Ramaswami Pillai vs Murugiah Padayachi and Another

Beasley, C.J.—The plaintiff in the suit, who is the petitioner here, on January 3, 1929, sold 10 kalams of paddy at Rs. 3 a kalam making a

total of Rs. 30, to the defendants, the respondents here, and on the same date took from the latter a hand letter which reads as follows:

January 3, 1929. The hand letter executed in favour of Ramaswami Pillai... by Murugayya Padayachi and Kailya Padayachi... We have taken,

from you on credit this day 10 kalams of kuruvai paddy at Rs. 3 a kalam for Rs. 30 and we have executed this hand letter promising to pay the

sum of Rupess thirty with interest thereon at three pies per rupee per mensem to you or to your order.

This document was unstamped; and being clearly a promissory note--and this is not contested by the petitioner--it was not admissible in

evidence because it was un stamped, The District Munsif having rejected the promissory note as evidence declined to give a decree to the

petitioner on the original debt holding that the hand letter was not given in respect of an antecedent debt but was a contemporaneous document

executed at the same time as the transaction relating to the sale of the paddy. This petition was directed to be posted before a Bench of three

Judges in view of the fact that it was suggested that in this High Court there has been a conflict of opinion on the question as to whether a plaintiff is

entitled to fall back upon the original debt where, through insufficiency of stamp or otherwise, a document, which is executed at the same time as

the debt sued upon is incurred, is inadmissible in evidence. Some recent decisions of single Judges of this High Court are relied upon in support of

the contention that previous Bench decisions of this High Court, viz. Pothi Reddi v. Velayudha Sivan 10 M 94, which followed Sheik Akbar v.

Sheik Khan 7 C 256 : 8 C L R 528, Muthu Sastrigal v. Viswanatha Pandara Sannadhi 38 M 660 : 21 Ind. Cas. 864 : 14 M L T 520 : (1914) M

W N 58 : 26 M L J 19 : A I R 1914 Mad. 657 and the recent case of At. N. At. Chockalingam Chettiar Vs. Rama Mu Rama Palaniappa

Chettiar, , are no longer good law and that on the contrary the views recently expressed by Stone, J., in Murugappa Chetty v. Nachiappa Chetty

67 M L J 30 : 155 Ind. Cas. 164 : 40 LW 167 : A I R 1931 Mal. 503 : 7 R M 559, and by Venkatasubba Rao, J., in Chinnayya Naidu Vs.

Srinivasa Naidu, and by Wallace, J., in Gapala Padayachi v. Rajagopala Naidu A I R 1928 Mad. 1118 : 98 Ind. Cas. 75 : (1923) M W X 757

correctly state the law. In Chinnayya Naidu Vs. Srinivasa Naidu, , Venkatasubba Rao, J., expresses the opinion that, so far from the law being

settled in this Presidency by the cases relied upon by the respondents, the preponderance of authority is in favour of the view that although the

execution of the note is simultaneous with the loan, the lender can fall back upon the original consideration. Coutts-Trotter, J., in Chhokalingam

Chetti v. Annamilai Chetti 34 Ind. Cas. 417 31 Ind. Cas. 417 AIR 1917 Mad. 480, says:

The giving of the security does not extinguish but merely suspends the cause of action on the original debt, which revives if the security be not

discharged at maturity.

and treats this proposition as ''fundamenal and rudimentary''. K. Srinivasa Ayyangar, J. in the same case says:

If a bill or a note is given for a contemporaneous debt, there is a difference of opinion, but the better opinion is that even in such a case the bill

merely suspends the remedy and does not operate as a discharge.

