IMPERIAL BANK OF INDIA Vs. PLAVEERAPPA

JUDGEMENT

(1.) This is an appeal from the decree of Waller, J., dated 16 February 1931 in C. S. No. 348 of 1928, a suit instituted by the Imperial Bank of India, Madras, to recover the amount due on two promissory-notes executed on the 4 and 7 days of August 1925 for Rs. 25,000 and rupees 37,000 respectively by one Kadiresan Chetty as agent of the guardian of the minor defendant 1, then aged about three years, and the sole proprietor of the P.L.A. Firm. The promissory-notes were executed in favour of defendant 2 firm known as the M.A.R.A.R. Firm, and they were endorsed in favour of the Imperial Bank of India, the first note being endorsed by Kadiresan Chetty himself as agent for defendant 2's firm, and the second note by the principal of that firm. The plaint proceeded on the basis that the promissory-notes were executed by the P.L.A. Firm, and the claim against this firm was based only on the execution of the promissory-notes by this firm. Defendant 2 firm consented to a decree, and only the minor defendant 1 resisted the claim. The minor defendant 1 who is the sole proprietor of the P.L.A. Firm was represented by his maternal uncle as guardian-ad-litem, and in his written statement he contended inter alia that the suit promissory-notes were not executed on his behalf or on behalf of his firm, and that neither his mother and guardian nor her agent Kadiresan Chetty had any authority in law to execute the promissory-notes in question on his behalf, and that he is therefore not liable thereon. He further contended that the first note was executed by Kadiresan Chetty for the purpose of accommodating the M.A.R.A.R. Firm of which also he was an agent, and that the second note was executed by Kadiresan Chetty for the purpose of discharging his own indebtedness to the plaintiff bank and that he, the minor, derived no benefit whatever from either of the promissory-notes which were executed in the absence of any necessity of the minor himself.

(2.) The trial Judge in a very brief judgment dismissed the plaintiff-bank's claim as against the minor defendant 1 with costs, being of opinion that the liability under the promissory-notes in question was not properly incurred by the guardian's agent. The plaintiff bank appeals. The only point for determination in this appeal is whether the minor defendant 1 is liable on the promissory-notes sued on. The minor's father Venkatachalam Chetty was originally the owner of the P.L.A. Firm and on his death on 1 July 1922 this minor who was then an infant less than a year old became the sole proprietor of the firm. On 24 January 1923 the minor's mother executed a power of attorney in favour of Kadiresan Chetty (Ex. B) authorizing him to manage and conduct the business of the firm in Madras and in Chittoor, Cochin State (and not at other places). This power of attorney authorized the agent inter alia to make, draw, endorse, accept and discount bills of exchange, promissory-notes, cheques, drafts and orders for money, and also to bind the guardian as such or the said firms as security to or for any persons and to sign all deeds necessary for that purpose.

(3.) The evidence shows that after the death of the minor's father in July 1922 the P.L.A. Firm had no dealings with the plaintiff-bank till the date of the plaint transactions. There is also evidence to show that the firm's business was rather in the process of being wound up than of being carried on, and there is the finding of the trial Judge to this effect which has not been shown to be wrong. Though there was no allegation in the plaint that the suit promissory- notes were executed by the agent in the course of his conduct of the business of the P.L.A. Firm as agent, during the trial an attempt was made to show that the notes were so executed, and in accordance with the custom or practice of mutual accommodation prevailing among Chetty money lending firms whereby the agent of one such firm accommodates another with the signature of his firm on condition that when need arises his firm will be similarly accommodated by the other agent. Some attempt was made to show that some enquiry was made by the plaintiff- bank about the state of account between the P.L.A. Firm and M.A.R.A.R. Firm, at the time the promissory notes were executed, and that the bank was satisfied after such inquiry that there was a necessity for a P.L.A. Firm to execute promissory notes for the purpose of accommodating the M.A.R.A.R. Firm. The trial Judge found that the practice or custom of mutual accommodation had been proved even in the case of firms belonging to infant proprietors, but nothing was said by the trial Judge about the existence of any necessity apart from the custom of mutual accommodation for the execution of the promissory notes on behalf of the P.L.A. Firm.