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2014 DIGILAW 4321 (MAD)

S. Ramanathan v. S. Pannalal Jain

2014-11-19

G.M.AKBAR ALI

body2014
Judgment 1. Suit is for recovery of Rs.70,00,821 with interest at 36%. 2. Suit is on pro-notes. The brief averments of the plaint is as follows: 3. One M/s Tatia Skyline and Health Farms Limited, a Company in which, the defendant was a Chairman, entered into a deed of licence dated 29.1.1993 with plaintiff's mother Mrs.Valiammal. This agreement relates to commercially exploiting the property of Mrs.Valiammal by putting up construction. After the execution of the said agreement, the defendant approached the plaintiff for funds and promised to return the same with 36% interest. 4. The plaintiff arranged a sum of Rs.22,50,000/-from 23 various persons, hailing from his native place, Chettinadu and gave it to the defendant. The defendant acknowledged the receipt of said sum and executed 23 separate promissory notices on 25.12.1996 in favour of the plaintiff. However, the defendant did not repay as promised. 5. On warning him, initiation of proceedings for recovery of same, the defendant assured payment and paid a token sum of Rs.1000/-on each of the promissory notes and had acknowledged the debt by making endorsement on the promissory note on 25.12.1999. 6. The defendant failed to fulfil that promise also. The plaintiff was constrained to issue a legal notice and on failure, the suit is filed for the principal and also interest for a total sum of Rs.70,00,821/- with future interest. 7. The defendant entered appearance through counsel and filed written statement interalia stating as follows: (a) The agreement of licence dated 29.1.1993 for exploiting the property of Mrs.Valiammal, is admitted. However, it was denied that the plaintiff had anything to do with the agreement. When Mrs.Valiammal had given possession of the property, she wanted the defendant to execute promissory notes as security and therefore, the defendant executed blank promissory notes as security. The defendant has not received any consideration. (b) On receipt of the notice, the defendant called upon the plaintiff to produce the list of the persons from whom the plaintiff collected Rs.22,50,000/-, account statement, income tax returns, the true copy of the promissory note and the statement of account for the acknowledgement of Rs.1000/- on each of the promissory notes. (c) Before completion of the construction, Mrs.Valliammal wanted the defendant to furnish security and therefore, the said Valliammal and the defendant assessed the value of the property at RS.22,50,000/- and she asked the defendant to execute 23 promissory notes. (c) Before completion of the construction, Mrs.Valliammal wanted the defendant to furnish security and therefore, the said Valliammal and the defendant assessed the value of the property at RS.22,50,000/- and she asked the defendant to execute 23 promissory notes. (d) When the construction was not completed and the promissory notes were to be time barred, Mrs.Valiammal had requested the defendant to make an endorsement on the rear side of the promissory notes and the same was done by the defendant only with the sole intention of revalidating the security given to Mrs.Vallammal. (e) On completion of the construction, amounts were paid to Valiammal and sale deeds were also executed, however, she had not returned the promissory notes and the plaintiff seemed to have obtained the same from his mother illegally to enrich himself. The suit is also barred by limitation. 8. On the above pleadings, the following issues were framed: 1. Whether the suit pronotes were given as blank pronotes by the defendant as security? 2. Whether the suit pronotes are not supported by consideration? 3. Whether the alleged acknowledgement of debt by making the endorsements on the suit pronotes is legally valid and binding on the defendants? 4. Whether the plaintiff is entitled to recover the principal amount covered by the pronotes with interest as claimed in the plaint? 5. To what other relief the plaintiff will be entitled? 9. However, during the course of arguments, the learned counsel for the defendant would submit that the suit is barred by limitation as the endorsement is not within the time limit. Therefore, the following additional issue viz., Whether the suit is barred by limitation is also framed. 10. To prove the case of the plaintiff, the plaintiff was examined as P.W.1 and four more witnesses were examined and Exs.P.1 to P.4 were marked. The defendant was examined as D.W.1 and no document was marked on the side of the defendant. 11. It is the case of the plaintiff that the defendant entered into an agreement for construction of the property of one Mrs.Valiammal the mother of the plaintiff on 29.1.1993. According to the plaintiff, the defendant approached him for funds and promised to return the same with 36% interest. 12. The plaintiff canvassed and collected from various friends and relatives of his native place Chettinadu and thereby, handed over a sum of Rs.22,50,000/-to the defendant. According to the plaintiff, the defendant approached him for funds and promised to return the same with 36% interest. 