Kandasami Mudaliar vs Muthukrishna Moorthy and Another

Abdul Hadi, J.—Plaintiff is the appellant in this second appeal against the reversing judgment in A.S. No. 205 of 1981 on the file of the

Principal District Judge, Pondicherry, which dismissed his suit O.S. No. 127 of 1979 on the file of the Principal Subordinate Judge, Pondicherry

for the recovery of a sum of Rs. 6,055 due under Ex. A-l promissory note executed by both the defendants in favour of the plaintiff.

The only question that is argued before me in this second appeal relates to the material alteration of Ex.A-1 promissory note. The 2nd defendant

remained ex parte. According to the 1st defendant, the suit promissory note bears, only the date 12.2.1975, but it has been altered by the plaintiff

to 12.2.1976. The lower appellate court has found that there is such an alteration and it has also held that it is a material alteration within the

meaning of Section 87 of the Negotiable Instruments Act. Therefore, the lower appellate court has dismissed the suit since as per Section 87 of the

Negotiable Instruments Act, Ex.A-1 is a void document in view of the said material alteration.

Though the learned Counsel for the appellant argues that there was no such alteration at all, after seeing Ex.A-1,I have only to concur with the

lower appellate court that there was such alteration of date.

Further, the 1st defendant also marked Ex.B-1, which is draft copy of Ex.A-1 promissory note and that bears the date 12.2.1975 only and the

lower appellate court also observes that the marking of Ex.B-1 was not objected to by the plaintiff and that on the contrary, by his suggestion to

the 1st defendant, the plaintiff impliedly admitted the existence of the draft. No doubt, the learned Counsel for the appellant argues that the

existence of this draft Ex.B-1 was not adverted to in the written statement. But, on that ground, the genuineness of Ex.B-1 cannot be challenged

when the plaintiff has not only chosen to object to the marking of the said document, but also put a suggestion to the 1st defendant in the witness

box impliedly admitting the existence of the draft.

But, the question that has to be considered is whether the said alteration is a ""material alteration"" within the meaning of that term u/s 87 of the

Negotiable Instruments Act. In this connection, there is of course a defence plea in the written statement of the 1st defendant, alleging the

abovesaid alteration. The relevant plea in the 1st defendant''s written statement is as follows:

The 2nd defendant and the plaintiff are colluding together. The plaintiff is the brother-in-law of the 2nd defendant. There has been recent enmity

and misunderstanding between 1st and 2nd defendant. The plaintiff and the 2nd defendant construed together and altered the years and brought

into existence a false endorsement.

The lower appellate court also says that the point for determination in the first appeal is whether the promissory note is void for material alteration.

Even in the trial court, though there is no specific express issue regarding the abovesaid material alteration, on 28.9.1981, while the suit was

pending there was an interim order by the trial court as follows:

Heard both sides on the question of burden proof. Perused pleadings and issues. The first defendant has alleged in his written statement that he has

not executed any pro-note and the suit pronote is not enforceable as there is a material alteration of the year. On perusing the issues and on

considering the pleadings, I find that the burden of proof first lies with the plaintiff and he has to discharge the burden first. Accordingly, I direct the

plaintiff to begin his side. For trial call on 19.10.1981.

Thus, the trial court, on the footing that there was plea of material alteration by the 1st defendant, found that the burden of proof initially was on the

plaintiff and had directed the plaintiff to discharge the said burden first by first letting in evidence. But, on 19.10,1981, when the suit was taken up

for trial, the plaintiff did not choose to lead evidence and the 1st defendant alone examined his witnesses, and the trial court below, on that day,

recorded that the plaintiff had no oral evidence, and that his counsel submitted to argue the case and posted the case for argument on 22.10.1981.

So, even before considering whether there was material alteration, it has to be seen whether the plaintiff has to be non-suited on the sole footing

that he has not chosen to discharge the abovesaid burden of proof, by letting in evidence first. The lower appellate court also observes as follows

after referring to the abovesaid interim order dated 28.9.1981 of the trial court:

The plaintiff did not challenge in any manner that order of the trial court on the ground that any evidence was inadmissible in the teeth of the

admission by the defendants in Ex.A-3. On the contrary he rested content with reporting that he had no evidence to place before the court. That

refusal by itself in view of the order made earlier by the court would have been sufficient to dismiss the suit. At any rate under the circumstances of

the case, it cannot be said that the recital in Ex.A-3 tantamounts to an admission and that no further enquiry on the matter was unnecessary and

unadmissible, I therefore do not accept his contention.

