Amberson Marten, Kt., C.J.
1. Our judgment in this appeal must be taken along with our judgments of yesterday evening in the two preceeding appeals, viz., Nos. 32 and 38 of 1927.
2. In the present case we have to deal with thirteen debentures of the Bombay Improvement Trust, and one debenture of the Bombay Municipality. Different questions arise on each of them. As regards ten out of the thirteen Improvement Trust debentures, the case is similar to that decided in Appeal No. 32, viz., that the Alliance Bank renewed the old debenture and obtained a new debenture in their own name which was subsequently transferred by endorsement in favour of the Mercantile Bank for valuable consideration. We have held in effect that this second document like the first was a negotiable instrument, and that the Mercantile Bank, being bona fide holders of this second document for value without notice, they are protected and can retain it notwithstanding any defect in title there may have been in the Alliance Bank to the old debenture by reason of Fernaudes' forged endorsement on the latter. Accordingly, it follows that as regards those ten debentures, the appeal of the Mercantile Bank must be allowed, and there will be corresponding relief to that which we have already given in Appeal No. 32.
3. But a different question arises as regards new debentures No. 4716, 6160 and 6161. That is because No. 47.16 was taken in the name of Fernandes himself, and by him endorsed over to the plaintiffs. Then on that new debenture there is a subsequent forged endorsement in favour of Fernandes. As regards the other two new debentures they were both issued to the plaintiffs direct, and the forged endorsement by Fernandes is on each of those new documents.
4. The distinction then between the present case and Appeal No. 32 is that the new documents now held by the Mercantile Bank contain in themselves forged endorsements, and it is through those forged endorsements, that the Mercantile Bank's title is derived. Accordingly, they are claiming to hold the document in reliance in part on this forged endorsement.
5. Now, as I pointed out yesterday, this being a negotiable instrument, the bank could have retained it apart from forgery although there was some other fraud by which the plaintiffs were induced to part with it, unless of course the bank had notice, or there were circumstances putting them on enquiry as to how Fernandes or the Alliance Bank came to deal with the document. But, as pointed out in Appeal No. 32, forgery under English law stands on a different footing. The principle was settled long before the date of the Bills of Exchange Act 1882, and it rests on a simple basis, viz., that a forgery is a nullity, and consequently a forged endorsement is a nullity. Therefore, there is on the face of the document a defect in the title of subsequent holders, because the effect is the same if on a bill payable to A B or order you were to find endorsements by X, Y, and Z. That being so, on the face of the document, the subsequent endorsees can get no title.
6. The question then which we have to determine is one of construction of the Indian Act-by which of course we are bound-as to whether the law in India is different on this point from the law in England. It has been pointed out to us that the English law with reference to forgery, which I have just alluded to, is now covered expressly by the Bills of Exchange Act, 1882 Section 24 provides that where a signature on a bill is forged, the forged signature is wholly inoperative, and no right to retain the bill or to give a discharge can be acquired through or under that signature, unless the party against whom it is sought to retain or enforce payment of the bill is precluded from setting up the forgery or want of authority. So, too, there is another section, No. 29, which defines a holder in due course, viz., that he took the bill in good faith, and that at the time the was negotiated to him he had no notice of any defect in the title of the person who negotiated it.
7. When we turn to the Indian Act, the Negotiable Instruments Act 1881, it will be noticed that that was prior in date to the English Act. There is no section there precisely corresponding to Section 24 of the English Act. But we have this in Section 58 that :-
When a negotiable instrument has been lost or has been obtained from any maker, acceptor or holder thereof by means of an offence or fraud, or for an unlawful consideration, no possessor or indorsee who claims through the person who found or so obtained the instrument is entitled to receive the amount due thereon from such maker, acceptor or holder, or from any party prior to such holder, unless such possessor or indorsee is, or some person through whom he claims was, a holder thereof in due course.
8. Then if one turns to the definition of 'holder in due course', Section 9 defines him to be a-
person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer.
or the payee or indorsee thereof, if payable to order, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.
9. It is said then that there is no distinction drawn here in the Indian Act between forgery and other forms of fraud, and that in the present case the bank are protected because there is nothing on the face of these particular three debentures Nos. 4716, 6160 and 6161 to give the bank cause to believe that any defect existed in the title of the person from whom they derived their title, viz., the Alliance Bank.
