Patna High Court
Hari Prasad Agarwal vs Nathuni Sahu on 1 March, 1961
Equivalent citations: AIR1962PAT165, AIR 1962 PATNA 165
JUDGMENT K. Ahmad, J.
1. The suit giving rise in this appeal way for recovery of Rs. 2,512/8/- including interest on the basis of a hand-note claimed to have been executed on 10-7-56 by the defendant in favour of the plaintiff. The defence put up at the trial was that though the endorsement made across the stamp was in the pen of the defendant hut that was done on a blank piece of paper and without any date in circumstances which shall he presently stated hereafter. In substance, therefore, the defendant denied either to have executed the hand-note or to have received any consideration thereunder and the explanation which was given in support of the claim that the endorsment was made on a blank piece of paper was that ". . . the plaintiff and his friend Nathuni Ram of Hussainabad proposed to the plaintiff to start a partnership business and also take one Tilak Prasad who is the brother of the plaintiff's bahnoi as one of the partners. The defendant agreed to this proposal but he had no ready money to contribute his quota of the capital investment in the said enterprise. The plaintiff then proposed that the defendant should execute a handnote for Rs. 2500/- representing his share of the capital investment in plaintiff's favour. This defendant accordingly made an endorsement on a blank paper in token of execution of a handnote on a nominal interest of 4 per cent. per annum. The contents of the handnote had not been written out and the endorsement was also not dated, the understanding being that the date will be put on the date of the registration of the partnership deed. Accordingly a stamp-paper of Rs. 21/8/- for the execution of a partnership deed was purchased by the plaintiff on that date, namely, 11-6-56. Subsequently on the refusal of Tilak Prasad the proposal for starting a partnership business fell through. Thereafter the defendant asked for the return of the paper containing the endorsement about the execution of the handnote but the plaintiff went on putting off the matter for sometimes and when hard pressed there was exchange of hot words between the parties, by which the plaintiff was annoyed and he, the plaintiff, in hot haste filed this suit by converting the blank paper with the defendant's endorsement into a handnote."
2. On these respective pleadings of the parties, the following issues were framed at the trial;
"1. Has the plaintiff any cause of action for the suit?
2. Did the plaintiff make any advance as alleged and is the handnote in suit genuine and for consideration?
3. To what relief if any, is the plaintiff entitled?"
Perhaps at the trial the plaintiff being under the impression that both the execution and the passing of consideration had been denied in defence, he entered the witness box first to prove both the points. The case of the plaintiff was that the amount of Rs. 2500/- as stipulated in the endorsement, referred to above, Bad been borrowed by the defendant in cash for payment of the price of commodities purchased by him on credit for his family business. Accordingly to prove this part of the case, the plaintiff gave evidence in regard to the purchase alleged to have been made by the defendant in regard to different commodities.
3. The trial Court on hearing the parties and on a consideration of the evidence brought; on the record decreed the suit but without costs As against that there was an appeal by the defendant and a cross-objection by the plaintiff. The lower appellate Court on hearing the parties has allowed the appeal and dismissed the suit and has further held that-
"Since I have found that the plaintiff': claim was false being based on a handnote which is not genuine the plaintiff is not entitled to the costs."
Thus, on that finding, the cross-objection has been dismissed. Now the plaintiff has come in second appeal to this Court.
4. Mr. Ashwini Kumar Sinha appearing for the plaintiff appellant has raised two contentions in support of this appeal. His first contention is that the endorsement as made across the stamp on the handnote read with Section 20 of the Negotiable Instruments Act amounts to an execution of the handnote as claimed by the plaintiff, and, therefore, on the basis of that admission, the Court below should have presumed that the consideration. thereunder did pass as provided in Section 118 of the said Act. Accordingly the learned advocate hast strongly challenged the approach made by the lower appellate Court where it has observed that-
"The presumption under Section 118 of the Negotiable Instruments Act does not properly arise in this case."
His second contention is that the entire discussion made by the lower appellate Court in paragraphs 14 to 21 of the judgment under appeal is based on facts and materials which should not have been taken into consideration by the lower appellate Court and which in the eye of law not having been pleaded in the plaint were inadmissible.
5. Now the endorsement, as made across the stamp, which is not denied to have been written by the defendant, reads:
"Sahi Nathuni Sahu Bald Chaturgun Sahu Sakin Hariharganj Hal Mokam Daltonganj Moblig 2500/-PACHIS Saw Rupaiya nagad wo yek must char ana Saikra Mahwari par lekar hand-note haza likh diya so Sahi Bakalam khas Tarikk 10-7-1956."