Whilst I do not agree with Venkatasubba Rao, J., that the preponderance of authority in this Presidency is in favour of that view, I agree that

there is certainly a conflict of opinion. In Chidambaram, Chettiar v. Ayyasami Thavan 40 M 585 : 36 Ind. Cas. 741 : 31 M L J 401 : (1916) 2 M

W N 210 : 4 L W 261 : 20 M L T 350, a decision of Oldfield and Krishnan, JJ., it appears from the facts that the loan and the promissory note

were contemporaneous and the question, was whete, if the promissory note was illegal and void, the lender could be given a decree apart from the

note. On page 587 page of 40 M.--[Ed.] of Chidambaram Chettiar v. Ayyasami Chettiar 40 M 585 : 36 Ind. Cas. 741 : 31 M L J 401 : (1916) 2

M W N 210 : 4 L W 261 : 20 M L T 350, Oldfield, J., says:

It is not possible to answer this question without further knowledge of the facts. For it is impossible on the information given by the District Munsif

to decide whether there was any obligation apart from the note, the fact that the loan and the note were contemporaneous not being decisive on the

point.

Krishnan J. says on page 589 page of 40 M.--[Ed.]

I agree that the second question cannot be answered in the present state of the record as it depends upon facts which have not yet been tried and

found. If there is an obligation apart from one under the note itself it may clearly be enforced. The fact that the loan and the note are

contemporaneous is not conclusive on the non-existence of such obligation.

In their opinion, therefore, this is a question of fact depending upon whether there was a completed contract independent of the promissory

note. The petitioner''s contention is that a promissory note is a conditional payment and that, therefore, whenever a promissory note is taken, so

long as the promissory note is outstanding, there is no right of action otherwise than upon the note but when the note is not paid at maturity or is

dishonoured, the original debt, which has merely remained suspended in the meantime, is revived and can be sued upon, provided that the

promissory note has not been negotiated by the payee. Stone, J. in Murugappa Chetti v. Nachiappa Chetty 67 M L J 30 : 155 Ind. Cas. 164 : 40

LW 167 : A I R 1931 Mal. 503 : 7 R M 559 is of the opinon that as soon as the promissory note is overdue, provided that it is in the possession

of the plaintiff, he can either sue on the note or can put the note on one side and sue on the debt; and he relies upon what was stated by Fletcher

Modlton, L.J. in In re A Debtor (1908) 1 KB 344 : 77 L J K B 409 : 98 L T 652 Reliance was also placed by Stone, J. upon the decision of the

Privy Council delivered by Lord Moulton, viz., Swaminatha Chetty v. Palaniappa Chetty (1914) A C 618 : 26 Ind. Cas. 218 : 41 I A 142 : 18 C

W N 617 : 17 New Law Rep. 56 : 83 L J P C 131 : 110 L T 913 where he expressed similar views. It is, however, to be observed that in that

case the contract sued upon irrespective of that on the promissory notes was held to be a separate and distinct contract and that both gave rise to

mutually exclusive causes of action. There, a sum had been found due by arbitrators and it was provided that part of the amount so found due was

to be paid for by the giving of the promissory notes in question i.e. that was a method of payment. This cannot be taken as a decision upon a

contemporaneous loan and document Stone, J. however, does say that it is a question of fact whether the original cause of action is the note itself

or whether there is also another cause of action and certainly he cannot be understood as deciding that, where the promissory note is the

consideration for the contract, any other contract can be sued upon which of course would be entirely contrary to the provisions of Section 91 of

the Indian Evidence Act. I will now deal with some of the earlier cases relied upon by the petitioner both Indian and English. The first of these is

Chho kaling am Chetty v. Annamalai Chetty 31 Ind. Cas. 417 31 Ind. Cas. 417 AIR 1917 Mad. 480, already referred to. The head-note reads

as follows:

The giving of an instrument in writing in recognition of an antecedent debt does not extinguish but merely suspends the cause of action on the

original debt, which revives if the security be not discharged at maturity, unless such instrument can be regarded as a mere collateral security in

which case it will not operate even as a suspension of the original debt"" and obiter dicta.

If a bill or a note is given for a contemporaneous debt, the bill merely suspends the remedy and does not operate as a discharge.

