This Second Appeal challenged a decree recovered for Rs.6,52,391/- under promissory notes. The appellant alleged material alteration due to his wife's signature and coercion. The High Court found no evidence of coercion or forgery and dismissed the appeal, affirming the lower courts' findings.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Judgment Reserved on Judgment Pronounced on 20.12.2021 01.02.2022
CORAM:
THE HONOURABLE MR. JUSTICE G.CHANDRASEKHARAN
S.A.No.821 of 2021 and CMP.No.15880 of 2021
Suresh Kumar
... Appellant/Appellant/Defendant
..vs..
1.Sivagami 2.Sundar Rajan 3.Hemalatha 4.Vanitha ... Respondents/Respondents/Plaintiffs
This Second Appeal is filed under Section 100 of Civil Procedure Code against the judgment and decree dated 09.11.2020 made in A.S.No.7 of 2019 on the file of the learned II Additional District Judge, Vellore at Ranipet (A.S.No.9 of 2019 on the file of Principal District Court, Vellore), confirming the judgment and decree dated 27.10.2017 made in O.S.No.233 of 2010 on the file of learned Subordinate Judge, Ranipet (PDJ Court, Vellore O.S.No.84 of 2008).
For Appellant :Mr.S.Kingston Jerold
For Respondents :Mr.A.Prabhakaran
JUDGMENT
Appellant/defendant, who lost the case before the courts below filed this Second Appeal against the judgment and decree of learned II Additional District Judge, Vellore at Ranipet, in A.S.No.7 of 2019 dated 09.11.2020 (A.S.No.9 of 2019 on the file of Principal District Court, Vellore) confirming the judgment and decree of learned Subordinate Judge, Ranipet in O.S.No.233 of 2010 (O.S.No.84 of 2008 on the file of PDJ Court, Vellore) dated 27.10.2017.
The suit was originally filed by one Kathirvelu, husband of first respondent and father of other respondents. Appellant borrowed a sum of Rs.50,000/- from Kathirvelu on 29.07.2005, agreeing to repay the principal with interest at Rs.2/- per hundred per month. He has executed a promissory note shown as 'A' promissory note on the same date. Subsequently also, appellant borrowed the following amounts on the same interest and executed promissory notes. The details of borrowings are as follows:-
| Date of | Amount | Date of execution of promissory |
|---|---|---|
| borrowal | borrowed | note |
| 26.05.2006 | Rs.50,000/- | 26.05.2006 - B promissory note |
| 03.06.2006 | Rs.75,000/- | 03.06.2006 - C promissory note |
| 03.06.2006 | Rs.1,50,000/ - |
03.06.2006 - D promissory note |
| 03.06.2006 | Rs.75,000/- | 03.06.2006 - E promissory note |
| 03.06.2006 | Rs.50,000/- | 03.06.2006 - F promissory note |
| 09.06.2006 | Rs.75,000/- | 09.06.2006 - G promissory note |
dues to the plaintiff as follows:-
| Sl.No | Date on which amount | Amount paid |
|---|---|---|
| . | paid and plaintiff signed |
|
| 1 | 04.08.05 | Rs. 4,500/- |
| 2 | 13.08.05 | Rs. 1,500/- |
| 3 | 21.08.05 | Rs. 1,000/- |
| 4 | 24.08.05 | Rs. 1,000/- |
| 5 | 28.08.05 | Rs. 2,000/- |
| 6 | 03.09.05 | Rs. 1,000/- |
| 7 | 05.09.05 | Rs. 1,000/- |
| 8 | 08.09.05 | Rs. 1,000/- |
| 9 | 15.09.05 | Rs. 1,000/- |
| 10 | 22.09.05 | Rs. 1,000/- |
| 11 | 17.09.05 | Rs. 1,000/- |
| 12 | 01.10.05 | Rs. 10,000/- |
| 13 | 07.10.05 | Rs. 1,000/- |
| 14 | January,06 | Rs. 1,000/- |
| 15 | January,06 | Rs. 1,000/- |
| 16 | February,06 | Rs. 1,000/- |
| 17 | March, 06 | Rs. 1,00/- |
| ------------ 40,000.00 |
||
| 18 | By cash in December, 2005 |
50,000.00 |
| ------------ 90,000.00 |
||
| Bulb ....... 576 | 4,268.00 | |
| Dhal ....... 680 | ||
| Canteen .... 662 | ||
| Cash ....... 70 | ||
| Chain ...... 330 | ||
| Kammal … 1850 | ||
| Cut-note ... 100 --------- |
||
4268.00 |
||
| 19 |
