J. N. Sahni v. State of Madhya Bharat — 1954 DIGILAW 24 (MP)

JUDGMENT : DIXIT, J. 1. This revision petition by the defendant arises out of a suit filed by the State of Madhya Bharat, as the successor of the former Gwalior State, for the recovery of Rs. 1,85,000/- together with interest thereon. The plaintiff's case was that on 27-5-1946 the applicant borrowed from the Government of the former Gwalior state Rs. 2,00,000/- and executed a pro-note in favour of "the Finance Member Gwalior State or order"; that on the same date the defendant Sahani executed an agreement in favour of the Finance Member, Gwalior State stating that he was taking a loan of Rs. 2 lacs from the Gwalior State for purchasing some immovable property in New Delhi and stipulating inter alia that he would mortgage the property to be purchased by him, free of any encumbrance in favour of the Gwalior State as security for the repayment of the loan amount of Rs. 2 lacs; that this amount would be repaid by him in yearly instalments of Rs. 15,000/-, the first instalment becoming due on 1-1-1948; that the loan will not carry any interest; and that in case the borrower did not execute a proper mortgage in favour of the creditor State within three months of the date of the agreement, the agreement would have no effect and the Gwalior State would be entitled to claim repayment of the loan on demand in accordance with, the terms of the promissory note executed by the borrower. The plaintiff further stated that the defendant Sahani did not at any time mortgage any property in favour of the Gwalior State; that after several reminders, the defendant paid Rs. 15,000/- to the plaintiff on 28-6-1947 in part payment of the loan and that thereafter the defendant did not pay any amount despite repeated reminders to repay the balance of the amount of the loan due from him. The plaintiff State averred that the loan amount was payable on demand at Gwalior and that the cause of action arose on 27-5-1946. On these allegations the plaintiff claimed to recover Rs, 1,85,000/- together with interest at the rate of Rs. 6/- per cent, per annum from 27-5-1946. 2. The plaintiff State averred that the loan amount was payable on demand at Gwalior and that the cause of action arose on 27-5-1946. On these allegations the plaintiff claimed to recover Rs, 1,85,000/- together with interest at the rate of Rs. 6/- per cent, per annum from 27-5-1946. 2. One of the grounds on which the defendant has contested the suit is that the Court of District Judge, Gwalior has no jurisdiction to try the suit because the defendant resides and carries on business at Delhi and never undertook to pay the debt at Gwalior, and because the whole transaction took place at Delhi where the promissory note was executed and delivered to the Finance Member of the Gwalior State. The Additional District Judge held that as the pro-note did not specify the place where the payment was to be made, the English Common Law Rule that the debtor must seek the creditor would apply and, therefore, a part of the cause of action must be held to have arisen in Gwalior where the plaintiff State "resided". He relied on a judgment of the Calcutta High Court in - 'Tulsiman Bidi v. Abdul Latif, AIR 1936 Cal 97 (A) and the decision of the Lahore High Court in - 'Nanumal v. Firm Shibbamal Nandkishore', AIR 1939 Lah 18 (B). The learned Judge also came to the conclusion that the plaintiff's suit was essentially one for the recovery of the balance of the loan amount, independent of the promissory note; that the pro-note was only an evidence of the loan or a collateral security; that, therefore, according to the rule that the debtor must seek the creditor the moneys were payable at Gwalior; that the burden of proving that the Court had no jurisdiction to try the suit lay on the defendant and he had failed to prove that the payment of the loan was not made at Gwalior and that on the other hand, the evidence on record showed that the parties intended that the loan should be repaid at Gwalior. The defendant has now come up in revision to this Court against the decision of the trial Court rejecting this objection as to the jurisdiction of the Court to try the suit. 3. The defendant has now come up in revision to this Court against the decision of the trial Court rejecting this objection as to the jurisdiction of the Court to try the suit. 3. When this petition first came up for hearing before my learned brother Chaturvedi, J., it was contended on behalf of the applicant that the English Common Law rule that the debtor must find his creditor was not applicable to negotiable instruments; that even under that rule the creditor must be within the realm and that as at the time of the execution of the pro-note the defendant resided in Delhi and the creditor in an Indian State, the defendant was not bound to find and pay the creditor in Gwalior - an Indian State. It was also urged that the plaintiff's suit was on the basis of the promissory note and the trial Court was wrong in drawing the inference from the evidence on record that the defendant was to pay any money at Gwalior. My learned brother thought that considering the importance of the points raised, the matter should be heard and disposed of by a larger bench rather than by his sitting singly. Accordingly this Bench has been constituted by my Lord the Chief Justice for the hearing of this petition. 