There Coutts-Trotter, J. was clearly dealing with the case which was before the Court, namely, an antecedent debt followed by the giving of a

promissory note and he did not refer to the effect of a contemporaneous loan and promissory note. K. Srinivasa Ayyangar, J. however, dealt with

this question and made the observations which I have quoted earlier in my judgment, Therefore, only one of the Judges there expressed an opinion

on this question which was one which did not arise for consideration in that case. I have already dealt with Chidinbiram Chettiar v. Ayyaswami

Thevan 40 M 585 : 36 Ind. Cas. 741 : 31 M L J 401 : (1916) 2 M W N 210 : 4 L W 261 : 20 M L T 350 which makes this question one of fact.

I now come to a Fall Bench decision of the Rangoon High Court, viz., Maung Chit v. Roshan N.M. A. Kareem Oomer & Co. 12 R 500 : 152

Ind. Cas. 1038 : A I R 1934 Rang. 389 : 7 R Rang. 184 where this question was very fully discussed. There it was held that when a promissory

note or any other instrument is given by the borrower to the lender in connection with a loan, either at the time when the loan is contracted or

afterwards, the terms upon which it is given and taken is a question of fact and not of law: that prima, facie the giving of a negotiable security by a

debtor to his creditor operates as a conditional payment only and not as a satisfaction of the debt unless the parties agree so to treat it and such a

conditional payment is liable to be defeated on nonpayment of the negotiable instrument at maturity; that if the negotiable instrument is given by the

borrower to the lender and the negotiable instrument is itself the consideration for the loan, or if the instrument is accepted as an accord and

satisfaction of the original debt, the lender is restricted to his rights under the negotiable instrument by which he must stand or fall but that if it is

agreed between the parties that the instrument shall be taken merely as collateral security for the re-payment of the loan, the lender is entitled to sue

upon the original consideration independently of the security and without regard to any rights that he may possess under the instrument: that if all the

terms of the agreement under which the loan was made have been embodied in a negotiable instrument or in any other document, no evidence can

be adduced in proof of the terms of the contract except the document itself and, if such document is for any reason inadmissible in evidence, the

suit must fail; that normally and prima facie a lender is regarded as taking a negotiable instrument only as conditional payment and not in satisfaction

of the loan: that where the handing over of the money and of the instrument is simultaneous, it does not follow that the instrument is the sole

repository of the terms of the agreement; and that it is not the time when but the terms upon which the loan was made that matters and that is a

question of fact to be determined according to the particular circumstances obtaining in each case. Amongst other cases, Pothi Reddi v. Velayudha

Sivan 10 M 94, Sheik Akbar v. Sheik Khan 7 C 256 : 8 C L R 528 were dissented from. A number of authorities, both English and Indian, were

considered. With regard to the former, these are: In re Romer & Haslam (1893) 2 Q B D 286 : 62 L J Q B 610 : 4 R 486 : 69 L T 547 : 42 W R

There, a client had given to his solicitor a negotiable security for the amount of his bill of costs, and the solicitor had given the client a receipt in

which the negotiable security was expressed to be taken ''in settlement'' of his bill: and it was held that the giving of the negotiable security was not

a payment in the event of. being dishonoured unless there was proof, the onus of which lay on the solicitor, that such was the intention of the parties

at the time. On p. 300 Page of (1893) 2 Q.B.D.--[Ed.] Bowen, L. J. says:

It has been established by a series of authorities, which it would be ridiculous to go through seriatim, that a bill of exchange given for a debt

amounts to conditional payment of that debt, and is only conditional payment so long as it is running; the payment is liable to be defeated when the

bill is dishonoured.

In that case, therefore, there was no question that the negotiable security Was taken as a payment of the debt and an antecedent one., In Day v.

