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TMI Blog1972 (11) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... a larger Bench arose as a result of the view expressed by Gopal Rao Ekbote, J. ( as he then was ) in Mohd. Jamal Saheb v. Munnar Begum, MANU/AP/0086/1964MANU/AP/0086/1964 : AIR 1964 AP 188 , which does not accord with the ruling of the Full Bench of the Madras High Court in Perumal Chettiar v. Kamakshi Ammal, MANU/TN/0229/1938MANU/TN/0229/1938) ). The learned Judge, Gopal Rao Ekbote, held that the plaintiff can have his money back through the document is inadmissible in evidence because it is insufficiently stamped and that Section 91 of the Evidence Act is no bar to the plaintiff succeeding on a non-contractual basis, that is, in an action for money had and received. In so coming to the conclusion, the learned Judge seems to have felt that he is not bound by the decision of the Full Bench in MANU/TN/0229/1938MANU/TN/0229/1938 as two decisions decided in 1918 by the Privy Council ( John v. Dodwell and Co. Ltd. AIR 1918 PC 241and Juscurn Boid v. Prithichandlal, AIR 1918 PC 151 ) were not brought to the notice of the Full Bench . Having regard to the fact that the High Courts of Allahabad, Bombay and some other High Courts have taken a view different from that expressed by the Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not an antecedent debt, in respect of which a promissory note has been taken, because of the bar of Section 35 of the Stamp Act and Section 91 of the Evidence Act, no obligation under Section 70 of the Contract Act will arise under the theory of ' implied promise. ' 5. Mr. Venkata Reddy and Mr. M. Jagannadha Rao appearing for the respondent ( decree-holder ) contended that, even where lending of money and execution of the promissory note are contemporaneous and form part and parcel of the same transaction, the promissory thus taken operates only as a conditional discharge and not full or complete discharge of the loan and when the promissory note becomes in-admissible in evidence, the creditor will be entitled to fall back on the original demand. The learned counsel also, relying upon the language of Section 70 of the Contract Act, contended that the expression anything is of sufficient amplitude to bring within its ambit transactions of money and that the creditor will be entitled to recover on the principles of ' implied promise ' or ' money had and received '. In short the learned counsel contended that the view of the Full Bench of the Madras H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained on the principle of money had and received under Section 70 of the Contract Act; and (3) which say that, even where the bar of Section 35 of the Stamp Act and Section 91 of the Evidence Act is there provided the promissory note does not embody all the terms of the contract, the true nature of such transaction can be proved where the instrument is given as a collateral security or by way of conditional payment provided it is so alternatively pleaded in the plaint. In Perumal Chettiar's case. MANU/TN/0229/1938MANU/TN/0229/1938 it was the third view that was expressed by the Full Bench. We may now proceed to examine the conflicting views expressed by the High Courts in India. 8. The opinion of the Calcutta High Court, it may be said, has not been consistent. While some of the decisions adopt the strict rule of the bar of Section 91 of the Evidence Act as stated by Chief Justice Garth in Sheikh Khan, ILR(1881) Cal 256, the other decisions show a marked departure from the strict rule enunciated by Garth, C.J. which we will refer to presently. 9. The earliest of the cases is the case of Golap Chund Marwaree v. Thakurani Mohokoom Kooaree. ILR (1878) Cal 314, where it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chief Justice of the same Court in Pramatha Natha Sandal v. Dwarka Nath Dey. ILR (1896) Cal 851, Sir. Comer Petheram .C.J. interpreted what was held by Garth, C.J. as not in conflict with the view he was taking and after referring to the above passage from Garth. C.J.'s judgment observed (at page 853) But a reference to the earlier portion of the Judgment shows that such was not the meaning of the Chief Justice, and that when he spoke of a deposit he did not mean a loan as he then says where money is lent and a bill or note given for the loan which is not paid at maturity, the creditor may disregard the note and sue on the original consideration. This is in accordance with the case of ILR (1878) Cal 314. That opinion of Petheram. C.J., was based on what is stated in Farr v. Price, (1800) 1 East 55 = 102 ER 22 viz. That the existence of an unstamped promissory note does not debar the plaintiff from recovering on the original consideration if the pleadings are properly framed for that purpose. 11. In Indra Chandra v. Hiralal Rong. MANU/WB/0168/1935MANU/WB/0168/1935 and Mahatobuddin Mia v. Md, Nazir Joddar MANU/WB/0181/1935MANU/WB/0181/1935 R.C.Mitter. J., sitting s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same time took a hundi to secure its repayment. There was the admission of liability by the defendant and he had promised to pay. There was also the further fact that the hundi had been admitted in evidence, as no objection was taken as to the absence or deficiency in stamping. The learned Chief Justice, therefore, said that it is perfectly true that the terms of the contract contained in the hundi can, apart from the conditions which permit secondary evidence, only be proved by the hundi, but this does not prevent proof of the loan independently of the note. The learned Chief Justice relied upon the decision in Chenbasapa v. Lakshman Ramachandra, ILR (1894) Bom 369. Where the distinction between cases in which the suit is brought solely on the note or hundi and cases in which there is and can be a claim to recover the original loan has been acknowledged. It may be pointed out that the learned Chief Justice was not considering the question under what circumstances when an action fails on a promissory note executed contemporaneously with the borrowing of the money on account of the bar of Section 35 of the Stamp Act, it would not debar the plaintiff from resorting to the original co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -known case of (1800) 1 East 55 = 102 ER 22 in holding that even where the debt is inseparable from the promissory note, the debt could be proved notwithstanding the note is not admissible in evidence. The learned Judges in Banarsi Prasad v. Fazal Ahmad, MANU/UP/0133/1905MANU/UP/0133/1905 : ILR(1906) All 298, though purported to follow the case of ILR(1881) Cal 256 by saying that the law on the subject is clearly stated by Garth C. J., however swung to the opposite view by observing : It seems to us therefore that the Court of first instance ought not to have summarily dismissed the plaint, but ought to have given the plaintiff an opportunity of proving the consideration of the note if there was such consideration. In a later case viz., Baijnath Das v. Salig Ram, (1912) 16 Ind Cas 33 (All) the learned Judges, after referring to the bar of Section 91 of the Evidence Act, however, took the view that where a promissory note is taken in consideration of the money advanced and is held to be inadmissible in evidence, a suit filed on foot of such a note may be treated as a suit for money had and received if the pleadings are properly framed without treating it as such a suit. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to determine whether a plaintiff can maintain a claim against the debtor founded upon an obligation independent of a promissory note. Although he was of the view that though the promissory note was in a form forbidden by law, it was admissible in evidence under Section 91 of the Evidence Act and the answer of two learned Judges. Boy and Kendall, JJ. Viz. The plaintiff could sue of the basis of any obligation whether antecedent to or arising simultaneously with the execution of the promissory note was not called for. The view of the Full Bench as expressed by Mukherji J., that verbal negotiations leading upto an express contract in writing cannot be set up as an independent contract and are not admissible in evidence as provided by Section 91 and that where there is an express promise will not be inferred, was overruled by a Full Bench of five Judges in MANU/UP/0007/1943MANU/UP/0007/1943( FB ). 