38. There remains the appeal relating to the 5th defendant. The judgment of the lower Court is attacked by the appellant as being an unsound: one. The complaint of the appellant in this behalf is that the lower appellate Court ought not to have permitted the appellant to invoke Order 6 Rule 17 C. P. C. having regard to the late stage at which the request was made in the trial court and also the circumstances in which the amendment was sought.
 39. The arguments adduced for the appellant in this behalf are substantial and deserve much weight. The narration of facts reveals that in the original written statement the 5th defendant not only called in question the genuineness of the will but wanted also the suit to be dismissed against him alleging that he was not a necessary party. Thus, far from not putting forward any rights in the partnership by and under the will it was specifically stated that he never functioned as a partner. Having regard to this written statement the material issues were framed thus:
 "(1) Whether the plaintiff and the 4th defendant had any share in the suit timber business according to the will relied on in the plaint?
 (2) Whether the 5th defendant was a necessary party to the suit?"
 The trial proceeded on the basis of these issues and concluded on 15-9-1952. Two days after that, i.e., six years two months after the original written statement was put in, the 5th defendant sought an amendment of the written statement. We may extract in extenso the affidavit filed in support of the petition to the extent it contains the reasons given by this defendant in view of the importance of the context:


Jaldu Anantha Raghurama Arya vs Jaldu Bapanna Rao And Ors. on 8 August, 1958

"I was not personally aware of the execution of the will and I was not informed by the executors about their having given a four-anna share to me, plaintiff and 4th defendant. I pleaded in my written statement that I was not aware of the fact of such a share having been given to us and consequently that I was not a necessary party. I never disclaimed any such share if there was any such. The averment that the suit might be dismissed was made only in the routine manner.
 Even the plaint averments make it clear that it was a consolidated share of 4 annas that was directed to be given jointly to plaintiff, 4th defendant and myself. Therefore, even according to the plaint either all of us get the share or do not. Issue No. 1 ought to have been therefore framed so as to say whether the plaintiff, 4th defendant and 5th defendant are entitled to a share in the suit business and not confined to plaintiff and 4th defendant alone. Issue No. III is also unnecessary, I therefore submit that the issue had to be recast accordingly.
 "4. By subsequent events it has transpired that the truth and binding nature of the will of late Jaldu Venkata Subba Rao Garu which was in dispute for a long time was finally admitted by all the concerned patties. It also now transpires from the evidence of the executors that they have in fact given a four-anna share jointly to plaintiff, 4th defendant and myself."


The trial Court rejected this application but that order is not before us. We do not get any inkling in the judgment as to the reasons for the dismissal. All that is stated there is that since the 5th defendant filed a written statement supporting the 3rd defendant and disclaiming any interest in it he could not have any share in it. The reasons given by the Subordinate Judge for allowing the appeal filed by the 5th defendant are these:--
 "The object of the contentions of the 5th defendant was to deny the existence of the will dated 20-6-1942. He merely pleaded that he was not aware of the fact that plaintiff 4th defendant and himself were given a share and at the time when he filed the written statement he supported the stand of the 3rd defendant who was antagonistic to the other two executors.
 The observations of the learned District Munsif in para 23 of the judgment that the 5th defendant disclaimed his interest in the business are incorrect inasmuch as the learned District Munsif did not refer in that paragraph to the application filed by the 5th defendant to have his written statement amended. If the plaintiff and the 4th defendant are to get a share in the timber business it is not as if the 5th defendant is foregoing his own proportionate share in that business."


It is plain that the learned Subordinate Judge did not approach the question from the right stand point. His criticism regarding the observations of the Munsif in para 23 does not stand any scrutiny. The mere fact that an application for amendment of the written statement was filed by the 5th defendant did not detract from what was stated in the original written statement. He did not consider whether any grounds existed for accepting an application for amendment of the written statement. Evidently what influenced the learned Judge was that since the plaintiff, the 4th defendant and the 5th defendant were together given a 1/4 share there was no reason why the 5th defendant should be deprived of his quota in that 1/4th share. We think that was not a decisive test. The learned Subordinate Judge had not applied his mind to the real question whether an amendment of the written statement was warranted by the circumstances of this case.
 If only the learned Judge had given any thought to this aspect of the matter, he would have arrived at a contrary decision. It has to be noted that the allegation in paragraph 3 that this defendant is not aware of the execution of the will is not a true one. Along with the plaint the copy of the will in dispute was marked as Ex. A-1 and therefore the knowledge of contents must be attributed to him.
 That apart, a specific reference is made in the written statement to that will. There is also no substance in the complaint that issue No. 1 as it stood ought not to have been framed and issue No. 3 was also unnecessary. These issues were formulated on the pleadings including the written statement of the defendant. One fails to understand how a grievance could be made of any of these issues when the defendant himself said that he was not a necessary party, that he did not claim any interest in the business and that the suit should be dismissed with his costs.


There can be little doubt that the application for amendment was lacking in bona fides. We understand that the 5th defendant approached the Court with the prayer for amendment two days after the trial ended having regard to the views expressed by the trial Court regarding the tenability of the contentions of the contesting defendants.
 40. It is true that as a general rule amendment of pleadings should be liberally granted to enable the real question between the parties decided except when it occasions any injury to the opposite party. All the rules of procedure are devised only in the interests of proper administration of justice and they should be made to serve that end. Therefore, the powers conferred on a Court by Order 6 Rule 17, C.P.C. should be liberally exercised.
 But an amendment claiming reliefs absolutely inconsistent with those in the original written statement would not come within the purview of Order 6 Rule 17, C.P.C. The exercise of the power given under Order 6 Rule 17, C.P.C., is subject to the same qualifications as stated by the Privy Council in Ma Shwe Mya v. Maung Mo Hnaung, ILR 48 Cal 832: (AIR 1922 PC 249):--
  ".........  but nonetheless no power    has yet been given to enable one distinct cause of action to be substituted for another, nor to change, by means of amendment the subject-matter of the suits."


41. In the instant case, the amended written
statement wholly displaces the original one and
destroys all that was stated and claimed therein.
The reliefs claimed in the amended written statement are in contravention of the original prayer
for the dismissal of the suit with his costs. The
Courts normally should not allow the party to raise,
an amendment which is in direct negation of what
is stated or contained in. the original statement. See
Sheik Masthan Sahib v. P Balarami Reddy, .

 42.  Another consideration that should enter the decision  of the point arising  under Order  6   Rule 17 is the stage at which it should be permitted to be  raised.   Unless there are  good  and proper reasons an amendment of plaint or written statement should not be allowed after the case is closed. In Vedachala    Chettiar   v.  Ameena  Bi Ammal,     AIR 1944     Mad     121 (F. B.), when the   plaintiff's evidence was about to be concluded, one of the defendants sought leave of the Court for amendment of one of the issues by inserting some words, and that   defendant   succeeded   in      inducing   the   trial Court to make that amendment.


