J.N. Sahni vs The State of Madhya Bharat

Dixit, J.

1.(sic) revision petition by the Defendant arises out (sic) filed by the State of Madhya Bharat, as processor of the former Gwalior State, for the (sic) of Rs. 1,85,000/- together with interest (sic).

(sic) Plaintiff''s case was that on 27-5-1946 the (sic)ant borrowed from the Government of the (sic) Gwalior State Rs. 2,00,000/- and executed (sic)note in favour of the Finance Member (sic) State or order"; that on the same date Defendant Sahani executed an agreement in of the Finance Member, Gwalior State statement he was taking a loan of Rs. 2 lacs from Gwalior State for purchasing some immovable (sic) in New Delhi and stipulating inter alia (sic) would mortgage the property to be pur(sic) him, free of any encumbrance in favour Gwalior State as security for the repayment (sic) amount of Rs. 2 lacs; that this amount be (sic) repaid by him in yearly instalments of (sic) the first instalment becoming due on 1-1-1948; that the loan will not carry any interest; and that in case the borrower did not execute a proper mortgage in favour of the creditor State within three months of the date of the agreement, the agreement would have no effect and the Gwalior State would be entitled to claim repayment of the loan on demand in accordance with the terms of the promissory note executed by the borrower.

The Plaintiff further stated that the Defendant Sahani did not at any time mortgage any property in favour of the Gwalior State; that after several reminders, the Defendant paid Rs. 15,000/- to the Plaintiff on 28-6-1947 in part payment of the loan, and that thereafter the Defendant did not pay any amount despite repeated reminders to repay the balance of the amount of the loan due from him. The Plaintiff State averred that the loan amount was payable on demand at Gwalior and that the cause of action arose on 27-5-1946. On these allegations the Plaintiff claimed to recover Rs. 1,85,000/- together with interest at the rate of Rs. 6/- per cent, per annum from 27-5-1946.

One of the grounds on which the Defendant has contested the suit is that the Court of District Judge, Gwalior has no jurisdiction to try the suit because the Defendant resides and carries on business at Delhi and never undertook to pay the debt at Gwalior, and because the whole transaction took place at Delhi where the promissory note was executed and delivered to the Finance Member of the Gwalior State. The Additional District Judge held that as the pro-note did not specify the place where the payment was to be made, the English Common Law Rule that the debtor must seek the creditor would apply and, therefore, a part of the cause of action must be held to have arisen in Gwalior where the Plaintiff State "resided". He relied on a judgment of the Calcutta High Court in Tusliman Bibi Vs. Abdul Latif Mia, and the decision of the Lahore High Court in ''Nanumal v. Firm Shibbamal Nandkishore'' AIR 1939 Lah 18 (B).

The learned Judge also came to the conclusion that the Plaintiff''s suit was essentially one for the recovery of the balance of the loan amount, independent of the promissory note; that the pronote was only an evidence of the loan or a collateral security; that, therefore, according to the rule that the debtor must seek the creditor the moneys were payable at Gwalior; that the burden of proving that the Court had no jurisdiction to try the suit lay on the Defendant and he had failed to prove that the payment of the loan was not made at Gwalior and that on the other hand, the evidence on record showed that the parties intended that the loan should be repaid at Gwalior. The Defendant has now come up in revision to this Court against the decision of the trial Court rejecting this objection as to the jurisdiction of the Court to try the suit.

When this petition first came up for hearing before my learned brother Chaturvedi J., it was contended on behalf of the applicant that the English Common Law rule that the debtor must find his creditor was not applicable to negotiable instruments; that even under that rule the creditor must be within the realm and that as at the time of the execution of the pro-note the Defendant resided in Delhi and the creditor in an Indian State, the Defendant was not bound to find and pay the creditor in Gwalior an Indian State. It was also urged that the Plaintiff''s suit was on the basis of the promissory note and the trial Court was wrong in drawing the inference from the evidence on record that the Defendant was to pay any money at Gwalior. My learned brother thought that considering the importance of the points raised, the matter should be heard and disposed of toy a larger bench rather than by his sitting singly. Accordingly this Bench has been constituted by my Lord the Chief Justice for the hearing of this petition.