18. A Full Bench of the Oudh High Court consisting of Wazir Hasan, C. J. Srivastava and Raza, JJ. However, took a different view from the one expressed in MANU/UP/0289/1930MANU/UP/0289/1930( FB ) holding that, in spite of the provisions of Section 91, it is open to the party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, J., expressed total disagreement with the view of the Full Bench of the Madras High Court and concurred with the statement of law by Sir Arthur Page, C. J. as contained in proposition No. 3 of his judgment in Maung Chit v. Roshan and Co., AIR 1934 Rang 339= ILR Rang 500 ( FB ). He, however, found himself unable to agree with the 4th and 6th propositions of Sir Arthur Page C. J. ( which were endorsed by the Full Bench of the Madras High Court ) on the ground that he ( Page C. J. ) did not correctly state the law. To quote the learned Judge, Dar J. In my opinion the law on the subject may thus be stated. When a promissory note was given in consideration of a sum of money it is a question of fact in each case whether the sum of money was given as a loan or not as a loan; in absence of all evidence the presumption is that it was given by way of a loan, and there is a further presumption that the promissory note was given in conditional payment of the loan. If by reason of the defect of stamp the promissory note is held inadmissible in evidence, it is open to the plaintiff to prove the loan and all its terms and to recover the loan irrespective and independently of the promiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sake of determining whether it contained all the terms of the contract, after the document is held inadmissible in evidence for want of proper stamp under Section 35 of the Stamp Act. Mathur, J., in so coming to the conclusion sought support from what Sir Asutosh Mookerjee said in Ram Bahadur v. Dasuri Ram, ( 1913 ) 17 CLJ 399. The learned vakil for the respondent has ingeniously suggested that as the instrument itself must be held inadmissible, there is no proof that the terms of the contract for payment of interest were reduced to writing. This argument is obviously fallacious. The written instrument may be looked at for the purpose of showing that the terms of the contract for payment of interest had been reduced to writing within the meaning of Section 91. Evidence Act, or oral evidence may be given to show that the contract, as a matter of fact, was reduced to writing. The learned Judge also drew support, quoting, Lord Atkin from his judgment in Mohd. Akbar Khan v. Attar Singh, 1936 ALJ 986 = AIR 1936 PC 171. The Judicial Committee there held that the document which was contended to be a promissory note was not a promissory note but was merely a receipt containi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oof of the debt other than by production of the document. In Patna, as observed by Varadachariar, J., in the Full Bench decision, the question can scarcely be regarded as settled ; ( Dhaneshwar Sahu v. Ramrup Gir, MANU/BH/0007/1928MANU/BH/0007/1928) where Macpherson, J., concerned only on the ground of stare decisis. 21. A Division Bench of the Patna High Court in Sarajoo Prasad v. Rampawari Devi. MANU/BH/0126/1950MANU/BH/0126/1950 : AIR 1950 Pat 493 considered the question whether every loan carried with it a contract to repay and if so, it was open to the plaintiff to bring a suit on the original consideration of the handnote. That question was answered having regard to the facts of that case that the handnote was taken as a collateral security for the debt, for it was alleged in the plaint that, as collateral security for the two loans, plaintiff 2, defendants 1 and 2 and father of defendant 3 executed the handnote on 30th Magh 1342 in favour of the persons already named. In paragraph 15 of the plaint it was also said that the cause of action arose on 15th January 1935, the date of the loans and the date of the handnote. On those facts, the learned Judges held that, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote not being a final accord or discharge of the date, so on and so forth. 24. The decision of the Mysore High Court in K. Anantharajaiah v. Shivaramaiah MANU/KA/0071/1968MANU/KA/0071/1968 does not render any assistance to the respondents. It was held by Gopivallabha Iyengar, J. That where a creditor lent a loan and had taken a receipt and a promissory note to evidence it, his claim for recovery of loan without producing the promissory note is not maintainable. But it is however pointed out by him, that, if the cause of action is antecedent to the making of promissory note, then there is nothing to prevent the creditor from maintaining a suit on the original cause of action founded on the loan. 25. Now it may be convenient to notice the Full Bench decision of the Rangoon High Court in AIR 1934 Rang 389 : ILR 12 Rang 500 (FB) which was approved by the Full Bench of the Madras High Court as regards the statement of law except proposition No. 3 formulated by Sir Arthur Page C.J. That was a case where the creditor had lent two sums of ₹ 300/- and ₹ 100/- to the debtor and on each occasion when the loan was made, a promissory note was executed by the debtor. A suit wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Esher M.R. In Re Romer and Haslam, (1893) 2 QB 286 at p. 296 and Bowen. L.J. (Ibid. P. 300):Farr v. Price (1800) 1 East 55 = (102 ER 22) and noticing English and Indian cases the learned Chief Justice proceeded to say: 4. If a promissory note or other negotiable instrument is given by the borrower to the lender and the negotiable instrument is itself the consideration for the loan, or if the promissory note or other negotiable instrument is accepted as an accord and satisfaction of the original debt, the lender is restricted to his rights under the negotiable instrument, by which he must stand or fall in the one case the note or bill is itself the original consideration and in the other the original debt has been liquidated by the acceptance of the negotiable instrument. 5. If it is agreed between the parties that the promissory note or other negotiable instrument shall be taken merely as collateral security for the repayment of the loan the lender is entitled to sue upon the original consideration independently of the security, and without regard to any rights that he may possess under the negotiable instrument, 6. Further, if the terms of the agreement, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumption does not automatically arise and it depends upon the intention of the parties and the circumstances under which the instrument was executed and whether the promissory note contains all the terms of the contract or not. 27. Before considering the correctness or otherwise of what was enunciated by the Full Bench, it may be necessary to notice what constitutes a conditional payment. Das, J. ( as he then was ) in Commr. Of Income Tax, Bombay v. Ogale Glass Works Ltd., MANU/SC/0087/1954MANU/SC/0087/1954 : [1954] 25 ITR 259(SC) explained that when it is said that a payment be negotiable instrument is a conditional payment what is meant is that such payment is subject to a condition subsequent that if the negotiable instrument is dishonoured on presentation the creditor may consider it as waste paper and resort to his original demand. This distinction between a collateral security and conditional payment is this. In the case of a collateral security, the cause of action is not suspended, but whereas conditional payment suspends the cause of action. 28. In Halsbury's Laws of England, Third Edition, Vol. 8 at p. 212, it is said that where a negotiable instrum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld entirely defeat the provisions of Section 91 of the Evidence Act. 30. Mr. C. N. Babu, in the course of his arguments, sought to point out that the Full Bench departed from the strict rule of Section 91 operating as a bar stated in Pothireddy's case, ILR (1884)Mad 94, when the Full Bench said that even in the case of a contemporaneous transaction, if it could be shown that all the terms of the contract are not incorporated in the promissory note and a plea is found in the plaint to that effect so as to show that the promissory note was executed as a collateral security or conditional payment. Section 891 will not operate as a bar. The Full Bench no doubt did not make any difference between the case of an antecedent debt or a contemporaneous one in this regard but we see no conflict between Pothi Reddy's case, (ILR (1885) Mad 94 and the Full Bench case, for Collins, C. J. and Parker, J., were never considering the question, if in certain given circumstances all the terms of the contract are not embodied in the promissory note. The Full Bench affirmed the view that, if the promissory note written in such a way as to leave no room to doubt the intention of the parties, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t principle enunciated by him no longer holds the field even in the Calcutta High Court. The later decisions of the various High Courts would show the swing that, where all the terms are not embodied in the contract Section 91 is no bar to establish the true nature of the transaction viz., that was given as collateral security or by way of conditional payment. The diametrically opposite view , to what Couch, C. J., expressed as stated by the Full Bench of the Allahabad High Court in MANU/UP/0007/1943MANU/UP/0007/1943 is that, in every case, where a promissory note is executed simultaneously with the borrowing of the money, there is always a presumption that the promissory note was given by way of a conditional payment or as a collateral security and that the bar of Section 35 of the Stamp Act as to its inadmissibility owing to the defect in stamping or the bar of Section 91 of the Evidence Act will not preclude the plaintiff from falling back on the original demand. This view is based on the assumption that every loan contains an implied promise to repay the money and when the promissory note becomes inadmissible in evidence under Section 35 of the Stamp Act, the plaintiff has a ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te was given. The facts of that case show that it was a case of an antecedent debt and therefore it was held that the plaintiff may prove his original debt. 35. In Re Romer Haslam, ( 1893 ) 2 QB 286 was also a case of a pre-existing debt for what has been held in that case that the handing by a client to his solicitor of a negotiable security for the amount of his bill of costs, coupled with the giving of a receipt by a solicitor in which it is expressed to be taken in settlement of his bill does not amount to repayment in the event of the negotiable security being dishonoured, unless there be proof ( the onus of which lies on the solicitor ) that such was at the time the intention of the parties, and that the client was aware of the effect of the transaction upon his right to tax the bill of costs. The facts of that case established that series of bills were sent by the solicitors to the clients and they were accompanied by cash account in which all payments on account were credited and showed a balance due to the solicitors. 