10. But this question as to whether a distinction exists between Indian law and English law on this particular point has been dealt with in at least four different cases in various Presidencies in India. There is in the first place the decision of Mr. Justice Russell in Hunsraj v. Ruttonji I.L.R (1899) Bom. 05: 1 Bom. L.K. 734, which I cited yesterday on another point, viz., as to the effect of a renewal where the forgery is in the old note.
11. I should here like to mention, what I intended to mention yesterday evening, viz., that under the Indian Securities Act, 1920, which applies to Government securities such as those which Mr. Justice Russell had to deal with, it is provided by Section 16 as follows :-
(1) When a renewed Government promissory note has been issued under Section 12, or a new Government promissory note has been issued upon conversion, consolidation or sub-division under Section 16, in favour of any person, the note so issued shall be deemed to constitute a new contract between the Government and such person and all persons deriving title thereafter through him.
(2) No such renewal, conversion, consolidation or sub-division shall affect the rights as against the Government of any other person to the security or securities so renewed, converted, consolidated or sub-divided.
12. Accordingly, I take it that, at any rate as far as Government promissory notes are concerned, the decision of Mr. Justice Russell as regards the renewal of those notes could not stand in a case to which Section 16 applies. Shortly stated, the effect of our decision in Appeal No. 82 is substantially on the lines of Section 1(3, viz., that a renewal is a new contract and must be dealt with accordingly.
13. But notwithstanding that we disagree with this portion of Mr. Justice Russell's judgment yet his main judgment is directed to the effect of forgery as between the defrauded owner and the subsequent transferee of the original document. After considering the whole matter he came to the conclusion that forgery was an exception both in India and in England, and that accordingly the original owners could recover the documents then in question.
14. In our court, there is also the judgment of Mr. Justice Mulla in Thorappa v. Umedmalji (1923) 25 Bom. h. R. 604. s. o. 1 Bom. h. R. 734. to the same effect. There the head-note runs:
Section 38 of the Negotiable Instruments Act, which proteota a holder in due course where a negotiable instrument has been obtained by means of an offence, does not apply to a case of forgery.
15. There the learned Judge says (p. 607):-
It is well established that if a party primarily liable on a negotiable instrument pays the amount thereof to a wrong person, who holds it under a forged indorsement, he remains liable to the true owner. The only exception to this is where the payee's indorsement on a cheque payable to order is forged. In such a case it ia provided by Section 85 of the Negotiable Instruments Act, 1881, that the drawee is discharged if he pays the amount in due course. No holder of a negotiable instrument, though he may be a holder in due course, can acquire a title to the instrument through a forged indorsement.
16. Then the learned Judge cites Hunsraj v. Ruttonji I.L.R (1899) Bom. 65, and Jai Narain v. Mahbub Bakhsh I.L.R (1906) All. 428 and Banku Behari Sikdar v. Secretary of State for India I.L.R. (1908) Cal. 239. Accordingly, in that case it was held that the first defendant was clearly liable to the true owner for the amount of the hundi, there being a forged endorsement on the hundi.
17. Next, turning to Jlanka, Behari Sikdar v. Secretary of Siate for India, there again the head-note runs :
No person can claim a title to a negotiable instrument through a forged indorsement. Such an indorsement is a nullity and must bo taken as if no such indorsement was on the instrument.
18. In that case the learned Judge held that the endorsement on the notes through which the bank claimed were forgeries, and he accordingly entered judgment against the bank for the amount of the notes. The learned Judge expressly says (p. 250): 'There does not appear to me to be any difference between the law in England and in India in this respect', viz., the effect of a forged endorsement.
19. So, too, in Jai Narain v. Mahbub Bakhsh, Sir John Stanley and Mr. Justice Burkitt followed the decision of Mr. Justice Russell in Hunsraj v. Ruttonji, and held that as there was a forgery, the subsequent holders could not retain the documents.
