Karnataka High Court
H.S. Srinivasa vs Girijamma And Ors. on 27 March, 2006
Equivalent citations: I(2007)BC92, 2006(4)KARLJ10
Author: Ajit J. Gunjal
Bench: Ajit J. Gunjal
ORDER Ajit J. Gunjal, J.
1. The petitioner is the plaintiff. He questions the order dated 29.08.2001 passed by the learned trial Judge on LA. XI in O.S. No. 213/96, a copy of which is produced at Annexure-B.
2. During the course of this order, the parties would be referred to as per their rankings in the trial Court.
3. The matter arises in the following manner.
One Janthakal Rachappa, the husband of defendant-1 and father of defendants 2 to 4 and one H.B. Padmanabha had approached the plaintiff-petitioner for the purpose of constructing and starting a business of bakery. An agreement was executed by late Janthakal Rachappa and H.B. Padmanabha in favour of the plaintiff on 29.9.1993. Under the said agreement late Rachappa had agreed to let out the building proposed to be constructed on a monthly rent of Rs. 7001/-. On the same day, late Rachappa had received an advance amount of Rs. 51,000/- by cash. It is the case of the plaintiff that late Sri Rachappa borrowed a sum of Rs. one lakh each on two separate occassions from him and he has signed and delivered two promissory notes to the plaintiff. In one promissory note the name of the promisor and promisee was left blank and the interest column also was left blank. But however the amount borrowed i.e., Rs. one lakh was mentioned in words. The said promissory note was also signed by late Rachappa on two revenue stamps. In Another pronote also the name of the promissor and promisee are left, blank and the amount borrowed was mentioned as Rs. one lakh, which is written in words. Interest has also been mentioned at 2% per month per Rs. 100. The said pronote is also signed by late Rachappa on two revenue stamps.
4. Suffice it to say, the plaintiff filed a suit in O.S. No. 128/94 for enforcement of the said agreement dated 29.9.1993. In the said suit the two blank promissory notes were produced. The promissory notes were kept in safe custody. Suffice it to say, an application I.A. 7 was filed in O.S. No. 128/94 to complete the two promissory notes as contemplated under Section 20 of the Negotiable Instruments Act. But, however, the learned Trial Judge has declined to complete the said inchoate instruments and has disposed of I.A.7 with an observation that it is open for the plaintiff to move the court in a suit to be filed by him for recovery of money to fill up the blanks left in the promissory notes. In these circumstances, the present I.A. 11 is filed in O.S. 213/ 96, which is filed for recovery of money with interest. The learned Trail Judge, as stated earlier, has rejected the said application on the ground that it is not permissible for the plaintiff to fill in the blanks of incomplete or blank promissory notes as it would be hit by Section 93 of the Evidence Act. The learned Trail Judge was also of the opinion that it is impermissible for the plaintiff to complete or fill in the blanks of the promissory notes.
5. Mr. K. Ragahavendra Rao, Learned Counsel appearing for the plaintiff would strenuously contend that the learned Trial Judge was clearly in error in rejecting the said appliction. He submits that under Section 20 of the Negotiable instruments Act it is always open for the holder of the said document, namely, the promissory notes, to complete and fill in the blanks of the said promissory notes. In the circumstances, he submits that the Learned Trial Judge was clearly in error in rejecting the application.
6. Mr. Krishna Dixit, Learned Counsel appearing for the defendants would contend that even assuming that under Section 20 of the Negotiable Instruments Act it is permissible the holder of the said documents to complete or fill in the blanks, but that could be done only in a case where the execution of the document is admitted. When the execution of the document is denied the question of invoking or taking recourse to Section 20 of the Negotiable Instruments Act is not at all permissible.
7. 1 have given my anxious consideration to the rival submission of the Learned Counsel for the parties.
8. It is useful to extract the relevant provisions, namely, Section 20 of the Negotiable Instruments Act, which would read as under:
20. Inchoate stamped instruments-Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount: Provided that no person other than a holder in due course shall recover from the person delivering the instrument, anything in excess of the amount intended by him to be paid thereunder.
