KOLLURI SUBBA RAO Vs. GURRAM VIRASWAMI

JUDGEMENT

(1.) The appellants are the plaintiffs who filed a suit on a promissory note, Ex. P-1 dated 23rd August, 1937, executed by the first defendant in favour of one Venkataratnam who is the plaintiffs father for a sum of Rs. 17, 169-12-3. The transaction has a long antecedent history. The main question to be decided is the effect of the application of Madras Act IV of 1938 to the debt.

(2.) The story begins in August, 1928, when the first defendant was proposing to buy certain lands in Court auction and he approached Venkataratnam for assistance in financing the purchase. They entered into an agreement Ex. P-2 dated 31 August, 1928, whereby it was settled that, as soon as the sale was confirmed in favour of the first defendant, the first defendant would give a half share of the property to Venkataratnam and Venkataratnam would pay to the first defendant half of the final bid of Rs. 15,050, and the agreement also recites the fact that Venkataratnam has on that day advanced a sum of Rs. 3,762 which was the deposit that the purchaser had to make towards the sale amount. The agreement concludes with the recital that if for any reason the sale should be cancelled both parties to the agreement should share the profit or loss equally.

(3.) Contemporaneously with this agreement there is a promissory note, Ex. P-6, which recites that the first defendant has borrowed from Venkataratnam a sum of Rs. 3,762 for the purpose of making a deposit in respect of the bid of Rs. 15,050 in the Court auction. On the 12 of September, 1928, the first defendant executed a further promissory note, Ex. P-7, in favour of Venkataratnam. This recites that for the purpose of paying the sale price into Court the borrower has borrowed Rs. 9,738 from Venkataratnam. It is common ground that the balance of the purchase price was made up by the first defendant himself except for an amount of Rs. 50 which is referred to in the final settlement.