But, while giving the judgment, the Court did not   give effect  to   the   amendment  but   proceeded on the basis  of the original written statement.  In dealing with that matter, this is what Chief Justice Leach who spoke for the court remarked:--
 "It is regrettable that the amendment of the issues should have been allowed ...... It was far too late at the close of the plaintiffs case to allow defendant 4 to set up a new case. The application has been renewed in this Court, but we see no reason to differ from the District Munsif. It would mean the remanding of the case for the taking of further evidence and the plea was raised too late in the trial Court."
 The present is an a fortiori case, and it would not be proper to allow the defendant to introduce the amendment sought.
 43. In this connection, we may usefully refer to a ruling of the English Court in Laird v. Briggs, (1880) 16 Ch D 440. In that case the plaintiff claimed to be a tenant in possession of the part of the fore-shore in the sea at Margate and he sought to restrain the defendant from removing shingle from the fore-shore. The defendant claimed an easement by reason of his enjoyment entitling him to do the acts complained of and also stated that the plaintiff was in possession of the foreshore in question subject to his rights.
 At the trial he wanted to have his written statement amended by striking out the qualifying words "thus making his denial of plaintiff's possession an absolute one and claiming the possession of the foreshore." Justice Fry disallowed it remarking that it would completely change his case.


44. The case on hand is not one where the party was unaware of his rights and came to know of them some time after the tiling of the written statement. He was fully aware of the existence of the will and what rights flowed from it. But, he chose to deny its genuineness since it suited his purpose then. It should be borne in mind in this context that at that time his sister i.e. the widow of Venkata Subbarao was contesting the wilt and he must have thought that it would he more paying to sail with her rather than be content with a 1/12th share under the terms of the will.
 It is only when the contest regarding the genuineness of the will was found to be unfruitful this change of front was resorted to. In the circumstances, we think the judgment of the lower appellate Court on this part of the case cannot be sustained.
 45. None of the rulings called, in aid on he-half of the 5th defendant (3rd respondent) is helpful to him. In Ahmed Hossein v. Chembelli, , in a suit on a dishonoured cheque it was not recited in the plaint that notice of dishonour was given or circumstances existed which rendered it unnecessary to issue such a notice. The plaintiff was permitted to introduce the statement. The learned Judge thought that it should be done in the interests of justice.


In Pramada v. Sagarmal, an additional claim was permitted by the High Court by way of amendment for the reason that by the time the amendment was sought, only preliminary issue was decided and the case had not been taken up. It was remarked in the course of the judgment that amendments ought to be granted unless a party was acting mala fide or by his blunder some injury to his opponent which could not be compensated by costs would be caused. The rule stated in Union of India v. Shalimar Tar Products. is the same as the one in .
 46. In Amolakchand v. Firm, Sadhuram Tularam, AIR 1954 Nag 200 the defendant who admitted in the written statement the plaintiffs right for redemption of a mortgage was permitted by way of amendment to set up ownership and exclusive title to the property in dispute and thus denied the plaintiff's right to redeem. It was held by Justice Chowdary that though the amendment would change the nature of the defence it could be allowed if sufficient grounds were shown. In support of his decision, the following passage from Cropper v. Smith, (1884) 26 Ch D 700 was extracted :--
 "It is a well established principle that the object of the Courts is to decide the rights of the parties and not to punish them for mistakes they make in the conduct of their case by deciding otherwise than in accordance with their rights.... I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct if it can be done without injustice to the other party."


These remarks were also relied on strongly by the counsel for the respondent. It is plain from that passage that if the error or mistake is fraudulent or was designed to overreach, a Court will not allow amendment. We need not express our view, as to the correctness of the authority of that case. There, it is specifically stated that such an amendment would not be allowed if asked at a late stage and even otherwise the request could be granted only if sufficient grounds are shown.
 Another instance of an admission made by one of the defendants being allowed to be withdrawn by amendment is Hollis v. Burton, 1992-3 Ch D 226. The amendment was permitted as it was proved by reliable evidence that the admission was made by mistake. In Bhimudu v. Pitchayya, 1946-1 Mad LJ 462: (AIR 1946 Mad 497) the new relief asked for in the amendment petition was necessitated by something that had occurred after the filing of the suit and so an appropriate relief was to be asked for by amending the plaint.
 In Gopalarao v. Peda Kitamma, , a suit in individual capacity was allowed to be converted into one in a representative capacity as a manager of the joint family. Another case relied on by the 3rd respondent is Chunnilal v. Deoram, AIR 1948 Nag 119. Far from establishing any theory favourable to him, it negatives his case. It is laid down there that amendment of pleadings shall not be allowed unless the amendments are necessary for the decision of the real question in controversy, and that the real question in controversy is one which is involved in the issues framed in the trial court.


A Court will not allow an amendment which would completely change the front in the defence and the defence should not be so altered as to introduce a set of circumstances different from and inconsistent with those pleaded initially. No principle can be extracted from any of these authorities which is contrary to what we have stated. On the other hand, the observations in some of the cases are detrimental to this respondent.
The 5th defendant was acting mala fide as indicated above and moreover the application for amendment of the written statement as also for the deletion of some and recasting of the issues was very late i.e., after the trial ended and just before the delivery of the judgment. Consequently, the "beneficial legal principle" embodied in Order 6 Rule 17 C.P.C., cannot be taken advantage of by him. There are no valid grounds for allowing an amendment of this nature. It follows that the appeal as against the 5th defendant is allowed without costs. It is dismissed with costs as against plaintiff and defendant 4.
 47. This appeal having been set down this day for being mentioned, the Court made the following:--
ORDER


48. A consolidated sum of Rs. 750/- is fixed towards advocate's. Out of this, the plaintiff's Advocate will get Rs. 500/- and the 4th defendant's Advocate Rs. 250/-.


Lothamasu Sambasiva Rao vs Thadwarthi Balakotiah on 14 November, 1972

JUDGMENT Obul Reddi, J.

 1. The question referred to this Bench of seven Judges by a Division Bench to which two of us ( Obul Reddi and Madhava Reddy, JJ. ) were members, is "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. "


2. The necessity to refer the question to 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, , which does not accord with the ruling of the Full Bench of the Madras High Court in Perumal Chettiar v. Kamakshi Ammal, ILR ( 1938 ) Mad 933 = ( AIR 1938 Mad 785 ( FB ) ). The learned Judge, Gopal Rao Ekbote, held that the plaintiff can have his money back through the document is in-admissible in evidence because it is in-sufficiently 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 ILR ( 1938 ) Mad 933 = ( AIR 1938 Mad 785 ( FB ) as " two decisions decided in 1918 by the Privy Council ( John v. Dodwell and Co. Ltd. AIR 1918 PC 241 and 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 Full Bench of five Judges of the Madras High Court in ILR ( 1938 ) Mad 933 ( 935 ) = ( AIR 1938 Mad 785 ( FB ) the question posed above was referred for consideration by a larger Bench.


3. It may be necessary at the outset to refer to the contentions put forth by the counsel appearing for the petitioner and the counsel appearing for the respondent. Mr. C. N. Babu appearing for the petitioners in C. R. P. No. 255/65, relying upon the decision in Pithi Reddy v. Velayudasivan, ( 1885-1887 ) ILR 10 Mad 94 and Perumal Chettiar's case, ILR ( 1938 ) Mad 933 = ( AIR 1938 Mad 785 ( FB ) ) contended that a plaintiff cannot recover money lent on a unstamped or an insufficiently stamped promissory note apart from the note in view of the bar of Section 35 of the Stamp Act and Section 91 of the Evidence Act. It is further contended by him that there is no presumption, when the lending of the money and the execution of a promissory note are contemporaneous that the promissory note operates as a conditional payment or a collateral security so as to say that the real contract is different from what is embodied in the promissory note and thus bypass the provisions of Section 91 of the Evidence Act.


