treated in the hospital. There is a further admission that besides admission fee, no any other kind of fee was being charged from any patient. The admission fee charged varied between Rs. 5/- and Rs. 12/-. The appellant was not earning anything from the hospital, but all the income from admission fee used to be spent for the maintenance of the hospital. Thus, it is clear that the hospital was, in essence, a charitable hospital meant for the benefit of the public, and in that sense, it might have been a public institution. But this will not decide the issue. The decision will depend on the question whether it was a proprietary institution in the sense that the management was purely in the hands of the appellant, or it was a non-proprietary in the sense that the management was in the hands of any committee.
No satisfactory evidence was brought on the record that there was ever any regular committee managing the affairs of the institution. The appellant was probably the self-styled secretary of it. No paper was brought on the record to show the constitution of the committee, nor was any paper brought on the record to show its constituents. There were only some letters filed on behalf of the appellant showing some correspondence between some officials of the State and the Secretary of the Institution.
30. The admission fee charges varied between Rs. 5/- and Rs. 12/- per patient. There was no other income from the patients of the hospital. There were, however, some donations made by some members of the public or even the Government to the hospital. No income of the hospital used to go to the appellant. All the income used to be spent on the maintenance of the hospital. There can be no denying the fact that the hospital was a charitable one, run. for the benefit of the public at large. But the question is, if it was a proprietary hospital managed by the appellant, or it was a public institution managed by any regular committee. Admittedly, it had not been registered under the Societies Registration Act, 1860. Initially it was started by the appellant and his father alone. But, later, it appears that there was some sort of a managing committee or governing body appointed, but it is not known how and under what constitution of the institution, the said committee came to be appointed.
Besides, even that committee does not appear to have been a regular one. The appellant has not filed all the papers and the rules of the committee which were to govern the management of the institution. A few letters, Exts. C series, only were filed on behalf of the appellant to show that there was some sort of a committee and the appellant was functioning as the secretary of it. (After dealing with these letters (Paras 31 to 37) the judgment proceeds further):
38. The letters, Exts. C/6, C/5 and C/2, do not relate to any constitution of the committee. They only refer to some help promised to or asked for by the Secretary of the institution. The correspondences between the Secretary of the institution and the District Magistrate, Bhagalpur, the Commissioner, Bhagalpur Division, the Minister of the Local Self-Government and Mr. Khemka only indicate that there was some sort of committee appointed for the institution. The District Magistrate, Bhagalpur, the Minister, Local Self Government and Mr. Khemka had accepted to have been on the committee. The Commissioner, Bhagalput Division, however. did not recognise the institution as a public one, but he treated it as a purely private institution. There can be no doubt that the committee, if any, was purely a private one not having been recognised or registered under the Societies Registration Act.
It was not even in the nature of any social club or association, wherein the members had to pay any membership fees. In the face of it, they must have been all honorary members. The institution was obviously not a legal personality, as that it could sue or be sued in its name.
Mr. A.B.N. Sinha, appearing for the appellant, has, However, argued that it was a semi-legal personality, and just as a social club, it could sue or be sued in its own name, in support of his argument, he has referred to certain observations at pages 324 and 326 of Salmond's Jurisprudence, 10th Edition Chapter XV and two cases reported in Taff Vale Rly. Co. v. Amalgamated Society of Railway Servants, 1901 AC 426 and National Union of General and Municipal Workers v. Gillian, 1946 KB 81. I need not refer to them, for the facts of none of those cases are at all attracted to the present case. The argument has absolutely no force. The rules of the committee, if any, are not known. The terms of the members if of the committee are also not known, and, therefore, it cannot be recognised as having any legal existence or even a semi-legal personality like unincorporated clubs. An unincorporated members' club, not being a partnership or legal entity, cannot sue or be sued in the name of the club, or can even the Secretary or any other officer of such a club sue or be sued in the name of the club, even if the rules were to give him power to sue or be sued, unless this was permitted by statute.
39. There was no privity of contract between the Matri Seva Sudan on one hand and the plaintiff on the other. The members of the committee were not a party to the contract. The appellant alone was a party to it, and it was before the institution had come into existence. Thus, the institution cannot be sued in its own name.
40. As matter of fact, the appellant had all the time treated the institution as his proprietary property, although it had been for the good of the members of the public. After the institution was closed and became defunct, the appellant's father had, in his petition (Ext. 7) which he had filed on 29-12-54 before the Sub-divisional Magistrate, Bhagalpur, claimed that he had started the hospital as a private hospital out of his own funds, that he had been defraying all its expenses and therefore, he was entitled to get back all the furniture thereof. His claim was being opposed on behalf of the then Lady doctor, Miss Prative Chaudhary, who was pleading that it was a public institution. The subdivisional Magistrate, by his order dated 8-2-55, allowed the appellant's father to take all the furniture on furnishing security.
