KEMPEGOWDA v. M. MAHALINGIAH — 1971 DIGILAW 241 (KAR)

( 1 ) THIS second appeal arises out of a suit filed bv the plaintiff in O. S. No. 1519 of 1963 on the file of the addl Munsiff. Mandva. The plaintiff's suit was for the recovery of a sum of Rs. 1334-00 inclusive of interest on the principal sum of Rs. 1. 000 at the rate of 12% and notice charges a sum of Rs. 10. ( 2 ) THE allegations contained in the plaint were that on 3-2-1960, defendant borrowed a sum of Rs. 1 000 from the plaintiff agreeing to pay interest at the rate of 12% per annum on the sum and as security for the said amount, executed a pronoto which has been marked as Ex. P. 1 in the case and a receipt along with it on the same day. It was stated that the defendant thereafter paid a sum of Ps. 120 towards interest on 5-4-1961 and made an endorsement to that effect on the pronote Ex. P-1. It was further alleged that the defendant represented to the plaintiff that the pronote Ex. P-1 and the consideration receipt were required for the purpose of producing the same before the Land Mortgage Co-op. Society, mandva in order to obtain a loan of Rs. 10,000 from the said society to discharge the debt clue tr the plaintiff as well as the other crediors of the defendant. But subsequently, the defendant did not return those documents; nor discharge the debt. From the enquiry which the plaintiff made he learnt that the pronote and consideration receipt have beenproduccd before the Society. The plaintiff therefore issued a notice to defendant demanding the amount lent to him. The defendant repudiated his liability. ( 3 ) THE defendant in his written statement denied that the pronote Ex. P-1 and the receipt were executed as security for the amount borrowed. He contended that the payment of consideration and execution of the pronote were contemporaneous. He admitted that he borrowed Rs. 1,000 on executing the Promissory note and the consideration receipt. He also admitted that on 5-4-61 he paid a sum of Rs. 120 towards interest. But, it was alleged by him that after taking a loan of Rs. He contended that the payment of consideration and execution of the pronote were contemporaneous. He admitted that he borrowed Rs. 1,000 on executing the Promissory note and the consideration receipt. He also admitted that on 5-4-61 he paid a sum of Rs. 120 towards interest. But, it was alleged by him that after taking a loan of Rs. 10,000 from the land mortgage Co-operative Society, Mandya, he requested the plaintiff to give him the true copy of the promissory note and consideration receipt and after obtaining the same from the plaintiff he produced them before the society As the Secretary of the Society wanted to verify the copies by comparing them with the original, the plaintiff was requested to show the pronote and receipt (though the written statement is not clear in this regard, it was submitted during the course of arguments by the counsel for the petitioner, the plaintiff was requested by the defendant ). Accordingly they were produced by the plaintiff and after due verification, returned to him. It was contended that after making necessary arrange ments, the defendant paid a sum of Rs. 1,290 on 4-7-1963 in full satisfaction of the pronote debt and that the plaintiff returned the pronote and consideration receipt tearing the top and removing the stamp in token of discharge. Thereafter the defendant has produced the document before the Secretary of the Society and made a report that the said debt has been discharged. It was also contended that as the suit is based on loan transaction it is barred by time. ( 4 ) THE trial Court held that plaintiff's suit is not barred by time. It was of the view that Ex. P-4 the statement of the defendant dated 4-4-62 and the memorandum sanctioning the loan Ex. P-5 dated 9-3-62 were sufficient acknowledgment by the defendant to save the limitation. On consideration of evidence it found that the defendant has not discharged the suit debt It also held that it is not proved by the evidence that the plaintiff has given the pronote to the defendant tearing the top of the pronote and removing the stamps thereof as alleged by the defendant. On the basis of the findings recorded by it the trial court decreed the plaintiff's suit. ( 5 ) IN the appeal by the defendant, the lower Appellate Judge held that plaintiff's suit was barred by limitation. On the basis of the findings recorded by it the trial court decreed the plaintiff's suit. ( 5 ) IN the appeal by the defendant, the lower Appellate Judge held that plaintiff's suit was barred by limitation. He further held that it is not true that plaintiff has handed over the pronote and the receipt to the defendant. On the basis of the conclusions reached by him he reversed the judgment and decree of the Trial Court and dismissed the plaintiff's suit with cost. ( 6 ) IT is against the decision of the learned Civil Judge, this Second appeal is preferred by the plaintiff. The first contention that has been advanced on behalf of the appellant was that the lower Appellate Court was wrong in holding that the plaintiff's suit is barred by Limitation. ( 7 ) THE second contention was that the lower Appellate Judge has misconstrued the