4. Mr. K. Jagannadha Rao appearing for the petitioner in C. R. P. No. 1998 of 1966 similarly contended that the view expressed by the Full Bench in Perumal Chettiar's case. ILR ( 1938 ) Mad 933 = AIR 1938 Mad 785 (FB) is the correct view and that it stood the test of time from 1938 onwards and that the learned single Judge of this Court was not justified in invoking the theory of ' money had and received ' on the ground that " two decisions decided in 1918 by the Privy Council " were not taken into consideration by the Full Bench. According to the learned counsel, there is no question of presumption of a conditional payment or collateral security where the money lending and the execution of the promissory note are part and parcel of the same transaction, in other words, contemporaneous or simultaneous and that being the case, the plaintiff is not entitled to set up a case independent of the note in view of the stringent provisions of Section 91 of the Evidence Act. The learned counsel also contended that when the factum of loan itself cannot be established by any means other than the promissory note itself, where the debt 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 High Court in Perumal Chettiar's case. ILR (1938) Mad 933 = AIR 1938 Mad 785 ( FB ), is not correct and the decision requires to be overruled.

 6. It is, therefore, necessary having regard to the contentions put forth by the learned counsel appearing for both sides and the view expressed by the learned single Judge, which is in conflict with the Full Bench's to frame the following questions for decision --
 "1. Whether a plaintiff can bring action for recovery of the amount advanced by him basing on the original consideration when the promissory note on foot of which action is brought is in-admissible in evidence under Section 35 of the Stamp Act, and, if so, under what circumstances ?


2. If the promissory note is in-admissible in evidence, whether action can be maintained for recovery of the amount either on the theory of " money had and received " or under the provisions of Section 70 of the Contract Act. "


7. It may be made plain at the beginning itself, before we consider the questions, that we are not concerned with a case where a promissory note has been executed in respect of an antecedent debt we are here concerned with the question under what circumstances the loan could be recovered apart from the promissory note, which is not duly stamped, when the execution of the promissory note is contemporaneous or simultaneous with the borrowing. There are no decisions of the Supreme Court so far which have any bearing on the questions raised. We, therefore, have necessarily to look to the decisions of the various High Courts and English Courts for answering the questions. The Courts in India have expressed divergent views as to the recovery of the loan independently of the note given. Broadly the decisions come under three categories (1) those which hold that, if the promissory note is not receivable in evidence because of the absolute prohibition of Section 35 of the Stamp Act, no action would lie independently of the note and to hold otherwise would be nullifying the provisions of Section 91 of the Evidence Act; (2) Notwithstandiing the bar of Section 35 of the Stamp Act, it would still be open to the creditor to prove the loan and all its terms in the case of a contemporaneous transaction also, independently of the promissory note by letting in other evidence and Section 91 of the Evidence Act will not operate as a bar and action can also be maintained 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.


as a collateral security or by way of conditional payment provided it is so alternatively pleaded in the plaint. In Perumal Chettiar's case. ILR (1938) Mad 933 = AIR 1938 Mad 785 (FB) 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, (1881) ILR 7 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. (1878) ILR 3 Cal 314, where it was held that the plaintiff could fall back on the original consideration when an insufficiently or unstamped promissory note cannot be received in evidence. But that would appear to be a case where a suit was filed by an indorsee of an unstamped promissory note, for the Court of first instance refused to allow the plaintiff to summon the production of the second defendant's books in order to show therefrom that the 1st defendant was the debtor for the amount for which the note was given. We are unable to subscribe to the view taken in this case for an indoors obviously cannot fall back on the original consideration between the maker and the payee.


10. The case of (1881) ILR 7 Cal 256 has been followed as laying down the authoritative pronouncement in innumerable cases of the several High Courts (Including the Full Bench decision of the Madras High Court). That case came up before Sir. Richard Garth, C.J. and McDonell. J. On reference from the Judge of the Small Cause Court at Dacca. Garth C.J. speaking for the Court said:
 "When a cause of action for money is once complete in itself, whether for goods sold or for money lent, or for any other claim, and the debtor then gives bill or note to the creditor for payment of the money at a 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 by 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. But when the original cause of action is the bill or note itself and does not exist independently of it, as for instance when in consideration of A depositing money with B.B. contracts by a promissory note to repay with interest at six month's date, here there is no cause of action for money itself because the deposit is made upon the terms contained in the note and no other. In such a case, the note is the only contract between the parties, and if for want of proper stamp or some other reason the note is not admissible in evidence the creditor must lost his money.


This passage was interpreted differently by another learned Chief Justice of the same Court in Pramatha Natha Sandal v. Dwarka Nath Dey. (1896) ILR 23 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 (1878) ILR 3 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. AIR 1936 Cal 127 and Mahatobuddin Mia v. Md, Nazir Joddar AIR 1936 Cal 170 R.C.Mitter. J., sitting single, held that it is not necessary that there should be an independent express contract prior to the execution of such a promissory note and that the fact that the money has been lent implies a promise to repay it and the plaintiff in such a case has a cause of action on the implied promise, which is independent of the promissory note. The fact that the money has been lent according to the learned Judge gives a cause of action to the plaintiff which is independent of the promissory note and in so holding he relied upon what Sir. Comer Petheram, C.J. said in (1896) ILR 23 Cal 851 that an implied contract to repay money lent always arises from the fact that the money is lent even though no express promise, either written or verbal is made to repay it. But the same learned Judge, we may point out, had expressed a different opinion in Firm Tarachand v. Tamijuddin, AIR 1935 Cal 658 where he said that if the plaintiff's cause of action to recover the money had become complete before the execution of the promissory note, he would be entitled to sue and succeed on the original: but if he does not base his case in the plaint on the original consideration, he is out of Court because the promissory note is inadmissible in evidence being insufficiently stamped. In so holding he relied upon the decision of the Privy Council in Sadasuk Janki Das v. Sir Kishen Pershad, SIR 1918 PC 146 and followed the decision in Sheik Akbar v. Sheikh Khan, (1881) ILR 7 Cal 256 and Nazir


v. Sheikh Khan, (1881) ILR 7 Cal 256 and Nazir Khan, v. Raz Mohan, AIR 1931 ALL 185 (FB). His view in the 1935 case was that if the execution of the promissory note and the borrowing of the money are contemporaneous constituting part and parcel of the same transaction and the note becomes inadmissible in evidence the plaintiff will be out of Court. The learned Judge with great respect to him seemed to swing between the two stands taken by the two Chief Justices of his Court. We do not even find a passing reference to the earlier decision of his in AIR 1935 Cal 658 in his two later Judgments as to what led him to take a different view.


12. Chief Justice Jenkins of the Bombay High Court sitting with Justice Candy in Krishnaji Narayan Parkhi v. Rajamal Manikchand Marwari, (1900) ILR 24 Bom 360 was dealing with a case of liability arising out of a hundi. There the plaintiff lent the defendant Rs. 675/- and at the 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, (1894) ILR 18 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 consideration.


13. Kemp J. In Jacob 7 Co.v. Vicumsey. AIR 1927 Bom 437, followed the decision in (1900) ILR 24 Bom 360 on the ground that it is binding upon him, in holding that if the promissory note is insufficiently stamped the plaintiff can proceed with the suit on the loan. He however doubted the correctness of that decision as it appeared to conflict with the provisions of Section 91, Illustration (b) of the Evidence Act .