41. It follows from all accounts that the appellant had taken the house on rent from the plaintiff in his personal capacity. He stared the institution in it as his personal concern. If at any stage, the institution came to be substituted as a tenant in respect of the building for the appellant, he alone must be liable personally, because the institution cannot be sued in its own name. Under Ext 3, by which the appellant accepted some past liability on account of the rent for the house, to which a reference shall be marie hereafter, he acknowledged the liability in his personal capacity, and not on behalf of the institution. His plea that he acknowledged it as the Secretary of the institution is altogether untenable. The learned Subordinate Judge was quite right in finding the appellant liable personally for the rent due in respect of the building.
42. The next question for consideration is whether any claim out of the amount decreed by the learned Subordinate Judge is barred by limitation. The learned Subordinate Judge has already disallowed out of Schedule II a sum of Rs. 300/- as time barred, The rest of the claim under this schedule was not contended to be barred at all. It has been made within three years, and, therefore, it is within time, it is only the claim for interest under this schedule that has been conceded by learned counsel for the respondent not to be maintainable, as already mentioned.
43. The controversy, however, relates to the claim under Schedule 1 based on the memorandum (Ext. 3), dated 1-10-53, said to have been executed by the appellant acknowledging the dues and later making a further payment of Rs. 1000/- by cheque nad endorsing the same on 2-4-54 on the back of the memorandum. If the memorandum and the endorsement thereon of the payment are genuine, and if the document is admissible in evidence, the claim thereunder would not be barred by limitation. This position was conceded on behalf of the appellant by learned Counsel Mr. A.B.N. Sinha. The first point for consideration, therefore, is, if the memorandum (Ext. 3) and the endorsement of payment on its back, said to have been made by the appellant in his own pen, are genuine.
The learned Subordinate Judge, after having carefully considered all the evidence, has answered the question in the affirmative. The execution of the memorandum was admitted by the defendant-appellant, inasmuch as he owned the signature appearing thereon, but he did not accept the body of it to have been written by him. The learned Subordinate Judge found the entire writing of the body and the signature port on to be exactly similar. There was also the evidence of Babulal Masaria (P. W. 4) and Mathura Prasad Kothariwal (P. W. 12), who deposed that the memorandum had been written and signed by the appellant in his own pen. The document had been written on a paper which bore in print the name of the appellant. No explanation was given on his behalf how his name came to be printed on the document which, according to his admission, bore at least his signature. The learned Subordinate Judge was quite right in holding that the document had been executed by him out of his own free will.
44. As for the endorsement (Ext. 13), appearing on the back of the memorandum (Ext. 3) the appellant denied that it had been written by him. But Mathura Prasad Kothariwal (P. W. 12), who was the manager of a firm in which the plaintiff was also a partner deposed that the appellant paid Rs. 1000/- by a cheque on the Central Bank, the cheque having been drawn by the appellant's father in the name of Jai Bhagat Stores, which was a partnership business of the appellant and his father. He further deposed that the appellant made an endorsement of payment (Ext. 13) in his own pen on the back of the memorandum. The cheque was marked as Ext. 8, and the payment by it was not denied on behalf of the appellant.
It was further supported by an entry, Ext. 1, in the Ledger book ox the Central Bank. The endorsement, Ext. 13, is dated 2-4-54, and the cheque, Ext. 8, is also dated 2-4-34. There was deott of that amount in the account of Jai Bharat Stores belonging to the appellant and his father. The learned Subordinate Judge, after considering, all the evidence on the point came to the conclusion that the endorsement was made by the appellant on the back of the memorandum after payment of a sum of Rs. 1000/-. I see no reason to differ from him. I hold, therefore, that the memorandum (Ext. 3) and the endorsement (Ext. 13) thereon are both genuine, having been made by the appellant in his own pen. As a matter of fact, the genuineness of the memorandum and the endorsement thereon were not seriously challenged before me.
