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TMI Blog1939 (9) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s shop and lent it to defendant No. 1 on a mortgage bond in his own favour, dated July 31, 1925. The plaintiffs protested against this and after some correspondence between defendant No. 2 and plaintiff No. 2, defendant No. 2 passed a promissory note for Rs. 5,000 and future interest at nine per cent, per annum in favour of plaintiff No. 2 on April 28, 1928 (exhibit 98). The promissory note was renewed in 1931 and again in 1934 (exhibits 99 and 100). The plaintiffs filed this suit to recover Rs. 8,000 from defendant No. 1 by the sale of the mortgaged property and if there remained any deficit they asked for liberty to proceed against defendant No. 2's estate in the hands of his sons who appear as his legal representatives after his de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to satisfy the mortgage debt. Yet in paragraph 26 of the judgment there are certain observations which go to indicate that under the promissory notes defendant No. 2 was regarded as having undertaken to pay the mortgage debt itself. Mr. Ramnath on behalf of the appellants contends that in fact defendant No. 2 did not guarantee the payment of the debt of defendant No. 1 and that as defendant No. 1 was not a party to the promissory note or to any promise which defendant No. 2 may have given to the plaintiffs there was no contract of guarantee as defined in Section 126 of the Indian Contract Act. He relied upon the ruling in Periamanna Marakkayar v. Banians Co. I.L.R. (1925) Mad. 156 in support of his contention that a contract of guarantee re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a contract of indemnity the promisor engages to save the promisee from loss caused by the conduct of the promisor himself or by the conduct of any other person (s. 124 of the Indian Contract Act). The cause of action for a claim against the promisor accrues to the promisee when the latter is actually damnified, and his suit is governed by Article 83 of the Indian Limitation Act. Under a contract of indemnity the promisee can claim only damages as distinguished from the debt for the non-payment of which the promisor has agreed to indemnify him. 4. Bearing this distinction in mind we have to determine the nature of the liability arising under the promissory notes passed by defendant No. 2 in favour of plaintiff No. 2. All the three promiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t No. 1 on a mortgage bond in his own name. Plaintiff No. 2 appears to have sent a strong protest in a language which was apparently not liked by defendant No. 2. The letters written by plaintiff No. 2 to defendant No. 2 have not been produced, but the replies sent by defendant No. 2 are produced at exhibits Nos. 89 to 92, 94 and 96. In exhibit 89, dated April 6, 1926, defendant No. 2 wrote: I cannot reply to your letters, but I shall personally tell you. I cannot use the same language which you have used owing to my age. You are after all young. I cannot compete with you... I have been demanding moneys from Ana Patil. (defendant No. 1). I shall let you know what he says. I have done a thing without taking your permission. It is my ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him unauthorisedly and that the plaintiffs were being put to a loss thereby. Defendant No. 2 therefore admitted that the liability for the amount in the said transaction was upon him and in respect of that he has given from time to time in writing promissory notes of Rs. 5,000 in the name of plaintiff No. 2. In this way as defendant No. 2 has accepted the liability for the amount of the said mortgage deed defendant No. 2 is liable to pay the amount payable under the said mortgage deed. Hence he is made a defendant. 8. It is not correct to say that defendant No. 2 accepted the liability for the amount due under defendant No. 1's mortgage deed. In that case he would have passed a promissory note for the full amount due under that deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 been a surety for defendant No. 1's debt, a joint decree for the entire amount would have been passed against the appellants. Hence the most favourable construction in favour of the plaintiffs which can be placed on the promissory notes is that they created a contract of indemnity whereby defendant No. 2 undertook to make good any loss that they might sustain. It was open to the plaintiffs to repudiate the mortgage transaction altogether and claim the whole of the amount from defendant No. 2, leaving him to file a suit against defendant No. 1 to recover the mortgage amount. But the plaintiffs chose to accept that mortgage transaction and to treat defendant No. 2 as their benamidar. It follows from this that they can hold the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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