DALTON STJ.—Silva et aL v. Weerasuriya.
1936 -Present: Dalton SJPJ. and Koch J.
SILVA et al. v. WEERASURIYA.
184—D. C. Galle, 34,359.
Liquid claim—Action on promissory note payable on demand—Endorsementon note by payee—Agreement not to sue for two years—Defence primdfacie sustainable—Civil Procedure Code, ss. 705 and 706.
Where a promissory note payable on demand contained an endorse-ment on the back signed by the payee to the following effect:
“This promissory note is given on the condition that the same shallnot be filed in Court or sued upon by the payee or any holder thereofwithin a period of two years from the date thereof, and I undertakenot to do so till the expiration of the said period.”—
Held (in an action on the note under the provisions of Chapter LULof the Civil Procedure Code), that leave to defend should be grantedunconditionally.
.A.PPEAL from an order of the District Judge of Galle.
N. Nadarajah, for defendants, appellants.
Keuneman K.C. (with him C. Ismail), for plaintiff, respondent.
Cur. adv. vult.
July 9, 1936. Dalton S.P.J.—
The plaintiff sought, under the provisions of Chapter LIII. of the CivilProcedure Code, to recover from the defendants, husband and wife, thesum of Rs. 10,117.50, being principal and interest alleged to be due ona promissory note for Rs. 9,000, dated July 8, 1933, signed by thedefendants in favour of the plaintiff, and further interest at 15 per cent,from the date of the action.
The promissory note is in the following terms, and bears a 5-centstamp duly cancelled : —
Galle, 8th July, i933.
On demand we, the undersigned G. T. E. de Silva and B. Florence de Silvaof Magalle in Galle, promise to pay to William Weerasuriya of Magalle ororder, the sum of Rupees Nine Thousand only.
Currency for value received, with interest thereon at the rate of 15 percentum per annum from the date thereof.
T. Weerasuriya(Sgd.) G. T. E. de Silva.
(and another)(Sgd.) B. Florence de Silva
On the back of it is written the following sentence, apparently in thefirst defendant’s handwriting, and signed by the payee, the plaintiff:—
“ This promissory note is given on the condition that the same shall notbe filed in Cotut or sued upon by the payee or any holder thereof within aperiod of two years from the date hereof, and-1 undertake not to do so tillthe expiration of the said period. The said period of two years shall becounted from the date hereof.
“ (Sgd. in Sinhalese) William Weerasuriya.
8. 7. 33.”
324DALTON SJP-T.—Sitw'a et al. v. Weerasuriya.
The defendants applied to the Court for leave to defend and filedaffidavits in support thereof. The first defendant admitted signing thenote, and states he gave it in renewal of a debt he owed the plaintiff.Certain payments have been, made thereon. He states further that thesum mentioned in the note includes interest on the sum that was due;the plaintiff was therefore seeking to recover compound interest. Hefurther alleged that the plaintiff could not maintain the action as thenote was not properly stamped.
The second defendant admitted signing the note, but denied she hadreceived any money on it from the plaintiff, nor had she made anypayments as alleged by him. She further alleged that the note wasnot properly stamped and that it was a fictitious note within the meaningof the Money Lending Ordinance, No. 2 of 1918.
The learned District Judge granted each defendant leave to defend,on each giving security in the sum of Rs. 5,000. They now appealhfom that order.
The chief matter dealt with in the order of the Court below is thenature and effect of the statement signed by the plaintiff endorsed onthe back of the note. If the effect of it is that the note is not a notepayable on demand, then a question immediately arises as to the suffi-ciency of the stamp upon it, and if it is not duly stamped, whether itis admissible in evidence. In my view of the matter, the nature andeffect of that endorsement to some extent depends upon evidence, forexample, as to how and when the endorsement came to be made, whichmust be put before the Court. It must appear of course to the Court,under the provisions of section 705 of Chapter L1II., that the instrumenton which the plaintiff sues is properly stamped, before summons isordered to be served on the defendants, but the learned Judge by hisorder here is of course not acting under the provisions of that section.He has in these proceedings under section 706, merely from a perusalof the note and the endorsement, made certain presumptions and sayshe is inclined to hold that the payee could have disregarded his endorse-ment. He holds in this way that the note is an “ on demand ” noteand is properly stamped.
He does not deal with the other defences raised in the affidavits underthe provisions of the Money Lendng Ordinance, and he nowhere in hisorder states that he does not think the defences or any of them are notprima facie sustainable. Nor does he say that he feels any doubt as tothe good faith of the defences raised.
The provisions of section 706 of the Civil Procedure Code must beread with the terms of the proviso to section 704. The latter mayhave been overlooked, in view of what I have said above.
So far as the question of the stamping of the note is concerned, it isno part of the functions of this Court to decide in this proceeding whetheror not the note was properly stamped. Several of the authorities citedto us may no doubt be of assistance to one side or the other in the courseof a trial. There is here a matter which, in my opinion, entitles thedefendants to leave to defend. The only question to be decided byus is whether >r not the Court is of opinion that that defence or otherdefences raise i is prima facie sustainable. As the question of the
Walles v. Commissioner of Income Tax.325
admissibility or othewise in evidence of the promissory note must bedecided by the trial Judge in the event of a trial, it is desirable, in thecircumstances, since, in my opinion, leave to defend unconditionallymust be allowed, for this Court to say no more than this that it is impossibleto say on the plaint and promissory note filed that the Court thinks thatthe defences or some of them are not prima facie sustainable. There isfurther no suggestion as to the want of good faith of the defences raised.
In my opinion, therefore the learned trial Judge was not, in the circum-stances, justified in granting leave to defend, only upon the defendantsgiving security, as set out in his order. Leave to defend should, on theplaint, promissory note, and affidavits, have been granted unconditionally.
The appeal must therefore be allowed with costs, and the applicationwill be granted.
Koch J.—I agree.
SILVA et al. v. WEERASURIYA