45. The next question is, if the document is admissible in evidence, it has been argued that since it is a promissory note within the meaning of Section 4 of the Negotiable instruments Act, 1881, as also under Section 2(22) of the Indian Stamp Act, 1899, and not having been stamped, it would not be admissible in evidence as provided in Section 35 of the Indian Stamp Act. The question for consideration is, whether the memorandum, Ext. 3, is a promissory note. It is to the following effect:
"Compliments from Malmbir Pd. Mawandia to Bhai Jai Narain Lall. I had taken your house at Naya Bazar on rent for Sri Narayani Matri Sew Sadan Hospital. A sum of Rs. 4500/- (Rupees four thousand five hundred) is due to you by me as rent up to 30th September, 1953, I shall certainly pay to you the sum of Rs. 4500/- at the rate of Rs. 1000/- at every six months. If I fail to do so, I shall be liable to pay interest thereon at the rate of -/9/-% p.m. from this date and in that case the Kistbandi shall cease. When I shall pay the last instalment towards full payment you shall have returned this chithi to me.
Dated (torn) October, 1953. Sd- Mahabir Pd. Mawandia."
46. A "promissory note" as defined in Section 4 of the Negotiable Instruments Act, 'is an instrument in writing (not being banknote or a currency-note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument."
Section 5 further provides that a promise or order to pay is not conditional within the meaning of Section 4 because of the fact that any amount is payable in instalments, or because the balance unpaid becomes due in default of payment of any instalment. Section 2(22) of the Indian Stamp Act defines "Promissory note" as meaning "a promissory note as defined by the Negotiable Instruments Act, 1881; it also includes a note promising the payment of any sum of money out of any particular fund which may or may not be available, or upon any condition or contingency which may or may not be performed or happen;" Section 35 of the Indian Stamp Act provides as follows:
"No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped: Provided that:
(a) any such instrument not being an instrument chargeable with a duty not exceeding ten naye paise only, or a bill of exchange or promissory note, shall, subject to all just exceptions, be admitted in evidence on payment of the duty with which the same is chargeable, * * *"
It follows that any other kind of instrument can be taken into evidence, if a duty payable on a particular document is paid. But an instrument chargeable with duty not exceeding ten naye paise, or a bill of exchange or promissory note cannot be admitted into evidence even on payment of necessary duty. There is no dispute about this principle. The only question is, whether the document in question answers to the definition of "promissory note", or it was a simple acknowledgment of past liability with a promise to pay, and if it falls in the latter class of documents, it would be admissible in evidence with payment of necessary duty with penalty. As a matter of fact, the document has already been impounded and penalty charged as due on an acknowledgment.
Learned Counsel for the appellant argued that the document was a promissory note. It would appear from the wordings of the document in question that it acknowledged past liability to the tune of Rs. 4500/- on account of rent due up to a particular date, and the promisor undertook to pay the sum in different instalments commencing from a particular date. It also provided that on failure to pay the instalments in time, the promisor would be liable to pay interest at a particular rate, otherwise in the event of regular payment of instalments, interest was not payable. It was, thus, not an "unconditional undertaking" to pay the debt with future interest. One of the tests of a promissory note is that it should be negotiable. The memorandum, Ext. 3, would show that it was, after full payment, to be returned to the promisor, that is the appellant, and, therefore, it was not negotiable. In this view also, it cannot be treated as a promissory note.
It will appear that the document was hedged in conditions, the important one of them being that in the event of failure of payment of any instalment in time, interest will be chargeable. It is particularly this clause and the non-negotiability of the document which would take out the document from the purview of the definition of "promissory note", and the decision of the Single Judge, Bennet, J., in Lakhmi Das v. Lakho Ram, AIR 1935 All 410 would not govern this case. In that case, the debt was payable in instalment with future interest without any other condition and, therefore, it was held that the document would come within the definition of "promissory note". As it. has been held above, the document, in my opinion, would not fall within the definition of "promissory note", but it answers to an acknowledgment of past liability with promise to pay the same in instalments, and with interest, if any instalment was not paid in time.
47. The question, however, for the purpose of this case is only academic, because it appears that the document was taken into evidence by the learned trial Court without any objection having been raised on behalf of the appellant at the time of its admission. Section 36 of the Stamp Act provides that if "an instrument has been admitted in evidence, such admission shall not, except as provided in Section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped."
No objection having been raised to the admissibility of the document, the appellant is estopped from challenging its admissibility now in appeal. In support of this view, the decisions in Krishna Kumar v. Mt. Jagpati Kuer, AIR 1937 Pat 73, Jamuna Kuer v. Ramagya Kuer, AIR 1953 Pat 209 Sm. Khemi Mahatani v. Charan Napit, AIR 1953 Pat 365 V. Annamalai Chettiar v. Veerappa Chettiar, (S) AIR 1956 SC 12, Mt. Bittan Bibi v. Kuntu Lal, AIR 1952 All 996, Ratan Lal v. Daudas, AIR 1954 Raj 173, Samirmall v. Gendalal, (S) AIR 1955 Madh-B. 81 and AIR 1935 All 410 relied upon on behalf of the appellant himself earlier, are some of the authorities on the point.