Mc Lea (1889) 22 QBD 610 : 58 L J Q B 293 : 60 L T 947 : 37 W R 483 : 53 J P 532 the defendants having broken their contract, the plaintiffs

made a claim against them for a sum of money as damages. The defendants sent a cheque for an amount smaller than that claimed stating that it

was in full payment of all demands. The plaintiffs kept the cheque stating that they did so on account and brought an action for the balance of their

claim and it was held that keeping the cheque was not, as a matter of law, conclusive, that there was an accord and satisfaction of the claim but

that it was a question of fact on what terms the cheque was kept. This case again was a case of an antecedent debt and it was a question of fact as

to whether the cheque was given and received in satisfaction of the claim and I make the observation also that, when a cheque is given in respect of

a debt, prima facie it can be presumed that it is intended as a payment. Certainly a cheque cannot be taken as embodying the terms of a contract

other than to pay. In Goddard & Son v. O''Brien (1881) 9 Q B D 37 A being indebted to B in �125 7s 9d for goods sold and delivered, gave

B a cheque for �100 payable on demand which B accepted in satisfaction. This was held to be a good accord and satisfaction. From the facts

of that case it would appear that the cheque was dated August. 16, 1880, and that previous to that date the defendant was indebted to the plaintiff

in the sum stated for goods sold and delivered to him. This, therefore, was a clear case of a cheque given in respect of an antecedent indebtedness

and the cheque was equally clearly given as a payment either in full satisfaction or on account. In Farr v. Price (1800) 102 E R 22 : 1 East 55 : 5 R

R 515, there is a very brief statement of the facts and it does not appear whether the debt there in respect of which a promissory note was taken

was an antecedent debt or a contemporaneous one; nor does it appear in respect of what the debt was, whether a loan or something else. The

decision was mainly upon the question as to whether the promissory note could be received in evidence on account of the stamp which was of a

greater value than the correct stamp required and it was held that it was inadmissible in evidence and Lord Kanyon, C.J., then observed that as

there were other general counts in the declaration, if the plaintiff could give other evidence of a consideration paid by him to the defendant, he

would not be concluded from recovering by the fact of the defendant''s having given the imperfect pormissory note for it. But there is a footnote to

that case which refers to Tyte v. Jones 1 East 58. There a promissory note had been given for money lent but when produced in Court was

unstamped. Lord Kenyon, C.J., permitted the plaintiff to recover on a common count for money lent by proving that when the money for which the

note had been given was demanded of the defendant, he acknowledged the debt.

In Cohen v. Hale (1878) 3 Q B D 371 : 47 L J Q B 495 : 39 L T 35 : 26 W R 680, a garnishee order was made attaching a debt. At the time

the order was made the garnishees had given the judgment-debtor a cheque for the amount of the debt. Upon service of the order on the

garnishees they stopped payment of the cheque at the Bank, the cheque not having been presented, and it was held that upon the cheque being

stopped it was as if it had never been given and that there was, therefore, an existing debt capable of being attached and the garnishee order was

effectual. On p. 373 Page of (1878) 3 Q.B.D.--[Ed.] Cockburn, C.J., says:

It is very true that a man who takes a cheque may be estopped from proceeding to enforce payment of the debt until presentment of the cheque,

and if the cheque is ultimately paid, the debt is extinguished. All that happens in the meantime is that the right of action is suspended. But when the

cheque is presented and dishonoured, the debt, the remedy for which was suspended until presentment of the cheque, may be treated as a debt

subsisting all along, just as if the cheque had never been given. The giving of the cheque only suspends the remedy, it does not extinguish the debt.

Of the Indian cases Swaminatha Chetty v. Palaniappa Chetty (1914) A C 618 : 26 Ind. Cas. 218 : 41 I A 142 : 18 C W N 617 : 17 New Law

Rep. 56 : 83 L J P C 131 : 110 L T 913, has already been referred to and so have other Indian cases. One other case which is referred to by

Venkatasubba Rao, J., in Chinnayya Naidu Vs. Srinivasa Naidu, , and was relied upon here is Gopala Padayachi v. Rajagopala Naidu A I R 1928

Mad. 1118 : 98 Ind. Cas. 75 : (1923) M W X 757, to which I have already referred, where Wallace, J., says:

When a promissory note is taken for a contemporaneous debt, the balance of opinion is that the execution of the promissory note does not

discharge the debt but only suspends the creditor''s ordinary remedy during the currency of the promissory note.