4. It is common ground that the promissory note in suit was executed and delivered at Delhi and that it does not specify the place where it is payable. The main question raised by this revision petition is whether the Common Law rule that a debtor must seek his creditor is applicable in the case of a promissory note payable on demand. Before expressing any opinion on this question, it is essential in the present case to reach a conclusion on the subsidiary point whether the plaintiff's suit is on the basis of the promissory note or on the original consideration. Mr. Mehtab Singh learned counsel for the applicant argued that the plaintiff's suit was on the promissory note itself. Before expressing any opinion on this question, it is essential in the present case to reach a conclusion on the subsidiary point whether the plaintiff's suit is on the basis of the promissory note or on the original consideration. Mr. Mehtab Singh learned counsel for the applicant argued that the plaintiff's suit was on the promissory note itself. He pointed out that under Clause 4 of the agreement dated 27-5-1946, on the failure of the defendant to execute a mortgage, the creditor was only entitled to "claim repayment of the loan on demand in accordance with the terms of the promissory note" and that, therefore, the plaintiff could only sue on the promissory note that according to the agreement no interest was payable on the loan amount but in the notice dated 19-7-1949 which was given to the defendant by the Advocate-General of the State, the defendant was called upon to repay the amount due from him with interest at the rate of Rs. 6/- per cent, per annum "as chargeable on the promissory note"; that no rate of interest has been specified in the promissory note but in the plaint the plaintiff has calculated interest at the same rate which has been provided by S. 80 of the Negotiable Instruments Act, 1881, in cases where no rate of interest is mentioned in the instrument, and that in para. 11 of the plaint the plaintiff has given the date of the promissory note as the date on which the cause of action arose and not the date on which according to the agreement dated 27-5-1946, the plaintiff became entitled to recover the amount of the loan on the default of the borrower to execute a mortgage in favour of the creditor. Learned counsel for the applicant said that these circumstances indicated that it is on the promissory note only that the plaintiff has based the suit. The argument in reply of the learned Advocate-General was that the liability on the promissory note was secondary; that on the breach of the agreement dated 27-5-1946 the creditor could sue on the original consideration and that the circumstances pointed out by the learned counsel for the applicant were by no means conclusive of the fact that the plaintiff's suit was on the basis of the promissory note. 4a. 4a. In my opinion the finding of the trial Court that the plaintiff's suit is on the original consideration and not on the promissory note is not correct. The learned trial Judge has not given any reason whatsoever in support of this conclusion. On a perusal of the plaint and the statements made an the trial Court on behalf of the plaintiff, there can be no doubt that the suit as framed, is founded on the promissory note itself. If, as is now contended on behalf of the plaintiff, the suit had been on the consideration which gave rise to the promissory note, then one would have found in the plaint the terms of the contract of the loan. But the plaintiff has not stated those terms in the plaint, which begins with a reference to the promissory note. No doubt, it has been alleged in para. 3 of the plaint that according to the agreement dated 27-5-46 the Finance Member of the Gwalior State was given the right to claim repayment of the loan on demand, in case the borrower defaulted in executing a mortgage within the stipulated period of three months. But, in my view, the right which was given by the agreement was of recovering the loan amount "in accordance with the terms of the promissory note" and not of recovering the original consideration independent of the promissory note. Even assuming that under the agreement the plaintiff became entitled to sue on the original consideration when the defendant applicant failed to execute the stipulated mortgage, the cause of action for such a claim could arise only on the expiry of the period of three months from the date of the agreement. But the plaintiff has nowhere said in the plaint that the cause of action for the suit arose on the default of the applicant to execute a mortgage within the agreed period of three months from 27-5-1946. On the other hand, it has been alleged that the cause of action arose on 27-5-1946. This is clearly the date on which the promissory note was executed and delivered to the plaintiff. The agreement to mortgage was also no doubt executed on 27-5-1946. But the date of this agreement in no way furnishes any cause of action for the suit and it is not the case of the plaintiff that it does. This is clearly the date on which the promissory note was executed and delivered to the plaintiff. The agreement to mortgage was also no doubt executed on 27-5-1946. But the date of this agreement in no way furnishes any cause of action for the suit and it is not the case of the plaintiff that it does. Again it has not been made clear in the plaint whether the interest claimed is on the ground of any agreement or on the basis of statute or on the ground of usage. These circumstances when taken into consideration with the demand in the notice dated 19-7-1949 calling upon the applicant to repay