1976 (3) TMI 251 - HC - Indian Laws

Summary

Issues Involved:
1. Discharge of the promissory notes.
2. Authenticity and consideration of promissory notes dated 13-8-1966 and 16-8-1966.
3. Excessiveness of the interest claimed.
4. Liability of the second defendant under the letter of guarantee.
5. Material alterations in the promissory notes.
6. Filling of blanks in the promissory notes by the plaintiff.
7. Revocation of the continuing guarantee by the second defendant.

Detailed Analysis:

1. Discharge of the Promissory Notes:
The first defendant admitted liability under Exhibits A-1 and A-2 but denied executing Exhibits A-3 and A-4, claiming they were discharged. The trial court found the discharge plea untrue, and the first defendant did not press this contention on appeal. Consequently, the plaintiff was entitled to a decree based on Exhibits A-1 and A-2.

2. Authenticity and Consideration of Promissory Notes Dated 13-8-1966 and 16-8-1966:
The first defendant claimed that Exhibits A-3 and A-4 were materially altered and denied consideration. The court emphasized that material alteration requires proof that the instrument was not the contract intended by the parties. The defendants provided inconsistent versions, and no plea of material alteration was raised in initial notices. The court found no evidence of material alteration and held that Exhibits A-3 and A-4 were validly executed and supported by consideration.

3. Excessiveness of the Interest Claimed:
The issue of excessive interest was not seriously argued before the appellate court. The plaintiff was thus entitled to the balance of the principal and interest due under Exhibits A-1 and A-2 as determined by the trial court.

4. Liability of the Second Defendant Under the Letter of Guarantee:
The second defendant argued that Exhibit A-5 ceased to be operative after the family partition in 1964. The court examined Exhibit A-5 and concluded that it was a continuing guarantee, binding until revoked by a registered notice with acknowledgment, which was not done. The second defendant's obligation as a surety continued, and the court dismissed the argument that the guarantee was revoked orally or by implication.

5. Material Alterations in the Promissory Notes:
The court found no material alterations in Exhibits A-3 and A-4. The defendants failed to prove that the instruments were altered in a manner that would invalidate them. The instruments were scrutinized, and no evidence of alterations was found. The plea of material alteration was dismissed.

6. Filling of Blanks in the Promissory Notes by the Plaintiff:
The court agreed with the trial court that there were no blanks filled in by the plaintiff. The instruments were in the usual printed form, and any differences in the style of writing, such as the rate of interest, did not constitute material alterations. The first defendant's assertion of blanks being filled was not substantiated.

7. Revocation of the Continuing Guarantee by the Second Defendant:
The second defendant argued that the guarantee was revoked after the family partition. The court held that under Section 130 of the Indian Contract Act, a continuing guarantee can only be revoked by notice to the creditor. The specific method of revocation prescribed in Exhibit A-5 was not followed. The court found no evidence of the creditor being informed of the partition or any intention to revoke the guarantee. The second defendant's liability as a surety continued.

Separate Judgment on Instalment Decree:
In A.S. No. 779 of 1970, the court set aside the instalment decree allowing the defendants to pay in monthly instalments of Rs. 500 each, noting that no instalments had been paid since the decree. The court decreed the suit with costs in the usual manner.

Conclusion:
Appeal No. 520 of 1972 was dismissed with costs, and the appellants were ordered to pay the court fee due to the government. Appeal No. 779 of 1970 was allowed with costs, setting aside the instalment decree.

Order:
Appeal No. 779 of 1970 is allowed with costs. Appeal No. 520 of 1972 is dismissed with costs, and the appellants in Appeal No. 520 of 1972 will pay the court fee due to the government on the appeal memorandum.