Kerala High Court
Krishnankutty vs Velayudhan on 12 January, 2005
Equivalent citations: AIR 2005 KERALA 124, 2006 (1) AKAR (NOC) 150 (KER), (2005) 32 ALLINDCAS 410 (KER), (2005) 2 KER LT 854, ILR(KER) 2005 (1) KER 291, 2005 (32) ALLINDCAS 410, (2006) 1 BANKJ 603, (2005) 2 CIVILCOURTC 610, (2005) 1 KER LJ 470, (2005) 3 BANKCAS 430, (2005) 4 ALLCRILR 343, (2005) 4 CIVLJ 708, (2006) 1 BANKCLR 814
Author: V. Ramkumar
Bench: V. Ramkumar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
AS No. 126 of 1994(E)
1. KRISHNANKUTTY
... Petitioner
Vs
1. VELAYUDHAN
... Respondent
For Petitioner :SRI.V.SIVASWAMY
For Respondent :SRI.V.GIRI
Coram
Dated : 12/01/2005
O R D E R
.PL 58 .SP 2 V. RAMKUMAR, J.@@ j
---------------------------@@ j A.S.NO.126 OF 1994 - A@@ j
---------------------------@@ j Dt.JANUARY 12, 2005. @@ j JUDGMENT@@ jCCCCCCCC ((HDR 0 AS 126/94 -A #@@ j )) .HE 1 The plaintiff in OS 262/91 on the file of the Sub Court, Palakkad, is the appellant in this appeal. The said suit filed by the respondents herein was one for realisation of a sum of Rs.30,000/- with interest thereon.
2. The case of the plaintiff can be summarised as follows:-
Agreeing to repay with 18% interest per annum on demand when needed by the plaintiff or his order, a sum of Rs.30,000/- was received in cash by the defendants for their business and the defendants executed Ext.A1 promissory note in the handwriting of the 2nd defendant on 14.1.1989 in favour of the plaintiff. Even after repeated demands for the said amount together with interest directly and through Ext.A2 lawyer notice dt. 23.5.1991, the defendants have failed to pay the same, but instead caused the lawyer notice sent in Ext.A3 cover to be returned unserved. Hence the suit.
3. Defendants 1 and 2, who are father and son respectively, resisted the suit by filing separate written statements. The 1st defendant contended inter alia as follows:-
The 1st defendant has not signed the suit promissory note, nor has he received any consideration thereunder. The purported signature of this defendant in the promissory note is a forgery. Even if the 2nd defendant has executed a promissory note, it has been rendered invalid by reason of material alteration and the suit is liable to be dismissed with costs. The statement in the promissory note that the money was borrowed for the purpose of trade of the defendants is incorrect since this defendant has never conducted any trade. This defendant has not received any lawyer notice from the plaintiff. The alleged return of the notice might have been stagemanaged by the plaintiff so as to avoid a denial of the same by this defendant. This defendant is not liable to pay the suit amount and there has been no financial transactions or dealings between this defendant and the plaintiff.
4. The 2nd defendant in his written statement raised the following contentions:-
The plaint allegation that the defendants borrowed Rs.30,000/- in cash for the purpose of their business on the terms set out therein, is false. This defendant had sought a loan of Rs.15000/- from the plaintiff for a temporary need. The plaintiff insisted that if the said loan was to be paid, both the defendants will have to execute a joint promissory note for Rs.30,000/- and, as narrated by the plaintiff, this defendant wrote down a promissory note and signed the same and handed over it to the plaintiff. When the plaintiff made it clear that the loan amount would be given only if the 1st defendant also affixed his signature to the promissory note, this defendant agreed to fetch the 1st defendant. This defendant thereafter informed the 1st defendant about the stipulation by the plaintiff. But the 1st defendant refused to sign the document. On the next day itself this defendant informed the plaintiff about the unwillingness of the 1st defendant to sign the promissory note. This was what transpired in the matter. The 1st defendant has never gone to the plaintiff, nor has he affixed his signature to the promissory note as alleged. At the time when this defendant affixed his signature to the promissory note, no stamps were affixed to the same. This defendant has not received any amount by way of loan from the plaintiff. Neither this defendant nor the 1st defendant has any trade or business. Since the promissory note was an incomplete one in which the 1st defendant had not put his signature also, this defendant did not consider it necessary to get back the document from the plaintiff. The promissory note relied on by the plaintiff is a fraudulent one amounting to forgery. It is also invalid due to material alteration. It is not supported by consideration. Since this defendant has not borrowed any amount from the plaintiff, this defendant is not liable to pay any amount to the plaintiff. This defendant has not received any notice, nor has he sent back any such notice as alleged. The plaintiff has no cause of action against this defendant and the suit is liable to be dismissed with costs of this defendant.
