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Gadadhar Samantaray Vs. Damo Behera and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtOrissa High Court
Decided On
Case NumberSecond Appeal No. 346 of 1964
Judge
Reported inAIR1966Ori230
ActsTransfer of Property Act, 1882 - Sections 130, 130(2) and 137; ;Negotiable Instruments Act, 1881 - Sections 8, 9, 43 and 118
AppellantGadadhar Samantaray
RespondentDamo Behera and anr.
Advocates:A.K. Padhi, Adv.
DispositionAppeal allowed
Excerpt:
.....the parties thereto' (section 8),'nor can the plaintiff under such an endorsement without any reference to his name therein claim as 'holder in due course'.thus the negotiable instruments act is a bar to the plaintiff's recovering the claim on the basis of the suit promissory note as endorsed. 7. the expressions 'endorsed',negotiated' and 'transferred' in section 43 and in section 118 of the negotiable instruments act show that the transfer otherwise than by negotiation is permissible;.....rejected by the courts below mainly on the finding that the plaintiff's claim on the basis of the suit promissory note ext. 2 is not maintainable for the reasons discussed hereunder.2. the facts so far as material for the purpose of deciding the point in this appeal are briefly stated these: on july 11, 1954 the defendants executed the suit promissory note ex. 2 for rs. 112-8-0 in favour of one bhikari dalai. on april 20, 1962 the said bhikari dalai transferred the suit promissory note ext. 2 in favour of the plaintiff after receiving a consideration of rs. 220 and after making an endorsement thereon ex. 2/c; the signature of the said bhikari dalai on the suit promissory note is ext. 2/d. the plaintiff brought a suit against the defendants including therein his claim on the suit.....
Judgment:

S. Barman, Ag. C.J.

1. This appeal arises out of plaintiff's claim on a promissory note dated July 11, 1954 for a sum of Rs. 112-8-0 which was rejected by the Courts below mainly on the finding that the plaintiff's claim on the basis of the suit promissory note Ext. 2 is not maintainable for the reasons discussed hereunder.

2. The facts so far as material for the purpose of deciding the point in this appeal are briefly stated these: On July 11, 1954 the defendants executed the suit promissory note Ex. 2 for Rs. 112-8-0 in favour of one Bhikari Dalai. On April 20, 1962 the said Bhikari Dalai transferred the suit promissory note Ext. 2 in favour of the plaintiff after receiving a consideration of Rs. 220 and after making an endorsement thereon Ex. 2/c; the signature of the said Bhikari Dalai on the suit promissory note is Ext. 2/d. The plaintiff brought a suit against the defendants including therein his claim on the suit promissory note Ext. 2. The suit was contested by defendant No. 1 the father of defendant No. 2. Among other defences taken by him it was contended that the plaintiff was not a 'holder' or 'holder in due course' within the meaning of the Negotiable Instruments Act as there is no specific endorsement on the promissory note in favour of the plaintiff. The Courts below accepted the defence contention and dismissed the plaintiff's claim on the suit promissory note Ext. 2 as not maintainable. Hence this second appeal by the plaintiff.

3. The short and simple reasoning on which the plaintiff's claim on the suit promissory note was rejected as stated in paragraph 4 of the judgment of the learned lower appellate Court, is this:

'4. The admitted fact in the instant case is that in the endorsement of transfer made upon the suit 2nd pronote Ext. 2 by Bhikari the holder in due course there is no specific mention of the name of the plaintiff. Neither the plaintiff has inserted his name before instituting the suit on the basis of the suit pro-note Ext. 2. It is therefore for consideration in the circumstances whether the claim of the plaintiff on the basis of the 2nd pronote, Ext. 2 is maintainable. The amount under the pronote is payable on demand or order to a specific person. In the instant case the name of the plaintiff not having been mentioned specifically in the endorsement made upon the pronote Ext. 2 he is precluded to claim the rights of a holder in due course or to that of a holder on the basis of the suit pronote Ext. 2. In view of the above, I entirely agree with the findings of the learned Munsif that the claim of the plaintiff in respect of the suit pronote Ext. 2 is not maintainable.'

4. In the endorsement Ext. 2/c on the suit promissory note the name of the plaintiff in whose favour the promissory note was purported to have been transferred was not mentioned; all that the endorsement states was:

'. . .. TUMBHANKU.. . TRANSFER KARIDELI (1 have transfered to you). That is to say, the word 'TUMBHANKU' (to you) was intended to mean the plaintiff to whom the document was delivered upon endorsement in the aforesaid manner. By the endorsement the plaintiff was given the right to realise the amount of the promissory note according to law: the endorsement states 'TUMBHE EHI NOTER DHANA BIDHIMATE ADAY KARINEBE' (you will realise the amount of the note according to law).

The word 'Tumbe'(you) in the endorsement was intended to mean the plaintiff to whom the document was delivered upon endorsement.

5. The question is: Has the plaintiff any right to claim the amount of the suit promissory note on the basis of such endorsement? He is neither a 'holder' nor a 'holder in due course' as defined under Sections 8 and 9 respectively of the Negotiable Instruments Act: as his name is not mentioned in the endorsement the plaintiff is not

'entitled in his own name to the possession thereof, and to receive or recover the amount due thereon from the parties thereto' (section 8),'

nor can the plaintiff under such an endorsement without any reference to his name therein claim as 'holder in due course'. Thus the Negotiable Instruments Act is a bar to the plaintiff's recovering the claim on the basis of the suit promissory note as endorsed.