the amount due from him with interest at Rs. 6/- per cent. per annum as "chargeable on the promissory note executed by him" unmistakably point to the conclusion that the cause of action as alleged is the promissory note itself. In fact in the lower Court it was never the case of the plaintiff that the suit was on the original consideration. This is clear from an application which the Deputy Government Advocate made in the trial Court on 6-4-1951. In this application the plaintiff stated that the defendant had not given a clear and categorical reply as regards the promissory note dated 27-5-1946 on which the suit was based and that, therefore, the defendant be examined orally and called upon to state whether he admitted or denied the execution of the pro-note. In this application the plaintiff also requested the Court to frame an issue with regard to interest saying that inasmuch as the document in suit was a negotiable instrument, therefore, under the Negotiable Instruments Act the plaintiff was entitled to get interest on the amount due in the promissory note. In my opinion, in the face of these statements made on behalf of the plaintiff in the trial Court, he cannot now be allowed to say that he is suing on the original consideration and not on the promissory note. The contention of the earned counsel for the applicant that the plaintiff's suit is on the promissory note itself, must, in my opinion, be accepted. 5. The contention of the earned counsel for the applicant that the plaintiff's suit is on the promissory note itself, must, in my opinion, be accepted. 5. In the next stage of the argument, learned counsel for the applicant submitted that the question as to the proper forum of action must be determined with reference to the provisions of S. 20, Civil P.C.; that as the defendant-applicant resided in Delhi and the promissory note was executed and delivered to the plaintiff at Delhi, the Gwalior Court would have jurisdiction only if the promissory note was payable at Gwalior; that the promissory note did not specify the place of payment; that, therefore, under S. 70 of the Negotiable Instruments Act it must be held to be payable at the place of business or residence of the maker and that the English Common Law rule that the debtor must find the creditor was not applicable to the case of negotiable instruments. To support the proposition that the rule that the debtor must find the creditor did not apply to negotiable instruments learned counsel for the applicant relied on - 'Gopi Kishan v. Jethmal', AIR 1935 Nag 144 (O); - 'Dalsukh Nathmal v. Motilal', AIR 1933 Nag 262 (D); - 'Jivatlal v. Lalbhai', AIR 1942 Bom 251 (E); - 'Piyara Singh v. Bhagwandas', AIR 1951 Punj 33 (F) and - 'S. Eshawarayya v. Thakur Devisingh', AIR 1953 Hyd 289 (FB) (G). Learned counsel proceeded to say that S. 49 of the Contract Act had no application to promissory notes which were governed by the Negotiable Instruments Act and the decision of the Privy Council in - 'Soniram Jeetmull v. R.D. Tata and Co. Ltd.', AIR 1927 PC 156 (H) was not relevant because it did not deal with the case of a negotiable instrument and did not lay down that in every case of a creditor and debtor, the Common Law rule of England that the debtor should seek out the creditor and pay the debt where the creditor resides, applied. Learned counsel also faintly suggested that the opening words of S. 49 of the Contract Act showed that the section was not applicable to a promissory note payable on demand. Learned counsel also faintly suggested that the opening words of S. 49 of the Contract Act showed that the section was not applicable to a promissory note payable on demand. It was further urged that no evidence could be admitted to prove that the promissory note was payable at Gwalior and that as the Common Law rule applied only when the creditor was within the realm and as at the time of the execution of the promissory note the plaintiff resided in a native state, therefore, it must be held that the parties intended that moneys under the promissory note would be paid not in Gwalior but in Delhi. 6. Now, I agree with the learned counsel for the applicant that the question of the jurisdiction of the Court must be determined with reference to the provisions of S. 20, Civil P.C. It is not in dispute in this case that the defendant applicant does not reside or work in Gwalior and that the promissory note was executed and delivered to the plaintiff in Delhi. Therefore the order of the Additional District Judge can be supported only if it is held that the promissory note was payable in Gwalior. The argument that the moneys under the promissory note were payable in Delhi and not in Gwalior is founded on the decisions referred to above, which were cited by the learned counsel for the applicant. Before proceeding to a consideration of those authorities, it will be convenient to refer to the material sections of the Negotiable Instruments Act. It is not necessary for me to travel seriatim and in detail through all the sections included in Chapter 5 of the Act which deals with presentment of negotiable instruments. For the purposes of this petition the important sections are Ss. 64 and 70. Section 64 provides that a promissory note must be presented for payment to the maker, bills of exchange must be presented for payment to the acceptor and cheques must be presented for payment to the drawee. It then says that "in default of such presentment, the other parties thereto are not liable thereon to such holder". The