5. The court below framed four issues for trial. On the side of the plaintiff two witnesses were examined as P.Ws.1 and 2 of whom P.W.1 is the plaintiff and P.W.2 is a person who allegedly accompanied the 2nd defendant when the latter approached the plaintiff for availing a loan. Three documents were marked as Exts.A1 to A3 on the side of the plaintiff. Defendants 1 and 2 were examined as D.Ws.1 and 2 respectively. Ext.X1 is the photocopy of the thumb impression register summoned at the instance of the plaintiff from the Sub Registry Office.
6. The learned Sub Judge, after trial, as per judgment and decree dt. 6.12.1993 dismissed the suit for the reason that Ext.A1 promissory note is incomplete and also defective due to material alteration. It is the said decree which is assailed in this appeal by the plaintiff.
7. I heard Adv.Sri V.V.Asokan, the learned counsel appearing for the appellant/plaintiff and Adv. Sri N.Subramonian, the learned counsel appearing for respondents 3 to 8 who are the other legal representatives of the 1st defendant and Adv. Sri V.Giri, the learned counsel appearing for the 2nd respondent/2nd defendant.
8. Adv. Sri V.V.Asokan made the following submissions before me in support of the appeal:-
This is a case in which Ext.A1 promissory note is admittedly in the handwriting of the 2nd defendant who has also confessed that he has affixed his signature thereto. Even though both the defendants have contended that Ext.A1 promissory note is invalid due to material alteration for the reason that the signature of the 1st defendant appearing in Ext.A1 promissory note is a forgery, the finding of the court below is that the forgery of the 1st defendant's signature might have been committed by the 2nd defendant. Since the 2nd defendant is a party to the document, he cannot take advantage of his own wrong to set up the plea that Ext.A1 is bad due to material alteration within the meaning of sec.87 of the Negotiable Instruments Act, 1881 (vide Madam Pillai@@ AAAAAAAAAAAAAAAAAAAA v. Adhinarayana Pillai - AIR 1925 Madras 929). The@@ AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA defendants initially filed a joint vakalath. Thereafter they engaged two separate lawyers to develop their defence. Even if this court upholds the finding of the lower court regarding material alteration, the forgery having been committed by the 2nd defendant, a decree should have been given atlest against the 2nd defendant, who admittedly executed the promissory note which was also admittedly prepared in his handwriting.
9. I am afraid that I cannot agree with the above submissions. This is not a case where the plaint allegations are admitted in toto. The 2nd defendant has narrated in his written statement the circumstances under which he happened to prepare Ext.A1 promissory note in his own handwriting as dictated to him by the plaintiff. According to the 2nd defendant, the amount which he wanted to borrow from the plaintiff was only Rs.15000/-, but the plaintiff insisted on a joint promissory note by the father and son and that too for Rs.30,000/-. The further case of the 2nd defendant is that the plaintiff was willing to part with the money only if the 1st defendant also affixed his signature to the promissory note and he therefore handed over the incomplete document to the plaintiff and went to fetch the 1st defendant who was, however, unwilling to go over to the plaintiff or affix his signature to the document. The 2nd defendant also offers an explanation for not receiving back the document from the plaintiff since the same was an incomplete one. When examined as D.W.2, the 2nd defendant has stuck to the above version. It was not seriously challenged in cross-examination also. The rights and liabilities under a negotiable instrument arise only if what is delivered under sec.46 of the Negotiable Instruments Act is a completed negotiable instrument (see Damji Hirji v. Mahomedalli Essabhoy AIR@@ AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 1939 Bombay 461). Going by the plea raised by the 2nd@@ AAAAAAAAAAAAAAAAA defendant and his deposition from the witness box, what was handed over by him to the plaintiff was an incomplete document. It did not contain the signature of the 1st defendant. There is no dispute that the admitted signature of the 2nd defendant is not on the revenue stamps affixed thereto, but appears above the stamps. Even the plaintiff examined as P.W.1 has stated that the 2nd defendant signed the document after preparing the same and when the plaintiff asked him as to why he put his signature without affixing the stamps, the 2nd defendant told him that he forgot about the same and took the stamps from his pocket and affixed the same beside his signature. But actually the stamps are seen affixed below the signature of the 2nd defendant. The evidence of P.W.2 is also to the effect that when the 2nd defendant put his signature, Ext.A1 did not contain the stamps or the signature of the 1st defendant on those stamps. No doubt, both P.Ws.1 and 2 would say that after the 2nd defendant signed the instrument, the stamps were affixed and the 1st defendant signed on the stamps. This part of their evidence is taken strong exception to by D.Ws.1 and 2. Thus, what the 2nd defendant signed was an unstamped instrument styled as a joint promissory note containing a joint undertaking by the two defendants to return the sum of Rs.30,000/-.
