1. This Second Appeal is by the defendant in O.S. 39/69 on the file of the Pri. District Munsif. Eluru against the judgment of the District Judge. West Godavari, confirming in appeal the decree passed in the suit by the trial Court.
2. The suit was for the recovery of a sum of Rs.4,191-89 being the balance due on Pronote executed by the defendant on 30-3-1957. The plaintiff contended that he was the partner of Choudary Jewellery Mart along with one K. Narayanarao, that the defendant borrowed some monies for his agricultural purposes from the firm; that on accounts being looked into it was found that he wad due a sum of Rs. 1,860-14-0 and fro this sum he executed the promissory note in his favour as per the arrangement between him and his partners and thereafter the defendant had paid three sums of Rs.10/-, 10/- and 300/- and the balance is due and hence the suit.
3. The defendant contended that he had not received any amount from the plaintiff, that the debt due by him was the Choudary Jewellery Mart and the plaintiff alone has no right to file the suit on the basis of the suit promissory note. He further contended that he had borrowed only a sum of Rs.1,100/- from the firm. Choudary Jewellery Mart; that though there was no agreement for payment of interest it was calculated and included and the suit promissory note was executed for Rs.1,860-14-0 and that the interest is therefore not liable to be paid. He further contended that he is an agriculturist and the debt has to be scaled down, that the plaintiff had taken on lease some grazing land from him and on that account he had to pay for two different period a sum of Rs.500/- and 250/- that he had also paid on behalf of the plaintiff a sum of Rs.80/- to Kamas of Kovvali for raising fencing for 50 acres of his land and for watching charges, that these amount had been agreed to be adjusted towards the debt due on the promissory note and be is also entitled to count interest on the same.
4. On appropriate issues being framed the trial Court held that the plaintiff is entitled to enforce the suit promissory note, that the defendant is not an agriculturist and the debt is therefore not liable to be scaled down, but the amount due from the defendant is only Rs.1,100/- the plaintiff is not entitled to interest on the balance of the amount due under the promissory note, that the set-off claimed by the defendant has not been established and in that view decreed the suit for Rupees 3,105-15 with interest on Rs.1,100/- at 6% P.A. from the date of the plaint till realisation.
5. On the defendant filing an appeal the plaintiff filed cross-objections claiming interest that was disallowed to him. The district Judge confirmed all the findings of the trial Court except the one on the question of interest and held that as the promissory note was executed for Rs.1,860-14-0 including interest on Rs.1,100/- upto the date of the promissory note, the plaintiff is entitled to the same as stipulated in the promissory note and also to interest thereon. Therefore while dismissing the appeal, he allowed the cross-objections. Hence this appeal by the defendant.
6. In this appeal it is first contended that the debt was due to the firm of Choudary Jewellery Mart and for that debt a promissory note was executed and the suit filed by the plaintiff in his personal name is not maintainable and for this contention the learned counsel relied on the decision in Davvura Jayarama Reddy v. Revathi Mica Co., 1972-1 Andh WR 7. That was a case where the suit was filed by the firm for the debt due to the firm and it was also pointed out that what was mentioned in the preamble of the promissory note was that it was executed in favour of the partner of Revathi Mica Company and that his name was mentioned thereafter as Ganagapatanam Venkata Subba reddy, that Revathi Mica Company is and therefore the suit filed by it is maintainable. In the present case, the suit is filed by the plaintiff and it is seen that the promissory note is executed in his personal name. No doubt the debt was due to the firm of which the plaintiff is a partner. But according to him as per the arrangement between the partner he was allowed to realise this debt and appropriate it himself. Therefore the promissory note was executed in his personal name.
As pointed out even in the above decision cited by the counsel for the appellant, the instrument should alone be looked into for finding out as to who is the promissee, that the Court cannot look into the surrounding circumstances to find out whether someone other than the one mentioned in the instrument is the promissee and the Court cannot travel beyond the contents of the instrument for that purpose and that is the effect of Sections 8 and 78 of the Negotiable Instruments Act. Under Sec. 8 of the said Act, the 'holder' is the person entitled, in his own name to the possession of the promissory note and to receive or recover the amount due thereon from the parties thereto. It is clearing transferable by a mere indorsement or by delivery, mercantile usage requires that the contract appearing on the face of the instrument should be taken as the real contract and it is well settled that no person can sue on a negotiable instrument unless he is named therein as the payee or unless he becomes entitled to is as indorsee or becomes the bearer of an instrument payable to bearer. In Subbu Nnarayana v. Ramasamy (1907) ILR 30 Mad 88 (FB), it has been further held that in a suit on a negotiable instrument by the payee named therein or by the indorsee it is not open to the defendant to plead that such payee or indorsee is a mere benamidar not entitled to payment. Therefore it is futile to contend now that the plaintiff, in whose name the promissory note has been executed, cannot file the suit and the suit is therefore not maintainable.
