MAGNIRAM KHUPCHAND Vs. LAXMINARAYAN RAMPRATAP

JUDGEMENT

(1.) The suit was brought by the appellant for a declaration that a certain promissory note executed by him in favour of the respondent agreeing to pay the sum of Rs. 3,556 had been fraudulently and by undue influence obtained from him, and was good only to the extent of such sum as might be found due on taking accounts between the parties. The respondent in his written statement denied the allegations of fraud and undue influence, and of want of free consent on the part of the appellant in the execution of the promissory note. Issues were raised on the question of fraud, undue influence, and free consent, and the Subordinate Judge who tried the suit held the allegations as to them proved. Accordingly he reopened the accounts between the parties and passed a decree in favour of the appellant.

(2.) On appeal by the respondent the learned District Judge has held the pleas of fraud, undue influence, and want of free consent not proved. And he has come to the conclusion that the promissory note in suit was executed by the appellant as being in substance the result of a compromise between the parties. It is true that in answer to the claim of the appellant, the respondent did not in his written statement raise any defence based upon a compromise. But upon the facts found proved by the learned District Judge the transaction which led to the execution of the promissory note by the appellant must be held in law to be one in the nature either of a settled account or of a compromise. Those facts are that the parties had mutual dealings and accounts; that the appellant of his own free will and accord, and without any fraud practised or undue influence exerted by the respondent, waived his right to an examination of the accounts for the purpose of ascertaining the balance due and agreed to treat a gross sum-Rs. 3.556-as due from him and accordingly executed the note in dispute. To this the respondent consented. These facts bring the case within.the principle of law enunciated by the Judicial Committee of the Privy Council in Mcellar V/s. Wallace (1853) 5 Moo. I.A. 372, 395 where their Lordships-say:- " If persons meet and agree, not to ascertain the exact balance, but agree to take a gross sum as the balance, a sum which one is willing to pay, and the other is content to receive as the result of those accounts, it is obvious that the production of vouchers is entirely out of the question, and errors in the account are so also, for the very object of the parties is to avoid the necessity for producing those vouchers, upon the assumption that there are or may be errors in the account so settled. Therefore, it is either an account stated and settled, in the formal sense of that expression, or it is the case of a settlement by compromise. In either case it may be vitiated by fraud; in either case it is good for nothing, if, either from the collusion of the parties, upon the circumstances under which the settlement takes place, it is proved in a Court of Equity that the transaction was not so fairly and so fully understood between the parties, either from the confusion in which it was involved, or from misrepresentations made on the one side or the other, as it ought to have been and that injustice has been done to either side ".

(3.) Here the allegations of fraud and undue influence on the part of the respondent and want of free consent on the part of the appellant have been held not proved. Under these circumstances the promissory note must be treated, on the principle enunciated by the Privy Council, either as the result of a settled account or as a settlement by compromise. In either case it cannot be re opened. For these reasons we confirm the decree with costs.