Exception to S. 64 says that where a promissory note is payable on demand and is not payable at a specified place, no presentment is necessary in order to charge the maker thereof. It then says that "in default of such presentment, the other parties thereto are not liable thereon to such holder". The Exception to S. 64 says that where a promissory note is payable on demand and is not payable at a specified place, no presentment is necessary in order to charge the maker thereof. Section 65 is concerned with the hours for presentment and Ss. 66 and 67 indicate the date or dates on which the instrument would be presented. Section 68 deals with all kinds of instruments and provides that where these are drawn or accepted payable at a specified place and not elsewhere, they must, in order to charge any party thereto, be presented for payment at that place. Section 69 provides for a promissory note or bill of exchange payable at a specified place and says that in order to charge the maker or drawer thereof, it must be presented for payment at that place. Section 70 lays down that a promissory note or bill of exchange which does not specify the place of payment, must be presented for payment at the place of business of the maker, acceptor or drawee. Section 71 points out the place where presentment is to be made if the maker, drawee or acceptor of a negotiable instrument has no known place of business or fixed residence. It will be observed that Ss. 64, 68 and 69 speak of presentment as a condition precedent to make the parties mentioned in those sections liable on the negotiable instrument. The object of presentment is to give the party concerned an opportunity to pay, and until such presentment no right to sue arises. The Exception to S. 64 only says that in the case of a promissory note payable on demand and which is not payable at a specified place, the presentment of the note as a condition precedent to charge the maker of the note is not necessary. In other words, the right to sue a maker of such a note arises even without giving him an opportunity to pay. The exception does not say that a promissory note payable on demand and which is not payable at a specified place need not be presented to the maker if payment is desired. In other words, the right to sue a maker of such a note arises even without giving him an opportunity to pay. The exception does not say that a promissory note payable on demand and which is not payable at a specified place need not be presented to the maker if payment is desired. Now S. 70 deals in a general way with presentment for payment of promissory notes or bills of exchange which are not covered by Ss. 68 and 69. The applicability of S. 70 is not confined only to those cases where presentment of the instrument is necessary as a part of the cause of action. Whether the presentment of the instrument is or is not necessary as a condition precedent to make any party liable on the instrument, if the instrument is presented, it must be presented at the place of business or at the usual residence of the maker, drawee or acceptor thereof as the case may be. The combined effect of the Exception to S. 64, and section 70 is that in the case of a promissory note payable on demand which does not specify the place of payment, presentment of a note is not necessary in order to make the maker liable, but if the note is presented for payment it must be presented at the place of business or at the usual residence of the maker. The learned Advocate-General contended that inasmuch as the presentment of such a note is not necessary in order to charge the maker, the question of its presentment cannot arise and that, therefore, the rule laid down in S. 70 can have no applicability to a promissory note of the type mentioned in the Exception to S. 64. The argument proceeds on the assumption that if the presentment of the promissory note is not necessary to charge the maker thereof, it is, therefore, not necessary to present the note to maker at all and even if payment is desired. That appears to me to be a non-sequitur. I am not prepared to accept the wide meaning which the learned Advocate-General sought to give to the Exception. That appears to me to be a non-sequitur. I am not prepared to accept the wide meaning which the learned Advocate-General sought to give to the Exception. From the fact that the presentment of the promissory note is not necessary in order to charge the maker thereof, it does not follow that if the holder desires payment he need not present the note to the maker and that he must wait until the maker seeks him out. It was said that Ss. 68, 69 and 70 of the Act have nothing to do with the question of jurisdiction. This is true in the sense that these sections do not directly deal with the place where the cause of action arises. But when they indicate the proper place at which presentment for payment must be made, it is difficult to conceive of any other place being the place of payment for the purpose of determining the jurisdiction of the Court. In my judgment, in the case of a promissory note payable on demand which does not specify the place of payment, though the presentment of the note is not necessary in order to make the maker of the note liable thereon, yet if the holder desires payment he must make the presentment under S. 70 or 71 of the Act. To put in another form such a promissory note is payable at the place of business or at the usual residence of the maker. On this view, it is plain that there is no room for the applicability of the English Common Law rule that a debtor must find his creditor to a promissory note payable on demand and which is not payable at a specified place. 