Prem Devi v. Priya Devi — 1970 DIGILAW 443 (ALL)

JUDGMENT S.D. Khare, J. - This is a defendant's first appeal directed against the judgment and decree dated 31st January, 1959, passed by the learned Second Additional Civil Judge, Agra, by which he decreed the plaintiff's suit for Rs. 24,283/56 and directed that a decree under Order 34, Rule 4, C.P.C. be prepared. 2. The suit in which the decree was passed was filed by Smt. Priya Devi, widow of Lala Narain Das against the firm Messrs Sheodayal Bishambharnath, Cloth Merchants, Johri Bazar, Agra, and its two partners, namely, Bishambhar nath and his son Jagdish Prasad. Smt. Prem Devi, wife of Jagdish Prasad, was also impleaded as defendant No. 1 as the guarantor for the remaining three defendants. The plaintiff prayed that the house property of Smt. Prem Devi, which she had mortgaged as a guarantee for the amount not exceeding Rs. 20,000/- be sold to recover the amount due from Messrs Sheodayal Bishambharnath and its two proprietors. 3. The plaintiff's case, briefly stated, was that the firm Sheodayal Bishambharnath was an old firm belonging to the family. The business of the firm had, however, become slack as a result of which the Hundis executed by the two proprietors of the firm were not acceptable in the local market, and before they could become acceptable it was necessary that somebody who possessed ample credit in the market must of endorse those Hundis. Lala Narain Das, the husband of the plaintiff, enjoyed good credit in the local market and on being approached by Bishambharnath and Jagdish Prasad he agreed to endorse the Hundies executed by them upto the value of Rs. 20,000/- within one year provided a house property which was in the name of Suit. Prem Devi, wife of Jagdish Prasad, be given as mortgage security for the debt. The interest on the loan was to be paid at 6 per cent per annum. As a result of this agreement Lala Narain Das, during his lifetime, endorsed the Hundis of the value of Rs. 15,500/- and also gave Rs. 4,500/- in cash to the proprietors of the said firm on the strength of Hundis executed by them. Lala Narain Das died on 11th March, 1951. The Hundis executed by defendants 3 and 4 were renewed from time to time, but a few months after the expiry of one year the defendants refused to renew the Hundis any further. 4,500/- in cash to the proprietors of the said firm on the strength of Hundis executed by them. Lala Narain Das died on 11th March, 1951. The Hundis executed by defendants 3 and 4 were renewed from time to time, but a few months after the expiry of one year the defendants refused to renew the Hundis any further. The plaintiff had to pay to the holders in due course, of the Hundis executed by Bishambharnath and Jagdish Prasad the full amount of those Hundis. It was alleged that the plaintiff had paid more than Rs. 20,000/- towards the satisfaction of those Hundis. But she claimed to recover only Rs. 20,000/-, secured under the mortgage deed, and Rs. 7,000/- as interest thereon. 4. Smt. Prem Devi (defendant No. 1) alone contested the suit. She did not dispute her signatures on the document alleged to be a mortgage deed. She, however, did not admit that it had been duly executed by her or was for consideration. Her case was that her husband Jagdish Prasad had become interested in Satta business and it was in that connection that he used 'to borrow money in the market. It was under the undue influence of Jagdish Prasad and also due to his coercion that she had signed the document without knowing its contents, She also claimed to be a purdanashin lady and alleged that she did not get any independent advice when she had signed the document. In the alternative the defendant pleaded that inasmuch as time had been allowed to the principal debtors the surety stood discharged. She also pleaded that she could not in any case be held liable for the Hundis, executed by defendants 3 and 4 after the period of one year stipulated in the deed itself. The other pleas raised by her were that the deed on the basis of which the suit had been filed was a mortgage deed and it was inadmissible in evidence for want of proper stamp on it, and that the firm Babu Lal Barain Das was a partnership firm and the widow of one of the partners only could not maintain the suit. It was also pleaded that the plaintiff could not sue without a succession certificate. 5. The suit had proceeded ex parte against the remaining defendants. 6. It was also pleaded that the plaintiff could not sue without a succession certificate. 5. The suit had proceeded ex parte against the remaining defendants. 