Sl.No Date on which amount Amount paid . paid and plaintiff signed So, total ..Rs. 92,700.00 Total amount paid -----------96,968.00
He paid a sum of Rs.1,75,000/- on 03.06.2006 and Rs.75,000/- on 08.06.2006. Totally, He paid a sum of Rs.2,50,000/- and that two promissory notes are in the custody of defendant. Promissory notes marked as 'C' and 'D' are not true and they are forged documents. Plaintiff filed a complaint before Crime Branch at Vellore. The DGP enquired the matter and the defendant paid Rs.55,000/- to the plaintiff on 12.02.2008. Thus, defendant paid a sum of Rs.4,01,968/-. Plaintiff and his son trespassed into the defendant's house and assaulted the defendant. They obtained signatures from the defendant in blank promissory notes and three promissory notes from defendant's wife. Therefore, the defendant issued legal notice on 27.06.2008. 'E', 'F', and 'G' are fabricated promissory notes. Defendant had not signed in these promissory notes. His signatures were obtained under threat and coercion. Therefore, plaintiff cannot claim any relief on the basis of these promissory notes. Therefore, the suit is liable to be dismissed.
(A.S.No.9 of 2019 on the file of Principal District Court, Vellore) against the judgment of the trial Court. Learned first appellate Judge has also found that there is no reason to differ from the view taken by the learned trial Judge and confirmed the judgment of the trial Court and dismissed the appeal. Therefore, the defendant filed this Second Appeal.
b) When appellant denies the genuineness of signatures of his wife in Exs.A1 to A7, whether it amounts to material alteration?
(i) CDJ 1928 MHC 340 (Santhu Mohideen Pillai Tharaganar ..vs.. Jamal Mohammad Jamaludin Labbai), wherein it is
held as follows:-
“Under such circumstances if the document was brought into existence in the presence of the plaintiff, and seeing that it was executed in his favour, it is impossible to hold that the plaintiff was unaware of, or was not a party to, the fraud by which 2nd defendant s name also was included in the document and his mark put by defendant 1. The plaintiff must have, at least, connived at the fraud, even if there is no direct evidence to show that he was instrumental in introducing defendant 2 s name. There is no direct evidence to prove that the plaintiff was a party to the fraud. Fraud has to be inferred from the circumstances and probabilities of the case. On a consideration of these I find that the plaintiff must have been a party to the fraud. The finding is submitted accordingly. ”
(ii) CDJ 1957 MHC 095 (Rangaswami Reddi ..vs.. K. Doraiswami Reddi), wherein it is held as follows:-
“4. ......
Section 87 of the Negotiable Instruments Act runs thus :
"Any material alteration of a negotiable instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties;
And any such alteration, if made by an indorsee, discharges his indorser from all liability to him in respect of the consideration thereof.
The provisions of this Section are subject to those of Sections 20, 49 86, and 125."
Here on account of Section 87 of the Negotiable Instruments Act the promissory note has become void and the plaintiff cannot be permitted to adduce any other evidence to prove the contract of loan. The promise to repay the amount of the loan is certainly a term, indeed an essential term, of the contract. Of course if there was a completed contract which existed before the execution of the promissory note, in which case the promissory note may be treated as a security or voucher, an action would lie on such a contract even though the promissory note executed subsequently cannot be admitted in evidence for any
reason.
