Kali Prasad Chaudhury and Another vs Narayan Prasad and Others

Ross, J.—Narayan Prasad, the son of Munshi Jannu Lal, Mukhtear, deceased, brought this suit on a mortgage-bond executed in favour of his father on the 5th April 1911, for Rs. 2,500 with interest at 1 per cent, per mensem compoundable monthly. The bond was executed by Ramchandra Chaudhury, now dead, for himself and as guardian of his two minor cousins, Kalika Prasid Chaudhury, and Dwarka Prasad Chaudhury, both of whom are now dead, and by their elder brother Kali Prasad Chaudhury, who is defendant 1. Defendant 2 is the minor son of defendant 1 born in 1922. Defendants 3 and 4 are subsequent purchasers of the mortgaged property and defendant 5 is a subsequent mortgagee. The executants of the bond were members of a joint Hindu family of which Ramchandra Chaudhury was the karta.

It was alleged in the plaint that there had been monetary transactions between the two families and that the defendants were timber merchants. The bond was executed to pay off a hand note in favour of Jannu Lal executed on 4th July 1907 by Hiralal, the father of defendant 1, for Rs. 552 upon which Rs. 788 was then due. The balance of the money was required, as stated in the bond for the purchase of logs and sleepers of the timber business which had been started, a few days before. The due date of the bond was two years after its execution, One of the stipulations in the bond was in these terms:

Such amount as shall be paid by us the executants, towards the simple and compound interest, etc., to the said creditor, we shall get the payment endorsed by the said creditor with his pen on this bond. Save and except this (other) allegations of payment by us such as by means of receipt or oral payment or by any other means shall be considered null and void.

Another stipulation related to an original kabuliyat and patta dated 16th July 1897, of one of the mortgaged properties which was handed over to the mortgagee and to the hand note already referred to. The stipulation was that when the bond. was paid off, then these two documents would be taken back along with the bond, The plaintiff stated in his plaint that subsequently to the execution of this bond, on 7th November 1919, he had advanced a further sum of Rs. 7,000 to Ramchandra Chaudhury on a hand note and, thereafter, he began to made demands for payment of this bond and, as the defendants put him off, he searched for the bond and found it missing. In a suit which he brought upon that hand-note the defendants produced the bond with a false endorsement of payment and he then knew that it had been stolen. He sued on a copy of the bond.

The defence of defendant 1 was that the timber business was not ancestral, but was started after the death of Hiralal who died in 1906, and that there was no antecedent debt; and that only Rs. 1,700 was advanced. He denied that the bond was stolen and said that it had been paid off by three currency notes of Rs. 1,000 each of which the numbers were given; and that when payment was made the stamp on the bond was torn in token of satisfaction. The defence of defendant 2 was that there was no antecedent debt and that if there was any, it was barred; and that he had not been benefide by the loan. Defendant 3, a subsequent purchaser, pleaded that before making tier purchase the discharged mortgage bond had been shown to her by the vendor; and that she was a bona fide purchaser for value without notice.

The learned Subordinate Judge held in the first place that the execution and the passing of full consideration under the bond had been proved and this has not been disputed in appeal. He further held that defendant 2 was not entitled to question the bond, because he was born after its execution; and that in any case the bond was executed for an antecedent debt and for the joint family business. With regard to the plea of payment he held that the question of onus was not pf much importance and that the endorsement on the bond was inaccurate; that the defendants account book was not reliable; that the allegation of purchase and payment of three notes of Rs. 1,000 each was untrue; and that the bond and lease had been procured surreptitiously by the defendant. With regard to defendant 3 he declared that her property should be sold last of all.

The argument on behalf of the appellants is that the judgment of the learned Subordinate Judge has been vitiated by his decision on the question of onus. The bond was produced by the defendant and, therefore, there was a presumption that if; had been discharged; and it was for the plaintiff to show that the bond had been stolen and that no payment had been made; a id the plaintiff had not discharged this burden. Further, the plaintiff ought to have produced his account books; but so far from doing that, he had given the defendants no assistance when they endeavoured to procure his Income Tax return.

In support of this argument learned Counsel referred to the decision in Binayak Rao v. Dinkar Rao [1913] 20 I.C. 308 and, on the question of the production of accounts, to the decision of the Judicial Committee in Murugesam Pillai v. Ganga Sambanda Pandara Sannadhi AIR 1917 P.C. 6. Learned Counsel further irelied upon the conduct of the plaintiff as confirming the truth of the defence. He pointed out that when the document was produced in the suit on the hand-note and the plaintiff was required to admit it, he took time to consult his karpardaz as to whether he should admit it or not; and, in fact, although the document was filed on 28th January 1923, it was not until 22nd February, that the plaintiff admitted the genuineness of the bond and alleged that; it had been lost.