7. Coming now to the authorities relied upon by the learned counsel for the applicant, the decisions in - 'AIR 1935 Nag 144 (C)'; - 'AIR 1942 Bom 251 (E)'; - 'AIR 1951 Punj 33 (F)'; and - 'AIR 1953 Hyd 289 (G)', are based on the provision in S. 70 of the Negotiable Instruments Act, 1881, and take a view similar to the one I have expressed above. In the case of - 'AIR 1951 Pun 33 (F)', the learned Judges of the Punjab High Court also relied on illustration (b) to S. 20, Civil P.C. to show that the Common Law rule that a debtor must follow his creditor is not applicable to suits on promissory notes payable on demand. The illustration is as follows : "A resides at Simla, B at Calcutta and C at Delhi. A, B and C being together at Baneras, B and C makes a joint promissory note payable on demand and deliver to A. A may sue B and C at Banaras, where the cause of action arose. He may also sue them at Calcutta where B resides or at Delhi, where C resides; but in each of these cases, if the non-resident defendant objects, the suit cannot proceed without the leave of the Court." 8. According to the learned Judges of the Punjab High Court, the illustration only mentioned that the suit could be brought where the defendants resided or where the note was executed; it nowhere said that the place where the plaintiff resides also gave jurisdiction and that, therefore, the illustration showed that in a suit on promissory note the residence of the plaintiff was wholly immaterial. I have, however, some hesitation in seeking aid of this illustration. To my mind illustration (b) simply examplifies and make intelligible clause (b) of S. 20, Civil P.C. I do not think that because of the mere omission in the illustration to state that the plaintiff could not sue at Simla where he resided, the Court would be justified in importing into the illustration a substantive provision of law that the Common Law rule that the debtor must find his creditor was not applicable to a promissory note payable on demand and which did not specify the place of payment. In the other Nagpur case, namely, - 'AIR 1938 Nag 262 (D)' it was held that the principle that the debtor must find the creditor was not applicable in the case of a negotiable instrument for the reason that R. 81 of the Negotiable Instruments Act, 1881, required the holder of the instrument to call upon the person liable to pay. With all respect to the learned Judge, I am not convinced by this line of reasoning. With all respect to the learned Judge, I am not convinced by this line of reasoning. Section 81 nowhere lays down that the person liable has to be called upon by the holder to pay'. The words used in that section are "any person liable to pay and called upon by the holder thereof to pay." I do not think that these words can be construed as meaning that S. 81 itself requires the holder of the instrument to call upon she person liable to pay. The provision in, S. 81 that the person liable to pay is entitled to have the instrument shown to him before payment and upon payment to have it delivered to him, is plainly intended for the protection of the payer. Section 81 has thus nothing to do with the place of payment of the negotiable instrument. The learned Advocate-General urged that in - 'AIR 1935 Nag 144 (C)'; - 'AIR 1951 Punj 33 (F)'; and - 'AIR 1942 Bom 251 (E)' due weight has not been given to the Exception to S. 64. It is quite true that in - 'AIR 1935 Nag 144 (C)' there is no discussion or even a mention of S. 64 or the exception to it. But in the Bombay and the Punjab cases the Exception to S. 64 was considered. On a consideration of the Exception and S. 70 of the Act, it was observed by Kapur, J.; in - 'AIR 1951 Punj 33 (F)' that want of presentment may not affect the liability of a maker of a note to pay, yet the holder who may or may not be the original promisee can have payment made to him if he, under S. 70 or 71 of the Act, makes the presentment. So also Beaumont C.J., said in the case of - 'AIR 1942 Bom 251 (E)' that no doubt under the exception to S. 64, where a promissory note i3 payable on demand and is not payable at a specified place, no presentment is necessary in order to charge the maker thereof, but S. 70 does not give some indication as to the way in which the maker can be notified of the holder of the note for the time being. 9. 9. The learned Advocate-General commended, to us for acceptance the view taken by the Lahore High Court in - 'AIR 1939 Lah 18 (B)' that where a pro-note does not specify any place where the payment was to be made, it should be presumed that the payment was to be made at the usual place of business of the creditor. It was further held in that case that the mere fact that the pro-note was liable to be presented to the debtor at a particular place under S. 70 of the Negotiable Instruments Act did not imply that the amount due on the pro-note was payable at that place. The point as to the applicability of S. 70 was disposed of in - 'AIR 1939 Lah 18 (B)' simply by the observation that no presentment is necessary in the case of a pro-note when the suit is against the maker of the pro-note. I cannot treat this case as any authority for the proper reading of the exception to S. 64 of the Act. There is no discussion of the exception or of any of the contentions raised in - 'AIR 1935 Nag 144 (C)' and - TLR (1940) Nag 502' which had