14. We may now notice some of the leading cases of the Allahabad High Court, which reveal that the view expressed in Sirdarkuar v. Chandrawati, ( 1882 ) ILR 4 All 330 ; Kundan Lal v. Sahu Bhikhari Das, AIR 1929 All 254; Nazir Khan v. Ram Mohan, AIR 1931 All 183 ( FB ) and Kunwar Bahadur v. Suraj Baksh, AIR 1932 Oudh 235 ( FB ) is no longer good law in view of the subsequent decision of the Full Bench of that Court in Sheo Nath Prasad v. Sarjoo Nonia, AIR 1943 All 220 (FB) which is followed in Lakshmi Narain v. Mt. Aparna Devi, . As the latest opinion of the Allahabad High Court as expressed in AIR 1943 All 220 and is in conflict with the Full Bench decision of the Madras High Court in Perumal Chettiar's case, ILR ( 1938 ) Mad 933 = ( AIR 1938 Mad 785 ) ( FB ) it may be useful to notice the leading cases of that Court :
 15. In ( 1882 ) ILR 4 All 330, a case arising in second appeal, it was expressed by Straight and Broadhurst, JJ. That in a case where the adjustment of accounts took place and the bond was made, it was intended to consolidate and secure the debt due from the defendant to the appellant, and the new contract was to subsist between the parties in suppression of the former one. The learned Judges however observed that :
 "Much though we might have wished to be able to hold that the bond entered into between the parties did not preclude the plaintiff-appellant from recovering on his account stated, we find ourselves unable to do so. "


16. The decision in Ram Sarup v. Jasodha Kunwar, ( 1912 ) ILR 34 All 158 which runs counter to the above view was rested on the dictum of Lord Kenyon in the well-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 Banarasi Prasad v. Fazl Ahmad, (1906) ILR 28 All 298, though purported to follow the case of (1881) ILR 7 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. These decisions were considered by Sulaiman and Kendall, JJ., in AIR 1929 All 254 and the view expressed by the learned Judges was quoted and endorsed by Sir Lionel Leach, C. J. in Perumal Cettiar's case, ILR (1938) Mad 933 = (AIR 1938 Mad 785) (FB) to the extent of the scope of Section 91 of the Evidence Act. What Sulaiman and Kendall, JJ. Said that case is that if a hundi is the embodiment of the whole of the contract between the parties and it is not admissible in evidence and cannot be looked at for the purpose of finding out the terms of the contract other evidence to prove the terms of such contract cannot be allowed. But where the hundi embodies only a part of the contract between the parties it cannot be said that the whole contract is reduced to the form of a hundi and Section 91 does not exclude evidence showing the terms of the whole contract which cannot be determined from the hundi alone. But the view of the learned Judges in so far as the applicability of Section 70 of the Contract Act was not endorsed by the Full Bench as may be seen from the judgment of Justice Varadachariar. What was said in the case of a hundi which need not necessarily contain all the terms of the agreement between the parties was applied by the


hundi which need not necessarily contain all the terms of the agreement between the parties was applied by the Madras Full Bench to a promissory note. The learned Judges, Sulaiman and Kendall, JJ. However affirmed the view in Baijanath Das's case (1912) 16 1nd Cas 33 (ALL) that, when a hundi is held to be inadmissible in the evidence, the plaintiff would still be able to succeed on the basis of the theory of 'money had and received' or for compensation and this view did not find favour with Varadachariar. J.


17. A Full Bench of the same Court composed of Mears. C.J. Mukerji and Young. JJ. In AIR 1931 ALL 183 (FB) overruled the decisions in (1912) ILR 34 AII158 and (1906) ILR 28 AII 293 referred to supra and followed the decisions Parsotham Narain v. Taley Singh, (1903) ILR 26 AII 178 and Sheikh Akbar v. Sheikh Khan. (1882) ILR 7 Cal 256. As may be seen from the Judgment of Mukerji. J. Who spoke for the Full Bench he did not approve the view of Sulaiman and Kendall, JJ. In so far as invoking the aid of Section 70 of the same Court in Miyan Bux v. Mt. Bodhiya, AIR 1928 AII 371 (SB). One of the learned Judges of the Special Bench, Sen. J. Refused to express any opinion on the ground that it is outside the scope of reference 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 AIR 1943 All 220 ( 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 AIR 1931 All 183 ( FB ) holding that, in spite of the provisions of Section 91, it is open to the party who has lent money on terms recorded in a promissory note which turns to be inadmissible in evidence for want of proper stamp duty to recover his money by proving orally the advance of the loan and that oral evidence to prove the terms of the contract however is admissible. Srivastava, J., with whom Nazir Hassan, C. J. " generally agreed and Raza, J., agreed wholly, was not of the opinion that the fact of the advance of the loan or the amount of the loan cannot be regarded as one of the terms of the promissory note. " In that view he opined that " if it is not so, then the path of the plaintiff is clear. In the case of every loan there is a presumption of an implied contract to repay the loan. " We shall deal later with the question of the presumption of an implied contract, but suffice it to say for the present that we are unable to understand how the amount of loan mentioned in the promissory note cannot be regarded as a term of the contract. A promissory note, as defined in Section 4 of the Negotiable Instruments Act, must contain an unconditional undertaking to pay a certain sum of money. If the amount of loan is not mentioned in the promissory note, then it ceases to be a promissory note which should constitute a contract between the maker and the payee. When the rate of interest, date of payment etc., could constitute terms of the promissory note, we fail to understand how it could be said that the amount on which interest is payable can


note, we fail to understand how it could be said that the amount on which interest is payable can be held to be not a term of the contract.


19. We may now notice the facts of the Full Bench case in AIR 1943 All 220. That was a case where the plaintiff is said to have lent a sum of Rs. 495 /- to one Bhaggu Nonia and obtained a promissory note and a receipt on the same day from the debtor. After the suit was filed, the legal representatives of the deceased defendant were brought on record. The Court of first instance dismissed the claim on the ground that the promissory note was inadmissible in evidence and that apart from the promissory note, the loan cannot be proved by any other evidence. The judgment was affirmed in appeal by the Civil Judge. In the second appeal preferred by the plaintiff, the matter was referred to a Full Bench of five Judges by a single Judge of that Court as he felt that the Full Bench decision in AIR 1921 All 183 ( FB ) required reconsideration. The learned Judge, Dar, 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 12 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 promissory note by giving other evidence including that furnished by a contemporaneous receipt if there be any. It is for the defendant to prove that the promissory note was given for a sum of money which was not given as a loan or it was given in absolute satisfaction of the loan or the plaintiff has made it his own by his agreement or by his conduct. If the defendant succeeds in proving any of these facts the plaintiff shall be restricted to the promissory note and he shall not be allowed to recover independently of the promissory note. " Having so said, he however was not prepared to express any opinion on the question whether the money given under a promissory note which is inadmissible in evidence for insufficiency of stamp can be recovered under Section 70 of the Contract Act. Mathur, J. Who wrote a separate Judgment concurring with the view on the main question, however, expressed the opinion, differing from Sulaiman and Kendall, JJ., in AIR 1929 All 254, that Section 70 of the Contract Act does not contemplate the case of payment of money and it will be doing violence to the language of the section to hold that the words ' lawfully does anything ' mean payment of money. On the other question, the learned Judge


words ' lawfully does anything ' mean payment of money. On the other question, the learned Judge agreed with the statement of the law made by Srivastava, J. In AIR 1932 Oudh 235 ( FB ) that Section 91 of the Evidence Act excluded parole evidence about the terms but not about the factum of the contract ; but he was unable to agree with him that the advance of the loan or the amount of the loan cannot be regarded as one of the terms of the promissory note. In the words of Mathur, J. " As I look at the matter, I think that amount of the loan is certainly one of the terms of the contract as would be the manner or the time of its repayment. " He was also not prepared to agree with Srivastava, J. That " there is nothing in Section 91 to prevent the plaintiff from giving evidence to prove that at the time of the transaction the plaintiff paid a sum of Rs. 700 /- in cash to the defendant. ' The leaned Judge, Mathur, J. In our opinion, rightly commented that ' I think if this were allowed it would make Section 91 absolutely nugatory. " Where we find it difficult to agree with Mathur, J., or Dar, J., with whom the other learned Judges of the Full Bench agreed is that it would be permissible to look at the document for 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 Cal LJ 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 All LJ 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 containing the terms on which the amount was to be refunded. It was, therefore, said by Lord Atkin "Being primarily a receipt, even if coupled with the promise to pay, it was not a promissory note. As the document did not record or purport to record all the terms of the contract between the parties and as there was nothing in the document explaining how the money came to be received the parties were not prevented from showing that it was paid by way of loan or deposit or for some other purpose. "