7. It is further contended that as admitted it is a transfer to the plaintiff of the debt due to the firm , it should be evidenced by an instrument as provided under Section 130 of the Transfer of Property Act and as there has been no such instrument in this case the suit promissory note becomes unenforceable. For this contention he has relied on the decision in M.Ramakotaiah v. M.Seshamma. : AIR1971AP315 That was a case on oral transfer of a promissory note and it was held that the mode of transfer prescribed by Section 130 of the Transfer of Property Act contemplates the execution of an instrument that the vesting of the interest in the transferee shall be complete and effectual only upon the execution of an instrument in writing and that the contention that Section 137 of the Transfer of Property Act takes promissory notes out of the purview of Section 130 of that Act is not well founded. As already pointed out that is a case of oral transfer of a promissory note and the ruling in that case cannot be applied to the facts of this case. Here, there is a promissory note executed by the defendant in favour of the plaintiff. There is no question of any transfer of this note. Under Section 8 of the Negotiable Instruments Act, the plaintiff is the 'holder' of the promissory note and under Section 78 of the Negotiable Instruments Act, a discharge of the promissory note can be obtained only on payment to the holder. In between it can be negotiated. It is for this reason that Section 137 of the Transfer of Property Act exempts of the negotiable instruments from the operation of that Act. Therefore it is not open to the defendant now to contend that the original debt has not been transferred to the plaintiff as per the provisions of Section 130 of the Transfer of Property Act, and the transfer is therefore bad. Moreover the plaintiff is a partner of the firm to which the debt is due, and the debt as such is due to him also in his capacity as a partner, that is as per the arrangement between the partners that the promissory note has admittedly been executed in his favour, as he is also in the nature of a creditor and therefore the validity of the promissory note cannot be challenged by the defendant who has accepted the arrangement and executed the promissory note. The contention that the transfer of the debt by the partnership to the partner is hit by the provisions of Section 130 of the Transfer of Property Act has not been taken in the pleadings and no issue has been framed and no findings have been given by the two Courts below. Therefore the defendant cannot be allowed to raise this at this stage.
8. The defendant contends that he is an agriculturists and therefore the debt should be scaled down. In Janakiamma v. Mallamma, 1969-1 Andh LT 409 a Bench of this Court held that all that is required under Section 13 of the Madras Agriculturists Relief Act (Act IV of 1938) is that the debtor should be an agriculturist on the date of the institution of the proceeding and that it is not necessary for the Court to investigate into the status of the debtor at every no land and he was not an agriculturist but was mainly doing business. But what is contended by him now is that he had an agreement of Sale Ex B-1 executed in his favour on 15-6-1964 for the sale of 30 acres of land in adikalapudi for Rs.30,000/- and he also paid a sum of Rs.8,000/- in advance and therefore he has saleable interest in the land and as such he is an agriculturist. This agreement of sale is the subject-matter of a suit O.S.No. 15/69 on the file of Sub-Court, Eluru, and Ex.5-A the printed copy of the judgment shows that there was contest with regard to the genuineness of the agreement and the suit has been dismissed and it is contended that the matter is pending in appeal.
No doubt, in Singharacharia v. Papathi Ammal, AIR 1941 Mad 127 it was held by a Bench of the Madras High court that the holder of vendor's lien in agricultural land is qualified to be an agriculturist. Similarly in Subburamier v. Venkatachalapathi, AIR 1940 Mad 941 it was found that a simple mortagee of agricultural land has a saleable interest therein so as to bring him within the definition of the term 'agriculturist' under Section 3 of the Act. On the basis of these decisions it is contended by the learned Counsel for the appellant defendant, that the defendant who has parted with the sum of Rs.8,000/- under an agreement of sale, has also a saleable interest and for this contention, the counsel relies on the decision in Jibhaoo v. Ajab Singh, : AIR1953Bom145 , In the decision the question rested on the interpretation of Section 24 (1) of the Bombay Agriculturists Debtors' Relief Act, and the remarks relating to the charge created under Section 55(6)9b) of the Transfer of Property Act made therein do not apply to the facts of this case. Under Section 55(6)(b) of the T.P. Act, a buyer is entitled to a charge only if he had not improperly declined to accept delivery of the property. There is no evidence in this case now as to what had happened with regard to the transactions under the agreement of sale. Moreover, in the suit the Court had found that the agreement has not been established. Therefore the defendant cannot claim to be a holder of a charge on the land for a part of the purchase money paid by him and therefore he has a saleable interest in the land. This objection is therefore over ruled.
9. The next contention raised is that he is not liable to pay interest on the amount of Rs.1,100/- which was found due as there was no undertaking to pay interest and as the promissory note included the interest payable on that sum towards principal it would amount to his paying interest on interest. Even under the provisions of the Usurious Loans Act, it must be shown that the interest is excessive and the transaction was substantially unfair. This is not established. As per the proviso to Section 3(2)(b) of the Act (as added by Madras Act VIII of 1937) to have the benefit of that provisions it must be shown that his is an agriculturist in the ordinary sense though he need not be shown to be an agriculturist under Act IV of 1938. (Vide Sevugan Chettiar v. Chinnasami, : AIR1950Mad654 ) As has been held already it is not established that the defendant is an agriculturist even in the ordinary sense. However, he had himself voluntarily executed a promissory note, which included the principal of Rs.1,100/- and also interest thereon that had accumulated upto that date and it is not open to him now to contend that the amount for which the promissory note was executed is not payable as it is a negotiable instrument and any holder in due course is entitled to claim interest on the amount stated in the promissory note. This objection is also overruled. The suit has therefore rightly been decreed by the Subordinate Judge.
10. This appeal therefore fails and is dismissed with costs. No leave.
11. Appeal dismissed.