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Madras High Court
A.R.A.R.S.M. Arunachallam … vs C. Jagannatha Pillai on 18 August, 1926
Equivalent citations: AIR 1926 Mad 1188
Author: Beasley


Beasley, J.

1. The facts in this case are briefly as follows: The defendant was indebted to the plaintiff in the sum of Rs. 62,000 odd in respect of partnership dealings, that being his alleged ascertained share of losses of the partnership. In respect of that Rs. 62,000, the defendant executed a promissory note and having executed the promissory note on 26th May 1923 he entered into an agreement which is called memorandum of agreement relating to the deposit of title-deeds and in that agreement it is recited amongst other things after setting out the ascertained liability of the defendant:

Whereas the said C. Jagannatham Pillai has further agreed to deposit the title deeds relating to his properties his properties are then described by way of equitable mortgage to secure the repayment of the amount and interest covered by the promissory note dated 25th May 1923 executed by him.

2. It further recites that:

C. Jagannatham Pillai shall deposit the title-deeds set out in the schedule to the agreement to create thereby an equitable mortgage to secure the repayment of the amount and interest covered by the promissory note.

3. These, I think, are the only words which it is necessary in this document to refer to. It is an agreement to deposit the title-deeds to secure the repayment of a sum owing on the promissory note. On the next day namely on the 27th May the defendant wrote the following letter to the plaintiff:

I have the honour of herewith sending you with the intention of delivering and depositing the same with you as per the memorandum dated the 26th May 1923 executed by me in your favour the title-deeds and papers relating to the property.

4. It is common ground that this letter was accompanied by the title-deeds ‘ There was a clear contract on the 26th May to deposit the title deeds by way of security for the repayment of the money advanced or money, owing and on the 27th May the actual deposit of title deeds in accordance with the memorandum of agreement was made. I think it is very important that the memorandum of agreement a day before was set out in the letter which accompanied the title-deeds. On behalf of the defendant, it is contended that this claim is not maintainable because neither the memorandum of agreement nor the letter on 27th May can be given in evidence as neither have been registered.

5. It is argued that both the documents must be taken together as forming the contract between the parties, that you cannot take either the document of 26th May or the document of 27th May by itself but that you have got to take the two together and the two together, it is argued, are the contract between the parties. The whole question is whether the documents have got to be . taken together. In my view they have. The first agreement was an agreement to deposit and the second was the actual deposit in accordance with the terms of the agreement. In my view both have to be taken together. The next thing that has got to be considered is what the effect of them is when they are taken together. If taken together, if the contract is a contract which purports to create a charge upon immovable property, then clearly under Section 17, (1) Clause (b) of the Registration Act it is a document which requires registration. Admittedly in this case there has been no registration. The contract between the parties has been reduced to writing and therefore under the Evidence Act the contract being in writing the question arises whether or not the contract has got to be registered.

6. I have been referred to Velauakauya Krishnayya v. Ponnuswami Ayyar A.I.R. 1924 Mad. 547 by the plaintiff and that, it is argued, is a decision against this view. But in that case all that the Court held was that the document in question being a document subsequent to that which created a charge was merely a document which recorded the charge and the learned Chief Justice in that case emphasized very strongly the fact that it was in the past tense. That is not this case. This case is an agreement to create something and in this case the memorandum of agreement is an agreement to create something followed by a latter which actually carries it out. This case, in my view is .concluded by the decision of the privy Council reported in Subramaniam v. Lutchman A.I.R. 1923 P.C. 50. It is true that there is a distinction, between the words appearing in the document in that case and the words in this but in my view the distinction is so slight as to be immaterial. The document under consideration in that case read as follows:

We hand yon herein title-deeds relating to 5th class Lot Nos.–then the property is described–also his promissory note for Rs. 63.000 due by us. This please hold as security against advances made to us.

