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1987 DIGILAW 353 (MAD)

P. K. Easwaran v. M. Kuppuswami

1987-10-13

SWAMIKKANNU

body1987
JUDGMENT Swamikkannu, J. 1. This is an appeal preferred by defendants 4, 5, 6 and 7, Easwaran, Shanmugham, Sachithanandam and Kaliannan, against the judgment and decree dated 26th June, 1981, in O.S. No. 395 of 1980 on the file of the Court of Principal Subordinate Judge of Erode, in a suit on a promissory note, decreeing the same as prayed for with costs against all the defendants. 2. The case of the plaintiff (first respondent herein) before the Court below was as follows: The plaintiff the appellants herein and some others entered into a partnership deed on 12.7.74 under the name and style of Vallinayagi Financiers at Erode, which firm was registered under the Indian Partnership Act. The main business of the firm is money-lending. The plaintiff had contributed a sum of Rs. 25,000 towards the share capital. One of the partners by name M.N. Chinnaswamy Gounder, retired from the partnership on 31.3.1976, leaving the entire assets and liabilities to the other partners, who reconstituted the firm on and from 1.4.1976, and got a partnership deed executed on 25.5.1976. Defendants 2 and 3 (respondents 3 and 4 herein) were managing the business of the firm form commencement of the partnership. The plaintiff and another partner expressed their desire to dissolve the firm by the end of March, 1978 and to settle the accounts. Defendants 2 and 3 desired to continue the firm from 1.4.1978 and agreed to pay the amounts to the plaintiff and the other retiring partner and suggested a transfer of the amounts due to them from the share capital account to the deposit account and make the payment thereof later, but the plaintiff and the other retiring partner insisted on some guarantee for the sum due to them. The second defendant took the appellants to Erode and got a guarantee letter executed by them in favour of the plaintiff and two others on 31.3.1978. After that, a sum of Rs. 39,826-94 p. due to the plaintiff from the first defendant firm was transferred to the deposit account. On 1.4.1978 the firm was reconstituted and defendants 2 and 3 entered into a partnership deed. The plaintiff paid a sum of Rs. 173-05p in cash to the first defendant to make the deposit a round figure of Rs. 40,000 and defendants 1 to 3 executed a promissory note for the said sum of Rs. On 1.4.1978 the firm was reconstituted and defendants 2 and 3 entered into a partnership deed. The plaintiff paid a sum of Rs. 173-05p in cash to the first defendant to make the deposit a round figure of Rs. 40,000 and defendants 1 to 3 executed a promissory note for the said sum of Rs. 40,000 in favour of the plaintiff on 1.4.1978, promising to pay the same with interest at 15 per cent per annum. Inspite of repeated demands, defendants 1 to 3 failed to pay the same to the plaintiff. Defendants 1 to 3 as executants of the promissory note and defendants 4 to 7 as guarantors, are jointly and severally liable to pay the amount to the plaintiff. The defendants are not entitled to claim benefits under any of the Tamil Nadu Debt Relief Acts. The plaintiff thus prayed for a decree for the said sum of Rs. 40.000. 3. Defendants 1 to 3 remained ex pane. 4. The fifth defendant resisted the suit and filed a written statement which was adopted by defendants 1, 6 and 7.The contentions of the fifth defendants are: the claim against the appellants cannot be sustained as they did not at all know who the plaintiff was. They had never seen him, nor was there any occasion for them to known him. They did not execute any letter of guarantee in his favour as alleged by the plaintiff. The third defendant is a close friend of the appellants and to make a capital of the situation he has managed to get hold of a signed paper of the appellants from their house and created a letter of guarantee by using the same and has thus cheated the appellants. The contents of the letter of guarantee were not executed by the appellants and the signatures of theirs in the blank paper have been used to fabricate a letter of guarantee, which for this reason, is a faked up document and does not create any right in favour of the plaintiff. The plaintiff cannot project any claim on foot of the guarantee letter. They prayed for dismissal of the suit. 5. Though subsequently remained ex-parte, the third defendant has filed a written statement contending that the suit is not maintainable. The plaintiff cannot project any claim on foot of the guarantee letter. They prayed for dismissal of the suit. 5. Though subsequently remained ex-parte, the third defendant has filed a written statement contending that the suit is not maintainable. Even on 6-10-79 he had retired from the firm on the understanding that he would not be made liable for any of the out standings due from the firm and as such, no claim against him is maintainable. Since some of the defendants are agriculturists, the provisions of the Tamil Nadu Debt Relief Acts would apply to the suit debt. The plaintiff cannot also claim any personal remedy against any of the defendants before exhausting his remedies against the assets of the firm. The suit is also bad for non-joinder of parties as one other partner has been left out in the plaintiffs claim which has got to be dismissed. 6. On the above pleadings, the following issues were framed for trial by the Court below: (1) Whether the provisions of any of the Tamil Nadu Agriculturists Debt Relief Acts are applicable to the defendants? (2) Whether the suit as framed is maintainable? (3) Whether the suit is bad for non-joinder of another partner? (4) Whether the plaintiff is entitled to any claim against the third defendant? (5) Whether the guarantee letter was not executed by defendants 4 to 7 (6) Whether the plaintiff is entitled to a decree against all the defendants 3 to 7. To what relief? The plaintiff examined himself as P.W.1 and one Ponnuswami and Doraiswami as P.Ws. 2 and 3 on his behalf, and filed the suit promissory note dated 1.4.1978 executed by the second defendant in his favour as well as the letter of guarantee dated 31.3.78 executed by the appellants, which were marked as Exhibits A-1 and A-2 respectively. The appellants examined the sixth defendant as D.W.1 in support of their contentions but did not file any documentary evidence. 