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Champalal Gajanand Vs. Padam Chand Sheolal JaIn and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMadhya Pradesh High Court
Decided On
Case NumberSecond Appeal No. 381 of 1963
Judge
Reported inAIR1971MP133
ActsNegotiable Instruments Act, 1881 - Sections 8 and 78; Code of Civil Procedure (CPC) , 1908 - Order 1, Rule 10; Transfer of Property Act, 1882 - Sections 130
AppellantChampalal Gajanand
RespondentPadam Chand Sheolal JaIn and ors.
Appellant AdvocateR.L. Sharma, Adv.
Respondent AdvocateS.C. Dube, Adv.
DispositionAppeal allowed
Cases Referred and Ghanshyam Das v. Ragho Sahu
Excerpt:
.....note dated 2 october 1955 was executed for old debts consisting mostly of interest and that, since shivlal was a money-lender and he had advanced the original loan in the course of his business, he was not entitled to any interest and costs of the suit, because he had failed to comply with the provisions of the money-lenders act, 1934. 5. both the courts below held that premlata and rajmati were not necessary parties because they gave up their interest in favour of their brothers. 1,200/- after disallowing all interest claimed subsequent to 7 october 1955 for the failure of shivlal to comply with the provisions of the money-lenders act. deokhiandan, air 1961 madh pra 314. 8. the three sons of shivlal, who brought the suit out of which this appeal arises, belatedly realised that they..........treatise on the transfer of property act, 4th edition at page 739 as follows: 'if the promissory note is negotiable, some early cases supposed that the note could not be assigned as an actionable claim. but later cases have held that, even if the promissory note is negotiable, it may be assigned by instrument in writing although such an assignment renders the assignee under section 132 subject to the equities to which the assignor was subject.' so, in muther sahib maraikar v. kadir sahib maraikar, (1905) ilr 28 mad 544, sir s. subrahmania ayyar, c. j., observed at page 546 : 'the fact that the note is negotiable does not make any difference except that it carries with it certain peculiar incidents attached to it by the law merchant. the rules in regard to these choses in action prior.....
Judgment:

K.L. Pandey, J.

1. This is a defendant's further appeal against an affirming decree of the lower appeal Court for Rs. 1,200/-passed on the foot of a promissory note dated 14 September 1958 which he admittedly executed in favour of one Shivlal for Rs. 1,670/-.

2. It is common ground that Shivlal, a money-lender, had advanced money to the defendant and the latter executed a promissory note dated 7 October 1955 for Rs. 1,200/-. Subsequently, on 14th September 1958 to be more precise, accounts were made and Rs. 1,670/-, inclusive of interest, was found due from the defendant who then executed a fresh promissory note for Rs. 1,670/- and promised to repay that amount with interest at 1 per cent, per month. The creditor, Shivlal, died in February 1960 leaving behind him surviving three sons and two daughters, Premlata and Rajmati.

3. The three sons of Shivlal initiated the action, out of which this appeal arises, on the averment that, upon the death of Shivlal, Premlata and Rajmati had transferred their interest in the money-lending business inherited by them along with their brothers to the latter The plaintiff claimed Rs. 1,670/-as principal and Rs. 601-20 on account of interest.

4. The defendant resisted the claim on several grounds. He denied that the daughters of Shivlal had transferred their interest in their father's money-lending in the manner alleged and pleaded that the suit was not maintainable without impleading them as parties. He further pleaded that he had repaid Rs. 1,200/-towards the loan. According to him, even the earlier promissory note dated 2 October 1955 was executed for old debts consisting mostly of interest and that, since Shivlal was a money-lender and he had advanced the original loan in the course of his business, he was not entitled to any interest and costs of the suit, because he had failed to comply with the provisions of the Money-Lenders Act, 1934.

5. Both the Courts below held that Premlata and Rajmati were not necessary parties because they gave up their interest in favour of their brothers. They concurred in passing a decree for Rs. 1,200/- after disallowing all interest claimed subsequent to 7 October 1955 for the failure of Shivlal to comply with the provisions of the Money-lenders Act.

6. Having heard the counsel, I have formed the opinion that the appeal should be allowed. The rules of law contained in Sections 8 and 78 of the Negotiable Instruments Act are not applicable to cases where a promissory note, a bill of exchange or any other negotiable instrument devolves by operation of law or is transferred to another by assignment. So, Broomfield J, observed in Shantaram Vithal v. Shantaram Bhagwan, AIR 1938 Bom 451 :

'But if the holder is dead, his legal representatives must, I think, be entitled to sue.....In my opinion, there can be no doubt about it. There is nothing in the cases cited, nor in the Act itself, as far as I can see, which is inconsistent with it. The Act regulates the issue and negotiation of bills, notes and cheques, but does not provide for the transmission of rights in such Instruments by operation of law or by transfer.'

(Page 452)

In Zujya Pascol v. Manmohandas Lallu-bhai, AIR 1940 Bom 164, Wassoodew J., observed :

'The Act does not expressly exclude the doctrine of representative action. If a holder named is dead, a person claiming representation to his estate can bring a suit to recover the debt upon a promissory note in the name of the deceased.'

(Page 166)

In Gulabgir v. Nathmal, 27 Nag LR 327 = (AIR 1932 Nag 23). Bose A. J. C. (as he then was) stated :

'What the Negotiable Instruments Act does is to prohibit negotiation except in the manner specified by it but not to prohibit assignment in any of the several ways allowed by law.' (Page 330) (of Nag LR) = (at p. 25 of AIR).

