1983 (7) TMI 332 - HC - Indian Laws

Summary

Issues Involved:
1. Did defendants 1 and 2 borrow Rs. 70,000 and execute a promissory note for the said sum?
2. Was the guarantee dated 1-2-1977 executed by the third defendant or was the blank form filled up by the plaintiff?
3. Is the suit barred by limitation?
4. To what relief is the plaintiff entitled?
5. Is the suit liable to be dismissed for reasons set out in the additional written statement?
6. Whether the suit promissory note is vitiated by material alteration?

Issue-wise Detailed Analysis:

1. Did defendants 1 and 2 borrow Rs. 70,000 and execute a promissory note for the said sum?
The plaintiff claims that defendants 1 and 2 executed a promissory note on 25-11-1976 for Rs. 70,000, agreeing to repay with interest at 24% per annum. However, the defendants contended they signed a blank promissory note and did not borrow any amount on that date. They argued that the plaintiff habitually took blank promissory notes from borrowers and that the amounts due under their dealings had been settled, but the notes were not returned.

2. Was the guarantee dated 1-2-1977 executed by the third defendant or was the blank form filled up by the plaintiff?
The plaintiff asserted that the third defendant, the wife of the first defendant, executed a letter of guarantee on 1-2-1977, acknowledging the liability under the promissory note. However, the defendants claimed that the letter of guarantee was signed on a blank paper and was filled up by the plaintiff.

3. Is the suit barred by limitation?
The defendants argued that the suit is barred by limitation. The plaintiff issued a notice of demand on 23-3-1979, and the suit was filed on 2-2-1980. The court needed to determine whether the suit was filed within the permissible time frame.

4. To what relief is the plaintiff entitled?
The plaintiff sought to recover Rs. 1,20,400 from the defendants based on the promissory note and the letter of guarantee. The court had to decide the validity of the promissory note and the guarantee to determine the relief.

5. Is the suit liable to be dismissed for reasons set out in the additional written statement?
The defendants contended that the promissory note was vitiated by material alteration and that the suit was not maintainable because it was filed on an incomplete promissory note. The court examined whether the plaintiff had the right to fill in the blanks after filing the suit.

6. Whether the suit promissory note is vitiated by material alteration?
The court analyzed Section 13 and Section 87 of the Negotiable Instruments Act, which define a negotiable instrument and address material alterations. The plaintiff relied on Section 20, which deals with inchoate stamped instruments, arguing that he had the authority to complete the note. However, the court concluded that the plaintiff did not exercise this authority within a reasonable time. The promissory note was not valid in law because it lacked the drawee's name and date at the time of filing the suit.

Conclusion:
The court found that the plaintiff did not fill in the blanks of the promissory note within a reasonable time and that the instrument was not valid in law. The subsequent filling of the blanks, even with court permission, amounted to a material alteration. The court also noted that the plaintiff, a professional money lender, had kept the blank instrument for several years, which was against public policy. Consequently, the suit was dismissed, and each party was directed to bear their own costs.