evidence led in the case in coming to the conclusion that the pronote and receipt were handed over by the plaintiff to the defendant and that the debt under the pronote was discharged. ( 8 ) CONSCIOUS as I am of the restricted power that we exercise in second appeal, I hesitated a great deal before deciding whether I should interfere with the finding of the lower Court in this case with regard to discharge of debt under the pronote. Having regard, however, to the particular facts and circumstances of the case and as I am of the opinion, that the lower Appellate Judge has misconstrued the evidence in that regard, i think I should interfere. ( 9 ) WITH regard to the limitation, the reasons given by the Lower Appellate judge are found in para 8 of his judgment. It is stated therein that"having regard to the fact that the plaintiff has not based his suit on the pronote the endorsement made thereon regarding payment of Rs. 120 on 5-4-61 which relates to the debt under the pronote does not save limitation in respect of the debt sued on the actual borrowing, which is claimed as independent transaction. It is impossible to agree with the view "taken by the Lower Appellate Judge. The endorsement of payment appearing on the pronote Ex. P-1 is effective for the purpose of extending the limitation. It is impossible to agree with the view "taken by the Lower Appellate Judge. The endorsement of payment appearing on the pronote Ex. P-1 is effective for the purpose of extending the limitation. Before I advert to this point of law, I must mention here that the defendant hae expressly admitted the execution of the pronote Ex. P-1 and its consideration. He has also admitted specifically the payment of rs. 120 on 5-4-61 and the endorsement to that effect on the pronote Ex. P 1. This is what he has stated in para 2 of the written statement: "it is true that the defendant borrowed Rs. 1000 on executing a promissory note and consideration receipt and subsequently on 5-4-61 paid rs. l20 towards interest mentioned in the endorsement thereon. " ( 10 ) IT is not disputed before me that the pronote Ex. P-1 is not sufficiently stamped In the said circumstances, I think the endorsement of payment on the pronote Ex. P-1 is effective for the purpose of extending the period of limitation. In a much harder case, where the pronote on which endorsement of payment was made was inadmissible in evidence for want of sufficient stamp, it was held by Madras High Court in Kondamma v. Venkatarayadu, AIR. 1989 Mad. 34. that although the pronote being insufficiently stamped and was inadmissible under S 35 of the Stamp Act, endorsement of payment appearing is effective for purpose of limitation. The question for consideration in that case was whether the plaintiff could rely on the endorsement on an insufficiently stamped promissory note as a valid endorsement acknowledging the original liability. It was observed at page 36 of the report:"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 under S. 35, Stamp Act. But it was held in a decision of this Court in 31 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. 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. "then their Lordships proceed to observe:"section 35 of the Stamp Act says that no instrument chargeable v. ith duty shall be admitted in evidence for any purpose. . . . . . uniess such instrument is duly stamped'' "under this Section an insufficiently stamped instrument is inadmissible in evidence. 'instrument' is defined in Stamp Act 2 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 Cl. 14); and "document" is defined in the General clauses Act 10 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 under S. 35, 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. " ( 11 ) WITH respect I agree with the above observation. But Mr J. M. Riazuddin learned counsel for the respondent contends that as the pronote Ex. P-1 was torn and thereby materially altered endorsement on the pronote is ineffective, because, it cannot be said that there was existing jural relationship in this connection it was argued that acknowledgment means promise to pay. But there is no such promise in the endorsement made on the pronote Ex. P-1. It is not possible to agree with his contention. An acknowledgment under S. 19 of the Limitation Act, must be a conscious admission of existing liability, in respect of property and the right claimed in the suit and must show existing jural relationship between the parties at the time when the admission was made. P-1. It is not possible to agree with his contention. An acknowledgment under S. 19 of the Limitation Act, must be a conscious admission of existing liability, in respect of property and the right claimed in the suit and must show existing jural relationship between the parties at the time when the admission was made. ( 12 ) THE first part of the argument advanced on behalf of the respondent falls to the ground, because when the endorsement was made on Ex. P-1, neither the pronote was torn nor was altered in any way. The second part of his contention is to the effect that acknowledgment means promise to par and as there is no such promise, in the endorsement appearing on Ex. P-1, it