1. The facts out of which these four appeals arise are prima facie very simple, for the four suits were brought on five promissory notes, the execution of which is admitted by the defendants. These latter, however, pleaded agriculturist status under the Dekkhan Agriculturists' Relief Act, and having been found to possess it, the provisions of that Act have been applied.
2. Suit No. 21 of 1930 based on a promissory note for Rs. 5,250 was dismissed. This appeal is No. 113 of 1931. The ground of dismissal was that the plaintiffs had not proved consideration.
3. Suit No. 29 of 1930 on a promissory note for Rs. 5,000 was decreed. The defence was satisfaction. The appeal is No. 199 of 1931.
4. Suit No. 28 of 1930 on a promissory note for Rs. 3,000 and one for Rs. 850 was decreed. The defence was satisfaction. It is appeal No. 178 of 1931.
5. Suit No. 32 of 1930 on a promissory note for Rs. 6,000 was decreed. The appeal is No. 170 of 1931. These last two appeals involve in each case a single question of fact-whether the promissory notes have been satisfied, or not; but the first two involve also questions of law.
6. The opposing parties are both money-lending family firms. The defendants, however, have been able to prove an income from land greater than that they have from money-lending, and so have been able to secure the advantages of being technically agriculturists. The plaintiffs carried on their business at Gadag, and were bankers of the defendant firm at Chinchali, about fourteen miles from Gadag. It is said that the transactions between the parties have been continuing harmoniously for many years but were exacerbated by a litigation which defendant No. 1 undertook against a daughter of plaintiff No. 1, shortly before the present suits were initiated. Meanwhile, there was also trouble in the plaintiffs' family, which ended in a partition effected by Mr. Potdar, the First Class Subordinate Judge, acting as arbitrator. His award had a decree passed on it on March 13, 1929. The quarrel leading to this had begun in 1926, and there are no regular accounts from September of that year, on the plaintiffs' side owing, it is said, to the books having been given up to the arbitrators, who functioned before Mr. Potdar did.
7. There were in all ten promissory notes, four executed by defendant No. 1, and six by defendant No. 2, the total sum thereby secured being Rs. 41,000 and executed at intervals between February 18 and April 1, 1927, mostly in March that year.
8. I will first take up appeal No. 113 of 1931, on the promissory note for Rs. 5,250 executed on February 18, 1927.
9. Plaintiffs' case was that the consideration had been paid in cash-defendants' that though the promissory note had been executed in order to raise a loan for the purchase of some land then in prospect, the money was never drawn as the deal fell through.
10. Both statements are, we think, false. Plaintiffs' case as to cash was fortified by a letter in defendant's handwriting, of the next day's date, complaining that four of the rupees paid were bad money and asking for their replacement by good ones, but it appears that this was part of the plaintiffs' money-lending system, which they habitually aided with similar pieces of fabricated false evidence. The position has been abandoned in appeal. The defendants called some evidence to prove the contemplated and abortive purchase of land, but neither they nor their witnesses have been believed by the learned Subordinate Judge, and we have been given no valid reason for rating their evidence higher than he did. It is evident that both sides are not to be relied on, and that the case between them must be decided on broad lines of probability.
11. The weak point of the plaintiffs' case is that no accounts in support of the promissory note have been produced. I have already stated the reason given for their absence. It is admitted that there were what are called 'tipans' or notes, but these also are not available.
12. The defendants' case is that they allowed the promissory note to remain in the plaintiffs' possession uncancelled, though they had not drawn the money owing to, as it now turns out, misplaced confidence. It is incredible that money-lenders, as they are, would do such a thing, and it is clear that there must have been consideration for the promissory note and that it was not cash. In fact, the learned Subordinate Judge, though he has dismissed the suit on the issue as to consideration, has remarked that he cannot believe the defendants' story about the want of it.
13. Mr. Nilkant Atmaram's case on appeal was presented as follows:
The plaintiffs' accounts up to September, 1926, show that the defendants between them owed the plaintiff firm Rs. 41,095 on the 'khata' balance. The trouble in the plaintiffs' family then arising, it was thought that softie better security was needed, and the promissory notes in question and the others, making ten in all, were asked for and given. The promissory note for Rs. 5,250 is not entered in the defendants' accounts, but the remaining nine are there. There is, however, a further sum of Rs. 2,410 entered in them, and when this is added to the total of the nine promissory notes, defendants' liability comes to Rs. 38,260. There are also two items, one for Rs. 2,000 and another for Rs. 835 which, though verified by the defendants' initials in plaintiffs' accounts, do not appear in their own. If the total of these two items is added to the Rs. 38,260 we are within Rs. 5 of the total liability represented by the ten promissory notes. The learned Subordinate Judge has not believed in the inference to be drawn from these facts, but the reasons of his disbelief are not very clear to us. He did not believe the defendants' story, and thought there was consideration, and says that what turns the scale is exhibit 36. Another argument is based on the fact that three of the promissory notes, this one, one for Rs. 6,000 and one for Rs. 850 are not dealt with in Mr. Potdar's award. They total Rs. 12,100. But the award does deal with a sum of Rs. 12,195 due from defendant No. 2 and called a 'khata' balance which, plaintiffs' case is, was wiped out by the promissory notes. The significance of these facts is also not clear.
