016-NLR-NLR-V-17-PALNIAPPA-v.-SAMINATHAN-et-al.pdf
1918
[Privy Council.]
Present: Lord Dunedin, Lord Shaw, and Lord Moulton.PALANIAPPA v. SAMINATHAN et. al.
C. Colombo, 30,719.
Res judicata—Civil Procedure Code *.84—Cause of action—Note
granted a$ conditional discharge of debt—Action on note dismissed—Material alteration—Subsequent action for money due.
Parties settled their existing disputes by entering into a newagreement in terms of an award of arbitrators, and as conditionaldischarge of that agreement the defendants granted two promissorynotes for Rs. 14,000 each. Plaintiff sued on the notes, but theaction was dismissed on the ground that the notes were materiallyaltered. The plaintiff thereupon brought thi6 action to recovertwo .sums (Rs. 11,566 and Rs. 771), which were included in theaward and settled by the new agreement.
Held, that the action was not barred by section 34 of the CivilProcedure Code.
44 A claim on the bills and a claim for the amount found dueunder the award, and for which payment was provided by theagreement, are not the same cause of action, but are in truth incon-sistent and mutually exclusive causes of action.4’
Section 34 is directed to securing the exhaustion of the relief inrespect of a cause of action, and not to the inclusion in one and thesame action of different causes of action, even though they arisefrom the same transactions.
The form of 'the plaint is such that it is clear that the plaintiff wasattempting to assert in the action two of the claims which wereincluded in the award, and settled by the new agreement. This her was not entitled to do, since they had been extinguished by the
acceptance of the new agreementTheir Lordships think
that justice will be done by treating the sum sued for as being part
of the amount found due by the arbitrators, the payment of which •• *
( )was provided for by the agreement, and in respect of which the
notes were given But this amendment wity entail the
consequence that, inasmuch as the plaintiff has sued far a part onlyof the total sum due, he cannot bring a fresh action for the remainder*
T
HIS was an appeal from a judgment of the Supreme Court(reported in 15 N. L. R. 161). The facts appear from the
judgment.
December 16, 1913. Delivered by Lord Moulton: —
The respondent is a money lender carrying on business in Colombo,and the first appellant was for a time his agent and manager. Hewas at the same time carrying on business as a money lender inpartnership with the second appellant.
s.
For about three and a half years prior to June, 1909, the respon-dent was absent from Ceylon, and the first appellant carried on hisbusiness during his absence. On his return serious disputes arosebetween them. The respondent alleged that there was a largebalance due to him from the first appellant, and also that the firstappellant had not credited the respondent with certain profits madeby. discounting promissory notes at the banks for firms in which thesecond appellant was a partner. Ultimately all the parties to thepresent suit agreed that these disputes should be referred to twoother money lenders named Bamanathan Chetfcy and Mutu BamenChetty, who, after the completion of the investigation, drew up, onAugust 30, 1909, what has been termed “ a receipt, " which theappellants signed, the arbitrators witnessed, and the respondentaccepted and acted upon. This document deals seriatim with6even sums thereby admitted to be due from the appellants to therespondent, amounting in all to Bs. 28,224 5/32, and it then proceedsas follows: —
“ And this sum of Bs. 28,224 5/32 we have this day settled withyou in the following manner:—
" Bs. 224 5/32 paid to you by us this day in cash; Bs. 14,000 by anon demand promissory note, payable with interest on September15 ; and Bs.: 14,000 by another on demand promissory note givenon- the same date, payable with interest on November 30 allaggregating to Bs. 28,224 5/32.
“ And this matter having been thus arranged and settled inrespect of all the accounts between us, this receipt shall be thewitness that there is no other claim against U6 by you or by usagainst you. ”
Accordingly Bs. 224 5/32 were thereupon paid‘by the appellantsto the respondent, and two .promissory , notes, each for a sum ofBs. 14,000, were handed to him. Their Lordshipg entertain nodoubt that, although informally conducted, the proceeding was inthe nature of an arbitration, and the so ealled “ receipt ” expresses
1918
Palaniappa
v.
Sammathan
( «* )WL the findings of the arbitrators, dnd the mode hawAtfdE it w to beLou> performed. But the question whether or not it should so be regardedMororow |8 immaterial to the decision of the present appeal. The receipt '*Paianiappa given by the appellants, and accepted by the respondent, and actedSomintUhan °n ^ both parties, proves conclusively that all the parties agreedto a settlement of all their existing disputes by the arrangementformulated in the “ receipt/’ It is a clear example of what used tobe well known in common law pleading as ** accord and satisfactionby a substituted agreement/' No matter what were the respectiverights of the parties inter ee, they are abandoned in considerationof the acceptance by all of a 'new agreement. . The consequence isthat when such an accord and satisfaction takes place the priorrights of the parties are extinguished. They have in .fact beenexchanged for the new rights; and the new agreement becomes a newdeparture, and the rights of all the parties are fully represented by it.
There appears to be no doubt, that it was the intention of all theparties that the sums for which the promissory notes were givenshould bear what is known as Chetty interest, which is at a ratedependent on the current bank rate, and would in the present casehave been between 6 per cent, and 7 per cent But, probably by anoversight, no rate of interest was inserted in the promissory notes,and the respondent, without communication with the appellants,went to one of the arbitrators and persuaded him to. alter bothpromissory notes by inserting therein 9 per cent, as the rate of interest.Though this was an irregularity of a grave kind, their Lordships donot understand that it was done with bad faith either on the partof the arbitrator or the respondent. It appears to have been the^result of a misunderstanding, and accordingly their • Lordships treatit' as a material alteration innocently made.