It is thus plain that what Lord Atkin said of a receipt which did not record all the terms of the contract cannot be applied to a case of a promissory note, which could not be received in evidence on account of the bar of Section 35 of the Stamp Act. It is in that context that Lord Atkin observed that Section 91 or 92 of the Evidence Act does not come in the way when " the document does not record or purport to record all the terms of the contract between the parties. " The ruling of the Judicial Committee, therefore, does not lend support to his ( Mathur, J.'s ) view as sought to be made out by him and for the same reason we regret we are unable to endorse the view of that eminent Judge, Sir Asutosh Mookerjee. We are also unable to agree with him for reasons which we will state presently when we deal with the scope of Section 35 that the words " no instrument chargeable with duty shall be admitted in evidence for any purpose, " occurring in Section 35 only mean that the document shall not be made the basis of the decision or that it shall not be relied on to support any finding, but to look at the document merely for the purpose of finding out whether it contained all the terms or not in order to attract the provisions of Section 91. Evidence Act would not be really admitting it in evidence.


20. A division Bench of the Allahabad High Court in following the Full Bench decision in AIR 1943 All 220 ( FB ) held that :
 ".............. in the absence of the evidence to the contrary, the presumption is that it is as a conditional payment or as a collateral security only. Where it is in absolute payment or discharge of oral debt, the document alone can be used to prove the terms of the debt because in that case the debt has been reduced " to the form of a document and therefore Section 91 is no bar to the proof 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, ILR 7 Pat 845 = ( AIR 1928 Pat 426) 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. 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 it is clearly shown that a promissory note was intended to be merely a collateral security for the loan, the person advancing the loan can sue on the original consideration of loan itself instead of the note. We do not read that decision as laying down a general rule that in every case where as action brought on foot of the promissory note fails, there arises automatically a cause of action otherwise than upon the note itself on the presumption that it was given as a conditional discharge or collateral security.


22. The Nagpur High Court in Udaram Mangiram v. Laxman Marwari, AIR 1927 Nag 241 held that even though the promissory note becomes inadmissible in evidence for want of proper stamp, the creditor can fall back on the original transaction under Section 70 of the Contract Act treating the promissory note as non-existent and ask for refund of the consideration paid. This decision supports the view of the learned Judge in , but runs counter to the Madras Full Bench view in Perumal Chettiar's case. ILR (1938) Mad 933 = AIR 1938 Mad 785 (FB).


23. A Division Bench of the Jammu and Kashmir High Court consisting of Fazl Ali and Janki Nath Bhat JJ. In Gulam Mohad. Labroo v. Habib Ullah. AIR 1966 J & K 127. After an elaborate review of the cases expressing divergent views, disagreed with the view expressed by the Full Bench of the Allahabad High Court in AIR 1943 AII 220 (FB) and held that, when the terms of the entire contract between the parties are reduced to the form of a promissory note and the advance of the loan and the execution of the promissory note are part of the same transaction, the provisions of Section 91 are a clear bar to any other evidence, except the promissory note and if the pronote is inadmissible in evidence, the whole suit must fail. In so holding, the learned Judges were not prepared to follow the view which accords either with the Allahabad Full Bench or the Madras Full Bench, as in the case of the former, according to them, they (the Judges there) completely ignored the existence of Section 91 of the Evidence Act and in the case of the latter, the Judges there have tried to bypass the provisions of S. 91 "by introducing such theories as that of the pronote not containing all the terms of the contract or that of the pronote 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. AIR 1968 Mts 148 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 Rs.300/- and Rs.100/- to the debtor and on each occasion when the loan was made, a promissory note was executed by the debtor. A suit was filed in the Small Cause Court of Mandolay on foot of the promissory note or in the alternative a like sum for money lent. The promissory notes were not duly stamped and they were held inadmissible in evidence under Section 35 of the Stamp Act. A decree was, however, passed on the alternative claim for the amount of the loans without interest. On revision to the High Court Durkley. J. Referred the following question for determination by a Full Bench:
 "When a creditor sues on a claim for money in respect of which the debtor has executed a promissory note, under what circumstances can the creditor sue for the original consideration if the promissory note cannot be proved."

 26. The learned Chief Justice Sir Arthur Page deduced the following propositions of law on a consideration of the "many Indian and English authorities on this question."

 1. When a loan is contracted it is an implied term of the agreement that the loan shall be repaid (1913) 41 1nd App 142 (PC)


2. When a promissory note or a bill of exchange or indeed anything else, is given by the narrower to the lender in connection with the loan, either at the time when the loan is contracted or afterwards, the terms upon which it is given and taken is a question of fact and not of law, (1889) 22 QBD 610.


3. It is prima facie to be presumed (although the presumption is rebuttable) that the parties to the loan transaction have agreed that the promissory note or other negotiable instrument given and taken in such circumstances shall be treated as conditional payment of the loan; the cause of action on the original consideration for money lent being suspended during the currency of the negotiable instrument, and if and so long as the rights of the parties under the instrument subsist and are enforceable; but the cause of action to recover the amount of the debt revives if the negotiable instrument is dishonoured or the rights thereunder are not enforceable. On the other hand the cause of action on the original consideration is extinguished when the amount due under the negotiable instrument is paid or if the lender by negotiating the instrument or by laches or otherwise has made the bill his own, and thus must be regarded as having accepted the negotiable instrument in accord and satisfaction of the borrower's liability on the original consideration."
 Then, after quoting 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, by which I mean the whole of the terms, under which the loan was made have been embodied in a negotiable instrument or in any other document no evidence can be adduced in proof of the terms of the contract except the document itself, or secondary evidence of the contents of the document in cases in which secondary evidence thereof is admissible. It follows therefore that in such cases if the document which contains the whole of the terms of the agreement is not admissible in evidence a suit to recover the amount of the loan must fail because the plaintiff is not in a position to prove the debt."
 He, however, regarded the oft-quoted passage of Garth. C.J. in (1881) ILR 7 Cal 256 as unfortunate and incorrect. These six propositions deduced by Sir Arthur Page .C.J. were quoted by Sir Lionel Leach. C.J. who was a party to that decision as a puisne Judge of the Rangoon High Court and relied upon the propositions deduced except in so far as the third proposition is concerned. This is how Sir Lionel Leach. C.J. explained in Perumal Chettiar's case. ILR (1938) Mad 933 at p. 944 = (AIR 1938 Mad 785) (FB) in later changing his view as regards proposition No. 3.