It is common ground that the promissory note in suit was executed and delivered at Delhi And that it does not specify the place where it is payable. The main question raised by this revision petition is whether the Common Law rule that a debtor must seek his creditor is applicable in the case of a promissory note payable on demand.

Before expressing any opinion on this question, it is essential in the present case to reach a conclusion on the subsidiary point whether the Plaintiff''s suit is on the basis of the promissory note or on the original consideration. Mr. Mehtab Singh learned Counsel for the applicant argued that the Plaintiff''s suit was on the promissory note itself.

He pointed out that under Clause 4 of the agreement dated 27-5-1946, on the failure of the Defendant to execute a mortgage, the creditor was only entitled to "claim repayment of the loan on demand in accordance with the terms of the promissory note" and that, therefore, the Plaintiff could only sue on the promissory note; that according to the agreement no interest was payable on the loan amount but in the notice dated 19-7-1949 which was given to the Defendant by the Advocate-General of the State, the Defendant was called upon to repay the amount due from him with interest at the rate of Rs. 6/- per cent, per annum "as chargeable on the promissory note"; that no rate of interest has been specified in the promissory note but in the plaint the Plaintiff has calculated interest at the same rate which has been provided by Section 80 of the Negotiable Instruments Act, 1881, in cases where no rate of interest is mentioned in the instrument, and that in para. 11 of the plaint the Plaintiff has given the date of the promissory note as the date on which the cause of action arose and not the date on which according to the agreement dated 27-5-1946, the Plaintiff became entitled to recover the amount of the loan on the default of the borrower to execute a mortgage in favour of the creditor. Learned Counsel for the applicant said that these circumstances indicated that it is on the promissory note only that the Plaintiff has based the suit.

The argument in reply of the learned Advocate-General was that the liability on the promissory note was secondary; that on the breach of the agreement dated 27-5-1946 the creditor could sue on the original consideration and that the circumstances pointed out by the learned Counsel for the applicant were by no means conclusive of the fact that the Plaintiff''s suit was on the basis of the promissory note.

4a. In my opinion the finding of the trial Court that the Plaintiff''s suit is on the original consideration and not on the promissory note is not correct. The learned trial Judge has not given any reason whatsoever in support of this conclusion. On a perusal of the plaint and the statements made in the trial Court on behalf of the Plaintiff, there can be no doubt that the suit as framed, is founded on the promissory note itself.

If, as is now contended on behalf of the Plaintiff, the suit had been on the consideration which gave rise to the promissory note, then one would have found in the plaint the terms of the contract of the loan. But the Plaintiff has not stated those terms in the plaint, which begins with a reference to the promissory note. No doubt, it has alleged in para. 3 of the plaint that according the agreement dated 27-5-46 the Finance Member of the Gwalior State was given the right to (sic) repayment of the loan on demand, in case (SIC) borrower defaulted in executing a mortgage wi(sic) the stipulated period of three months. But, in view, the right which was given by the argument was of recovering the loan amount "in(sic)cordance with the terms of the promissory (sic) and not of recovering the original consider independent of the promissory note.

Even assuming that under the agreement Plaintiff became entitled to sue on the original consideration when the Defendant applicant (sic) to execute the stipulated mortgage, the cause action for such a claim could arise only on expiry of the period of three months from date of the agreement. But the Plaintiff has where said in the plaint that the cause of act for the suit arose on the default of the applied to execute a mortgage within the agreed of three months from 27-5-1946. On the (sic) hand, it has been alleged that the cause of act arose on 27-5-1946. This is clearly the date which the promissory note was executed and (sic)vered to the Plaintiff. The agreement to month was also no doubt executed on 27-5-1946. But date of this agreement in no way furnishes cause of action for the suit and it is not the (sic) of the Plaintiff that it does.

Again it has not been made clear in plaint whether the interest claimed is original ground of any agreement or on the basis of (sic) or on the ground of usage. These circumstances when taken into consideration with the (sic) in the notice dated 19-7-1949 calling upon the applicant to repay the amount due from him with interest at Rs. 6/- per cent. per annum as "chartable on the promissory note executed by him mistakably point to the conclusion that the (sic) of action as alleged is the promissory note (sic) In fact in the lower Court it was never the (sic) of the Plaintiff that the suit was on the oris(sic) consideration.