But, on this point, I am unable to concur with the lower appellate court and I shall presently give out my reasons for holding that view. No doubt,

the learned Counsel for the appellant submits that in view of what is stated in Ex.A-3, there was no necessity for the plaintiff to let in any evidence

first. Ex.A-3 dated 6.2.1979 is the reply by the 1st defendant to the suit notice Ex.A-2 dated 1.2.79. No doubt, the relevant observation therein is

as follows:

It is true that my client along with his brother executed a pronote on 12.2.76 in your client''s favour.

The learned Counsel for the appellant points out that there is an admission that the suit promissory note was executed only in 1976 and not in

1975. But, first of all, D.W.1, the 1st defendant has explained the abovesaid deposition as follows:

Ex.A-3 is the reply. On the date of giving the reply as per A-3.I don''t remember the year and date of pro-note. Only at the time when I took the

draft B-1 and saw immediately after receiving the summons I came to know the year of pronote is only 75.

That apart, I have already observed that by simply seeing Ex.A-1 promissory note, it is clear that the year 1975 has been altered as 1976. So, the

abovesaid explanation given by D. W. 1 has to be accepted and the above referred to finding that there is alteration in the promissory note is

correct. When that is so, it is only for the plaintiff to discharge the burden case on him, particularly in the light of the abovesaid order dated

28.9.1981 specifically directing him to let in evidence first to discharge the burden. When that is not done and the plaintiff has not let in any oral

evidence, explaining the abovesaid alteration and convincing the court that it was not a material alteration can the suit be dismissed on that score

alone, when the 1st defendant has chosen to let in his evidence and without even considering whether in law, there would be material alteration?

The Supreme Court has observed in M.M.B. Catholicos v. T. Paulo Avira AIR 1959 S.C. 31 @ 38 (D.B.), as follows:

The question of burden of proof at the end of the case, when both parties have adduced their evidence is not of very great importance and the

court has to come to a decision on a consideration of all materials.

Likewise, in Kalwa Devadattam and Others Vs. The Union of India (UOI) and Others, . The Supreme Court has also observed at page 885 as

follows:

The question of onus probandi is certainly important in the early stages of a case. It may also assume importance where no evidence at all is led on

the question in dispute by either side; in such a contingency the party on whom the onus lies to prove a certain fact must fail. Where however

evidence has been led by the contesting parties on the question in issue, abstract considerations of onus are out of place; truth or otherwise of the

case must always be adjudged on the evidence led by the parties.

Further, in Rishi Kesh Singh and Others Vs. The State, ,it has been observed as follows:

Whenever the law places a burden of proof upon a party a presumption operates against it. Hence, burdens of proof and presumptions have to be

considered together.... As has been often pointed out, when there is ample evidence from both sides, the fate of the case is no longer determined

by presumptions or burden or proof but by a careful election of the correct version, based no doubt on preponderance of probabilities which has

to be so compulsive or overwhelming in the case of a choice in favour of a conviction as to remove all reasonable doubt. In other words, the

importance of burdens of proof and presumptions vanishes in the face of evidence given by both sides.

So, the 1st defendant, having chosen to let in evidence, the court has only to analyse the whole evidence before it and come to a conclusion based

on the entire evidence and the law applicable, and cannot come to a decision solely on the presumption that operates against the plaintiff in view of

himself not discharging initial burden of proof.

So, it has to be seen whether there is really any material alteration in the present case, taking into consideration the entire evidence and the law

on the point. The suit was filed only on 25.4.1979, as I find it from the decree copy, No doubt in this regard, the lower appellate court''s

observation that the suit was filed on 9.2.1979, is not correct since 9.2.1979 is only the date of the plaint, though the suit has been filed only on

25.4.1979. The lower appellate court has held that as per the French Law, the above said limitation of three years'' period would begin to run only

from 1.2.1979, the date when the demand for the amount due under the promissory note was made by the plaintiff pursuant to the suit notice

Ex.A-2 regarding this peculiarity of French Law, as stated by the lower appellate court, I tried to make some investigation, since the learned

Counsel for the 1st respondent contended that what was stated by the lower appellate court could not be the law since it would lead to absurdity.

In this connection, Mr. V.S. Ramakrishnan, who was Government Pleader for Pondicherry some time back and who knows French also, at my

request, rendered assistance for me to understand some of the relevant provisions in the French Code De Commerce and I record my

appreciation of the service rendered by him. From what I could gather from the said assistance given, I think what the lower appellate court has

observed in this aspect can be taken as correct. As per the official translation of Article 179 of the French Code De Commerce, the relevant

expression used therein would mean, in commerce, only ""maturity"" and not ""payment"" as contended by the respondent''s counsel. It so, the lower

appellate court cannot be said to be wrong in having come to the conclusion that the limitation of 3 years, as per the said Article 179, begins to run

only from the date of demand. The said Article 179 no doubt relates to bills of exchange, But, Article 185 which relates to promissory notes says

that the law applicable to Bills of Exchange (as found in Article 179) would apply to promissory notes. Article 179 no doubt uses the word

maturity"" in relation to bills of exchange. But in relation to demand promissory notes, that term could refer only to the date of demand. Unless

demand is made for payment of the sum due under the promissory note, a promissory note payable on demand cannot be said to have become

matured for payment.