All that the aforesaid part of Section 87 says is that if a material alteration is made by the indorsee of a promissory note and on that ground the promissory note becomes void, the indorsee who is himself responsible for the result cannot make the indorser liable. The indorsee has to suffer the loss occasioned by his own fraud. This rule has nothing to do with the liability of the executant of a promissory note to the payee.
(iii) CDJ 1972 MHC 324 (Verco Private Ltd., Padi & Others Versus Newandram Naraindas & Another). The relevant portions are as follows:-
“1. ...... One such defence which was put forward with reference to Ex. A. 2 promissory note was that it had been materially altered by the plaintiff and consequently it was inoperative and no suit could be instituted thereon. The material alteration is said to be insertion of the rate of interest in the document. ....
Judge, City Civil Court, Madras, has decided in favour of the first respondent. I am unable to hold that this provision is attracted to the facts of this case. P. W. 1 has not stated in this evidence that there was a common intention of the parties at the time when the promissory note was executed to pay interest at the rate mentioned above and that only for the purpose of giving effect to the common intention he inserted that rate. ....... ”
(i) 2012 (2) LW 521 (John Thangadurai and eze ..vs.. Arul Azir), which reads as follows:
“11. The phrase "Material Alteration" has not been defined in the Negotiable Instruments Act, 1881. But, it has been explained judicially.
" A material alteration is one which varies the rights, liabilities, legal position of the parties as ascertained by the deed in its original state".
The first paragraph of Section 87 makes it clear that the party who consents to the alteration as well as the party who made the alteration are disentitled to complain against such alteration, e.g. if the drawer of the cheque himself altered the cheque for validating or revalidating the same instrument he cannot take advantage of it later by saying that the cheque became void as there is material alteration thereto.”
(iii) 2018 (4) CTC 190 (Pachaiappa Chettiar ..vs.. Muthukrishna Naidu). The relevant portion reads as under:-
“12. The position of law on the above subject is that as per Halsbury's Laws of England, Volume 11, 3rd Edition, Article 599 at P.368:
“A material alteration is one which varies the rights, liabilities, or legal position of the parties as ascertained by the deed in its original state, or otherwise varies the legal effect of the instrument as originally expressed, or reduces to certainty some provision which was originally unascertained and as such void, or may otherwise prejudice the party bound by the deed as originally executed.
The effect of making such an alteration, without the consent of the party bound, is exactly the same as that of cancelling the deed.”
This could be culled out from the decision reported in 1969 (SLT SOFT) 100=1970 (1) SCC 56, Kalianna Gounder v. Palani Gounder and Another and it could be further seen that as per the decision reported in AIR 1951 Kar. 102, K.M. Basappa and Another v. Patel Marule Gowda and Another, the above subject was analysed as follows:
“The plaintiffs are traders who profess to have dealings to the extent of three or four lakh of rupees and are not unfamiliar on their own showing with proceedings in Cts. They should have taken care to avoid suspicion being raised against them on account of the date being tampered with. So long back as 1884 it was held by Lord Den-man C.J. in Davidson and Cooper, (1884) 67 R.R. 638.
“that a party who has the custody of the instrument made for his benefit is bound to preserve it in its original state and that any material alteration will vitiate the said instrument.”
The above said position of law has been discussed in the decision reported in 2014 (5) LW 887, A. Thirumoorthy & Another v. S. Bastin, wherein it is had been held that
“A negotiable instrument, afflicted with the disease of material alteration is a void instrument. A void instrument/document cannot be enforced in a Court of
Law. Promissory note, which is having material alteration, thus cannot been enforced in a Court of law. In such an event, the suit must fail.”
