IN THE HIGH COURT OF KERALA AT ERNAKULAM
AS No. 126 of 1994(E)
1. KRISHNANKUTTY
... Petitioner
Vs
1. VELAYUDHAN
... Respondent
For Petitioner :SRI.V.SIVASWAMY
For Respondent :SRI.V.GIRI
Coram
Dated : 12/01/2005
O R D E R
.PL 58
.SP 2
V. RAMKUMAR, J.@@
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A.S.NO.126 OF 1994 – A@@
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Dt.JANUARY 12, 2005. @@
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.HE 1
The plaintiff in OS 262/91 on the file of the Sub
Court, Palakkad, is the appellant in this appeal. The
said suit filed by the respondents herein was one for
realisation of a sum of Rs.30,000/- with interest
thereon.
2. The case of the plaintiff can be summarised
as follows:-
Agreeing to repay with 18% interest per annum on
demand when needed by the plaintiff or his order, a sum
of Rs.30,000/- was received in cash by the defendants for
their business and the defendants executed Ext.A1
promissory note in the handwriting of the 2nd defendant
on 14.1.1989 in favour of the plaintiff. Even after
repeated demands for the said amount together with
interest directly and through Ext.A2 lawyer notice dt.
23.5.1991, the defendants have failed to pay the same,
but instead caused the lawyer notice sent in Ext.A3 cover
to be returned unserved. Hence the suit.
3. Defendants 1 and 2, who are father and son
respectively, resisted the suit by filing separate
written statements. The 1st defendant contended inter
alia as follows:-
The 1st defendant has not signed the suit
promissory note, nor has he received any consideration
thereunder. The purported signature of this defendant in
the promissory note is a forgery. Even if the 2nd
defendant has executed a promissory note, it has been
rendered invalid by reason of material alteration and the
suit is liable to be dismissed with costs. The statement
in the promissory note that the money was borrowed for
the purpose of trade of the defendants is incorrect since
this defendant has never conducted any trade. This
defendant has not received any lawyer notice from the
plaintiff. The alleged return of the notice might have
been stagemanaged by the plaintiff so as to avoid a
denial of the same by this defendant. This defendant is
not liable to pay the suit amount and there has been no
financial transactions or dealings between this defendant
and the plaintiff.
4. The 2nd defendant in his written statement
raised the following contentions:-
The plaint allegation that the defendants
borrowed Rs.30,000/- in cash for the purpose of their
business on the terms set out therein, is false. This
defendant had sought a loan of Rs.15000/- from the
plaintiff for a temporary need. The plaintiff insisted
that if the said loan was to be paid, both the defendants
will have to execute a joint promissory note for
Rs.30,000/- and, as narrated by the plaintiff, this
defendant wrote down a promissory note and signed the
same and handed over it to the plaintiff. When the
plaintiff made it clear that the loan amount would be
given only if the 1st defendant also affixed his
signature to the promissory note, this defendant agreed
to fetch the 1st defendant. This defendant thereafter
informed the 1st defendant about the stipulation by the
plaintiff. But the 1st defendant refused to sign the
document. On the next day itself this defendant informed
the plaintiff about the unwillingness of the 1st
defendant to sign the promissory note. This was what
transpired in the matter. The 1st defendant has never
gone to the plaintiff, nor has he affixed his signature
to the promissory note as alleged. At the time when this
defendant affixed his signature to the promissory note,
no stamps were affixed to the same. This defendant has
not received any amount by way of loan from the
plaintiff. Neither this defendant nor the 1st defendant
has any trade or business. Since the promissory note was
an incomplete one in which the 1st defendant had not put
his signature also, this defendant did not consider it
necessary to get back the document from the plaintiff.
The promissory note relied on by the plaintiff is a
fraudulent one amounting to forgery. It is also invalid
due to material alteration. It is not supported by
consideration. Since this defendant has not borrowed any
amount from the plaintiff, this defendant is not liable
to pay any amount to the plaintiff. This defendant has
not received any notice, nor has he sent back any such
notice as alleged. The plaintiff has no cause of action
against this defendant and the suit is liable to be
dismissed with costs of this defendant.
5. The court below framed four issues for trial.
On the side of the plaintiff two witnesses were examined
as P.Ws.1 and 2 of whom P.W.1 is the plaintiff and P.W.2
is a person who allegedly accompanied the 2nd defendant
when the latter approached the plaintiff for availing a
loan. Three documents were marked as Exts.A1 to A3 on
the side of the plaintiff. Defendants 1 and 2 were
examined as D.Ws.1 and 2 respectively. Ext.X1 is the
photocopy of the thumb impression register summoned at
the instance of the plaintiff from the Sub Registry
Office.
