- (1.) THIS Civil Second Appeal by Hira Lal plaintiff arises out of the suit filed by him against Ratanlal, Jethmal and Himmatram defendants No. l, 2 & 3 respectively. The suit is for the recovery of Rs. 6,215/- and is based on a cheque (Ex. P/l) executed by Shri J. M. Rathor (Jeth Mal Rathor) Defendant No. 2 directing the Bank of Jaipur Ltd. to pay Rs. 6,000/- to the plaintiff out of the joint account of Defendants No. 1 & 2. It is the admitted case of the parties that this cheque was a post-dated cheque bearing the date 6th April, 1949, but was executed on 6th March, 1949. The case of the plaintiff is that Defendants Nos. 1 & 2 carried on business under the name and style of the Motor Exchange Company. , Jodhpur in which Himmat Ram Defendant No. 3 was the sub-partner of Ratanlal. The plaintiff had dealings with Himmat Ram Defendant who had from time to time borrowed Rs. 8,000/- for purchasing a house. Himmat Ram Defendant when pressed by the plaintiff to pay the said amount represented that he had invested the aforesaid amount in the aforesaid Firm and on 28th December, 1947, he executed a fruqqa' in favour of the plaintiff for Rs. 8,000/ -. When the plaintiff demanded this amount he took a false stand that out of this amount, Rs. 2,000/-had been paid to the plaintiff. Later on, Defendants Nos. 1 and 2 intervened and informed the plaintiff that Himmat Ram defendant had suffered loss in the business and that the plaintiff should reduce his claim by Rs. 2,000/- and also forbear to file the suit, and they would for Rs. 6,000/- to the plaintiff. On this, the plaintiff relinquished Rs. 2,000/-/- and agreed to accept Rs. 6,000/ -. In pursuance of the aforesaid agreement, Jeth Mal Rathor Defendant No. 2 on 6th March, 1949 handed over the cheque (Ex. P/l) for Rs. 6,000/- which the plaintiff accepted. The cheque was not honoured by the Jaipur Bank Ltd. The plaintiff filed a complaint under Sec. 420 IPC. in a criminal court and also filed the suit on 1lth November, 1949 for the recovery of Rs. 6,000/- principal and Rs. 215/- as interest, in all Rs. 6,215/ -.
(2.) RATANLAL defendant No. 1 denied the allegation made in the plaint. He also pleaded that he had not signed the cheque and was not liable. Alternatively he pleaded that even if it; be held that he carried on business in partnership with Jethmal, he was not liable as Jethmal has acted beyond his authority. Jethmal Defendant No. 2 admitted that he and Ratanlal Defendant No. 1 carried on the business of the Motor Exchange Company. He, however, denied the other allegations, except that he had signed the cheque (Ex. P/l ). His case is that the plaintiff required money to be sent to his agent and he approached Ratanlal Defendant No. 1 to give him a post-dated cheque. He also promised that he would deposit within one month the amount of the cheque in the account of Defendant No. 1 Ratanlal. He, therefore, handed over the cheque (Ex. P/l) to be paid from the joint account of Defendants Nos. 1 and 2. The defendant also pleaded that the cheque was without consideration. Himmat Ram Defendant No. 3 admitted that from time to time he had borrowed Rs, 8,000/- which, however, were not invested in the Motor Exchange Company. He denied that there was ever an agreement for giving up Rs. 2,000/-as alleged by the plaintiff and forbearing to sue him. He stated that Rs. 2,000/-had in fact been paid. Relating to the handing over of the cheque, he took the stand taken by Defendant No. 2. He also pleaded that as Defendants Nos. 1 & 2 had taken upon themselves the liability to pay the amount due against him, he stood discharged and the suit could not be filed against him. He however, also prayed for fixing up instalments in case a decree was passed against him. The trial court decreed the suit for the recovery of Rs. 6,000/- against Ratanlal and Jethmal and dismissed the suit against Himmat Ram holding that Himmatram stood discharged as a result of what took place between the parties on 6th March 1949. It also held that Ratanlal was liable on the basis of the cheque signed by Jethmal as Ratanlal and Jethmal were partners and the cheque was given in the joint account by Jethmal to the plaintiff in the presence of Ratanlal, and that in the notice (Ex. P/2) sent by Jethmal and Ratanlal in reply to the telegraphic notice of the plaintiff to pay the amount due under the cheque after it had been dishonoured, Ratanlal had admitted that the cheque had been handed over to him on behalf of the partnership. Ratanlal Defendant preferred an appeal in the court of the District Judge, Jodhpur and the plaintiff filed cross-objection regarding interest and costs. The learned District Judge by his judgment dated 27th August, 1960 allowed the appeal of Ratanlal and the decree of the Civil Judge was set aside against the appellant Ratanlal and the respondent Jethmal. The plaintiff's suit for the recovery of Rs. 6,000/-/- was decreed against Himmatram. Parties were ordered to bear their own costs. The cross-objection was dismissed as it was not pressed. The lower appellate court took the view that as the plaintiff had not pleaded that the liability of Himmatram was extinguished because the other two defendants had undertaken to pay Rs. 6,000/-/-, it was not