1965 (4) TMI 137 - HC - Indian Laws

Court Allows Amendment of Plaint, Emphasizes Framing Cases

The court allowed the plaintiff's amendment of the plaint under Order 6, Rule 17, emphasizing the framing of alternative cases. The promissory note was ... Inadmissibility of insufficiently stamped instrument - exclusion of oral agreement by Section 91 of the Evidence Act - insufficiently stamped promissory note and Section 35 of the Indian Stamp Act - promissory note as accord and satisfaction or as conditional payment/collateral security - presumption that a pronote given for pre-existing debt is conditional payment - allowance of amendment to plead alternative causes of actionAllowance of amendment to plead alternative causes of action - inadmissibility of insufficiently stamped instrument - Amendment of the plaint to aver that the suit is founded on the original loan (and alternatively on the promissory note) was permissible and should be allowed subject to costs. - HELD THAT: - The plaint, though confused in parts, showed that the promissory note was executed as security for the loan and that the plaintiff sought relief on the original transaction. The Court relied on the principle that a plaintiff may frame alternative cases and plead both on a negotiable instrument and alternatively upon the consideration. In view of Janki Das v. Sir Kishen Pershad and consistent authorities, it would be improper to refuse amendment which merely seeks to clarify that the suit is based on the original loan as well as on the hundi. The amendment was therefore allowed but made conditional on payment of consolidated costs to the defendant to compensate for delay and harassment. [Paras 6, 7]Amendment allowed; petitioner to pay consolidated costs as condition precedent, failing which amendment stands dismissed.Insufficiently stamped promissory note and Section 35 of the Indian Stamp Act - exclusion of oral agreement by Section 91 of the Evidence Act - promissory note as accord and satisfaction or as conditional payment/collateral security - presumption that a pronote given for pre-existing debt is conditional payment - Legal principle governing whether a plaintiff may sue on the original loan when the promissory note is inadmissible for being insufficiently stamped. - HELD THAT: - An insufficiently stamped promissory note is inadmissible in evidence under the Stamp Act and cannot be relied upon. Section 91 of the Evidence Act bars proving terms of a contract reduced to a document except by that document, but its exclusionary operation applies where the instrument operates as an absolute discharge of the original obligation. Where a promissory note was taken as complete discharge (accord and satisfaction), exclusion of the instrument prevents enforcement of the original cause. By contrast, where the pronote was taken only as conditional payment or as collateral security (and especially where it relates to a pre-existing debt), the presumption is that it operates as conditional payment or collateral security unless proved otherwise; in such cases the original contract of loan remains actionable despite the instrument's inadmissibility. Whether the pronote operates as discharge or as conditional security is a question of fact to be decided on evidence. [Paras 2, 3, 4, 5]If the pronote was taken in discharge, the suit on the original cause fails; if it was only collateral or conditional payment, the plaintiff may sue on the original loan-determination to be made on evidence.Final Conclusion: The revision is allowed: the learned Subordinate Judge's order refusing amendment is set aside; amendment permitting alternative pleading on the original loan is allowed subject to payment of consolidated costs as a condition precedent; the legal position as to enforceability of the original loan when a pronote is inadmissible is clarified and depends on whether the pronote operated as discharge or merely as collateral/conditional payment. Issues:1. Amendment of the plaint under Order ft, Rule 17, Civil Procedure Code.2. Admissibility of a promissory note insufficiently stamped.3. Interpretation of Section 91 of the Evidence Act regarding exclusion of oral agreement of loan.4. Legal implications of a promissory note as conditional payment or collateral security.5. Conflict of judicial opinions on the admissibility of promissory notes.6. Consideration of allowing the amendment of the plaint based on the original cause of action.Analysis:1. The plaintiff filed for an amendment of the plaint under Order 6, Rule 17, seeking to substitute certain portions to clarify that the suit was based on the original transaction of loan, not the promissory note. The court allowed the amendment based on precedents like Janki Das v. Sir Kishen Pershad, emphasizing the possibility of framing alternative cases in the plaint itself.2. The promissory note in question was found insufficiently stamped, rendering it inadmissible as evidence under Section 35 of the Indian Stamp Act. The court highlighted that an unstamped promissory note is inadmissible for any purpose and discussed the implications of insufficiency of stamp duty on the admissibility of the promissory note in court proceedings.3. The judgment delved into the interpretation of Section 91 of the Evidence Act concerning the exclusion of oral agreements of loan. Various Full Bench decisions were referenced to illustrate the conflicting opinions on whether oral agreements could be excluded under Section 91, with a detailed analysis of the legal principles involved.4. The legal implications of a promissory note as conditional payment or collateral security were discussed, emphasizing that if the promissory note is not in absolute discharge of the original contract of loan, the terms of the original contract can be proved. The court provided insights from relevant case laws to support this interpretation.5. The judgment addressed the conflict of judicial opinions on the admissibility of promissory notes, citing cases like Abdul Majid v. Ganesh Das Kaloo ram Ltd. and Gow Chandra Sahu v. Garib Kar. The court highlighted the need for a nuanced examination of whether the promissory note was taken in discharge of the claim or merely as collateral security.6. The court considered whether the amendment of the plaint based on the original cause of action should be allowed. It emphasized that while the amendment was permitted, the success of the plaintiff's suit would depend on the evidence presented regarding the agreement between the parties concerning the promissory note and the original cause of action. The judgment concluded by setting aside the Subordinate Judge's order and allowing the amendment with a specific condition for costs.In conclusion, the judgment provided a detailed analysis of the issues involved, including the admissibility of insufficiently stamped promissory notes, the interpretation of relevant legal provisions, and the considerations for allowing the amendment of the plaint based on the original cause of action.