6. The learned Sub Judge, after trial, as per
judgment and decree dt. 6.12.1993 dismissed the suit for
the reason that Ext.A1 promissory note is incomplete and
also defective due to material alteration. It is the
said decree which is assailed in this appeal by the
plaintiff.
7. I heard Adv.Sri V.V.Asokan, the learned
counsel appearing for the appellant/plaintiff and Adv.
Sri N.Subramonian, the learned counsel appearing for
respondents 3 to 8 who are the other legal
representatives of the 1st defendant and Adv. Sri V.Giri,
the learned counsel appearing for the 2nd respondent/2nd
defendant.
8. Adv. Sri V.V.Asokan made the following
submissions before me in support of the appeal:-
This is a case in which Ext.A1 promissory note is
admittedly in the handwriting of the 2nd defendant who
has also confessed that he has affixed his signature
thereto. Even though both the defendants have contended
that Ext.A1 promissory note is invalid due to material
alteration for the reason that the signature of the 1st
defendant appearing in Ext.A1 promissory note is a
forgery, the finding of the court below is that the
forgery of the 1st defendant’s signature might have been
committed by the 2nd defendant. Since the 2nd defendant
is a party to the document, he cannot take advantage of
his own wrong to set up the plea that Ext.A1 is bad due
to material alteration within the meaning of sec.87 of
the Negotiable Instruments Act, 1881 (vide Madam Pillai@@
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v. Adhinarayana Pillai – AIR 1925 Madras 929). The@@
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defendants initially filed a joint vakalath. Thereafter
they engaged two separate lawyers to develop their
defence. Even if this court upholds the finding of the
lower court regarding material alteration, the forgery
having been committed by the 2nd defendant, a decree
should have been given atlest against the 2nd defendant,
who admittedly executed the promissory note which was
also admittedly prepared in his handwriting.
9. I am afraid that I cannot agree with the
above submissions. This is not a case where the plaint
allegations are admitted in toto. The 2nd defendant has
narrated in his written statement the circumstances under
which he happened to prepare Ext.A1 promissory note in
his own handwriting as dictated to him by the plaintiff.
According to the 2nd defendant, the amount which he
wanted to borrow from the plaintiff was only Rs.15000/-,
but the plaintiff insisted on a joint promissory note by
the father and son and that too for Rs.30,000/-. The
further case of the 2nd defendant is that the plaintiff
was willing to part with the money only if the 1st
defendant also affixed his signature to the promissory
note and he therefore handed over the incomplete document
to the plaintiff and went to fetch the 1st defendant who
was, however, unwilling to go over to the plaintiff or
affix his signature to the document. The 2nd defendant
also offers an explanation for not receiving back the
document from the plaintiff since the same was an
incomplete one. When examined as D.W.2, the 2nd
defendant has stuck to the above version. It was not
seriously challenged in cross-examination also. The
rights and liabilities under a negotiable instrument
arise only if what is delivered under sec.46 of the
Negotiable Instruments Act is a completed negotiable
instrument (see Damji Hirji v. Mahomedalli Essabhoy AIR@@
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1939 Bombay 461). Going by the plea raised by the 2nd@@
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defendant and his deposition from the witness box, what
was handed over by him to the plaintiff was an incomplete
document. It did not contain the signature of the 1st
defendant. There is no dispute that the admitted
signature of the 2nd defendant is not on the revenue
stamps affixed thereto, but appears above the stamps.
Even the plaintiff examined as P.W.1 has stated that the
2nd defendant signed the document after preparing the
same and when the plaintiff asked him as to why he put
his signature without affixing the stamps, the 2nd
defendant told him that he forgot about the same and took
the stamps from his pocket and affixed the same beside
his signature. But actually the stamps are seen affixed
below the signature of the 2nd defendant. The evidence
of P.W.2 is also to the effect that when the 2nd
defendant put his signature, Ext.A1 did not contain the
stamps or the signature of the 1st defendant on those
stamps. No doubt, both P.Ws.1 and 2 would say that after
the 2nd defendant signed the instrument, the stamps were
affixed and the 1st defendant signed on the stamps. This
part of their evidence is taken strong exception to by
D.Ws.1 and 2. Thus, what the 2nd defendant signed was an
unstamped instrument styled as a joint promissory note
containing a joint undertaking by the two defendants to
return the sum of Rs.30,000/-.
