Singh v Singh (C.A. 5/1934.) [1937] EACA 137 (1 January 1937)

## COURT OF APPEAL FOR EASTERN AFRICA.

Before ABRAHAMS, C. J. (Uganda), Ag. P.; LAW, C. J. (Zanzibar) and WEBB, J. (Kenya).

SANTA SINGH (Appellant) (Original Defendant) $\boldsymbol{v}.$

## M. THAKAR SINGH (Respondent) (Original Plaintiff). C. A. $5/1934$ .

- Bills of Exchange Ordinance of Kenya, 1927, sections 96 and 62 and 59—Indian Contract Act, section 63—Written document signed by holder of promissory note agreeing to charge a lower rate of monthly interest—whether such document void for want of consideration—Onus on holder of promissory note to prove lack of consideration for the document-Document given conditionally. - Held (29-6-34).—That, where the holder of a promissory note for Sh. 2,000, with interest at 3 per cent per mensem signed a document to the effect that he would charge the borrower interest at only $1\frac{1}{2}$ per cent per mensem, the onus of proving want of consideration for the document was on the holder of the note, and that in this case the trial Judge rightly held that there was no consideration. - Held Further.-That, if the document had been absolute and unconditional, it would have operated to discharge the right of the holder of the promissory note against the borrower to the extent of the holder's rights to the extra 1} per cent per mensem interest; but, in this case, the evidence showed that the document was given conditionally. Cook v. Lister (1863), 32 L. J. C. P., page 121 referred to. Appeal dismissed.

Gautama for appellant.

Modera for respondent.

Gautama.-Bills of Exchange Ordinance, 1927, and the Indian Contract Act, section 62 of the Ordinance, "absolutely and" unconditionally renounces his rights". Promissory note and document of remission of interest. Partial renunciation means partial discharge. Indian Contract Act, section 63, 55 Indian. Appeals, p. 154 at p. 159. 19 Madras, p. 398; 49 Cal., p. 599; 34 Mad., p. 156. "I agreed to reduction on condition that defendant would pay interest regularly every month". The consideration is the same. Chitty on Contracts, 18th Ed., p. 23. This would not avoid the contract. Failure of consideration. Chitty on Contracts, pp. 58, 65 and 68.

Modera.—Only serious point is that section 63 of Indian. Contract Act should apply here. Section 62 of Bills of Exchange Act deals with discharge, not partial discharge. Section 63 of the

Contract Act does not apply to bills of exchange. The transaction was to alter the rate of interest. Section 64 of Bills of Exchange Ordinance. Section 63 of Contract Act did not contemplate a case like this. In 55 Indian App., 154 the Privy Council evidently contemplated a dispensation not an agreement. Bills of exchange involve a number of persons. Oral evidence. On face of document a lack of consideration. Proviso $1$ to $\cdot$ section 92. No consideration for reduction of interest. Failure -of consideration. Order for costs Campbell Donald and Co. $v$ . Pollock (No. 2) (1927) 96, L. J.; K. B. 1132, p. 1138. If this was consideration there was failure. I admit there can be partial discharge of a bill—and by partial renunciation. $\mathcal{A}^{\mathcal{F}}\mathcal{M}$

Gautama replied.—On the question of section 62 of Bills of Exchange Ordinance see Chalmers, p. 235. On question of costs $(1924)$ A. C., p. 514.

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## Appeal from Supreme Court of Kenya.

LAW, C. J. (Zanzibar).—The dispute between the parties in this case is in respect of the amount of interest due by appellant to respondent. The facts are that appellant executed a promissory note, Exhibit T. S.2., in favour of respondent, on the 2nd February, 1932, for value received, for Sh. 2,000 with interest at 3 per cent per mensem.

On the 1st May, 1932, the respondent signed a written document (Exhibit T. S.1) to the effect that, as from that date, he would charge appellant interest only at $1\frac{1}{2}$ per cent per mensem. The learned trial Judge held that the onus of proving want of consideration for that exihibit lay on the respondent.