It was further pointed out that no complaint had ever been made to anyone about the loss of the (bond, either to the police or to Ramchandra Chaudhury or to any pleader; but that, on the contrary, a further loan of Rs. 7,000 was said to have been made on a hand-note in which no previous dues were recited. Reference was also made to the evidence of Damodar Pal, the husband of defendant 3, who said that he mentioned to the plaintiff that he had purchased one of the mortgaged properties and the plaintiff said nothing about the mortgage. Learned Counsel also referred to the fact that the lease of one of the mortgaged properties which was to be returned when the, bond was discharged, was in fact produced by the defendant''s predecessor in the Land Acquisition Court in 1913; and that consequently there was no reason to suppose that this had been obtained by improper means and that the evidence offered by the defendant that this lease had been given back by Jannu Lal on taking a receipt in order that it might be produced in the Land Acquisition Court was true and should be believed. It was further contended that the payment by means of the three notes of Rs. 1,000 each had been proved by defendant''s witness Harilal, whose evidence should be considered as sufficient in view of the presumption in favour of the defence arising from the production of the bond.

With regard to the case of defendant 2, it was contended that he was entitled to question the necessity for the loan. It was pointed out that the alienation had been made without the consent of the two minors Kalika and Dwarka and was, therefore, an incomplete alienation and could be questioned by an after-born son. Learned Counsel referred to Hurodoot Narain Singh v. Beer Narain Singh 11 W.R. 480 and Tulshi Ram v. Babu Lal [1911] 33 All. 654.

Now it has been held by the Judicial Committee more than once that when evidence has been given on both sides, the question of the burden of proof is of academic interest only, and that the Court has to decide on the evidence that has been given which version of the transaction is true. It is true that the presumption u/s 114, Evidence Act, ill. (i), is that when a document creating an obligation is in the hands of the obligor the obligation has been discharged. That is subject to the qualification, however, in the section itself that when the bond is in the possession of the obligor, but the circumstances of the case are such that he may have stolen it, these circumstances are to be considered by the Court in deciding whether the maxim would apply or not.

In the case of Mohammad Mehdi Hasan Khan v. Mandir Das [1912] 34 All. 511 the Judicial Committee held that the presumption did arise in favour of the defendant when there was an endorsement on the bond by the plaintiff''s agent. In the case relied upon by the learned Counsel it was held that where there was a suspicious endorsement on the bond, it was for the defence, to prove the payment. Now the plaintiff here denied payment and the return of the bond.

It was not necessary for him to produce his accounts which would have shown nothing and the decision in Murugesam Pillai v. Gnana Sambanda Pandara Sannadhi 11 W.R. 480 has no application to the present case. There the accounts were with the party who pleaded that the money had not been applied to the necessities of the Mutt and it was held that it was for them to produce their accounts; here the plaintiff simply denies that he received any money and his accounts would show nothing. Besides this the plaintiff shows circumstances that indicate the possibility of theft having taken place. He says that his father''s bonds and papers were kept in a bundle and he used to give the bundle to Ramchandra who was his friend, and Ramchandra took the necessary papers and made accounts of the dues from the debtors who came to pay.

Learned Counsel says that this evidence is not to be believed because the statement is not made in the plaint. But this is a matter of evidence which it was not necessary to plead. The plaintiff''s case is that it was in 1920, that he searched for the bond and that he had never seen it in his house subsequent to his father''s death. Kamla Prasad, a relation, says that the plaintiff is a man wanting in intelligence and that in 1920 he asked him to search for a bond executed by Ramchandra and he made a search, but could not find it. He adds that the plaintiff knows how to read and write a little. He further says that sometimes Ramchandra calculated the accounts. He saw him two or three times looking to plaintiff''s bundle. Mahabir Prasad, who was the clerk of Jannu Lal, says that there was intimacy between the two families from Jannu Lal''s time and that the plaintiff and Ramohandra and his cousins were fast friends. He further says that Narayan Prasad knows how to write very little and can write Hindi with difficulty and on dictation only. The evidence of the defendant himself is that Narayan Prasad is not capable of making accounts or of writing without help from others. This evidence shows that there was at least a possibility that the deed had been abstracted; and the inactivity of the plaintiff in the matter is explicable by his want of business ability; and in this case it seems to me that the circumstances are such that the presumption of payment from production of the bond is not enough and that positive proof of payment must be given.

With regard to the patta it is doubtless true that it was made over by Jannu Lal to Ramchandra for presentation before the Land Acquisition Court, but this leads to no conclusion. This was long, before the alleged payment and there could be no connexion, on the defendants own case between their possessioa of the patta and their possession of the bond itself.

