NAMBURI VENKATA KRISTNAYYA Vs. KARNEDAN KOTHARI

JUDGEMENT

(1.) The 2nd defendant is the appellant. The suit instituted by the plaintiff was for the recovery of money due on a promissory note executed by the 1 and 2nd defendants in his favour. The 2nd defendant contended that he executed the promissory note only as a surety to the knowledge of the plaintiff, that he was exhonerated by the plaintiff from his liability, and that in any event by reason of the plaintiff's conduct he being a surety was deprived of the security against the 1 defendant and was thereby discharged. We are not concerned in the Second Appeal with the plea of exhoneration. On the remaining pleas the following issues were framed by the District Munsif: (a) Whether the 2nd defendant is entitled to plead that he is only a surety to the knowledge of plaintiff? (b) If he is a surety was he deprived of the security against 1 defendant by reason of the plaintiffs conduct, and is he discharged thereby. (c) Was there a valid contract of sale of 1 defendant's properties to plaintiff as alleged by 2nd defendant and does it exhonerate 2nd defendant from all liability?

(2.) On all these issues the District Munsif recorded findings in favour of the 2nd defendant and dismissed the suit as against him. In appeal by the plaintiff the same points as decided by the District Munsif were set down as points for determination. The learned Subordinate Judge came to the conclusion that having regard to Section 92 of the Evidence Act it was not open to the 2nd defendant to plead that he was only a surety and as the promissory note Ex. A. distinctly showed that both the defendants were equally liable, the lower Court's decree dismissing the suit as against the 2nd defendant was set aside and a decree was given against him also. This Second Appeal has been filed by the 2nd defendant against that decree.

(3.) Under Section 4 of the Negotiable Instruments Act the maker of a promissory note gives an unconditional undertaking to pay the sum of money mentioned in the note. Under Section 124 of the Contract Act a surety is a person who undertakes a liability which is conditional on the failure of another person to discharge the liability. There is thus an essential incompatability between the position of a surety and that of an executant of a promissory note.