Karnataka High Court
Sri D.L.Ramesh vs Sri Marilingaiah on 21 November, 2023
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RSA No. 151 of 2016
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF NOVEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM
REGULAR SECOND APPEAL NO. 151 OF 2016 (MON)
BETWEEN:
SRI D. L. RAMESH,
S/O LINGEGOWDA,
AGED ABOUT 50 YEARS,
R/AT DADAMAHALLI VILLAGE,
KASABA HOBLI, MALAVALLI TALUK,
MANDYA DISTRICT - 571 421
...APPELLANT
(BY SRI. VENKATARAMI REDDY E, ADVOCATE)
AND:
SRI. MARILINGAIAH,
S/O LINGEGOWDA @ KARIGOWDA,
Digitally signed
by YAMUNA K AGED ABOUT 49 YEARS,
L
R/AT NELAMAKANAHALLI VILLAGE,
Location: HIGH
COURT OF KASABA HOBLI, MALAVALLI TALUK,
KARNATAKA
MANDYA DISTRICT - 571 430.
...RESPONDENT
(BY SRI. G.M. ANANDA, ADVOCATE)
THIS RSA IS FILED UNDER SEC.100 OF CPC., AGAINST
THE JUDGMENT AND DECREE DATED 08.10.2015 PASSED IN
RA.NO.74/2014 ON THE FILE OF THE SENIOR CIVIL JUDGE
AND J.M.F.C, MALAVALLI, ALLOWING THE APPEAL AND
SETTING ASIDE THE JUDGMENT AND DECREE DATED
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RSA No. 151 of 2016
08.03.2013 PASSED IN OS.NO.96/2012 ON THE FILE OF THE
IST ADDL. CIVIL JUDGE, MALLAVALLI.
THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY,
THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
The captioned Second Appeal is filed by the
unsuccessful defendant questioning the judgment and
decree rendered by the Appellate Court in
R.A.No.74/2014, wherein the Appellate Court has reversed
the decree of the Trial Court and plaintiff's suit, seeking
recovery of Rs.66,000/-, based on a promissory note, is
decreed.
2. For the sake of brevity, the rank of the parties
are referred as they are ranked before the Trial Court.
3. Facts leading to the case are as under:
The plaintiff has instituted the present suit seeking
recovery of Rs.1,13,520/- based on a demand promissory
note. The plaintiff contended that defendant approached
him on 03.04.2009 and requested a hand loan of
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Rs.66,000/-. The plaintiff claimed that he has lent the
money to the defendant in the presence of witnesses and
the defendant, on receipt of a hand loan of Rs.66,000/-,
has executed a promissory note in the presence of two
witnesses. The present suit is filed alleging that the
defendant having availed hand loan has inspite of repeated
requests, failed to repay the amount as agreed by him
under the promissory note.
4. Defendant, on receipt of summons, tendered
appearance, filed written statement and stoutly denied the
entire averments made in the plaint. The defendant
seriously disputed the alleged promissory note and
contended that the plaintiff has misused the signatures
obtained by him on blank papers by giving a false
assurance that he would help him secure bail in
C.C.No.70/2010. The defendant claimed that his
signatures on blank papers were given to accused No.1 in
C.C.No.70/2010 and accused No.1 in collusion with the
present plaintiff, concocted the documents styled as
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promissory note. The defendant stoutly denied the claim of
the plaintiff that he had availed hand loan from plaintiff.
On these grounds, sought for dismissal of the suit.
5. Plaintiff to substantiate his respective claim has
examined himself as P.W.1 and both the witnesses as
P.Ws.2 and 3 and produced a demand promissory note,
which was marked as Ex.P.1. The defendant's signature
was identified and marked as Ex.P.1(a) while the
signatures of both witnesses were identified and marked
as Ex.P.1(b) and (c). The defendant, to support his
defence, placed reliance on the chargesheet filed in
C.C.No.70/2010, which is marked as Ex.D.1.
6. The Trial Court dismissed the suit on the ground
that the demand promissory note relied on by the plaintiff
is found in conflict with Section 4 of the Negotiable
Instruments Act, 1881 (for short, 'Act'). While reproducing
the relevant portion of the demand promissory note at
paragraph No.14, the Trial Court held that, in terms of
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definition and explanation to Section 4, the undertaking
given by the payer should be unconditional, and since the
pronote contemplates right to seek recovery in the event
the defendant/maker failed to repay the hand loan of
Rs.66,000/-, the Trial Court was of the view that Ex.P.1
cannot be treated as a demand promissory note. On these
set of reasonings, the Trial court dismissed the suit.
