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Madangopal Vs. Narsingdas and Sons - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberFirst Appeal No. 32 of 1949
Judge
Reported inAIR1951Raj64
ActsNegotiable Instruments Act, 1881 - Sections 28 and 80
AppellantMadangopal
RespondentNarsingdas and Sons
Appellant Advocate Sohannath, Adv.
Respondent Advocate Amritraj, Adv.
Cases ReferredCompany. In Sitaram Krishna v. Chimandas Fatehchand
Excerpt:
.....the firm mitra and sons and was endorsed twice by them, mitra and sons' and again 'mitra and sons' managing agents, lister antiseptics and dressing company limited. in fact, while accepting the hundies, the principal for whom he was acting was not disclosed and it is well established that in an action on a bill of exchange, it is not open by way of a defence to show that the signatory was in reality acting for an undisclosed principal. it might well be urged in this case that the principal for whom the agent was acting was already well-known and could be no other than the film corporation of india limited bat this fact must actually appear after the acceptance so that no doubt whatsoever may be left of the fact that the acceptance had been made by the person making it, not in his..........case date back to 1941 when the defendant was carrying on business in calcutta and acting as the managing director of a firm by the name of film corporation of india ltd. in the months of may and june 1941, he drew three hundies in his capacity as managing director of the above mentioned firm as per detail below (1) on 31-5-1941 he drew a hundi for rs. 1200 in favour of mt. s. devi. (2) again on 31-5-1941 he drew a hundi for rs. 1200 in favour of narsinghdas agarwal and sons. (3) on 24-6-1941 he drew a third hundi for rs. 2500 in favour of narsingdas agarwal and sons.3. the drawee of these hundies was mdangopal kabra, l motisil street, calcutta. all these hundies were payable after sixty days and when they were presented to him, he accepted them. under the acceptance he signed his own.....
Judgment:

Nawalkishore, C.J.

1. This is a defendant's regular first appeal from the judgment of the learned District Judge decreeing the plaintiffs' suit for Rs. 5800 with costs.

2. The various events in this case date back to 1941 when the defendant was carrying on business in Calcutta and acting as the Managing Director of a firm by the name of Film Corporation of India Ltd. In the months of May and June 1941, he drew three Hundies in his capacity as Managing Director of the above mentioned firm as per detail below (1) On 31-5-1941 he drew a Hundi for Rs. 1200 in favour of Mt. S. Devi. (2) Again on 31-5-1941 he drew a Hundi for Rs. 1200 in favour of Narsinghdas Agarwal and Sons. (3) On 24-6-1941 he drew a third Hundi for Rs. 2500 in favour of Narsingdas Agarwal and Sons.

3. The drawee of these Hundies was Mdangopal Kabra, l Motisil Street, Calcutta. All these Hundies were payable after sixty days and when they were presented to him, he accepted them. Under the acceptance he signed his own name but also added M. D. after his signature. The Hundi in favour of Mt. Devi was endorsed to Narsingdas Agarwal and Sons. Accordingly, since payment due under these Hundies was not made on 1-5-1944, notice was sent to Madangopal Kabra calling upon him to pay the sum of Rs. 4900 due on account of principal and Rs. 800 as interest under the three Hundies and later on, since there was no response to this notice, the suit, out of which this appeal arises, was instituted for the recovery of Rs. 6800 including interest up to date at 6% per annum. The defendant pleaded that the Hundies had indeed been executed by him as Managing Director of the Company but that they had also been accepted by him in the same capacity and not in his personal capacity. He accordingly pleaded that he was not personally liable under these Hundies. He also pleaded that the plaintiff was not entitled to interest. Several other pleas were raised but they are not material for purposes of this appeal. The learned District Judge, who tried this suit, came to the conclusion that the defendant had by accepting the Hundies undertaken a personal liability. Accordingly, he passed a decree for the principal amount due and also awarded interest at 6% per annum by force of Section 80, Negotiable Instruments Act. Interest pendente lite and future interest at 6% per annum was also awarded till the date of payment.

