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Alluri Venkataratnam Vs. Alluri Kanakasundara Rao and anr. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtChennai
Decided On
Reported in(1936)71MLJ473
AppellantAlluri Venkataratnam
RespondentAlluri Kanakasundara Rao and anr.
Cases Referred and D.N. Shaha & Co. v. The Bengal National Bank
Excerpt:
- - it was alleged in the plaint that the plaintiff had obtained the transfer of the promissory note by endorsement on 22nd june, 1933, for good consideration. it is not as if there is any evidence to show that the plaintiff did not act in good faith or did not pay consideration for the endorsement. it has not been clearly found that the discharge took place actually before the endorsement. it cannot be said that a promissory note becomes mature the moment after it is executed and that any endorsement thereafter even for consideration does not constitute the transferee or endorsee a holder in due course even if he acted in good faith......it was alleged in the plaint that the plaintiff had obtained the transfer of the promissory note by endorsement on 22nd june, 1933, for good consideration. it was contended by the defendants that the debt due under the suit promissory note had been discharged long ago by the transfer of another promissory note to kameswara row in full discharge of the suit debt. it was also contended that the plaintiff is not a holder in due course. the two questions that were decided by the district munsiff were that the discharge pleaded was true and that the plaintiff was not a holder in due course. so far as the truth of the plea of discharge is concerned, it has not been contended in the argument that the finding of the district munsif is not according to law. the argument has been confined.....
Judgment:

Pandrang Row, J.

1. This is a petition to revise the decree of the principal District Munsiff of Guntur dated 10th November, 1933, in S.C.S. No. 1403 of 1933, a suit to recover Rs. 191 odd being the amount due on a promissory note dated 6th July, 1930, executed by the first defendant in favour of the plaintiff's transferor one Kameswara Row. The second defendant is the undivided son of the first defendant. It was alleged in the plaint that the plaintiff had obtained the transfer of the promissory note by endorsement on 22nd June, 1933, for good consideration. It was contended by the defendants that the debt due under the suit promissory note had been discharged long ago by the transfer of another promissory note to Kameswara Row in full discharge of the suit debt. It was also contended that the plaintiff is not a holder in due course. The two questions that were decided by the District Munsiff were that the discharge pleaded was true and that the plaintiff was not a holder in due course. So far as the truth of the plea of discharge is concerned, it has not been contended in the argument that the finding of the District Munsif is not according to law. The argument has been confined to the District Munsif's finding on the second point and the main complaint is that the learned District Munsiff has ignored the presumptions contained in the Clauses (a), (c) and (g) of Section 118 of the Negotiable Instruments Act, and that on account of this omission to bear in mind the legal presumptions in favour of the plaintiff the finding must be deemed to be vitiated by an error of law.

2. There is no doubt that this complaint is fully justified as will be seen from the following extract from the District Munsiffs judgment which deals with this point:

The plaintiff is not certainly a bona fide holder in due course. The plaintiff has not chosen to go into the box. The allegation in the plaint that the endorsement was for consideration has not been proved. I find that no consideration was paid for the transfer of the suit promissory note and that the plaintiff is not a bona fide holder in due course.

3. It is clear therefore that the finding was based on the fact that the plaintiff did not go into the box and did not prove that he had paid consideration for the endorsement. It is not as if there is any evidence to show that the plaintiff did not act in good faith or did not pay consideration for the endorsement. In these circumstances the finding cannot be upheld as it is vitiated by a material error of law.

4. It has however been attempted to be supported by a reference to Section 60 of the Negotiable Instruments Act in view of the finding that the debt due under the suit promissory note had been discharged. It has not been clearly found that the discharge took place actually before the endorsement. Even assuming that the discharge was prior to the endorsement, there is no evidence whatever to show that the fact of the discharge was known to the plaintiff when he took the endorsement or that he was aware that any demand had been made for payment of the debt due under the suit promissory note before he took the endorsement. In the absence of any evidence as to the knowledge of the plaintiff in this case it must be assumed in deciding this point that he had no such knowledge.

5. Reliance has been placed on the decision reported in Venkanna v. Subbayya (1932) 64 M.L.J. 241. Even in that decision which goes counter to at least two previous decisions of this Court, viz., Muthu Reddi alias Doraisami Reddi v. Velu Asari (1916) 2 M.W.N. 107 and Ramanadan Chettiar v. Gunbu Aiyar (1928) 113 I.C. 456, it is stated at the end that the case would be different if in the case of a promissory note payable on demand this discharge takes place before the demand. There is no evidence here that the discharge in this case was not made before the demand.

6. The question of maturity does not arise in the case of a promissory note payable on demand; it cannot be said that a promissory note becomes mature the moment after it is executed and that any endorsement thereafter even for consideration does not constitute the transferee or endorsee a holder in due course even if he acted in good faith. If this were the correct position, it would be impossible to imagine that there could be any holder in due course in the case of a promissory note payable on demand. Reference has been made in this connection also to Sivaramakrishna Pattar v. Moideen Musaliar (1909) 19 M.L.J. 509 : I.L.R. 33 Mad. 34 and D.N. Shaha & Co. v. The Bengal National Bank, Ltd. I.L.R (1920) 47 Cal. 861. I am of opinion that apart from these authorities the law is very clear that where an endorsee of a promissory note payable on demand is not aware that the promissory note has been discharged or that any demand was made he must be deemed to be a holder in due course even if as a matter of fact the endorsement in his favour was made after the discharge.

7. The decree of the District Munsiff must therefore be set aside as there is no evidence to show that the plaintiff was not a holder in due course. There must be a decree in his favour as prayed for with costs in this Court and in the Court below.


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