7-A In this connection I may also point out that as per Sendamarai Animalv Vs. Vijaya Rajagopal Chettiar, , only French Law of Limitations has to

be applied, in view of Section 29(2) read with Section 3 of the Limitation Act, 1963 and the said French Law would be ""special or local law

referred to in the said Section 29, applicable in the Union Territory of Pondicherry.

The learned Counsel for the appellant cited decisions like AIR 1940 160 (Privy Council) and Seth Loonkaran Sethiya and Others Vs. Mr. Ivan

E. John and Others, to contend that only if the alteration in question varies the rights, liabilities or legal position of the parties, it will be material

alteration. According to him, since the suit is actually within time, as also found by the lower appellate Court, there is no variance, by the abovesaid

alteration of the rights, liabilities or legal position of the parties, particularly, that of the defendants, In Seth Loonkaran Sethiya and Others Vs. Mr.

Ivan E. John and Others, , the Supreme Court, observed as follows, after quoting a passage from Halsbury''s Laws of England:

A material alteration, according to this authoritative work, is one which varies the rights, liabilities or legal position of the parties as ascertained by

the deed in its original state, or otherwise varies the legal effect of the instrument as originally expressed, or reduces to certainty some provision

which was originally unascertained and as such void, or which may otherwise prejudice the party bond by the deed as originally executed....To the

same effect are the observations made by the Privy Council in AIR 1940 160 (Privy Council) .

AIR 1940 160 (Privy Council) has also observed that it cannot be said that an alteration in date is always material, irrespective of its effect upon

the rights, liabilities or legal position of the parties.

On the other hand, the learned Counsel for the 1st respondent contends that the abovesaid observation of the Supreme Court was made only in

relation to a material alteration of a deed and not a negotiable instrument. But, I do not think that there is any basis for such distinction, which is

sought to be made by the said counsel between the material alteration of negotiable instrument and that of a deed. No authority also has been cited

by the said counsel supporting the said argument. No doubt, the said counsel relied on the decision of K.M. Natarajan, J., in Vythinathan v.

Murugayya Padayachi, 1985 T.L.N.J: 265, in this regard, but, in the said case, there was only an argument that Seth Loonkaran Sethiya and

Others Vs. Mr. Ivan E. John and Others, , AIR 1940 160 (Privy Council) and Rajagopala Ayyar and Another Vs. Avadai Velar and Others, ,

consisting of P.V. Rajamannar, C.J., and Veeraswamy, J.) are in respect of deeds, and not a negotiable instrument. But, I do not find in the said

case that such distinction as such, was accepted by the learned Judge, who decided the said case. No doubt, as pointed out by the learned

Counsel for the 1st respondent in the said decision in Vythinathan v. Murugayya Padayachi, 1985 T.L.N.J. 265, there was reference to

Rangaswami Reddi Vs. K. Doraiswami Reddi, , consisting of the same P.V. Rajamannar, C.J., and another learned Judge. But in Rangaswami

Reddi Vs. K. Doraiswami Reddi, , the issue was entirely different. On the footing that there actually a material alteration, the issue there was,

whether the plaintiff therein was entitled to any relief, despite Section 87 of the Negotiable Instruments Act making the promissory note in question

void, and the court came to the conclusion that the plaintiff therein could not fall back on the original consideration, nor could he invoke Section 65

of the Contract Act to sustain his claim.

In Vythinathan v. Murugayya Padayachi 1985 T.L.N.J. 265, also, the date of the suit promissory note was altered, but it was found on facts

that even without the said alteration, the suit would not be barred by limitation, in view of the promulgation of moratorium Acts. Yet, the lower

appellate court therein held that there was material alteration and in view of Section 870 of the Negotiable Instruments Act, the suit promissory

note had become void. K.M. Natarajan, J., who decided the said case, after setting out the rival submissions, concluded thus:

But in view of the provisions of Section 87 of the Negotiable Instruments Act and the ratio laid down by this Court in Rangaswami Reddi Vs. K.

Doraiswami Reddi, , it cannot be said that the decision rendered by the appellate Judge is erroneous and unsustainable.

