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Judgment
Wort, J.—This appeal arises out of an action by the Benares Bank, Limited, of Muzaffarpur against four defendants, Babu Lakshminath, defendant No. 1, Babu Ramdeo Narain, defendant No. 2, Babu Shyama Charan, defendant No. 3 and Babu Rama Charan, defendant No. 4 on two promissory notes, one dated 3rd of December, 1919, for Rs. 6,000 and the other on the 20th February, 1920, for Rs. 2,500. The promissory notes were joint and several signed by the two first named defendants in favour of Shyama Charan and endorsed in favour of and to the plaintiff Bank. Rama Charan being defendant No. 4 was joined as a defendant as being a brother of Shyama Charan being defendant No. 3 who was the manager and karta of a joint Hindu Mitakshara family of which defendants Nos. 3 and 4 were members. The first of these notes dated the 3rd December, 1919, was a renewal of a former promissory note for the same amount dated the 2nd September, 1919, but the defendants Nos. 1 and 2 being unable to pay the principal and interest they executed a new promissory note which was one of the promissory notes upon which the action is brought. The defence of defendant No. 1 briefly stated was that there was no consideration and that he received no money as a loan under the said notes and that at the time they were executed the defendant was insane and was, therefore, incapable of contracting. In the written statement of defendant No. 1 it is also alleged that the promissory notes were fraudulent and the signature had been obtained by collusion and a conspiracy between the defendants Nos. 2 and 3. Judgment was given by the learned Subordinate Judge against the defendants and a decree was pronounced in favour of the Benares Bank. Defendant No. 1 appeals.
The two promissory notes were put in evidence and proved, witnesses Ram Saran Lal and Raj Narain Lal being called for the purpose. In that state of affairs there arises u/s 118 of the Negotiable Instruments Act of 1881 the presumption that consideration had been given for the two notes and the onus thus being shifted to the defendants to show that no consideration was in fact given. I mention this matter at this stage because it was the first defence and also if it were shown that consideration was given the defence of the defendant No. 1 of collusion and conspiracy will naturally fall to the ground, for the simple reason that there would be no purpose in obtaining the signature on the promissory note of defendant No. 1 if in fact he obtained the money for which the notes were given.
Now there has been no attempt on the part of the defendant whatsoever to discharge the onus upon him regarding consideration. On the other hand, quite apart from the presumption in their favour u/s 118 of the Act above mentioned, the plaintiffs gave the clearest possible evidence that Shyama Charan had in fact paid the amounts being Rs. 6,000 and Rs. 2,500 named in the notes, that defendant No. 1 received the cheque for both and with defendant No. 2 signed receipt for the Rs. 6,000; but it does not appear whether a receipt was given for the Rs. 2,500. Further, apart from the plaintiffs'' evidence defendant No. 2 in cross-examination proved that defendant No. 1 received the consideration. Defendant No. 1 made no attempt to prove the collusion and conspiracy alleged, but invited the Court to infer it from the fact that a large number of notes and hundis were signed by him about the time in which these notes were executed and that having regard to the defendant''s state of mind he was a prey to a number of unscrupulous people amongst whom the Court was invited to include defendant No. 3. In my opinion this defence entirely fails first because of lack of evidence and secondly as indicated above it was conclusively shown that defendant No. 1 received the money for which the notes were given.
The main defence, however, to this action was that defendant No. 1 was insane at the time and was, therefore, incapable of contracting. It has never been seriously urged either in the Court below or in this Court that defendant No. 1 was generally insane with lucid intervals, but rather that he had from time to time attacks of insanity. This being so, it was necessary for the defendants to show that at the time of the execution of these promissory notes there was an attack of insanity which made the defendant No. 1 incapable in law of executing them. For the purpose of this part of their case the defendants called three Doctors, Dr. A.H. Napier, Dr. S.B. Laha and Dr. Satish Chandra Banarji. Dr. Napier stated in cross-examination that defendant No. 1 was unable to give evidence in Court, that is, in January 1924 although it appears that the last time he had seen him to examine him was in October 1923 which was the month in which he first attended him. As these notes were executed in December 1919 and February 1920 it is obvious that his evidence does not assist the defendants in proving their defence of insanity.
