Abdul Muhammad Khan vs Mahananda Upadhyaya

Kulwant Sahay, J.—This appeal by the plaintiff arises out of a suit for recovery of money lent to the defendant. The plaintiff''s case was that he lent a sum of Rs. 434 to the defendant under four hand notes executed respectively on 16th February 1924, 19th February 1924, 11th August 1924 and 25th August 1924. His case further was that in May 1925, there was an adjustment of accounts and a sum of Rs. 770 was found due under the four hand notes on account of principal and interest; a payment of Rs. 300 was made and after remission of a sum of Rs. 20, a fresh note was executed by the defendant on 16th May 1925, for the sum of Rs. 450. The plaintiff further states that on 15th July 1925, there was a fresh adjustment of account when a sum of Rs. 56-4-0 was found due on account of interest on the hand note of 16th May 1925; a fresh advance of Rs. 44 was made and after remitting a sum of four annas a fresh hand note was executed on 15th July 1925 for a sum of Rs. 550. This hand note however was insufficiently stamped. The plaintiff accordingly instituted the suit not on the hand note of 15th July 1925, which was inadmissible in evidence, but upon the transactions of the loan set out above. The defence of the defendant was a denial of the first two hand notes of 16th February 1924 and 19th February 1924. He admitted execution of the hand notes of 11th August 1924 and 25th August 1924, but alleged payment thereof. The defendant further admitted the execution of the hand note of 16th May 1925, but alleged that this was for a fresh advance and not on account of the previous debts which had been repaid. The defendant further admitted the execution of the last hand note of 15th July 1925, but his case again was that this was for a fresh advance and not for the previous debts which had all been paid off.

The learned Munsif held that the plaintiff''s story was substantially correct and although the last hand note could not be taken in evidence on account of its being insufficiently stamped, yet the plaintiff was entitled to a decree upon the loan which carried with it an implied contract to repay. The Munsif however reopened the whole transaction and took an account on account of the principal and interest due on the transactions as they were originally entered into and after reducing the rate of interest from one anna in, the rupee per month to 24 per cent per annum he gave a decree to the plaintiff for a sum of Rs. 445-11-6. On appeal to the learned Subordinate Judge it has been found that the plaintiff''s version as regards the several transactions was substantially correct, but the learned Subordinate Judge has dismissed the suit on a finding that the hand note of 15th July 1925, being inadmissible, the suit could not be entertained. He has referred to the decision of this Court in Dhaneshwar Sahu Vs. Ramrup Gir and Others, and is of opinion that this decision made an inroad into the salutary provisions of Section 91, Evidence Act, and that further inroads are to be deprecated; and he is of opinion that care should be taken that the principle that has been introduced by the decision in Dhaneshwar Sahu Vs. Ramrup Gir and Others, may not be extended any further. The learned Subordinate Judge seems to be clearly wrong in thinking that the decision in Dhaneshwar Sahu Vs. Ramrup Gir and Others, made any inroad into the salutary provisions of Section 91, Evidence Act.

It is a well-established principle of law that every loan carries with it a contract to repay and if a hand note, which forms the evidence of the transaction, cannot be accepted in evidence for some reason or other, there is nothing in law to prevent the plaintiff from giving other evidence as regards the loan, and if he can satisfy the Court as regards the truth of his version there is no reason why a decree should not be made in favour of the plaintiff. In this case apart from the allegations made by the plaintiff, even if the defendant''s case be accepted as correct he cannot escape liability. His case was that all the previous loans had been paid off and that the loan evidenced by the inadmissible hand note of 15th July 1925, was a fresh advance made on that date and his case was that that loan had been paid off. Both the Courts below have found that this plea of payment has not been established. Upon that alone the plaintiff is entitled to a decree. Having regard to the fact that both the Courts below have found that the plaintiff''s story is substantially correct, there is no reason why the decree made by the Munsif should be disturbed.

There is however one point which has to be considered. The rate of interest as stated in the hand notes is excessive. It was at the rate of one anna per rupee per month. The learned Munsif has reduced it to 24 per cent per annum. I am of opinion that this should be further reduced to 12 per cent per annum. With this modification the decree of the Munsif will be restored and that of the Subordinate Judge set aside. The plaintiff will be entitled to his costs in this Court as well as in the Courts below.

Jwala Prasad, J.

I agree.