10. The case of the plaintiff regarding the
place and the manner of execution of the promissory note
is also materially discrepant. Going by the apparent
tenor of Ext.A1, the undertaking is to repay the money
with interest to the plaintiff residing at Pattancherry
village in Chittur taluk of Palakkad District. In the
plaint also what is alleged in paragraph 6 is that the
cause of action took place at Pattancherry. But what
P.W.1 would categorically say is that both the defendants
came in the company of P.W.2 to his house at Chandranagar
in Palakkad town where he was then residing and
Pattancherry is his permanent address. The evidence of
P.W.2 is also to the effect that he went along with
defendants 1 and 2 to the house of the plaintiff at
Chandranagar.
11. The signature of the 1st defendant over the
revenue stamp affixed in Ext.A1 materially differs from
his admitted signature found in Ext.X1 thump impression
register summoned from the office of the Sub Registrar.
In fact, there is no serious challenge against the
finding that the signature of the 1st defendant appearing
in Ext.A1 promissory note is a forgery. If P.W.1 is to
be believed, both the 2nd defendant as well as the 1st
defendant signed in his presence at the time of preparing
the document itself. This cannot evidently be true since
the signature of the 1st defendant is a forgery. It is
not known as to how the trial court came to the
conclusion that the signature of the 1st defendant in
Ext.A1 might have been forged by the 2nd defendant. Both
P.Ws.1 and 2 have no case that after the 2nd defendant
put the signature in Ext.A1, the document was handed over
to the 2nd defendant for getting the signature of the 1st
defendant. On the contrary, the definite case pleaded by
both the 1st and the 2nd defendants is that it was the
plaintiff who forged the signature of the 1st defendant.
If so, the plaintiff cannot take advantage of the
observation by the trial court to contend for the
position that in a case where the material alteration is
not committed by the plaintiff, but by the 2nd defendant,
the defence of material alteration should not be
permitted to be raised by the defendants. Similarly, the
plaintiff cannot claim a decree against the 2nd defendant
alone on the basis of the admission by the 2nd defendant
of his signature in Ext.A1 promissory note which is a
joint one imposing a joint liability and which contains
the forged signature of the 1st defendant. The decision
reported in AIR 1925 Madras 929 (supra) was refused to be@@
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followed in Santhu Mohideen Pillai v. Jamaludin Labbai@@
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AIR 1928 Madras 1092 which was, in turn, approved in@@
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Kumaraswami Desikar v. Dhiraviam Pillai – AIR 1935@@
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Madras 40 wherein it is held as follows:-@@
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“The suit was laid on a promissory note said to@@
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have been executed by the two defendants.
Defendant 1 admitted execution but pleaded that
he was not liable on the note. Defendant 2
denied execution and the lower Court found that
his signature was forged. A decree has been
granted against defendant 1 and the present
revision petition is filed against that decree.
The general trend of decisions in this Court is
that a decree cannot be given on a document which
is found to be a forgery. The earliest case here
is is an unreported ruling of Miller, J., in
C.R.P.No.601 of 1912, where he followed 33 Cal
812. This case was followed in 1914 Mad 369 by
Sadasiva Ayyar, J., and Wallace, J., in 1928 Mad
1092 followed these two rulings and refused to
follow the ruling of Devadoss, J., in 1925 Mad
929. There is one other reported case of this
Court in favour of the respondent 1915 Mad 425.
Some distinction was attempted between some of
these cases and the present by the fact that in
some of these cases execution by one defendant
was to be conditional on the execution by the
defendant whose signature was found a forgery.
That does not however apply to C.R.P.No.601 of
1912 where there was no such condition about
execution. Also in 1914 Mad 369, Sadasiva Ayyar,
J., decided the question on general principles as
well as on the particular facts of the case. As
to the argument founded on defendant 1’s
admitting execution, I am unable to see how from
a legal point of view there is any difference
between an execution which is admitted and an
execution which is denied but found on the
evidence to be true.
The English authorities are clear on the@@
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point 98 ER 1120 and (1892) 2 QB 724. The
principle upon which such suits are dismissed is
not the interest of the party who is found to
have executed the document but the interests of
justice in general. They rest on the principle
“Ex turpi causa non oritur actio.” There is no
reason that I can see why this principle should
not be applied in India. If anything, I should
consider it is even more needed here than in
England. The revision petition must be allowed
and the suit be dismissed against defendant 1
also.”
Thus, courts do not aid or become instrumental in
enforcing transactions ex turpi causa (arising from a
base cause). In view of the position stated above, the
dismissal of the suit by the court below is only to be
confirmed.
In the result, this appeal is not entitled to
succeed and the same is dismissed, but without costs.
.JN
(V. RAMKUMAR)
(JUDGE)
mt/-
V. RAMKUMAR, J.
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A.S.No. 126 of 1994 – A
JUDGMENT
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12.1.2005