6. The learned Civil judge held that the document which was the basis of the suit was duly executed by Smt. Prem Devi (defendant No. 1) , that it was for consideration and that it amounted to a mortgage and was properly stamped He, however, held that the consideration proved by the plaintiff was Rs. 18,100/-. and not Rs. 20,000/-. The other pleas raised by defendant No. 1 were rejected and the plaintiff's suit.on the basis of the mortgage was decreed for Rs. 18,100 principal and Rs. 6,183/56 as interest, total R. 24,283/56, and it was directed that a preliminary decree under Order 34, Rule 4, C.P.C. be prepared. 7. In the grounds of appeal all the points which had been taken by defendant No. 1 in the written statement were reiterated. However, at the time of arguments the defendant's pleas on the point that she was a pardanashin lady, that the deed in suit was not duly executed by her, that there had been undue influence and coercion on her at the time she signed the deed and that its consideration to the extent of Its. 18,100/- could not be established and pressed. We have been taken through the entire evidence and we find that there is abundant evidence on the record in support of the findings recovered by the learned Civil judge on all those points. We have no hesitation in affirming those findings. 8. We might mention in the passing that on the point of the due execution by defendant No 1 of the deed, the basis of the suit, we have the testimony of Raj Narain (P. W. 4), the scribe of the deed, and also of Radhey Lal (P. W. 1) , an attesting witness of the deed. It is clear from their statement that defendant No. I was not observing parda at the time of the execution of the deed, that she had put her signatures on the deed in the presence of the attesting witnesses and the attesting witnesses had also signed the deed in her presence, and that the document had been read out to her and she had signed it after fully understanding its contents. In the circumstances the plea of undue influence or coercion could not be substantiated. The testimony of these two witnesses is quite consistent, and we fully agree with the opinion of the trial court that they are reliable. Smt. Prem Devi (defendant No. 1) and her father Goverdhan Das (D. W. 11) entered the witness box in support of the defendant's case. They are highly interested witnesses. The learned Civil judge has very rightly not placed any reliance on their testimony, and we see no reason to differ from him. 9. On the point of consideration also which could not be disputed before us, the plaintiff has filed the endorsed Hundis as well as the renewed Hundis (Ex. 17 to Ex. 44), and has also produced her account books. Moti Lal (P. W. 7), brother of Smt. Priya Devi, who used to work for her after the death of her husband Lala Narain Das, has stated that the payments as entered in the account books were duly made. Nathumal (P.W. 2), Munim of Firm Tulsi Ram Shah and Jagdish Prasad, Satish Prasad, Priya Devi (P.W. 3), Kalyan Das (P. W. 5), son of Pisto Devi, have also been examined in support of the payments made. The learned Civil judge has given very good reasons for arriving at the conclusion how the payment by Lala Narain Das and the plaintiff to the extent of Rs. 18,100/- is fully established both from oral and documentary evidence on the record and we see no reason to differ from him. The learned counsel for the appellant did not dispute that the consideration to the extent of Rs. 18,100/- in the manner alleged by the plaintiff had been fully proved and, therefore, it is not necessary for us to discuss the plaintiff's evidence on that point in greater detail. 10. The next point that arises for consideration is whether the document - the basis of the suit - amounted to a mortgage deed as alleged by the plaintiff. The document at first described the circumstances in which the giving of security became necessary. There after it was mentioned in the document that if the endorsed Hundis to the extent of Rs. 20,000/- were not either renewed or paid up, the house property fully described in the document shall stand mortgaged to the creditor by way of security for Rs. 20,000/- only. There after it was mentioned in the document that if the endorsed Hundis to the extent of Rs. 20,000/- were not either renewed or paid up, the house property fully described in the document shall stand mortgaged to the creditor by way of security for Rs. 20,000/- only. The words used in the original document are :- "Bis sahastra rupya ki zamanat men maqful (wa) mustaghraq karke pratigya karti hun." (I make this promise after having mortgaged it for a consideration of Rs. 20,000/-......). The deed provides for the contingency if the payment or renewal was not made by the executors of the Hundis. The relevant portion regarding the consequences of non-payment as contained in that document on that point reads as follows :- "To us rupye ko chukane ke bhar tatha uttardaitya mujh per tatha meri jaedad per jisko maen ne zamanat men rahen kara hae hogi." (Then in that condition myself and my property which I have mortgaged by way of security shall remain liable for the satisfaction of that debt). 