Venkatasubba Rao, J., proceeds upon the view that it is a well settled rule of English Law that a negotiable instrument operates only as a

conditional discharge and that it is difficult to conceive that Illus. Chinnayya Naidu Vs. Srinivasa Naidu, to Section 91 of the Evidence Act can

have been intended to abrogate or annul that well-settled rule. He adds that the effect of that illustration is no more than to exclude all proof other

than the bill itself when the matter to be proved is the contract embodied in that bill. Prima facie no doubt a negotiable instrument operates only as

a conditional discharge but, if the promissory note embodies all the terms of the contract it is difficult to see how any contract other than that can be

put in evidence without offending against the provisions of Section 91 of the Evidence Act. Upon this question Venkatasubba Rao, J., refers to

Pramatha Nath Sandal v. Dwarka Nath Dey 23 C 851. There the defendant had taken a loan from the plaintiff and executed a document which

was held to be a promissory note. At the trial the document was produced but was held to be insufficiently stamped and the Judge refused to admit

it in evidence. The Appellate Court held that the plaintiff had a cause of action independently of the document. The defendant in his written

statement admitted that he borrowed the sum in question from the plaintiff and the Appellate Court held that there was an implied contract to re-

pay the money lent even though there was no express promise. Sheikh Akbar v. Sheikh Khan 7 C 256 : 8 C L R 528, was referred to by

Petheram, C.J. in the course of his judgment and he explains the decision of Sir Richard Garth, C.J., stating that when he spoke of a ''deposit'' he

did not mean a ''loan.'' What Sir Richard Garth, C.J., in that case did was to make a two-fold classification first, where there is a completed cause

of action as for goods sold and, secondly, where the cause of action, is the note itself, stating with regard to the latter class :

When the original cause of action is the bill or note itself and does not exist independently of it, as for instance, when in consideration of A

depositing'' money with B, B contracts by a promissory note to repay it with interest at six months'' date, here there is no cause of action for

money'' lent or otherwise than upon the note itself, because the deposit is made on the terms contained in the note and no other.

With regard to the former class, he says on at p. 259 Page of 7 C--[Ed.]:

When a cause of action for money is once complete in itself, whether for goods sold, or for money lent, or for any other claim, and the debtor then

gives a bill or note to the creditor for payment of the money at a future time, the creditor, if the bill or note is not paid at maturity, may always, as a

rule, sue for the original consideration, provided that he has not endorsed or lost or parted with the bill or note, under such circumstances as to

make the debtor liable upon it to some third person.

This decision was also referred to by Jenkins, C.J., in Krishnaji Narayan Parkhi v. Rajmal Manikchand Marwari 24 B 360 : 2 Bom. L R 25.

In that case also there was an independent admission of a loan by the defendant in addition to the hundi which was held to be inadmissible in

evidence for want of a stamp and as in Pramatha Nath Sandal v. Dwarka Nath Dey 23 C 851, it was held that the plaintiff could still fall back

upon the other consideration. Dealing with Sheikh Akbar v. Sheikh Khan 7 C 256 : 8 C L R 528, Jenkins, C.J., says:

It is apparent that the actual ratio decidendi was that there was no loan independently of the note.

Whereas in Krishnaji Narayan Parkhi v. Rajmal Manikchand Marwari 24 B 360 : 2 Bom. L R 25, there was a loan independently of the note.