This is clear from an application which Deputy Government Advocate made the in Court on 6-4-1951. In this application the Plaintiff stated that the Defendant had not given a(sic) and categorical reply as regards the promissory note dated 27-5-1946 on which the suit was and that, therefore, the Defendant be exa(sic) orally and called upon to state whether he added or denied the execution of the pro-note this application the Plaintiff also requester Court to frame an issue with regard to in saying that inasmuch as the document (sic) was a negotiable instrument, therefore, under Negotiable Instruments Act the Plaintiff was added to get interest on the amount due in promissory note. In my opinion, in the fact these statements made on behalf of the place in the trial Court, he cannot now be allows that he is suing on the original consideration not on the promissory note. The content the learned Counsel for the applicant Plaintiff''s suit is on the promissory note must, in my opinion, be accepted.

In the next stage of the argument, (sic)ed counsel for the applicant submitted that question as to the proper forum of action m(sic) determined with reference to the provision Section 20, Code of Civil Procedure; that as the Defendant-(sic) resided in Delhi and the promissory note executed and delivered to the Plaintiff at Del(sic) Gwalior Court would have jurisdiction only promissory note was payable at Gwalior;

promissory note did not specify the place of payment that, therefore, u/s 70 of the Negotiable Instruments Act it must be held to be payment at the place of business or residence of the and that the English Common Law rule (sic) the debtor must find the creditor was not (sic)ticable to the case of negotiable instruments.

To support the proposition that the rule that (sic) debtor must find the creditor did not apply negotiable instruments learned Counsel for the applicant relied on ''Gopi Kishan v. Jethmal'' AIR 1935 Nag 144 (C) ''Dalsukh Nathmal v. (sic)lal AIR 1938 Nag 262 (D); Jivatlal Purtapshi Vs. Lalbhai Fulchand Shah, ; ''Piyara Singh v. Bhagwandas'' AIR 1951 P&H 33 (F) and ''Eshawarayya v. Thakur Devisingh'' AIR 1953 Hyd 289 (FB) (G).

Learned Counsel proceeded to say that Section 49 the Contract Act had no application to promissory notes which were governed by the Negotiable Instruments Act and the decision of the Privy council in AIR 1927 156 (Privy Council) was not relevant cause it did not deal with the case of a Negotiable instrument and did not lay down that in (sic)ery case of a creditor and debtor, the Common (sic) rule of England that the debtor should seek the creditor and pay the debt where the crediter(sic) reaides, applied. Learned Counsel also faintly (sic)requested that the opening words of Section 49 of the Contract Act showed that the section was not applicable to a promissory note payable on demand. (sic) further urged that no evidence could be added to prove that the promissory note was payment at Gwalior and that as the Common Law rule (sic) only when the creditor was within the (sic) and as at the time of the execution of the promissory note the Plaintiff resided in a native therefore, it must be held that the parties (sic)ded that moneys under the promissory note (sic) be paid not in Gwalior but in Delhi.

Now, I agree with the learned Counsel the applicant that the question of the jurisdiction of the Court must be determined with reference to the provisions of Section 20, Code of Civil Procedure. It is (sic) dispute in this case that the Defendant Appellant does not reside or work in Gwalior and (sic) promissory note was executed and delivered the Plaintiff in Delhi. Therefore the order (sic) Additional District Judge can be supported (sic)if it is held that the promissory note was (sic) in Gwalior.

(sic) argument that the moneys under the (sic) note were payable in Delhi and not in (sic)sory is founded on the decisions referred to which were cited by the learned Counsel applicant. Before proceeding to a consideration of those authorities, it will be convenient (sic) to the material sections of the Negotiable Instrument Act. It is not necessary for me to (sic)serlatim and in detail through all the (sic) included in Chapter 5 of the Act which (sic) with presentment of negotiable instruments, the purposes of this petition the important (sic) are Sections 64 and 70.

