Posted On by &filed under Bombay High Court, High Court.

Bombay High Court
Pestonji Manekji Mody vs Bai Meherbai on 24 January, 1928
Equivalent citations: (1928) 30 BOMLR 1407
Author: Crump
Bench: Crump


Crump, J.

1. This is a somewhat unfortunate suit. It arises out of family dissensions which might have been better composed outside a Court of law. But unfortunately the parties have found themselves unable to come to any terms, and the differences between them must, therefore, be decided according to their strict legal rights.

2. The introductory facts necessary to understand the points that arise are as follows. One Dr. Edalji Mody was engaged in the business of preparing certain chemicals useful in the mills, and that business was at one time a very flourishing one. Defendant No. 1 is his widow, and the plaintiff is his brother. It appears that from a very early age the plaintiff lived with his deceased brother and defendant No. 3, and as it has been expressed by both sides, was regarded by them in the light of a son. He took an active part in the business from a very early age, and in the year 1913, he was admitted into partnership, his share being one anna. There is an agreement of partnership dated October 12, 1913, which defines the shares of the parties concerned. The share of defendant No. 1 is two annas, the plaintiff’s share is one anna, the share of Dr. Edalji Mody was twelve annas, and the share of his son Keki Edalji Modi was one anna. There is not proved to be any other agreement of partnership, and in spite of certain statements that have been made by the plaintiff, that document appears to contain the only terms that were settled between the parties. As they were all members of one family, they appear to have lived together in the same house in complete amity down to the year 1924, when. Dr. Edalji died. It is abundantly established in the evidence that the whole of the partnership profits were expended by Dr. Edalji on what may be called briefly the board and lodging of the family, and that there was never any distribution of profits among the partners, and never any demand for such distribution. In fact it appears from the evidence in the case that the parties lived at a rate considerably beyond the profits which they derived from the partnership, and it was necessary from time to time to borrow money either for the expenses of the common house or for the expenses of the maintenance of the members of the family. Defendant No. 1 had money of her own, and from time to time she made advances to her husband. We find in the year 1912 as shown by Exhibit No. 10, a receipt of April 9 of that year, that at that date she had advanced Ru. 60,000 to her husband. On October 9, 1913, see Exhibit 7, Edalji made, a declaration that he had borrowed in all Rs. 1,00,000 from his wife from 1909 to date, and that the rent of the bungalow amounting to Rs. 650 was being paid to her as equitable mortgagee. It also appears in the case that at some date which is disputed the plaintiff advanced Rs. 11,000 for the purposes of the common dwelling house. Whether that advance wag made to Dr. Edalji or to defendant No. 1 is one of the questions which is in dispute in the case. It also appears from certain documents in the plaintiff’s own hand (see Exhibits 1 and 2) that between July 81, 1919, and September 6, 1921, he advanced two sums of Rs. 3,178-9-4 and Rs. 2,230-12-3. The former of these sums was for household expenses, and the latter for expenses incurred as regards the establishing of a dispensary for Keki, the son of Edalji, who had set up as a doctor. Keki, it might be remarked, was then a major, That was, generally speaking, the state of the affaire of this family up to the time of Edalji’s death, After Edalji died the plaintiff and defendant No. 1 continued to live together for some time and to carry on the business. But unfortunately, as is only too apparent from the evidence in this case, the parties found it impossible to continue to Jive together harmoniously, and in the year 1925 (the exact date is not material) the plaintiff left the house in Bombay and went to live at Poona with his father-in-law. Some correspondence ensued which does not cast any very clear light upon the points for decision in the suit, but may be briefly alluded to as bringing matters up to the date when the facts ‘took place which gave rise to the questions in this suit. On May 6, 1925, the plaintiff wrote to defendant No. 1 complaining of the position which he found himself in after twenty-live years of service. He says he has left the house penniless, and he desires to know his position as a partner in the business, and what arrangements defendant No. 1 proposed to make for repaying the sum of Rs. 11,000 and the miscellaneous sums large and small taken from time to time for household expenses, and for brother Keki’s dispensary. The defendant No. l’s reply to that letter, Exhibit B, is vague, and contains nothing hut protestations as to her unfortunate position in the world. Then on January 10, 1926, there was a further letter from defendant No. 1 to the plaintiff alluding to certain attempts at settlement of the matters in dispute, and asking the details of the plaintiff’s claim and for any suggestion that he may have to make as regards the disposal of the questions arising between them. On March 2, 1925, defendant No. 1 wrote a further letter to the plaintiff in which she again asks for an account of his claims, and suggests that he should come down to Bombay along with his father-in-law in order that matters may be satisfactorily ended. I may add here that defendant No. 1 took out letters of administration to the estate of her deceased husband on March 6, 1925. Generally, therefore, the position was that the plaintiff believed himself to have some claim against defendant No. 1 on account of the advances which be had made, and possibly on account of profits which might be due to his share as a partner.

