WAZIR SULTAN AND SONS Vs. P SATCHITHANANDA RAO

JUDGEMENT

(1.) THESE two appeals arise out of two suits filed originally in this court on its original Side (C. S. Nos. 103 and 183 of 1954) and subsequently transferred to the City Civil Court at Madras, where they were numbered as O. S. Nos. 1453 and 1463 of 1955 respectively. Both the suits were tried together by the learned additional Judge of the City Civil Court and decreed as prayed for. The first defendant in the two suits is the appellant in the two appeals before us. O. S. No. 1456 of 1955 is a suit to recover a sum of Rs. 26798/4/7 alleged to be due for balance of principal and interest in res-pect of a promissory note executed on 1-31951 by the first defendant, M/s. Wazir Sultan and Sons, a firm of merchants carrying on business at Hyderabad, in favour of the second defendant Shyamala industries Corporation Ltd. , a private limited company, for Rs. 32691/5/2 O. S. (that is, Hyderabad currency) and assigned by the second defendant to the plaintiff, Karlapaty Syamalamba, on 15-1-1954. The following are the material allegations in the plaint. On 1-3-1951, the defendants settled their accounts in respect of a partnership business carried on by them at Secunderabad and the second defendant retired from the partnership and released its rights therein in consideration of a sum of Rs. 32691/5/2 agreed to be paid by the first defendant to the second defendant. For this sum the first defendant executed a promissory note agreeing to pay the sum with interest at 4 per cent, per annum. Towards the promissory note a sum of Rs. 2691/5/2 (O. S.)was paid and there is a sum of Rs. 30,000 (O. S.) now due for principal, equivalent to Rs. 25714/4/7 in Indian Currency and interest from 1-3-1951 which comes to Rs. 1084. On 19-2-1954. the first defendant paid a sum of Rs. 2000 by a cheque towards the promissory note. After giving credit for the said sum, an amount of Rs. 26798/4/7 is due for principal and interest. The first defendant by partner Abdul hameed Sultan filed a written statement in which the execution of the promissory note was admitted. The only plea was that in addition to the payments admitted by the plaintiff to have been received, the defendant made further payments of rs. 5000 (O. S.) Rs. 5000 (O. S.) and Rs. 2000 (Indian Cur-rency) on 12-6-1951, 21-7-1951 and 17-10-1951 respectively and therefore the first defendant is liable to pay only the amount that may be found due after giving credit to these payments. These payments were alleged to have been made to Mr. K. Appa Rao, Managing director of the second defendant company. The first defendant complained that the said Appa Rao had for his own reasons unlawfully treated the said payments to other accounts on which no amount was due to him and had also filed another suit. The plaintiff was no other than the mother of the said Appa Rao and the plaintiff in the other suit is no Other than his nephew. An error in the calculation of the amount due in the plaint was also pointed out.

(2.) THE other suit. O. S. No. 1463 of 1955, is a suit on another promissory note executed on 2-1-1950 by the first defendant, M/s. Wazir Sultan and Sons, represented by its managing partner Hameed Sultan, in favour of the second defendant, K. Appa Rao, for a sum of Rs. 45000 and transferred by him to the plaintiff on 25-8-1951. The following are the material allegations in this plaint, On 2-1-1950, the first defendant by its managing partner Hameed Sultan executed a promissory note in favour of the second defendant for a sum of Rs. 45000 (O. S.)repayable with interest at 12 pec cent, per annum. In respect of the said promissory note the first defendant paid to the second defendant two sums of Rs. 5000 each on 12-6-1951 and 21st July, 1951 respectively. The balance due in respect of the principal and interest is Ms. 52985 (O. S.) equivalent to Rs. 45414 in Indian. Currency. The first defendant practically admitted the execution of the promissory note but denied all liability under it. His case was as follows. By deed of partnership dated 12-6-1949 the first defendant and Shyamala Industries Corporation Ltd. , a private limited company of which K. Appa Rao was the Managing Director, became parners and conducted business at hyderabad. Under the said deed of partnership the Shyamala Industries Corporation Ltd. , was to invest in the partnership firm capital to the extent of Rs. 70,000 and the second defendant, its Managing Director, was to be in sole charge of the business. The partnership commenced its business on 12-6-1949 and was dissolved by mutual consent on 28-2-1951. Advances were made by the Shyamala Industries from time to time and as per the balance-sheet of the partnership as on 31-12-1949 the total sum thus advanced was Rs. 42959/14/0. In respect of this amount the second defendant K. Appa Rao,. Managing Director of the Shyamala Industries corporation Ltd. , desired that the first defendant should execute a promissory note for a sum of Rs. 45,000 in his favour, and in pursuance of such a request he executed the promissory note. It was specifically agreed at the time that the suit promissory noe was enforceable, only to the extent of the amount that might be intimately due by the partnership. The promissory note was an additional security for the sums advanced. As per the balance-sheet of the partnership firm drawn on 28-2-1951, the date of its dissolution, the first defendant had to pay to the other partner a sum oi Rs. 16490/8/10 towards the balance due on the loan account and half the losses of the partnership which amounted to Rs. 14741/0/8. After certain adjustments it was settled that the first defendant was liable to pay the sum of Rs. 32691/5/2 and for this sum a promissory note was executed by the first defendant in favour of the Shyamala Industries Corporation Ltd. (the promissory note which is the subject-matter of O. S. No. 1456 of 1955 ). This sum included the balance due in respect of the advances made by the second defendant to the firm. Hence the suit promissory note for Rs. 45,000 automatically got extinguished and is therefore not enforceable. The assignment in favour of the plaintiff who is a near relation of the second defendant is fraudulent and intended to make the first defendant liable twice over for the same debt. Though the first defendant demanded a return of the promissory-note the second defendant promised to do so but did not. The first defendant also raised a plea of limitation as the suit had been filed more than three years after the execution of the promissory note.

(3.) BOTH the suits were tried together and the evidence adduced by the parties was treated as evidence in the two suits. The learned trial judge held that the promissory note for Rs. 45,000 was not executed for the purpose and in the circumstances set out by the first defendant, that the said promissory note was not extinguished by the execution of the other promissory note for Rs. 32691/5/2 as alleged by the first defendant, that the two sums of Rs. 5000 each were sent by the first defendant in part payment of the promissory note for Rs. 45,000 and not for the other promissory note and thai the suit was not barred by limitation. Following the result of these findings, the learned Judge also held that the first defendant should not be given credit to the said two sums as payments towards the promissory note of Rs. 32691/5/2. There was one other payment of Rs. 2000 made-by the first defendant on 17-101951 which K. Appa Rao credited towards his alleged dues in respect of a mica transaction. The learned Judge expressed a doubt whether Appa Rao could lawfully appropriate this sum towards the mica account when such appropriation was disputed by the first defendant. But he held that the said sum could not be taken as paid towards the promissory note for Rs. 32691/5/2 and refrained from recording a definite finding as to what relief the first defendant should get for this admitted payment. In the result both the suits were decreed as prayed for.