Nimma Chitti Appayyamma vs P.V. Narasimham

S.K. Ray, J.—This is a Defendant''s appeal from the decision of the Sub-Judge, Jeypore dated 10.8-1971 passed in Money Suit No. 27 of 1970 decreeing the suit for Rs. 5,386.66/- with pendentelite and future interest based on promissory note, Ext. 1.

The Petitioner''s case is that one N.V. Jagannathayya husband of the Defendant borrowed a sum of Rs. 5,000/- from him for the purpose of business. Sometime in December, 1965 he died without discharging the debt of the Petitioner. Upon his death, his widow, the Defendant, inherited the properties of the deceased which are being managed by one G Veeraswamy, her illatum son-in-law The Petitioner approached the Defendant and her son-in-law concerning payment of his dues which the latter admitted to be outstanding, but put off the payment on some pretext or other. At the instance of common friends, the Defendant agreed to execute a promissory note for a sum of Rs. 4,000/- only in favour of the Petitioner as the accounts of her deceased husband disclosed that only Rs. 4,000/- was due to the Petitioner. The Petitioner agreed to take a pronote for that amount and accordingly on 7-4-1964 the Defendant executed the suit pronate (Ext. 1) in favour of the Petitioner agreeing to repay Rs. 4,000/-. with interest at the rate of 6 per cent per annum. She promised to pay the whole amount within a fortnight, but on several demands the Defendant paid only a sum of Rs. 50/- on 5-4-1967 and made an endorsement on the reverse of the promissory note to that effect acknowledging her liability. Thereafter she defaulted to pay further. The Petitioner served a registered notice dated 9-3-1970 through his advocate for payment and ultimately filed the present suit on 4-4-1970 claiming a sum of Rs. 5,386.66, particulars of which have been set out in the plaint.

The Defendant in her written statement alleges that she is not aware if her husband and the Petitioner were friends and whether the former had ever borrowed any money from the latter. Her husband died on the 31st December, 1956 owing to sudden heart attack without telling any body as to his liabilities. He died leaving behind his widow, the Defendant and two daughters. The Petitioner''s allegation that she admitted her liability and duly executed the suit pronate for Rs. 4,000/- is not true. She is an illiterate pardanashin lady and not conversant with accounts. Her thumb mark was taken on a paper by her son-in-law, Veeraswamy and p.w. 3, Scribed Ext. 1 without explaining or reading out the same as a pronate in favour of the Petitioner. The suit pronate is not supported by any consideration and not valid in law. The debt of her husband, if any, in respect of which the suit pronate was executed was time-barred. She has denied the payment of Rs. 50/- on 5-4-1967 and to have made any endorsement to that effect on the reverse of the promissory note. The suit is barred by limitation and is bad for non-joinder of parties inasmuch as her two daughters have not been impleaded.

The trial Court rendered the following findings:

(a) The Defendant duly executed the pronate in the presence of the Petitioner, p.w. 3 and her son-in-Law, Veeraswamy. The contents of the suit pronate were read out and explained to him and she was fully conscious of the nature of the transaction at the time she executed the pronate. The Petitioner successfully proved due execution of the pronate.

(b) The suit pronate has been duly executed by the Defendant and is supported by consideration.

(c) The endorsement of payment dated 5-4-1967 on the back of the suit pronote is true and was made by the Defendant. Accordingly, the suit is in time and not barred by limitation.

(d) The Petitioner has not only proved the debt but also proved the promise to pay the debt.

(e) The Petitioner is entitled to a decree as prayed for and he is to realise the decretal dues out of the properties of the late husband of Defendant.

On the aforesaid findings, the trial Court directed:

...the Defendant do ''pay to the Petitioner the sum of Rs. 5386.66 with pendente lite and future interest on Rs. 5000/- at the rate of 6 (six) per cent per annum from 4-4-1970 (the date of institution of the suit) to the date of realisation of the said sum....