Jenkins, C.J., appears also to share Petheram, C.J.''s opinion with regard to the remarks of Sir Richard Garth, C.J., to which reference has already

been made, upon the question of the words, ''loan'' and ''deposit.'' In referring to illus. (b) of Section 91 of the Evidence Act, he says:

It is perfectly true that the terms of the contract contained in the hundi can, apart from the conditions which permit secondary evidence, only be

proved by the hundi, but this does not prevent proof of the loan independently of the note.

I do not understand him to mean that, if the whole of the terms of the contract are set out in the document, any evidence other than the

production of the document itself is permissible. In Parsotam Narain v. Talay Singh 26 A 178 : A W N 1903, 217, Aikman, J. differs from the

view of Patheram, C.J., in Pramatha Nath Sandal v. Dwarka Nath Dey 23 C 851, and is of the opinion, thal Sir Richard Garth, C.J., in Sheikh

Akbars case 7 C 256 : 8 C L R 528 did not intend to draw any distinction between the two classifications stated by him with regard to the nature

of the debt, i.e., whether it was a loan or whether it was a deposit, being of the opinion, that he used the word ''deposit'' merely as an illustration. I

agree with Aikman, J.s'', view and cannot think that Sir Richard Garth, C.J. intended any such distinction. It is difficult to see why such a distinction

should have been intended particularly as a deposit of money with a person to be repaid at a future date with interest is really a loan. Aikman, J.''s

judgment is relied upon by the respondents here. Page, C.J. in Maung Chit v. Roshan N.M.A. Kareem Oomer & Co. 12 R 500 : 152 Ind. Cas.

1038 : A I R 1934 Rang. 389 : 7 R Rang. 184 , thinks that in cases in which the parties agree that the negotiable instrument shall be taken as

conditional payment only and not in accord and satisfaction of the original. debt, Section 91 of the Evidence Act has no application because he has

himself never known or heard of an instance in which that term of the agreement has been embodied in the negotiable instrument. I fully agree with

his view of the matter which is based upon the instrument not containing all the terms of the contract. Where it does, however, and is itself the

consideration of the loan, he is of the opinion, that the lender is restricted to his rights under the instrument by which he must stand or fall. I now

propose to refer to the cases relied upon by the respondent. The earliest of these is Sheikh Akbar''s case 7 C 256 : 8 C L R 528 which I need not

refer to again and which was followed in Pathi Reddi v. Velayudha Sivan 10 M 94. The head-note of the latter case reads as follows:

The terms of a contract to re-pay a loan of money with interest, having been settled and the money paid, a promissory note specifying these

terms was executed later in the day by the defendant and given to plaintiff. This promissory note was not stamped. In a suit brought to recover the

unpaid balance of the loan on an oral contract to pay, it was held that the plaintiff could not recover. On p. 96 Page of 10 M.--[Ed.] Collins, C.J.,

and Parker, J. says:

But when a loan is made by plaintiff to defendant and in consideration of that loan the defendant contracts by a promissory note to pay it with

interest at a certain date, there is no cause of ction ''for money lent'' or otherwise than upon the note and, of for want if a stamp the note is not

receivable in evidence, the plaintiff''s claim must fail.

The promissory note there admitted the receipt of the money and promised to re-pay the same on a certain date with interest. In Muthu

Sastrigal v. Viswanatha Pandara Sannadhi 38 M 660 : 21 Ind. Cas. 864 : 14 M L T 520 : (1914) M W N 58 : 26 M L J 19 : A I R 1914 Mad.

657, there was a varthamanam which read as follows:

Amount of cash borrowed of you by me is Rs. 350. I shall in two weeks'' time, returning this sum of Rs. 350, with interest thereon at the rate of

Rupee one per cent per month, get back this letter.

