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Janga Ramakrishna Reddi Vs. Challasitarama Reddi and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAndhra Pradesh High Court
Decided On
Case NumberAppeal No. 353 of 1956
Judge
Reported inAIR1962AP255
ActsNegotiable Instruments Acts, 1881 - Sections 50
AppellantJanga Ramakrishna Reddi
RespondentChallasitarama Reddi and anr.
Appellant AdvocateR. Rajeswara Rao, Adv.
Respondent AdvocateA.V. Krishna Rao, Adv.
Excerpt:
.....act, 1881 - promissory note executed by manager of joint family - whether endorsee of such promissory note can recover debt amount from members of family - only right to collect due amount transferred by endorsement - no transfer of debt to endorsee - such endorsee cannot compel anyone who is not party in promissory note to make payment. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to defend the action only on grounds enumerated..........a suit on the basis of ex. a. 23, the 1st defendant who is the brother of khasimreddi executed the suit promissory note ex. a.24 dated 2-3-51 for rs. 6,256-4-0. the payee transferred the suit promissory note in plaintiff's favour on 22-2-54 as per the endorsement, ex. a. 25. the plaintiff alleged in theplaint that he is an endorse for the collection. he sought a decree against defendants 2 and 3 also on the allegation that the debt originally incurred under ex. a. 23 by kasimreddi for family necessity. the 1st defendant denied the material allegations in the plaint and put the plaintiff to strict proof of the borrowing and endorsement of the suit promissory note. he also contended that the borrowing was not for the purposes of the family trade. defendants 2 and 3 while adopting the.....
Judgment:

Chandrasekhara Sastry, J.

(1) The plaintiff is the appellant in this appeal. He filed O. S No. 35 of 1954 in the Subordinate Judge's Court Guntur to recover a sum of Rs. 7,288-8-0 being the principal and interest due on a promissory note dated 2-3-1951 executed by the 1st defendants 1 to 3, in favour of plaintiff's transferor, Kusam Kotireddi for Rs. 6,256-4-0. Defendants 1 to 3 are members of a Joint Hindu trading family. One Khasimreddi is the deceased father of the 2nd defendant and the husband of the 3rd defendant. He borrowed a sum of Rs.5,000 under a promissory note, Ex. A.23 dated 22-4-1949 from Kusum Kotireddi. Khasimreddi died soon after and there after when Kussam Kottireddi intended to file a suit on the basis of Ex. A. 23, the 1st defendant who is the brother of Khasimreddi executed the suit promissory note Ex. A.24 dated 2-3-51 for Rs. 6,256-4-0. The payee transferred the suit promissory note in plaintiff's favour on 22-2-54 as per the endorsement, Ex. A. 25. The plaintiff alleged in theplaint that he is an endorse for the collection. He sought a decree against defendants 2 and 3 also on the allegation that the debt originally incurred under Ex. A. 23 by Kasimreddi for family necessity.

The 1st defendant denied the material allegations in the plaint and put the plaintiff to strict proof of the borrowing and endorsement of the suit promissory note. He also contended that the borrowing was not for the purposes of the family trade. Defendants 2 and 3 while adopting the contention of the 1st defendants further pleaded that the suit promissory note was not supported by consideration and that the endorsement was not true and valid. The trail court decreed the suit against the 1st defendant who executed the suit promissory note, but dismissed it against defendants 2 and 3, who were not the executants on the ground that the plaintiff could not get a decree against them on the suit promissory note as the plaintiff is only an endorsee and what was transferred to him was only the amount due under the promissory note and not the debt which was originally incurred. Hence the plaintiff preferred the present appeal contending that the suit should have been decreed against the family properties of the defendants 2 and 3 as well.

(2) The appeal was first heard by our learned brother Srinivasachari, J. Before him, reliance was placed by the learned counsel for the appelant on a decision of this Court in C. Purnachandra Rao v. K. Mallikharjuna Rao, : AIR1961AP247 . That decision was given by Bhimasankaram and Srinivasechari JJ. But the whole question was fully argued before Srinivasechari J. again in this case and as he felt that certain observations of Bhimasankaram, J. in the said decision require reconsideration in view of the decision of the Full Bench of the Madras High Court in Maruthamuthu Naicker v. Kadir Badsha Rowther, ILR (1938) Mad LJ 568: (AIR 1938 Mad 377) (FB) and also the decision in vira Raghavulu Naidu v. Dhara Chinna Rajalingam, 1939-2 Mad LJ 531: (AIR 1939 Mad 846) which is the decision of Pandrang Row and Abdur Rahman JJ., our learned brother directed the appeal to be posted before a Bench of two Judges. Hence it is posted before us for hearing.

