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1901 DIGILAW 40 (CAL)

Hurkissen Dass Serowgee v. Nibaran Chander Banerjee

1901-04-11

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JUDGMENT Sale, J. - The Plaintiffs in this case sue the Defendants on a promissory note, dated the 15th February 1900, executed by them. The terms of the note are as follows :--"On demand we jointly and severally promise to pay Baboo Hurkissen Dass Serowgee and Greedharee Lall Serowgee or order the sum of rupees four thousand with interest thereon at 12 per cent. per annum." 2. The execution of the note is admitted, but the Defendants Rajendra and Punualall say that they signed the note as sureties and they so signed on the faith of the representation by the Plaintiffs that the note should only continue in force for a period of 48 hours from the date of execution, it being the intention of the parties that within this period a bond should be executed by the first Defendant Nibaran providing for the payment of the debt admittedly then due by him to the Plaintiffs in monthly instalments of Rs. 100. The first Defendant sets up in his written statement a similar defence. He states that the Plaintiffs have wrongly insisted on his executing a bond for Rs. 4,000 although the arrangement was that he should execute a bond for the balance of the decree obtained against him--which he says is less than Rs. 4,000. The story set up as to the liability of the Defendants other than" Nibaran being limited to the period of 48 hours is highly improbable, because if the Plaintiffs were prepared to accept the arrangement that the debt due to them should be secured by a bond to be executed by the 1st Defendant only, it is difficult to imagine why they should have insisted on a promissory note being executed as a preliminary by all three Defendants which was only to remain in force for 48 hours. 3. It appears that the Plaintiffs obtained a money-decree against the Defendant Nibaran and had arrested him in execution of that decree. Nibaran made strenuous efforts to obtain the Plaintiffs' consent to an arrangement by which he might be released from arrest and he appears to have called on the Defendants Punnalall and Rajendra to assist him, both these Defendants being related to him. 4. I think the more reasonable story is the one told by the Plaintiffs' witnesses. These witnesses are Mr. 4. I think the more reasonable story is the one told by the Plaintiffs' witnesses. These witnesses are Mr. N. C. Bose who conducted the negotiations on behalf of the Plaintiffs, and his clerk Choonee Lall Kar. Mr. Bose explains that the Defendant Nibaran was brought to him under arrest and that it was proposed that Nibaran should be released on the three Defendants executing a promissory note for Rs. 4,000, that amount being made up of the balance due on the decree obtained by the Plaintiffs against the first Defendant and certain other costs then due or to become due in respect of the bond which was proposed to be executed. The reason why the bond was proposed is this. After it was arranged that the Defendant Nibaran and the two others should execute a promissory note for Rs. 4,000, Nibaran stated that he was unable to pay the Rs. 4,000 in a lump sum and thereupon Mr. Bose suggested that a bond should be executed by all three Defendants to secure the payment of Rs. 4,000 by monthly instalments by the first Defendant. 5. The Plaintiffs being willing to adopt this proposal the note was drawn up and signed by the three Defendants, it being arranged that if the bond was executed within two days then the note should Stand cancelled. 6. There can be no doubt that this was the arrangement come to between the parties and it has been amply proved by the evidence of Mr. Bose, supported by the entry in his day book and by the letter containing the terms of the arrangement which Nibaran signed on the same day and handed to Mr. Bose. A copy of this letter has been put in by the first Defendant That disposes of the main ground of defence which the Defendants set up. 7. Nor does the evidence which the Defendants have adduced tend to support the case made by them in their written statement. 8. The Defendant Punnalall Banerjee states that he and Rajendro signed the note on the understanding that if they got the Defendant Nibaran to execute a bond within the stipulated period of two days the note would be cancelled. Nor does the evidence which the Defendants have adduced tend to support the case made by them in their written statement. 8. The Defendant Punnalall Banerjee states that he and Rajendro signed the note on the understanding that if they got the Defendant Nibaran to execute a bond within the stipulated period of two days the note would be cancelled. If that was the arrangement, it is sufficient to dispose of the case set up by the Defendants in their written statement, because it is admitted that no such bond was executed by the Defendants or any of them. 9. It is quite clear that the condition alleged by the Defendants as regards the cancellation of the promissory note fails, and from that point of view it is immaterial whether the bond was to be executed by all three Defendants or by the first Defendant. 