The first question for consideration is whether the suit pronate, Ext. 1 was duly executed and was for consideration. The Petitioner''s, case is that Defendant''s husband borrowed a sum of Rs. 5.000/- from him on the basis of a pronate. After the Defendant executed the suit pronate by way of renewal, in respect of part of the past liability of her husband in settlement of the Petitioner''s full claim, the original pronate executed by her husband In favour of the Petitioner was returned to her son-in-law, Veeraswamy. The Petitioner has proved that the Defendant''s husband took a loan of Rs. 5,000/- from him on ,the basis of a pronate and died without making any payment. As to the execution of the suit pronate by Defendant, there is evidence of the Petitioner and p.w. 3. an advocate of Jeypore Bar. Both the Petitioner and p.w. 3 have also testified that the old pronote of Jagannathayya was returned to Defendant''s son-in-law. Though the fact of execution of a pronate by the Defendant''s husband and its return on execution of Ext. 1 are not mentioned in the plaint, those facts have been proved by p.ws. 1 and 3. There is evidence that p.w.3 is a family friend of Defendant and is also ex-student ofPetitioner while reading in the fourth class. No plausible ground has been shown to exist from which it could be reasonably inferred that p.w. 3 was unduly interested in the Petitioner or entertained any hostile intention against the Defendant. On the contrary, p.w. 3 appears to be a completely disinterested witness having no axe of his own to grind. The truth of the testimony of p.w. 3 is intrinsically corroborated by non-examination of Veeraswamy, son-in-law of Defendant. P.w. 3 has deposed as follows:

I know the Petitioner. I am scribe of the pronate Ext. 1. I explained the contents to the executant. It was scribed at the residence of the executant.

There was an old pronate executed by Jagannadhayya in favour of Petitioner who was putting pressure for payment. So I was sent for by G. Veeraswamy. Plaintiff was there. Veeraswamy gave out that as per the Chitta of Jagannadhayya only Rs. 4000/- outstanding as the loan of Petitioner, though the pronate was for Rs. 5000/-. I advised Petitioner to accept Rs. 4000/-. Plaintiff agreed to accept the amount if it was paid within 15 days. The Defendant was also present at that time. Accordingly I wrote the pro note for Rs. 4000/(Ext. 1). The executant put her L.T.I. in my presence. Plaintiff gave the old pronate to Veeraswamy ....

Defendant who is the only witness from her side has deposed:

My husband died about 15 to 16 years ago. During his (sic) time he was carrying on business on large scale. He was having clerks and maintaining accounts. I do not know what were the amounts due to him and the debts payable by him. Became I am illiterate and because the two other heirs of my husband are daughters, all of us executed ;1 General power of Attorney in favour of my son-in-law G.V. Swami to manage all our properties and affairs. I do not know my late husband owed money to Joshi. I do not know how the dues of Joshi was settled by my son-in-law. I trust my son-in-law fully. I never asked him (G.V. Swami) how he is managing nor did he ever ten me. I know that my son-in-law will not do anything and will not get anything done by me which is unjust or which is prejudicial to my interests.

...I have no enmity with p.w. 3. My relationship with my son-in-law is cordial. My son-in-law G.V. Swamy has not deceived me or otherwise did anything against my interest by taking my thumb mark on any paper. My son-in-law as power of attorney holder always acted with a sense of responsibility as our power of attorney holder.

In view of this statement of the Defendant, non-examination of Veeraswamy who was present at the time of suit transaction and non-production of her account books maintained by her son-in-law are important factors which considerably substantiate the evidence of the Petitioner and p.w. 3 that Ext. 1 was read out and explained and thereafter the Defendant put her thumb mark on the document. This is what p.w. 1 has stated:

On 7-4-1964 Veeraswamy, son-in-law called his Advocate, K. Satyanarayana Rao and me to the residence of Defendant where K. Satyanarayana Rao wrote a new pronate for Rs. 4000/- in English. Thereafter the scribe read and explained the contents of the pronote to the Defendant who was present there. Then Defendant gave her thumb mark on the stamp of the pronate. Veeraswamy and G. Gurumurty one clerk Veeraswamy signed on the pronate as witnesses. The pronate was written under the Instructions of Veeraswamy.

