Vakkalanka Kondamma vs Kasaneedi Venkatarayadu and Others

Madhavan Nair, J.—The plaintiff is the petitioner. Her suit was for the enforcement of a promissory note dated 9th August, 1929, executed

by the first defendant, the undivided father of defendants 2 to 5. The promissory note bears an endorsement on the back of part payment, dated

6th July, 1932. The plaint was filed on 28th June, 1935. The suit note was insufficiently stamped and was inadmissible in evidence u/s 35 of the

Indian Stamp Act. The plaintiff therefore on 30th July, 1935, applied for an amendment of the plaint seeking permission to take his cause of action

on the promissory note dated 11th August, 1926, which had been cancelled and superseded by the execution of the suit note which was renewal

of this note. This note also had been filed along with the suit note. The application for amendment was refused by the learned Judge on the ground

that the endorsement dated 6th July, 1932 can only refer to the suit note and cannot be taken as an acknowledgment of the prior promissory note

debt. The order further stated:

Even assuming that the endorsement has such an effect, the claim on the prior pronote became barred after the expiry of three years from the date

of endorsement, that is, 6th July, 1932. The plaintiff cannot be allowed to get over the difficulty of limitation by obtaining the amendment.

The amendment having been refused the suit was dismissed. In the Civil Revision Petition the main argument has been that in the circumstances

of the case, the amendment should have been allowed.

The granting of an amendment is left to the discretion of the Court under Order 6, Rule 17, Civil Procedure Code. As a general rule leave to

amend will be granted to enable the Court to determine the real question in issue between the parties provided that the amendment will occasion no

injury to the opposite party except such as can be compensated for by costs or other terms to be imposed by the Court. Consideration of the

question whether any injury will be caused to the defendant in the present case will entail practically a decision of the plaintiff''s case; and if in the

course of the discussion it is found that the defendant is not deprived of any legitimate plea that he can raise, including of course the plea of

limitation, I think the amendment should be granted. I would therefore proceed to consider the case on its intrinsic merits before deciding whether

the amendment should be allowed or not.

It is clear that no new cause of action is introduced in the suit if the plaintiff is allowed to rely upon the earlier promissory note dated 11th

August, 1926. The debt was originally incurred under that note and afterwards it was renewed on 9th August, 1929, by the suit note. The suit note

therefore embodies the original claim and in seeking the amendment the plaintiff is only asking for the enforcement'' of that claim, which he should

be allowed to enforce if such enforcement will not prejudice the defendant-in putting forward any legitimate plea which the defendant might have.

The plea relied on by the defendant is the plea of limitation. We shall proceed to examine how far this plea can be availed of by the defendant in

the circumstances of the case.

The suit upon the earlier note dated 11th August, 1926, will be barred on the date of the plaint if the debt is not in the first place acknowledged

before the expiry of three years from the date of the note. The first acknowledgment relied on is on 9th August, 1929, the date of the suit

promissory note. Even if an acknowledgment is established on that date, the plaintiff will have to rely on yet another acknowledgment to bring the

suit within time; about this, later. About the first acknowledgment, it is argued by the respondent that the suit note executed on 9th August, 1929,

being insufficiently stamped, cannot be relied upon for any purpose and so cannot serve as an acknowledgment on 9th August, 1929, of the

original liability. But it is urged on behalf of the plaintiff that it is not necessary for her to rely upon the suit note for establishing the acknowledgment

on 9th August, 1929, for she can rely on the cancellation continued in the earlier promissory note as an acknowledgment. At the end of the earlier

promissory note dated 11th August, 1926, there is this memorandum:

This note is cancelled as a fresh promissory note was executed on 9th August, 1929, for the principal and interest due up to date on this note.

The fresh note executed is the suit promissory note. It is argued that the mention of the fact that the original note was cancelled by the execution

of a fresh note on 9th August, 1929, amounts to an acknowledgment of the liability on that date under the cancelled note, that is, the note dated

11th August, 1926. If this position is correct, then it is not necessary that the plaintiff should rely upon the insufficiently stamped suit note to prove

the acknowledgment on 9th August, 1929. The decision in Salig Ram v. Radhay Shiam (1931) 134 I.C. 254 completely supports the contention of

the plaintiff on this point. In that suit the defendant had executed a promissory note to the plaintiff on the 10th November, 1922. On the 7th.

September, 1925, another promissory note was executed in renewal of the previous one and an endorsement was made to the following effect on

the previous note:

On 7th November, 1925, in lieu of the present promissory note a second promissory note of the amount of Rs. 1,350 has been executed and this

promissory note has become void.

It may be mentioned that this promissory note became void as it was not properly stamped u/s 35 of the Stamp Act. The plaintiff instituted a suit

in 1927 on the second promissory note and finding that it was not properly stamped amended the plaint by basing the suit on the promissory note

of 1922 and relying on the endorsement on it as. an acknowledgment. It was held that the meaning of the endorsement was that there was a

subsisting debt though a new security was being substituted and it contained a valid acknowledgment of liability (see the head note). It is clear from

this decision that the endorsement of cancellation on the previous note in the present case, that is, the note dated 11th August, 1926, amounts to a

valid acknowledgment of liability, on 9th August, 1929.