36. In Halsbury's Laws of England, Third Edition, Vol. 8 at page 213, it is stated having regard to what is held in ( 1893 ) 2 QB 286 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving and taking a note or bill is that the debt was conditionally paid. It was also held on the evidence that the plaintiff had accepted the hundis unconditionally and was, in consequence, precluded from suing on original debt; in other words, the acceptance of the hundis was in complete discharge of the debt and not was conditional discharge and therefore, the plaintiff, having accepted the hundis unconditionally, cannot fall back on the original debt. 39. What Benson and Sundaram Aiyar, JJ., said in Palaniappa Chetty v. Arunachellam Chetty, MANU/TN/0095/1911MANU/TN/0095/1911 is that the general presumption is that a Bill of exchange or hundi given for a debt operates only as a conditional discharge of the debt : that the execution of a formal for the amount covered by the bill of exchange or hundi is not sufficient to rebut the presumption of conditional discharge ; and that an endorsement of receipt on the promissory note is on no better footing. We wish to observe that what is said of a bill of exchange or hundi cannot be made applicable to a promissory note, for a cheque, bill or hundi does not embody a promise to pay by the maker, but only a direction to another person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by Byles in his book on Bills of Exchange ( Twenty-second Edition ) at page 392 : The word ' payment ' is not always used in its strict legal sense. A plea of payment by bill means in law that the bill has been taken in satisfaction; but in the popular sense payment by bill may merely mean that a bill has been given for and on account of the debt. Whether a bill is taken in complete satisfaction or merely as conditional payment, is a question depending on the facts of each case, the onus lying on the party alleging that the bill operated as a complete satisfaction of the original debt, the presumption of fact being the other way. 41. Leach, C. J. and Varadachari, J., after referring to the previous cases of the court ( it is not necessary to notice all those cases here ) as also the English decisions on the point because some of the High Courts followed the English rule of ' best evidence ', held that the English authorities which were cited before them and the Indian decisions, which followed the English authorities, do not really bear on the objection arising under Section 91 of the Evidence Act. The reason, as rightly stated by the learned Chief Jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 44. AIR 1918 PC 151, was a case where a taluk was put up for auction for arrears of rent at the instance of the Zamindar. The purchaser paid the entire amount of the purchase money and also obtained a sale certificate of payment. The purchaser received an order for possession but a third party being desirous of contesting the right of the Zamindar to make the sale, sued for reversal of the sale. A decree for reversal of the sale was passed and the suit was, therefore, brought by the purchaser to recover from the Zamindar the total amount of purchase money including interest. The Court of first instance dismissed the suit as barred by limitation and that decree was affirmed by the High Court on appeal and that decision was the subject-matter of appeal before the Judicial Committee. They were construing Section 14 of the Bengal Patni Regulation 1819, which authorises a suit against the Zamindar for the reversal of the sale under the Regulation and then provides that the purchaser shall be made a party in such suits and upon decree passing for reversal of the sale the court shall be careful to indemnify him against all loss at the charge of the Zamindar at whose suit the sale m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould any obligation based on its contract be imputed to the person whose tort was waived inconsistent with the actual contract which he, in point of fact, made with the intermediary ? point was one which their Lordships were reluctant to deal with unnecessarily in an appeal from a Court which was not confined to administering the common law of England and which could be disposed of on the other principle referred to. It is, therefore, clear that their Lordships did not choose to apply the common law of England to Ceylon, which had its own laws. This decision can obviously have no application where an action is laid on an improperly-stamped promissory note, the effect of which is governed by statutory provisions. 46. AIR 1918 PC 146, which was relied upon in MANU/AP/0086/1964MANU/AP/0086/1964 : AIR 1964 AP 188 , is a case where it was held that it is contrary to established rules to contend that in an action on a bill of exchange or a promissory note against a person whose name properly appears as party to the instrument it is open either by way of claim or defence to show that the signatory was in reality acting for an undisclosed principal. The Judicial Committee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f action could be based on the doctrine of money and received , for the learned Judge, Gopal Rao Ekbote, J. To assume that the opinion of the Full Bench would have been different had they looked at those two decisions in AIR 1918 PC 151 and AIR 1918 PC 241. 48. Now it remains to be considered how far Section 70 of the Contract Act can be invoked for the purpose of recovering the loan on the theory of ' implied promise to pay ' or ' money had and received ' . Section 70 of the Contract Act is in these terms :-- Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered. The learned Counsel, Mr. Jagannadha Rao, seeks to construe the words does anything or delivers anything as to include payment of money under promissory note and in support thereof, relied upon three decisions of the Supreme Court in State of West Bengal v. B. K. Mondal and Sons, MANU/SC/0114/1961MANU/SC/0114/1961 : AIR 1962 SC 779 ; New Marine Coa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ane therefore observed, It appears to their Lordships that the special account was opened solely for the purposes of the scheme, and that when the action of the Government in 1910 altered its conditions, the leaders in London were entitled to claim from the bank at its head office in Montreal the money which they had advanced solely for a purpose which had ceased to exist. Their right was a civil right outside the province and the Legislature of the province could not legislate validly in derogation of that right. The statute was held to be beyond the powers of the Legislature of Alberta, inasmuch as what was sought to be enacted was neither confined to property and civil rights within the province nor directed solely to matters of merely local or private nature within it. In so holding Viscount Haldane extended the principle of English common law as to apply to cases of money transactions on the ground that, when money has been received by one person which, in justice and equity, belongs to another, under circumstances which render the receipt of it a receipt by the defendant to the use of the plaintiff, the latter may recover as for money had and received to his use. In stretch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s obliged by the ties of the natural justice and equity to refund the money. Lord Sumner, in 1914 AC 398 commented on what Lord Mansfield said in these terms ( at pp. 455, 456 ) :-- I think it is evident that Lord Mansfield did not conceive himself to be deciding that this action was one in which the Courts of common law administered an equity in the sense in which it was understood in the Court of Chancery and the cases actually decided show that the description of the action as being founded in the aequum et bonum is very far