been reported by AIR in 1938 Nagpur 262 (D). It would be pertinent here to refer to a decision of the Calcutta High Court in - 'Srilal Singhania v. Anantlal', AIR. 1940 Cal 443 (I) where Lort Williams, J., has held that section 49 of the Contract Act has no application to a pro-note which is payable on demand and is silent as to the place of repayment and that consequently a fortiori the common law rule that the debtor must seek out his creditor would apply and the Court at the place where the creditor resides would have jurisdiction to entertain a suit on the pro-note. This case was referred to during the course of arguments but was not relied upon by any party. In the Calcutta case the promissory note payable on demand was addressed to the promisee at Bhagalpur where he then resided; the note did not specify any place of payment and at the time of the institution of the suit the promisee had ceased to be the holder of the note and resided in Calcutta. In the Calcutta case the promissory note payable on demand was addressed to the promisee at Bhagalpur where he then resided; the note did not specify any place of payment and at the time of the institution of the suit the promisee had ceased to be the holder of the note and resided in Calcutta. The learned Judge of the Calcutta High Court held that the Court at Calcutta had jurisdiction to entertain the suit upon the promissory note because the promisee resided in Calcutta. This reasoning does not appeal to me at all. Lort-Williams, J., further held that because the promissory note was payable on demand and not on an application by the promisor to the promisee, therefore S. 49 had no application, to the case and a fortiori the common law rule that the debtor must seek his creditor applied. The learned Judge has not given any reason to show how the common law rule was applicable to negotiable instruments. He did not refer to any of the provisions referred to above of the Negotiable Instruments Act. I do not find myself in agreement with the view in - 'AIR 1940 Cal 443 (I)'. I respectfully agree with the criticism made by Beaumont C.J. in - 'AIR 1942 Bom 251 (E)' of the decision of the Calcutta High Court and with the view expressed by the learned Chief Justice that the words 'on demand' only mean that the promissory note is payable immediately, or at sight and that the words do not in themselves take the promissory note out of the terms of S. 49 of the Contract Act and that S. 49 is one of those provisions of the Contract Act which have no applicability to matters governed by the Negotiable Instruments Act. It seems to me necessary to make it clear that S. 49 of the Contract Act can have no applicability to negotiable instruments because S. 70 of the Negotiable Instruments Act itself lays down a rule as to the place of payment where the negotiable instrument does not specify it. 10. It seems to me necessary to make it clear that S. 49 of the Contract Act can have no applicability to negotiable instruments because S. 70 of the Negotiable Instruments Act itself lays down a rule as to the place of payment where the negotiable instrument does not specify it. 10. Relying on the Privy Council decision in - ' AIR 1927 PC 156 (H)' the learned Advocate-General submitted that S. 49 of the Contract Act was applicable to the present case and that the principle that the debtor was bound to seek out his creditor and pay his debt applied here for the purpose of determining the jurisdiction of the Court. I am unable to accept this contention. The Privy Council case did not deal with any promissory note. It was a case of moneys payable under a commercial contract which did not say anything as to where the defendants were to pay. Their Lordships of the Privy Council held that upon the fact of the contract, not indeed in express terms, but by the clearest implication payment was to be made in Rangoon where the whole of the business transactions out of which the outstanding debts arose, took place and where the plaintiff-firm was. On behalf of the defendant, it was contended before their Lordships that the case was governed by S. 49 of the Contract Act and that as no place of payment was fixed by the contract and no application had been made by the promisor to the promisee to appoint a reasonable place, therefore, there was no place of payment; and consequently no part of the contract was performable in Rangoon. It was urged that S. 49 replaced any rule of law with regard to the obligation of the debtor to seek out the creditor. Repelling this contention the Privy Council observed that S. 49 of the Contract Act did not get rid of inferences that should justly be drawn from the terms of the contract itself or from the necessities of the case involving in the obligation to pay the creditor, the further obligation of finding the creditor so as to pay. Repelling this contention the Privy Council observed that S. 49 of the Contract Act did not get rid of inferences that should justly be drawn from the terms of the contract itself or from the necessities of the case involving in the obligation to pay the creditor, the further obligation of finding the creditor so as to pay. As I read the Privy Council decision it seems to me that the decision does not go further than holding that the words "no place is fixed" in S. 49 of the Contract Act do not exclude any inference the Court may draw as to the intention of the parties from the nature and circumstances of the contract especially where the obligation is to pay money. The Privy Council