3. The events with which we are more closely concerned took place on March 6, 1926. It is admitted that there was a meeting between the parties concerned, whether it was on the fifth and the sixth, or whether it was on March 6 only, is a matter on which there is some discrepancy in the evidence, hut that is quite immaterial for the purposes of this case. Defendant No. 1 was assisted by a number of persons. She had the advice of Dr. Desai, who had been living in the house practically as a member of the family and who had been helping her in her worldly affairs. She had also the advice of a very respectable witness, Mr. Coyajee, who was also at one time living in the same house. She was also, as I see the matter, advised by defendant No. 2, who is the managing clerk in a firm of solicitors. Her son was also with her, and all these persons wore present at this interview. On the other side were the plaintiff and his father-in-law.

4. I may here digress in order to explain how defendant No. 2 came to be concerned in these matters. Defendant No. 2 has given no evidence in the case. He relies upon the evidence adduced for defendant No. 1. But it must not be assumed that defendant No. 1 and defendant No. 2 are making common cause. That is not the case. There are indeed grave causes of disagreement between them, But this much is clear that defendant No. 2, long before the date of the meeting of March 6th, had become acquainted with defendant No. 1. He appears to have gone to her in the first instance for some proposition to sell a house of his. And defendant No. 1 replied that far from being in a position to purchase a house, she was.looking for a chance of selling her own house, that is, the house in which all these parties formerly resided, and that she also desired to dispose of some of her jewellery, as the estate left by Edalji was, if not insolvent, at all events highly embarrassed. I do not desire to say much as regards what took place between defendant No. 1 and defendant No. 2, for I understand that there are criminal proceedings as between them which are now sub judice, but so far as is necessary for the purposes of this case, I may say that it appears to me that defendant No. 2 made a proposition to defendant No. 1 that he would find a purchaser for the house in the Maharaja of Birwani for whom he said he was acting, and that there would be no difficulty in obtaining two and half lakhs of rupees for that property. As regards the question of the ornaments it is unnecessary to me to say anything in this suit beyond this, that there plainly was some talk as between the defendants of the sale of the ornaments of defendant No. 1. Thus at the date with which we are concerned, March 6, 1926, defendant No. 2 was plainly assisting defendant No. 1 in her affairs. As to what happened at the interview of March 6, 1926, there is to some extent no dispute. It is agreed that two documents were executed, one, a promissory note by defendant No. 1 in favour of the plaintiff’ for Rs. 16,408, and the other a document in the nature of a release passed by the plaintiff to defendant No. 1, in which the execution of the promissory note is recited. It is stated that some arrangement will be made hereafter as regards the business, the partnership having come to an end on the death of Dr. Edalji Mody, and further that the plaintiff gives up all claims to any share of the profits of the said business up to date. There is also a final clause in this document that the plaintiff will not make use of the promissory note for three months. The present suit arises out of these transactions and it will be convenient here to turn to the pleadings of the parties in order to understand what are the precise points in dispute.

5. The plaint was filed on February 22, 1927, and the suit being framed as a summary suit, does no more than recite the fact of the promissory note of March 6, 1926. The defendants thereupon applied for leave to defend according to the provisions of Order XXXVII, and defendant No. 1 put in an affidavit of March 15, 1927. In that affidavit there are certain statements which are relevant for the purpose of this suit. In para 3 she sets out some of the facts as regards the execution of the promissory note and she recites that defendant No. 2 at that time had offered to get Rs. 2 1/2 lakhs for the immovable property and Us. 80,000 for the jewellery. And as regards the execution of the note she says :

As I was very anxious to sec that the aforesaid bargains wore pub through and I did not like to displease the defendant No. 2 and as the plaintiff himself tacitly accepted all that the defendant No. 2 had stated to me in his presence to the effect that I should be responsible for payment) of the amount only if the aforesaid bargains were put through and that in default the plaintiff would look to the defendant No. 2 alone and as further inducement was also given to me in manner hereinafter stated I signed the said promissory note jointly with the 2nd defendant.