from being precise. Even the decision in ( 1760 ) 97 ER 676 which has since been dissented from for sometime unsettled the law ( see Smith's Leading Cases, Notes to Marriot v. Hampton, ( 1797 ) 7 TR 269 = 2 Sm LC ( 11th Ed. ) 421) and this last mentioned case is one which illustrates the proposition that money is not thus recoverable in all cases where it is unconscientious for the defendant to retain it, for no one could doubt that Hampton's retention of the money in that case was very like sharp practice............. There is now no ground left for suggesting as a recognizable equity the right to recover money in personam mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easonable, having regard to the relationship of the parties. Now what is 'just and reasonable' except 'natural justice' in another guise? But I wish to add that (as I have tried to show elsewhere) this fiction of implied contract is really unnecessary in the law of quasi-contract at the present day. It did good service in the development of that department of the English system but at its best it was quite in adequate to explain intelligibly many of the decisions on quasi-contract and on the scope of elegantia juris we should be well rid of it nowadays. In 1914 AC 398 it led to this remarkable result . The Court started to search for a non-existent contract and abandoned the chase because even if it had found one, the contract would have been illegal. This remains one of a recent book by a famous mathematician intended for popular reading in which , in explaining the theory of relativity he first urged the uninstructed public to get into their heads the square root of -1 and then frankly admitted that no such quantity exist. 54. Mr. Winsfield thus ridiculed the doctrines propounded by the English Courts, the latest of them being the principle of ' just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of quasi-contractual liability, the nature of a quasi-contract is stated in Chapter XXI of Anson's Law of Contract, at page 589 in these words : Circumstances must occur under any system of law in which it becomes necessary to hold one person to be accountable to another, without any agreement on the part of the former to be so accountable on the ground that otherwise he would be retaining money or some other benefit which has come into his hands to which the law regards the other person as better entitled, or on the ground that without such accountability the other would unjustly suffer loss. The law of quasi-contract exists to prove remedies in circumstances of this kind. The three common law actions of a quasi-contractual nature as we get from page 590 of the same Volume are : (1) for money paid by the plaintiff to the defendant's use ; (2) for money had and received by the defendant to the plaintiff's use and (3) quantum meruit. It is under the first two heads that Mr. Jagannadha Rao sought to put his case as, according to him. Section 70 incorporates what is a quasi-contract in the English Common Law. 56. The question of quasi-contract or implied promise to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptance of a thing and there was no conflict between Section 70 of the Contract Act and Section 175(3) of the Government of India Act. In upholding the claim for compensation, Gajandragadkar, J., ( as he then was ) observed :-- Where a claim for compensation is made by one person against another under Section 70, it is not on the basis of any subsisting contract between the parties ; it is on the basis of the fact that something was done by the party for another and the said work so done has been voluntarily accepted by the other party. In regard to the claim made against the Government of a State under a Section 70 it may be that in many cases the work done or the goods delivered are the result of a request made by some officer or other on behalf of the said Government. In such a case, the request may be ineffective or invalid for the reason that the officer making the request was not authorised under Section 175(3) of the Government of India Act, or if the said officer was authorised to make the said request the request becomes inoperative because it was not followed up by a contract executed in the manner prescribed by Section 175(3) of the Government of India Act. In eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiff to recover the money lent under the note under the provisions of section 70. As the expression anything delivered, according to the learned counsel, is of wide import or amplitude as to take within its ambit or range money given under an invalid promissory note. That was a case where the appellant had purchased a right to pluck, collect and remove the forest produce. Out of the forest produce only the tendu leaves crop was allowed to be enjoyed by the appellant on his depositing a sum ₹ 3,000 in the Government Treasury. The deposit was made by the appellant to save the tendu leaves crop from being sold to others by the Government. The case of the appellant was that he was entitled to the refund of the amount, as the right to collect tendu leaves had already been purchased by him. From the facts it is clear that that was a case of deposit of money by way of security, so that the tendu leaves crop may not be sold to others. The deposit of money as a security cannot be equated to money lent under a promissory note. For there is no element of lending when the money is deposited into the Treasury in terms of a condition imposed by the Government. There, there is no borrow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an instrument chargeable with a duty not exceeding ten naya paise only, or a bill of exchange of promissory note, shall. Subject to all just exceptions be admitted in evidence on payment of the duty with which the same is chargeable, or. In the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees of when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion. It is well settled that a promissory note not duly stamped cannot be used for any purpose whatsoever and it is not one of those documents which could be received in evidence on payment of deficit duty and penalty. 59. The expression for any purpose occurring in Section 35 was construed by the Madras High Court as early as in 1907 in Thaji Beebi V. Tirumalaiappa, (1907) 17 MLJ 308 and by the Allahabad High Court in Mt. Bibbo v. Gokaran Singh. MANU/UP/0038/1936MANU/UP/0038/1936 and later by the Privy council in Ram Rattan v. Parmanand. MANU/PR/0046/1945MANU/PR/0046/1945, and by this Court in Sanjeeva Reddy v. Johanputra Reddy, MANU/AP/0060/1972MANU/AP/0060/1972 : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought to be recovered on the basis of the contract put in writing viz., the promissory note, which cannot at all be received in evidence and looked into for any purpose whatsoever even if it be for a collateral purpose ( see MANU/PR/0046/1945MANU/PR/0046/1945 ). 61. We may now read Section 91 of the Evidence Act to the extent material for our purpose : When the terms of a contract, or of a grant or of any other disposition of property, have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter, except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained. Illustration (b) : If a contract is contained in a bill of exchange, the bill of exchange must be proved. It is cardinal and well established principle of the law of evidence that where written contracts exist they shall be produced as being the best evidence of their contents. It is an inflexible rule that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in V. G. Rao v. Andhra Bank, MANU/SC/0602/1971MANU/SC/0602/1971 : AIR 1971 SC 1613 . Referring to Ex. A-6 a document in that case, Hegde, J., observed : If that document is considered as a contract of mortgage between the Bank and the depositors, the same having not been registered, it is inadmissible in evidence. If on the other hand that document is considered as a mere memorandum evidencing the deposit of title deeds in pursuance of an earlier contract then the correctness of the recitals therein can be gone into without being inhibited by Sections 91 and 91 of the Evidence Act. 63. In K. Bhavanarayana v. S. Venkataratnam, MANU/AP/0080/1971MANU/AP/0080/1971 : AIR 1971 AP 359 a Division Bench of this Court, to which one of us ( Obul Reddi, J. ) was a party, dealing with the admissibility of a document. Ex. A-7 evidencing the deposit of title deeds, observed : that if a document of this nature is not registered as provided under Section 49 of the Indian Registration Act, it cannot be used as evidence at all and that the transaction cannot be proved by oral evidence either, in view of what is provided under Section 91 of the Evidence Act. 64. It is not necessary to mult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not embodied in the promissory note. In that case, it cannot be said that the plaintiff is attempting to nullify the provisions of S. 91 or by-passing or circumventing those provisions, for then his action is not on foot of the promissory note, but on the basis of the alternative cause of action shown in the plaint viz., that