decision is not an authority for the proposition that in every case of a debtor and creditor the Common Law Rule of England that the debtor should seek out the creditor and pay the debt where the creditor resides applies or for the proposition that the rule is applicable in the case of negotiable instruments. Mr. Chitale also referred us to - 'Nathubhai Ranchhod v. Chhabildas Dharmachand', AIR 1935 Bom 283 (J). But that case appears to me to be of no assistance in deciding the instant case. It related to a suit brought on the breach of a contract and followed - ' AIR 1927 PC 156 (H)'. Learned counsel for the applicant referred to the Privy Council decision in - 'Bansilal Abirchand v. Ghulam Mahbub', AIR 1925 PC 290 (K) and distinguished it. I agree with him that the contention that the Common Law rule of the debtor seeking out the creditor is applicable to negotiable instruments does not derive any support from the judgment of the Privy Council in - ' AIR 1925 PC 290 (K)'. In that case the question was whether a suit for the recovery of a loan borrowed at Secunderabad - a British cantonment - and repayable at Hyderabad, the capital of the Nizam's Dominions by a person residing in Hyderabad, could be filed at Secunderabad. In that case the question was whether a suit for the recovery of a loan borrowed at Secunderabad - a British cantonment - and repayable at Hyderabad, the capital of the Nizam's Dominions by a person residing in Hyderabad, could be filed at Secunderabad. The Privy Council while holding that the Court at Secunderabad had no jurisdiction to entertain the suit, observed that "even by British law the duty of a debtor to find and pay his creditor is only imposed upon him when the creditor is within the realm and the plaintiff has not contended that if there be any such duty at all imposed by Indian Law upon a debtor it extends in this respect further than in England". It is plain from these observations that the Privy Council did not express any opinion on the applicability of the Common Law rule in India. What their Lordships said was that even on the assumption that the Common Law rule was applicable, the defendant in that case was under no obligation co make any payment to the plaintiff at Secunderabad which was not within the realm. 11. It follows from what I have said above, that, in my judgment, the Common Law rule that the debtor must find out his creditor is not applicable to the case of a negotiable instrument and that a promissory note payable on demand which does not specify the place of payment is payable at the place where the maker of the promissory note resides or carries on business. Indeed as pointed out by the learned Judges of Bombay High Court in - 'AIR 1942 Bom 251 (E)' the applicability of the rule to negotiable instruments is beset with difficulty in that the holder may be residing in any part of the country and the debtor may have no notion where he is, or where to seek him. 12. The next point that was debated in the course of arguments, is whether evidence is admissible to prove the place where the moneys under the note were payable and whether on the evidence on record the place of payment has been established. 12. The next point that was debated in the course of arguments, is whether evidence is admissible to prove the place where the moneys under the note were payable and whether on the evidence on record the place of payment has been established. Learned counsel for the applicant objected to the reception of the evidence on the ground that the words of the pro-note were free from ambiguity and did not create any doubt or difficulty as to their meaning and that, therefore, evidence dehors the pro-note for the purpose of explaining it according to the intention of the parties as regards the place of payment, was inadmissible. According to the learned Advocate-General the evidence was admissible under the second proviso to section 92 of the Evidence Act because the promissory note was silent as to the place of payment. In my opinion, in the case before us evidence to prove the place of payment can be admitted. It is no doubt true that where words of any written instrument are free from ambiguity in themselves and where external circumstances do not create any doubt or difficulty as to the proper application of the words to the subjects matter of the instrument or to claimants under the instrument, the words must be construed according to their strict plain common meaning and evidence dehors the instrument for the purpose of explaining it according to the alleged intention of the parties is not admissible. But here we are not concerned with any question of the construction of the words used in the pro-note. The question before us is whether evidence is admissible about a matter on which the promissory note is silent. On this point proviso 2 to S. 92 of the Evidence Act is very clear. It allows proof of any separate oral evidence about any matter on which a document is silent and which is not inconsistent with its terms, and it provides that in admitting the evidence the Court must have regard to the degree of formality of the document. The promissory note in suit is silent as to the place of payment. It cannot, therefore, be maintained that evidence to prove the place of payment would be an evidence contradicting, varying, adding to or subtracting from any term of the promissory note. The promissory note in suit is silent as to the place of payment. It cannot, therefore, be maintained that evidence to prove the