7. Plaintiff feeling aggrieved by the judgment and
decree of the Trial Court, preferred an appeal before the
appellate Court. The Appellate Court has independently
assessed the entire material on record. The Appellate
Court has also given anxious consideration to the
definition of Section 4 of the Act and has also examined
the recitals found in the pronote. On re-assessing the
recitals in the pronote and having examined Section 4 of
the Act, the Appellate Court was of the view that the
undertaking given by the defendant/maker is not in any
way contrary to Section 4 of the N.I.Act. It is in this
background, the Appellate Court was not inclined to concur
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with the reasons assigned by the Trial Court while applying
Section 4 of the Act in the present case on hand. The
Appellate Court also held that the reasons assigned by the
Trial Court are patently erroneous and accordingly
reversed the reasonings as well as the decree passed by
the Trial Court. Consequently, the Appellate Court has
allowed the appeal and decreed the suit.
8. Heard learned counsel appearing for the
defendant and learned counsel appearing for the plaintiff.
Perused the divergent findings of the Courts below.
9. On examining the material on record, this Court
would find that the plaintiff, to substantiate his claim, has
placed reliance on a demand promissory note executed by
the defendant. To prove the due execution, the plaintiff
has examined two witnesses, who have identified the
defendant's signature on the pronote.
10. Before a document can be treated as a
promissory note, the recitals of the promissory note
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should demonstrate, both in form and in intent, an express
undertaking on the face of the instrument to pay the
money before it can be held to be a promissory note.
Section 4 of the Act defines a "Promissory note" as under:
"Section 4 of the Act defines, "A promissory note
is an instrument in writing (note being a bank-note
or a currency note) containing an unconditional
undertaking, signed by the maker, to pay a certain
sum of money to or to the order of a certain person,
or to the bearer of the instruments."
11. An instrument to be a promissory note must
possess the following elements:
1. It must be in writing: A mere verbal promise
to pay is not a promissory note. The method of
writing (either in ink or pencil or printing etc.) is
unimportant, but it must be in any form that cannot
be altered easily.
2. It must certainly an express promise or clear
understanding to pay: There must be an express
undertaking to pay. A mere acknowledgement is not
enough. The following are not promissory notes as
there is no promise to pay."
12. On reading the definition and the elements to
constitute a promissory note, it can be gathered that an
instrument to constitute a promissory note should contain
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a promise at the hands of a maker to pay the amount
unconditionally. A conditional undertaking destroys the
character of an otherwise negotiable instrument. What
can be inferred from the wordings in Section 4 of the Act is
that there should be an "unconditional undertaking"; the
promise must not depend upon the happening of some
outside contingency or events. It must be payable
absolutely and the maker must be certain. The note itself
must show clearly who is the person agreeing to
undertake the liability to pay the amount. The promise
should be to pay money and money only and the amount
should be certain.
13. The trial Court though has culled out the relevant
portion of the promissory note, but however, has misread
the provisions of Section 4 of Act and has also misread
and misunderstood the object of securing an unconditional
undertaking from the maker. I deem it fit to cull out the
undertaking given by the defendant/maker, which reads as
under:
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"¸ÀzÀj ªÉƧ®VUÉ ªÀiÁºÉAiÀiÁ£À ±ÉÃPÀqÀ JgÀqÀÄ gÀÆ. §rØ
¸ÉÃj¹ PÉÆqÀ®Ä §zÀÞ£ÁVzÀÄÝ PÁ®PÁ®PÉÌ ¤ªÀÄUÉ §rØ ¥ÁªÀw
ªÀiÁqÀÄvÀÛ §AzÀÄ ¸ÀzÀj ºÀtªÀ£ÀÄß ¤ÃªÀÅ £À¤ßAzÀ ªÁ¥À¸ÄÀ ì ¥ÀqÉAiÀÄ®Ä
C¥ÉÃPÉë ¥ÀqÀĪÀ ªÉÃ¼É ¤ªÀÄUÁUÀ°Ã ¤«ÄäAzÀ C£ÀĪÀÄw
ºÉÆA¢zÀªÀjUÁUÀ°Ã AiÀiÁªÀ «zsÀªÁzÀ ¸À§Æ§Ä ºÉüÀzÉà vÀPÀgÁgÀÄ
ªÀiÁqÀzÉà ¤ªÀÄä ºÀtªÀ£ÀÄß ªÀÄgÀÄ ¥ÁªÀw ªÀiÁqÀ®Ä §zÀÞgÁVgÀÄvÉÛãÉ.