the promissory note was given by the debtor as a collateral security or conditional payment and on the basis of the alternative cause of action pleaded by him he would be entitled to let in other evidence to prove his claim. The bar of Section 91 therefore operates in such a case only to the extent of the terms of the contract embodied in the promissory note, but not to the terms of the contract which are not evidenced by the promissory note. In other words, the promissory note, which cannot be used for any other purpose whatsoever on account of the bar of Section 35 of the Stamp Act, becomes a ' worthless piece of paper ' in which event Section 91 will not come in the way, as the plea of conditional discharge or collateral security is not founded on the terms of the promissory note, but on the terms of the contract which do not find a place in the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s debt not on the foot of a promissory note but on the basis of the personal law, why should not the debt be recovered from the promisor himself de hors or independently of the promissory not. It should be remembered that, if the action against a Hindu father, the executant of the promissory note, fails on account of the bar of Section 35 of the Stamp Act and Section 91 of the Evidence Act then there is no question of proceeding against the sons of recovery of the debt invoking the personal law. The liability of the sons to pay the father's debt arises not because the promissory note is duly stamped but on account of the personal law in respect of such a debt contracted by a Hindu father, so long as that debt is not tainted with immorality or vice. If this is borne in mind, there is no question of recovering the money lent under an insufficiently stamped promissory note, except in the manner and circumstances already made clear by us agreeing with the view of the Madras Full Bench. 68. For the reasons recorded by us. We find no conflict between Perumal Chettiar's case ILR (1938) Mad 933 : (MANU/TN/0229/1938MANU/TN/0229/1938 : AIR 1938 Mad 785 (FB) and Pothi Reddy's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dred years, the Courts in India have been struggling with the question whether a plaintiff is without any remedy if a promissory note executed in his favour is not stamped or insufficiently stamped and is in admissible in evidence or whether he is entitled to sue on the debt or on the consideration. Different views have been expressed from time to time expressing different shades of opinion. A mass of authorities representing the views of the High Courts from Jammu Kashmir in the North to Kerala in the South have been placed before us. Sitting as we are in a Full Bench of seven Judges, it is not necessary for us to consider in detail all these decisions as none of these decisions are binding upon us. Of course, we have derived considerable light from the reasoning contained in some of those decisions and we are indebted to the advocates on both sides for the able manner in which their respective cases were presented. As the decisions have been discussed in detail in the judgments of my learned brothers Obul Reddi and Venkataramasastry, JJ. I have considered the matter mainly in the light of first principles. 72. The three provisions of law which have to be considered in dealin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory note, it is seen that if the promissory note contains the terms of the contract between the parties, then proof of such terms is to be given only by the document itself and no evidence except the document shall be given in proof of the terms. But in this case as the promissory note is unstamped or insufficiently stamped, it shall not be admitted in evidence for any purpose, nor shall it be acted upon. The combined effect of S. 91 of the Evidence Act and Section 35 of the Stamp Act would therefore be, in the case of unstamped or insufficiently stamped promissory note which contains the terms of the contract, that the promissory note is inadmissible for any purpose and no other proof of the terms of the contract is permissible, except the document, with the result that the plaintiff's suit in such a case will have to be dismissed. 75. The question therefore, in every suit for the recovery of an amount for which a promissory note is executed resolves itself into this viz., whether the terms of the contract have been reduced to the form of a document, namely, the promissory note, or in other words whether the promissory note contains the terms of the contract. All that is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods purchased by him; or the promisor might have borrowed certain sum of money even without a document and later on at the instance of the latter may execute a promissory note for the amount borrowed. (b) A promissory note may be executed simultaneously with the loan advanced or the debt incurred. In this connection the expression ' simultaneously ' is used in the sense that the execution of the promissory note or the incurring of the debt from part of one and the same transaction . It is possible that they may be separated in point of time, for instance, the amount may be borrowed in the morning and the promissory note executed in the evening, but the true position is that they form part of the same transaction, the mere fact that they are separated by some interval of time would not really make a difference. 77. In cases coming under (a) it may be the intention of the parties that the previous debt is discharged by the execution of the promissory note and the promissory note alone should hence-forward be treated as constituting the contract between the parties. In other words, there is accord and satisfaction of the debt and thenceforward the liability based u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to be a conditional payment or by way of collateral security and that has to be decided with reference to the evidence in each case. 80. It was sought to be argued by Sri M. Jagannadha Rao that in every case of a promissory note there is always an implied promise to pay, apart from what is contained in the promissory note and therefore, it must be taken that a promissory note must always be regarded as conditional payment or executed by way of collateral security. At any rate it was contended that there is a presumption that the promissory note was taken by way of conditional payment or by way of collateral security and unless that presumption is rebutted by evidence the plaintiff would be entitled to prove the contract by evidence other than the promissory note. We are not inclined to accept the argument. On a review of all the authorities referred to in the judgments of Obul Reddi and Sastry, JJ., it would appear that there is no presumption either way and in each case it has to be considered on the evidence on record whether the promissory note was executed only by way of conditional payment or by way of collateral security or whether it embodies all the terms of the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract the true nature of the transaction can be proved. I do not think there is any warrant for restricting the right of the plaintiff to fall back on the original debt only in such cases. The last part of the judgment of Leach, C. J. Also makes this clear, wherein it is stated The learned trial Judge did not consider the question whether the promissory note embodied the whole of the terms of the contract between the parties. The case should therefore be remanded to the trial court for further consideration and decision in the light of this judgment. While I agree with the conclusions of the Full Bench of the Madras High Court in MANU/TN/0229/1938MANU/TN/0229/1938 (FB ) (Supra) on this part of the case. I would like to make it clear that my understanding of the decision is that the plaintiff has a right to fall back on the original consideration in all cases where the promissory note does not contain all the terms of the contract and is not restricted merely to a case where the promissory note is executed by way of conditional payment or by way of collateral security. 82. Another question which has crept up during the course of the argument is whether the promissor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action brought upon the hundies themselves, the sole question for decision was whether upon the form of the hundi the first respondent was properly included as a defendant to the suit and proceeded to consider that question. This decision cannot be taken as an authority for the proposition that in every case of a hundi or negotiable instrument a suit can be filed on the original consideration. That would depend upon the terms of the hundi and on the question whether it contained all the terms of the contract or not, as has been pointed out earlier. 84. Considerable arguments were advanced on the second question as to whether the plaintiff would in any event be entitled to recover the amount under the provisions of Section 70 of the Contract Act or under the theory of money had and received. 