Rangaswami Gounder vs Ramaswami Gounder

This revision arises out of a suit filed by the petitioner as an assignee of a promissory note dated 26-9-1966 executed by the respondent for a

sum of Rs. 3000 in favour of the petitioner''s assignor. The said suit was resisted by the respondent. he also filed an application under O. 8-A, Rule

1 of the CPC for impleading the husband of the assignor as a party defendant to the suit contending that the consideration for the promissory note

was paid by the assignor''s husband, that he had received the entire amount due under the promissory note and had passed a receipt to him in full

discharge of it, and that as such he is entitle to be indemnified for the payments made to him in the event of the petitioner succeeding in getting a

decree against him. This application was resisted by the petitioner on the ground that the assignor''s husband cannot be made a party to this suit,

that the remedy of the respondent, if any, was to file an independent action against him for the amounts alleged to have received by him and that the

provisions of O. 8-A, Rule 1 cannot therefore be invoked in this case. The lower court had noted that the respondent had filed three receipts along

with his written statement to prove his case of payment of the amounts to the assignor''s husband in full discharge of the promissory note debt and

held that, in the circumstances of the case, the third party procedure under Order 8-A, Rule 1, C.P.C. The plaintiff challenges the order of the

lower court as incorrect and erroneous.

The learned counsel for the petitioner relies on the decision in Malligai Sundaram Ammal Vs. Krishnaswamy Reddiar and Others, , wherein a

Division Bench of this court held that it is not open to the promisor of a note to contend that some one, other than the payee on the face of the note

is the real owner of the note, and contends that the case now put forward by the defendants is that the assignor''s husband is really the payee under

the promissory note and not the assignor and that such a contention cannot be put for forward in the suit to enforce the promissory note. I do not

accept this contention. The defendant in this case merely says that the amounts due under the promissory note have been paid to the assignor''s

husband treating the payment made to the assignor''s husband as payment made to the assignor. hence the above decision cannot stand in the way

of the respondent.

The learned counsel then cites the decision of Ramachandra Iyer, J, (as he then was) in P.S. Pattabhiraman and Others Vs. Ganapathy

Kannappa Mudali and Others, where it has been held that, though Order 8-A will apply also to suits on promissory notes and the court should not

refuse to adopt third party procedure merely on the ground that the suit is based on a negotiable instrument, before a third party notice could be

issued it is necessary for the court to find whether the defendant is entitled to an indemnity or contribution from the third party concerned. In that

case, in defence to a suit on a promissory note the defendant pleaded that certain payments had been made to the payee which he had failed to

give credit to, and the learned Judge held that if the maker is put to a loss on account of the fraudulent act of the payee and endorser, his remedy

would be in the nature of damages and not by way of indemnity, and that Order 8-A, Rule 1 is inapplicable to that case. But, the learned Judge,

however, directed the payee to be impleaded as a party defendant in the suit under Order 1, Rule 10, C.P.C. Relying on this decision, the learned

counsel for the petitioner submits that the respondent has no right of indemnity as against the assignor or the assignor''s husband and that his only

remedy was to file a separate suit for damages in the event of the suit being decreed against him. With due respect, I am not in a position to say

that the respondent cannot proceed against the assignor''s husband under the third party procedure in this case.

In S. Subulal Sahib Vs. N. Perianna Pillai, it has been held that an application under Order 8-A, rule 1, C.P.C. would lie, even if there had been

no privity of contract between the plaintiff and third party that the application of Order 8-A will not depend upon the right of the plaintiff to choose

any of the parties liable to him as defendant in the suit, and that the third party procedure is for the protection of the defendant.

In Eastern Shipping Co. v. Quah Beng Kee, 1924 AC 177, Lord Wrenbury stated at p. 182-

A right to indemnity generally arises from contract express or implied, but it is not confined to cases of contract. A right to indemnity exists where

the relation between the parties is such that either in law or in equity there is an obligation upon the one party to indemnify the other. There are, for

instance, case in which the state of circumstances is such that the law attaches a legal or equitable duty to indemnify arising from an assumed

promise by a person to do that which, under the circumstances, he ought to do. The right to indemnify need not arise by contract; it may (to give

other instances) arise by statute; it may arise upon the notion of a request made under circumstances from which the law implies that the common

intention is that the party requested shall be indemnified by the party requesting him...................

In C. R. P. 945 of 1956 (Mad), (Andiammal v. Komalambal) Rajamannar, C. J, held in a case where the defendant pleaded that the promissory

note on which the suit has been laid by the endorsee from the original payee was not supported by consideration and sought to implead the legal

representatives of the original payee invoking Order 8-A, that Order 8-a can rightly be applied. In Rudrappa Chetty Vs. Narasimha Chetty and

Another, , the court observed that the expression ""indemnity"" occurring in Order 8 a should be interpreted broadly and it would mean claims to

indemnity as such either at law or in equity.

In K. Muniandi Vs. Selvarajan and Another, , Ramaprasada Rao, J. had expressed the view that Order 8-A prescribing a special method by

which a party defendant could secure relief without independently filing a suit against a third party can be invoked by a defendant if he makes out a

case that such third party is bound to indemnify him in connection with the suit transaction and that the liability to indemnify need not necessarily

spring from contract. In that case the defendant had paid certain amounts to the father of the plaintiff in liquidation of the promissory note, but the

father did not account for the same either by instructing his son to give credit to it or otherwise. The court held that the defendant is entitled to

impleaded the father as the second defendant in the section invoking Order 8-A. This decision directly applies to the facts of the instant case. But

the learned counsel for the petitioner seeks to distinguish this case on the ground that the suit in that case had been filed by the payee himself while

in the present suit the suit has been filed by an assignee of the promissory note who is a holder in due course. I cannot accept the distinction

pointed out by the learned counsel. The application of the third party procedure under Order 8-A does not depend upon the person suing but will

only depend upon the right of the defendant to get indemnified by the third party. The rights of the defendant as against the third party cannot be

decided with reference to the plaintiff who files the suit.

Veeraswami J. (as he then as in Parasmal Chordia Vs. Rajalakshmi Ammal and Another, had observed-

Conceived, as it is, for the benefit of the defendant, as I had already stated, all that is necessary for the application of third party procedure is

whether if the plaint claim is allowed the defendant has a claim, in that event, for indemnity by reason of such claim being allowed, from a third

party. If that requisite is satisfied, the court will not be justified, on any extraneous ground, from refusing third party procedure.

On a due consideration of the principles laid down in the above decisions, I am of the opinion that the earlier view held by Panchapakesa Ayyar,

J., in Uthaman Chettiar v. Thiagaraja Pillai AIR 1956 Mad 155, that the third party procedure cannot be applied to suits on negotiable instruments

is no longer good law, that the procedure contemplated in Order 8-A can equally be applied to suits on negotiable instruments as the language of

Rule 1 of Order 8-A does not justify any such limitation being placed on its application, that the expression ""indemnity""'' referred to in Order 8-A

need not necessarily spring from a contract, and that the facts in this case establish an equitable right of indemnity against the assignor''s husband. I

therefore hold that the lower court was fully justified in allowing the application made by the respondent under Order 8-A.

In the result the civil revision petition is dismissed, but in the circumstances, no costs.

Petition dismissed.