In AIR 1937 Pat 73, Courtney Terrel, C. J., with whom James, J. agreed, quoted from the judgment of Sir George Rankin in Nirode Basini v. Sital Chandra, 128 Ind Cas 187: (AIR 1930 Cal 577 (I)) as follows:
"On the merits of the appeal, it appears to me that Section 36, Stamp Act, makes it reasonably clear that the instrument having once been admitted in evidence is not to be called in question at any stage of the same suit. The Special Judge has seen this section but has thought to avoid the consequence of it by taking notice of an affidavit in which it is said that the tenure-holders did object when the document was tendered and that there was a discussion as to its admissibility. The learned Judge has entirely failed, to see that, under Section 36, it matters nothing whether it was wrongly admitted or rightly admitted or admitted without objection or after hearing or without hearing such objection. These stamp matters are really no concern of the parties, and if the objection was taken at the time when the record was made up by the trial court, there it might be rejected; if not, the matter stopped there."
Learned Counsel for the appellant, Mr. A.B.N. Sinha, relying on the decision of a Single Judge in Yerri Swami v. M. Chinna Vannurappa, AIR 1949 Mad 300 has contended that where the defendant had raised a specific plea in his written statement that the promissory note on which the suit had been based was inadmissible in evidence being insufficiently stamped, there was no point in his raising an objection to its admissibility at the time of trial. This was, however, a case in which a specific plea had been taken in the written statement regarding the admissibility of the promissory note on which the suit had been based. But in the instant case, no such specific plea had been taken in the written statement of the appellant that the memorandum in question was a promissory note, and that it was not admitted in evidence, as not being duly stamped. At the time of trial also, no objection bad been raised as to its admissibility, and, therefore, its admissibility cannot be questioned now.
48. Mr. A.B.N. Sinha has, however, contended that the admissibility of a document is different from acting on it. Section 35 of the Stamp Act provides that the document in question "shall not be acted upon" although it might be admitted in evidence. He has further contended that none of the cases relied on the respondent's behalf took into consideration this aspect of the question. But 1 think there is no substance in this contention. Once a document is admitted into evidence, it is presumed that it is admitted for being "acted upon"; otherwise, there is no point in admitting a document and then saying that it will not be 'acted upon'. Section 36 of the Stamp Act as referred to before, is quite clear that once an instrument has been admitted into evidence, such admission shall not be called in question, and, it, therefore, follows that once a document has been admitted, it will be naturally acted upon, subject to its relevancy.
49. The memorandum, Ext. 3, establishes the liability of the appellant for the amount due thereunder, and the endorsement, Ext. 13, on the back of it saves the limitation for the entire amount due under it.
50. The claim under schedule III for Rs. 229/-and odd on account of electric charges and excess water Lax, which the plaintiff-respondent had to pay on behalf of the defendant-appellant, however, does not seem to be maintainable at all. According to the plaintiff's own case, the electric charges and the excess water tax were payable by the defendant to the appropriate departments, and they were not payable by the plaintiff. If the defendant-appellant failed to pay them, and the plaintiff-respondent paid the same on the appellant's behalf, it was a gratuitous payment. There was no obligation on the plaintiff-respondent to have paid the same on the defendant-appellant's behalf. It was for the department concerned to have realised the dues from the appellant. In this view of the matter, the plaintiff cannot recover the amount from the appellant in this case.
51. In the result, the plaintiff-respondent is entitled to get the full claim under section 1, and in part under schedule II, only the claim for interest being Rs. 539/7/9 is disallowed. The claim under Schedule III for Rs. 229-10-3 is completely disallowed.
52. The appellant in running the hospital for the benefit of the public at large might have been under a bona fide impression, though wrongly, that he could not be personally liable for the rent of the building in which the hospital was located, and also for the reason that the respondent's claim has not been allowed in full, I award no costs of this appeal to the respondent, and would reduce in the costs of the lower court the pleader's fee. I disallow also for both the Courts pendente lite interest as also future interest until six months hence, whereafter interest at six per cent per annum shall be payable unless, in the meantime, the decree has been satisfied.
53. In the result, the judgment and decree of the trial court is modified as indicated above, and with the above modifications, the appeal is dismissed.