does not amount to an acknowledgment. I do not find any substance in the contention. S. 19 of the Limitation Act is undoubtedly free from the Doctrine of English Law which puts the value of acknowledgment upon its being equivalent of a new promise to pay. Under S. 19 of the Limitation Act there must be no doubt about the identity of the debt and once it is clear that the defendant admits that he owes the money and it is clear what debt he has admitted, it is a valid acknowledgment It need not contain a promise to pay. It will no doubt amount to subsistence of debt and existence of jural relationship. Therefore it has to be concluded that plaintiff's suit is not barred by time, and the endorsement appearing on the pronote Ex P-1 is effective for the purposes of limitation. ( 13 ) I think there is considerable force in the second contention It is stated in the written statement,". On receipt of the amount, the plaintiff returned the promissory note with consideration receipt tearing the top and removing the stamp as a token of discharge. . "the defendant was examined twice - once before the remand, viz. , on 2-2-65 and the second time after the remand on 18-1-1967. In his deposition before remand, the defendant, in his examination-in-chief, has stated:"then I borrowed from D. W. 1 under Ext. D2 and paid plaintiff's loan and took back 'he pronote tearing on the top and punching the stamps. "in his deposition recorded on 13-1-196? , on 2-2-65 and the second time after the remand on 18-1-1967. In his deposition before remand, the defendant, in his examination-in-chief, has stated:"then I borrowed from D. W. 1 under Ext. D2 and paid plaintiff's loan and took back 'he pronote tearing on the top and punching the stamps. "in his deposition recorded on 13-1-196? after the remand, he has stated in his examinataon-in-chief: "the stamp on the suit pronote was torn off and returned to me by the plaintiff". It is thus seen that the defence evidence on that point is inconsistent. Moreover what he has deposed in his statement recorded on 2-2-1965 is inconsistent with his pleading. The lower appellate Judge in para 9 of its judgment has stated:"the defendant has contended that so far as the production of the document before the bank is concerned, it was by the plaintiff for purpose of comparison and verification and that subsequently he paid the amount due to the plaintiff and received the document from him, who got the top of the document torn and the stamps therein punched as token of discharge. "and then again, further down in the same para, he has stated:"the defendant has deposed that as the plaintiff demanded to discharge the amount immediately he borrowed from D. W. 1 under ext. D-2 and paid the amount to the plaintiff and took back the pronote from him who returned it by tearing off and punching the stamps. " ( 14 ) IT is thus seen that the lower appellate judge has misread the evidence. He has not considered that portion of the evidence of the defendant in his deposition which was recorded after the remand wherein he has stated that the stamps on the suit pronote were torn off and returned to him by the plaintiff nor the learned Judge has adverted to the portion of the written statement of the delendant cited above. This shows that the learned Judge without scanning the evidence on that point and misreading the evidence arrived at an erroneous conclusion and this circumstance weighed much on his mind in arriving at the conclusion with regard to the production of the pronote before the Land Mortgage Bank and the discharge of the debt under the pronote. This shows that the learned Judge without scanning the evidence on that point and misreading the evidence arrived at an erroneous conclusion and this circumstance weighed much on his mind in arriving at the conclusion with regard to the production of the pronote before the Land Mortgage Bank and the discharge of the debt under the pronote. ( 15 ) IT is the case of the plaintiff that the defendant took the pronote and the receipt from him stating that he had to produce the same before the land Mortgage Bank, Mandya. On the other hand, the case of the defendant is that it was the plaintiff who produced those documents before the said Bank. The plaintiff has examined himself and produced two witnesses p. Ws. 2 and 3. The plaintiff has deposed:"defendant requested me to give him Ext. P-1 as he promised he would produce that in Land Mortgage Bank and discharge my debt. One Kenchaiah (PW. 3) was present when I handed over Ext p-1 to defendant. When I gave the pronote it was not torn in its top and the stamps were not punched as they are now. "p. W. 3 Kenchegowda has also deposed to the same effect. P. W. 2 who is the Secretary of the Bank in his examination in chief at first deposed that it was the defendant who produced Ext. P-1 before the Bank. But later on he resiled from his statement and said that the plaintiff had produced ex. P-1 before the Bank. The appellate judge discarded the evidence of this witness merely stating that his evidence was inconsistent on that point. The mistake the learned Judge has committed was that he overlooked the fact that it is the duty cast on the court to separate