14. Exhibit 36, already mentioned as turning the scale in the learned Subordinate Judge's mind, is dated February 19, 1927, and is a letter written by defendant No. 1 to plaintiff saying that Rs. 4 out of Rs. 5,250 paid him the previous day proved to be bad coin and were returned for exchange. The learned Subordinate Judge thinks that it was not worth while sending a servant from Chinchali to Gadag at some expense to exchange a few coins which could easily be passed as good ones in the course of business transactions.
15. It is evident, however, that the letter was intended to give colour to the cash theory of consideration now abandoned, a piece of chicanery not unmatched on the defendants' side, and we do not quite follow the reasoning that it turns the scale.
16. The broad facts are that on the accounts, which are largely corroborated by the defendants' accounts, the defendants owed plaintiffs Rs. 41,095 and that the promissory notes passed about the time by the defendants' total Rs. 41,100. It seems to us, after brushing aside the falsities of both sides, that the promissory notes as 'a series were based on this consideration, and if so, clear that the one sued on in this case represented part of this liability.
17. On this point we differ from the learned Subordinate Judge, who had not apparently very strong convictions on it.
18. The second point arising on this appeal is one of law. This promissory note, exhibit 35, was executed by Mahadevappa, defendant No. 1, in favour of Rachappa, plaintiff No. 1. The plaint alleges that at a family partition the promissory note went to the share of plaintiff No. 2, Rao Sahib Virappa. It is quite clear by definition in the Act, we think, that a promissory note executed in favour of a named payee is payable to his order, and is a negotiable instrument. But this promissory note has not been endorsed by plaintiff No. 1 in favour of plaintiff No. 2, and the question is whether or not plaintiff No. 2 can recover on it. The point has not been discussed by the learned Subordinate Judge who, dismissing the suit on the facts, did not need to consider it, but it has been mentioned in connection with the other two suits at the end of his judgment, where he decides to pass decrees in favour of plaintiff No. 1. It is also discussed in the judgment in suit No. 29 of 1930 in which it arose in another form. Now it arises because the payee, though a party to the suit in the Court below, has not appealed, and is not before us. In suit No. 29 of 1930 the payee was made defendant No. 3, and has been made a party to the appeal by the defendants in this Court. Another difference between the two cases is that there is no mention of the promissory note for Rs. 5,250 in the award and decree, while those instruments do allot the promissory note to the then plaintiff Rao Sahib Virappa in the other suit. The statutory law is contained in Section 13(1) and explanation, and Section 48 of the Negotiable Instruments Act, and Section 130 of the Transfer of Property Act, and there are three possible modes of transfer conceivable-by endorsement, by assignment as a chose in action, and by operation of law.
19. The case-law we have been referred to falls into two schools of opinion, represented by the two cases of Brojo Lal Saha Banikya v. Budh Nath Pyarilal and Co. I.L.R.(1927) Cal. 551 and Harkishore Barna v. Gura Mia Chaudhuri I.L.R.(1930) Cal. 752.
20. We may say generally that the equitable view is represented by Brojo Lal Saha Banikya v. Budh Nath Pyarilal and Co., Sarjug Singh v. Deosaran Singh : AIR1930Pat313 , Surajman Prasad v. Sadanand : AIR1932Pat346 , Ramnagina Prasad v. Bishwanath Prasad : AIR1934Pat85 , and Sewa Ram v. Hoti Lal I.L.R (1931). 53 All. 5, and the stricter one by Harkishore Barna v. Gura Mia Chaudhuri, Subba Narayana Vathiyar v. Ramaswami Aiyar I.L.R (1906). 30 Mad. 88, and Jaswant Singh v. Gobind Ram A.I.R. (1932) Lah. 620.
21. Sadasuk Janki Das v. Kishan Pershad (1918) L.R. 46 IndAp 33 : 21 Bom. L.R. 605, and Hirjibhoy v. Ratanbai : AIR1933Bom444 were also quoted, but do not bear directly on the point, while there is No. other clear authority of this Court.