"I concurred in this judgment and subject to one qualification I still consider that it correctly states the law. The qualification which I would now make has reference to the statement that the giving of a negotiable instrument operates prima facie as a conditional payment of the debt. On further consideration I have come to the conclusion that this must depend on the facts of the particular case and that there is no presumption that the instrument has been given as conditional payment. Therefore, in my opinion when the lender wishes to sue on the original contract on the ground that the instrument was given by way of conditional payment he must prove facts which warrant the inference.' What precisely has to be considered by us is whether there is a presumption, when a negotiable instrument is taken in lieu of payment, the parties intended it to be a conditional charge or a collateral security. While Mr. D. Venkata Reddy and Mr. M. Jagannadha Rao would argue that presumption automatically arises in every case of a promissory note taken in lieu of money payment, though such presumption is rebuttable. Mr. C.N. Babu and Mr. K. Jagannadha Rao contend that such a 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., 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 instrument is given by a debtor to his creditor the question upon what terms it is given is one of the fact, depending on the intention of the parties. The question whether a negotiable instrument has been accepted in absolute satisfaction or only as a conditional payment is one of fact and depends on the intention of the parties,. If what the parties intended is put in the instrument in other words, if all the terms agreed upon are incorporated in the promissory note itself then no difficulty arises. The difficulty arises only of all the terms relating to the contract are not found in the promissory note.


29. All the decisions which accord with the view expressed in ( 1885-1887 ) ILR 10 Mad 94 and also the two of the cases in Gopala Padayachi v. Rajagopal Naidu, AIR 1926 Mad 1148 and Chinnayya Naidu v. Srinivasa Naidu, AIR 1935 Mad 206 = ( 67 ad LJ 912 ) which struck a different note were referred to in main judgment of Sir Lionel Leach, C. J., and in the judgment of Justice Varadachariar, Krishnasami v. Rangaswami, ( 1884 ) ILR 7 Mad 112 ( which ) was a case of an improperly stamped promissory note executed in favour of two members of a joint Hindu family in consideration of a loan given to them. It was held that though the promissory note was insufficiently stamped, that was no bar to the suit because the cause of action for the money lent was complete in itself before the giving of the note. It, therefore, appears to be a case of an antecedent debt as rightly put by Leach, C.J. Before Collins C. J. And Parker, J., in ( 1885-1887 ) ILR 10 Mad 94. It was urged on the strength of ( 1884 ) ILR 7 Mad 112, that the plaintiff may be permitted to prove the consideration which preceded the contract and that the suit may be regarded as one for the return of " money lent " to defendant. The learned Judges rejected that plea observing, " We cannot assent to such a doctrine and to do so would entirely nullify the provisions of Section 91 of the Evidence Act. They went on to add ; " It is a necessary condition to every written contract that the terms should be orally settled before they are reduced to writing, and to hold when


written contract that the terms should be orally settled before they are reduced to writing, and to hold when such a contract has been reduced to a writing that a plaintiff can take advantage of the absence of a stamp on the promissory note to sue at once for the return of money which he may have contracted to lend for a fixed period would 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, ( 1885-1887 ) ILR 10 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, ( 1885-1887 ) ILR 10 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, no further evidence can be permitted in the face of the intention of the parties which has been completely expressed in the promissory note. In such a case, they also hold that the debt cannot be proved aliunde. It would no doubt appear prima facie that the rule viz., the bar of Section 91, laid down in Pothi Reddy's case, ( 1885-1887 ) ILR 10 Mad 94 is relaxed but Chief Justice Leach made it absolutely clear that Section 91 would operate as a bar if all the terms of the contract are embodied in the


that Section 91 would operate as a bar if all the terms of the contract are embodied in the promissory note. In ( 1884 ) ILR 7 Mad 112, the learned Judges were not considering a case where a plea of a collateral security or conditional payment was advanced before them on foot of the pleadings and, therefore, we feel that it may not be correct to say that what was laid down there covers actions brought on the alternative plea viz., that all the terms of the contract do not find a place in the note. The defendant in that case admitted the receipt of the money on the evening of the same day when he obtained the loan of Rs. 1,000 /- and promised to pay the same with interest in three instalments under the promissory note. There the memorandum which was held to be a promissory note, contained all the terms of the contract and it was not the case of the plaintiff there, as already pointed out, that it was executed as a collateral security or a conditional payment. The Full Bench, of course, has not stated in so many words what it meant by " all the terms of the contract ", but it is quite plain that that expression ' all the terms of the contract ' was used only with reference to a collateral security or conditional payment as otherwise they would not have qualified it by stating " where an instrument has been given as a collateral security or by way of conditional payment, a suit on the debt will lie ". Therefore, the words " if it does not embody all the terms of the contract " only mean, if the promissory note does not contain terms regarding its having been as a collateral security or as a conditional payment, it would be open to the plaintiff to fall back on the original demand provided such a plea is based on the pleadings.


31. Sir Richard Couch, C. J., in Kedarnath v. Sham Lall, ( 1873 ) 11 Beng LR 405 at p. 412 was of the opinion that the promissory note is " the only repository and the appropriate evidence of the agreement ". But that strict 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 AIR 1943 All 220 ( FB ) 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 cause of action de hors or independently of the promissory note notwithstanding that the borrowing of the money and the execution of the promissory note formed part of the same transaction. The presumption of an implied promise to repay the money when the promissory note is shut out from evidence by virtue of Section 35 of the Stamp Act is not recognised by the Full Bench of the Madras High Court.


35 of the Stamp Act is not recognised by the Full Bench of the Madras High Court.


32. As Sadasiva Iyer, J., pointed out in Muthusastrigal v. Viswanatha, ILR 38 Mad 660 at p. 663 = ( AIR 1914 Mad 657 (2) ). " To import the doctrines laid down in English cases about vague obligations to repay arising out of equity and not out of contract or about obligations which can be enforced if the plaintiff skilfully draws up his plaint as one on account of money had and received cancelling the real contract of loan which had been reduced to the form a document is, it seems to me, merely trying to nullify Section 91, Evidence Act ". To the same effect was the view of Rankin, J. In Dula Meah v. Abdul Rahaman, 28 Cal WN 70 = 81 Ind Cas 461 = ( AIR 1924 Cal 452 ), where there is an express promise, an implied promise cannot be inferred.

 33. Mr. M. Jagannadha Rao sought to rely upon certain English decisions to show that, even where the borrowing of money and the execution of the promissory note are contemporaneous and form part and parcel of the same transaction, still there exists always an implied promise to pay the loan notwithstanding the inadmissibility of the promissory note on account of the bar of Section 35 of the Stamp Act. What fails for determination is whether presumption as such that the promissory note was executed as a conditional payment or collateral security without further investigation or enquiry as to the intention of the parties at the time when they made the contract arises in the case of the contemporaneous transaction when Section 35 of the Stamp Act shuts out the promissory note from being admitted in evidence for " any purpose ".


34. The case of Brown v. Watts, ( 1808 ) 127 ER 870, relied upon by Mr. M. Jagannadha Rao is not a case of a contemporaneous transaction. That was a case where " the plaintiff declared on a promissory note with the usual counts for money, and upon an account stated. " The note " was upon a wrong stamp and therefore could not be read. " Then the plaintiff proved a distinct admission of the original debt made before the note 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. A. that the question whether a negotiable instrument has been accepted in absolute satisfaction or only as a conditional payment is one of fact and depends on the intention of the parties. That, in our view, represents the correct position. Crowe v. Clay, ( 1854 ) V. 9 Exch 604 is another case of pre-existing debt incurred for goods delivered.