place of payment would be an evidence contradicting, varying, adding to or subtracting from any term of the promissory note. As to the degree of formality of the document on which the admissibility of evidence depends, it will vary according to the care, elaboration and details with which the terms of the document are set forth therein. In the instant case on the day on which the promissory note was executed the parties entered into another agreement providing for the mortgage of the properties which were to be purchased from the loan amount, the conditions on which the mortgage-debt would be repaid and giving to the creditor the right "to claim repayment of the loan on demand in accordance with the terms of the promissory note". The execution of this separate agreement is evidence of the fact that the promissory note was given merely as a provisional security for the money and did not record all the terms of the loan transaction. It is noteworthy that clause 4 of the agreement dated 28-5-1946 mentioned that in the event of the failure of the applicant to execute the stipulated mortgage the creditor would be entitled to claim, repayment of the loan on demand " in accordance with the terms of the promissory note". But the promissory note does not specify "the terms". The pro-note in form contains merely an undertaking by the applicant to pay on demand to "the Finance Member Gwalior State or order" a sum of Rs. 2 lacs. It is thus plain that in the degree of formality of the promissory note here is not so high as to lead to the presumption that it was intended to contain the full agreement. I, therefore, think that the plaintiff is entitled to prove that the parties agreed that the promissory note was to be paid at Gwalior. A perusal of the judgment of Wadia, J., which was affirmed in 'AIR 1942 Bom 251 (E)' shows that in that case also evidence was led to show that the intention of the parties was that the place of payment of the pro-note was Bombay. 13. A perusal of the judgment of Wadia, J., which was affirmed in 'AIR 1942 Bom 251 (E)' shows that in that case also evidence was led to show that the intention of the parties was that the place of payment of the pro-note was Bombay. 13. As to the evidence on record, I do not think it leads to any inference one way or the other as regards the place of payment. Here, the burden of showing that the suit was properly filed in the Court of the Additional District Judge Gwalior and that the promissory note was payable in Gwalior, was obviously on the plaintiff. Learned Advocate-General frankly and rightly conceded that the onus was on the plaintiff. But the learned trial Judge failed to grasp this elementary fact, placed the burden of proof on the defendant-applicant and drew an adverse inference against him from his omission to examine Mr. Birjraj Narain, the person through whom the loan was negotiated and completed, and to whom the promissory note was delivered, as the Finance Minister of the Gwalior State. The trial Judge was clearly wrong in drawing an adverse inference against the applicant for his failure to examine Mr. Brijraj Narain when it lay on the plaintiff to prove that the moneys being payable in Gwalior, the lower Court had jurisdiction to entertain the suit. In this state of things, the plaintiff must, in my opinion, be given an opportunity to examine in particular Mr. Brijraj Narain, a very material witness, and to prove the place of repayment of the moneys under the note. In this view of the matter it would not tie proper for me to express any opinion on the value and weight to be attached to the evidence on record and to the exhibits A/4, A/5 and A/6 in drawing any inference as to the place of payment. But I must observe that the fact that the defendant-applicant actually made a part payment at a particular place cannot be held to be decisive of the fact that payment according to the agreement between the parties was to be made in that place. But I must observe that the fact that the defendant-applicant actually made a part payment at a particular place cannot be held to be decisive of the fact that payment according to the agreement between the parties was to be made in that place. Learned counsel for the applicant suggested that as at the time of the execution of the promissory note the applicant was in Delhi and the lender was not within the realm and as under the Common Law rule a debtor is not bound to seek the creditor who is not within the realm, therefore, the intention of the parties was that the moneys under the pro-note would be paid in Delhi. The argument is untenable. The Common Law rule that it is the duty of a debtor to find his creditor when he is within the realm is wholly irrelevant to the question of drawing an inference of fact as regards intention or agreement of the parties about the place of payment from the evidence on record. 14. For the above reasons I would set aside the decision of the Additional District Judge of Gwalior and direct him to determine the question of jurisdiction in the light of this order after recording such evidence as the parties may produce to prove the place of payment of the promissory note. It is needless to add that if the plaintiff State fails to establish that the moneys were payable in Gwalior, the plaint must be returned to the plaintiff for presentation to the proper Court. Costs of this application shall follow the result of the suit in the lower Court. 15. G. K. SHINDE, J. – I agree. 16. B. K. CHATURVEDI, J. – I concur. Application allowed.