9. The said provision imposes a serious liability upon person who allows an incomplete instruments to go out in the world and therefore must be strictly construed. A reading of Section 20 of the Act would contemplate that it authorises a person to complete the inchoate instrument delivered to him by filing the blanks.
10. Section 20 of the Negotiable Instruments Act authorises that where promissory note is signed and delivered to another person on a properly stamped and either left blank or an incomplete document, the person whom the promissory note delivered will have prima facie authority to make the document complete. In the circumstances, if the Section were to be applied to the case on hand, certainly the plaintiff will have the authority to fill in his name. The plaintiff now wants to exercise his powers under Section 20 of the Act. But however the question is when the original executant of the said document is not alive whether the death of the executant would affect the right. It is to be noticed that the right is a statutory one and also coupled with interest. The death of a person giving the authority cannot affect the right. In fact in the case of Glenie v. Bruce Smith, ((1908) I KB 263) put the object and intent in an inimitable language, which is as follows:
The logical order of operations with regard to a bill is, no doubt, that the bill should be first filled up, then that it should be signed by the drawer, then that it should be accepted, then it should be negotiated, and then that it should be indorsed by the persons who become successively holders; but it is common knowledge that parties very often vary, in a most substantial manner. The logical order of those proceedings and Section 20 of the Bills of Exchange Act is intended to deal with those cases.
11. It is useful to refer to the observations made in Halsbury's Laws of England, Vol-4, under caption "Bills of Exchange and other Negotiable Instruments."
The delivery by the signer of a simple signature upon a blank paper in order that the paper may be converted into a bill or note operates as a prima facie authority to fill the paper up as a complete instrument for any amount, using the signature for that of the drawer, acceptor, maker, or indorser. A blank acceptance may be converted into a complete instrument after the death of the acceptor, and this is the case even where the party to whom the blank acceptance was delivered also dies, if his administrator inserts his own name as drawer.
In Chalmers on Bills of Exchange, 13th Edition, under the heading "Inchoate Instruments or blank signatures", it is stated thus:
Where a simple signature on a blank stamped paper is delivered by the signer in order that it may be converted into a bill, it operates as a prima facie authority to fill it up as a complete bill for any amount the stamp will cover, using the signature for that of the drawer, or the acceptor, or an indorser, and, on like manner, when a bill is wanting in any material particular, the person in possession of it has a prima facie authority to fill up the omission in any way he thinks fit.
12. A reading of Section 20 of the Act which is extracted above reveals that the words used are 'either wholly blank or having written therein an incomplete negotiable instrument'. The instrument may be wholly blank or incomplete in particular in either case, the holder has the authority to make or complete the instrument as a negotiable a one. The authority implied by a signature to a blank instrument is so wide that the party so signing is bound to be a holder in due course. Promissory notes are often executed in the name of the payer and left unfilled to be afterwards filled by the actual holder, the object being to enable the owner to pass it off to another without incurring the responsibility as an endorser. Thus it is seen that the person in possession of an incomplete instalment in material particulars, has the authority prima facie to fill it up and thus the executant becomes liable to pay the amount due.
13. But however the question would be that would be the repercussion if the said execution is denied by the defendant. But however the said question need not be decided in the present proceedings in the circumstances of the case. The said question can be agitated by training an issue in a suit. At present justice requires that the petitioner should be allowed to fill in the name in the promissory note. This he can certainly be done in the presence of the Registrar at a time appointed by him for the purpose. But however this filling up of the name of the holder will not preclude the defendant from raising the contention that the promissory note is inadmissible in evidence for want of proper stamp or that there were circumstances in the case to show that the petitioner had no authority. The question relating to the admissibility of the document and the proof thereof are left open to be decided during the course of the trial.
14. In the circumstances, I am of the considered view that the Learned Trial Judge was not justified in rejecting the said application on the ground that under Section 93 of the Evidence Act, the filling up of blank is impermissible. This will also not amount to alteration of the material document as the statute itself provides for such a course to be adopted when the said document is left blank.
15. Consequently, the petition stands allowed. The impugned order dated 29.8.2001 at Annexure-B is set aside. The application I.A. XI filed by the plaintiff stands allowed, subject to the observations made during the course of this order. No costs.