It was held that this amounted to an unconditional undertaking to re-pay borrowed money and was, therefore, a promissory note and not

merely an offer to borrow or an acknowledgment of indebtedness. The document was inadmissible for want of a stamp and Sadasiva Ayyar and

Spencer, JJ. held that to allow a suit as one on ''account for money had and received'' concealing the real contract of loan which had been reduced

to the form of a document would nullify Section 91 of the Indian Evidence Act. Krishnaji Narayan Parkhi v. Rajmal Manikchand Marwari 24 B

360 : 2 Bom. L R 25was dissented from and Pothi Reddi v. Velayudha Sivan 10 M 94, followed, D. Deynan Kunhathamma Vs. P. Avulla and

Others, , Gura Sahu Vs. Tangi Krishnamma and Others, and Chendrasekaran Pillai and Another Vs. Srinivasa Pillai, , are all decisions in which the

view supporting the respondent''s contention has been taken. The recent decision of Varadachariar and Burn, JJ. in At. N. At. Chockalingam

Chettiar Vs. Rama Mu Rama Palaniappa Chettiar, , also supports that contention; and also the decision of Anantakrishna Ayyar, J. in Alimane

Sahiba v. Subbarayudu 63 M L J 303 : 139 Ind. Cas. 486 : A I R 1932 Mad. 693 : (1932) M W N 793 : Ind. Rul. (1932) Mad. 730 : 36 L W

In Nazir Khan and Another Vs. Ram Mohan Lal and Another , a decision of a Full Bench of that Court in which a number of authorities are

referred to, it was held that where the promissory note and the lending of the money are part and parcel of the same transaction and the terms of

the loan are the very terms of the promissory note, the contract of loan cannot he proved apart from the document itself and the plaintiff''s suit must

fail if the document itself be inadmissible in evidence. The Lahore High Court also seems to have taken the same view as that of the Allahabad High

Court in this case in which reference is also made to the observations of Rankin, C.J. in Dula Meoh Vs. Moulavi Abdul Rahaman, . It is clear that

upon this question there is a conflict of opinion. So far as the Madras High Court is concerned, the preponderance of opinion seems to me to

support the respondents'' argument. But all Courts take the view that with regard to antecedent debts, the position is that the original debt can be

sued'' upon irrespective of the subsequent document or promissory note and the better opinion with regard to contemporaneous loans and

promissory notes is that, where the promissory note is the consideration for the loan, the debt, cannot be proved aliunde. That view, in my opinion,

is clearly the correct view, in view of Section 91, of the Evidence Act, With regard to the view expressed in the Rangoon case that prima facie a

negotiable instrument is given as a conditional payment for a loan, I think that that view expresses the matter rather too generally. Certainly in cases

where the note is given in payment of goods, which was the position in most of the English cases, that would be so. But dealing with money-lending

transactions, I am not disposed to think that this view is entirely correct and in a country where borrowing and lending of money is so universal, the

prima facie rule as stated in English cases cannot be adopted without some qualification. A borrower goes to a person who lends money and asks

for a loan. The lender says that he will not lend the money unless the borrower executes a promissory note. The borrower agrees to do so, and I

imagine, in a majority of cases executes the promissory note first and in exchange for it receives the money. Is the lender under these circumstances

to be presumed to be receiving the promissory note as a conditional repayment of the money? Or does the promissory note which states that the

borrower has received a sum of money on the date of the receipt and a promise to repay it with interest from the contract itself? It is, in my view,

difficult to avoid the conclusion that it does. What other term is there which is omitted? Page, C.J. in Maung Chit v. Roshan N.M.A. Kareem

Oomer & Co. 12 R 500 : 152 Ind. Cas. 1038 : A I R 1934 Rang. 389 : 7 R Rang. 184 , case is of the opinion that the term that the promissory

note is taken as a conditional payment is omitted but this presupposes that there was such a term. I fully agree with what has been stated in many

of the cases to which reference has been made that the question must be one of fact but where it is clear that the promissory note itself contains all

the terms, I think that, in the absence of any evidence to the contrary, it must be accepted as the contract and that no contract aliunde cannot be

proved. A great deal must depend upon what appears on the face of the document. In some cases the promissory note may state that it is given in