Having thus far kept alive the original liability, the plaintiff next contends that the endorsement on the suit note, though the note itself is

insufficiently stamped, on 6th July, 1932, before the expiry of three years from 9th August, 1929, gives her another three years from 6th July,

1932, for the enforcement of her claim, and that the suit having been instituted on 28th June, 1935, within this period of three years is not barred

by limitation. The question is whether the plaintiff can rely on the endorsement on the insufficiently stamped promissory note as a valid endorsement

acknowledging the original liability. It is argued that the promissory note itself being insufficiently stamped and inadmissible in evidence, the

instrument cannot be used in evidence for any purpose u/s 35 of the Stamp Act. But it was held in a decision of this Court in Chokkalingam Chetty

v. Annamalal Chetty (1915) 34 I.C. 417 that though the promissory note itself is inadmissible the endorsements of payment appearing on it can be

availed of as acknowledgments of the liability upon the original debt. If so, in this case it is clear the suit is not barred by limitation as it was

instituted within three years from 6th July, 1932, the date of the endorsement. Nothing has been said to shake the strength of this decision. Section

35 of the Indian Stamp Act says, that

no instrument chargeable with duty shall be admitted in evidence for any purpose...unless such instrument is duly stamped.

Under this section an insufficiently stamped instrument is inadmissible in evidence. ''Instrument'' is defined in the Indian Stamp Act (II of 1899) to

include every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded

(see Section 2, Clause 14) and ""document"" is defined in the General Clauses Act (X of 1897) as follows:

''Document'' shall include any matter written, expressed or described upon any substance by means of letters, figures or marks, or by more than

one of those means, which is intended to be used, or which may be used, for the purpose of recording that matter.

From this it follows that the instrument that is inadmissible u/s 35 of the Stamp Act is the ""matter written on the substance"" by means of letters

described as the promissory note. For the purpose of extending the period of limitation what is relied on is not the writing which constitutes the

promissory note and which is inadmissible, but the endorsement on the insufficiently stamped note. So long as it acknowledges the liability under

the original note I can see nothing in law to prohibit its admission in evidence. That the endorsement acknowledges the original liability under the

previous promissory note and that it can be relied on for the purpose of saving limitation though it appears on an insufficiently stamped promissory

note have been both clearly laid down in Chokkalingam Chetty v. Annamalal Chetty (1915) 34 I.C. 417 just referred to, and the present suit has

been instituted within three years from the date of the endorsement, that is, 6th July, 1932. For the above reasons it follows that the plaintiff''s claim

under the previous promissory note dated 11th August, 1926, is not barred on the date of the suit. What she now asks for is that the suit

promissory note being insufficiently stamped she may be allowed to fall back upon the prior promissory note. As already stated, this plea if allowed

does not introduce a new cause of action and the defendant cannot legitimately plead that he has been deprived of the plea of limitation as the

cause of action remains the same. The circumstances of the case justifying the amendment being clear I do not think it is necessary to refer to cases

of this Court which have allowed amendments on this principle. See Muthammal v. Guruswami Nayakan (1934) 67 M.L.J. 921 Muthiah Chettiar

v. Chidambaram Chetty (1916) 31 M.L.J. 668 and also The Official Assignee of Madras Vs. V.A. Kuppuswami Naidu and Others, and Chellam

Sakka Raja Vs. Muthusami Moopar, . I do not propose here to discuss those cases in detail as the principle to be applied is clear and the decision

of each case should depend upon its special circumstances.

For the above reasons I would set aside the decision of the lower Court, allow the amendment asked for by the petitioner and remand the case

to the lower Court to be disposed of according to law and in the light of my observations.

As regards costs, I think the petitioner should pay the respondent all the costs he has incurred up to Sate. Knowing that the suit note was

insufficiently stamped he should have filed the suit in the first instance on the cancelled note. There are other reasons also for making him pay the

costs. It would appear in the amendment application the insufficiently stamped suit note was relied on as containing the first acknowledgment of the

liability under the original promissory note. This plea is of course untenable. Till the date of the argument before me it was never pleaded that the

acknowledgment of the original liability for the first time was contained in the cancellation of that promissory note by the execution of the suit

promissory note dated 9th August, 1929, written on it. Even when the case was posted for argument before the late Chief Justice this argument

does not seem to have been present to the mind of the learned Counsel. It has now been put forward before me for the first time, and without

proving that there was a valid acknowledgment on 9th August, 1929, which she could prove only by relying on the cancellation and not by relying

on the suit note, the petitioner could not succeed. For these reasons, I think this is a proper case in which the petitioner should compensate the

respondent by paying him the costs up to date for obtaining the liberty of amending the plaint now accorded to him.