11. After having mentioned all that it was said in the last paragraph of the document that for the reasons mentioned earlier a security deed had been executed. 12. The question for consideration is whether the document-the basis of the suit-creates only a charge on the property or does it amount to a mortgage. The mere use of the words "maqful wa mustagharaq" may not be regarded to be sufficient to establish the intention of the executor of the deed that she intended to creat a mortgage. It was held in the case of Moti Begum v. Har Prasad, A.L. 570, that where the predominant intention from a perusal of the document appears to be that only a security deed was being executed and the property was not being mortgaged although at one place the words "maqful wa mustaghraq" had also been used, it could not be held that the intention was to create a mortgage on the property. It was observed in the case of Moti Begum that the executant of the document had not said anywhere in it that he intended to mortgage the property mentioned in the document. The word "Rahen" (mortgage) was not used by the executant any where in that document. It was observed in the case of Moti Begum that the executant of the document had not said anywhere in it that he intended to mortgage the property mentioned in the document. The word "Rahen" (mortgage) was not used by the executant any where in that document. That was the main reason why it was held in that case that the document in question did not amount to a mortgage deed. In the present case, as observed earlier, the word "Rahen" (mortgage) has also been used towards the close of the document. Taking into consideration the circumstances in which the document was executed and the actual words used in the document itself, we have no doubt that the intention of the executant was to mortgage the property as security for the liability to the extent of Rs. 20,000/- to be incurred by the husband and the father-in-law of the executant within a period of one year from the date of the execution of the document. 13. Article 57 of the First Schedule to the Indian Stamp Act lays down that a document of this nature, whether or not it amounts to a mortgage deed, shall be on a stamp of a fixed amount indicated in that article. The stamp duty under Article 57 has been paid in full. ' The contention of the defendant that the document, the basis of the suit, cannot operate as a mortgage deed because the full amount payable on a mortgage deed has not been paid stamp duty is without force. When Article 57 of the Stamp Act clearly provides that a fixed stamp duty was to be paid, the executant was not liable to pay any larger sum, payable as stamp duty on mortgage simpliciter. 14. Although the document, the basis of the suit, amounts to mortgage, it also retains the character of a security, deed and, therefore, the provisions of the Contract Act will apply-vide Thakurain Harnath Kaur v. Thakur Indar Bahadur Singh, A.I.R. 1922 P.C. 403. 15. It has been contended by the learned counsel for the appellant that the plaintiff's suit as against the guarantor or surety could not be decreed because of the provisions of Secs. 15. It has been contended by the learned counsel for the appellant that the plaintiff's suit as against the guarantor or surety could not be decreed because of the provisions of Secs. 136 and 139 of the Contract Act which read as follows : "135 :- A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promise to give time to, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract." "139 :- If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged." It has come in evidence that the Hundis originally executed by defendants Nos. 3 and 4 and endorsed by the husband of the plaintiff were renewed from time to time and the last such renewal is dated 28th June, 1951 (vide Ex. 24). The mortgage deed, the basis of the suit, was executed on 15th March, 1950, and therefore, it is contended that all the renewals made after 14th March, 1951, could not be in accordance with the terms of the contract, and, in any case, the guarantor was relieved because further time had been allowed by the creditor to the principal debtors. 