1967 (1) TMI 93 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the document in suit is a promissory note or an acknowledgment of liability with an agreement to pay.
2. Whether Ratan Lal and Rameshwar Dayal had the authority to execute the document on behalf of the defendants.
3. Whether the suit was barred by time.

Issue-wise Detailed Analysis:

1. Whether the document in suit is a promissory note or an acknowledgment of liability with an agreement to pay:

The primary issue in this appeal is to determine the nature of the document in question. The plaintiff's firm alleged that the document was an acknowledgment of liability with an agreement to pay, while the defendants contended that it was a promissory note, which was deficiently stamped and hence inadmissible in evidence. The trial court and the lower appellate court both concluded that the document was a promissory note, leading to the dismissal of the suit.

The High Court, however, disagreed with this conclusion. The court analyzed the document, noting that it was in the form of a letter and included detailed accounts of credit and debit. The relevant portion of the document stated, "35447/8/9 dene baqi rahe Pauh Sudi 12 sambat 2009," indicating an acknowledgment of the liability. The document also mentioned the installments and dates for payment, but there was no express promise to pay, which is a key characteristic of a promissory note.

The court referred to various precedents, including *Mohammad Akbar Khan v. Attar Singh AIR 1936 P.C. 171* and *Keshavji Thakershi v. Narshi Ramii AIR 1954 Sau 52*, to support the contention that the document lacked the negotiability feature of a promissory note. The court emphasized that the intention of the parties and the manner in which the document was executed indicated that it was an acknowledgment of liability with an agreement to pay, not a promissory note.

2. Whether Ratan Lal and Rameshwar Dayal had the authority to execute the document on behalf of the defendants:

This issue was not decided by the lower appellate court as it had already concluded that the document was a promissory note. The trial court had decided this issue in favor of the plaintiff, but since the High Court disagreed with the lower courts' views on the main point, the case was remanded for a decision on this issue by the lower appellate court.

3. Whether the suit was barred by time:

The defendants argued that the suit was barred by time if the document was considered a promissory note, as it could not be used as an acknowledgment to extend the limitation period. The High Court acknowledged this argument but found it moot since the document was held to be an acknowledgment of liability with an agreement to pay, not a promissory note. Thus, the limitation period would be calculated based on the acknowledgment, and the suit would not be barred by time.

Conclusion:

The High Court concluded that the document in question was an acknowledgment of liability with an agreement to pay, not a promissory note. Therefore, the judgments of the trial court and the lower appellate court were set aside. The case was remanded to the lower appellate court with directions to readmit the appeal and decide it based on the document being an acknowledgment of liability with an agreement to pay. The costs of the High Court were made easy, and the costs of the two lower courts were to abide by the result of the lower appellate court's decision.