12. The plaintiff canvassed and collected from various friends and relatives of his native place Chettinadu and thereby, handed over a sum of Rs.22,50,000/-to the defendant. It is his further case that such amount was collected from 23 friends and relatives. The defendant executed 23 promissory notes for various amounts, however, to the total of R.22,50,000/-. 13. The plaintiff would state that promissory notes were executed in favour of him and not in favour of 23 persons. According to him, the promissory notes were executed on 25.12.1996 and on 25.12.1999 the defendant acknowledged the debt by paying a token sum of Rs.1000/-on each promissory note and also making an endorsement on the rear side of them. 14. However, the defendant would take a defence that those promissory notes were given as security to the plaintiff's mother Mrs.Valiammal as blank promissory notes and not supported by consideration. The endorsement dated 25.12.1999 was also admitted by the defendant and the defendant would state that only to revalidate the promissory notes at the request of Mrs.Valiammal, an endorsement was made without any payment. 15. In a suit on promissory note, the initial burden is on the plaintiff to prove passing of consideration and execution of pronote. However, if the execution is admitted and the promissor takes a plea that the promissory notes are not supported by consideration, the burden shifts on the defendant to prove the same. 16. When there is a defence that blank promissory notes were given as security, again the burden is heavily upon the defendant to prove that the promissory notes were given as blank and for security purpose. 17. It is well settled that by holding a blank promissory note the holder of the promissory note is entitled to fill up the promissory note. It is also well settled that under Sec.118 of the Negotiable Instruments Act, the presumption is that Negotiable Instrument is supported by consideration, however, it is a rebuttable presumption. Therefore, the initial burden is on the plaintiff to prove the execution of the promissory note for a consideration. In the present case, the execution is admitted by the defendant and now the defendant is burdened to discharge that the promissory notes are not supported by consideration. Therefore, the initial burden is on the plaintiff to prove the execution of the promissory note for a consideration. In the present case, the execution is admitted by the defendant and now the defendant is burdened to discharge that the promissory notes are not supported by consideration. On the plaintiff's side, oral and documentary evidence are let in to prove the execution of promissory notes and sources for passing of consideration. 18. The promissory notes were executed on 25.12.1996 and acknowledgement of debt was made on 25.12.1999. 19. The suit is filed on 18.11.2002. Whether such acknowledgement on 25.12.1999 constitute a fresh period of limitation under sec.18 (1) of the Limitation Act is to be considered now. Therefore, the additional issue is taken for consideration. 20. Mr.D. Anand, learned counsel for the defendant at the outset would state that the limitation to file a suit on a promissory note is three years and it expired on 24.12.1999 as the promissory note was dated 25.12.1996. 21. The learned counsel submitted that the alleged acknowledgement was made on 25.12.1999 and therefore, a fresh period of limitation cannot be computed and the learned counsel relied on sec.18(1) of the Limitation Act. 22. On the other hand, Mr. C.A. Diwakar the learned counsel for the plaintiff would submit that the Limitation Act provides in computing the period of limitation prescribed for any suit, the day from which such period is to be reckoned shall be excluded. The learned counsel relied on a decision reported in AIR 1973 Bombay 147 (S.B.Nilakhe vs N.B. Gholave). 23. He also relied on a decision reported in 2000 8 SCC 649 (Tarun Prasad Chatterjee vs Dinanath Sharma), where, the limitation for an election petition was considered by the Apex Court and the Apex court held that the first day is to be excluded for the computation of limitation. 24. Heard and perused the materials available on record. 25. The promissory notes were executed on 25.12.1996. The limitation to file a suit on promissory note is three years. Therefore, calculating from 25.12.1996, the three years period will fall on 24.12.1999. However, the present acknowledgement were made on the next day i.e., 25.12.1999. Sec.18 (1) of the Limitation Act provides that the fresh period of limitation will be computed from the time when the acknowledgement was made. The limitation to file a suit on promissory note is three years. Therefore, calculating from 25.12.1996, the three years period will fall on 24.12.1999. However, the present acknowledgement were made on the next day i.e., 25.12.1999. Sec.18 (1) of the Limitation Act provides that the fresh period of limitation will be computed from the time when the acknowledgement was made. Sec.18(1) reads as follows: 1) Where, before the expiration of the prescribed period for a suit of application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed. 26. Therefore, the key word is before the expiration of the of the prescribed period for a suit. S.12 (i) reads as follows: Exclusion of time in legal proceedings (1) In computing the period of limitation for any suit, appeal or application, the day from which such period is to be reckoned, shall be excluded (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. 