P L S A R S ARUNACHALAM CHETTIAR, LEGAL REPRESENTATIVE OF P L S A R S SABAPATHI CHETTY (DECEASED) Vs. KRISHNA AIYAR (MINOR)

JUDGEMENT

(1.) This appeal arises froma suit brought by the plaintiffs in the Subordinate Judge's Court at Madura on a Hundi or Bill of Exchange executed by one Pasimuthu Pillai on behalf of the firm of one Kuppuswami Aiyar, now deceased, in Madura, whose agent he was. The Hundi was drawn in favour of one Kolandavelu Pillai, the 2nd plaintiff, as representing the 1 plaintiff's firm on the 23 of August, 1918, and is for a sum of Rs. 22,066. It was drawn on the 1 defendant's firm in Madras and is marked Ex. A in the case. It was dishonoured when presented to the Madras firm ; notice was given of it to the 1 defendant who was called upon to pay but failed to do so. Hence this suit was brought. Kuppuswami Aiyar died leaving the 2nd and 3 defendants as his sons and heirs who succeeded to their father's estate and his trade. The 2nd plaintiff has been joined as a plaintiff to avoid any objection as to parties.

(2.) The circumstances under which this Hundi was executed are briefly these: The 1 defendant's firm carried on trade in Madura in yarn and cotton thread and, in the course of that trade, the agent of the firm, Pasimuthu Pillai, who was looking after the business, entered into seven contracts with Kolandavelu Pillai, the agent of the 1 plaintiff's firm about the middle of August, 1918, for the purchase of 229 bales of yarn to be manufactured by the Madura Mills of certain counts at certain stated prices. Of these contracts we are concerned in the suit only with four of them relating to 153 bales. The contracts were originally made orally, but at the request of the 1 defendant's agent, they were reduced to writing on the 7 of September, 1918. They are called Varthamanam letters Nos. 21, 22, 23 and 24 and are filed in the case as Exs. B, BI, BII and BIII. The terms of the contracts are fully set out in these letters. It appears from them that the suit Hundi amount was made up of advances agreed to be paid under the contract towards the purchase- moneys at the rate of Rs. 150 per bale, for 25 bales under Ex. B, 20 bales under Ex. BI and 10 bales under Ex. BII, and at the rate of Rs. 142 per bale for 98 bales under Ex. BIII, less Rs. 100 paid in cash, which is the subject-matter of the suit--O.S.No. 12 of 1920--brought by the 1st defendant against the 1 plaintiff and tried along with this suit. Only two bales were actually taken delivery of and paid for by the 1st defendant under the contracts. Plaintiffs assert in their plaint that the contracts were broken by the 1 defendant and not by themselves. They claim the amount due under the Hundi with interest and costs.

(3.) The defendants pleaded that the plaintiffs committed breach of contract and were not therefore entitled to claim the Hundi amount and further that the Hundi, having been passed in part payment of the stipulated price for goods to be manufactured, and no goods having been sold or offered for sale to 1 defendant was not enfirceable. In reply to 1 defendant's pleas, plaintiffs contended that the suit being one on a negotiable instrument, a collateral enquiry could not be held in this suit into the question as to who committed the breach of contract, as such an enquiry is barred by Section 45 of the Negotiable Instruments Act, even though as the payee he was a holder standing in immediate relation to the 1 defendant,the drawer. They also contended that if the question of breach could be gone into, the 1 defendant committed the breach, and the damages they are entitled to being more than the Hundi. amount, there was no failure of consideration on the Hundi.