20. The authorities, therefore, in India so far as they have been brought to our attention are unanimoua in favour of the plaintiffs in this respect, and after carefully considering the arguments presented to us, we think we ought to follow them in the present case. I will do so on the ground that there is nothing in the Negotiable Instruments Act, which obliges us to treat a forged endorsement as if it was a valid endorsement. The ratio decidendi given in the forgery cases appeals to my mind, viz., as I have already explained, that a forged endorsement is a nullity and consequently there is no question of a subsequent holder being a holder in due course.
21. That being so, it follows that as regards these three debentures, the judgment of the learned Judge must be affirmed and the appeal dismissed.
22. I now turn to the Municipal debenture, and although this is only for Us. 1,000, it raises to my mind questions of considerable legal difficulty. In the first piacs, we have no doubt an old debenture and a new one, viz., the old one No. 126 dated July 29, 1909, and the new one No. 308 dated May 26, 1920. Further, the old debenture like those in Appeal No. 32, was renewed by the Alliance Bank. The new debenture is expressed to be in the latter's favour, and there is aa endorsement by the Alliance Bank in favour of the Mercantile Bank.
23. Stopping there, therefore, we have circumstances similar to those in Appeal No. 82, viz., that the fresh debenture on which the Mercantile Bank relies is not in any way forged but that the forgery is on the old one. But we have to consider at least two other important points, First, was this debenture a negotiable instrument, like we have held the other documents to be in the other appeals? And, secondly, if it was not a negotiable instrument, then can the plaintiffs recover? This particular debenture is issued in pursuance of the City of Bombay Municipal Act, 1888, as subsequently amended. Section 106 gives power to borrow and Section 108 gives power to borrow inter alia on the security of the taxes which the corporation is authorized to levy. Then Section 110 provides that:-
(1) Every mortgage authorized to be made under this chapter shall be by debenture in the form contained in Schedule C, or is such other form as the corporation, with the consent of Government, shall from time to time determine.
(2) Every debenture issued under this Act shall be transferable by endorsement and such transfers may be in the form of Schedule D., or to the like effect.
(3) The right to payment of the moneys secured by tiny of such debentures and to sue in respect thereof shall vest in the holder thereof for the time being, without any preference by reason of some of such debentures being prior in data to others.
24. When one turns to Schedule C it will be found that the document in question contains a promise to pay A B, his heirs, executors, administrators and assigns and then by way of security for the said payment, the corporation grants and assigns to A B, his heirs, executors, administrators and assigns, such proportion of the moneys arising or accruing by virtue of the said Act from the particular taxes as the sum aforesaid doth or shall bear to the whole sum which is or shall be borrowed on the credit of the said taxes to hold to the said A B, his heirs, executors, administrators and assigns. Then the form of endorsement in Schedule D is:-
1, A. B., in consideration of the sum of paid to me by 0. 1), of, do hereby transfer to the said 0, D., his heirs, executors, administrators and assigns, the within security, and all my right, estate and interest in and to the money thereby secured in and to the (taxes) thereby assigned.
25. Now the particular documents we have got are first the' original one No. 126. This contains a promise to pay to the Bank of Bombay, their successors and assigns, and there is by way of security an assignment to the bank, their successors aud assigns of the foregoing proportion of the moneys accruing from the taxes. It will be observed that this document is by no means in the ordinary form of a negotiable instrument. Nothing there is said of as to its being to order. There is added to it an assignment by way of mortgage of the taxes.
26. Then when we come to the now debenture No. SOS I do not know whether the form of it is equally material for present purposes, but it has been altered in rather a curious way. This new debenture is expressed to be payable to 'the Alliance Bank their successors and assigns or their order.' And still more strangely the assignment of the debt is: 'We do hereby grant and assign unto the said Alliance Bank of Simla Ltd. their successors and assigns or their order such proportion of the moneys' etc.
27. I may add that so far as the endorsements on the old and new debentures go, they are not in the form given in Schedule D, but are simply ordinary endorsement ' Pay A.B., or order.' Further on the new debenture 308 there is at the side a statement 'Old Number 126 Renewal, This Debenture is transferable by endorsement.'
