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Vadilal Malukchand and anr. Vs. Ugarchand Pitambardas - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtGujarat High Court
Decided On
Judge
Reported in(1963)4GLR305
AppellantVadilal Malukchand and anr.
RespondentUgarchand Pitambardas
Excerpt:
- - in view of section 49 and 50 of the indian contract act it was open to the promisee to appoint any place he liked for the performance of the promise......promissory notes which are negotiable instruments are therefore of two classes namely a promissory note payable to bearer and a promissory note payable to order. but in view of explanation (i) to section 13(1) a promissory note payable to a particular person would also be a negotiable instrument if it does not contain the word prohibiting transfer or indicating an intention that it shall not be transferable.2. in the instant case by the document a stated sum of money is payable to the plaintiff and prima facie it amounts to a promissory note. the question however is whether it contains the express words prohibiting transfer or indicating an intention that it shall not be transferable section 14 of the act reads as follows:when a promissory note bill of exchange or cheque is transferred.....
Judgment:

V.B. Raju, J.

1. This is a civil revision application arising out of Small Cause Suit No. 2923 of 1957 filed in the Court of the Additional Judge Small Causes Ahmedabad by the opponent in respect of a money claim arising out of a document executed at Nakhatrana a village in Kutch. The suit was against two persons namely defendants Nos. 1 and 2. The document was executed by defendant No. 2 who was then trading in the name of his minor son defendant No. 1. The learned Small Causes Court Judge held that the Ahmedabad Court had jurisdiction because the creditor was residing at Ahmedabad and it was the duty of the debtors to seek the creditor. As regards defendant No. 1 he held that defendant No. 1 was liable only to the extent of his share in the joint family property and he was not personally liable because the document was executed by defendant No. 2 as a person trading in the name of his minor son As regards defendant No. 2 he made him liable to the full extent of Rs. 1099/-.

2. In revision, only two points are urged. It is first urged that the Ahmedabad Court had no jurisdiction, because the document amounts to a promissory note and was made at Nakhatrana in Kutch. It is secondly urged that the Court was wrong in making defendant No. 1 liable even to the extent of his share in the joint family property.

I hold that the document is not a promissory note and that defendant No. 1 is not liable even to the extent of his share in the joint family property. The document contains a promise by the executant to pay the promisee the stated amount and contains the following additional words:

It is contended by the Learned Counsel for the applicants that this is a promissory note and a negotiable instrument and in view of Section 70 of the Negotiable Instruments Act it must be presented for payment at the place of business or at the usual residence of the maker namely at Nakhatrana. He therefore contends that the Ahmedabad Court had no jurisdiction. A promissory Note is defined in Section 4 of the Negotiable Instruments Act which will hereinafter be referred to as the Act as follows:

A promissory note is an instrument in writing (not being a bank note or a currency note) 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.

As regards the description of the payee there must be an undertaking only to or to the order of a certain person or to the bearer of the instrument. In view of the law relating to currency notes there cannot be an undertaking to pay the amount to the bearer of the instrument. Section 13(1) of the Act defines the term negotiable instrument as follows:

A negotiable instrument means a promissory note bill of exchange or cheque payable either to order or to bearer.

Explanation (i) to Section 13(1) of the Act reads as under:

A promissory note bill of exchange or cheque is payable to order which is expressed to be so payable or which is expressed to be payable to particular person and does not contain words prohibiting transfer or indicating an intention that it shall not be transferable.

Therefore_even if there is an undertaking to pay a particular person it does not cease to be a negotiable instrument provided it does not contain words prohibiting transfer or indicating an intention that it shall not be transferable. The provisions of Section 46 of the Act are also important. That section read as follows:

A promissory note bill of exchange or cheque payable to bearer is negotiable by the delivery thereof. A promissory note bill of exchange or cheque payable to order is negotiable by the holder by indorsement and delivery thereof. Promissory notes which are negotiable instruments are therefore of two classes namely a promissory note payable to bearer and a promissory note payable to order. But in view of Explanation (i) to Section 13(1) a promissory note payable to a particular person would also be a negotiable instrument if it does not contain the word prohibiting transfer or indicating an intention that it shall not be transferable.

2. In the instant case by the document a stated sum of money is payable to the plaintiff and prima facie it amounts to a promissory note. The question however is whether it contains the express words prohibiting transfer or indicating an intention that it shall not be transferable Section 14 of the Act reads as follows:

When a promissory note bill of exchange or cheque is transferred to any person so as to constitute that person the holder thereof the instrument is said to be negotiated.

Sec. 8 of the Act reads as under:

The 'holder of a promissory note bill of exchange or cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto.

Therefore when a negotiable instrument is transferred the holder has a right to demand payment of the money and to receive and recover the amount due. But in the instant case in view of the words it is clear that there is an indication in the instrument itself that the document is not transferable. The right to demand and recover payment is restricted to the person in whose favour the document is made. It is true that ordinarily even when a document is made in the name of a specified particular person it does not cease to be a promissory note if it otherwise satisfies the conditions of a promissory note. If a document is headed payable on demand and proceeds to say that the maker shall pay the specified amount to a particular person it does not cease to be a promissory note. But in this case in addition to the document being payable on demand there is a provision in the document whereby the amount is made payable on demand to a particular person and not to any person in general. In view of the provisions contained in Explanation (i) to Section 13(1) of the Act it does not satisfy the requirements of a negotiable instrument. I therefore hold that the document in question in the instant case is not a promissory note and that therefore Section 70 of the Act under which a promissory note is payable only at the place of business or at the usual residence of the maker does not apply. The common law rule that a debtor must seek his creditor in order to pay him has no application in the instant case. But in the instant case 1 have already held that the document is not a negotiable instrument but amounts to a promise to pay the stated amount of money together with interest. To such an instrument Sections 49 and 50 of the Indian Contract Act would apply. They read as follows:

49 When a promise is to be performed without application by the promisee and no place is fixed for the performance of it it is the duty of the promisor to appoint a reasonable place for the performance of the promise and to perform it at such place.

50. The performance of any promise may be made in any manner or at any time which the promisee prescribes or sanctions.

3. As provided in Section 20 Civil Procedure Code every suit shall be instituted in a Court within the local limits of whose jurisdiction the cause of action wholly or in part arises. In view of Section 49 and 50 of the Indian Contract Act it was open to the promisee to appoint any place he liked for the performance of the promise. It is true that in this case there was no previous notice by the promisee to the promissor and no correspondence appointing or requesting the promisee to appoint reasonable time for the performance of the promise or appointing such place or prescribing or sanctioning the manner of performance of the promise. But by reason of the fact that the suit itself is filed in Ahmedabad it can be taken that the promisee selected Ahmedabad as the place for the performance of the promise. Therefore the Ahmedabad Court would have Jurisdiction because the place of the performance of a promise would be place where the cause of action wholly or in part arises. The first contention of the Learned Counsel for the applicants therefore fails.

4. As regards the second contention it is admitted that on the date of the Suit defendant No. 1 was a minor. Defendant No. 2 made the document in question because he was trading on the date of the document in the name of his minor son. When defendant No. 1 was minor defendant No. 2 cannot bind defendant No. 1 for the debt of the firm as prima facie defendant No. 2 was trading in the name of his minor son whose name was really the name of the firm. The decree passed against defendant No. 1 even to the extent of his share in the joint family property is erroneous and is set aside. The rest of the decree is confirmed. The plaintiff will pay the costs of defendant No. 1 throughout and defendant No 2 will pay the costs of the plaintiff.


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