It is found that the decision reported in AIR 1966 AP 267, Allampatti Subba Reddy v. Neelapareddi, has been followed in the above said decision wherein the English Rule that a material alteration of a date makes it altogether void is summarized following the Halsbury's Laws of England as found in III Edition, Volume 11, page 367 paras 598 and 599 which is reproduced as follows:
“598. A writing proposed to be executed as a deed may be altered by erasure or inter lineation or in any other way before it is so executed, and any alteration so made before execution does not affect the validity of the deed. Any alteration, erasure or interlineation appearing upon the fact of a deed is presumed, in the absence of evidence to the contrary, to have been made before the execution of the deed.
records.
totally denied the borrowal. Appellant's case is that he borrowed a sum of Rs.5,25,000/- in June 2005 and repaid to the tune of Rs.4,01,968/- on various dates. Both the courts below have found that appellant was able to prove the repayment of Rs.1,46,968/- and therefore, granted decree only for a sum of Rs.6,52,391/-. It makes clear that the loan transactions between the appellant and Kathirveluu were true. Allegation raised by the learned counsel for the appellant is that the suit was filed against the appellant; his wife is in no way involved in the alleged borrowal, but her signature appears in Exs.A1 to A7 promissory notes. His wife has not signed in Exs.A1 to A7 promissory notes and they are forged signatures and it amounts to material alteration.
were forged in Exs.A1 to A7 promissory notes and when there is no evidence to show that the signatures of appellant and his wife in Exs.A1 to A7 promissory notes were obtained by threat and coercion, it has to be necessarily concluded that the suit promissory notes are genuine promissory notes executed by the appellant, after receiving loan amounts mentioned in these promissory notes. When that be the case, the judgments relied on by the learned counsel for the appellant to show that there is material alteration in the suit promissory notes, have no application to the facts and circumstances of this case.
Assistant Registrar(CS-IX)
// True Copy //
Sub Assistant Registrar
mra To
1.The Principal District Judge, Vellore
2.The II Additional District Judge, Vellore at Ranipet.
3.The Subordinate Judge, Ranipet. Copy to: The Section Officer, V.R.Section, High Court, Madras +1cc to Mr.A.Prabhakaran, Advocate SR.No.6111 S.A.No.821 of 2021 and CMP.No.15880 of 2021
NRL(CO) CB(10/03/2022)
3 issues framed by the court
Whether the courts below were correct in decreeing the suit given the plausible explanation for the wife's signature in promissory notes.
Whether the appellant's denial of genuineness of his wife's signatures amounts to material alteration under Section 87 of the Negotiable Instruments Act.
Whether the appellant satisfactorily proved coercion or threat regarding the execution of promissory notes with his wife's signature.
Colour shows how this judgement treated each authority
Santhu Mohideen Pillai Tharaganar ..vs.. Jamal Mohammad Jamaludin LabbaiReferred¶38
CDJ 1928 MHC 340
Rangaswami Reddi ..vs.. K. Doraiswami ReddiReferred¶42
CDJ 1957 MHC 095
Verco Private Ltd., Padi & Others Versus Newandram Naraindas & AnotherReferred¶55
CDJ 1972 MHC 324
John Thangadurai and eze ..vs.. Arul AzirReferred¶64
2012 (2) LW 521
Kaliana Gounder .vs. Palsu GounderReferred¶66
Kaliana Gounder .vs. Palsu Gounder (AIR 1970 SC 1942) · Who else cites this
NATHULAL .VS. GOMTIReferred¶68
NATHULAL .VS. GOMTI (AIR 1940 PC 160) · Who else cites this
Pachaiappa Chettiar ..vs.. Muthukrishna NaiduReferred¶71
2018 (4) CTC 190
Kalianna Gounder v. Palani GounderReferred¶76
Kalianna Gounder v. Palani Gounder 1970 (1) SCC 56 · Who else cites this
K.M. Basappa and Another v. Patel Marule GowdaReferred¶76
K.M. Basappa and Another v. Patel Marule Gowda 1970 (1) SCC 56 · Who else cites this
Allampatti Subba Reddy v. NeelapareddiReferred¶83
AIR 1966 AP 267 · Who else cites this
Suresh Kumar
1.Sivagami 2.Sundar Rajan 3.Hemalatha 4.Vanitha
G. Chandrasekhar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
