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Judgment
Ramaprasada Rao, J.—The unsuccessful defendant in O.S. No. 67 of 1970 on the file of the Court of the Subordinate Judge of Vellore, is
the appellant. The respondent herein filed the suit on a promissory note, the principal liability under which was a sum of Rs. 14,292.70 and a
further sum of Rs. 4,287.81 towards interest making in all, the sum payable at Rs. 18,580.51. The defendant admits execution of the promissory
note. He refers to the long course of dealings which he had with the plaintiff-partnership firm since 1958 and would set out the modus of dealings
as between them. According to him, he used to supply raw materials on credit to the plaintiff firm who are manufacturers of brass vessels, and the
accounts used to be looked into from time to time and mutual adjustments made thereunder. After looking into such accounts on 1st April, 1968,
the promissory note, Ex. A-1, in and by which the defendant admitted the liability as above, was executed. The defendant''s case is that the
promissory note was written up at Kalahasthi, though it was payable at Vellore, that under the Promissory note, the defendant had paid a sum of
Rs. 8,464.99, and after the receipt of the suit notice, he contacted one of the partners of the firm, Mr. Soundararaja Iyengar who, in acceptance of
the amount so paid by the defendant after the suit notice, passed a receipt for Rs. 7,200/-. The defendant would also say that he paid
Soundararaja Iyengar a further sum of Rs. 1,000/- on 12th May, 1969 and Rs. 200/- on 5th December 1969. He would, therefore, claim a partial
discharge towards the suit claim at Rs. 9,627/-. His further contention is that, at the time when the suit promissory note was executed at
Kalahasthi, it was not attested, but he found the suit promissory note as having been attested by one V.G. Sundaramurthy and, by reason of such
induction of the signature of an attestor, when it was not there on the date of execution, the instrument should be deemed to have been materially
altered, and therefore, not enforceable in the eye of law. Finally, he would seek for a credit being given to a sum of Rs. 9,627/-. In the additional
written statement, curiously enough, the defendant would contend that he signed the promissory note acknowledging the debt, believing the plaintiff
that there was no scrutiny at all of the accounts by him and that on such scrutiny, a sum far less than the amount stated in Ex. A-1 would be due.
He raised also the usual plea that the interest was usurious and unconscionable. The plaintiff in its rejoinder denied such allegations. On the above
material pleadings the following issues were framed for trial :
(1) Whether the payments amounting to Rs. 9,627/-alleged in paragraphs 3 and 4 of the written statement are true and binding on the plaintiff ?
(2) Whether this court has no jurisdiction to try the Suit?
(3) Whether there is material alteration in the suit promissory note?
(4) To what relief, the plaintiff is entitled ?
Additional issue framed on 30-3-1971 :--
Whether the transaction is liable to be re-opened for the reasons stated in the additional written statement and the suit promissory note is not
supported by consideration to considerable extent ?
The learned Subordinate Judge found all the issues in favour of the plaintiff and decreed the suit. It is as against this, the present appeal has been
filed.
Mr. Sarvabhauman, learned counsel for the appellant, raised four contentions before us. The first one is that the Court at Vellore had no
jurisdiction to entertain the suit. Secondly, the plea of the partial discharge has been wrongly discountenanced by the Court below, and thirdly, by
the introduction of the name of an attestor, when no such attestation had been made at Kalahasthi the negotiable instrument has been materially
altered, and therefore, has become unenforceable in the eye of law, Fourthly, the suit promissory note is not fully supported by consideration, and
he should be given an opportunity to re-open the transaction as between himself and the plaintiff firm, and the actual amount found on the basis of
which only the plaintiff could be given a decree for, if any such amount is found due.