correct on the part of the trial court to record a finding of novation of contract in favour of the plaintiff. He further took the view that it was not also a case of guarantee. It was further held that so far as the cheque (Ex. P/l) was concerned, forbearance to sue Himmat Ram was only consideration for the liability, but as Himmatram was actually being sued by the plaintiff and as the plaintiff had during the course of the trial of the suit insisted that Himmatram continued to be liable alongwith the other defendants, it must be held that there was no consideration. In other words, it was urged that since the plaintiff did not forbear to sue Himmatram, he was not entitled to sue Ratanlal and Jethmal and the suit against them must fail. A decree for Rs. 6,000/- was however passed against Himmatram under Order 41, Rule 33 C. P. C. Hence this second appeal. Learned counsel for the plaintiff-appellant has strenuously urged that it must be held that the cheque (Ex. P/l) was with consideration and the case put forward by Defendants Nos. 1 and 2 for handing over the cheque to the plaintiff was not borne out by the evidence on record. It has been further contended that as a result of what took place between the parties on the 6th March, 1949 when the cheque was handed over, it must be taken that the plaintiff had discharged Himmat Ram from paying Rs. 8,000/-, or, in any case, Rs. 6,000/- on Defendants Nos. 1 and 2 having handed over the cheque (Ex P/l) to him, and thus, the cheque was with consideration. It has been pointed out that the learned District Judge has laid too much emphasis on the fact that the plaintiff had also sued Himmatram and had insisted for a decree against him in the course of the trial of the suit and it has been urged that merely because of these circumstances Defendants Nos. 1 and 2 could not be exonerated from their liability to pay the amount of the cheque with interest. Learned counsel for Ratanlal has argued that the view taken by the trial court is correct. He has further urged that he had not signed the cheque and there was nothing in that document to show that it was executed on behalf of the partnership firm of Defendants Nos. 1 and 2, and, as such, Ratanlal could not be held liable for the issue of the cheque. Learned counsel for Jethmal defendant-respondent has supported the view taken by the trial court and has further urged that the cheque was without consideration inasmuch as there is no evidence to show that the plaintiff has discharged Himmatram Defendant No. 3 of his liability. He has also urged that the case be remanded to the lower appellate court as that court had not given any finding on the oral evidence on the point of consideration and has based its finding only on the plaintiff's statement. The first point for determination in this appeal is whether Jethmal has been rightly exonerated from his liability in spite of the fact that he is the maker of the cheque (Ex. P/l ). Sec. 37 of the Negotiable Instruments Act clearly says that the maker of a cheque, in the absence of a contract to the contrary, is liable there on as a principal debtor. For exonerating biro of his liability under the cheque the plea of want of consideration was set up by Jethmal in his written statement. His case is that the plaintiff required to send some money to his agent outside Jodhpur and as he had no account in the Bank, he requested Defendant No. 1 Ratanlal that he may be given a post-dated cheque of one month which he may send to his agent, and as it will take time for the cheque to be honoured, he would in the meanwhile arrange for the money and deposit it in the account of Defendant No. 1. Defendant No. 2 then handed ever the cheque (Ex. P/l) to the plaintiff on the request of Defendant No. 1. This has been denied by the plaintiff. The trial court has disbelieved this case of Defendants Nos.) and 2. The lower appellate court has given no finding on this point. Learned counsel for Defendant No. 2 has argued that if a finding on this point is material, the case may be remanded to the lower appellate court. The suit was instituted in the year 1949 and I am not inclined to remand the case and would prefer to examine the evidence myself. There are three witnesses including himself produced by Defendant Jeth Mal on this point. They are Ambalal (D. W. l), and Jethmal (D. W. 3 ). Ambalal stated that Hiralal went to the shop of Dfdts. Nos. 1 & 2 and stated that he stood in need of money and wanted to take a loan which was to be repaid when he received the money. Then the witness stated that Hiralal asked for a post dated cheque and the defendant handed over the cheque. Jindas witness stated that Hiralal plaintiff went to the shop of the defendant and talked with Ratanlal taking him aside and thereafter Ratanlal came and asked Jethmal defendant to hand over the cheque. This version is slightly different from the varsion given by Ambalal (DW. 1 ). Jethmal (DW. 3) stated that he haej handed over the cheque at the instance of Ratanlal defendant. Himmatram owed seme money to Hiralal plaintiff. Himmatram told Ratanlal that the plaintiff stood in need of money, that he was a man of credit and wanted to send money outside, and so a post-dated cheque may be