Decided on March 27,1953

Garimella Mallikharjuna Rao Appellant
Mangipudi Tripura Sundari Respondents


Rajamannar, C.J. - (1.) THIS second appeal arises out of a suit brought by the respondent in the court of the District Munsif of Amalapuram to recover a sum of Rs. 1072 -5 -3 being the amount due for principal and interest on a promissory note executed by the appellant defendant in. his favour on 6 -4 -1945. Admittedly, this promissory note was in respect of the amount of principal and interest due under a prior promissory note dated 8 -4 -1942 which again was for the amount due under a still prior promissory note of 1939. The origin of the defendant's liability in fact can be traced to the -first promissory note of 30 -4 -1936. Though by the date of the suit promissory note the Madras Agriculturists Relief Act had come into operation, the amount for which the promissory note was executed represented the amount due under the prior promissory note for principal and interest without taking into account the provisions of the Madras Agriculturists Relief Act, which it is common ground applies to the case inasmuch as the defendant is an agriculturist. The plea of the defendant was in the main that the plaintiff and her husband promised to collect only that amount which would be found due on a proper scaling down of the debt under the provisions of Madras Act 4 of 1938. It was also incidentally pleaded that the defendant had to execute the promissory note because of a threat by the plaintiff and her husband that they would at once file a suit. In the alternative, there was a further plea that as the promissory note was taken for an amount higher than what was due in accordance with the provisions of Madras Act 4 of 1938, there was failure of consideration in so far as the excess amount was concerned. The defendant therefore prayed that a decree may be passed only for the amount of the debt as scaled down under Act 4 of 1938. Both the learned District Munsif and on appeal the learned Subordinate Judge of Amalapuram decreed the suit as prayed for by the plaintiff. Both the courts found against the specific plea of the defendant that there was an agreement by the plaintiff and her husband to collect only the amount due after scaling down. The learned Subordinate Judge refused to accept the plea of failure of consideration on the ground that the plaintiff stayed her hands from filing the suit and gave time to the defendant and this forbearance on her part to sue would be sufficient consideration for the excess amount of interest. Hence this second appeal by the defendant.
(2.) I agree with Mr. Rama Rao that there is nothing in the plaint or in the evidence of the plaintiff's husband even suggesting the case on which the learned Subordinate Judge rested his decision, namely that there was such a forbearance to sue on the part of the plaintiff as could be treated as sufficient consideration for an agreement to pay the excess amount. The learned Subordinate Judge was therefore wrong in overruling the plea of the defendant as to failure of consideration on this ground which was not set up by the plaintiff. It was next contended by Mr. Bhima -Sankaram, learned counsel for the plaintiff -respondent that the bargain between the parties should be considered to be that the amount lawfully due in accordance with the Madras Act 4 of 1938 was sufficient consideration for the promise to pay the larger amount. It was argued that there was nothing in law which would render invalid a promise to repay a larger amount on receipt of a smaller amount. For this position, he relied upon, the decision of a Division Bench of this court in A. S. No. 26 of 1927 referred to by Varadachariar J. in - - 'Narasamma v. : AIR1935Mad769 . But it is not the plaintiff's case that the defendant in consideration of a smaller amount actually due deliberately consented to pay a larger amount. I do not think that the principle of the decision in A. S. No. 26 of 1927 which was rendered on very peculiar facts applies to the present case.
(3.) IN my opinion, this case is covered directly by the unreported decision of a Division Bench of this Court (Patanjali Sastry and Shahabuddin JJ.) in A. S. No. 290 of 1944 (Mad) (B). In that case too a promissory note was executed for an amount in excess of what was due on the basis of Madras Act 4 of 1938. The main plea of the defendant in that case as well as in this case, was that there was an agreement between the parties that the creditor should only receive an amount due after scaling down under Madras Act 4 of 1938 and not the amount mentioned in the suit note. That plea was not accepted. Alternatively it was also pleaded there, as here, that the suit promissory note was not supported by consideration to the extent of the excess over the sum that was payable under the earlier note after scaling down. The learned Judge accepted the latter plea and held that there was a failure of consideration in respect of the excess amount. After observing that a plea that the promissory note sued on was not supported by consideration to the extent of a payment made under the earlier note but not taken into account at the time of the execution of the new note in renewal was open to the debtor under Section 44, Negotiable Instruments Act, the learned Judges held that the same principle applies in the several cases under Madras Act 4 of 1938, where promissory notes executed prior to the commencement of the Act were renewed subsequent to the Act for the full amounts due under the earlier notes without taking into account the statutory reduction of the liability thereunder. Following that principle, the learned Judges held that the plaintiffs were not entitled to recover anything more than what would be found due and properly payable under the prior note after applying the provisions of Act 4 of 1938. This decision is binding on me and I am also in respectful agreement with it. Following it, I must hold that the plaintiff in this case would not be entitled to more than what would be due to her after applying the provisions of Madras Act 4 of 1938 to the original debt and its renewals.;

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.