T K SHANMUGASUNDARA MUDALIAR Vs. S C SIVALINGA MUDALIAR
HIGH COURT OF MADRAS
S.C. SIVALINGA MUDALIAR
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Raghava Rao, J. -
(1.) This appeal arises out of a suit for recovery of the amount due under a promissory note executed by the defendants in favour of the plaintiff on 2-31948 for Rs. 2750 payable with interest at 9 per cent, per annum. The answer of the defendants was that although they had executed the promissory note it was unenforceable on account of an agreement in bar of the suit, which they detailed as follows in their written statement:
(2) "The plaintiff along with Rudrakoti Mudaliar, Kuppuswami Mudaliar and Arumuga Mudaliar are carrying on business in partnership under the name and style of Ganapathi Palaighat Company. They owned a casuarina tope planted on land belonging to the local temple. The first defendant is carrying on business in firewood in Madras and the second defendant is only working under him. In or about February 1948, the plaintiff and his partners agreed to sell the tope to the first defendant for Rs. 7750 with an advance of Rs. 500. At this time there was considerable dispute between the trustees of the temple and the villagers that land belonging to the temple was leased out for a nominal rent in the name of a son of one of the trustees and they sub-leased it to the plaintiff and his partners arid made a huge secret profit. There was also control restrictions about the sale of firewood. In this state of things the plaintiff and his partners insisted on a separate agreement showing that the sale of the tope was for Rs. 2000 only and two pro-notes for Rs. 5000 and Rs. 2750 making it appear that the pronotes were executed for cash consideration borrowed for business. Accordingly the second defendant herein executed an agreement of sale of the tope in favour of Arumuga Mudaliar. Two pronotes, one for Rs. 5000 dated 26-2-1948 and the suit pronote for Rs. 2750, dated 3-3-1948, were also executed by the defendants, the former in favour of Rudrakoti Mudaliar and the latter in favour of the plaintiff herein. It was then distinctly agreed and understood between the parties that in case these defendants sustained any loss owing to relaxation of control and other causes the plaintiff and his partners should remit Rs. 2000 out of the sale price. (3) Within a month or two after the sale all control restrictions were removed and the defendants sustained very heavy loss. The plaintiff and his partners in the presence of respectable panchayatdars reiterated the original agreement that they would forego Rs. 2000 and receive the balance of Rs. 5500 only. The defendants paid various amounts from time to time amounting to Rs. 5000 and the pronote for Rs. 5000 was returned to him on 2-12-1948. As regards the suit pronote the plaintiff agreed that on payment of Rs. 750 only he would discharge the suit pronote and return the same to the defendants. As T.K. Shanmugasundara Mudaliar vs. S.C. Sivalinga Mudaliar and Anr. (03.10.1950 - ... Page 3 of 7 the defendants could not make up the said sum immediately there was some delay. In the meanwhile at the instigation of others and for reasons not known the plaintiff sent a notice dated 11-11-1948, demanding the full amount and before the defendants had time to reply the plaintiff has instituted this suit on 17-11-1948. 4. These defendants submit that though there was a recital in the pronotes for interest it was agreed between parties at the time of the execution of the pronotes that no interest should be charged and the terms will not be enforced. Rs. 5000 was paid without interest and it was accepted." The issue framed on the pleadings was: "whether the agreement pleaded is true & valid." As the suit was taken up for trial, there was a preliminary objection taken on behalf of the plaintiff that no proof of such agreement could be adduced by the defendants in bar of his suit. The objection found favour with the Judge below who accordingly decreed the suit as prayed for. It was contended in this appeal by Mr. Narasimhachariar that the view taken by the Court below is wrong.
(2.) Learned counsel placed strong reliance on a ruling of this Court reported in 'Mathew Henry Abraham v. The Lodge "Good Will". 34 Mad 156, in support of his attack against the judgment of the Court below. In that case the learned District Judge of Bellary dismissed the suit there in question brought by Mr. Henry Abraham as executor of Mathew Abraham for recovery of money due on a promissory note executed on the 12th November 1891 in the latter's favour by certain office bearers of the Lodge "Good Will", No. 465, of Bellary on the ground that although the document marked as Ex. IV in the case and executed by Mathew Abraham on the 21st February 1902 was not operative as a release, yet, since the Lodge regarded it as such, being led so to regard it by the conduct of Mathew Abraham at the time of its execution and completed the building of the Lodge premises on the faith of such belief, the plaintiff was estopped from enforcing his claim. No estoppel having been pleaded in the suit or raised by the issues or at any rate, proved by any evidence, this Court held that the District Judge was wrong in dismissing the suit on the ground of estoppel. The real question which thereupon this Court (Munro and Abdur Rahim JJ) had to consider was whether the District Judge was right in holding that Ex. IV was not a good and effective release. The judgment of the Court was delivered by Abdur Rahim J. who at page 157 of the report sets forth the document in these words in which it ran: "Know all men by these presents that I, Mathew Abraham, proprietor of Messrs. Abraham and Co. Bellary, do covenant and agree with the Worshipful Master and Wardens of Lodge Good Will No. 465, for the time being, that if the Masonic Lodge building which has been burnt down is resuscitated, I shall have no claim, whatever, upon the building or any of the property of the said Masonic Lodge." Dealing with the argument that the document could not be treated as a good release because there wag no mention of the promissory note there, the Court T.K. Shanmugasundara Mudaliar vs. S.C. Sivalinga Mudaliar and Anr. (03.10.1950 - ... Page 4 of 7 held that where a deed of release was silent as to the claim released, evidence 'aliunde' was admissible under Section 95 of the Evidence Act to show what claim was intended to be released. After coming to the conclusion that the promissory note claim was intended to be released by the document in question the Court proceeded to consider the further question of law -- which is the one material to the present case--whether under Section 63 of the Indian Contract Act, the release in question could be regarded as invalid. The Court ruled, after discussing the authorities bearing upon the point, that it was not the intention of the legislature in enacting Section 63 of the Contract Act to depart from the English law, under which releases, contingent on the happening of a future event are valid, and that such releases are valid under the Contract Act, the only difference between the English Law and the Indian Law being that the former requires consideration in the case of releases not under seal, while the Contract Act requires no consideration in the case of releases.
(3.) The distinction sought to be made by Mr. Narasimhachariar on the basis of this decision between a remission in 'praesenti' which is suspended until a certain future event occurs and an agreement to remit 'in future.' which clearly requires consideration, if it is to be a binding contract, is no doubt well-founded, however tenuous it may be on the facts of a particular case to which it may have to be applied. The distinction in my opinion is nonetheless real because thin. Reference may in this connection be made to Pollock and Mulla's Commentary on Indian Contract and Specific Relief Acts (7th edn.) at page 339:
"An agreement to remit 'in future' clearly requires consideration, if it is to be a binding contract. But this must be distinguished from a remission or dispensation which is made contingent on the happening of a future event. In such a case the remission is 'in praesenti', though it is suspended until the event occurs. The holder of a promissory note from the officers of a masonic lodge agreed in writing to make no claim if the lodge building which has been burnt down is resuscitated'. He cannot sue on his note after the lodge is rebuilt. It would be monstrous if he could.";
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