6. Then she goes on to say :

The defendant No. 2 told me that he had induced the plaintiff to attend to the business again and that he would attend be it and would stay with me as he used to do before May 1925.

7. Further in para. 5 she says that the whole sum of Rs. 16,408 was claimed by the plaintiff ‘against her late husband.

8. The affidavit of defendant No. 2 in support of his application for leave to defend is dated March 17, 1927, and in para. 2 he makes this point that the promissory note and the release are one and the same transaction, and that, therefore, some question as to stamp arises. The plaintiff filed two affidavits in reply. As regards defendant No. 1’s affidavit he says that the money was borrowed by defendant No. 1, that the maintenance of himself and his family by his deceased brother was a part of the partnership arrangement, further that he made his claim under two heads; first as regards the several sums borrowed aggregating Rs. 16,408, secondly as regards the profits of the partnership business, and as to the latter he makes the following statement:

As regards the 2nd head of my claim, viz., in the partnership business, the 1st defendant said that the business was not very paying and she asked me to forego all my past claims about the business offering at the same time to take me into the business again and to settle the terms about the conduct of the business in future. In view of the relations between myself and the 1st defendant and in view of the promise made by the 1st defendant to discuss terms about introducing me into the business again I did not press for my past claims against the business and thereupon the 1st defendant asked me to pass a release in her favour in respect of my past claims in the business.

9. That affidavit was sworn on March 26, and as regards the case of defendant No. 2 the plaintiff’s affidavit was sworn on April 6. In that he says:

I deny that the release and the promissory note form part of the same transaction, The facts above set forth in para 3 to 7 of this affidavit clearly show that the promissory note and the release related entirely to different matters. The promissory note as stated above dealt with my claim in respect of the loans made by me from time to time to the lab defendant herself, whilst the release dealt with an entirely different matter, viz., my rights in the business at the deceased husband. The release was executed after the promissory note, and the clause therein relating to my agreement not to demand payment of the promissory note for a period of three months constitutes an agreement arrived at subsequently to the signing of the said promissory note and the same is an independent agreement made subsequently to the promissory note in question and cannot affect the same.

10. That is a significant statement as will shortly appear, having regard to the questions in dispute. And though no doubt it is made for the purpose of countering the objection taken by defendant No. 2 on the score of stamp, it cannot necessarily be assumed, to put the matter no higher, that it is not the truth. It is indeed consistent with what I have set out of the affidavit made in reply to the affidavit of defendant No. 1. One thing more I may add, and that is that in the affidavit in reply to defendant No. 1 plaintiff says :

Assuming that the said debt was due not from the 1st defendant but from her husband even then she is liable under the said promissory note, she having obtained letters of administration to his estate in November 1924 showing the assets of the deceased to be about Rs. 27,000.