7. The only difference is that in the document of 26th May the agreement is to deposit the title-deeds by way of equitable mortgage to secure the repayment, whereas in the Calcutta case, title-deeds were handed over to be held as security against advances. I cannot myself see any distinction between the two. These words in, the judgment of the Privy Council were quite sufficient to create a charge upon immovable property and in my yiew following that decision the words in this case, taking these two documents together are words which did create a charge upon immovable property and therefore the documents, memorandum of agreement of 26th May and letter of 27th May taken together, require registration and without registration cannot be received in evidence. I was referred to a decision in Muthiah Chetty v. Kothandaramaswami Chetty [1916] 31 M.L.J. 347 but that seems to me to be somewhat in conflict with the Calcutta decision and as this decision was a decision prior to the decision in the Calcutta case and moreover as the Calcutta case is a decision of the Privy Council I am bound by that, I need not follow this decision.

8. The plaint has now been amended and asks for a personal decree against the defendant for the sum of Rs. 71,837-5-6 due on the promissory note set out in paragraph 4 of the plaint. The defence raised to this by the defendant in his further written statement in answer to the amended plaint and really the one ‘ which I need consider is that the plaintiff cannot sue on the promissory note because the promissory note is in the name of A.R.A.B.S.M. Somasundaram Chettiar and has not been endorsed to the plaintiff. One argument put forward is this : that this is a negotiable instrument; and under the Negotiable Instruments Act it cannot be sued upon except -by the person to whom it has been endorsed over or in certain instances by the legal representatives of the plaintiff ; and furthermore that a succession certificate will in any case be necessary before it can be sued upon by the plaintiff. It is quite clear from the plaint put in in C.S. No. 358/ 24 in which the present defendent was the plaintiff and the present plaintiff was the defendant from paragraphs 2 and 3 of that, that this was a joint Hindu family and Somasundaram Chettiar was the managing member of it and was carrying on the joint family business and in the course of carrying on that family business the moneys claimed in the suit were advanced. It is now said that there is no evidence that this was a joint family. It is perfectly clear from the plaint which has been marked and put in as an exhibit in this case that even, according to the defendant’s own case when he was the plaintiff in that suit, his was a joint Hindu family being carried on by Somasundaram Chettiar as managing member of it and this was a debt incurred in respect of the joint family business. What is the position then ?

9. The question is whether without anything more, without any endorsement, the managing member of the family having died, the surviving members of the family can sue upon a negotiable instrument without anything further, without an endorsement and without a succession certificate. I think that the case in Vyravan Ghettiar v. Sreenivasa Chariar A.I.R. 1921 Mad. 68 is a case very much in point. That case held that no succession certificate was required where a suit is brought on a document by the surviving members of the joint Hindu family unless it is in respect of separately acquired property. I think that shows quite clearly that where it is not separately acquired property no such succession certificate is required and obviously applies to the case where there has been no endorsement of the document. Two cases are quoted in 28 M.L.J.: Kuttia Pillai v. Ranganadham [1915] 28 M.L.J. 323 and Ramanatham Chetti v. Subramanyam Chetti [1915] 28 M.L.J 372. I think it is quite clear on the authority of these cases that the plaintiff in this suit being a surviving member of a joint Hindu family can sue and take the benefit of the promissory note given to the managing member in respect of moneys advanced by the managing member out of the joint family funds.

10. The other point taken in the written statement is that the defendant is at any rate entitled to take credit for the three promissory notes amounting in all to Rs. 17,700 which were executed in his favour and endorsed by him to the plaintiff in this suit. But it is clear from the document executed by him at the time when he so endorsed over the promissory notes that the plaintiff was given full liberty to deal with the promissory notes as he desired. He was entitled not to bring a suit at all upon it or if he brought a suit or claimed the amount he could claim an amount less than that set out in the promissory note and only if any sum was collected, on the promissory note or on those promissory notes, would such a sum be applied pro tanto in diminution of any claim the plaintiff might have against the defendant. The promissory notes are admittedly valueless, and upon the plaintiff getting a decree in this suit will be handed back to the defendant.

11.There will be a decree for the plaintiff for Rs. 86,293-10-8 with costs and interest at 6% from this date till date of realization.

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