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Lachmi Rai v. Srideo Rai
Factual and Procedural Background
The plaintiffs filed a suit for recovery of money based on two instruments: a bond and a sarkhat. The trial Court decreed recovery of the bond money but dismissed the claim regarding the sarkhat. Upon appeal by the plaintiffs, the lower appellate Court decreed the suit for recovery of the money due on the sarkhat as well. The defendants, as appellants before the present Court, challenged the appellate decree related to the sarkhat money.
Legal Issues Presented
- Whether the lower appellate Court was correct in decreeing recovery of money on the basis of the sarkhat which had undergone a material alteration without the defendants' consent.
- Whether oral evidence regarding an agreement to pay interest, which was not originally mentioned in the sarkhat, is admissible.
Arguments of the Parties
Appellants' Arguments
- The material alteration made by the plaintiffs to the sarkhat after its execution, without the defendants' consent, rendered the negotiable instrument void.
- Reliance was placed on English law principles that such material alteration voids the document against the other party.
- Oral evidence concerning the agreement to pay interest was inadmissible since the original document was silent on this matter.
Respondents' Arguments
- The alteration was made to carry out the common intention of the parties, as supported by Section 87 of the Negotiable Instruments Act, and thus did not void the instrument.
- There was an agreement between the parties for payment of interest at Re. 1-8-0 per cent per mensem, and the omission in the original sarkhat was accidental.
- Oral evidence to prove the agreement on interest is admissible under Proviso (2) to Section 92 of the Evidence Act and Section 87 of the Negotiable Instruments Act.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Section 87 of the Negotiable Instruments Act | Material alteration does not void a negotiable instrument if made to carry out the common intention of the parties. | The Court found that the alteration regarding interest was made to carry out the common intention and thus did not void the sarkhat. |
| Proviso (2) to Section 92 of the Evidence Act | Allows proof of separate oral agreements on matters on which a document is silent. | The Court held that oral evidence regarding the agreement to pay interest was admissible. |
Court's Reasoning and Analysis
The Court analyzed the effect of the material alteration made to the sarkhat after execution. It recognized the general rule under English law that material alteration without consent voids a document but noted that Section 87 of the Negotiable Instruments Act provides an exception when the alteration is made to carry out the common intention of the parties. The Courts below found, and this Court agreed, that the parties had an agreement to pay interest which was accidentally omitted originally and that the alteration was made to reflect this mutual intention. Regarding admissibility of oral evidence, the Court referred to Proviso (2) to Section 92 of the Evidence Act and Section 87 of the Negotiable Instruments Act, which permit oral evidence to prove agreements on matters silent in the document. Consequently, the Court found no merit in the appellants' contentions and upheld the appellate decree.
Holding and Implications
Appeal dismissed.
The Court upheld the lower appellate Court's decree for recovery of money on the basis of the sarkhat despite the material alteration, affirming the applicability of statutory safeguards under the Negotiable Instruments Act and the Evidence Act regarding alterations and admissibility of oral evidence. The decision directly affects the parties by confirming the plaintiffs' right to recover the sarkhat money with interest. No new precedent was established beyond the application of existing statutory provisions.
Bajpai, J.:— The defendants are the appellants before us. The plaintiffs brought a suit for the recovery of a sum of money on the basis of a bond and of another sum of money on the basis of a sarkhat. The trial Court decreed the suit so far as the bond money was concerned but dismissed the suit so far as the sarkhat money was concerned. On appeal by the plaintiffs, the lower appellate Court decreed the suit for the recovery of the money due on the sarkhat as well.
2. The contention before us is that the suit for the recovery of the money on the basis of the sarkhat has been wrongly decreed by the lower Appellate Court. There is no controversy before us so far as the money due on the bond is concerned.
3. It appears that the sarkhat, as originally drawn up, did not contain any reference as to the payment of interest. An alteration—and we may take it a material alteration—was made some time afterwards by the plain, tiffs without reference to the defendants. It was contended in the Courts below that the material alteration made the negotiable instrument void against the defendants. Keliance was placed on several authorities and on the rule of English law that mate, rial alteration in a document after its execution without the consent of the other party renders a document void. This rule has been with certain safeguards enunciated in Section 87 of the Negotiable Instruments Act, where the document in question is a negotiable instrument and according to the provisions of that Section, if the alteration is made in order to carry out the common intention of original parties, the negotiable instrument does not become void. In the present case the Courts below have found that there was an agreement between the parties for payment of interest at the rate of Re. 1-8-0 per cent, per mensem and the alteration was made presumably on behalf of the creditors in order to carry out the common intention of the parties. The omission regarding the payment of interest was accidental as found by the Courts below.
4. It was also contended by the appellants that oral evidence as to the agreement to pay interest was inadmissible in evidence. We may point out that Proviso (2) to Section 92 of the Evidence Act, makes any separate oral agreement as to any matter on which the document is silent, capable of proof and there is no prohibition in that respect. Moreover Section 87 of the Negotiable Instruments Act, itself postulates the possibility of such an agreement being proved by oral evidence. In this view of the case there is no force in this appeal and we dismiss it with costs.
R.M/R.K
5. Appeal dismissed.
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