given to him. This is yet another version and is not in consonance with the version given by the other two witnesses. Jindas had even stated that Himmatram defendant was not at all present at that time. Hiralal has denied all this on oath. I am not at all impress-ed by the evidence produced by Jethmal defendant on this point. It cannot be easily believed that defendant Jethmal will pass over a postdated cheque under the circumstances mentioned by him in his evidence. The plaintiff's case on the other hand, is that the cheque was given as a result of the settlement which Ratan-Lal and Jethmal had got effected between him and Himmatram. I am of the opinion that the version given by the plaintiff regarding the passing of the cheque to him is believable and is in consonance with the circumstances of the case. Thus, the theory put forward by Jethmal about want of consideration is not acceptable. Learned counsel for Jethmal, however, has argued that even if the case put forward by his client for want of consideration is rejected, he is still entitled to show that no consideration passed for the cheque between Jethmal and the plaintiff as it is clear from the circumstances of the case that Jethmal was not benefited at all in the entire transaction. His argument is that for proving want of consideration the defendant is entitled to press into his service all the circumstances which appear on the record and when want of consideration is proved from the evidence of the plaintiff himself, Jethmal defendant cannot be held liable.
(3.) NOW there is a presumption under Sec. 118 of the Negotiable Instruments Act that every negotiable instrument was made for consideration, and it was for Jethmal to rebut this presumption. No doubt in rebutting this presumption, he is entitled to rely on the circumstances which appear from the evidence of the plaintiff himself. I may, however, point out that it is not necessary in law that the promisor himself should be benefited. Consideration has been defined in sec. 2 (d) of the Contract Act and the consideration for a promise may be doing or abstaining from doing something by the promisee at the desire of the promisor. In this case, the plaintiff has stated in the plaint that Defendants Nos. 1 and 2 had agreed to pay Rs. 6,000/-to the plaintiff if he relinquished Rs. 2,000/- from his claim of Rs. 8,000/- against Himmatram and also did not sue him. In pursuance of this agreement, it is alleged by the plaintiff, the cheque (Ex. P/l) was handed over to him on the 6th March, 1949. The plaintiff on cross-examination stated that it was not correct that there was no agreement between him and Ratanlal and Jethmal that if he would not file the suit against Himmat Ram and they would pay him Rs. 6,000/ -. The plaintiff stated on oath that what he had stated in the plaint was correct. Learned counsel for defendants Ratanlal and Jethmal have argued that the case of the plaintiff for the relinquishment of Rs. 2,000/- was not correct as according to the account (Ex. P. W. 5/1) the amount of Rs. 2,000/- had already been paid by Himmatram to the plaintiff even before he had executed the ruqqa- (Ex. P/2 ). Yet, it cannot be denied that Himmatram was liable to pay at least Rs. 6,000/- to the plaintiff. I have, therefore, to examine whether the plaintiff's case that he had agreed to forbear to sue Himmatram at the instance of Defendants Nos. 1 and 2 is correct or not. It may be stated that forbearance to sue is a question of fact to be decided on the evidence on the record and circumstances of a case may sometimes furnish surer ground for holding in favour of the plaintiff. I may refer in this connection to the case of Fullerton and Provincial Bank of Ireland (l ). In this case, a customer of a Bank of Ireland having overdrawn his account and being pressed by the bank undertook by letter to deposit a title-deed of an Irish estate as security for his overdraft. He deposited the title-deed with the bank, who did not register the charge. The customer afterwards mortgaged the estate to the appellants, who registered their charge without notice of the prior charge. While deciding the question of the priority of the two incumbrances, the following observations were made in the speech of Lord Macnaghten : - "the other point on which the learned Solicitor-General relied was that there was no proof of consideration. The promise, he said, if it was a definite promise, was "nudum pactum" no doubt, he said Colonel Stevenson had overdrawn his account, but there was no stipulation for forbearance for any definite time. The point does not seem to have been argued in the Courts below, though it was suggested and touched upon by Fitz Gibbon L. J. My Lords, this point seems to me to be settled by authority. In such a case as this it is not necessary that there should be an arrangement for forbearance for any definite or particular time. It is quite enough if you can infer from Lord Davey also observed, as follows - "the bank did exercise patience, and gave some forbearance by not demanding, as they might have done, immediate payment of the debt, and by giving Colonel Stevenson the required time to effect the security. I think that such forbearance in fact, although there was no agreement by the bank to forbear suing Colonel Stevenson for any definite period, was sufficient consideration to support his promise to give the security, on the principle stated by Kinderaley V.