On October 18, 1909, the respondent commenced an action in theDistrict Court of Colombo upon the two promissory notes so given tohim. The appellants raised as a defence that a material alterationhad been made in them, and on this ground the action was dismissedon February 8, 1910.
On April 20, 1910, the respondent commenced the present actionfor the two sums of Rs. 11,526.7/32 and Rs. 771. These were two outof six items referred to in the receipt, all going towards making upthe total of Rs. 28,224which was the basis of the new agreement.The form of the plaint is such that it is clear that the respondent wasattempting to assert in the action two of the claims which wereincluded in the award and settled by the new agreement. This hewas, not entitled to do, since they had been extinguished by theacceptance o{ the new agreement.
At the trial of the action the District Judge found in favour of theappellants, on the ground that the two promissory notes were givenin absolute payment of the debt, and that, therefore, no remedyremained to the respondent, excepting upon those npt.es. On appeal
( 59 )
the Judges of the Supreme Court held that the notes were onlyaccepted as a conditional discharge, so that they only amounted topayment if paid, and that, inasmuch- as they had not been paid, thooriginal debt of Bs. 26,000 remained. They accordingly allowedthe appeal. It is from this decision that the present appeal isbrought.
Their Lordships are of opinion, as has already been stated, thatthe form of the claim was faulty, inasmuch as the sole existingliability was under the agreement set out in the receipt. But theyare also of opinion that the arrangement for the discharge of theamount found due by means of the promissory notes only expressedthe mode of payment contemplated and arranged for at the time.This was essentially a matter of form only, the substance of theaward being that the specified amount was actually due from the appel-lants to the respondent. Through an innocent act the promissorynotes have become incapable of being enforced, and the appellantshave availed themselves of this and have refused to pay thenotes, so that payment in the form contemplated has failed. Butthis does not affect the substance of the award or the basis of thearrangement, which was liability, and therefore it was open to therespondent to bring an action for the unpaid balance of the sumfound due, i.e., for the amount of the promissory notes. He hasbrought His action for an amount less than this and based it onwrong grounds; but, on the other hand, the appellants omitted toraise their true defence in their pleadings, when there would havebeen an opportunity for the respondent to correct the grounds of hisclaim.
The learned Judge at the trial held that this action was barred bysection 34 of the Ceylon Civil Procedure Code, and counsel for theappellants relied strongly upon this section in the argument beforeus. On account of the importance of the point it is desirable tocite the section in full: —
“ Every action shall include the whole of the claim which theplaintiff is entitled to make in respect of the cause of action; buta plaintiff may relinquish any portion of his claim in order to bringthe action within the jurisdiction of any Court.
" If a plaintiff omits to sue in respedt of or intentionally relin-quishes any portion of his claim, he shall not afterwards sue inrespect of the portion so omitted or relinquished. A personentitled to more than one remedy in respect of' the same cause ofaction may sue for all or any of his remedies; but if he omite(except with the leave of the Court obtained before the hearing)to sue for any of such remedies, he shall not afterwards sue for theremedy bo omitted.
“ For the purpose of this section an obligation and a collateralsecurity for its performance shall be deemed to constitute but onecause of action ”
1018.
Lord
MouxxOH
Palaniappc
v.
Saminathan
( 60 )
1918*
Lord
Moulton
Bohndappa
V'
Saminathan
Their Lordships are of opinion that the learned Judge took anerroneous view of the object and meaning of this section. * It is-directed to securing the exhaustion of the relief in respect of a oepseof action, and not to the inclusion in one and the same action ofdifferent causes of action, even though they arise from the sametransactions. The first part of the clause makes it incumbent on theplaintiff to include the whole of his claim in his action. The secondportion makes it incumbent on him to ask for the whole of hisremedies. The final paragraph, in their Lordships* opinion, is' notintended to be an illustration of the foregoing provisions, but asubstantive enactment, making an obligation and a collateralsecurity for its performance (which would otherwise be two inde-pendent causes of action) one cause of action for the purposes of thesection.
Viewed thus, it is evident that a claim on .the bilk and a claim lorthe amount found due under the award, and for which payment wasprovided by the agreement, are not the same cause of action, but arein truth' inconsistent and mutually exclusive causes of action. Solong as the bills were outstanding, there was no right of actionotherwise than upon the bills. It is therefore impossible, in theirLordships* opinion, to hold that the claim for the amount due wasthe same cause of action as the claim upon the bills and ought tohave been included in the prior action.
Their Lordships therefore think that justice will be done bytreating the sum 6ued for as being part of the amount found due bythe arbitrators, the payment of which was provided for by theagreement, and in respect of which the promissory notes were given.They hold that, as such, it is recoverable by the respondent, and thatthe appeal should be dismissed. But this amendment will .entail theconsequence that, inasmuch as the respondent has sued for a partonly of the total sum due, he cannot bring a fresh action for theremainder.
Their Lordships will therefore humbly advise His Majesty that theappeal should be dismissed, but without costs.
Appeal dismissed.