27. In AIR 1973 Bombay 147 (S.B.Nilakhe vs N.B. Gholave) cited supra, the Bombay High court was considering a case where the liability was acknowledged by the defendant on 5.11.1963 and the plaintiff instituted the suit on 5.11.1966 and the defendant pleaded that the suit was barred by limitation. The Bombay High Court held “3. The view taken by the trial Court is obviously erroneous. Section 12(1) of the Limitation Act, 1963 provides that in computing the period of limitation prescribed for any suit, appeal or application, the day from which such period is to be reckoned shall be excluded. The Bombay High Court held “3. The view taken by the trial Court is obviously erroneous. Section 12(1) of the Limitation Act, 1963 provides that in computing the period of limitation prescribed for any suit, appeal or application, the day from which such period is to be reckoned shall be excluded. Now, under Section 18 (1) where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through who he derives his title or liability a fresh period of limitation shall be computed from the time when the acknowledgement was so signed. Sec.1 of the General Clauses Act, 1897, provides that in any general Act or Regulation made after the commencement of this Act, it shall be sufficient for the purpose of excluding the first in a series of days or any other period of time to use the word “from”, and, for the purpose of including the last in a series of days or any other period of time, to use the word “to”. Since Sec.18 (i) of the Limitation Act provides that the fresh period of limitation shall be computed “from” the time when the acknowledgement was so signed, in view of the provisions of sec.12 (i) of the Limitation Act and of Sec.9 (i) of the General Clauses Act, it is clear that the day on which the acknowledgement is made will have to be excluded in computing the period of limitation of three years.” 28. However, the above case law is not applicable to the case law on hand. Here is a case where the acknowledgement was made on 25.12.1999 on a promissory note dated 25.12.1996.Under the Limitation Act, the time to file a money suit is three years and that falls on 24.12.1999. Therefore, under sec.18(1) the acknowledgement should have been made prior to the expiration of the prescribed period for filing the suit, in the present suit it has not been done so. 29. However, interestingly, the defendant, in the written statement, in paragraph-5 would state as follows: “5. .... Therefore, under sec.18(1) the acknowledgement should have been made prior to the expiration of the prescribed period for filing the suit, in the present suit it has not been done so. 29. However, interestingly, the defendant, in the written statement, in paragraph-5 would state as follows: “5. .... This defendant states that as Mrs.Valiammal wanted this defendant to furnish security and that the said Valiammal and this defendant had assessed the value of the property and ascertained it at Rs.22,50,000/- and hence she had asked this defendant to execute 23 promissory notes. This defendant states that he had given the promissory notes only to Mrs.Valiammal and not to the plaintiff.” In paragraph-6 he would state “6. This defendant states that the project of commercially exploiting the property of Mrs.Valiammal by building of shops were not completed and as the promissory notes were to be time barred Mrs.Valiammal had requested this defendant to make an endorsement on the rear side of the promissory notes and the same was done by this defendant only with sole intention of revalidating the security given to Valiammal. Further, the endorsement also states that amount is paid towards the amount borrowed in promissory notes and not towards interest as claimed by the plaintiff. This defendant states that he has not paid any money to the plaintiff or his mother on 25.12.1999, the receipt of the said payment is subject to proof.” 30. It is not the case of the plaintiff that the suit is filed on the acknowledgement of time barred debt. The Bombay High court was dealing with the presentation of suit filed on the same day after three years from the date of acknowledgement. The High court relied on section 12 of the limitation Act and General clauses act. But under the Gregorian calender, three years will fall on the previous day and the fourth year will commence on the next day. Therefore, the three years will expire on 24.11.1999 and the acknowledgement should have been made on or before 24.11.1999 and not on 25.11.1999. 31. Therefore the suit pro note is time barred and there is also acknowledgement of time barred debt for a fresh time of limitation. The additional issue is answered against the plaintiff. 32. Therefore, the three years will expire on 24.11.1999 and the acknowledgement should have been made on or before 24.11.1999 and not on 25.11.1999. 31. Therefore the suit pro note is time barred and there is also acknowledgement of time barred debt for a fresh time of limitation. The additional issue is answered against the plaintiff. 32. Since, the additional issue is answered holding that the suit pro note is time barred, the suit though filed within three years from date of acknowledgement, not maintainable. The other issues need not be considered. 33. In the result the suit is dismissed. No costs.