The respondent gave evidence to the effect that, as appellant complained of not being able to pay the higher rate of interest, he consented to accept interest at the lower rate provided it was paid regularly every month. On the other hand, appellant's evidence was to the effect that he threatened to pay off respondent, because of the high rate of interest, and to raise a loan elsewhere on better terms. In my opinion the respondent's version is more probable and acceptable, but whichever view: be taken the conclusion must be the same masmuch as in neither case can there be said to have been any legal consideration for the new arrangement. It was always in the power of appellant. provided he could have obtained funds for the purpose, to pay off respondent whatever the rate of interest might have been, so appellant gained no particular advantage in having respondent as his creditor. Again, it is obvious that respondent gained no advantage because appellant admitted it is usual to pay interest monthly and for respondent to take a lower rate of interest con-. ferred no benefit on him. The learned trial Judge therefore was quite correct in finding that there was no consideration for Exhibit T. S.1. There having been no consideration, any question

of failure of consideration or otherwise does not arise. This disposes of the second, third and fourth grounds of appeal. The first ground was not argued but abandoned. This should dispose of this appeal, but appellant's learned counsel, before opening his arguments, applied to add a new ground of appeal in the following terms "that no consideration was necessary to support Exhibit T. S.1." The respondent's learned counsel offered no substantial objection to the application, saying it had not taken him by surprise. There is no doubt that this new point could and should have been taken before the learned trial Judge. It was certainly raised by the pleadings, but, in justice to the case, the Court considered it should be determined in this appeal. The application In support of his arguments on this was accordingly allowed. additional ground, appellant's learned counsel has referred us to section 62, Bills of Exchange Ordinance, 1927 (which corresponds with the same section in the Imperial Act of 1882) and to section 63, Indian Contract Act, which not only has no counterpart in but is contrary to the principle of English law on the In my opinion, however, it is not necessary to consider point. section 63 in view of the provisions of section 96. Bills of Exchange Ordinance, 1927, which has certain saving clauses which do not cover the Indian Contract Act. From my interpretation of section 96 I am of opinion that questions affecting the rights and liabilities attached to a bill of exchange must be determined only in accordance with the provisions of the 1927 Ordinance, and, in this case, according to the provisions of section 62 thereof. This section reads as follows:—

" (1) When the holder of a bill at or after its maturity absolutely and unconditionally renounces his rights against the acceptor the bill is discharged. The renunciation must be in writing, unless the bill is delivered up to the acceptor.

(2) The liabilities of any part of a bill may in like manner be renounced by the holder before, at, or after its maturity; but nothing in this section shall affect the rights of a holder in due course without notice of the renunciation."

On behalf of appellant it has been argued that an absolute and unconditional renunciation under that section by a holder of a bill of exchange may be made not only of his entire rights under the bill but of his partial rights thereunder. Neither of the learned counsel has been able to quote any decided case, either for or against this proposition. It seems to me, however, that the argument, to be acceptable, must be supported by reason and good sense. Section 62 falls under the general heading of "discharge" as does section 59 of the Ordinance which relates to discharge of a bill by payment. It has ben held ( $Cook \ v.$ Lister, 1863, 32, L. J.: C. P., p. 121) that discharge by payment may be full or partial. It seems therefore that an absolute and unconditional renunciation of rights under a bill may be of the entire rights or of partial rights thereunder. Both payment and renunciation are forms of discharge. There seems no reason why in the one case partial discharge may be effected and not in the other. I am of opinion, therefore, in the absence of authority to the contrary, that Exhibit T. S. 1, if absolute and unappellant to the extent of respondent's rights to $1\frac{1}{2}$ per cent per mensem of the 3 per cent per mensem as and from the 1st May, 1932. But the respondent's evidence relating to the circumstances of this exhibit, which I accept, clearly shows that the exhibit was given conditionally. This ground of appeal therefore fails also. Accordingly, I would dismiss this appeal with costs.

ABRAHAMS, C. J. (Uganda), Ag. P.-I agree.

WEBB, J.-I agree.