 37. Payana Reena Saminathan v. Pana Lena Palaniappa, (1913 ) 41 Ind App 142 ( PC ) is not a case of contemporaneous there was in respect of a pre-existing liability under an award. The plaintiff in that case sued upon promissory notes, but the action failed owing to a material alternation in the notes. He afterwards sued to recover a part of the consideration for which the promissory notes had been given. It was held by the Judicial Committee, on those facts, that although the claims in the two actions arose out of the same transaction, they were in respect of different causes of action, and that consequently, the second action was not brought contrary to Section 34 of the Ceylon Civil Procedure Code ( same as Order 2, Rule 2 of the Indian Code of Civil Procedure ) and could not be maintained.


38. Dargavarabu Sarrapu v. Rampratabu ( 1902 ) ILR 25 Mad 580 ( FB ) was also a case of an antecedent debt. The plaintiffs sold and delivered opium to defendants on different occasions taking a promissory note at each sale for the value of the parcel sold. The case of the defendants was that action should have been brought on the foot of the notes and not on the sales. But the Full Bench consisting of Sir Arnold White, C. J., Benson and Bhashyam Ayyangar, JJ., repelled that contention and held that the plaintiffs were entitled to sue for the price of the goods sold and delivered.


Jambhu Chetty v. Palaniappa Chettiar ( 1903 ) ILR 26 Mad 526, was a case where a suit was laid on the amount due on account of the goods sold and delivered and money lent. The defence was that the plaintiff was accepted hundis in discharge of the debt and was, in consequence, debarred from suing on the original consideration and that his remedy, if he had one, was on the hundis. What was held by the learned Judges, Benson and Bhasyam Ayyangar, JJ., is that it is a question of fact, with regard to promissory notes or bills or hundis, whether the parties intended them to operate as absolute or conditional payment and the presumption is that the effect of 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, ( 1911 ) 21 Mad LJ 432 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 and the lender can fall back on the implied promise in the absence of a promise in writing. The distinction between the promissory note and hundi or bill of exchange is explained by Vradachariar, J., in these words :
 "But where the borrower gives his own promissory note as part of the loan transaction, it seems to me artificial to treat that every ' promise to pay ' obtained in that note as amounting to a payment, and then to seek to import the theory of ' conditional ' payment. "


, was a case where an income-tax assessee expressly requested the Government to ' remit ' the amounts of the bills by cheques. The Government sent the cheques by post as requested by the assessee and posted them at Delhi and none of the cheques had been dishonoured on presentation. On those facts, Das J. ( as he then was ), after quoting Benjamin on Sale, 8th Edition, p. 23. Hart on Banking, 4th Edition, Vo. 1 p. 342, Byrne, J., in Felix Hadley & Co. v. Hadley ( 1898 ) 2 Ch 680 and Lord Maugham in Rhokana Corpn. Ltd. v. Inland Revenue Commrs. 1938 AC 380 observed at p. 433 :
 "The position, therefore, is that in one view of the matter there was in the circumstances of this case, an implied agreement under which the cheques were accepted unconditionally as payment and on another view even if the cheques were taken conditionally the cheques not having been dishonoured but having been cashed, the payment related back to the dates of the receipt of the cheques and in law the dates of payments were the dates of the delivery of the cheques. "

 It is on those facts that an implied agreement of unconditional acceptance of payment was inferred and it is therefore not an authority for the proposition relied upon by Mr. Jagannadha Rao.


40. In Chitty on Contracts ( Twenty-third Edition ) dealing with " payment by negotiable instrument ", it is pointed out in para 1184 at page 560 that " Apart from express agreement a creditor is not bound to accept payment in any way except cash, i. e., legal tender. If, however, he accepts a negotiable instrument, such as a bill of exchange, promissory note or cheque, it is a question of fact depending on the intention of the parties, whether it is taken in absolute satisfaction of the debt, or only in conditional satisfaction. " To the same effect is what is stated 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 Justice is that the English rules of evidence are not statutory, but judge made and the tendency in England has always been to ignore as far as possible stamp objections ( See Taylor on Evidence Vol. 1 P. 276 ( 12th Edition ).) In this connection, it is not necessary for us to refer to the two decisions of the Madras High Court in AIR 1926 Mad 1148 and AIR 1935 Mad 206, which conflict with Pothi Reddy's case, ( 1885-1887 ) ILR 10 Mad 94, for those two decisions were referred to and overruled by the Full Bench.


42. We may here refer in brief to the decisions of the Punjab High Court, which has consistently taken the view which accords with the view taken in Pothi Reddy's case ( 1885-1887 ) ILR 10 Mad 94, and Sheik Akbar v. Sheikh Khan, ( 1881 ) ILR 7 Cal 256. In Chanda Singh v. Amritsar Banking Co., AIR 1922 Lah 307, Chevis and Harison JJ., held that even in a case where the execution of the ' hundi ' had for certain reasons been postponed for sometime after the loan had been advanced, the loan, having been granted on the security of the ' hundi ', the plaintiff had no cause of action independent of the ' hundi ' and that, as the ' hundi ' was inadmissible in evidence and Section 91 of the Evidence Act forbids secondary evidence, the plaintiff's suit must fail. It was similarly held with regard to a promissory note by Broadway and Forde, JJ., in Ram Jas v. Shahabuddin, AIR 1927 Lah 89. To the same effect is the decision in Sohan Lal Nihal Chand v. Raghu Nath Singh, AIR 1934 Lah 606, where Shadi Lal, C. J. and Rangi Lal, J., went to the extent of holding that a decree cannot be passed on the basis of a promissory note which is inadmissible in evidence even if the defendant admits the liability on it. These decisions were referred to and followed by Khosla and Falshaw, JJ., in Amin Chand v. Firm Madho Rao Banwari Lal, .


43. Now let us examine whether the learned Judge, Gopal Rao Ekbote, J. had any valid reason in not following the Full Bench decision by invoking the theory of money had and received. He felt not bound by the Full Bench decision on the ground that the two decisions of the Privy Council in AIR 1918 PC 241 and AIR 1918 PC 151, were not noticed by the Full Bench. The question is whether those two decisions touch the question involved at all.


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 may have been made ". It is with reference to that provision that it was observed :
 "And so the Courts in that series of suits failed to apply the provision of Section 14 in a manner that would be conclusive as to the purchaser's right to be indemnified. How far the remedy provided by Section 14 in a purchaser's favour excludes all other remedies apart from any determination of an issue, is a question of some nicety. There is much to be said in favour of its exclusive character on the score of policy and convenience.


xx xx xx xx xx xx xx But they again desirs to emphasize the point that if the Court observe the duty cost on them by Section 14 this difficulty never can arise. And they would only add this, that there decision of this appeal on other grounds is due to the particular course this litigation had taken, and must not be regarded as indicating an opinion that the suit is competent. "
 This decision, it is manifest from the above facts has absolutely no bearing on the questions with which we are now concerned. The Privy Council based their conclusion on the express terms of Section 14 of the Regulation and were not expressing any views on the doctrine of " money had and received " generally, much less with reference to a claim under an unstamped promissory note.