Section 64 provides that a promissory note must (sic) for payment to the maker, bills of (sic) must be presented for payment to the (sic) and cheques must be presented for pay the drawee. It then says that "in default presentment, the other parties thereto are (sic) thereon to such holder". The Exception (sic)says that where a promissory note is pay (sic) demand is not payable at a specified (sic) presentment is necessary in order to the maker thereof. Section 65 is concerned with the hours for presentment and Sections 66 and 67 indicate the date or dates on which the instrument would be presented.

Section 68 deals with all kinds of instruments and provides that where these are drawn or accepted payable at a specified place and not elsewhere, they must, in order to charge any party thereto, be presented for payment at that place. Section 69 provides for a promissory note or bill of exchange payable at a specified place and says that in order to charge the maker or drawer thereof, it must be presented for payment at that place.

Section 70 lays down that a promissory note, or bill of exchange which does not specify the place of payment, must be presented for payment at the place of business of the maker, acceptor or drawee. Section 71 points out the place where presentment is to be made if the maker, drawee or acceptor of a negotiable instrument has no known place of business or fixed residence.

It will be observed that Sections 64, 68 and 69 speak of presentment as a condition precedent to make the parties mentioned in those sections liable on the negotiable instrument. The object of presentment is to give the party concerned an opportunity to pay, and until such presentment no right to sue arises. The Exception to Section 64 only says that in the case of a promissory note payable on demand and which is not payable at a specified place, the presentment of the note as a condition precedent to charge the maker of the note is not necessary. In other words, the right to sue a maker of such a note arises even without giving him an opportunity to pay. The exception does not say that a promissory note payable on demand and which is not payable at a specified place need not be presented to the maker if payment is desired.

Now Section 70 deals in a general way with presentment for payment of promissory notes or bills of exchange which are not covered by Sections 68 and 69. The applicability of Section 70 is not confined only to those cases where presentment of the instrument is necessary as a part of the cause of action. Whether the presentment of the instrument is or is not necessary as a condition precedent to make any party liable on the instrument, if the instrument is presented, it must be presented at the place of business or at the usual residence of the maker, drawee or acceptor thereof as the case may be. The combined effect of the Exception to Section 64, and Section 70 is that in the case of a promissory note payable on demand which does not specify the place of payment, presentment of a note is not necessary in order to make the maker liable, but if the note is presented for payment it must be presented at the place of business or at the usual residence of the maker.

The learned Advocate-General contended that inasmuch as the presentment of such a note is not necessary in order to charge the maker, the question of its presentment cannot arise and that, therefore, the rule laid down in Section 70 can have no applicability to a promissory note of the type mentioned in the Exception to Section 64. The argument proceeds on the assumption that if the presentment of the promissory note is not necessary to charge the maker thereof, it is, therefore, not necessary to present the note to maker at all and even if payment is desired. That appears to me to be a non-sequitur. I am not prepared to accept the wide meaning which the learned Advocate-General sought to give to the Exception. From the fact that the presentment of the promissory note is not necessary in order to charge the maker, thereof, it does not follow that if the holder desires payment he need not present the note to the maker and that he must wait until the maker seeks him out.

It was said that Sections 68, 69 and 70 of the Act have nothing to do with the question of jurisdiction. This is true in the sense that these sections do not directly deal with the place where the cause of action arises. But when they indicate the proper place at which presentment for payment must be made, it is difficult to conceive of any other place being the place of payment for the purpose of determining the jurisdiction of the Court. In my judgment, in the case of a promissory note payable on demand which does, not specify the place of payment, though the presentment of the note is not necessary in order to make the maker of the note liable thereon, yet if the holder desires payment he must make the presentment u/s 70 or 71 of the Act. To put in another form such a promissory note is payable at the place of business or at the usual residence of the maker. On this view, it is plain that there is no room for the applicability of the English Common Law rule that a debtor must find his creditor to a promissory note payable on demand and which is not payable at a specified place.