28. Are we then to consider this document as a negotiable instrument by the law of merchant. Here I may notice that the bank did not in the Court below produce any evidence whatever to show that these particular debentures of the Municipal Corporation are treated by the law of merchant in Bombay as being negotiable. Consequently we have not the circumstances relied on by Mr. Justice Kennedy in Bechuanaland Exploration Co. v. London Trading Bank  2 Q.B. 658, that though a particular document-in that case a bearer debenture-may not be a negotiable instrument within the meaning of the Bills of Exchange Act by reason of the special conditions attached to that debenture, yet if it is shown by conclusive evidence that in the mercantile world and on the Stock Exchange for many years it has been the custom to treat the document as negotiable and as passing by delivery, then it may and should be treated as a negotiable instrument.
29. We are, therefore, thrown back in the present case on the Negotiable Instruments Act. T will here note that under Section 4 of the Act, a promissory note is defined to mean 'an instrument in writing containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of a certain person, or to the bearer of the instrument.' A bill of exchange is deflned in similar terms by Section 5, and at the end of Section 5 it is stated 'The person to whom it is clear that the direction is given or that payment is to be made may be a 'certain person', within the meaning of this section and Section 4, although he is mis-named or designated by description only.'
30. We have to consider here then whether a direction to pay A B 'their successors and assigns' in the earlier document, or 'A B their successors and assigns or their order' in the second document, satisfies the requirements of Section 4 or 5 of the Act. We have further to consider the effect of Section 110(2) of the Bombay City Municipal Act as to the form in which an endorsement for transfer of the debenture should be made. It is clear that the endorsements that have taken place are not in the form of Schedule D, or to the like effect. And if it be said that there is power to have debentures in other forms as in Schedule 0, then that other form must be with the consent of Govern men t, and the bank has given no evidence that such a consent has been obtained. Speaking for myself I do not attach importance to the form of endorsement as Section 110(2) is permissive and not compulsory as regards Schedule D. But I do attach importance to the description of the payee, and I cannot help thinking that this change of form has been done deliberately, and that the ordinary form of a negotiable instrument has been deliberately altered here.
31. On the whole, then, particularly in the absence of any evidence by the bank as to the custom of the market to treat these documents as negotiable, I would hold that the defendant bank have failed to prove that the document on which they rely is a negotiable instrument.
32. But that leaves one to consider what is then the legal position. Now if we were merely dealing with the old debenture, and the Mercantile Bank were subsequent holders of it after the forged endorsement, then of course the present would be an a fortiori case from that which we have already held as regards Improvement Trust debentures Nos. 4716, 6160 and 6161. It would follow that if the bank could not hold even a negotiable instrument because it bore a forged endorsement, still less could they hold a non-negotiable instrument. But that is not the case we have to deal with. There is no forgery on the new debenture. We are consequently left to enquire from the plaintiff's as to what right they have to the possession and delivery up of the new debenture. Let the old debenture be treated as stolen property. I think in effect it was stolen by Fernandes. But I am not prepared to accept the proposition that the proceeds of stolen property may be recovered in whosoever's hands they may eventually be found and identified, notwithstanding that the holder may have no notice whatever that these proceeds represent the proceeds of stolen property.
33. I do not want to go into the English authorities as regards the recovery of stolen property itself. But there is an instructive judgment, if I may be allowed to say go, by Mr. Justice Channell in Moss v. Hancock 2 Q.B. 111. That was a case where a thief had stolen from the respondent a five-pound gold piece (which by Royal Proclamation had been made current coin of the realm) and had changed it with the appellant, who was a dealer in curiosities, for five sovereigns. It was held that under the circumstances the coin had not baen received by the appellant as current coin, and that an order might be made ordering the appellant to restore it to the respondent. That was on the ground that the five-pound gold piece was not really dealt with as current coin of the realm but was sold as curiosity. Dealing with that, Mr. Justice Channell says (p. 118):
If the coin had been dealt with and transferred as current coin of the realm, as, for instance, in payment for goods purchased or in satisfaction of a debt, or bona fide changed as money for money of a different denomination, I think a question of law of great difficulty would arise.
He then proceeds to deal with the law on that point. That is partly because current coin of the realm, like a negotiable instrument, is an exception from the general English law that stolen chattels can under certain conditions be recovered by the true owner if they can be indentified.