85. In MANU/SC/0114/1961MANU/SC/0114/1961 : AIR 1962 SC 779 , it was observed, quoting the judgment of the Privy Council in Ramanandi Kuer v. Kaalawati Kuer, 55 Ind App 18= ( AIR 1928 PC 2 ) that where there is a positive enactment of the Indian Legislature the proper course is to examine the language of that statute and to ascertain its proper meaning uninfluenced by any consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the original consideration or on the footing that the defendant had received the benefit or derived advantage. 88. I must confess that I felt considerable difficulty in arriving at the above conclusion in view of certain decisions of the Supreme Court which were relied on this connection. In MANU/SC/0114/1961MANU/SC/0114/1961 : AIR 1962 SC 779 ( Supra ) the Supreme Court had to consider a case where a contract was void by reason of its not being in conformity with Section 175 (3)of the Government of India Act . But the party to the contract had done some works and one of the questions was whether if the contract was invalid his claim for compensation for the work done. Fell under Section 70 of the Contract Act. The Supreme Court held that Section 70 was applicable to the facts of that case. One of the contentions urged was that the recognition of the respondent's claim for compensation virtually permits the circumvention of the mandatory provisions of Sections 175 (3)of the Government of India Act. Because the work done was no more than the performance of the contract, which was contrary to the said provisions. If a decree was passed for the compensation it would in sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dachariar H. Only and cannot in any sense be regarded as the view of the Full Bench. There is no reference to S.70 of the Contract Act in the decision of Leach, C. J. No authority is cited by Varadachari, J., in support of the proposition that the expression thing delivered would only mean in specie and lending money to the defendant cannot be described as something done for the defendant. On the other hand. In MANU/SC/0009/1968MANU/SC/0009/1968 : [1968] 3 SCR 214 of the Contract Act was made applicable to a case where an amount was paid in pursuance of a contract and the contract was ultimately found unenforceable as it was contrary to Sec. 175 of the Government of India Act. It was held that the plaintiff would be entitled to a refund of the amount though in the particular case they held that he was not entitled to such refund having regard to the evidence in that case. The expression thing: used in Sec. 70 is of general import and I am unable to see any valid reason why it should not take within its purview money also. 90. It remains only to refer to the decision in MANU/AP/0086/1964MANU/AP/0086/1964 : AIR 1964 AP 188 . In which Gopal Rao Ekbote. J. (As he then was)ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de of both sides they ought to deal with the face on the assumption that the suit would come within Art 97 of the Limitation Act. In this case also. No light is thrown on the question for consideration. I do not think that a reference to the above decisions of the Privy Council would have affected the result of the decision of the Full Bench in MANU/TN/0229/1938MANU/TN/0229/1938 : AIR 1938 Mad 785 (FB) supra. 93. In the result the first question is answered by saying that the plaintiff would be entitled to sue on the original consideration if the promissory note does not contain all the terms of the contract. The plaintiff has to allege and prove that all the terms of the contract are not contained in the promissory note. While agree with the majority view that the decision of the Full Bench in MANU/TN/0229/1938MANU/TN/0229/1938 : AIR 1938 Mad 785 (Supra) is correct I am not able to share their view as to the interpretation and scope of that judgment. 94. The plaintiff will not be entitled to claim compensation under Section 70 of the Contract Act if the promissory note is inadmissible in evidence under section 35 of the stamp Act. Here again I am in agreement with the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained therein cannot be relied on for any purpose, as the promissory note is defective as it is inadequately stamped and is inadmissible in evidence. The term ' any purpose' excludes even a collateral purpose and evidence aliunde has to be let in regarding the prior debt and the understanding or agreement relating to the promissory note being only a collateral security or a conditional payment. 97. What we are concerned with is the third category of promissory notes. Where the lending is under a promissory note. Where the lending and the note form part and parcel of the same transaction and the entire contract is contained wholly in the promissory note. In such a case apart form the promissory note and the terms contained therein, there is no other transaction to evidence the debt and other transaction cannot be proved by reason of the provisions of Section 35 of the Stamp Act and Section 91 of the Evidence Act., the cause of action disappears because they are so inextricably interwined as the substance and its shadow. If the shadow is to be eliminated, the substance has to disappear. There is no factum of loan to be proved independent of the one that arises under the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote is contemporaneous with the borrowing cannot exclude the possibility of the instrument having been given as collateral security or by way of conditional payment. Whether a suit lies on the debt apart from the instrument therefore depends on the circumstances under which the instrument was executed . 99. The Court has necessarily to look into the instrument first to find out whether it constitutes a promissory note as per the provisions of Section 4 of the Negotiable Instruments Act and then find out whether it is properly stamped, to see whether the provisions of Section 35 of the Stamp Act are attracted. If the latter provisions are attracted, the other occasion for the Court to look into it is when oral evidence is sought to be let in to find out whether the instrument contains any of the terms with regard to which such oral evidence is adduced to exclude it if it offends the provisions of Section 91 of the Evidence Act. These are the two occasions when the Court has to took into the instrument and they are purely procedural. 100. If the promissory not is inadmissible under Section 35 of the Stamp Act and the terms cannot be proved by other evidence as per the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it will be unenforceable but only to establish the agreement and enable the party to sue on the original consideration. 103. With the above observations, I agree with the Judgment of my learned brother Obul Reddi. J. That the judgment of the Full Bench in MANU/TN/0229/1938MANU/TN/0229/1938) : lays down the correct law and that no claim can also be based under Section 70 of the Contract Act if the instrument on which a claim is based is hit by the provisions of Section 35 of the Stamp Act and Section 91 of the Evidence Act. G. Venkatarama Sastri, J. 104 . I agree with the judgment just delivered by my learned brother Obul Reddi. J on behalf of the Bench. But having regard to the importance of the question and the divergent views expressed by the several High Court in India I propose to add my own reasons : 105. Following is the question referred to this Full Bench :- Whether a plaintiff can lay action for recovery of the amount advanced by him basing on the original cause of action when the Negotiable Instrument evidencing the transaction is inadmissible in evidence under Section 35 of the Stamp Act. 106. A negotiable instrument, according to Section 13 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso to Section 49 of the Registration Act makes an unregistered document receivable in evidence of a contract in a suit for specific performance or evidence of part performance of a contract for the purposes of Section 53-A of the Transfer of Property Act or as evidence of any collateral transaction not required to be effected by a registered instrument. But the inhibition imposed under Section 35 is absolute and complete and makes it inadmissible in evidence for any purpose. Some decisions have gone to the length of saying that an instrument which is not duly stamped is a worthless one and nothing more that a waste paper. The principle underlying this prohibition appears to be that promissory notes and bills of exchange are commercial instruments, which are put into circulation in large numbers in the commercial world and as the claims on them would be mostly settled out of court, severe penalties should attach to non-stamping them, or understanding them in order that there may be wholesome check on any tendency to defraud the public Revenue. 