As to this admitted endowment, the submission made on behalf of the appellant is that it is a self-contained statement and by itself sufficient to constitute a promissory note as contemplated by Section 4 of the Negotiable Instruments Act and as such even if that instrument at its inception as contended by the defendant, was left incomplete or inchoate, that cannot be a ground for holding that in law it in any way ceased to be a promissory note as contemplated under the aforesaid Section 4. That being so, even if the inchoate stamp instrument was left blank, the plaintiff had the right in law to make or complete upon it a negotiable instrument for the amount specified therein. In support of this contention reliance has been placed by Mr. Sinha on the decision in Hridaysingh v. Kailash Singh, AIR 1940 Pat 377. In that case the endorsement as made across the stamp read:
"Sahi Kailash Singh ek bazar rupaiya qurza leli wo handnote likh deli so sahi bakalam khas."
The defence pleaded was that this endorsement had been made by the defendant on a blank piece of paper and it was intended only to operate as collateral security for a loan. In dealing with that part of the defence, in the light of Section 20 of the Negotiable Instruments Act, Agarwala, J. (as he then was) observed therein as follows:
"It is contended on behalf of the defendant-respondent that this action does not authorise the person to whom the stamped and signed paper is delivered to insert in it as payee the name of anyone but himself. In this connection reference was made to Section 4 of the Act which defines a promissory note as an instrument in writing (not being a bank note 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. The promissory note in question does, of course, promise to pay the sum mentioned unconditionally to a certain person namely, the plaintiff, and I can see nothing in that section which in any way curtails the general authority conferred by Section 20 on the person to whom a stamped and a signed paper is delivered to convert it into a negotiable instrument payable to any specified person. This appears also to be the law in England. In Cruchely v. Clarance, (1813) 2 M and Section 90, the facts were that a bill of exchange was drawn in Jamaica upon one Henry Man of London leaving a blank for the name of the payee. This bill was negotiated in England by one Bashan who endorsed it to plaintiff in payment of an old debt. The plaintiff inserted his own name as the payee. In a suit on the bill the defence was that the plaintiff had ho right to insert his own name in the bill. Lord Ellenborough C. J. disposed of this defence in the following words:
'As the defendant has chosen to send the bill into the world in this form, the world ought not to be deceived by his acts. The defendant by leaving the blank undertook to be answerable for it when filled up in the shape of a bill.' Bayley. J. said:
'The signing the bill in blank without the name of the payee wag an authority to a bona fide holder to insert the name.' Twomey J., in M. N. P. L. Firm v. Kirwan Gyan, 17 Ind Cas 915 (Burma) also held that-
'a payee can fill in a blank inchoate instrument and sue on it himself after filling it or endorsing it to some one.' This case was referred to by Dhavle, J. in Brijbhusan Pande v. Ramjanam Kuers 13 Pat LT 506: (AIR 1932 Pat 324). Mr. Sarjoo Prasad on behalf of the defendants-respondents contends that under Section 20, Negotiable Instruments Act Shamnandan Prasad Singh must be taken to have been authorised by the defendant only to execute an instrument of surely for the debt of Dhanukdhari. In my view, the defendant cannot be heard to challenge the authority of Shamnandan Prasad Singh on that particular ground in view of the endorsement which he himself wrote across the stamps on the instrument in which he described the document as a hand-note. He chose to send this instrument into the world in a form showing that the document was a handnote ana therefore he is answerable for it."
6. Mr. Das appearing for the respondent has contended that this authority is available in a ease only where the instrument is a promissory note and not only a handnote and that in order that an instrument may be a promissory note, it is necessary that there should be a clear unconditional undertaking made by the defendant to pay the amount stipulated thereunder and that independent of the consideration whether the fact of receiving the amount is admitted or not. In this case the learned counsel, therefore, has drawn my attention to the endorsement as already quoted above and on that basis has submitted that that endorsement does not fulfil the condition as provided in Section 4 of the Negotiable Instruments Act. That section provide? that-
"A 'promissory note' is an instrument in writing (not being a bank-note of 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."
Therefore, on the words and the language of this section the contention as submitted by Mr. Das is prima facie no doubt correct and It cannot be denied that in the endorsement of the present handnote there is no unconditional undertaking stated in so many words therein. There is, however, one thing which requires consideration namely, that the endorsement does include the words "handnote haza likh diya." The point, therefore, that next arises for consideration is whether these words as used in the endorsement do or do not amount to an unconditional undertaking for the payment back of the amount as stimulated in the handnote.' In my opinion, though it is true that the word 'handnote' has not been specifically in this connection used in the Negotiable Instruments Act but in the common and usual course of business an instrument like this is so well known and the implication arising therefrom so well, established that it is difficult to hold that the word 'handnote' as used in the endorsement was not implied to convey an unqualified undertaking as is necessary in the case of a promissory note. This is so is also established by the authority in Sagarmal v. Bhuthu Ram, AIR 1941 Pat 99. Therein Meredith, J. held: "A handnote is a promissory note."