But, with due respect, I have to reiterate that no support can be drawn from Rangaswami Reddi Vs. K. Doraiswami Reddi, , to decide the

question whether there was actually a material alteration, since the said decision proceeded on the footing that there was actually a material

alteration and the only question there was whether despite material alteration, relief could be given to the plaintiff. Further, the abovesaid Section

87 only speaks to the effect or consequence of material alteration. It does not say what ""material alteration"" is or in what cases there would be

material alteration. Nor any of the other provisions of the Negotiable Instruments Act defines or explains ""material alteration"" That is why courts

have been called upon to explain the same. In this connection, the Privy Council and the Supreme Court have adopted the meaning of the said

terms as explained in Halsbury''s Laws of England. As already indicated, in applying the said meaning, no authority has been cited before me,

which lays down that a distinction should be made between deeds on the one hand and the negotiable instruments on the other hand and that the

said meaning cannot be applied to negotiable instruments. Therefore, I have to apply the abovesaid meaning given by the Supreme Court in Seth

Loonkaran Sethiya and Others Vs. Mr. Ivan E. John and Others, . even with reference to material alteration of negotiable instruments. On so

doing, I have only to conclude that the abovesaid alteration of the date of the suit promissory note in the present case, does not vary ""the rights,

liabilities or legal position of the parties"" or ""the legal effect"" of the suit promissory note, nor the said alteration ""may otherwise prejudice the party

bound"" by the document. I reach this conclusion only because of the above referred to peculiar French Law that the limitation begins to run only

from the date of demand. That is why, the above referred to alteration from the year 1975 to 1976, will have no bearing on the limitation question

in the present case. No doubt, a Division Bench of this Court in Govindasami v. Kuppusami ILR 12 Mad. 239, has held in a case where the date

of the promissory note has been altered from 11th September to 25th September, that the said alteration materially affected the liability of the

defendant, for it extended the time within which the plaintiff was entitled to sue. But, the said decision is not applicable to the present case, because

the change of date in the present case does not and is also not likely to alter the law of limitation since the French Law, which alone is applicable to

the present case, is different, as already indicated. Therefore, the change of date effected in the present case, will not amount to material alteration,

in the light of the abovesaid observation of the Supreme Court as to the meaning of the said term. It must also be pointed out that the Supreme

Court has also impliedly indicated, by approving the abovesaid meaning given in Halsbury''s Laws of England that for material alteration, it is

enough, if by alteration, prejudice is likely to cause though not actually caused ultimately to the party bound by the document. This is indicated by

the expression used, ""which may otherwise prejudice the party bound by the deed as originally executed"", in the abovesaid observation of the

Supreme Court, approving what is contained in Halsbury''s laws of England, viewed in this light, the following observation in P.R. Subramania

Pattar Vs. Porathana Andi, , which was also referred to by K.M. Natarajan, J. in Vythinathan v. Murugayya Padayachi 1985 T.L.N.J. 265, is no

doubt correct:

The fact that an alteration does not ultimately involve any change in the rights and liabilities of the parties is not very germane to the consideration of

the question whether it amounts to a material alteration within the meaning of Section 87 of the Negotiable Instruments Act.

But the further observation therein, viz., ""whether the change be prejudicial or beneficial to the maker does not in the least matter, ""with due

respect, cannot be quite correct, since if the change ""may prejudice"" him-that is, it is likely to prejudice him it will be material alteration.

While so, in the present case, in view of the abovesaid peculiar French Law on limitation, which is applicable to the present case, there is no

likelihood even of prejudice to the defendants because of the abovesaid alteration of the year 1975 to 1976. So, the said alteration cannot be

termed a material alteration.

The lower appellate court has no doubt observed thus:

Therefore in the present case, though it is true that the change of the year from 1975 to 1976 has not ultimately in any manner changed the right of

the plaintiff as regards the limitation, there was every reason for the plaintiff to apprehend that the suit would be declared barred by limitation. This

apprehension which prompted him to change the date would show that the alteration was a material one.

But, I do not find any evidence to show that the plaintiff had such ""apprehension which prompted him to change the date."" The 1st defendant, as

D.W.I, did not whisper anything about such apprehension on the part of the plaintiff. D.W.2 is the scribe of the suit promissory note. He also did

not whisper anything about the above referred to apprehension. No doubt the plaintiff himself did not choose to get into the, witness box to depose

that he did not have such apprehension. But from the said fact alone there is, no warrant for coming to the conclusion that the plaintiff had such ah

apprehension at the time when he altered the date, particularly when the defendants have not even chosen to allege such apprehension on the part

of the plaintiff. That apart, it is a moot point whether in the light of the above ''referred to Supreme Court observation as to the actual meaning of

material alteration"", the existence or otherwise of such apprehension or even ulterior bad intention on the part of the plaintiff is germane to the issue

whether the alteration is a material alteration or not.

In the result, the second appeal is allowed, the judgment and decree of the lower appellate court are set aside and that of the trial court are

restored. However, in the circumstances of the case, there will be no order as to costs.