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TMI Blog1981 (3) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... the company in liquidation while it was carrying on business. The chit value was Rs. 2,500. Respondent No. 1 was the highest bidder at the auction held for chit group-DLN of the company (in liquidation). The auction was held on June 23, 1974. He received the prize amount on July 22, 1974, and on the latter date he executed a promissory note for Rs. 1,675 promising to repay the said amount together with interest at the rate of 18 per cent, per annum. Respondents Nos. 2 and 3 executed the pronote as sureties. After the company came to be wound up, the official liquidator issued notice of demand to the respondents for the payment of the balance due by the 1st respondent in respect of the aforementioned transaction he had with the company w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction the 1st respondent had with the company but have denied their liability jointly and severally to pay the sum demanded. It is, however, asserted in the statement of objections that the respondents had settled the debt due under the chit transaction of the 1st respondent as far back as December 2, 1975. 2nd respondent had paid totally Rs. 1,715 in respect of three accounts he had in pass books Nos. 1, 2 and 3. The statement of account of the 2nd respondent has been produced at annex. 1 to the objection statement. It is, however, asserted by the respondents that the managing director of the company (in liquidation) agreed with the 1st and the 2nd respondents in adjusting the amount in the account of the 2nd respondent to the extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 and his father as on that day owed Rs. 1,078.50 to the company. His father's account was on that day closed after adjusting the amounts due to respondent No. 2 and respondent No. 1 agreed to pay Rs. 1,078.80 to respondent No. 2. Exhibit R-1 is the receipt issued by the managing director of the company for Rs. 1,078.80. In cross-examination he has stated that Rs. 1,078.80 represented both the principal sum borrowed and the interest thereon. He did not remember how much his father owed to the company in January, 1975. He did not know the name of the managing director of the company. But the signature on Ex. R-1 is that of the managing director of the company. He denied knowledge as to whether a complaint to the police had been given about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the office of the company in his (R.W. 1) presence as well as in the presence of respondents Nos. 1 and 2. But this statement is totally uncorroborated. Respondents Nos. 1 and 2 have not examined themselves and no reason has been offered as to why they could not step into the witness box to speak to the events that occurred on December 2, 1975. Though it is claimed that the 2nd respondent's account was adjusted against the account of the 1st respondent; that 2nd respondent had three accounts with the company has not been proved by any documentary evidence such as the pass books mentioned in the objection statement. Nor have the respondents taken the precaution to summon the books of the company now in the possession of the official liquida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents' defence is a self-serving and concocted story and has placed reliance on two decisions of the Madras and Kerala High Courts in support of his contention. In the case of Alapati Venkala Krishnaiah v. Vemuri Manikyaraw, AIR 1948 Mad. 171, Rajamannar J. (as he then was) had occasion to consider the plea of discharge with reference to section 81 of the Negotiable Instruments Act. In that case, the suit was filed by the plaintiff on the basis of the pronote. The pronote was executed by defendant No. 1 therein in favour of defendant No. 2 and defendant No. 2 transferred the pronote to the plaintiff on March 27, 1944, for consideration. The trial court granted a decree in favour of the plaintiff against the transferor, defendant No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition came to be allowed holding that defendant No. 1 was liable to a holder in due course. Similar is the view taken by a learned single judge of the Kerala High Court in the case of K. K. Koran v. T. Tara Bai, AIR 1958 Ker. 124. The learned judge has explained the scope and the application of section 81 of the Negotiable Instruments Act, in the following terms (p. 124): "The normal rule is that the document on which the suit is based should be produced along with the plaint. The production of the basic document is thus insisted on to afford protection to the person liable under it against a similar claim in a subsequent suit brought by a party who might claim to have legally acquired the rights under the document and produce i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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