That being so, I think there is no substance in the contention advanced by Mr. Das that in the endorsement as made in the present case there is no unconditional undertaking given for the payment of the loan and as such the instrument in suit is not a promissory note or that for that reason the provisions of law as laid down in Sections 20 and 118 of the Negotiable Instruments Act do not apply to the facts of the present case.
Mr. Das, however, has advanced an alternative argument as well and that part of his contention in this connection is that at the trial it was the plaintiff who had first given evidence and that both in support of execution and consideration, and, therefore, now it is too late for him to contend that the Court below should have disposed of the case on the principle of presumption as stated in Section 118 of the Negotiable Instruments Act. In support of this part of the submission made by Mr. Dasi, reliance has been placed on a Bench decision of the Allahabad High Court in Muhammad Shafi Khan v. Md. Moazzam Ali, AIR 1923 All 214. Therein the learned Judges in the concluding portion of the judgment observed as follows:
"We agree entirely with the views expressed in the two judgments, and, though it is undoubted that the onus does lie upon the defendant, in cases of this kind, to prove that no consideration was given, nevertheless, if a plaintiff when, as in this case, consideration was denied in the written statement, goes into the witness-box and if the result of his examination is such that he fails to establish the point which he set out to make, namely, that he gave the consideration and the Court is thus satisfied that he did not give the consideration which he alleges, the defendant can avail himself of that and has a right to a decree. This in no way, trenches upon the ordinary rule that the defendant must prove absence of consideration if that is his case."
Now in the present case there are certain facts which are either admitted or proved. They are that the date of the endorsement, as now found mentioned therein, is 10-7-56 and that it was only a day before, namely on 9-7-56, that the plaintiff had taken the moneylender's licence. Further it was only after about sixteen days, namely, on 26-7-56, that the present suit was brought for repayment of the amount claimed to have been borrowed under the instrument in dispute. Further, as already stated, the claim of the plaintiff was that the loan had been taken for the payment of the price of commodities purchased by the defendant on credit for his family business and in proof thereof had given exhaustive evidence. The lower appellate Court has dealt with all these materials elaborately. Further it has also weighed elaborately the evidence given by the defendant in support of his defences and finally has held that the admitted endorsement in the present case was made on 11-6-56 and not on 10-7-56 as now stated thereunder. Further in conclusion what it has held is in these words:
"Thus considering all the facts, the evidence and the circumstances and giving my best consideration over it I hold that the handnote in suit is not genuine and for consideration and the learned Munsif was not justified in decreeing the suit."
Therefore, even if it be conceded, as it has to be conceded on the facts of the present case, that there was originally the rule of presumption available to the plaintiff, it cannot be ignored that at least at the trial it was not relied upon and secondly the presumption, if any, that is provided in Section 118 of the Negotiable Instruments Act is only a rebuttable presumption. That being so, if on the facts as stated in the judgment under appeal, the lower appellate Court has come to the conclusion that in spite of the so-called admission made in the endorsement the hand-note has been proved to be not a genuine document and that thereunder no consideration passed, can it be said that this finding is not binding on this Court in second appeal, specially when the discussion made in support thereof and thereafter the finding arrived at are based on all the materials that are available on the record? In my opinion the answer has to be given in the negative. It has, however been argued as a second point in support of the appeal by Mr. Sinha that as a matter of fact the entire materials that are to be found discussed in paragraphs 14 to 21 are in law inadmissible as they have not been referred to in the plaint or the pleading, and, therefore, any conclusion drawn on the basis of those materials cannot be said to have been based on legal evidence. In my opinion, so far as this part of the contention advanced by Mr. Sinha is concerned, that is not at all correct for it is well-established rule of law that evidence is not to be pleaded in the plaint but has to be brought on the record in the course of the trial. Therefore, if the plaintiff had already pleaded in the plaint that the money advanced under the alleged handnote was taken for the payment of the price of commodities purchased by the defendant on credit for his family business, there way nothing wrong on the part of the plaintiff in giving evidence in support thereof nor the evidence so given can be said to be inadmissible in law as the same has not been pleaded in the plaint.
7. For these reasons I hold that though the contention as advanced by Mr. Sinha on the question of law is correct, but, on the findings as arrived at by the lower appellate Court, there is no escape from the conclusion that the handnote in suit is not a genuine document and that thereunder no consideration did pass. Accordingly the appeal is dismissed but in the circumstances, I think, there should be no order for costs.