10. I am satisfied, however, that the bond was to be executed by the three Defendants and to be executed for the sum of Rs. 4,000 but the main purpose of the Defendants, namely, to obtain the release of the first Defendant from jail, having been attained, they were no longer disposed to execute the bond. So far therefore as the defence rests on the facts of the case, I think it has failed. But another ground of defence is that under sec. 257A of the CPC the Plaintiffs are barred from maintaining a suit on this promissory note. It is said that the promissory note is part of the agreement for the satisfaction of the decree and inasmuch as that agreement was not made with the sanction of the Court first had and obtained, the Plaintiff is disentitled from maintaining this suit on the note. 11. Reliance is placed on the 2nd clause of the section. The section runs as follows :--"Every agreement to give time for the satisfaction of a judgment-debt shall be void unless it is made for consideration and with the sanction of the Court which passed the decree, and such Court deems the consideration to be under the circumstances reasonable. Every agreement for the satisfaction of a judgment-debt, which provides for the payment, directly or indirectly, of any sum in excess of the sum due or to accrue due under the decree, shall be void unless it is made with the like sanction." 12. Every agreement for the satisfaction of a judgment-debt, which provides for the payment, directly or indirectly, of any sum in excess of the sum due or to accrue due under the decree, shall be void unless it is made with the like sanction." 12. It is said in the first place that the agreement of which the promissory note is a part is an agreement for the satisfaction of a judgment-debt; next; that it provides for payment of a sum in excess of the sum due under the decree and that it was made without having first obtained the sanction of the Court. 13. That being so, it is contended that the promissory note being a part of an agreement which is void under the section is itself void. 14. It appears that different Courts have taken somewhat different views as regards the proper construction of the section. This Court has held that the section is a bar only to the enforcement of agreements of the character mentioned in the section by execution proceedings, and that the section was not intended to prevent separate suits being instituted to give effect to such agreements which are otherwise valid. 15. This view is approved by the Madras High Court, but the Bombay and Allahabad High Courts take a somewhat different view of the meaning of the section. The effect of the authorities in the Bombay and Allahabad Courts is that that section has a wider operation and agreements which fall within it are void for all purposes. 16. The Bombay cases, however, show that certain exceptions exist in respect of the rule laid down as regards the operation of the section. 17. It is admitted in the first place that the section does not apply to agreements by persons who are not parties to the suit in which the original decree was made and in the next place it is said that, where good consideration exists and has in fact been performed for the new agreement, the section does not create a bar to the enforcement of such an agreement by suit. An illustration of the view last mentioned is to be found in the case of the Bank of Bengal v. Vyabhoy Gangji I. L. R. 16 Bom. 618 (1891). An illustration of the view last mentioned is to be found in the case of the Bank of Bengal v. Vyabhoy Gangji I. L. R. 16 Bom. 618 (1891). In that case a bond was entered into by the parties which provided amongst other things for the satisfaction of a decree obtained by the Bank. The Bank, it was found, had performed the consideration stipulated by the bond and thereupon the Court held that "such consideration not being in its nature illegal and not having as a fact failed there was no reason why the obligor should not enforce the terms of the bond." 18. This principle seems to me to govern the present case because the consideration moving from the Plaintiffs was his consent to the release of the Defendant Nibaran from jail and the benefit of this consideration has in fact been enjoyed by the Defendants. 19. In any case I should be disposed to follow the rulings of this Court and to hold that the section is a bar only to execution proceedings in respect of agreements therein mentioned and that it does not prohibit their enforcement by separate suit. There must be therefore a decree for the Plaintiffs for the full amount of their claim against all three Defendants with costs on scale No. 2.