- C. in Alliance Bank vs. Broom (2 Dr, & the surrounding circumstances that there was an implied request for forbearance for a time, and that forbearance for a reasonable time was in fact extended to the person who asked for it. That proposition seems to me to be established by the case of Atliance Bank vs. Broom - (1864) 2 Dr. & sec. 289. to which my noble and learned friend Lord Lindley referred yesterday, and other cases, among which I may mention Oldershaw vs. King (1857) 2 H. & N. 517: with the observations on that case and the case in Drewry and Smale by Bowen L. J. in Miles vs. New Zealand Alford Estate Co. (1886) 32 Ch. D. 289, and I may add that the proposition seems to be good sense " (on Pages 313-314) S. 289 ). The Vice Chancellor's Judgment in that case was quoted with approval by Lord Bowen in Miles vs. New Zealand Alford Estate Co. (32 Ch. D, 266, 290) as laying down a sound principle. In the case before Lord Bowen the question was whether a guarantee which had been given by the promoter of a company at a general meeting of the shareholders to guarantee a dividend of a certain amount for a certain time on the shares was given with or without consideration, and in referring to the case before him Lord Bowen said, after quoting the Vice-Chancellor's judgment: "so it will be sufficient here that the director, did not bear if their forbearance was at the request expressed or implied of the guarantor and in consequence of his guarantee being given, and it seems to me there is no sort of necessity to discover language of any particular form, or writing of any particular character, embodying the resolution of the directors. We must treat the thing in a business way and draw an inference of fact as to what the real nature of the transaction was as between business men. " My Lords, that seems to me to be directly applicable to the present question. There can be no doubt that the forbearance was given in this case, and f think it is a just inference of fact that it was given at the request of Colonel Stevenson in consequence of his undertaking to secure the account and place it on what he describes as a satisfactory basis. " (Pages 315/316) This authority lays down that forbearance may be inferred from the circumstances of case and! forbearance even for a reasonable time was sufficient to be called a good consideration in law. Spencer J. referred to this case in Srinivasa Raghava Aiyangar vs. K. R. Ranganatha Aiyangar (2) and made the following observations which may be quoted with advantage - "in the present ca$e forbearance from suing has been set up in the plaint, there is evidence to support the plea, and there is the fact that the first defendant was not actually sued upon the promissory note from the date of its execution 4th December, 1913 till this suit was brought on 12th July 1915. Even in the absence of evidence it was open to the lower Courts to have presumed from the circumstances of the l case that the security bond would no! have been given unless the creditor had expressed his dissatisfaction with the promissory note payable oh demand. " Learned counsel for Jethmal has relied on Oliver vs. Davis (3 ). The facts of that case may be taken from the head note - On July 18, 1947, the plaintiff lent £350 to W. D, and received from him a cheque for £400 post-dated to Aug. 8, but it was not presented by Aug. 19. On that date W. S. who was unable to meet his cheque, persuaded M. W. to draw a cheque for £ 400 in favour of the plaintiff, and an envelope containing M. W. 's cheque without any covering letter was left at the plaintiff's house. The plaintiff was away at the time and did not return home until Aug. 22, when he received M. W. 's cheque but did not know why she-had sent it. In the meanwhile M. W. had discovered certain facts about WD. and she informed the plaintiff, within an hour or two of his receiving her cheque, why she had sent it and also that she had stopped payment of it. On Aug. 23 the plaintiff presented W. D. 's cheque, which was dishonoured. Later he presented M. W. 's cheque, but it was returned by the bank marked: "stopped by order of drawer. " In an action by the plaintiff against M. W. suing her on her cheque, the plaintiff relied inter alia on sec. 27 (l) (b) of the Act of 1882, but M. W. contended that there was no consideration for the cheque. " It was held that M. W. was not liable on the cheque as there was no valuable consideration as defined in Sec. 27 (1) of the Bills of Exchange Act, 1882 which runs, as follows - "valuable consideration for a bill may be constituted by (a) Any consideration sufficient to support a simple contract; an antecedent debt or liability. Such a bebt or liability is deemed valuable consideration whether the bill is payable on demand or at a future time. " It was held that in that section "an antecedent debt" or liability was a debt or liability due from the maker or negotiator of the instrument and not from a third party, and, therefore, the plaintiff could not rely on S. 27 (l) (b), and he could not also invoke in assistance S. 27 (1) (a) for the reason that although M. W. drew her cheque with the intention that it should be substituted for W. D. 