Coming now to the authorities relied upon by the learned Counsel for the applicant, the decisions in ''AIR 1935 Nag 144 (C)''; ''AIR 1942 Bom 251 (E)''; ''AIR 1951 Punj 33 (F)''; and ''AIR 1953 Hyd 289 (G)'', are based on the provision in Section 70 of the Negotiable Instruments Act, 1881, and take a view similar to the one I have expressed above.

In the case of ''AIR 1951 Pun 33 (F)'', the learned Judges of the Punjab High Court also relied on illustration (b) to Section 20, CPC to show that the Common Law rule that a debtor must follow his creditor is not applicable to suits on promissory notes payable on demand. The illustration is as follows:

A resides at simla, B at Calcutta and C at Delhi. A, B and C being together at Bareras, B and C makes a joint promissory note payable on demand and deliver to A. A may sue B and C at Banaras, where the cause of action arose. He may also sue them at Calcutta where B resides or at Delhi, where C resides; but in each of these cases, if the non-resident Defendant objects, the suit cannot proceed without the leave of the Court.

According to the learned Judges of the Punjab High Court, the illustration only mentioned that the suit could be brought where the Defendants resided or where the note was executed; it nowhere said that the place where the Plaintiff resides also gave jurisdiction and that, therefore, the illustration showed that in a suit on promissory note the residence of the Plaintiff was wholly immaterial. I have, however, some hesitation in seeking aid of this illustration. To my mind illustration (b) simply exemplifies and make intelligible Clause (b) of Section 20, Code of Civil Procedure. I do not think that because of the mere omission in the illustration to state that the Plaintiff could not sue at Simla where he resided, the Court would be justified in importing into the illustration a substantive provision of law that the Common Law rule that the debtor must find his creditor was not applicable to a promissory note payable on demand and which did not specify the place of payment.

In the other Nagpur case, namely, ''AIR 1938 Nag 262 (D)'' it was held that the principle that the debtor must find the creditor was not applicable in the case of a negotiable instrument for the reason that Section 81 of the Negotiable Instrument Act, 1881, required the holder of the (sic)ment to call upon the person liable to pay(sic) all respect to the learned Judge, I am (sic)vinced by this line of reasoning. Section where lays down that the person liable (sic) "called upon by the holder to pay''. The (sic) used in that section are "any person liable (sic) and called upon by the holder thereof to (sic) do not think that these words can be con(sic) as meaning that Section 81 itself requires the (sic) of the instrument to call upon the person to pay. The provision in Section 81 that the (sic) liable to pay is entitled to have the instrument shown to him before payment and upon (sic) to have it delivered to him, is plainly into(sic) for the protection of the payer. Section 81 thus nothing to do with the place of payment the negotiable instrument.

The learned Advocate-General urged that ''AIR 1935 Nag 144 (C)''; ''AIR 1951 Panj 33 (F); and ''AIR 1942 Bom 251 (E)'' due we(sic) has not been given to the Exception to Section 64, (sic) quite true that in ''AIR 1935 Nag 144 (C)'' (sic) is no discussion or even a mention of Section 64 (sic) exception to it. But in the Bombay and the (sic) cases the Exception to Section 64 was considered a consideration of the Exception and Section Act, it was observed by Kapur J.; in ''AIR 1951 Punj 33 (F)'' that want of presentment may (sic) affect the liability of a maker of a note to yet the holder who may or may not be the (sic) promisee can have payment made to him (sic) u/s 70 or 71 of the Act, makes the pre(sic) merit. So also Beaumont C.J., said in the (sic) ''AIR 1942 Bom 251 (E)'' that no doubt; (sic) the exception to Section 64, where a promissory no(sic) payable on demand and is not payable a (sic) fied place, no presentment is necessary in (sic) to charge the maker thereof, but Section 70 does (sic) give some indication as to the way in which (sic) maker can be notified of the holder of the for (sic) the time being.

The learned Advocate-General comme(sic) to us for acceptance the view taken by the La(sic) High Court in ''AIR 1939 Lah 18 (B)'' that (sic) a pro-note does not specify any place where (sic) payment was to be made, it should be prese(sic) that the payment was to be made at the (sic) place of business of the creditor. It was further held in that case that the mere fact that the (sic) note was liable to be presented to the debtor a particular place u/s 70 of the Negotiable Instruments Act did not imply that the due on the pro-note was payable at that (sic). The point as to the applicability of Section 70 was posed of in ''AIR 1939 Lah 18 (B)'' simply (sic) observation that no presentment is necessary the case of a pro-note when the suit is agree the maker of the pro-note.