16. In our opinion there is no force in any of these contention. A perusal of the mortgage deed which is also a deed of guarantee and the basis of the suit clearly shows that one year's term was limited for making endorsements on the Hundis executed by defendants 3 and 4. It is the admitted case of both the parties that no endorsement on any Hundi executed by defendants Nos. 3 and 4 was made after 14th March, 1951. Lala Narain Das alone had made those endorsement. He died on 11th March, 1951, i.e., well within the period of one year as stipulated in the deed, which is the basis of the suit. 17. According to the provisions of the Negotiable Instruments Act the person making an endorsement also became liable for the amount due on the Hundi to its holder in due course. He died on 11th March, 1951, i.e., well within the period of one year as stipulated in the deed, which is the basis of the suit. 17. According to the provisions of the Negotiable Instruments Act the person making an endorsement also became liable for the amount due on the Hundi to its holder in due course. It is, therefore, clear that the liability of Lala Narain Das was created as soon as he endorsed any of the Hundis executed by defendants nos. 3 and 4. It is clear from the testimony of Moti Lal (P. W. 7) that upto 11th May 1950, i.e., within two months of the date of the execution of the deed, the basis of the suits, Lala Narain Das had endorsed Hundis of the value of Rs. 15,500/- written by defendants 3 and 4 and had also paid to them Rs. 4,500/- in cash on the basis of certain Hundis. Thus Lala Narain Das incurred the liability for the payment of a sum of Rs. 15,500/- by 11th May, 1950, after having paid Rs. 4,500/- in cash to defendants nos. 3 and 4. The liability was thus incurred will within one year of the date of the execution of the deed, the basis of the suit. 18. The document which is the basis of the suit nowhere says that the payment by Lala Narain Das should also be made within one year of the date of the execution of the deed nor does it fix any such time limit for the renewal of the Hundis. So long as the Hundis were renewed Lala Narain Das or the plaintiff could not say that there had been any breach of the terms of the agreement between the parties. It is only in the case of non-renewal of the Hundis or non-payment of the amount due under the Hundis that cause of action arose to Lala Narain Das or the plaintiff to enforce the liability of the guarantor. 19. The Hundis which were to be executed by defendants nos. 3 and 4 were to become payable after two months. They could be executed by defendants, nos. 3 and 4 and endorsed by the creditor upto any time within-one year of the date of the execution of the deed of guarantee which amounts to a mortgage. 19. The Hundis which were to be executed by defendants nos. 3 and 4 were to become payable after two months. They could be executed by defendants, nos. 3 and 4 and endorsed by the creditor upto any time within-one year of the date of the execution of the deed of guarantee which amounts to a mortgage. It, therefore, follows that it was within the contemplation of the executant that the renewals and the payments could be made even after the period of one year. It is not open to defendant no. I to say that the terms of the guarantee have been varied on that account. 20. The liability of the surety would not, therefore, be discharged under Section 135 of the Contract Act for the simple reason that there is a clear stipulation in the deed of guarantee itself that the Hundis could be renewed. It is no doubt true that the guarantor could not be held liable under the Hundis executed within one year for all time to come and the renewal which were contemplated were to be made within a reasonable period after the expiry of one year reckoned from the date of the execution of the deed. No renewal was made beyond two and a half months of 14th March, 1951. All the renewals were, therefore, made within a reasonable time and in our opinion it will not be possible for the guarantor to say that her liability is discharged because of the provisions of Section 135 of the Indian Contract Act. 21. It has come in evidence that an year or so after the execution of the deed, the basis of the suit, an application was moved for declaring defendants nos. 3 and 4 as insolvents. The guarantor being the wife of defendant no. 4, one of the principal debtors, and the daughter-in-law of defendant no. 3, the other principal debtor must have known about the financial condition of her husband and father-in-law. In the present case there could be no question of the remedy of the surety against the principal debtor being impaired. Defendant no. 1, therefore, cannot claim that she stands discharged under the provisions of Section 139 of the Indian Contract Act. 22. The next argument of the learned counsel for the appellant is based' on Secs. 62 and 134 of the Indian Contract Act. Defendant no. 1, therefore, cannot claim that she stands discharged under the provisions of Section 139 of the Indian Contract Act. 22. The next argument of the learned counsel for the appellant is based' on Secs. 62 and 134 of the Indian Contract Act. They read as follows :- "62 : If the parties to a contracts agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed." "134 : The surety is discharged by an any contract between the creditor and the principal