4. The learned counsel for the defendant-appellant has confined his arguments in this appeal to two points only namely (l) That the defendant was not personally liable. (2) That since Negotiable Instruments Act was not in force in Marwar at the time the suit was instituted, the learned District Judge erred in awarding interest under Section 80 of the Act and also in awarding interest pendente lite and future interest. So far as the first point is concerned, after hearing the learned counsel for the parties, we are firmly of the view that the learned District Judge has arrived at a correct conclusion. As will be clear from the detail given above, the Handies were executed by Madangopal Kabra as Managing Director of the Company but the drawee of these Hundies and the person accepting them was not the defendant in his capacity as Managing Director. Undoubtedly, when he accepted these Hundies, he added M D., obviously meaning 'Managing Director' after his signature but it is a question whether this addition of M. D. is by itself sufficient to indicate that the defendant had not undertaken a personal liability. This is a point concerning general legal principles surrounding negotiable instruments and we will deal with it presently. It may be pointed out here that P. W. 1 Dharamdeo, who had arranged the loan, stated that the money had been advanced on the guarantee of the defendant Madangopal and that he had accepted all the three Hundies in his personal capacity. This witness also produced a certified copy of what purports to be the defendant's affidavit in the Calcutta High Court in case no. 1357 of 1941. It had been argued on behalf of the appellant in connection with this document that it had not been duly proved, inasmuch as the certified copy did not bear the seal of a notary public or of a British Consul or diplomatic agent. The learned counsel argues that at the utmost, it was a public document, in a foreign country as indeed Calcutta was at the time of the institution of the suit vis-a-vis Jodhpur, and, therefore, according to Section 78(6), Evidence Act, it could be proved either by the production of the original or of a copy certified by the legal keeper thereof, with a certificate under the seal of a notary public, or of a British Consul or diplomatic agent, that the copy is duly certified by the officer having the legal custody of the original, and upon proof of the character of the document according to the law of the foreign country. A perusal of the copy shows that although it had been certified by the Registrar of the High Court of Judicature at Calcutta to be a true copy of the original in his custody, it does not bear either a certificate under the seal of a notary public or one from a British Consul or diplomatic agent. In the circumstances there is no escape from the conclusion that the document was neither admissible in evidence nor can it be said to have been proved. The learned District Judge has drawn upon this document for supporting the conclusion arrived at by him but it is obvious that in view of what has been stated above, it must be kept completely out of consideration. On the record as it stands, the only other statement which might have been material is that of the defendant himself but he did not mention anything substantial except that the hundies had been accepted by him as Managing Director of the Film Corporation of India Limited. Accordingly, so far as oral evidence is concerned, we we left with the statement of P. W. 1 Dharamdeo only. The important question which now arises is whether there was any force in the con. tention put forward on behalf of the defendant that since he had added the words 'M. D 'after his signature while accepting the bundles, he could not be held to be personally liable. Undoubtedly, since the Negotiable Instruments Act was not in force in Marwar, reference to the various sections of this Statute would be futile. But on general principles it may be stated that Ordinarily when a person signs a negotiable instalment without showing on the face of it that he signs as an agent, he will be personally bound. It is well established that it must be clear on the face of a negotiable instrument who has executed it and whose estate is liable on it. Accordingly, if it is not made clear on the face of the note that the parson signing it is binding not himself but someone else, he must himself take the consequences. In order to exclude personal liability, an agent should indicate on the instrument that he signs at an agent. Merely signing as an agent has been held to be insufficient to indicate that the person signs as an agent only. In other words, he must clearly indicate the name of the principal on the instrument itself and state that he is doing it for or on behalf of such principal as agent and not in his personal capacity. An undisclosed principal is unknown in the case of negotiable instrument. Accordingly, it has been held that where a person after signing his name adds Managing Director or Managing Agent, it is not sufficient to indicate that he is making the Company liable and thereby excluding his personal liability. In Jhandumal v. Official Liquidators, Dehra Dun Mussoorie Electric Tramway Co., 52 ALL. 883 : (A. I. R. (17) 1930 ALL 778), a promissory note was signed by T. B. Gilani, Managing Agent, Dehra Dun Mussoorie Electric Tramway Company but it was held that it was not binding on the Company as the name of the maker of the promissory note was Gilani and not that of the Company and the words appended after his name were a mere description of Gilani. Similarly, in Sree Lal Mangtulal v. Lister Antiseptic Dressing Go., 52 Cal. 802 : (A. I. R. (12) 1925 Cal. 1062), a hundi was drawn in favour of the firm Mitra and Sons and was endorsed twice by them, 'Mitra and Sons' and again 'Mitra and Sons' Managing agents, Lister Antiseptics and Dressing Company Limited. It was held that the words 'Managing Agents, Lister Antiseptics and Dressing Company Limited' were merely descriptive of Mitra and sons and did not bind the Company. In Sitaram Krishna v. Chimandas Fatehchand, 52 Bom. 640 : (A. I. R. (15) 1928 Bom. 516), the Managing Proprietor of a firm signed the hundi as 'G. V. Athale, Managing Proprietor, Gangadhar and B. Friends, Sandhurst Road, Bombay.' It was held that the firm Gangadhar and B. Friends was not liable but Athale was personally liable as the words following his name were mere description and did not show that he had signed as agent merely. In the case before us, the defendant has accepted the hundies, indeed mentioning after his signature that he was doing so as Managing Director, but he has not added afterwards that he was accepting them on behalf of the firm in his capacity as an agent of that firm. In fact, while accepting the hundies, the principal for whom he was acting was not disclosed and it is well established that in an action on a bill of exchange, it is not open by way of a defence to show that the signatory was in reality acting for an undisclosed principal. It might well be urged in this case that the principal for whom the agent was acting was already well-known and could be no other than the Film Corporation of India Limited bat this fact must actually appear after the acceptance so that no doubt whatsoever may be left of the fact that the acceptance had been made by the person making it, not in his personal capacity but as an agent for the principal expressly mentioned. In view of the above, there is no escape from the conclusion that the defendant had undertaken a personal liability for the payment of the amount due under the handles.