I cannot treat this case as any authority for the proper reading of the exception to of the Act. There is no discussion of the (sic)tion or of any of the contentions raised in ''AIR 1935 Nag 144 (C)'' and - ILR (1940) Na(sic) which had been reported by AIR 1938 262 (D). It would be pertinent here to re(sic) decision of the Calcutta High Court in Srilal Singhania Vs. Anant Lal Mondal, (sic) Lort Williams J., has held that Section 49 (sic) Contract Act has no application to a (sic) which is payable on demand and is silent as place of repayment and that consequently (sic)titori the common law rule that the debtor seek out his creditor would apply and the (sic) at the place where the creditor reside would (sic) petition to entertain a suit on the pro-note. these was referred to during the course of (sic) but was not relied upon by any party. The Calcutta case the promissory note payment demand was addressed to the promisee at (sic)lpur where he then resided; the note did not (sic) any place of payment and at the time of institution of the suit the promisee had ceased of the holder of the note and resided in Calcutta. learned Judge of the Calcutta High Court that the Court at Calcutta had jurisdiction entertain the suit upon the promissory note use the promisee resided in Calcutta. This (sic) does not appeal to me at all. Lort Williams J., further held that because the promisee note was payable on demand and not on an location by the promissory to the promisee, there(sic) Section 49 had no application to the case and a (sic) the common law rule that the debtor must this creditor applied.

The learned Judge has not given any reason (sic)sow how the common law rule was applicable Negotiable instruments. He did not refer to any the provisions referred to above of the Negotiable Instruments Act. I do not find myself in (sic)ement with the view in Srilal Singhania Vs. Anant Lal Mondal, I respectfully agree with the criticism made '' Beaument C.J. in Jivatlal Purtapshi Vs. Lalbhai Fulchand Shah, '' the decision of the Calcutta High Court and the view expressed by the learned Chief (sic) that the words ''on demand'' only mean that promissory note is payable immediately, or at Land that the words do not in themselves (sic) the promissory note out of the terms of Section 49 the Contract Act and that Section 49 is one of those (sic) of the Contract Act which have no Instruments to matters governed by the Negotiable Instruments Act. It seems to me necessary to make (sic) Section 49 of the Contract Act can have (sic) to negotiable instruments because the Negotiable Instruments Act itself lays (sic) a rule as to the place of payment where the Negotiable instrument does not specify it.

Relying on the Privy Council decision in AIR 1927 156 (Privy Council) the learned Advocate-General submitted that Section 49 of the Contract Act applicable to the present case and that the that the debtor was bound to seek out liter and pay his debtor applied here for the (sic) of determining the jurisdiction of the court. I am unable to accept this contended.

(sic) Privy Council case did not deal with promissory note. It was a case of moneys (sic) under a commercial contract which did (sic) anything as to where the Defendants were(sic). Their Lordships of the Privy Council, that upon the fact of the contract, not indeed (sic) terms, but by the clearest implication (sic) it was to be made in Rangoon where the business transactions out of which (sic) standing debts arose, took place and where Plaintiff-firm was.

(sic) behalf of the Defendant, it was contended (sic) their Lordships that the case was governed (sic) of the Contract Act and that as no place tenant was fixed by the contract and no ap(sic) had been made by the promissory to the (sic) to appoint a reasonable place, therefore, (sic) was no place of payment; and consequently (sic) of the contract was performable in Ran(sic) It was urged that Section 49 replaced any rule (sic) with regard to the obligation of the debtor (sic) out the creditor. Repelling this conten(sic) Privy Council observed that Section 49 of the contract Act did not get rid of inferences that (sic) Justly be drawn from the terms of the contract itself or from the necessities of the case involving in the obligation to pay the creditor, the further obligation of finding the creditor so as to pay.