Undoubtedly the Defendant is an illiterate pardanashin lady and the burden of proof is on the Petitioner to establish that Ext. 1 was entered into by her after clearly understanding the nature of transaction. Judicial decisions dealing with this rule have stated that the person on whom the burden of proof originally rests must establish not only that the contents of the documents taken from the illiterate pardanashin lady was read out and explained to her but also that she understood the contents thereof. That is insisted upon because the Court has to be satisfied that the suit transaction was not only her physical act but also her mental act. Though neither p.w. 3 nor the Petitioner expressly states that the Defendant executed Ext. 1 after understanding its contents, it reasonably follows from the fact that the entire transaction took place in presence of Veeraswamy, who was readily available to tender independent advice in the matter of execution of the pronate coupled with, to repeat, non-examination of Veeraswamy and non-production of her account book from which the aforesaid inference that Defendant executed Ext. 1 after understanding its contents, is reasonable, otherwise, the transaction could not have gone through and Veeraswamy could not have retained her confidence in the management of her properties. I think the Petitioner has successfully discharged his burden of proof that the transaction Ext. 1 was not only the physical act of the Defendant but also her mental act. The conclusion of the trial Court that the Ext. 1 was duly executed by the Defendant has thus force.

The next question which has been raised is whether the Ext. 1 was for consideration or not. The recital of Ext. 1 clearly indicated that it was executed in respect of the past liability of Defendant''s husband. Thus, the transaction on the basis of Ext. 1 is a loan as defined in Orissa Money Lenders Act and could be enforced against the Defendant in the same manner as the old pronote executed by Jagannathayya could have been enforced on his death, against her. The debt of Jagannathayya was incurred in the year 1956 and there being no evidence on record to show that it was kept alive till 1964 when Ext. 1 is executed, transaction under Ext. 1 must necessarily be taken to be a transaction in respect of a barred debt. But Ext. 1, being q promise in writing and signed by the Defendant to pay wholly or in part a debt of which the creditor might have enforced Payment but for the law of limitation, constitutes an enforceable agreement. This is borne out by Section 25(3) of the Indian Contract Act which runs as follows:

An agreement made without consideration is void unless

(3) it is a promise made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorised in that behalf, to pay wholly or in part a debt which the creditor might have enforced payment but for the law for the limitation of suits.

In order to satisfy this provision of law,

(a) there must be a ''promise'' to pay a debt,

(b) there must be a debt of which the creditor might have enforced payment but for the law for the limitation of suits,

(c) the promise must be made in writing.

(d) the writing must be signed by the person to be charged therewith or by his agent generally or specially authorised on his behalf.

If these conditions are satisfied, then the promise becomes a contract, though there may not be any consideration for it. There is evidence in the case that there was a demand made by Petitioner for the payment of his money advanced to the Defendant''s husband and acknowledgement made by the Defendant and her power of attorney holder., Veeraswamy, on examination of the Jagannathayya''s account, of liability to the tune of Rs. 4000/- only and that the Petitioner having become willing to settle his account for that sum, Ext. 1 was, accordingly, written and executed by Defendant. Thus, it is clear that Ext. 1 is a promise made in writing and signed by the Defendant to pay part of the debt of Jagannathayya, her husband to the Petitioner who might have enforced her husband''s debt against her but for the law of limitation. Therefore, even though there may not be any consideration for Ext. 1, it could nevertheless be enforced against the Defendant. There are authorities in support of this view in the case of Sriram Arjundas Vs. Governor General in Council, and K.K. Rm. Muthayee Achi (died) and Another Vs. A.K. Rm. S. Rm. Sabbiah Chettiar and Another, .