34. An illustration occurs in a case from Allahabad, reported in this morning's newspaper, to the effect that a Government currency note passing into the hands of a bona fide holder for value without notice of a theft can be retained by that bona fide holder, and that he ought not to be ordered by a Magistrate under the Criminal Procedure code or the Indian Penal Code to give up that currency note merely because the original thief had been prosecuted to conviction.
35. The strongest way then in which I think the case can be put for the plaintiffs is that Fern modes was their trusted agent and in a fiduciary capacity, and that consequently the old debenture was trust property in his hands, and that certainly the old debenture and the proceeds of it, if those proceeds could be identified, could be recovered from Fernandes or from his legal personal representatives. That is exhaustively dealt with by Sir George Jessel in In re Halleit's Estate (1879) 13 Ch. D. 696. I refer in particular to what the learned Judge says at pp. 708 to 711, and again at pp- 718 and 720. Sir George Jessel there Points out that in equity there is no substantial difference between a person occupying one form of a fiduciary position and a person occupying; another. Consequently in that case the bailee of certain bonds, who corresponded very much to the position of Fernandes in the present case, was in a fiduciary position to the true owner Mrs. Cotterill, and none the less so because, like Fernandes in the present case, he was authorized to receive interest on the bonds in question. Hallett, like Fernandes in the present case, misappropriated the bonds, and the question was whether the proceeds of those bonds could be followed by the true owner into the hands of Hallett or his legal representatives. The actual decision was that the proceeds could be followd, and that where the proceeds had been mixed up by the bailee with the moneys of his own in the bank, then the true owners had a charge on that account to the extent to which it represented the trust property. On the other hand, it must be borne in mind, as pointed out in the Union Bank of Australia v. Murray-Aynsley (1898) A.C. 693, that there is a clear distinction between the position of a trustee towards his cestui que trust on the one hand, and the position of a trustee towards his own banker on the other. The mere fact that a trustee keeps a banking account which contains no notice of a trust, does not mean that a beneficiary can get a charge valid against the bank's claims. Consequently in the latter case it was held on the facts that the bank had no notice that the moneys paid into this particular account were trust funds, and that accordingly as against the bank's debt the charge could not be enforced.
36. One may also put it in another way, that speaking generally these trusts or equities cannot be enforced unless the person acquiring the property in question has notice of the trust. That is borne out clearly by the Indian Trusts Act, 1882, Section 63 of which states :-
Where trust-property comes into the hands of a third person inconsistently with the trust, the beneficiary may require him to admit formally, or may institute a suit for a declaration, that the property is comprised in the trust.
Then comes an exception in Section 64:-
Nothing in Section 63 entitles the beneficiary to any right in respect of proparty in the hands of (a) a transferee in good faith for consideration without having notice of the trust, either when the purchase-money was paid, or when the conveyance was executed, or (b) a transferee for consideration from such a transferee.
37. The question then to my mind resolves itself into this : Did the Mercantile Bank when they took this new debenture No. 308 have notice of any trust in favour of the plaintiffs? there is nothing whatever on the face of this new debenture to give them any such information. There is nothing in the case to suggest that there was anything suspicious in the relations between Fernandes and the Alliance Bank, or in the relations between Fernandes and the Mercantile Bank. It was admitted in the case that up to the discovery of the forgeries, Fernandes was regarded as a respectable and responsible person. I am not quoting the exact words but that is the effect of it. So that all that really can be relied on to show that the bank had notice is this endorsement of the renewed debsnture. Even supposing in equity the bank had notice of the renewal and therefore of the forgery how did it get notice of any trust in favour of Fernandes. A forged endorsement is no notice of a trust, and if it could be said, which I very much doubt having regard to the nature of the instrument, that it was the duty of the bank to call on the Municipality to produce the old documents, yet even if they had done so, in my opinion, that would not give them notice of the trust in question. That being so, it follows that in my judgment the plaintiffs have failed to establish their case in equity against the bank on the ground of notice of Fernandes' breach of trust. I think the plaintiffs also fail if they base their case-as they have done in their plaint-on their being the owners at law of this second debsnture as representing the proceeds of the first one. We have already held in the other appeal that these documents must be regarded as distinct contracts, and as I have already pointed out, we think it really follows in that respect what is stated in the Indian Securities Act, Section 16, as regards Government securities.