We shall take up the last contention. It is not open to a defendant, in an action on a negotiable instrument, to plead that the accounts as between
himself and the plaintiff firm ought to be re-opened to find whether the consideration recited in the negotiable instrument is correct or not. It may
be, for the purposes of proving that the instrument is not fully supported by consideration, such a scrutiny of accounts of both the executant and the
execute is possible. But, the defendant in such actions, cannot, as a matter of course, claim, as of right without even taking the elementary
precaution of putting forth the plea in a manner known to law, to seek for a scrutiny of his accounts with plaintiff and request for a re-opening of
the accounts maintained by the plaintiff on a mere unilateral assertion on his part. In the instant case, no independent suit has been filed for such
accounts, and much less was a relief of that kind asked for by paying the requisite court fee under the Court Fees Act when he raised such a
defence in the written statement. We are unable, therefore, to accept the illogical contention of the defendant that on a bare suit on a promissory
note, the defendant could claim the re-opening of the accounts of the plaintiff who advanced moneys under it, on the only ground that the defendant
demands it. Further, this is a very stale defence for the reason that, in the additional written statement filed by the defendant, he would say that
there was no scrutiny of the accounts at all by the defendant and that he signed the promissory note believing the representations of the father of the
plaintiff''s partner, in whom he had implicit faith and confidence, whilst when he was in the witness-box, he would categorically admit that as on 1st
April, 1968, his account book showed that the sum reflected in Ex. A-1 was admittedly due and payable by him. Exs. B-20, B-22, B-23 and B-
24 are the relative entries in the account books to show that the defendant owed as on 1st April 1968, Rs. 14, 292-70 to the plaintiff firm. It is in
this sense that this defence of want of consideration has become stale and indeed a false defence. We are unable to agree with the learned counsel
for the appellant on this account.
The next contention is that the Vellore Court did not have the jurisdiction to entertain and try the suit. Even assuming that the defendant''s theory
that the negotiable instrument was written up at Kalahasthi and at that time, only the scribe had subscribed his signature to the instrument as such, is
true, the defendant cannot overlook the specific contract which he made on the date of execution of the promissory note in and by which he has
agreed to repay the principal and the interest payable under Ex. A-1 at Vellore. Such being the express contract between the parties, the fact, even
if it is true, that the instrument was drawn up at Kalahasthi, does not materially alter the situation and would not affect the jurisdiction of the Vellore
Court which could, in the above circumstances entertain a suit on Ex. A-1, under which the defendant agreed to pay the suit amount at Vellore.
The third contention is about ""partial discharge"". There are varied versions as to the quantum of money paid towards the promissory note.
Whilst in the first written statement, the defendant would say that he paid a sum of Rs. 8,464.99, and was entitled to interest on the said amount
and he would be entitled to a credit of 9,627/-, the defendant''s later case is that he adjusted a sum of Rs. 7,200/- payable by Soundararaja
Iyengar, one of the partners of the plaintiff firm, towards the suit debt at the request of Soundararaja Iyengar and as evidenced by a receipt Ex. B-
1, and further, on two occasions, paid two sums of Rs. 1000/- and Rs. 200/- and all these amounts are to be given credit to by the plaintiff. The
very reading of the various stories set out by the defendant at various stages creates a suspicion even at the threshold, whether the plea of
discharge could be true at all. We shall, however, consider it in greater detail.
[The discussion of facts is omitted--Ed.]
X X X X
For all these reasons, we hold that the defendant failed to establish that he made any payment towards the suit promissory note
The last contention which remains for consideration is whether the instrument has been materially altered and on account of this, the negotiable
instrument has become unenforceable in the eye of law. It has been repeatedly held by Judicial decisions that not every alteration would come
within the mischief of the doctrine of material alteration and even if such a material alteration is visibly demonstrable in an instrument, it must have a
relation, to the original contract entered into between the parties and should not have a reference to immaterial or unnecessary particulars of an
instrument. The entire basis of the doctrine of material alteration rests on the sound principle of equity that the parties to a contract cannot make a
new contract which was not thought of or intended as between them at the time when they entered into it. On proof of material alteration, the
Court should be satisfied that the party propounding such a materially altered instrument is trying to put into the Court, not the original contract
intended to be acted upon between the parties, but a new contract which was not in their minds when they forged it. It is pursuant to the above, the
doctrine of material alteration has developed, and the mere assertion of a party that in a negotiable instrument or a deed, there is or are material
(which is found ultimately to be innocuous,) cannot, by such an unilateral assertion on his part, make such material, may be apparent on the
instrument, a material alteration. In the instant case, the defence is that, though the name of the scribe was there, the name of the witness or the
attestor was not there on the instrument on the date when it was drawn up at Kalahasthi. Here again, D.W.1 comes to the rescue of the defendant.