10. The case of the plaintiff regarding the place and the manner of execution of the promissory note is also materially discrepant. Going by the apparent tenor of Ext.A1, the undertaking is to repay the money with interest to the plaintiff residing at Pattancherry village in Chittur taluk of Palakkad District. In the plaint also what is alleged in paragraph 6 is that the cause of action took place at Pattancherry. But what P.W.1 would categorically say is that both the defendants came in the company of P.W.2 to his house at Chandranagar in Palakkad town where he was then residing and Pattancherry is his permanent address. The evidence of P.W.2 is also to the effect that he went along with defendants 1 and 2 to the house of the plaintiff at Chandranagar.
11. The signature of the 1st defendant over the revenue stamp affixed in Ext.A1 materially differs from his admitted signature found in Ext.X1 thump impression register summoned from the office of the Sub Registrar. In fact, there is no serious challenge against the finding that the signature of the 1st defendant appearing in Ext.A1 promissory note is a forgery. If P.W.1 is to be believed, both the 2nd defendant as well as the 1st defendant signed in his presence at the time of preparing the document itself. This cannot evidently be true since the signature of the 1st defendant is a forgery. It is not known as to how the trial court came to the conclusion that the signature of the 1st defendant in Ext.A1 might have been forged by the 2nd defendant. Both P.Ws.1 and 2 have no case that after the 2nd defendant put the signature in Ext.A1, the document was handed over to the 2nd defendant for getting the signature of the 1st defendant. On the contrary, the definite case pleaded by both the 1st and the 2nd defendants is that it was the plaintiff who forged the signature of the 1st defendant. If so, the plaintiff cannot take advantage of the observation by the trial court to contend for the position that in a case where the material alteration is not committed by the plaintiff, but by the 2nd defendant, the defence of material alteration should not be permitted to be raised by the defendants. Similarly, the plaintiff cannot claim a decree against the 2nd defendant alone on the basis of the admission by the 2nd defendant of his signature in Ext.A1 promissory note which is a joint one imposing a joint liability and which contains the forged signature of the 1st defendant. The decision reported in AIR 1925 Madras 929 (supra) was refused to be@@ AAAAAAAAAAAAAAAAAAA followed in Santhu Mohideen Pillai v. Jamaludin Labbai@@ AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AIR 1928 Madras 1092 which was, in turn, approved in@@ AAAAAAAAAAAAAAAAAAAAAAA Kumaraswami Desikar v. Dhiraviam Pillai - AIR 1935@@ AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA Madras 40 wherein it is held as follows:-@@ AAAAAAAAA "The suit was laid on a promissory note said to@@ i have been executed by the two defendants. Defendant 1 admitted execution but pleaded that he was not liable on the note. Defendant 2 denied execution and the lower Court found that his signature was forged. A decree has been granted against defendant 1 and the present revision petition is filed against that decree. The general trend of decisions in this Court is that a decree cannot be given on a document which is found to be a forgery. The earliest case here is is an unreported ruling of Miller, J., in C.R.P.No.601 of 1912, where he followed 33 Cal
812. This case was followed in 1914 Mad 369 by Sadasiva Ayyar, J., and Wallace, J., in 1928 Mad 1092 followed these two rulings and refused to follow the ruling of Devadoss, J., in 1925 Mad
929. There is one other reported case of this Court in favour of the respondent 1915 Mad 425. Some distinction was attempted between some of these cases and the present by the fact that in some of these cases execution by one defendant was to be conditional on the execution by the defendant whose signature was found a forgery. That does not however apply to C.R.P.No.601 of 1912 where there was no such condition about execution. Also in 1914 Mad 369, Sadasiva Ayyar, J., decided the question on general principles as well as on the particular facts of the case. As to the argument founded on defendant 1's admitting execution, I am unable to see how from a legal point of view there is any difference between an execution which is admitted and an execution which is denied but found on the evidence to be true.
The English authorities are clear on the@@ i point 98 ER 1120 and (1892) 2 QB 724. The principle upon which such suits are dismissed is not the interest of the party who is found to have executed the document but the interests of justice in general. They rest on the principle "Ex turpi causa non oritur actio." There is no reason that I can see why this principle should not be applied in India. If anything, I should consider it is even more needed here than in England. The revision petition must be allowed and the suit be dismissed against defendant 1 also."
Thus, courts do not aid or become instrumental in enforcing transactions ex turpi causa (arising from a base cause). In view of the position stated above, the dismissal of the suit by the court below is only to be confirmed.
In the result, this appeal is not entitled to succeed and the same is dismissed, but without costs.
.JN (V. RAMKUMAR) (JUDGE) mt/-
V. RAMKUMAR, J.
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A.S.No. 126 of 1994 - A JUDGMENT
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12.1.2005