ºÁUÉãÁzÀgÀÆ ¥ÁªÀw ªÀiÁqÀzÉà EzÀÝ ¥ÀPÀëzÀ°è ¤ÃªÀÅ £À¤ßAzÀ®Æ
£À£Àß ZÀgÀ¹ÜgÀ D¹ÛUÀ¼À ªÀÄÆ®PÀ PÁ£ÀÆ£ÀÄ jÃvÁå «¯Éà ªÀiÁrPÉƼÀî®Ä
£À£ÀßzÁzÀ vÀAmÉ vÀgÀPÁgÀÄUÀ½gÀĪÀÅ¢¯ÁèªÉAzÀÄ M¦à §gɹPÉÆlÖ
¥ÁæA¸Àj¥ÀvÀæ."
14. On reading the undertaking, it nowhere indicates
that it contravenes the provisions of Section 4 of the Act.
What the maker has stated while offering an undertaking
is in the event he fails to pay the amount, the payer is at
liberty to proceed against his property. This latter part of
the undertaking does not alter the express undertaking
given by him. The latter part of the undertaking even
otherwise is available to the payer in the event the maker
of the instrument fails to honour the undertaking given
under the instrument. The term "unconditional
undertaking" conveys the absolute nature of promise,
emphasizing the absence of any contingencies or
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conditions that might impede or alter the payment
obligations.
15. In the context of Section 4 of the Negotiable
Instruments Act, the incorporation of an "unconditional
undertaking" within a promissory note is intricately
designed to afford paramount protection to the payer, as
opposed to conferring undue advantage upon the maker of
the note. The term "unconditional undertaking" epitomizes
the absolute commitment of the maker to honor the
specified payment without contingent qualifiers or
hindrances.
16. The emphasis on an unconditional commitment
serves as a shield for the payer by fostering certainty and
predictability in financial transactions. It ensures that the
payer, whether an individual or entity, can rely upon the
unequivocal promise made by the note's creator. This legal
construction mitigates the risk of arbitrary revocation or
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alteration of the payment obligation, thereby safeguarding
the interests of the payer.
17. The pronote culled out supra clearly reveals that
the defendant has given an unconditional undertaking that
he would repay the amount without raising any objections
and failure to make the payment, discretion is given to the
payer to recover it by initiating proceedings against the
properties held by the defendant/maker. The Trial Court,
referring to this latter part of the condition, has come to
the conclusion that the right conferred on the payer to
recover by initiating proceedings is found to be in conflict
with Section 4 of the Act. The said contention of the
defendant cannot be acceded to. What Section 4
contemplates is that the promissory note should contain
an unconditional undertaking signed by the maker to pay a
certain sum of money. This unconditional undertaking is
found in the present promissory note, marked as Ex.P.1.
However, the maker, i.e., the defendant herein, has
further indicated that the payer is at liberty to proceed
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against the property in the event he fails to repay the
amount. This additional condition, which is found in the
latter part of the document, does not, in my view,
contravene the provisions of Section 4 of the Act. What
defines a promissory note is that there must be an express
undertaking on the part of the maker to pay the money
before it can be held to be a promissory note. Such an
unconditional undertaking is found in Ex.P.1. The latter
part of the undertaking given by the maker himself will not
take away the character of the promissory note as
contemplated under Section 4 of the Act. The latter part of
the undertaking found in the pronote, vide Ex.P.1, infact
gives additional protection to the payer to recover the
amount in the manner known to law in the event
defendant fails to repay the hand loan. The right conferred
on the payer to recover in accordance with law does not in
any way dilute the requisite unconditional undertaking,
which is requisite to constitute a document as a pronote.
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18. On examining the reasons assigned by the Trial
Court, this Court is more than satisfied that the Trial Court
not only misread Section 4 of the Act but also misread the
recitals found in Ex.P.1/promissory note. What an
unconditional undertaking means is an unconditional
undertaking given by the maker that he would repay the
amount availed by him under the document. Therefore, I
am of the view that the findings and conclusions recorded
by the Trial Court suffer from serious perversity. The
Appellate Court has rightly reassessed the entire material
on record and there is proper appreciation of the material
on record. The Appellate Court has also rightly interpreted
and applied Section 4 of the Act while decreeing the
plaintiff's suit.
19. In the light of discussion made supra, I do not
find that any substantial question of law would arise for
consideration. The regular second appeal is devoid of
merits and accordingly stands dismissed.
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19. In view of dismissal of second appeal, all pending
applications, if any, do not survive for consideration and
stand disposed of.
Sd/-
JUDGE
hdk
