Thiruvallur Finance Corporation (Regd) vs V.T. Subramaniam

S. Suryamurthy, J.—This is a civil revision petition against an order of the Learned District Munsif, of Tiruvallur, dismissing a petition filed by

the plaintiff under Order 6, Rule 17 of the Code of Civil Procedure, to amend the plaint, enabling the plaintiff to sue the defendant alternatively on

the original cause of action.

The suit was filed for the recovery of a sum of Rs. 2,813-34 due on a promissory-note dated 16th October, 1975, executed by the defendant

for the consideration of Rs. 2,500 alleged to have been received in cash. The promissory-note was intended to be executed originally by the

defendant as well as his wife. Subsequently, the wife did not join in the execution of the promissory-note, though it would appear to have been

written as if it was executed by both the defendant and his wife. Therefore, the defendant contended in his written statement that he cannot be

made liable on the promissory-note ""as he agreed to be liable jointly along with other executant from whom the plaintiff failed to obtain her

signature"". There was no other executant except the defendant and what the defendant obviously means by referring to ''the other executant'' is the

person who was going to join in the execution of the promissory-note, but did not do so. In view of the stand taken by the defendant, the plaintiff

sought the amendment. The plaintiff is entitled to sue upon the promissory-note and the onus is on the defendant to prove that he executed the

promissory-note only on the faith that his wife will also join in the execution thereof and that otherwise, he would not have executed the

promissory-note.

The consideration for the suit promissory-note is said to be the chit amount received in cash by the defendant after successfully bidding for the

same. The suit promissory-note was, therefore, executed as a collateral security and it has not embodied all the terms of the contract. The true

nature of the transaction has to be proved and the fact that the suit promissory-note has been given as a collateral security would be rendered

probable by the fact that it was executed contemporaneously with the receipt of the bid amount. The suit may, therefore, lie on the debt apart from

the instrument.

In Perumal Chettiar Vs. Kamakshi Ammal, , the question whether a person who has lent money on a promissory-note can sue to recover the

debt apart from the note when the note embodies the terms of the contract with the borrower but is inadmissible in evidence owing to a defect in

the stamping, was considered by a Full Bench of this Court and Leach, CJ., speaking for the Bench, observed as follows:

If the promissory-note embodies all the terms of the contract and the instrument is improperly stamped, no suit on the debt will lie. Section 91,

Evidence Act, and Section 35, Stamp Act, bar the way. But if it does not embody all the terms of the contract, the true nature of the transaction

can be proved and where an instrument has been given as collateral security or by way of conditional payment, a suit on the debt will lie. The fact

that the execution of the promissory note is contemporanous with the borrowing cannot exclude the possibility of the instrument having been given

as collateral security or by way of conditional payment. Whether a suit lies on the debt apart from the instrument therefore depends on the

circumstances under which the instrument was executed.

In the instant case, the suit promissory note is said to have been given as a collateral security for payment of the future instalments due by the

successful bidder of the chit in auction, viz., the defendant. The suit promissory-note has been executed contemporaneously with the receipt of the

bid amount by the defeadant. Though the recital would appear to be that a cash of Rs. 2,500 was received, it would appear that only the bid

amount, which might have been less than the amount mentioned in the suit promissory-note was received. The true nature of the transaction is not

set out in the suit promissory-note. All the terms and conditions of the contract are not incorporated therein. There fore, the plaintiff is entitled to

found the cause of action on the original debt, viz., the receipt of money by the defendant. In the circumstances, there would be no change in the

cause of action by amending plaint. Hence, this, civil revision petition is allowed; the order of the learned District Munsif of Tiru-vallur, in I.A. No.

2003 of 1979 in. O.S. No. 771 of 1978 is set aside; and the petition for amending the plaint is allowed with costs throughout.