11. From those pleadings two matters of fact appear to be in dispute. And both those matters have been put in issue in the suit. The first question is whether the loans were made to defendant, No. 1 or to the husband of defendant No. 1. The second question is whether there was, to use the words of proviso 3 of Section 92 of the Indian Evidence Act, any separate oral agreement constituting a condition precedent to the attaching of any obligation under the promissory no to. As regards the first point the plaintiff’s case is that he advanced the money to the lady herself. And defendant No. 1 denies this. Now as between these conflicting statements I propose to take as a guide the documentary evidence and the probabilities of the case. As regards probabilities I can see no reason whatever to suppose that if the plaintiff was inclined to advance moneys to his brother who was living in the same house and conducting the same business, he would have found it necessary to pay the money to defendant No. 1. And even if he did so defendant No. 1 would have merely been the channel through which the loan would be made. And that the loans were in fact for the purposes of the family seems to me clear beyond possibility of doubt. As to the exact application of the sum of Rs. 11,000, the evidence may not be clear, but as regards the two other sums which I have set out, which along with the Rs. 11,000 go to make up the precise sum of Rs. 16,408, the consideration of the promissory note, there can be no such doubt, We have two memoranda written by the plaintiff in his own hand, of which Exhibit 1 is an account of various comparatively small items of household expenditure from July 31, 1919, down to September 6, 1921. The plaintiff has admitted that to some extent at least he took part in the house-hold management, and it seems to me absurd to suppose that every one of these petty items was paid to. defendant No. 1 from time to time, and even if it had been so paid, the plaintiff was perfectly well aware, as this document shows, that the money was spent on the maintenance of the household for which Dr. Edalji was primarily responsible. Indeed on the right hand Bop corner of this memorandum plaintiff has endorsed the words ‘ to be recovered from Shetjee,” and it is not disputed that Shetjee” is a familiar term for Dr. Edalji. It is clear that the plaintiff looked to him for these moneys, and taking that along with the probabilities of the case, I have no doubt whatever that the money was advanced by the plaintiff to his brother and not to defendant No. 1. I do not overlook the fact that in the correspondence before March 6, 1926, the plaintiff in addressing defendant No. 1 speaks of the money advanced “to you”. That is a natural mode of expression in the position in which the parties then stood. Edalji was dead, and the plaintiff and his widow were not on amicable terms. It was unnecessary for the purpose of that correspondence to specify with accuracy that the money was lent to the wife and not to the husband. I may also add upon this part of the case that defendant No. 1 has clearly admitted that all these moneys including the sum advanced for the establishment of the dispensary were loans made to her husband. And, therefore, one and all of them stand upon the same footing. Thus on March 6, 1926, when the promissory note came to be executed, there was a sum of precisely Rs. 16,408 due as principal upon the loans made from time to time by the plaintiff to Dr. Edalji. And it is agreed that these loans were long ago time-barred. Upon this part of the case I believe defendant No. 1 rather than the plaintiff.

12. I now come to the second disputed question of fact, and that is as to the existence of any conditions precedent to the attaching of an obligation under the promissory note. Here I consider that defendant No. 1 has entirely failed to make out her case. I have already set out the passage from her affidavit which goes to show that what really happened was that defendant No. 2 held out to her certain hopes in which she placed reliance, and that acting upon the belief that she was going to receive a large Hum of money for the bungalow, presumably the property of her deceased husband, though she herself had a mortgage upon it, she decided that the amount of these debts due by her deceased husband would be a comparatively trifling matter, and no doubt out of respect for his memory it would be a good thing to pay them. That is the real position, and the oral evidence which has been adduced upon the point falls far short of making out any condition precedent. With reference to this matter I may state here that at one time suggestions were made as to collusion between defendant No. 2 and the plaintiff. Of that there is no evidence whatever in the case, and those suggestions have been abandoned. And, therefore, it is impossible to impute to the plaintiff any inducements that may have been held out by defendant No. 2 at the time of the execution of the promissory note. If the evidence of Dr. Desai and Mr. Coyajee be read, it will be seen that they do not really prove a condition precedent in the sense that the plaintiff agreed not to execute the promissory note until the happening of any specified event. The evidence really goes to show that, as I have said, defendant No. 1 was led to believe that a large sure of money was about to come into her hands, and, therefore, she undertook to pay these time-barred debts. As to the second condition, that the promissory note was to have no effect until the plaintiff returned to the house of defendant No. 1 and continued to manage the business as before, it is enough to read the statement of defendant No. 1 to see that there was not any agreement upon that point. And here again the documents are all in favour of the plaintiff and against defendant No. 1. The deed of release says nothing whatever which can be construed into a condition precedent, Indeed it is distinctly said that the question of the future management of the business, and what should be done about it was reserved for decision on some future occasion, a statement which is corroborated by the evidence of more than one witness; but any doubt that might be felt upon the point is completely dispelled by the correspondence that passed between the parties after the execution of the promissory note. On March 22, 1926, this correspondence apparently began. The plaintiff in his letter of that date says that some discussion was taking place as regards the continuance of the business, and asks defendant No. 1 to let him know what she has decided about the matter, Defendant No. I replies in her letter of March 26 that she is also anxious to settle that question, Then on April 11 the plaintiff writes to defendant No. 1 and alludes to the fact that defendant No. 2 was preparing a draft of an agreement. There is nothing here about any agreement already arrived at which could possibly constitute a condition precedent. Then on May 19, 1926, plaintiff writes to defendant No. 1 asking for the amount of the promissory note. On July 17, 1926, he writes in much more pressing terms saying that he is in great need of money, and that no further delay will be tolerated. On August 2, 1926, defendant No. 1 writes, apparently in reply to this letter. And it is impossible, in view of that reply) to believe that she thought that there was any condition precedent in the sense in which lawyers understand it. She says that at the time of the execution of the promissory note it was clearly impresssd on her mind that Bhai Nanabhai, that is defendant No. 2, had held out to her very high hopes about the bungalow, and that he was to place in her hands a substantial amount within three months, and that in that event she would be able to pay the amount mentioned to “you Bhai also along with others.” Further on in the letter she alludes again to the period of three months, and says that defendant No. 2 had full hopes of disposing of the bungalow within that period. There is not a word here to the effect that the moneys were not payable until the bungalow was sold or that plaintiff could not demand the money until be came back to the house and took up the business again. That letter appears to me to be almost conclusive upon this part of the case. It appears further that later on there was some attempt to settle the matter of the promissory note on this basis that defendant No. 1 should pay Ks. 10,000 in cash and pass a promissory note for the balance of Rs. 6,408 That arrangement was put forward in the plaintiff’s letter of September 18, 1926, and again in a letter of October 7, 1926. In her answer of October 8, 1926, defendant No. 1 does not deny it. And that too is against the suggestion now made that any conditions precedent existed. Upon this point, therefore, I must find against defendant No. 1.