the 'grain from the chaff' as observed by the Supreme Court. It is not as though that the witness P. W. 2 had simply stated that defendant produced Ext. P-1 before the Bank so that it may be construed that due to a slip of tongue or otherwise due to lack of memory he had made that statement and later on he corrected himself. This is what he has stated in this examination-in-chief:"we require the original document under which the party wants to pay out debt before sanctioning the loan in our Bank. This is what he has stated in this examination-in-chief:"we require the original document under which the party wants to pay out debt before sanctioning the loan in our Bank. In this case also, we had required the defendant to produce the documents of debt with duplicate, i. e. , Ex. P-1. Ex. P-1 was produced by defendant and it is thus seen that he has given evidence in detail with regard to the production of Ext. P-1 by the defendant in the Bank. It cannot be said that due to lack of memory or otherwise, he had made that statement. In his examinaion in chief, further down he has stated: " Ext. P-1 pronote was produced in our Bank by plaintiff Kempegowda. I have returned Ext. P-1 to plaintiff alone after verification. At that time, the pronote was not torn or the stamps not taken. " ( 16 ) IT is abundantly clear that the witness has prevaricated. It is an admitted fact in this case that the defendant was one of the directors of the Bank at the relevant period of time and PW. 2 was the Secretary of the said bank at that time. The learned Judge has skipped off this piece of evidence without applying his mind to it by stating that PW. 2 being the secretary of the Bank was a responsible officer. As already observed, it is quite evident that at first he came out with the truth and then he went on resiling from his statement. The reason for the same was quite obvious. Further the learned Judge has described P'w. 3 as an obliging witness'. He has observed in para 9 of his judgment:"moreover this witness appears to be an obliging witness, as he is obliged to the plaintiff who is accustomed to lend agricultural implements like ploughs. " ( 17 ) BUT he overlooked the fact that PW. 2 was working as Secretary in the bank and the defendant was one of the Directors of the Bank. He adopted different standards in evaluating the evidence of plaintiff's witnesses. What PW. 3 deposed was " One and a half years back, I had been to plaintiff's house to borrow a plough. " it does not appear from his statement as the learned Judge thought, 'that the plaintiff was accustomed to lend agricultural implements like ploughs to him. He adopted different standards in evaluating the evidence of plaintiff's witnesses. What PW. 3 deposed was " One and a half years back, I had been to plaintiff's house to borrow a plough. " it does not appear from his statement as the learned Judge thought, 'that the plaintiff was accustomed to lend agricultural implements like ploughs to him. That was the only ground on the basis of which the evidence of pw. 3 had been rejected by the lower appellate Judge. I do not think that the learned Appelalte Judge was right in discarding his evidence. Even otherwise, if the earlier piece of evidence of PW. 2 is accepted, and I do not see any reason why it should not be accepted, it has to be concluded that the pronote Ext. P-1 was produced by the defendant before the Bank. The very fact that the evidence of the defendant with regard to the removal of the stamps or punching the same is not consistent and further his evidence is against his own pleading, viz. , what he has stated in his written statement, shows that the evidence of the defendant is unworthy of credit. ( 18 ) IN support of the alleged discharge the defendant has examined himself and three witnesses. DW. 1 is a relative of the defendant. His evidence discloses that his annual income is Rs. 1,000 and he ia a member of a large family consisting of five children, his mother, step-mother as well as himself. He has stated that he borrowed Rs. 400 from one Godigowda and made up the amount advanced to the defendant. The said godigowda is not examined. DW. l is a relative of the defendant. The very nature of the document Ext. D-2 (pronote) indicates that it can be easily prepared at any time. ( 19 ) DW. 2 has given evidence that defendant borrowed Rs. 1000 from him and that the defendant had told him that he had applied for a loan from the Land Mortgage Bank. In that connection, the defendant executed a proncte in his favour. He has also deposed that at the instance of the defendant he took the pronote for comparison by the Secretary of the land Mortgage Bank. His further evidence is that after comparing the copies with the original, the Secretary returned the pronote to him. In that connection, the defendant executed a proncte in his favour. He has also deposed that at the instance of the defendant he took the pronote for comparison by the Secretary of the land Mortgage Bank. His further evidence is that after comparing the copies with the original, the Secretary returned the pronote to him. He adds that at that time Kapregowda alias Channegowda, Gaddegowda and plaintiff had also come to the