's cheque, her motives were 6 not communicated at the material time to the plaintiff, and he gave her no promise, express or implied, to forbear in respect of any remedy he might have against W. D. nor, as a result of her cheque, had he changed his position in any way to his detriment in regard to his claim on W. D. 's cheque. So far as the Indian law is concerned, there is no provision of the nature in Section 27 (1) of the Bills of Exchange Act, 1882 in the Indian Negotiable Instruments Act. Consideration has been defined in the Indian Contract Act, and under that definition the promisor or any other person must have acted at the desire of the promisee. If it is not shown that the promisor had acted at the desire of the promisor, but had acted for any other reason or motive, at his own instance in doing something, then under the Indian Contract Act, it is,no consideration. The ratio decidendi in Oliver's case (3) on the point of the applicability of Sec. 27 (1) (b) is that the plaintiff in that case did not act at the instance of M. W. who drew the cheque. The following observations of Lord Lopes, L. J. in Crears vs. Hunter (4) have been quoted in that case - ''the law appears to be that a promise to forbear is a good consideration but also that actual forbearance at the request, express or implied, of the defendant would be a good consideration. Taking the latter of these two alternatives, it is undisputed that there was actual forbearance from suing in. this case. That by itself would not be sufficient; such forbearance must have been at the request, express or implied of the defendant. " I am of the opinion that on facts Oliver's case (3) is distinguishable. In the circumstances of the present case, it was at the instance of Jethmal and Ratanlal, that the plaintiff had forborne to sue the defendant or had at least forborne to sue defendant Himmatram till the date of honouring the cheque arrived. Such is the conclusion which must be drawn from the facts and circumstances of the case and also from the statement of the plaintiff already referred to in answer to the question put to him in cross-examination. A great deal of controversy in this case was raised on the point whether the plaintiff had agreed not to sue Himmatram for ever which in other words amounts to saying whether he had discharged Himmatram altogether from his liability as soon as he received the cheque from Jethmal, or he had only agreed to give a temporary respite to Himmatram. Learned counsel for the plaintiff-appellant has candidly stated that in fact the arrangement which was arrived at the time of the taking of the cheque was that he (the plaintiff) had given complete discharge to Himmatram in receipt of his liability of Rs. 8,000/ -. He has stated that such is also the evidence produced by the plaintiff. He has admitted that in spite of such being the correct legal position of the entire transaction which took place at the time of the passing of the cheque, the plaintiff either through ignorance of his legal rights, or through foolishness sued Himmatram and persisted in obtaining some relief against him. He has further urged that the plaintiff might have taken the view that after the cheque was dishonoured, the liability of Himmatram revived. The lower appellate court has taken a very grave view of this attitude of the plaintiff. The lower appellate court has while considering the provisions of sec. 62 of the Contract Act on the point of novation observed that - "it is well settled that novation is not consistent with the original debtor remaining liable in any form. In other words, the right against the original debtor is relinquished, gets extinguished. " At another place it has been observed by the learned Judge of the lower appellate court that there was no plea of novation in the plaint. On the other hand, it was stated in the plaint that Himmatram was not absolved and that all the three defendants were responsible to pay the money of the cheque, and that in the replication filed by the plaintiff it is stated that Defendant No. 3 was liable to pay the money on the basis of the 'ruqqa' The plaintiff also opposed the application dated 1st February, 1951 filed by Himmatram for framing certain issues, one of which related to the question whether the suit was maintainable against Himmat Ram when the plaintiff accepted the cheque. All these circumstances relate to the persistence of the plaintiff in seeking relief against Himmatram but they are not sufficient to dis-entitle him to relief against Defendants Nos. 1 and 2 in case it is held that they were liable for payment of the amount of Rs. 6,000/- on account of the cheque (Ex. P/2 ). These circumstances can only be taken into account for refusing the plaintiff any costs of the suit. In my view, the learned Judge of the lower appellate court has laid too much emphasis on these circumstances which cannot be taken to be of such consequence as to refuse the plaintiff a decree against Defendants Nos. 1 and 2 if he is otherwise entitled to get it on the true appreciation of the contract. ;