13. I do not propose to deal with the correspondence between the attorneys of the parties prior to the filing of the suit. I do not think that that correspondence carries the matter any further, nor is there anything more in the oral evidence which throws any more light upon the case-Thus on March 6, 1926, the position was this. Defendant No. 1 was the administratrix of her husband’s estate. Plaintiff’ had certain claims, he says, against defendant No. 1, but in effect against the estate of the deceased, and it was under those circumstances that the document in suit came to be executed. The question which I have to determine is whether this promissory note is binding, and if so, to what extent. And the matter has been presented under several aspects.

14. I will first consider the position of defendant No. 1 in her personal capacity. I may say here that no question of fraud or undue influence has been raised or even suggested in this case. In the circumstances any suggestion of the kind would be impossible. We must, therefore, take it that defendant No. 1 executed this promissory note of her own free will and pleasure whatever may have been the inducements emanating from defendant No. 2 which led her to do so. Now there were the debts of her husband, and in her personal capacity she was not liable for those debts. And if she undertook to pay those time-barred debts, she can only be held liable by virtue of Section 25 of the Indian Contract Act. Section 25 begins by reciting that an agreement made without consideration is void. That is the general rule laid down, and there follow three cases in which agreements made without consideration are nevertheless contracts. That is the general scope of the section, and any agreement which is a contract by virtue of Section 25 must, ex hypothesi, be without consideration. In the present case reliance is placed upon the third exception. That runs as follows :

(3) (Unless) it is a promise made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorised in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.

15. It seems to me that these words imply that the person making the promise is the person against whom the liability might have been enforced. And if that is the case, a promise made by a person who is under no obligation to pay the debts of another, even though they are time-barred, is clearly not within this exception to the general rule. The grounds of that rule have been stated by Westropp C.J. in Tillakchand Hindumal v. Jitamal Sudaram (1873) 10 B.H.C.R. 206, 214 That learned Judge rests the efficacy of such promises on the principle that a person may renounce the benefit of the law made for his own protection. I fail to see how that principle applies to the case of one who undertakes to pay the time-barred debts of a third party which he would not be bound to pay even if no statute of limitation existed. If exceptions are sought to be made to the general rule that an agreement made without consideration is void, then they must, in my opinion, be brought strictly within the words of the exceptions to Section 25. Therefore, in her personal capacity defendant No. 1, by executing this promissory note, incurred no liability by virtue of anything contained in Section 25 of the Indian Contract Act.