As I read the Privy Council decision it seems to me that the decision does not go further than holding that the words "no place is fixed" in Section 49 of the Contract Act do not exclude any inference the Court may draw as to the intention of the parties from the nature and circumstances of the contract especially where the obligation is to pay money. The Privy Council decision is not an authority for the proposition that in every case of a debtor and creditor the Common Law Rule of England that the debtor should seek out the creditor and pay the debt where the creditor resides applies or for the proposition that the rule is applicable in the case of negotiable instruments.

Mr. Chitale also referred us to Nathubhai Ranchhod Vs. Chhabildas Dharamchand, But that case appears to me to be of no assistance in deciding the instant case. It related to a suit brought on the breach of a contract and followed AIR 1927 156 (Privy Council)

Learned Counsel for the applicant referred to the Privy Council decision in Bansilal Abirchand v. Ghulam Mahbub Khan, AIR 1925 PC 290 and distinguished it. I agree with him that the contention that the Common Law rule of the debtor seeking but the creditor is applicable to negotiable instruments docs not derive any support from the judgment of the Privy Council in Bansilal Abirchand v. Ghulam Mahbub Khan, AIR 1925 PC 290

In that case the question was whether a suit for the recovery of a loan borrowed at Secunderabad a British Cantonment, and repayable at Hyderabad, the capital of the Nizam''s Dominions by a person residing in Hyderabad, could be filed at Secunderabad. The Privy Council while holding that the Court at Secunderabad had no jurisdiction to entertain the suit, observed that.

even by British law the duty of a debtor to find and pay his creditor is only imposed upon him when the creditor is within the realm and the Plaintiff has not contended that if there be any such duty at all imposed by Indian Law upon a debtor it extends in this respect further than in England.

It is plain from these observations that the Privy Council did not express any opinion on the applicability of the Common Law rule in India. What their Lordships said was that even on the assumption that the Common Law rule was applicable, the Defendant in that case was under no obligation to make any payment to the Plaintiff at Secunderabad which was not within the realm.

It follows from what I have said above, that, in my judgment, the Common Law rule that the debtor must find out his creditor is not applicable to the case of a negotiable instrument and that a promissory note payable on demand which does not specify the place of payment is payable at the place where the maker of the promissory note resides or carries on business. Indeed as pointed out by the learned Judges of Bombay High Court in Jivatlal Purtapshi Vs. Lalbhai Fulchand Shah, the applicability of the rule to negotiable instruments is beset with difficulty in that the holder may be residing in any part of the country and the debtor may have no notion where he is, or where to seek him.

The next point that was debated in the course of arguments, is whether evidence is admissible to prove the place where the moneys under the note were payable and whether on the evidence on record, the place of payment has been established. Learned Counsel for the applicant objected to the reception of the evidence on the ground that the words of the pro-note were free from ambiguity and did not create any doubt or difficulty as to their meaning and that, therefore, evidence dehors the pro-note for the purpose of explaining it according to the intention of the parties as regards the place of payment, was inadmissible. According to the learned Advocate- General the evidence was admissible under the second proviso to Section 92 of the Evidence Act because the promissory note was (sic) as to the place of payment.

In my opinion, in the case before us evidence to prove the place of payment can be admitted. It is no doubt true that where words of any written instrument are free from ambiguity in themselves and where external circumstances , do not create any doubt or difficulty as to the proper application of the words to the subject-matter of the instrument or to claimants under the instrument, the words must be construed according to their strict plain common meaning and evidence dehors the instrument for the purpose of explaining it according to the alleged intention of the parties is not admissible. But here we are not concerned with any question of the construction of the words used in the pro-note.

The question before us is whether evidence is admissible about a matter on which the promissory note is silent, On this point proviso 2 to Section 92 of the Evidence Act is very clear. It allows proof of any separate oral evidence about any matter on which a document is silent and which is not inconsistent with its terms, and it provides that in admitting the evidence the Court must have regard to the degree of formality of the document. The promissory note in suit is silent as to the place of payment. It cannot, therefore, be maintained that evidence to prove the place of payment would be an evidence contradicting, varying, adding to or subtracting from any term of the promissory note. As to the degree of formality of the document on which the admissibility of evidence depends, it will vary according to the care, elaboration and details with which the terms of the document are set forth therein.