107. Failure to stamp a Negotiable Instrument properly does not affect the validity of the transaction embodied therein. But renders th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no independent contract of loan except what is embodied in the promissory note. 111. This leads us to the question as to the admissibility of other evidence relating to the debt or original consideration apart from and dehors the promissory note. In the case of a promissory note executed in discharge of an antecedent debt arising out of goods sold or mutual dealings in account or on account of liability incurred prior to and not contemporaneous with the lending of money which is evidenced by the promissory note there arises no difficulty because there exists in all those cases a debt or liability dehors the promissory note. The evidence in proof of such a debt or liability is not shut out by Section 91 of the Evidence Act , since the plaintiff in such a case is not proving the terms of the contract as evidenced by the writing in the promissory note. 112. But difficulty has always arisen giving rise to a lot of divergence of judicial opinion in our country, in the case of proof of loans contemporaneous with the execution of the promissory note. The stricter view was that the promissory note represents all the terms of the contract and when the said note becomes inadmissib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must do it by the production of the writing, which not being stamped, cannot be used in evidence, and the suit must fail (the words in brackets are mine). (Vide (1874) 21 Suth WR 1) 114. The earliest of the decisions which stems all the development of the case law on the subject now under discussion is that of Sir Richard Garth C.J. and Mcdonnel J. In ILR(1881) Cal 256, wherein two propositions have been laid down as follows:- (1) When a cause of action for money is once complete in itself whether for goods sold or for money lend or for any other claim, and the debtor then gives a bill or note to the creditor for payment of the money at future time the creditor if the bill or note is not paid at maturity may always as a rule, sue for the original consideration provided that he has not endorsed or lost or parted with the bill or note under such circumstances as to make the debtor liable upon it to some third person. In such cases the bill or note is said to be taken but the creditor on account of the debt and if it is not paid at maturity the creditor may disregard the bill or note and sue for the original consideration. (2) But when the original cause of action i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory note and the better opinion with regard to contemporaneous loans and promissory note is the consideration for the loan the debt cannot be proved aliunde. That view in my opinion is clearly the correct view in view of Section 91 Evidence Act . My view, therefore is that in all cases courts must be guided by what appears on the face of the promissory note. If it is expressed in such a way as to leave what was intended by the parties in any way in doubt then the facts must settle the question. If it is clear on the face of the promissory note that it is the contract, then no further evidence can be permitted. 117. Even after this pronouncement the authority of the decision in ILR (1877) Mad 94was again challenged and a Full Bench of five Judges was constituted in 1938 and its decision is in MANU/TN/0229/1938MANU/TN/0229/1938 : AIR 1938 Mad 785(FB). This Full Bench upheld the correctness of the decision in ILR (1887) Mad 94and overruled the two decisions in Gopala Padavachi v. Rajagopala Naidu. MANU/TN/0571/1926MANU/TN/0571/1926and Chinnayya v. Srinivasa, MANU/TN/0353/1934MANU/TN/0353/1934which struck a different note. Sir Lionel Leach C.J. expressed the opinion of the Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39; in every case where money is lent and in view also of the admission of one loan by the defendant in that case the suit was held to be maintainable as an action for breach of an implied promise or contract independent of the promissory note. The case in ILR (1881) Cal 256 was distinguished on the ground that deposit was not meant to be a loan. The case in (1913) 17 CLJ 399permitted a suit if the debt did not merge in the promissory note. Though a similar view was held in Sudhir Chandra Das v. Govinda Chandra Roy, ILR Cal 538 = (AIR 1918 Cal 688) it related to a Hundi, wherein the borrowing is complete before a direction is given by a hundi to a third party to pay. The suit was on an account between a principal and agent, in Ramendra Mohan v. Keshab Chandra, MANU/WB/0030/1934MANU/WB/0030/1934where an amendment of plaint was allowed to sue on the basis of debt as per the 1st proposition in ILR (1881) Cal 256. The decisions of Mukerjee J., in Shekh Abdul Rabbani v. Shyam Lal Tapa, (1930) 34 Cal WN 554and of R. C. Mitter J., in Tarachand Protap Mal v. Tanijuddin Sheikh MANU/WB/0067/1935MANU/WB/0067/1935); Indra Chandra Bag v. Hiralal Rong, MANU/WB/0168/1935MANU/WB/0168/1935) and Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1952 : AIR 1952 All 509 it was held by Raghubir Dayal J. (As he then was ) in the case of a promissory not executed in the following manner:- I have at this time borrowed ₹ 300/- half of which ₹ 150/- in cash according to my needs from you. I shall pay this amount of yours with interest at eight annas per cent per mensem on demand and have therefore written these few sentences by way of a stamped promissory note so that they may be of use in time of need. That it included all the substantial terms of the contract of loan and therefore no oral evidence to prove the loan transaction was admissible. His Lordship referred to the Full Bench decision in MANU/UP/0007/1943MANU/UP/0007/1943 and yet the refusal of the trial Court to prove the loan transaction was upheld. If according to the Full Bench the contract of loan could be proved this decision strikes a different note. 123. But in MANU/UP/0260/1953MANU/UP/0260/1953 : AIR 1953 All 535 it was held that the promissory note was held to be a collateral security and a suit on the basis of original loan was held maintainable and Section 91 was no bar. 124. Though Section 91 was held to be a bar for proof about or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the oral agreement and the inadmissibility of the document will not affect the oral contract which may be proved aliunde. 128. This view was followed in Lalchand v. Pyare Dasarath, MANU/MP/0072/1971MANU/MP/0072/1971 : AIR 1971 MP 245 , where it was held: It was next contended that the trial Court also erred in holding that the plaintiff could not be allowed to proved the loan except by producing the pronote. We have briefly stated the case set up in the plaint. The contract of loan was not contemporaneous with the pronote. The contract pleaded contained terms relating to the pledge of diamond and payment of interest. These terms do not find place in the pronote which according to the plaint was executed by the defendants not at the instance of the plaintiff but at the instance of other persons after the defendants had already committed the breach of the original contract by refusing to deliver the diamonds to the plaintiff. On the case pleaded in the plaint it cannot he held that the pronote was intended to constitute the contract or that the original contract of loan merged in or was extinguished by the promissory note. In these circumstances, the original contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of a promissory note no decree can be passed on the debt. 132. In Gangaram v. Keshava Deo, MANU/RH/0003/1960MANU/RH/0003/1960 Bapna Ag. C. J. Ranawat J. Accepted the principal of an implied contract in every loan after entire case law was reviewed. 133. In Champalal v. Saligram MANU/RH/0069/1961MANU/RH/0069/1961 Modi Chhangani JJ. Held that where a promissory note is not proved to have been given in absolute discharge of a debt it can be treated as a conditional payment of the debt and a suit on the debt would lie. 134. In Dhondi Emki v. Hazari Vittal AIR 1952 Hyd 137. Saidatali Khan J. Followed the decision in Sadasukh Jankidas v. Sir Kishen Pershad AIR 1918 PC 146 ; Sarafalli v. Maha Sukhbhai MANU/MH/0067/1933MANU/MH/0067/1933 and Hazi Syed Shah v. Bachi Rajappa, 35 DeccanL.R. 368 and held that if there is a distinct and separate transaction and the promissory note was given as a collateral security, then separate transaction can be proved, and to that effect an amendment also can be allowed, whether the transaction is antecedent or contemporaneous with the promissory note, and section 91 is no bar. In a decision rendered on 22-8-1956 in Brji Raj v. Raja Ram A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at page 392: I confess that I do not understand why in the above cases so much significance should have been held to attach to the handing over of the promissory note and the money being part of the same transaction ; and I am of opinion, with all respect, that the fallacy that lies within the above proposition of law is that it does not appear to have been appreciated in those cases that it is not the time when but the terms upon which, the loan was made that matters, and that whether the promissory note or bill of exchange was given at the time when the money was handed over to the borrower or subsequently in either case it is necessary for the court to ascertain the terms of the agreement upon which the loan