Kambam Rami Reddy vs Pallela Rami Reddy

Krishna Saran Shrivastav, J.—This Second Appeal preferred by the defendant, has been admitted on the following substantial question of law:

"Whether the Lower Court has not erred in law in thinking that in spite of the defendant conclusively establishing through Ex.P-2, recital in Ex. A-1, evidence of D.W.3 and admission of P.W.2, as held by the trial Court, that the defendant has got to prove that no type of any consideration passed ? Whether the lower Court has not erred in law in its failure to notice that defendant has discharged the evidential burden on him and the plaintiff has failed to discharge his legal burden ?"

Looking to the limited scope of appeal, it is not necessary to transverse in details the facts of the case. Suffice it to say, that on 3-7-1975 the appellant- defendant executed a pronote Ex.A-1 in favour of the respondent-plaintiff for a sum of Rs. 4,400/- with interest at the rate of 12% per annum. On the same day he had purchased a house and some land belonging to the wife and father-in- law of the respondent-plaintiff through a registered sale deed, but was short of Rs. 4,400/- out of the settled amount of consideration and, therefore, they got the pronote Ex.A-1 executed in the name of the respondent-plaintiff showing receipt of the whole amount of consideration in the sale deed. Sometime in month of May, 1978, the defendant found that the father-in-law of the respondent-plaintiff had sold his half share in well and the trees standing on the land in question to third parties before 3-7-1975. The dispute was referred to the elders of the village and in the Panchayat convened by them the respondent- plaintiff admitted the factual position and agreed to return the pronote Ex. A- 1 to the defendant. As per the plaint allegations, the amount of Rs. 4,400/- had been paid in cash by the respondent to the appellant for purchasing the land in question from his wife and father-in-law.

The trial Court in O.S. No. 223 of 1978, on assessment of the evidence on record, reached the conclusion that no cash consideration was passed and, therefore, the pronote Ex.A-1 was without consideration. The trial Court dismissed the suit.

In First Appeal No. 164-A of 1985, the Additional District Judge, Madanapalle agreed with the trial Court that the plaintiff-respondent did not pay Rs. 4,400/- in cash to the appellant-defendant in pursuance of the promissory note Ex.A-1, but it has held that the appellant-defendant has failed to establish that the pronote Ex.A-1 was without consideration because he has pleaded in the written statement, as also deposed in the lower Court that the pronote was executed in lieu of the balance amount of consideration of purchase money which was payable by him to the father in-law and wife of the respondent-plaintiff and it was done at the instance of his vendors. The learned Additional District Judge has also discussed the case of Manyam Janaka Lakshmi v. Manyam Madhava Rao 1972 (2) ALT 85. The lower appellate Court decreed the suit of the respondent for Rs. 4,400/- with interest at the rate of 6% per annum from 26-6-1978 till realisation.

Feeling aggrieved by the judgment and decree of the first appellate Court, the defendant has preferred this appeal.

It has been urged on behalf of the appellant that the learned appellate Court erred in relying on the case of Manyam Janaka Lakshmi v. Madhava Rao 1972 (2) ALT 85 to conclude that in a suit based on pronote where the defendant fails to discharge the burden that there was no consideration, the plaintiff is entitled to a decree notwithstanding that his plea of cash consideration turns out to be false for the simple reason that this case has been overruled by a Full Bench of three judges in the case of G. Vasu v. Syed Yaseen AIR 1987 SC 139. It has been further urged that the respondent-plaintiff did not amend his plaint alleging that at the instance of his father-in-law and wife, the defendant-appellant had executed the pronote Ex.A-1 for payment of the balance amount of consideration of the sale deed which had been executed by them in his favour on the same day and, therefore, the first appellate Court should not have made out a different case for the respondent-plaintiff that the pronote Ex.A-1 was not without consideration.

In the case of G. Vasu v. Syed Yaseen AIR 1987 SC 139 it is held that once the defendant shows either by direct evidence or circumstantial evidence or by use of other presumptions of law or fact that the promissory note is not supported by consideration in the manner stated in the promissory note or in the manner stated in the suit notice or in the manner stated in the suit notice or in the pleading, the evidential burden shifts to the plaintiff and the legal burden of the plaintiff is revived, i.e., to prove that the promissory note is supported by consideration and at that stage, the presumption of law covered by Section 118 of the Negotiable Instruments Act "disappears" and no longer subsists. The words "until the contrary is proved" in Section 118 did not mean that the defendant must necessarily show that the document is not supported by any form of consideration. It cannot be said that even when the case of the plaintiff and the defendant is disbelieved still the suit is to be decreed on the basis of the presumption u/s 118 of the Negotiable Instruments Act.