We have already seen that D.W.1 is a dismissed employee of the plaintiff and that his testimony has to be carefully adjudged upon. D.W.1 would
say that the name of the attestor, one Mr. Sundaramurthy, was not there in the instrument on the date when it was written up. No doubt,
Sundaramurthy was not examined. But as we said, it is difficult to believe D.W. 1 and discard the evidence of P.Ws. 1 and 2 who would swear
that Ex.A-1 was executed at Vellore and V.G. Sundaramurthy had attested it. It is also brought out that V.G. Sundaramurthy is a resident of
Vellore. The mere non-examination of Sundaramurthy, by itself, does not compel us to discard the testimony of P.Ws. 1 and 2 and accept that of
D.W.1 who is not favourably disposed towards the plaintiff. The contention of Mr. Sarvabhauman however, is that the defendant''s testimony,
taken in conjunction with that of D.W. 1 should be accepted and that his story that the name of the attestor was not there should also be accepted
and in consequence, his contention that there has been a material alteration in the suit promissory note should be upheld and the plaintiff, non-
suited. In our prefatory remarks, we touched upon the purport of ""material alteration"" Lakshmammal Vs. Narasimharaghava Aiyangar and Others,
. That was a case where the words ""or order"" in continuation of the words ""one of the payees"" were disturbed. It was in those circumstances, that
the learned Judges said that an alteration in a document which has the effect of enabling the payee to sue on the document in a court where he
could not have sued on it in its original form, is a material alteration and, as such, destroys the right of action on the document. They were of the
view that altering a negotiable instrument by causing the words ""or order"" to disappear and making it non-negotiable is a material alteration, under
ordinary law and also under the provisions of the Negotiable Instruments Act. The principle in this decision has no application to the facts of this
case at all. It is common ground that a promissory note need not be attested. Apart from the fact that there is no acceptable proof in this case that
the name of the attestor has been interpolated at a later stage, we are of the view that, even if the name of the attestor has been brought in at some
stage after the execution, without altering the basic structure of the contract between the parties, it would not amount to material alteration. There is
a direct authority on this, of our Court. In Ramayyar Vs. Shanmugam and Others, an attestor''s name in a hypothecation bond executed before the
passing of the Transfer of Property Act was introduced. In a suit on the hypothecation bond, a Division Bench of this Court said that the plaintiff,
namely the execute of the hypothecation bond, was not precluded from recovering the debt by reason of this alteration in the bond sued on. That is
because the law did not compel such a hypothecation bond, before the passing of the Transfer of Property Act, to be attested. Even so, a
promissory note needs no attestation, and therefore, even if the name of an attesting witness has been introduced after the execution of the
instrument in proper and due form, such induction of the name of the attesting witness would not make it an unenforceable instrument on the ground
that it has been materially altered. The Supreme Court, under similar circumstances, in Kalianna Gounder v. Palani Gounder (1970) II M.L.J. 19
(S.C.) =83 L.W. 31 (S.N.) were considering an alteration said to have been made in a deed after its execution, but which was not material and
which did not, in any way, affect the validity of the deed. Reiterating the proposition that a material alteration is one which varies the rights, liabilities
or legal position of the parties as ascertained by the deed in its original state, or otherwise varies the legal effect of the instrument as originally
executed, or reduces to certainty some provision which originally was unascertained and as such void or may otherwise prejudice the party bound
by the deed as originally executed, the Supreme Court said that an alteration in some particular mode in a deed, after its execution, which does not
materially affect the validity of the deed is not a material alteration, provided the alteration does not otherwise prejudice the party liable thereunder.
They would also accept the principle that an alteration is not a material alteration which does not vary the legal effect of the deed. It therefore,
follows that even if the defendant''s story is true, the induction of the name of a witness after the due execution of the promissory note would not
alter the legal effect of the instrument, nor would it in any way, vary, alter or substitute the original bargain between the parties, and would not,
therefore, amount to an alteration, much less a material alteration, which is referred to with some legal significance in the Law Merchant, and
particularly in the Negotiable Instruments Act. We are, therefore, unable to agree with the contention of Mr. Sarvabhauman that there was a
material alteration in the suit promissory note and consequent thereon, the Instrument has become unenforceable in the eye of law. The appeal,
therefore fails and is dismissed with costs.