The real question in the case is whether the payment of this debt has-been proved. Learned Counsel contends that it must be accepted as a fact that three notes of Rs. 1,000 each were purchased by the defendant. (His Lordship-after examining the evidence, proceeded.) But accepting it as a fact that these notes were in the possession of the defendant, the fact is still to be established that they were paid to the plaintiff. Learned Counsel contends that the Subordinate Judge erred in dealing with this part of the case in giving undue importance to the account of interest and that if the payment is accepted, the question of the details of the interest account becomes unimportant.

This is true; but if the proof of payment is doubtful, then the question whether the interest was regularly paid becomes important both as testing the actual settlement of the account at Rs. 3,000 and as testing the truth of the endorsement on the bond, I have already referred to the stipulation in the bond about payment of interest. The defendant''s case is that interest was paid regularly up to 1st March 1915, by a tenant of a house of his, whose rent was Rs. 25 a month. This payment is said to have been made to the mortgagee; but neither was the tenant called as a witness nor were any receipts for these payments produced nor is there any endorsement by the mortgagee on the bond as the stipulation requires. There was a further payment alleged by Suraj Mall Marwari of Rs. 10 as rent, but no attempt was made to procure his evidence. Moreover, the defendant says that he himself made a payment of Rs. 80 in 1914, or the beginning of 1915; but, if the interest was regularly paid by the tenants, it is difficult to see how this payment of Rs. 80 by the defendant came to be made.

There is absolutely no corroboration of defendant''s evidence about this payment of interest and, in view of the stipulation in the bond itself, I am unable to hold that it was ever made. Now, if there was no payment of interest, the amount due for simple interest on the date of the alleged payment was Rs. 1,912-8-0 and, if compound interest was insisted upon (and it is not said to have been disputed), there would be a further sum of Rs. 1,842-14-6, due on that date. This added to the principal makes a total sum of Rs. 6,255-6-6 due; and yet, without any apparent reason, the plaintiff accepted Rs. 3,000 as payment in full. The transaction itself seems improbable.

As to the actual payment, the evidence of the defendant is that it was made by Ramchandra. (His Lordship then discussed the evidence about payment and continued). I, therefore, find myself in agreement with the Subordinate Judge in disbelieving the plea of the payment.

The question that remains is with regard to the liability of defendant 2. Learned Counsel for the respondents cited the decision in Prem Sukh Das v. Ram Bujhawan Mahto [1919] 1 P.L.T. 34. All that was decided in that case was that a member of a joint family, who was not born either at the time of the alienation or at the date when the other coparcener consented to it, had no right to challenge the transaction. That case does not meet the authorities cited on behalf of the appellant and the question comes to this: whether this loan was made for legal necessity. Learned Counsel lays great stress on the recital in the bond that the business in timber had only recently been started. But the bond does not say that the loan was taken to start the business. The business was already there and, from the vagueness of the pleading of defendant 1, it would appear that the business had been going on for some considerable time. Moreover, the evidence which the learned Subordinate Judge has believed is that this business was not in fact started after the death of Harilal, as the defendant says in his written statement, but during his lifetime. The plaintiff said that this was a family business and had been in existence for 20 or 22 years and in the time of Harilal Mahabir, who was in the service of Jannu Lal, also says that the occupation of the family of the defendant was trade in timber which was ancestral from the time of Harilal; and the loan on the hand-note, which was discharged by the bond, was also taken for that trade. There is no reason to disbelieve this evidence; and it seems to me to be fully proved that the money was taken for the family business and was for legal necessity. I would, therefore, hold that defendant 2 is liable equally with defendant 1. No argument was addressed to us on the rate of interest.

Two minor points remain to be considered. On behalf of respondent 5 it is contended that he is a minor and his property, which was purchased subsequently to the mortgage, should be sold last. It is sufficient to say that his minority is no reason for giving him any preference over other subsequent purchasers.

Respondent 4, that is, defendant 3, contends that she was a bona fide purchaser for value and that she has an equity against the plaintiff because of his carelessness in letting the bond go out of his possession. The bond was shown to this defendant before her purchase was made. It seems to me, however, that this equity is met by the negligence of this defendant. The bond showed an endorsement by the mortgagor. This in itself should have been sufficient to put an intending purchaser on enquiry as to whether the bond had in fact been discharged or not; and there was no difficulty about this enquiry because the plaintiff himself lived in the neighbourhood. But no reference was made to the plaintiff until five or six months after the transaction was completed. Any equity that this respondent may have has been sufficiently adjusted by the order of the learned Subordinate Judge that this property should be sold last.

I am, therefore, of opinion that the decision of the learned Subordinate Judge in this case is right and that the appeal should be dismissed with costs.

Kulwant Sahay, J.

I agree.