7. On a consideration of the above evidence, oral and documentary, the trial Court held on Issue 1 that the provision of the Debt Relief Acts will not apply to the claim in the suit. On Issue 2 it held that the suit as framed is maintainable. 7. On a consideration of the above evidence, oral and documentary, the trial Court held on Issue 1 that the provision of the Debt Relief Acts will not apply to the claim in the suit. On Issue 2 it held that the suit as framed is maintainable. On Issue 3 it held that the suit is not bad for non-joinder of any party and under Issue 4 it held that the plaintiff is entitled to the claim against the third defendant. It further held that a letter of guarantee need not necessarily be on a stamped paper or a thick paper and there is no reason to doubt the genuineness of Exhibit A-3 guarantee letter relied on by the plaintiff. Under issue 6, the trail Court held that the plaintiff is entitled to a decree against all the defendants. Aggrieved by the above decision of the trial Court, defendants 4 to 7 have come up in appeal. 8. Mr. P. Pandi, learned Counsel for the appellants, inter alia contends that the trial Court ought to have held that the guarantee letter was not executed by the appellants and that it was a fabricated document. It is also contended that the Court below erred in throwing the burden of proof on the appellants regarding the factum of execution and genuineness of the alleged letter of guarantee. He further contends that the Court below failed to note that the execution of the letter of guarantee which is on an ordinary paper, is surrounded by suspicious circumstances, and that the intrinsic evidence in Exhibit A-2 itself would show that the alleged letter of guarantee is a fabricated document. Though a contention was raised in the memorandum of appeal that the Court below ought to have held that the provisions of the Tamil Nadu Debt Relief Acts would apply to the suit claims, the said contention has not been raised during the arguments by learned Counsel for the appellants. Under these circumstances, the only point that arises for our consideration in this appeal is, whether the letter of guarantee (Exhibit A-2) is a genuine one executed by the appellants, viz., defendants 4 to 7. 9. Section 129 of the Indian Contract Act deals with a continuing guarantee. It reads that a guarantee which extends to a serious of transactions is called a continuing guarantee. 9. Section 129 of the Indian Contract Act deals with a continuing guarantee. It reads that a guarantee which extends to a serious of transactions is called a continuing guarantee. It may, for instance, relate to collection of rents payable periodically, or it may relate to supply of goods from time to time. In Durga Priya Chowdhury v. Durga Pada Roy I.L.R. (1928)55 Cal. 154, where a person was appointed for collecting rents and another held himself responsible for due collection of the rents and executed a security bond for certain amount, it was held that it was continuing guarantee. Similarly, in Wall Mahomed v. Ganpat I.L.R. (1931)52 A11.1014, a surety bond to the effect, "I agree to become surety for the Judgment debtor in Court on each and every occasion when his attendance is called for by the order of the Court, was held to be a continuing guarantee. But, In Bhagvandas v. Secretary of State (1926)28 Bom.L.R. 662 where the plaintiff stood surety to a lincence for sale of liquor and under the terms of the licence, the money was payable in instalments, it was hold that the guarantee was not a continuing one. In the instant case, the question is whether Exhibit A-2 is a continuing guarantee as per the provision of Section 129 of the contract Act. Since Exhibit A-2 has got a caption 'continuing guarantee', this Court is obliged to refer to the above decisions and the provision of Section 129 of the Contract Act. 10. Exhibit A-2 reads as follows". CONTINUING GUARANTEE LETTER It is not in dispute that the signatures found in Exhibit A-2 are those of the clients. But, the only question that is now raised at this stage is that in the blank paper these signatures of the appellants were obtained and that later on the contents which are found above the signatures were typed out. It is also contended that the person who typed out the contents of Exhibit A-2 has not signed in the document, but only his name and address have been mentioned in Exhibit A-2. It is also contended that the person who typed out the contents of Exhibit A-2 has not signed in the document, but only his name and address have been mentioned in Exhibit A-2. We have carefully gone into the contents of Exhibit A-2 and we do Find that there is absolutely no ground whatever to uphold the contention raised by the appellants with respect to the genuineness of otherwise of Exhibit A-2 on an appreciation of the oral evidence available on record, we find that the four appellants did sign the letter of guarantees only after the contents were typed in Exhibit A-2 and they have been fully acquainted with the contents before they signed it and as such, they are bound by the tenor of the contents in Exhibit A-2. It is not possible to accept the argument that a signed blank paper was found in the premises of P.W.1 which came to be utilised for the purpose of writing up a letter of guarantee, because, as rightly pointed out by the learned trial Judge, if one of the persons alone was sufficient with reference to applying for extension of time for payment, there is no reason for all the four signing and leaving a blank paper. 11. Further, no argument substantive has been raised so far as the genuineness of the promissory note (Exhibit A-1) is concerned. It is admitted that it is signed by the second defendant, M.L. Ramaswami, on behalf of the first defendant firm. Thus, we find that the contention raised on behalf of the appellants that Exhibit A-2 is not a genuine document, cannot be upheld. We do find that it is genuine and that it had been executed by the appellants herein. There is no merit in the appeal. Hence the appeal is dismissed, but in the circumstances, there will be no order as to costs.