debtor, by which the principal debtor is released or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor." 23. The stipulation in the deed of guarantee was that defendant no. 1 would be liable for the payment of the amount due on all the Hundis which had been endorsed by Lala Narain Das. It is the admitted case of the parties that most of these endorsed Hundis were renewed from time to time and there was no endorsement of Lala Narain Das on the subsequent Hundis. It is, there, contended that as and when the Hundis were renewed in payment of earlier Hundis. the liability of the principal debtors under the original Hundis became fully discharged and the suit could he brought only on the basis of the renewed Hundis. 24. At this place it may be mentioned that all the Hundis executed by defendants nos. 3 and 4 are drawn on themselves and the renewed or paid up Hundis have come from the custody of the plaintiff. The question to be considered is whether in the case of such renewals of Hundis the original liability of the debtor (and, therefore, also of the guarantor) could be discharged. 25. It was held in the case of Govind Singh v. Bijay Bahadur, AIR 1929 Allahabad 980, that a new pronote executed for the same consideration wipes out old debt. Although Sulaiman, J. (as he then was) was a party to that decision he did not fully agree with it, as will appear from the case of Ghulam Murtaza v. Mt. Fasiunnissa, A.I.R. 1935 ALL. 129. In that case Sulaiman, J. observed that renewal could be treated as an acknowledgment. 26. In the case of Hira Lal. Although Sulaiman, J. (as he then was) was a party to that decision he did not fully agree with it, as will appear from the case of Ghulam Murtaza v. Mt. Fasiunnissa, A.I.R. 1935 ALL. 129. In that case Sulaiman, J. observed that renewal could be treated as an acknowledgment. 26. In the case of Hira Lal. v. Badku Lal, A.I.R. 1953 S.C. 225, the question arose whether in a case whether the parties to the suit had mutual dealings and an entry signed by the defendant existed in the plaintiff's Khata (ledger) to indicate that upto a certain date of certain amount had been found due from the defendant after checking the understanding the accounts maintained by the defendants, it was held that a suit could be brought by the plaintiff on the basis of that entry which by itself afforded a fresh cause of action. 27. The case of Hira Lal does not at all solve the problem which is before us. We have not to consider whether or not a suit could be instituted on the basis of a renewed Hundi. All that we have to consider in the present appeal is whether in order to enforce the guarantee the payment by execution of Hundis could be ignored and the creditor could fall back upon the original debt. That question has been answered by the Supreme Court in the case of Commissioner of Income Tax Bombay South v. Messrs Ogale Glass Works Ltd, A.I.R. 1954 S.C. 429. Interpreting the provisions of Section 82 of the Negotiable Instruments Act, 1881, it was observed that when it is said that payment by a negotiable instrument is a conditional payment what is meant is that such payment is subject to a condition. Subsequent to that if the negotiable instrument is dishonoured on presentation, the creditor may consider it as waste paper and resort to his original demand. It was further observed that a cheque unless dishonoured is payment. The payment takes effect from the delivery of the cheque but is defeated by the happening of the condition, that is, non-payment on maturity. 28. In the present case the intention of the creditor could not be to wipe out old liability of the principal debtor as well as the guarantor because from the very beginning it was known that the Hundis executed by defendants nos. 28. In the present case the intention of the creditor could not be to wipe out old liability of the principal debtor as well as the guarantor because from the very beginning it was known that the Hundis executed by defendants nos. 3 and 4 had lost credit in the local market and the likelihood was that they would not be able to re-pay their debt. In the circumstances of the case the plaintiff could fall back upon the original liability created as the time of the payment or the making of endorsement by Lala Narain Das on the Hundis executed by defendants nos. 3 and 4, and after it was established that the plaintiff had to make certain payments because of those liabilities incurred, the guarantor cannot escape liability. In the circumstances of the case neither Section 62 nor Section 134 of the Indian Contract Act can help the defendant no. 1. 29. No other point was pressed before us at the time of arguments. 30. We have, therefore, no hesitation in affirming the judgment and decree of the court below. 31. There is no force in this appeal and it is dismissed with costs.