Land Mortgage Bank and that the Secretary compared the true copies with the originals produced by them and returned the originals. He stated that the Secretary compared the true copies with the originals produced by all of them. DW. 3 has also given evidence substantially to the same effect. He is the defendant's son-in- law and a close relative. Further he has deposed that they have been paid their loans. It is an admitted fact in this case that the creditors of the defendant have not been paid their amounts by the Bank though the cheques had been prepared. There fore, no reliance can be placed upon the evidence of these witnesses. ( 20 ) WIH regard to the discharge the relevant portion of the written statement reads:" Consequently, the defendant with great difficulty had to arrange for the money to make a payment of Rs. 1. 290 (principal Rs. 1000 and balance of interest up to 4-7-63 Rs. 290) in full satisfaction of the pronote debt. "it is seen that that portion relates to obtaining of the loan to discharge the debt under the pronote. Nowhere it is stated in the written statement as to on what date the debt under the pronote had been repaid. But the learned Counsel for the respondent submitted that the date mentioned in the written statement 4-7-1963 should be understood to be the date on which the debt under the pronote had been discharged. Even if it is taken to be so, the defendant in his deposition has stated: " I do not remember the date on which I repaid the suit debt. can't say the exact amount I paid to the plaintiff. " ( 21 ) THE defendant is a retired Court clerk and is an experienced man. The amount was a substantial one. His evidence coupled with his written statement furnished a reasonable basis for an inference that he was not at all telling the truth. can't say the exact amount I paid to the plaintiff. " ( 21 ) THE defendant is a retired Court clerk and is an experienced man. The amount was a substantial one. His evidence coupled with his written statement furnished a reasonable basis for an inference that he was not at all telling the truth. He being a literate man and also well experienced in wordly affairs it is hardly acceptable that he would have made payment of such substantial amount without taking any receipt or writing to that effect from the plaintiff. Moreover it is borne by the evidence let-in in the case that the defendant had applied for loan in the Land Mortgage Bank to discharge the debt of the plaintiff and his other creditors and the loan had been sanctioned. This was sometime in the year 1and62. After the necessary requirements were complied with, the defendant executed a mortgage bond in favour of the Bank on 30-3-1963. On 4-7-1963 the defendant made an application to the Land mortgage Bank as per Ext. P-8 (a) to the effect that the amount may be distributed to the creditors on 5-7-1963 as per details furnished in the application. Now Ext. D-2 pronote which is alleged to have been executed by the defendant in favour of DW. l is also dt. 4-7-63. The evidence of the defendant is that the plaintiff was demanding repayment of his debt since 2 years prior to the date of filing of the application in the Bank. ( 22 ) IF really there was any pressure from the plaintiff for repayment of the debt, it can hardly be believed as to why the defendant waited all that time. Moreover it looks highly improbable, as argued on behalf of the appellant when the cheques were already ready, the defendant would have discharged the debt under the suit pronote on 4-7-1963, more so when on the very day he had presented an application to the Bank requesting the Bank to make payment to his creditors on 5-7-1963. In these circumstances, I think the learned Advocate for the appellant is right in his contention that no reliance can be placed upon the evidence relating to the discharge of the debt produced on behalf of the defendant. In these circumstances, I think the learned Advocate for the appellant is right in his contention that no reliance can be placed upon the evidence relating to the discharge of the debt produced on behalf of the defendant. It has to be held that the alleged discharge has not been proved by the evidence produced on behalf of the defendant as already observed by me the learned lower appellate Judge has not only misread the evidence but ed the same without considering the checks that were available in the record For to sting the evidence of the witnesses In this view of the matter the judgement of the lower appellate Court is liable to be set aside and the plaintiff is entitled to a decree. ( 23 ) ON the reasons stated above, this appeal is allowed and the judgment and decree of the lower appellate Court are set aside and the judgment and decree passed by the trial Court are restored. The trial Court has not awarded present and future interest to the plaintiff The pronote Ext. P-1 carried with it interest at 12 per cen per annum In these circum stances I am of the opinion that in the. nterest of justice the plaintiff should be awarded interest present and future at the rate of (six) 6 per cent per annum and it is ordered accordingly. The plaintiff appellant will also get his costs throughout --- *** --- .