22. On the whole, we think, that the view, well expressed in Harkishore Barna v. Gura Mia Chaudhuri, is really the proper one to adopt, and if this is done, appellant cannot succeed on the record, for the promissory note has not been endorsed in his favour, and it is not mentioned as going to his share in the award, and all there is to infer from that he is the beneficiary, is the acquiescence of his son the payee, in the plaint, which clearly is not enough on any view of the law on the point. Mr. Nilkant. Atmaram has explained that he had a vakalatnama from the original plaintiff Rachappa also, and did not lodge the appeal in his name as well out of pure error.
23. It is, therefore, a question whether we should allow him to become a party under Order I, Rule 10, read with Section 107, Civil Procedure Code. In this connection we have been referred to the cases of Rangam Lal v. Jhandu I.L.R 1911 All. 32. and Chokalingam Chetty v. Seethai Acha I.L.R(1927) IndAp 7 : 30 Bom. L.R. 788, which explain that this is an extraordinary remedy seldom to be applied. This is so, but we think this is one of the cases in which it should be applied, and we, therefore, propose to do so, because not including his name as an appellant was not his fault, but admittedly an oversight of his learned advocate's.
24. Appeal No. 178 of 1931 arises out of suit No. 28 of 1930, which was based on two promissory notes (1) for Rs. 3,000, dated March 24, 1927, and (2) for Rs. 850, dated March 31, 1927. The merits are dealt with in the main judgment. Execution and indebtedness were admitted, but it was pleaded that the amount had been paid though the note had not been cancelled, neither had a receipt been taken. The payment pleaded was at Gadag on March 3, 1928. The evidence in support is that of defendant No. 1 and entries in defendant No. 1's books. Defendant No. 1 has been disbelieved, and it is evident that the contention is a very weak one when put forward in a case so bitterly and recklessly contested, for there is no independent evidence of the payment. We think we must reject the plea and find that payment has not been made. The original Court decree is confirmed and the appeal is dismissed with costs.
25. Suit No. 32 of 1931 and Appeal No. 170 of 1931-The promissory note sued on was for Rs. 6,000 executed on March 17,1927. Payment is alleged to have been made to plaintiff No. 1 on November 20, 1927. No receipt was taken, neither was the note cancelled. The evidence in favour of the contention is that of defendant No. 2 and of two witnesses of the defendant's village said to have been casually present. None of these witnesses has been believed and the supporting entries in defendant's accounts have also been rejected. The case, except for the presence of the two casual witnesses, is similar to that made in appeal No. 178/31. As in that case, we accept the learned trial Judge's estimate of the value of this evidence and reject the plea. The decree in suit No. 32 of 1931 is confirmed and the appeal is dismissed with costs.
26. The last of these appeals is No. 199 of 1931. The plaintiff in this case had made his separated son Rachappa a defendant and stood alone as plaintiff, because the promissory note was allotted to him in Mr. Potdar's award and the decree on it.
27. There was a plea of satisfaction by payment on February 12, 1928. The evidence in favour of payment is that of defendant No. 1 and corresponding entries in his accounts. These show payments to defendant No. 1, and not to defendant No. 3, and the argument is based on the haste or 'by the hand of' mentioned in the entries. But the haste is usually entered in the payee's and not the payer's books. A witness examined in support of the payment has been disbelieved by the learned Subordinate Judge. The defence is in fact similar to those set up in the two companion suits and equally weak on the question of payment or no payment, and we agree with the trial Court and find it has not been made out.
28. The third issue tried in this case was:
Is the suit of plaintiff not maintainable because the promissory note is not in his name?
29. This is the point which I have just discussed in appeal No. 113 of 1931. The learned Judge has considered some of the cases referred to before us, though not all of them, and his conclusion of the whole matter is that as Mr. Potdar's award and the decree on it allotted this promissory note to the plaintiff, it was transferred to him by operation of law, especially as defendant No. 3 has stated this in evidence, and so discharged the defendants' liability to pay the amount to him. Our own conclusion on the rulings is that these facts do not amount to an assignment by operation of law, and we think the learned Subordinate Judge should have transposed defendant No. 3 to the plaintiff's side of the case and have passed a decree in his favour accordingly, and since defendant No. 3 is a party to the appeal, we can, we think, do this.
30. Mr. Nilkant Atmaram has now filed two applications, one is that in appeal No. 113 of 1931, the plaintiff No. 1 should be made an appellant for the reasons given in our judgment, and that a decree should be passed in his name. We have already discussed the matter in the judgment and we allow the application and direct that the applicant be made an appellant and that the decree be drawn up in his name. His second application is in First Appeal No. 199 of 1931. The applicant now was a party to the appeal as a respondent and the application is that his name be removed from among the defendants and added as plaintiff No. 2, and we grant this application also for the reasons already stated in our judgment, and direct that the decree be drawn up in his favour.
31. We think that in the circumstances of these two appeals each party must pay its own costs, and also that there should be no costs of these two applications.