38. The result is that in my opinion the plaintiffs have failed to establish their case as regards this Municipal debenture, and that accordingly as regards this Municipal debenture the appeal must be allowed The question of costs we will deal with after my brother Blackwell has given judgment.
39. With regard to the Municipal debenture it is difficult from an examination of it to ascertain precisely what the document is intended to be. The operative words are: 'do hereby promise to pay,' Prima facie, therefore, it would appear to be a promissory note. And 1 do not think that the document could not properly be treated as a promissory note within the meaning of the Negotiable Instruments Act, merely because there appears on the face of it a security by way of a charge, because the promise to pay is an unconditional promise, apart from the after provision for security by way of a charge. The difficulty, however, of construing this document as a promissory note in my view is that it is not a promise to pay 'a certain person' within Section 4 of the Negotiable Instruments Act, inasmuch as it is payable to the Alliance Rank of Simla Limited, 'their successors and assigns, or their order'. I am not, therefore, prepared to treat it as a promissory note.
40. The fact, however, that the document is not a promissory note, as I hold it is not, within the meaning of the Negotiable Instruments Act, might not prevent it from being a negotiable instrument. But, as the learned Chief Justice has pointed out in his judgment, before we could treat it as a negotiable instrument, if it is not such within any of the definitions of the Negotiable Instruments Act, some evidence would of necessity have had to be called before the trial Judge to prove that documents in this form have been treated as negotiable by the custom of merchants in Bombay, In the absence of such evidence it seems to me impossible for this Court to treat the document as a negotiable instrument.
41. With regard to the provisions of Section 110(2) of the Bombay City Municipal Act, 1838, that sub-section provides that 'Every debenture issued under this Act shall be transferable by endorsement, and such transfers may be in the form of Schedule D, or to the like effect.' Speaking for myself, having regard to the use of the word 'may' I am not prepared to hold that it would be incompetent for the Bombay Municipality as a matter of law to issue a document, in the form of a document before us which provides on the face of it that it is transferable by endorsement, for Section 110, Sub-section (2), provides that 'Every debenture issued under this Act shall be transferable by endorsement', and the words following seem tome to be permissive and not compulsory. Speaking, therefore, for myself, I should not feel any difficulty occasioned by the form of endorsement provided for in Schedule D. That, in my opinion, is merely a permissible form and, under the words of the sub-section, I think that the Municipality might provide on the face of the document that it should be transferable by endorsement. However that may be, this document is clearly, in my opinion, not a negotiable instrument either under the Negotiable Instruments Act or otherwise in the absence of evidence of custom.
42. Upon the footing that the document is not negotiable a further question then arises: Have the plaintiffs any right to demand the return of this document from the Mercantile Bank? In my opinion they have no such right. It was argued by Mr. Lalji on their behalf that this document was pledged by Fernandes with the Mercantile Bank together with other securities, and he asked us to treat the Mercantile Bank as if they stood in the shoes of Fernandes. I think that there is a fallacy underlying that argument. The Mercantile Bank can in no sense, in my opinion, be regarded as agents of Fernandes for the purpose of deciding what are their rights to this document, It is true that they received the document as a pledge at the instance of Fernandes, but they themselves gave value in good faith without notice of any defect in the document itself, because there was none, and without notice of tiny defect by reason of the forged endorsement in the original debenture in the hands of the Alliance Bank. Under those circumstances it appears to me that the chain was broken, and although it may well be that the plaintiffs could have claimed to repossess themselves of this new document, if it had been in the hands of Fernandes or of the Alliance Bank, I do not think that they can possibly maintain such a claim, the moment an innocent third person has altered his position for valuable consideration, and has taken a document which on the face of it appears to be free from any defect of title and is not impressed with any trust. The document itself bears the endorsement of the Alliance Bank, and contains a direction to pay to the Mercantile Bank of India Ltd., or order. There was nothing upon the face of it which suggested that the Alliance Bank had acquired it under any circumstances which would vitiate their right either to retain it themselves, or to transfer it by endorsement.