Mr. Murty has cited Perumayammal v. Chinnamal ILR 1967 Mad. 189, in support of his stand that the Petitioner could not rely on Section 25(3) of the Indian Contract Act. That was a case where wife Executed the pronote in favour of the Petitioner in renewal of one executed by her husband. By the time of execution of the pronate her husband was alive and the promissory note was executed by the wife in her personal capacity. In that case, their Lordships said that wife had no liability for the debt of her husband on the date she executed the pronote. Accordingly, Section 25(3) of the Indian Contract Act was not attracted. I think the decision is correct and is inapplicable to the present case. Here, the Defendant''s husband was dead and Ext. 1 was executed by Defendant undertaking liability to pay her husband''s debt which could have been enforced against her but for law of limitation.

There is also another aspect regarding consideration. There is a presumption arising u/s 118 of the Negotiable Instruments Act in favour of the Petitioner that the pronote was for consideration. As stated by Their Lordships in the case of Tarmahomed Haji Abdul Rehman Vs. Tyeb Ebrahim Bharamchari, .

Section 118 raises a statutory presumption in favour of there being consideration for every negotiable instrument. The presumption continues until it is rebutted and the only way it can be rebutted is by proving the contrary, viz, that the negotiable instrument was without consideration. The presumption that is raised under the section is not in respect of the consideration mentioned in the negotiable instrument but the presumption is in favour of there being a consideration for the negotiable instrument, any consideration which is a valid consideration in law. It is perfectly true that if a particular consideration is mentioned in a negotiable instrument and that consideration is found to be false and some other consideration is set up, that is a factor which the Court would take into consideration in deciding whether the Defendant had discharged the burden case upon him by Section 118. But the mere fact that the consideration mentioned in the negotiable instrument turns out to be wrongly described does not rebut the presumption u/s 118 and the burden still lies on the Defendant to satisfy the Court that there was no consideration for the instrument. In order to determine whether the contrary is proved or not as required by Section 118, the whole volume of evidence led before the Court including - admissions of the Petitioner made in his cross-examination, must be considered. But in considering the volume of evidence the Court must always bear in mind the statutory presumption and also the fact that the burden of proof lies upon the Defendant and that burden has got to be discharged by the Defendant. Where the Petitioner attempts to prove a particular consideration, the mere fact that he failed to prove such a consideration does not, in any way, relieve the Defendant from his obligation in law to establish the contrary of the presumption.

On perusal of the entire evidence on record, I am not satisfied that the presumption raised in Section 118 of the Negotiable Instruments Act that Ext. 1 was for consideration has been rebutted. Therefore, on presumption alone, it has to be held that Ext. 1 is for consideration. There is also a third aspect of the matter. u/s 2(b) of the Indian Contract Act consideration has been defined as follows:

2(d). When, at the desire of the promisor, the promisor or any other person has done or abstained from doing, or does or abstains from doing, or promisses to do or to abstain from doing, something, such act or abstinence or promise is caned a consideration for the promise.

The Petitioner abstained from taking steps for recovery of the loan advanced to her husband and that was apparently at the desire of the Defendant or by her power of attorney holder, Veeraswamy, the son-in-law of the Defendant, so that the matter might be amicably settled and, at last, Ext. 1 was the outcome of such settlement. Thus Ext. 1 could be said to be supported by consideration and would be an enforceable contract.

The decree has directed pendente lite and future interest on Rs. 5000/- at the rate of 6 per cent per annum from 4-4-1970 till the date of realisation of the said sum. I do not understand why such interest will run on Rs. 5000/- when the suit pronate is for the sum of Rs. 4000/-. I think pendentelite and future interest should run on Rs. 4000/- instead of Rs. 5000/-. The decree is, accordingly, varied and future interest is to run on Rs. 4000/- from 4-4-1970 till the date or realisation. The appeal is, thus, partly allowed. In the peculiar circumstances of the case, there will be no order as to costs of this Court.