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Narayan Rajaram Vs. Prabhakar Keshav and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMumbai
Decided On
Case NumberFirst Appeal No. 324 of 1944
Judge
Reported inAIR1951Bom345; (1950)52BOMLR830; ILR1951Bom108
ActsNegotiable Instruments Act, 1881 - Sections 32 and 50
AppellantNarayan Rajaram
RespondentPrabhakar Keshav and anr.
Appellant AdvocateP.G. Kher, Adv.
Respondent AdvocateV.S. Desai, Adv.
DispositionAppeal dismissed
Excerpt:
.....against the son and the widow on the original debt and asked for a decree to be recovered from the joint family estate:;that the suit was not maintainable as it was not a suit by an endorsee on the promissory note but was on the original debt. if, however, the suit can be said to be based on the promissory note, the same is bad as it is not against the maker of the promissory note or against his legal representative.;maruthamuthu naicker v. kadir badsha, rowther [1938] mad. 568, f. b., followed.;raghunathji tarachand v. the bank of bombay (1909) i. l. r. 34 bom. 72, s. c. 11 bom. l. r. 255, explained.;narayana rao v. venkatappayya [1937] mad. 299, referred to. - - on 1-6-1942, krishnaji endorsed the said promissory note in favour of the plaintiff. his contention is that defendant 1, as..........the plaintiff. keshav died on 19 9-1941. at the time of his death, keshav was the manager of the joint family consisting of himself and his minor son defendant 1. the plaintiff filed a suit to recover the amount due on the promissory note and made the son and the widow of keshav as also the three brothers of keshav as party defendants, on the allegation that keshav and his three brothers and his son constituted a joint and undivided hindu family. the learned judge held that the three brothers were not joint with keshav and he passed a decree in favour of the plaintiff only against the son and the widow of keshav, but limited the decree to the separate property ofthe deceased keshav come to the handa of defendants 1 and 2. from that decision the plaintiff has preferred this appeal and.....
Judgment:

Chagla, C.J.

1. The facts leading up to this appeal may be briefly stated: One Keshav Bhangale, father of defendant 1 and the husband of defendant 2 executed a promissory note on 5-6-1941, in favour of one Krishnaji Amrit Kulkarni, with whose shop Keshav had dealings. On 1-6-1942, Krishnaji endorsed the said promissory note in favour of the plaintiff. Keshav died on 19 9-1941. At the time of his death, Keshav was the manager of the joint family consisting of himself and his minor son defendant 1. The plaintiff filed a suit to recover the amount due on the promissory note and made the son and the widow of Keshav as also the three brothers of Keshav as party defendants, on the allegation that Keshav and his three brothers and his son constituted a joint and undivided Hindu family. The learned Judge held that the three brothers were not joint with Keshav and he passed a decree in favour of the plaintiff only against the son and the widow of Keshav, but limited the decree to the separate property ofthe deceased Keshav come to the handa of defendants 1 and 2. From that decision the plaintiff has preferred this appeal and defendants 1 and 2 have filed cross objections. It is contended on behalf of the plaintiff that the learned Judge was in error in passing a decree restricted to the separate estate of Keshav. His contention is that defendant 1, as the son of Keshav is liable to discharge the debt of his father on the well known principle of Hindu law of the pious obligation of a son and that the decree should also be executable against the joint family property come to the hands of defendant 1. On the other hand, the contention of the respondents is that the suit as framed by the plaintiff was not maintainable and should have been dismissed.

2. Now in order to understand the contention of the parties, it is necessary in the first place to decide what is the frame of the suit. The learned Judge has taken the view that the suit is on the promissory note. We are unable to accept that view. Looking to the plaint it is clear that the plaintiff has sued on the original debt. The plaint sets out the whole history of how this debt was contracted by Keshav and then avers that the debt had been contracted for a reasonable cause; that all the defendants, the joint family and the estate had benefited by the same and that Keshav had contracted the debt in his capacity as the manager of the joint family for agricultural purposes and for reasonable needs of the family. Finally the plaintiff prays for a decree to be recovered from the defendants through the estate of the joint family of the deceased Keshav and the present defendants and through the separate estate of Keshav come to their hands. On a perusal of this plaint two points are apparent: first, that this is a suit on the original debt and not on the promissory note, and the other, that it is not a suit against the legal representative of the maker of the note but is a suit against all the members of the joint Hindu family of which according to the plaint Keshav was the karta, on the basis that the members of the joint family and the estate of the joint family sere liable to make good the debt contracted by the karta. This is not a suit by a promisee of a promissory note. It is a suit by an endorsee. Now, the effect of an endorsement is set out in Section 50, Negotiable Instruments Act, and the effect is that the property in the promissory note is transferred to the endorsee with the right to further negotiation. It is to be noted that thej original debt in respect of which the promissory note was passed is not assigned to the endorsee. The endorsee has no title to the debt. No privity is established with regard to the debt between the endorsee and the maker of the promissory note. All that the endorsee gets by the endorsement is the right to sue on the promissory note and to recover the amount due under it. It therefore follows from this that an endorsee of a promissory note can only sue on the promissory note itself.He cannot sue on the debt as he is not entitled to that debt and in this case as the suit is by an endorsee not on the promissory note but on theoriginal debt, the suit is not maintainable.