(3) The plaintiff, as stated above is an endorse of the suit promissory note and the original payee is Kottireddi. The endorsement states that the suit promissory note was transferred to the plaintiff as an endorsee is only the right to collect the amount of principal and interest due under the promissory note. There is no mention in this endorsement of the debt originally incurred by the defendants'family and the debt originally incurred was not transferred to the plaintiff. Hence the question arises whether the plaintiff can sue to recover the debt originally incurred by the defendants' family and obtain a decree against the shares of defendants 2 and 3 in their family properties also. This question has been finally decided by the Full Bench of the High Court of Madras in ILR 1938 Mad 568 : (AIR 1938 Mad 377) (FB).

There it has been held that:

' The endorsee of a promissory note excuted by the managing member of a Hindu Joint family is limited to his remedy on the note,unless the indorsement is so worded as to transfer the debt as well, and the stamp law is complied with; and therefore, in the case of an ordinary indorsement the indorse cannot sue the non-executant co-parceners on the ground of their liability under the Hindu law.' It was also pointed out in that decision that: 'An indorsement may operate to assign the debt as well when it is so worded and the requirements of the law with regard to stamping are complied with but unless there is an indorsement of this nature the indorse has rights merely on the instrument.'

This decision is binding on us and it has to be followed. But it is contended that, in the present case, the plaintiff is only an indorsee for collection and that, as such heis an agent of the original payee and that if the payee can sue the other members of the family and obtain a decree against their interests in the family properties, it follows that the plaintiff also can maintain the suit against the other members of the family. We are unable to agree with this contention.

The fact that the plaintiff is an indorsee for collection does not make any difference, because the real question is what is the right that is transferred to him Is it merely a right to collect the amount due under the promissory note or is the right to recover the amount orginally borrowed also transferred to the plaintiff so as to enable the plaintiff to sue on the basis of the debt originally incurred In this case, the endorsement is only the right clear and shows that what was transferred to the plaintiff by the said endorsement is only the right to recover the amount of principal and interest due under a promissory note and nothing else. Thus the present case is clearly governed by the decision of the Full Bench of the Madras High Court in ILR (1938) Mad 568 : (AIR 1938 Mad 3770 (FB).

Further, there is also a decision of a Division Bench of the High Court of Madras in (1939) 2 Mad LJ 531 : (AIR 1939 Mad 846) which is directly in point. There also the plaintiff is an indorsee for collection and the suit in that case was brought by that indorse on the allegation that the plaintiff was only an indorsee for collection and the indorsement was of the ordinary kind and it was not so worded as to transfer the debt itself and no stamp duty has been paid on the indorsement as required by law. The learned Judges held that the plaintiff could not get a decree against the persons who were not the executants of the promissory note. The learned Judges pointed out that the case of an indorsee for collection also is governed by the decision of the Full Bench referred to above. The decision of the Full Bench is based upon the principle laid down by the Privy Council in Sadasuk Janki Das v. Sir Kishen Pershad, ILR 46 Cal 663 : (AIR 1918 PC 146) that:

' The name of a person or firm to be charged upon a negotiable document should be clearly stated on the faceor on the back of the document so that the responsibility is made plain, and can be instantly recognised as the document passes from hand to hand.'

It is also well settled that the cause of action for a suit based on the promissory note is quite different from the cause of action for a suit based on the debt originally incurred. It therefore follows that the plaintiff has no right to get a decree against the defendants 2 and 3 in this case who were not executants of the suit promissory note.

In view of what is stated above we cannot follow the observations on : AIR1961AP247 as the decision of the Full Bench is binding on us. We wish to point out that the observations at page 35 in the report of the said decision are based on a mis-apprehension. Bhimasankaram J. who delivered the judgement of the Court in that case sought to distinguish the decision in 1939-2 Mad LJ 531 : (AIR 1939 Mad 846) on the ground that the latter was not a case of an indorsee for collection; but as a matter of face that was a case of an indorsee for collection.

Further, we are unable to see what difference it can make if the plaintiff is only an indorsee for collection, when the real question in cases like this is: What is the right that is transferred to the plaintiff by the endorsement. If it is only the right to collect the amount due under the promissory note and not the right to recover the debt incurred, the plaintiff cannot sue the persons, who were not parties to the promissory note.

(4) For these reasons, we hold that the plaintiff's claim against the defendents 2 and 3 is not maintainable. In there sult the appeal is dismissed with costs.

(5) Appeal dismissed.


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