payment for goods sold and delivered. Such cases, in my opinion, do not present any difficulty because the presumption there would be that the

promissory note was given in conditional payment for the goods sold and delivered. In other cases it may be clear that there was already a

completed contract before the promissory note was given. In such cases I agree that evidence of that contract can be given irrespective of the

promissory note. The position does seem to me to be different, however, when the promissory note appears to be part and parcel of the

transaction of loan. My view, therefore, is that in all cases Courts must be guided by what appears on the face of the promissory note. If it is

expressed in such a way as to leave what was intended by the Parties in any way in doubt, then the facts must settle the question. If it is clear on

the face of the promissory note that it is the contract, then no further evidence can be permitted. Turning to the suit document itself, it seems to me

that it was given as a conditional payment for the paddy. This being so, the promissory note not having been paid on demand may be treated as

dishonoured and the original debt thus revived. The plaintiff was, therefore, entitled to fall back upon the original debt. The petitioner succeeds with

costs and the case must go back to the lower Court for disposal according to law.

Cornish, J.

Upon the vexed question whether the payee of a note given for a contemporaneous loan has or has not a right of action on the debt I prefer to

reserve my opinion, because it seems to me that that question cannot be said to arise for decision on the facts of this case. Of course if there is

evidence that a note was agreed to be taken in satisfaction of the debt created by the loan, there is no difficulty in restricting the payee''s right of

action to the note. But I am unable to appreciate why that position should be assumed to be established by the accident of the loan and note being

contemporaneous transactions. It would seem to be contrary to what was stated by Lord Esher and In re Romer and Haslam (1893) 2 Q B D

286 : 62 L J Q B 610 : 4 R 486 : 69 L T 547 : 42 W R 51 as:

Perfectly well-known law, which was acted upon in every form of mercantile business, that the giving of a negotiable security by a debtor to his

creditor operates as a conditional payment only, and not as a satisfaction of the debt unless the parties agree so to treat it.

But as I have already stated I think that on the facts disclosed it is not necessary to decide the question. Therefore, I confine my judgment to

the particular facts of this case. On the construction of the plaint I think that the suit must be held to have been brought upon the debt on account of

which the unstamped note had been taken by the plaintiff. The document is referred to as a hand letter, which shows a consciousness on the part of

the plaintiff or his legal adviser that the document unstamped could not be relied upon as a promissory note. The material allegations in the plaint, as

I read them, are that there was a sale of paddy by the plaintiff to the defendant and that defendant gave to plaintiff for the sum due with interest a

document which pur ported to be a note. In these circumstances if the note had been a valid instrument, it seems to me that the case would fall

within the well established rule that when a creditor takes a bill or a note or a cheque on account of a debt, it is a qualified or conditional payment;

that is to say, the instrument is received in payment subject to the condition that it will be duly honoured. The debt remains unaffected, though the

cause of action is suspended while the instrument is running. Thus, in Cohen v. Hale (1878) 3 Q B D 371 : 47 L J Q B 495 : 39 L T 35 : 26 W R

680, Lord Chief Justice Cockburn stated:

When the cheque is presented and dishonoured, the debt, the remedy for which was suspended until presentment of the cheque, may be treated as

a debt subsisting all along, just as if the cheque had never been given.

A creditor may indeed accept a negotiable instrument in satisfaction of his debt. But in the present case there is not the shadow of a plea in the

defendants'' written statement that the note was given and accepted in satisfaction of the debt on the contrary, the mainstay of the defence in the

pleading and at the trial apparently was that the note was an invalid instrument, treating the suit as brought on the note. It can make no difference

Whether the note is invalid or dishonoured as regards the creditor''s right of action upon the debt on account of which the document purported to

have been given. In my judgment, therefore, the suit was maintainable on the debt independently of the unstamped and inoperative note, and it

follows that I agree that the revision petition should be allowed.

Pandrang Row, J.

I entirely agree with my Lord, the Chief Justice.