In this case of G. Vasu v. Syed Yaseen AIR 1987 SC 139 the defendant had succeeded in establishing that the pronotes were not supported by consideration and, thereafter, the plaintiff recalled him and suggested a case of the suit pronotes being renewals of earlier notes, which was denied. Then the plaintiff admitted in his evidence that the pronotes were not supported by cash consideration but were renewals of earlier pronotes. In this case, the evidence adduced on behalf of the plaintiff that the pronotes in question were renewals of earlier pronotes was disbelieved on merits.

In Halsbury''s Laws of England, Simonds Edition, Volume 8, page 117, the law is thus stated:

"The fact, moreover, that the promisee is already under a legal liability to some third person to perform the act does not prevent his promise to perform it at the request of the promisor from constituting a valid consideration".

Pollock has considered the question whether the promise in such a case is valid consideration in his treatise on Principles of Contract, Tenth Edition, at pages 183 to 187 and concluded:

"What is here mentioned is that a promise made for valuable consideration, and otherwise good as between the parties, is not the less valid because the performance will operate in discharge of an independent liability of the promisor to a third person under an independent contract already existing. This was the opinion of W.H. Leake, a most accurate lawyer, and of Prof. Langdell of Harvard".

The definition of consideration is Section 2(d) of the Indian Contract Act comprehensively provides that when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or promises to do or abstains from doing, something, such act or abstinence or promise is called the consideration for the promise.

It has been held in the case of Srinivas Ram Kumar Vs. Mahabir Prasad and Others, as follows:

"The rule undoubtedly is that the Court cannot grant relief to the plaintiff on a case for which there was no foundation in the pleadings and which the other side was not called upon or had an opportunity to meet. But, when the alternative case, which the plaintiff could have made, was not only admitted by the defendant in his written statement but was expressly put forward as an answer to the claim which the plaintiff made in the suit, there would be nothing improper in giving the plaintiff a decree upon the case which the defendant himself makes, a demand of the plaintiff based on the defendant''s own plea cannot possibly be regarded with surprise by the latter and no question of adducing evidence on these facts would arise when they were expressly admitted by the defendant in his pleadings".

It is noteworthy that the appellant-defendant has pleaded that he had to pay Rs. 4,400/- to the father-in-law and wife of the respondent-plaintiff being the balance amount of the purchase money of their house and land on 3-7-1975 as he was short of funds. Therefore, at their instance he had executed the pronote for the said amount of Rs. 4,400/- in favour of the respondent-plaintiff. Since the defendant-appellant was legally bound to pay the amount of Rs. 4,400/- to the wife and father-in-law of the respondent-plaintiff, the pronote Ex. A-l was executed in favour of the respondent-plaintiff for payment of the aforesaid amount of Rs. 4,400/- and thus it constitutes a valid consideration, particularly, because this has discharged him of his liability to pay to the father-in-law and wife of the respondent-plaintiff the balance amount of consideration of purchase money of their land and house through sale deed Ex.B-2.

On the touch stone of the authority of the case of Srinivas Ram Kumar Vs. Mahabir Prasad and Others, , I hold that there was nothing improper in giving the respondent-plaintiff a decree upon the case which the appellant-defendant had himself made out because it cannot be said by any stretch of imagination that the appellant was surprised by his own plea in his written statement and under these circumstances no question of adducing evidence on these facts would arise in view of the pleading and evidence of the appellant himself. Under these circumstances, the rule that the Court cannot grant relief to the plaintiff on a case for which there was no foundation in the pleadings does not apply, for admitted facts need not be proved. It is now well settled that where an alternative case, which the plaintiff could have made, but did not make in the plaint, is admitted by the defendant in his written statement, it is permissible to grant to the plaintiff relief on that basis alone.

As noted above, in the case of G. Vasu v. Syed Yaseen (2 supra), the plaintiff had failed to prove his alternative case. But, in the case in hand, in view of the admission of the appellant-defendant himself, it cannot be said that the respondent is not entitled to a decree because he has neither pleaded nor adduced oral evidence about the alternative mode of passing the consideration. True, that the lower appellate Court has erred in relying on the case of Manyam Janaka Lakshmi v. Manyam Madhava Rao (1 supra), but the lower Court has further found that the pronote Ex. A-l was supported by consideration because the defendant has himself pleaded in his written statement and has admitted in his evidence that he had executed the pronote in favour of the respondent- plaintiff in lieu of the balance amount of consideration that was to be paid by him to the wife and father-in-law of the respondent-plaintiff.

For the foregoing reasons, there appears to be no substance in the appeal and, therefore, it is hereby dismissed. The Judgment and decree of the lower appellate Court are hereby confirmed, Counsel fee as per Scale, if certified.