Dr. Laha states that defendant No. 1 was under his care and treatment towards the end of 1919 and in the beginning of 1920, but added in answer to the Court that it would be impossible for him to state what the mental condition of defendant No. 1 was on the 2nd September, 1919, and 20th February, 1920. Dr. Banerji states that Dr. Laha treated defendant No. 1 before he (Dr. Banarji) took over his care. Dr. Banarji is clear that he undertook treatment of defendant No. 1 during October and up to about first week of November in 1919 and states that during that period defendant No. 1 was an absolute maniac. He also states that he was in good health before October 1919. It is, therefore, clear that neither of the two material dates are covered by the evidence of these two Doctors. A further witness on this issue was called, namely, Babu Gayanendro Kumar Sarkar, a Pleader, who stated that defendant No. 1 was out of his mind towards the end of 1919 when he visited him for the purpose of transacting business. But under cross-examination it was found that his knowledge of dates was vague, and the time when he found defendant No. 1 in insane condition was uncertain. In my opinion, a close examination of the evidence on this point makes it necessary to find that this defence has not been established. Indeed there is evidence to the contrary. During the period in which he was supposed to have been unable to transact business by reason of his insanity he was in fact engaged in litigation, writing letters and during the hearing of the suit against him he was attending Court every day and looking after his case. He was guardian at the material time to a minor nephew and it is impossible to conceive that the District Judge of Murshidabad who had appointed him would have allowed him to continue in that capacity had he been insane.
That on 11th September 1919, nine days after the signature on the first promissory note which was renewed by that of 3rd December, 1919, defendant No. 1 executed a power of attorney or vakalatnama on his own behalf and on behalf of the minor for whom he was guardian, in favour of certain Pleaders who were thereby authorized to conduct certain rent suit in his behalf. In September he also signed a plaint in a rent suit brought in Court of Munsif at Muzaffarpur and that during the period of alleged insanity he was writing letters to different people.
In my opinion, the main defence to this action completely fails.
In addition to the defence on the facts the appellant by his Counsel urged a point of law that being, that the notes, having regard to their form, were not negotiable instruments and that being so the endorsements to the plaintiff Bank were not sufficient in law as assignments of actionable claims to satisfy Section 130 of the Transfer of Property Act of 1882.
The first part of this argument is addressed to this fact: the notes were expressed to be promises to pay on demand the two respective sums named therein ''with interest at 10 per cent. per annum with quarterly rests.'' It was said that here there was no promise to pay a sum certain within the definition of a promissory note u/s 4 of the Negotiable Instruments Act of 1881. That the term ''quarterly rests'' made the defendant liable to be sued for interest apart from principal at a time when the demand for payment may not have been made so that a subsequent endorsee would be uncertain what amount by way of principal and interest he was entitled to receive at the hands of the maker of the note. In support of this contention two cases were quoted, Pratapchand Gulabchand v. Purshotamdas Malji 33 Ind. Cas. 366 : 18 Bom. L.R. 124 and Joti Parshad v. Brij Raj Sharan 68 Ind. Cas. 461 : 52 P.L.R. 1922 : 4 U.P.L.R. (Lah.) 97 : AIR 1923 Lah. 29 : 5 Lah. L.J. 148. Whether these cases support the appellants'' contention depends upon the proper construction to be placed upon the condition as to quarterly rests on the notes in this appeal. The term ''quarterly rests'' is a well-known term and means nothing more than when ultimately the interest comes to be calculated, it is to be calculated on a certain basis or system, and by no means gives the holder or the promisee the right to sue for interest apart from the demand for the principal. It is clear on an examination of the authorities quoted that in both cases there was a liability to pay interest at certain periods and before the principal had been demanded, or the due date for such payment had arrived. That being so, these cases do assist the appellant. Further, Section 5 of the Negotiable Instruments Act provides that the amount of a note is not uncertain by reason of the fact that it includes future interest. In my opinion these notes are for a sum certain within Sections 4 and 5 of the Act before mentioned and, therefore, are negotiable instruments within the meaning of the Negotiable Instruments Act, 1881.
There was a further point urged which it is unnecessary to decide, if my view expressed above is correct, and that was that if these notes not being negotiable instruments are to be regarded as simple bonds then they are insufficiently stamped. The answer to this, however, is that this point was not taken in the Court below, the notes were received in evidence without objection and it is not open to the appellants to rely upon it now. And in any event all that we could do in the appeal would be to levy the deposit fee and penalty, if the fact had been established that stamps were insufficient.
In my opinion the appeal fails both on the facts and the law and must be dismissed with costs.
B.K. Mullick, Acting, C.J.
I agree.