was made ; the question as to what those terms were being a question of fact to be determined according to the particular circumstances obtaining in each case. Stress is therefore laid on the terms of the agreement upon which the loan was made. Evidence is admissible regarding those terms without any inhibition under Section 91 Evidence Act. But for the view that there is a presumption that promissory note is prima facie conditional payment, this view accords wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount ; again in para 3 plaintiff sums up his claim as follows ₹ 2,000 /- due on the pronote, ₹ 341 /- as interest and ₹ 180 /- as rent. This would appear to be a clear admission that the contract was in fact contained in the pronote and we find it difficult to regard the pronote as a mere subsidiary contract in respect of interest and time of payment and not in respect of liability for the principal, for the pronote, if admissible would undoubtedly afford a cause of action for both principal and interest. Assuming that the money actually changed hands before the execution of the pronote, the implied contract for repayment would be reduced to writing in the form of the pronote which must then deemed to have been regarded by the parties as the repository of their agreement, and therefore the only evidence thereof under Section 91 Evidence Act. For this proposition the decision in MANU/MH/0375/1926MANU/MH/0375/1926 was followed as laying down the correct rule. It therefore accords with the Madras view. 141. In T. S. Srinivasa Gowda v. Siddiah AIR 1971 Mys 144 it was held following the earlier decision of the same High Court in Srinivasa v. Thimmaiah AIR 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n transaction is reduced to the form of a writing or a document like a promissory note. In all such cases Section 91 lays down the best evidence rule namely that no evidence shall be given in proof of the terms of such contract or of such matter except the document itself or secondary evidence of its contents in cases in which such secondary evidence is admissible under the provisions of the Evidence Act. Their Lordships of the Supreme Court have held in Jupudi v. Pulavarthi, MANU/SC/0573/1971MANU/SC/0573/1971 : [1971] 3 SCR 590 as follows : The first limb of Section 35 clearly shuts out from evidence any instrument chargeable with duty unless it is duly stamped. The second limb of it which relates to acting upon the instrument will obviously shut out any secondary evidence of such instrument for following such evidence to be let in when the original admittedly chargeable with duty was not stamped or insufficiently stamped, would be tantamount to the document being acted upon by the person having by law or authority to receive evidence. Proviso (a) is only applicable when the original instrument is actually before the Court of law and the deficiency in stamp with penalty is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f there is an express promise resort cannot be made to an implied promise. In that case their Lordships held that the creditor could not establish as to the deposit of title deeds. A fortiori the fact of the loan cannot be proved on the basis of an implied promise. The law laid down by this Privy Council decision was also recently approved by their Lordships of the Supreme Court in a decision in MANU/SC/0602/1971MANU/SC/0602/1971 : AIR 1971 SC 1613. 150. Regarding the theory that a promissory note is a conditional payment, though it may happen in many cases, it cannot be decided as a matter of presumption in every case. It is a matter of allegation in the plaint and proof in each and every case. In the case of a simple loan the lender may lend and the borrower may borrow the money by execution of a promissory note at the time of the borrowing to evidence that loan. In such a case, it cannot be said that debt borrowed is instantaneously repaid by the promissory note. It depends upon the intention of the parties whether they intended to treat the promissory note as a conditional payment or not. In the generality of cases of a simple loan payment by a pronote may not arise on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract and which are not contracts by themselves. It deals with certain obligation imposed by law on the parties concerned and not resulting from any contract express or implied. Such relations though they are commonly known as quasi-contracts the basic element of a contract viz. agreement is entirely lacking in most of them. Hence in the obligations imposed there can be nothing contractual. The promise or the obligation which Section 70 creates is entirely fictitious and is a creating of law. Any action to enforce this obligation is not an action based on a contract. It has been held by lord Gopal Rao Ekbote, J. ( as his Lordships then was ) in N. Kanaka Rao v. Venkata Ramalinga Reddy, MANU/AP/0155/1966MANU/AP/0155/1966 : AIR 1966 AP 297 that Section 70 cannot be pressed into service and no relief can be granted on the basis of a quantum meruit where there is an express contract. His Lordship has cited the relevant case law and elaborately discussed the question in that decision. Thus where there is an express contract and that contract is not admissible in evidence for any purpose, as in this case. Section 70 cannot come to the rescue of the plaintiff. Failure to stamp the prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 1938 Mad 785states the law correctly and has to be followed in these cases as well. My answer therefore to the question posed before this Full Bench is that plaintiff can lay any action for recovery of the amount advanced by him basing on the original cause of action, where the suit negotiable instrument becomes inadmissible on account Section 35 of the Stamp Act, provided that there is an allegation in the plaint and proof in evidence about the fact that the promissory note did not incorporate all the terms of the contract of loan and that it was executed as a conditional payment or a collateral security. C. R. P. No. 255 of 1965. A. Sambasiva Rao, J. 156. This revision petition has contributed substantially to legal history. From a single Judge it went to a Division Bench and from there it travelled to a Full Bench of seven Judges. It has now come back all the way to me for deciding the case in the light of the opinion expressed by the Full Bench. 157. A few facts relevant for determination of the case may be briefly stated. The defendant borrowed from the plaintiff a sum of ₹ 1,000 /- on 21-11-1960 and contemporaneously executed a hand letter in favour of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : AIR 1964 AP 188 . 163. In the present case the incurring of the loan and the execution of Hundi were contemporaneous. It is also common case that the Hundi was insufficiently stamped. Simply proceeding on the averment in the plaint that the Hundi, though contemporaneously taken, was only in the nature of a collateral security, the lower Court was inclined to decree the suit. It also invoked the principle of money had and received in further support of the decree. There is no discussion and no finding that the execution of the Hundi, though contemporaneous with the incurring of the debt, was quite apart from the actual contract of debt. In the absence of any such finding this revision by the defendant should be allowed in the light of the Full Bench decision in C. R. P. No. 255/65 and batch dated 3-10-1972. 164. The revision petition is thus allowed. But in view of the finding that the defendant had actually received the money I direct the parties to bear their own costs. C. R. P. No. 1998 of 1966. 165. This another revision petition that comes up before me after the Full Bench expressed its opinion on the question of law in C. R. P. No. 255 of 1965 and batch dated 3r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly received the money. I direct the parties to bear their own costs. C. R. P. No. 605 of 1969. 171. This revision petition is also coming up before me after the Full Bench expressed the opinion in C. R. P. No. 255 of 1965 and batch dated 3rd October, 1972 affirming the view of the Full Bench of the Madras High Court in MANU/TN/0229/1938MANU/TN/0229/1938. 172. This is a plaintiff's revision petition. The suit was on the foot of a promissory note dated 7-6-1965 for ₹ 400 /- to recover a sum of ₹ 456.85 Ps. One of the decrees was that the debt was discharged but the lower Court was not prepared to believe this defence. All the same it dismissed the suit following Perumal Chettiar's case, MANU/TN/0229/1938MANU/TN/0229/1938 on the ground that the promissory note was insufficiently stamped though executed contemporaneously with the incurring of the debt. It is not in doubt that the promissory note is insufficiently stamped and it is contemporaneous with the incurring of the debt. So, following the opinion of the Full Bench dated 3rd Oct. 1972 in C. R. P. No. 255/65 and batch. I dismiss the plaintiff's revision petition. But, in the circumstances of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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