019-NLR-NLR-V-58-M.-IBRAHIM-Appellant-and-N.-ADUME-Respondent.pdf
1956Present : Basnayake, C.J., and K. D. de Silva, J.
31. IBRAHIM, Appellant, and N. ADUME, Respondent –
S. C. 27-i—D. G. Matale, 31. ,S‘. 200
Promissory note—“ Valuable consideration "—Hills of Exchange Ordinance, ss. ‘J00.
J"n im action oil a promissory noto the evidence showed that- tho defendanthad given tho promissory noto to tho plaintiff in exchange for tho purportedsurrender by the plaint iff of his “ rights ” to purchase a land under an agreementwhich was, in fact, null a'nd void for tho reason that it. was oral and did notsatisfy tho requirements of section 2 of tho Prevent ion of Frauds Ordinance.
Held, that the promissory note was unenforceable as there was no “ valuableconsideration ” in the sense in which that expression is used in section 27 of thoBills of Exchange Ordinance.
J^.PPEAL from a judgment of the District Court, Matale.
V. Per era. Q.C., with T. B. Dissent a//ale and G. D. C. Wcerctsinyhe,for defendant-appellant.
G. Wceramanlry, with Ananda Karunatilleke, for plaintiff-respondent.
Cur. aclv. vitll.
May 2, 1956. Basnayake, C.J.—
This is an action on a promissory note. The appellant (hereinafterreferred to as the defendant) and the respondent (hereinafter referredto as the plaintiff) agreed orally with another, one E. h. Senanayake,to buy for the sum of Es. 3S,000 a block of land in extent 20 acres 3 roodsknown as the Ivalalpitiya Division, out of an Estate known as UkuwelaEstate which Senanaj'ake had purchased for the purpose of blocking upand selling. The defendant was the moving spirit in the transaction.The arrangement between the plaintiff and the defendant was that theplaintiff should pay Rs. 5,500 and the defendant the balance.
On 10th October 1950 the first instalment- of 13s. 3,500 was paid andin the receipt which was given by Senanayake the names of both plaintiffand the defendant were mentioned and the pajunent was described as anadvance on the sale of Ivalalpitiya Division, a block 20 acres, 2 roods, and15 perches in extent. The receipt alsostated that a.sale agreement was tobe signed on 5th November 1950 and that 50 per cent, of the balance,advance of the purchase price of Rs. 38,000 was to be paid on signingthe agreement. But such an agreement was never signed.
The defendant made further payments and completed the paymentof the entire sum and received the transfer of another block in exchangefor the ICalalpitiya Block which he had agreed to purchase.
The plaintiff contributed only Rs. 1,000 towards the purchase price.According to the defendant this contribution was made in two instalmentsof Rs. 500 but the plaintiff saj’s it was made in one instalment of Rs. 1,000.
4LVIII
2J. X. B GO 107—1,593 (11/50)
The plaintiff’s version is that for a contribution of Its. 5,-500 lie wasto get 5 acres of land and a line room ; but according to the defendantthe extent of the land to be given was 3 acres, 3 roods and 2S perches.
Either because of the plaintiff’s inability to pay the balance sum duefrom him or on account of the defendant’s desire to purchase the entireland, it was agreed that the defendant should refund the lis. 1,000 paid bythe plaintiff and give him a promissory note for Rs. 1,500 payable in threemonths in exchange for his " rights
It is common ground that out of the amount stipulated in thepromissory note the defendant paid lis. 100. This action is to enforce,the payment of the balance Rs. 1,400 with interest thereon at 6 per cent,as stipulated in the note.
The defendant and the plaintiff are at variance as to why the promissorynote was given. The defendant states that it is for loss of profits, theplaintiff states that it is for the surronder of his rights.
The sole question that was raised at the trial and in appeal was whetherthere was valuable consideration for the promissory note and if notwhether the action could be maintained.
Counsel for the defendant against whom judgment has been given bythe District Judge argued that the promissory note was unenforceableas there was no consideration for it.
He submitted that as the oral agreement between tlie plaintiff andthe defendant in regard to the purchase by the former of a portion of theland that (lie latter had aVranged to buy from Senanayako was of noforce or avail in law the plaintiffhad no “ rights ” which lie could surrender.There was therefore no consideration for the promissory note.
Reamed Counsel for the plaintiff contended that there was considerationas the right, which the plaintiff gave up though not enforceable in law wassomething that had some-value and that for .surrendering something ofvalues to him he took the promissory note- which was therefore enforceable.Wc are unable to uphold the submission of Counsel for the plaintiff.
Section 27 of the Bills of Exchange Ordinance prescribes how valuableconsideration for a Bill may be constituted. Section 90 makes theprovision of the Ordinance relating to Bills of Exchange applicable withnecessary modifications to promissory notes.
There can be no valuable consideration in the sense in which that ex-pression is used in the Ordinance in an agreement which is mill and void,for, that is the effect of an agreement that does not satisfy the requirementsof section 2 of the Prevention of Frauds Ordinance1. '
I would therefore allow the appeal with costs. .
K. D. t>b Silva, J.—T agree.
A])j>cal allotted.
1 .tf.'ftiuiralnc v. Percra (JJ A.i ii. -7k?).