It is, therefore, clear, and is also not now disputed, that, upon the death of the holder Shivlal, his heirs became entitled to sue for recovery of loan evidenced by the promissory note dated 14 September 1958.

7. When the owner of a single right as the holder of a promissory note dies and his right passes by devolution to his heirs, all of them must join in a suit to enforce that entire right as a whole. If any of them refuses to join as plaintiff, he must be impleaded as a defendant. The reason is that joint promisees cannot divide the debt among themselves and sue severally for parts of the debt. It follows that a suit to enforce the right by one or some of the promisees is liable to be dismissed: Kishan lal v. Chendha, AIR 1924 Nag 196; Siluvaimuthu Mudaliar v. Md. Sahul, AIR 1927 Mad 84; Pir Bakhsh v. Kidar Nath, AIR 1935 Lah 478; Munshi Sahu v. Bhupal Mahton, AIR 1936 Pat 274 and Shrikrishan v. Deokhiandan, AIR 1961 Madh Pra 314.

8. The three sons of Shivlal, who brought the suit out of which this appeal arises, belatedly realised that they alone could not maintain it without showing how the rights of their two sisters in the debt became vested in them and, therefore, they pleaded :

'2 (a) That in February 1960 at Itarsi the interest of all the daughters of the deceased Shivlal, if any, in the money-lending business was transferred to the plaintiffs out of love and affection and to maintain cordial relations between them and from that date the plaintiffs alone had interest in the claim in suit.

2. (b) That in the alternative it is submitted that all the daughters of Shivlal having been married thereby going out of the family previous to the date of the suit, they shall be deemed to have separated themselves from the coparcenary in accordance with Explanation 2 of Section 6 of the Hindu Succession Act, 1956, as such they have no right, title or interest in the claim in suit.'

9. The plea that the daughters did not obtain any share in the debt because they must be deemed to have separated from the coparcenary by reason of their marriage is easily answered by the proviso to Section 6 of Hindu Succession Act, 1956. That proviso contemplates devolution of interest by intestate succession on certain females not because they are coparceners but on account of their relationship to the deceased either by affinity or by consanguinity. Since the point was not argued, it is unnecessary to pursue it further.

10. As already indicated, the Negotiable Instruments Act deals only with transfer by negotiation and leaves untouched the rules of general law which regulate the transmission of negotiable instruments by operation of law or by legal devolution or by assignment in writing under Section 130 of the Transfer of Property Act and their transfer as chose in action according to the general law. Having regard to the provisions of Sec. 137 of the Transfer of Property Act which excludes negotiable instruments from the purview of the provisions of that Act relating to transfer of actionable claims, it has been argued on the one hand that no writing as contemplated by Section 130 of the Act is necessary at all and an oral transfer is possible and on the other that any assignment of such instruments is not possible at all. According to D. F. Mulia, neither view is correct. He observes in his treatise on the Transfer of Property Act, 4th Edition at page 739 as follows:

'If the promissory note is negotiable, some early cases supposed that the note could not be assigned as an actionable claim. But later cases have held that, even if the promissory note is negotiable, it may be assigned by instrument in writing although such an assignment renders the assignee under Section 132 subject to the equities to which the assignor was subject.'

So, in Muther Sahib Maraikar v. Kadir Sahib Maraikar, (1905) ILR 28 Mad 544, Sir S. Subrahmania Ayyar, C. J., observed at page 546 :

'The fact that the note is negotiable does not make any difference except that it carries with it certain peculiar incidents attached to it by the law merchant. The rules in regard to these choses in action prior to the Act do not cease to be any the less applicable to them by the passing of the Act unless its provisions expressly or impliedly affect those rules. If we now turn to the Act. so far as one can see, no provisions there constrain one to come to any other conclusion.'

In Perumal Ammal v. Perumal Naicker, ILR 44 Mad 196 = (AIR 1921 Mad 137), Wallis C. J. observed :

'The prevailing view of this Court is that negotiable instruments are action able claims assignable under this section.....' (Page 203)

In this connection, I may mention two other cases of the Madras High Court, namely, Narayanamoorthi v. Vuma-maheswaram, AIR 1930 Mad 197 and C.R. Venkatarama Ayyar v. B. S. Krishnaswami Chettiar, AIR 1933 Mad 133 (1). In the earlier of these two iudg-ments, the difference of opinion between the earlier cases and the later cases was noticed. The latter view was accepted in Surath Chandra v. Kripanath, AIR 1934 Cal 549 and Ghanshyam Das v. Ragho Sahu, AIR 1937 Pat 100 (FB). As shown earlier, the same view was taken in 27 Nag LR 327 = (AIR 1932 Nag 23). In view of these authorities it should be held that Section 130 of the Transfer of Property Act applies to assignment of a promissory note as a chose in action.

11. Although it was pleaded that the two daughters of Shivlal verbally transferred their interest in the money-lending of their father, including the promissory note in this case. Premlata P. W. 1 and Rajmati P. W. 2 stated that they relinquished their interest in the money-lending. Unlike a surrender by a Hindu widow which accelerated succession, this was in law a conveyance and was, as pleaded, intended to be such because only to that way could the brothers claim to be entitled to the entire right to the promissory note as whole. Since Section 130 of the Transfer of Property Act applies, it could not be effected by parol. That being so, the suit brought by only some of the heirs of Shivlal must fail.

12. In the view I have taken of this case, it is not necessary to consider other points raised in the grounds of appeal.

13. The appeal succeeds and is allowed. The lower appeal Court's decree is set aside and the suit is instead dismissed. However, in the special circumstances of this case, I direct the parties to bear their own costs throughout.


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