In the instant case on the day on which the promissory note was executed the parties entered into another agreement providing for the mortgage of the properties which were to be purchased from the loan amount, the conditions on which the mortgage-debt would be repaid and giving to the creditor the right "to claim repayment of the loan on demand in accordance with the terms of the promissory note". The execution of this separate agreement is evidence of the fact that the promissory note was given merely as a provisional security for the money and did not record all the terms of the loan transaction. It is noteworthy that Clause 4 of the agreement dated 28-5-1946 mentioned that in the event of the failure of the applicant to execute the stipulated mortgage the creditor would be entitled to claim repayment of the loan on demand "in accordance with the terms of the promissory note". But the promissory note does not specify "the terms".

The pro-note in form contains merely an undertaking by the applicant to pay on demand to "the Finance Member Gwalior State or order" a sum of Rs. 2 lacs. it is thus plain that in the degree of formality of the promissory note here is not so high as to lead to the presumption that it was intended to contain the full agreement. I, therefore, think that the Plaintiff is entitled to prove that the parties agreed that the promissory note was to be paid at Gwalior. A perusal of the judgment of Wadia J., which was affirmed in 1942 Bom 251 (E)'' shows that in that case also (sic) ence was led to show that the intention(sic) parties was that the place of payment of the note was Bombay.

As to the evidence on record, I do not (sic) it leads to any inference one way or the other regards the place of payment. Here, the bu(sic) showing that the suit was properly filed in (sic) Court of the Additional District Judge (sic) and that the pr omissory note was payable (sic) Gwalior, was obviously on the Plaintiff. Learned(sic) Advocate-General frankly and rightly concer (sic) that the onus was on the Plaintiff. But the learned (sic)trial Judge failed to grasp this elementary (sic) placed the burden of proof on the defendant-applicant and drew an adverse inference aga(sic) him from his omission to examine Mr. Brijraj Narain, the person through whom the loarr(sic) negotiated and completed, and to whom the promissory note was delivered, as the Finance Minister(sic) of the Gwalior State.

The trial Judge was clearly wrong in (sic) an adverse inference against the applicant for failure to examine Mr. Brijraj Narain when (sic) on the Plaintiff to prove that the moneys (sic) payable in Gwalior, the lower Court had juridition to entertain the suit. In this state of the Plaintiff must, in my opinion, be give(sic) opportunity to examine in particular Mr. Brijraj Narain, a very material witness, and to prov(sic) place of repayment of the moneys under the(sic).

In this view of the matter it would not be per for me to express any opinion on the (sic) and weight to be attached to the evidence (sic)record and to the exhibits A/4, A/5 and A(sic)drawing any inference as to the place payment(sic) But I must observe that the fact that the Defendant-applicant actually made a part payment(sic) particular place cannot be held to be decided (sic) the fact that payment according to the agree(sic) between the parties was to be made in that(sic).

Learned Counsel for the applicant suggested as at the time of the execution of the promissory(sic) note the applicant was in Delhi and the (sic) was not within the realm and as under the (sic)mon Law rule a debtor is not bound to se(sic)creditor who is not within the realm, there(sic) the intention of the parties was that the (sic) under the pro-note would be paid in Delhi argument is untenable. The Common Law(sic) that it is the duty of a debtor to find his (sic) when he is within the realm is wholly irre(sic) to the question of drawing an inference of (sic)as regards intention or agreement of the about the place of payment from the evidence(sic) record.

For the above reasons I would set asid(sic) decision of the Additional District Judge(sic) Gwalior and direct him to determine the question(sic)jurisdiction in the light of this order after(sic) according such evidence as the parties may to prove the place of payment of the promnote.(sic) It is needless to add that if the Plaintiff fails to establish that the moneys were payment(sic)Gwalior, the plaint must be returned to the Plaintiff for presentation to the proper Court of this application shall follow the result suit in the lower Court.

G.K. Shinde, C.J.

I agree.

B.K. Chaturvedi, J.

I concur.