16. But it is further urged that there was consideration for the promissory note of another kind. It is said that there was a compromise, viz.. that the plaintiff gave up certain rights in consideration of defendant No. 1 undertaking to pay the time barred debts of her husband. If that was so, there would be goad consideration, but upon the evidence I do not think that that is so. I have already set out passages from the plaintiff’s affidavit in which he says distinctly that the promissory note was an entirely separate transaction. And that appears to be the truth of the matter. Again it is by no means clear to me that the plaintiff’ gave up any real rights of any kind whatever. No doubt the compromise of a doubtful claim may be good consideration, but where the claim is almost on the face of it groundless, then the compromise of such a claim is not a good consideration. As to this I may refer again to what I have already said as to the manner in which the family lived and in which the profits of the business were expended. The plaintiff’s share in the business was one anna, and accepting the estimate that for five years from 1914 onwards the profits were Rs. 25,000 a, year, his share of the profits would be somewhere about Rs. 130 a month, And having regard to the style in which the family lived, it is impossible to suppose that the plaintiff did not get an equivalent or even more than an equivalent for any profits accruing due to his share. And after all, the plaintiff acted with his eyes open he lived with the family, allowed the profits to be expended in this manner; he never took any objection or made any claim for payment of his profits, and he must be taken to have acquiesced in that which was done by his brother with the profits of the business. Therefore it is absurd to say that the plaintiff gave up his claim for the profits in consideration of the defendant undertaking to pay the time-barred debt. He did nothing of the kind. I have no doubt that what really happened has been correctly stated by the witnesses for defendant No. 1 that plaintiff advanced his claim, and defendant No. 1 pointed out that if he had a claim for Rs. 15,000 for profits, then her claim would be Rs. 30,000 and her son’s claim, Rs. 15,000, and as a matter of fact there wore no partnership assets which could possibly moot that claim. It is also significant, in consideration of this matter, that the promissory note was executed for the precise amount of the principal of the loans advanced by the plaintiff to the deceased Dr. Edalji, That against shows that the two transactions were entirely unconnected, and that the promissory note must stand or fall alone.

17. So far as defendant No. 1 is concerned, there remains one last point which is by no means free from difficulty, and it is this. Defendant No. 1 was in point of fact the administratrix of her husband’s estate. And if what she did be regarded as done by her in the capacity of administratrix, entirely different considerations would arise. I pointed out that the plaintiff in his affidavit in reply to the summons for leave to defend stated catagorically that as administratrix of her husband’s estate defendant No. 1 was liable to pay the amount of his debt even if the money had been advanced to her husband and not to her. I see no reason why the plaintiff should be precluded from raising that question here. I do not think that the provisions of Order I, Rule 8, to which I made a reference in the argument, would necessarily stand in his way. It is impossible for me to say that there are numerous creditors, and that, therefore, a suit should have been filed in a representative capacity. The point is sufficiently raised in the pleadings, and all the evidence necessary to determine it has been given on either side. It was mentioned at a very early stage of the suit. Therefore, I consider that I am bound to determine it. I do not think that it is very fruitful upon this question to try to determine upon the evidence in what capacity defendant No. 1 acted, The fact is that she was the administratrix, and I see no reason why what she did should not be referred to her capacity as administratrix. What then are the powers of an administratrix as regards the estate? For this purpose I refer to the Indian Succession Act and I begin with Section 211. Under that section the administrator of a deceased person is his legal representative for all purposes, and all the property of the deceased person vests in him as such. Therefore, stated broadly, it would appear that an administrator can do that which a deceased could have done, and if it was open to the deceased, as undoubtedly it was, to promise to pay his time barred debts, it seems to me that it must be open to the executor to make the same promise Nor is there wanting authority upon that point. In the very case which I have already cited, Tillakchand Hindumal v. Jitamal Sudaram (1873) 10 B.H.C.R. 206 Westropp C.J. says (p. 214):

An executor may pay a debt justly due by his testator, although barred by the Statute of Limitations, and will, in equity, be allowed credit, for such a payment.

18. If an executor can pay a time-barred debt and take credit for the payment, I can see no logical reason for holding that he cannot undertake to pay a time-barred debt and be bound by such undertaking. The two things must, in my opinion, go together. In another case, Administrator-General v. Hawkins (1877) I.L.R. 1 Mad. 267, the Madras High Court have held that the Administrator General may pay a time barred debt, and they rest it upon the general rights of an administrator. In this case, as also in Mohesh Lal v. Busunt Kumaree (1880) I.L.R. 6 Cal. 340, it is laid down that the Indian Limitation Acts do not extinguish the liability, but merely bar the remedy, and just as the deceased could have waived the statute introduced for his own benefit, so equally an executor can, in my opinion, do so. And if the executor does so, then he is as much bound as the deceased would have been bound. In reality the case of an executor who gives a promissory note in consideration of a time-barred debt is precisely within the terms of the 3rd exception to Section 25 of the Indian Contract Act, for he is a person against whom but for the statute of limitation the creditor might have enforced payment, to the extent of course of the estate in his hands, and, therefore, he is a person who can make the promise we find in the 3rd exception to that section, and if he does make that promise, then the promise is a contract. The same view was taken in Rama Pattar v. Viswanatha Pattar (1921) I.L.R. 45 Mad. 345, 356. Thus in the result it appears to me that defendant No. 1 as administratrix is liable to pay the amount of this promissory note, but that the liability is limited to the estate of the deceased in her hands.