6. Then the question arises: Is the plaintiff in such a case without any remedy? The answer is No. The promissory note on the basis that it is an actionable claim transferable under the Transfer of Property Act. In this context the material portions of the relevant provisions of the Transfer of Property Act are these:

3. 'actionable claim' means a claim to any debt, other than a debt secured by mortgage of immoveable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent.'

'130. (1) The transfer of an actionable claim whether with or without consideration shall be effected only by the execution of an instrument in writing signed by the transferor or his duly authorised agent, shall be complete and effectual upon the execution of such instrument, and thereupon all the rights and remedies of the transferor, whether by way of damages or otherwise, shall vest in the transferee, whether such notice of the transfer as is hereinafter provided be given or not;

Provided that every dealing with the debt or other actionable claim by the debtor or other person from or against whom the transferor would, but for such instrument of transfer as aforesaid, have been entitled to recover or enforce such debt or other actionable claim, shall (save where the debtor or other person is a party to the transfer or has received express notice thereof as hereinafter provided) be valid as against such transfer.

(2) The transferee of an actionable claim may, upon the execution of such instrument of transfer as aforesaid, sue or institute proceedings for the same in his own name without obtaining the transferor's consent to such suit or proceedings, and without making him a party thereto.'

'137. Nothing in the foregoing section oftin's Chapter applies to stocks, shares or debentures, or to instruments which are for the timebeing by law or custom, negotiable, or to anymercantile document of title to goods.' ,According to the definition of 'actionableclaim', the amount due on a promissory noteis a claim to the amount as a debt; the possible way of bringing a promissory note withinthe ambit of Section 130 of the Transfer of Property Act would be to dissociate the conceptof debt underlying a promissory note from thepromissory note itself and to confine the operation of the element of assignability to the debtor actionable claim which forms the basis of the promissory note, while the rights, privileges and immunities flowing from the promissory note as such could only be transferred by an endorsement.

7. The expressions ''endorsed', 'negotiated' and 'transferred' in Section 43 and in Section 118 of the Negotiable Instruments Act show that the transfer otherwise than by negotiation is permissible; if any negotiable instrument can be assigned otherwise than by an endorsement the assignee can sue; the other modes of transfer are either by operation of law or transfer as an actionable claim as contemplated by Section 130 of the Transfer of Properly Act. Section 130 enacts that the transfer of an actionable claim can be effected only by an instrument in writing but Section 137 provides that nothing in the chapter shall apply negotiable instruments. Thus Section 137 excludes negotiable instruments from the operation of the rule, which requires that transfer shall be made by written instruments, because they arc ordinarily transferred by negotiation. It is however to be kept in view that nothing in Section 137 prohibits the transfer of a negotiable instrument by means of separate written instrument; the section gives an extended privilege to mercantile document, and is in no way restrictive; the possible way of excluding the limitation of Section 137 would be to dissociate the concept of debt underlying the instrument from the instrument itself and confine the operation of the element of assignability to the debt or actionable claim as aforesaid.

8. In the present case, therefore, although the plaintiff is neither a 'holder' nor a 'holder in due course' because his name has not been mentioned in the endorsement he cannot recover his claim on the basis of a promissory note itself as governed by the Negotiable Instruments Act. Even so the amount due on the promissory note being a claim to a debt--such debt dissociated from the promissory note itself--is an actionable claim within the meaning of the Transfer of Property Act; such a debt is transferable under Section 130; as such, by virtue of Sub-section (2) of Section 130 the plaintiff as transferee of the actionable claim may sue for the same in his own name.

9. The concurrent finding of both the Courts is that the promissory note Ext. 2 is genuine and is for consideration; P. W. 8 was a witness who was present at the time of execution and transfer of the suit promissory note to the plaintiff; P. W. 4 was a witness to the payment of interest for the dues on the promissory note. The finding of the trial Court, which was upheld by the lower appellate Court is that there is ample evidence that the suit promissory note was genuine. It is also in evidence that the document was delivered to the plaintiff. Thus it was a valid transfer of the debt due on the document Ex. 2 as an actionable claim. It was by execution of Ex. 2/c signed by the transferor Bhikari Dalei that the claim to the debt mentioned in the document Ex. 2 was transferred and delivered to the plaintiff. There is also evidence that the word 'TUMBHANKU' in Ext. 2/c was intended to mean and actually meant the plaintiff to whom Ext, 2 was transferred as an actionable claim under the Transfer of Property Act in the manner aforesaid.

10. Apparently the attention of neither the trial Court nor the lower appellate Court was drawn to this aspect of the legal position with the result that the plaintiff's claim as a transferee of the claim to the debt as evidenced by Ext. 2 was not considered.

11. In this view of the case the decision of the Courts below dismissing the plaintiff's claim to the debt mentioned in Ext. 2 must be set aside. In the result therefore this second appeal is allowed.

12. The suit is decreed in favour of the plaintiff; he is entitled to realise from the defendants the sum of Rs. 112-8-0 with interest at the rate of 12 per cent from the date of the transaction till the filing of the suit by deducting the amount already paid thereon.

In the circumstances of the case, eachparty is to bear its own costs throughout.


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