3. There is also another important principle underlying the law with regard to negotiable instruments against which this plaint and this suit offends. That principle is this: A suit on a promissory note can only be filed against the maker of the promissory note or his legal representative. This suit is not against the maker because the maker is dead. It is equally clear that the suit is not against the legal representative of the maker. As I have pointed out earlier the suit is against the members of a joint and undivided Hindu family on the basis that the debt was contracted for the benefit of the family by the karta of the family. Therefore whichever way one looks at it, the suit is not competent. If it is a suit on the original debt, then the endorsee cannot maintain the suit. If the suit is on a promissory note, then it is not against the maker of the promissory note or against his legal representative and therefore also the suit must fail.

4. The principle that an endorsee can only sue on the promissory note and not on the debt has been clearly enunciated by a Full Bench by the Madras High Court in Maruthamuthu Naicker v. Kadir Badsha Rowther I. L. R. (1938) Mad. 568 : A.i.r. 1938 Mad. 377. The learned Chief Justice in his judgment has referred to the fundamental principles of the law relating to negotiable instruments. At p. 573 the learned Chief Justice gives expression to the two principles which according to his Lordship emerge from the various decisions which were considered and they are: (1) No one whose name does not appear on the promissory note can be sued on the promissory note, and (2) there is no privity of contract between the endorsee and the maker or acceptor of the promissory note. Varadachariar J. in a concurring judgment observes that a debt can be assigned provided the provisions of the T. P. Act were satisfied but it could not be assigned merely by an endorsement of the promissory note itself. Mr. Kher for the appellant has strongly relied on an earlier decision of the same High Court in Narayana Rao v. Venkatappayya I. L. R. (1937) Mad. 299 : A. I. R. 1937 Mad. 182. There the suit was by an endorsee on the debt and the question was whether the sons who were made parties to the suit were liable to discharge the debt as a matter of pious obligation. The trial Court decreed the suit, but in appeal a bench of the Madras High Court (Varadachariar and Mockett JJ.) allowed the appeal. The main question that was debated before the two Judges was the question of onus of proof in a suit which was not against the maker of the promissory note but against the sons on the basis of pious obligation. The view that the Court took was that the presumptions which arise under Sections 119 to 122, Nego-tiable Instruments Act did not arise in a case where the liability under the promissory note was attempted to be fastened not under the provisions of the Negotiable Instruments Act but under the principles of Hindu law. Mr. Kher contends that although this was a suit by an endorsee, it was never suggested that such a suit could not lie on the original debt. Varadachariar J. at p. 311 expressly points out that there is a conflict of judicial opinion as to whether an endorsee's right is limited to suing on the note or he can also claim to recover the debt, and he goes on to add that as he had come to a definite conclusion on the merits of the appeal it was unnecessary to decide that question, and as it happens that question which Varadachariar J. left undecided in 1937 came to be decided by the Full Bench in 1938 and to which decision he was himself a party. Befer-ence was also made to a decision of our Court in v. The learned trial Judge has relied on this case as laying down a proposition that an endorsee can sue a person who is not the maker of a promissory note if the maker happens to be a karta and the debt was contracted for the family purposes, and I find that so well known an authority like Adiga in his book on Negotiable Instruments also refers to this decision as laying down that proposition. But when we turn to the facts of that case I think it is perfectly clear that Chandavarkar and Bachelor JJ. have not laid down that principle. The facts of that case were that the promissory note was executed by a karta in the name of the joint family firm of Raghu-nathji Taraehand. That note was subsequently endorsed in favour of the Bank of Bombay and the Bank of Bombay sued the firm of Raghunathji Taraehand. The question that arose was whether a minor coparcener was liable on that note, and the Division Bench came to the conclusion that he was. It is to be noted that the promissory note was not executed by the karta in his own name. It was executed in the name of the joint family firm. The joint family firm was sued and brought before the Court. In that joint family firm the minor coparcener was interested as a coparcener, and as and when the firm was brought before the Court, all the members of the firm were before it, and therefore the endorsee was not suing anyone else than the maker of the promissory note. As it happened the maker was not an individual but a joint family firm. I, therefore, do not read that decision as laying down any principle different from or contrary to what was decided in the Madras Full Bench case.

5. An interesting question was debated at the bar whether a Hindu son was liable to discharge his father's obligation under a promissory note in contradistinction to his liability to discharge the debt contracted by the father, and it was suggested that when a suit was filed on a promissory note against the son in respect of a note executedby the father, the decree must be confined to the separate property of the father come to the hands of the son and the son was not liable to discharge the debt out of the joint family funds come to his hands. The learned Judge accepted that view and following the Madras decision in Natarajan Chettiar v. Permul Ammal A.I.R. 1943 Mad. 246 : 206 I. C. 356 passed a decree as I have pointed out, limited to the separate property ofthe father come to the hands of the son. We expressly decline to express any opinion on thecorrectness of that view expressed by the learnedtrial Judge. As we have come to the conclusion that the suit is not maintainable and must fail, it may be perhaps not quite necessary to consider the form of the decree passed by the trial Court. But we may point out that whatever may be the true position in law, whether a son is liable or not to discharge his father's obligation under a pro. rnissory note, that question cannot arise at the time when the trial Court passes the decree. If the son was sued as a legal representative, then the proper form of decree must be under Section 52, Civil P. C., and the question whether the son is liable to pay the decretal amount out of the joint family funds come to his hands would only arise in execution under Section 53, Civil P. C. Then the question would have to be determined as to whether the joint family property in the hands of the son is liable to discharge the debt incurred by the father under the promissory note.

6. The result, therefore, will be that the appeal will be dismissed with costs. On the civil application the delay in filing cross-objections is condoned. Cross-objections allowed and the decree passed by the learned trial Judge set aside and the suit is dismissed with costs. The appellant to pay the costs throughout.


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