43. It was contended that the fact that the words 'Old Number 126. (Renewal)' appeared upon the document was notice to the Mercantile Bank of the existence of a former document. No doubt that is true. It was further contended that the mere notice that the new document was in substitution of the original document carried with it notice of any defect of title which might have affected the previous holder of the original document. I cannot for one moment agree with this contention. I regard the new document as a fresh contract by the Municipal Corporation and it seems to me that it would not have been open to the Mercantile Bank to go to the Bombay Municipality, and to demand inspection of the old document of -which this was a renewal. Even if they had been entitled so to do, as the learned Chief Justice has pointed out, a mere inspection of the endorsement appearing upon the back of the previous document would not have given the bank notice of any trust with which the previous document was impressed.
44. Accordingly, in my judgment, the plaintiffs have entirely failed to make out any claim to repossession of the second document. It seems to me that their rights must stop either with the first document itself, or with persons into whose possession the second document had come with notice of the trust attaching to the first. I am not prepared to hold that where stolen property in effect the first document was stolen property-is converted into other property there is any right in the original holder to follow the proceeds into the hands of an innocent purchaser for value without notice.
45. With regard to the City of Bombay Improvement Trust debentures the only special feature affecting this case as distinct from Appeal No. 32, is the fact that in regard to three debentures, Nos. 4716, 6160 and 6161, the forgery appears upon the face of the renewed document itself. I entirely agree with what, the learned Chief Justice has said as to the effect of forgery upon a negotiable instrument in India. It is quite true that the Negotiable Instruments Act contains no provision similar to Section 24 of the English Bills of Exchange Act, and makes no distinction between forgery and other offences, That fact no doubt gives colour to the argument that has been put forward in this case, namely, that as Section 58 is the only section which mentions offences in connection with the obtaining of negotiable instruments, it follows that if a person is a holder in due course within the definition of Section 9, he is protected and gets a good title even though there is a forged endorsement, assuming of course that he had no sufficient cause for believing that any defect existed in the title of the person from whom he derived his title. But after a very careful consideration of the argument that hae been presented to us, I am not prepared to hold that Section 58 deals exhaustively with all possible offences that may arise in connection with the obtaining of an instrument. Forgery is one of them, and as has been pointed out by the Chief Justice, a forged endorsement is a nullity, and such an endorsement must be treated as no endorsement at all. I think that the decision of Mr. Justice Mulla to this effect in Thorappa v. Umedmalji : (1923)25BOMLR604 , following the earlier decisions to which the learned Chief Justice has referred, is correct.
46. In my opinion, therefore, Section 58 of the Negotiable Instrumeats Act affords no protectiou under the circumstances of this case. Accordingly, I agree with the learned Chief Justice that the appeal of the Mercantile Bank fails in regard to those three documents.
Amberson Marten, Kt., C.J.
47. The question of costs is not an easy one. The short, effect of our judgment is that the plaintiffs have been successful as regards three bonds worth Us. 2,000. But on the other hand the third defendants (the bank) have been successful as regards the remainder of the plaintiffs' claim, viz., other bonds representing approximately Eh. 8,00. As regards, however, certain issues, wo take the same view as we did in the earlier appeal, that, as far as the trial Court is concerned, the bank ought to pay in any event the costs of the issues on which they have failed, via., their denial that the plaintiffs were owners, their denial that the signatures were forgeries, and also I think their contention that the plaintiffs by reason of their conduct and their delay were estopped from disputing the claim of the bank.
48. Now, no doubt, as is suggested by counsel for the defendant bank, it might be possible to frame a fractional order for costs, awarding a certain fraction to the plaintiffs, and another fraction to the defendants, and a set-off, and also to provide that the plaintiffs wore to get in any event their costs of the particular issues 1 have mentioned. But on the whole, looking at the case in the Court below, and the points urged before us in this Court, we think the fair order would be that each party must bear his own coats of this suit and of this appeal.
49. Then as regards the actual form of the order, the learned Judge's decree of April 14, 1927, will have to be varied by declaring the right of the plaintiffs to the three debentures to which we have held they are entitled, and that they are not entitled as against the bank to the remaining debentures. Similarly, the order for handing over the debentures will have to be varied, as also the order for costs.