5. The next question that has been agitated on behalf of the appellant relates to interest. IS- is common ground, since it is conceded by the learned counsel for the respondents, that inasmuch as Negotiable Instruments Act was not in force in Marwar on the date the suit was instituted and the hundies themselves are silent as to the rate of interest chargeable on the amount advanced, the plaintiffs could not claim any interest up to the date of the suit. The learned counsel for the appellant further urges that the learned District Judge also erred in awarding interest pendente lite and future interest at 6% per annum till repayment and has based his argument on the ground that the discretion should not be exercised in favour of a person who has not chosen to specifically charge interest in the instruments themselves. It must be remembered that these hundies were executed in Calcutta where the Negotiable Instruments Act is in force and accordingly, the parties were fully aware that even if they did not specify the rate of interest in the instruments themselves interest would be awarded to them according to the provisions of Section 80 of the Act. In the circumstances, the contention put forward by the learned counsel for the appellant for not awarding interest pendente lite and future interest has no force. The amount was advanced sometime in 1941 and nothing whatsoever has been paid till now and on the top of it, when a suit for the recovery of this amount was actually instituted sometime in 1944, it was resisted by the defendant on a ground which has turned out to be altogether frivolous. He has succeeded in keeping this litigation going for about six years. Accordingly, it seems to be a fit case in which the Court would be fully justified, in exercising its discretion in favour of awarding interest both during the pendency of the suit and till the amount is paid. In our opinion, this discretion has been properly exercised by the learned District Judge.

6. The result is that this appeal partially succeeds and is accepted as such and the decree passed by the learned District Judge is hereby modified by reducing the decretal amount to Rs. 4900 with costs on this amount and interest pendente like and future interest at 6% per annum till realization. Since the appellant has succeeded to the extent of Rs. 900, he will get his costs from the respondents on this amount in this Court while the respondents who have already been awarded costs on Rs. 4900 in the Court below will get their costs on this amount in this Court as well.


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