19. The further question arises as regards the position of defendant No. 2. Defendant No. 2 has admittedly become surety for the payment of the amount due under the promissory note. The fact that by operation of law the liability of the principal debtor is limited to the estate in her hands does not in any way affect the contract of guarantee except in so far as any limitation is imported by Section 128 of the Indian Contract Act. But it has been urged that so far as defendant No. 2 is concerned there is no consideration for the contract of guarantee. I am disposed to hold that that is correct. And I do so for this reason that I cannot see in this case anything done or any promise made for the benefit of the principal debtor, and, therefore, under Section 127 of the Indian Contract Act there is no consideration for a contract of guarantee. It seems to me that the same result is arrived at from a consideration of Section 25 of the Indian Contract Act. As I have already said, ex hypothesi the agreement is an agreement without consideration, that is to say, that there is nothing done, and there is no promise made for the benefit of the principal debtor. It is not always easy to construe the provisions of the Indian Contract Act with accuracy, but if it be true that the exceptional cases set out in Section 25 are cases of agreements wherein there is no consideration, then, though the law may make such agreements effective as a contract against the principal debtor, the fact remains that there is no consideration. The surety who guarantees the performance of an agreement without consideration is not bound by his guarantee. For these reasons, therefore, it appears to me that as against the 2nd defendant this suit must be dismissed.

20. As regards the position of defendant No. 1, I wish to add one word in reference to an argument advanced based upon Section 29 of the Negotiable Instruments Act. That section runs as follows:

A legal representative of a deceased person who signs his name to a promissory note, bill of exchange or cheque is liable personally thereon unless he expressly limits his liability to the extent of the assets received by him as such.

21. The case contemplated by this section is of course one where a person signs a promissory note without adding anything to show that he is acting as executor or administrator of another. In the ordinary case if he does so, no doubt he may be personally liable, but in this case the plaintiff cannot have it both ways. If he chooses to treat defendant No. 1 as having executed the promissory note in her personal capacity, well and good, but in that case, as I have already shown, he would be entitled to no relief whatever. If, on the other hand, he treats her as administratrix, then she is entitled to whatever protection that capacity gives her as regards the liability which she has incurred. In the first event plaintiff would get nothing, in the second event he is entitled to that which I have allowed him. He cannot say : “I sue you as executor, but because in signing the promissory note you did not make it clear that you were the executor, therefore you are bound to pay on the footing that you are personally liable even though in your personal capacity you would not be bound”. That is not a possible position.

22. As regards the costs of the suit, the suit must be dismissed with costs as against defendant No. 2. As to plaintiff and defendant No. 1, I feel some doubt as to the correct order which should be made. A large amount of the difficulty of the case is due to the fact that the plaintiff filed the suit as a summary suit, which should not, I think, have been done, and think ha nowhere, or at least not till a late stage, stated specifically that he was suing defendant No. 1 in her representative capacity. Indeed that was not the case which he put forward on the facts, though it was suggested as an alternative in his affidavit. Defendant No. 1, on the other hand, set up what was in part at least a frivolous defence. The ordinary rule is that costs follow the event. But here the decree for the plaintiff is something much more limited than that which he set out to obtain. He was asking for a personal relief against defendant No. 1 and he gets a decree against the assets of the deceased Edalji. Taking matters all round, it appears to me that the fairest order is that as between plaintiff and defendant No. 1 the parties should bear their own costs, and that is the order which I make.

23. Decree for plaintiff as against defendant No. 1 out of the estate of the deceased Edalji.

Leave a Reply

Your email address will not be published. Required fields are marked *

* Copy This Password *

* Type Or Paste Password Here *

109 queries in 0.199 seconds.