45. In AIR 1918 PC 241, the Privy Council was concerned with entrustment of the property to an agent. A stranger had taken transfer of property from the agent with knowledge of a breach of a duty committed by him in making the transfer. The transferee applied for the property according to the agent's instructions. It was, therefore, held that the transferee is accountable to the principal and that that obligation is not based on contract, but on fiduciary obligations. It was also held that the claim may also be maintainable, as it was not merely for conversion but alternatively to recover what was in effect a trust fund. Viscount Haldane discussed the theory of " money had and received " under the Common Law of England and observed :
 "The question in the present case, where an agent in accordance with whose instructions appellants had acted, intervened between the owner and the tort-feasor was as what was the effect and extent of such affirmance of contractual relation. Could the contractual relation be split up and only part of it be approbated while the rest was reprobated and could 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 ?

 xx                 xx          xx                      xx                          xx              xx                       xx                   xx           xx

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 , 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 considering a case where the drawer of a hundi described himself beneath his signature as " Acting Superintendent of the Private Treasury of His Excellency Sir Maharaja the Prime Minister of H. H. Nizam. " It was held that it was nothing but a description of the drawer's position and was certainly not a signature in the form necessary for an agent signing on behalf of a Principal. The observation that " it would of course have been open to the plaintiffs had they thought fit to have framed their case in an alternative form, and to have sued both of the hundis and, alternatively, upon the consideration " relied upon by the learned single Judge in, , was with reference to a hundi transaction. As already adverted to the difficulty created by Section 91 of the Evidence Act does not come in the way as a cheque, bill or hundi does not embody a promise to pay by the maker, but only a direction to another person and therefore the lender can fall back on the implied promise in the absence of a promise in writing. The above discussion on the Privy Council cases would bear out that, as they were not relevant for the purpose of the question to be answered by the Full Bench, the need to consider them did not arise. However, in the dissenting judgment of Stodart, J., he noticed Sadasuk Janki Das's case, AIR 1918 PC 146, and that is indicative of the fact that the learned Judges of the Full Bench were invited to the decisions or were aware


indicative of the fact that the learned Judges of the Full Bench were invited to the decisions or were aware of them. We are, therefore, of the opinion, with great respect to the learned Judge, Gopal Rao Ekbote, J. That there was no warrant to strike a different note from what is laid down by the Full Bench on the assumption that, if the two decisions in AIR 1918 PC 151 and AIR 1918 PC 241, were noticed by the learned Judges of the Full Bench they would not have taken the view that they had taken.


47. AIR 1929 Allahabad 254 is one of the cases where it was held that, even if the hundi is held to be inadmissible, the plaintiff would still be able to succeed if his suit can be treated as one for recovery of the money had and received or for compensation of money paid by him. That case was referred to and disagreement with the view taken there was expressed by Leach, C. J. It is not as if the learned Judge of the Full Bench did not consider the question whether the cause of 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, ; New Marine Coal Co. v. Union of India, and Mulamchand v. State of Madhya Pradesh, in addition to other decisions which we shall presently refer.

 49. Section 70 no doubt is intended to apply to all cases of benefit bona fide conferred by one person on another which benefit is enjoyed by the person receiving it. What the plaintiff is required to prove is that he did something lawful to another person or delivered something to him and that what he did or delivered was not intended to be gratuitous and the person to whom " anything " was delivered or done derived benefit under it, or has been a beneficiary of what he did or delivered to him so as to entitle him to be compensated or to restore the " thing " so delivered or done.


50. Before referring to the cases of the Supreme Court, it may be necessary to refer to the other cases relied upon by the learned Counsel, Sri M. Jagannadha Rao. The case of a Royal Bank of Canada v. The King, 1913 AC 283, was an appeal from the judgment of the Supreme Court of Alberta. The main controversy was as to the validity of the statute ( Alberta Act 1 Geo 5 C 9 ) passed in 1910, dealing with the sale of certain bonds. The proceeds were deposited in certain banks, one of them being the Royal Bank of Canada, the defendant-appellant. The Government of Alberta brought action against the Royal Bank of Canada and two other companies to recover certain amount with interest being the amount of the deposit held by the bank. The Courts below had held against the Bank. On appeal, the Privy Council said that the lenders in London remitted their money to New York to be applied in carrying out the particular scheme which was established by the statutes of 1909 and the Orders in Council, and by the contracts and mortgage of that year. The money claimed in the action was paid to the appellant-Bank as one of those designated to act in carrying out the scheme. The Bank received the money at its branch in New York, and its general manager then gave instructions from the head office in Montreal to the manager of one of its local branches, at Edmonton in the province of Alberta for the opening of the credit for the special account. The local manager was told that he was to act on instructions from the head office, which retained control. Viscount Haldane 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


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 stretching the principle he relied upon what Brett L. J., said in Wilson v. Church, ( 1879 ) 13 Ch D 1 at p. 49, viz., " when money has been paid to borrowers in consideration of the undertaking of a scheme to be carried into effect subsequently to the payment and which has become abortive. " The principle in that case was sought to be stretched here beyond limits of what was stated there, to a case of promissory note too on the ground that whatever may be the reason which invalidated the promissory note, still the right to recover the money is not lost. There, it should be remembered. the action was laid not on foot of any promissory note but solely on the ground that money remitted was to be applied in carrying out a particular scheme by certain statutes and the orders in Council and certain contracts. The Royal Bank of Canada, which had received monies was to carry out the scheme adumbrated under the statute. It was for that reason that the Privy


out the scheme adumbrated under the statute. It was for that reason that the Privy Council held that a civil right existed and was enforceable outside the province of Alberta and the Legislature of the province of Alberta could not validly legislate beyond its jurisdiction.


51. What Lord Mansfield said in Moses v. Macferlan, ( 1760 ) 97 ER 676, cannot also applied where there is a statutory prohibition under the Stamp Act and the Evidence Act. It is not necessary to refer to the facts of that case except to state what Lord Mansfield observed, for that decision was not later followed in Sinclair v. Brougham, 1914 AC 398. What Lord Mansfield said in that case is this : ( at p. 680 ):
 "This kind of equitable action to recover back money, which ought not in justice to be kept, is very beneficial, and therefore much encouraged. It lies only for money which ex aequo et bono, the defendant ought to refund. It does not lie for money paid by the plaintiff, which is claimed of him as payable in point of honour and honesty, although it could not have been recovered from him by any course of law; as in payment of a debt borrowed by the Statute of Limitations xx xx xx But it lies for money got through imposition. ( express or implied ) or extortion, or oppression; or an undue advantage taken of the plaintiff's situation contrary to laws made for the protection of persons under those circumstances. In one word, the gist of this kind of action is, that the defendant upon the circumstances of the case, is 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 merely because it would be the right and fair thing that it should be refunded to the prayer. "
 52. It should be clearly borne in mind that the principles of natural justice, equity and good conscience cannot be imported so as to alter or put an end to the contractual rights or obligations regulated by statutes.


53. Brook's Wharf and Bull Wharf Ltd. V. Goodman Brothers, )1937 1 KB 534, was a case where the defendants had imported a consignment of squirrel skin, out of which some of the packages stored in the warehouse were stolen. The plaintiffs as bonded warehousemen were compelled by law at the demand of the Customs to pay the duties on those packages out of their own moneys. The defendants had refused to supply for that purpose. The plaintiffs laid an action in respect of the amount paid towards customs duty on the ground that as between themselves and the defendants, the defendants were primarily liable for the duties. It is on those facts that it was held that the plaintiffs having been compelled under Section 85 of the Customs Consolidation Act. 1876. To pay the duties on the defendants' goods were entitled to be reimbursed the amount of the duties they had so paid. That was a case where the statute provided for reimbursement and as such it can have no application to a loan under a promissory note. There is an interesting commentary quoted hereunder on this case and 1914 AC 398 by P.H. Wins-field in (1937) 53 LQR 447. Which answers the theory of an implied promise or of liability in quasi-contract pleaded by the learned counsel, Mr. M. Jagannadha rao.