(VATAKKAM CHIRAYIL PARKUM) KURUNDALIAMMAL Vs. TPENKUNHI KANNAN

JUDGEMENT

(1.) The plaintiff as the endorsee of a promissory note, Ex. C executed by defendants 1, 2 and 3 in favour of defendants 4 and 5 instituted the original suit against all the defendants to recover the amount due on the promissory note. The plea of defendants 1, 2 and 3 was that there was no consideration for the promissory note, that it was executed on account of fraud practised upon them by defendants 4 and 5 and that plaintiff was not a holder in due course as he knew the defect of the title of defendants 4 and 5 to the promissory note. Defendant 4 did not appear in the suit and defendant 5 supported the plaintiff. The trial Court came to the conclusion that there was no fraud and that the amount must be taken to have been due. It gave a decree in favour of the plaintiff against all the defendants for the amount due on the promissory note. Defendants 1, 2 and 3 preferred an appeal to the lower appellate Court. The learned Subordinate Judge came to the conclusion that the promissory note was executed by defendants 1, 2 and 3 as the result of fraud practised by defendants 4 and 5 and also that the plaintiff had knowledge of the defect of title of defendants 4 and 5 when he got endorsement of the note from them in his favour. On these findings he reversed the decision of the first Court and dismissed the suit against defendants 1 to 3. Hence this second appeal has been filed by the plaintiff against defendants 1, 2 and 3 only. We are not here concerned with the decree granted by the first Court against defendants 4 and 5 which has become final.

(2.) On behalf of the appellant the learned advocate raised two points before me. In order to appreciate the first contention raised it is necessary to state a few facts. There was a partnership in timber carried on by these defendants. Defendants 4 and 5 would seem to be working partners and defendant 1, 2 and 3 really the monied partners who provided the capital. There were misunderstandings between the partners with the result that they were anxious to have the partnership dissolved and the accounts taken. Two attempts were made for settlement, the first at a place called Chokli. Though no accounts were produced at the Chokli settlement it would appear that the parties were persuaded through the intervention of some arbitrator, to fix a particular amount as the amount due to some of the partners, and that after accepting the said settlement a release deed was executed by them in favour of the others. Immediately afterwards the said settlement was set aside by consent and the release dead was treated as cancelled. There were further negotiations and at Kasargod there was another settlement. Defendant 5 was the working partner in charge of the actual partnership transactions. He produced certain account books at the settlement at Kasargod and he also produced two balance sheets, Exs.-B and I. According to these it appeared that defendant 4 was found entitled to a sum of Rs. 341-8-0 and defendant 5 to a sum of Rs. 4,885-5-6. The amount due to defendant 4 namely, Rs. 341-8-0 was treated as not really due, having regard to the state of affairs of the partnership and in respect of the amount due to defendant 5 some amount was reduced from the Rs. 4,885-5-6, appearing in the books as due to him and from the amount arrived at a sum of Rs. 1,385-0-0 was deducted on account of defendant 4 and 5's share of the loss. Rs. 215-1-0 was paid in cash and 22 logs of timber worth Rs. 570-15-0 were also given. It is in respect of the balance of Rs. 2,714-0-0 which was found to be due to defendants 4 and 5 that this promissory note, Ex.-C was executed on 30 October 1920. The finding of the lower appellate Court was that defendant 5 who was in charge of the business had tampered with the accounts and the balance sheets, Exs.-B and I, which he produced before defendants 1, 2 and 3 and on the basis of which the parties settled accounts were all tainted by fraud.

(3.) The lower appellate Court has discussed this question of the fraud practised on defendants 1, 2 and 3 at the time of the settlement. A commissioner was appointed to go into the interpolations and alterations made in the accounts by the partners in charge of the business. It is unnecessary for me to go into the details of the mistakes and frauds which the lower appellate Court finds proved. To take one instance, in para. 15 of the lower appellate Court's judgment, in considering item 166 of the commissioner's report, it is observed that the entry as it stood at first related to a debit of Rs. 15 on 15 November 1919 in the firm's books. The figures were subsequently changed into Rs. 715. The sum is said to have been sent to one Kamevadi Chappa for meeting expenses in connexion with the partnership. The alteration of the figures "15" into "715" clearly benefits the working partners to the extent of Rs. 700. This alteration of the figure "15" into "715" in respect of a debit on 15 November 1919 is carried out both in the ledger and also in the fair day book. But unfortunately for defendants 4 and 5, the rough daybook contains only the original entry "15", so that the lower appellate Court had before it a case where accounts had been tampered with by partners who kept the accounts and who produced those accounts as the accounts properly representing the affairs of the partnership at the settlement made by them with the other partners, defendants 1, 2 and 3. No doubt certain explanations were offered with reference to these entries. The lower appellate Court in para. 15 observed that it was unable to accept the explanation. My attention was drawn by the learned advocate for the respondent to other similar entries also where figures "100" was changed into 300" and various similar changes were made; for example, Rs. 20 changed into Rs. 320 and 7 annas 7 pies changed into Rs. 100-7-9. Sitting in second appeal it is not necessary for me to multiply instances.