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R.P. Koneti Naicker, and 2 ors. Vs. Jatu Gopala Aiyar and anr. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtChennai
Decided On
Reported in(1913)25MLJ425
AppellantR.P. Koneti Naicker, and 2 ors.
RespondentJatu Gopala Aiyar and anr.
Cases ReferredAiyathurai Aiyar v. Dharmasiva Aiyar
Excerpt:
- - so far as the english cases go, the weight of authority seems to me clearly on the side of the respondent......be prepared to hold as a matter of constructions, that there is no indication on the note that the maker signed as agent or that he did not intend to incur personal responsibility. he is described as holding a power of attorney from the zemindar. it is not stated that the power of attorney included a power to sign promissory notes, or that the note was signed in pursuance of the power. there are no words added to the signature indicated that the maker signed in the capacity of agent.5. it was suggested that the law as laid down in the english cases before the english and the indian acts was not the same as the law under the acts and that the english cases which supported the respondent's contention that the maker was personally liable could not be relied on. i do not agree.6. the indian.....
Judgment:

Arnold White, C.J.

1. The main question we have to determine is whether the party who signed the promissory note in question as maker is personally liable thereon. The following is a translation of the note:

12th August 1907 corresponding to 28th Audi Plevanga--'Promissory note executed to you both (1) Gopalaiyar and '(2) Nagasamier, sons of Soothi Seshaiyar, residing in No. 1 Police 'Station lane, Madura town, by E. P. Koneti Nayudu Garu, son of 'Nanjundappa Nayudu Garu, agent holding power of Attorney from 'the Zemindar Dorai Rajah Avergal and residing in Vellikurichi 'Village, Mana Madura Taluk, Madura District.

Amount due to you including principal and interest up to date 'upon settlement of account of dealings which was standing against ' the name of Ranichekkani ammal on cloths &c;, having been purchased ere this for the Vellikurichi palace, is Rs. 694-5-0. On ' demand, I promise to pay this sum of Rupees six hundred and ' ninety four and annas six with interest at Re. per cent, per ' mensem from this date either to you or order and shall take this ' back with the endorsement of payment thereon.

(Signed) R.P. KONETTI NAYUDU

(in Telugu.)

2. The contention for the Appellant was that the Zemindar was liable on the note and not the party who signed it.

3. Section 28 of the Indian Act (Negotiable Instruments Act, 1881) makes the party who signs liable unless, there is, on the note, an indication that he signs as agent, or that he does not intend to incur personal responsibility.

4. The words in the instrument before us which are relied on as affording the required indication are the words in the body of the not 'agent holding power of attorney from the zemindar.' If I had to decide the question entirely on the words of the instrument, leaving out of the consideration the English decisions, I should be prepared to hold as a matter of constructions, that there is no indication on the note that the maker signed as agent or that he did not intend to incur personal responsibility. He is described as holding a power of attorney from the zemindar. It is not stated that the power of attorney included a power to sign promissory notes, or that the note was signed in pursuance of the power. There are no words added to the signature indicated that the maker signed in the capacity of agent.

5. It was suggested that the law as laid down in the English cases before the English and the Indian Acts was not the same as the law under the Acts and that the English cases which supported the respondent's contention that the maker was personally liable could not be relied on. I do not agree.

6. The Indian Negotiable Instruments Act was passed in 1881 one year before the English Bills of Exchange Act, 1882. The latter enactment was drafted by Sir M.D. Chaimers and was based on his Digest of the law of Bills of Exchange published by him in 1878. In the preface to the 3rd edition of his book on the Act he states that for the most part the propositions of the Act were taken word for word from the propositions of the Digest. He goes on to observe that since the Act the cases decided before the Act are only law in so far as they can be shown to be correct and logical deductions from the general propositions of the Act. This statement is consistent with the observations on the same subject, made by Lord Herschell in Vugliano v. The Bank of England (1891) A.C. 107 and seems to me to be equally applicable to the Indian Act.

7. Sir M.D. Chaimers states in his introduction to his first edition of the Indian Act that it reproduces in a statutory form the English common law of negotiable instruments with scarcely any modifications. Elsewhere he observes that as the Indian Act, in so far as it deals with any subject, adopts and enforces English law almost in its entirety, it is conceived that in matters relating to negotiable instruments which are introduced by the Act (and which do not come within the scope of the Indian Contract or Evidence Act) English law would be looked to and followed as a guide.

8. The question of the liability of the maker of a note who disclaims personal responsibility on the ground that he signed as agent is, as it seems to me, not a matter untouched by the Act.' It is specifically dealt with in Section 28.

9. The language of the section of the English Act (section 26) no doubt differs from that of the corresponding section of the Indian Act (section 28). It declares that a person who signs and adds words to his Signature indicating that he signs for and on behalf of a principal, or in a representative character, is not personally liable, while Section 28 of the Indian Act declares that an agent who signs is personally liable unless he indicates on the instrument that he signs as agent or that he does not intend to incur personal liability. It might be said that in view of this difference of language the onus on the party who seeks to avoid personal responsibility on the ground he signed as agent is heavier under the Indian than under the English enactment. I do not, however, attach importance to this variation of language because, I think the legislature intended in both enactments to reproduce the English common law, though the language for the purpose of carrying out their intention is different.

10. In dealing with this question we are, in my opinion, warranted in considering the decisions before the Indian Act, bearing in mind that they are only law ' in so far as they can be shown to be correct and logical deductions from the general propositions' in the Indian Act, in the same way as an English Court would be warranted in considering the English decisions in an English case.

11. Perhaps the strongest case in the appellant's favour is one since the Act, the decision of the Court of Appeal, overruling Channel J, in Chapman v. Smethurst (1909) 1 K.B. 927. The court held that the man who signed was not personally liable, but in that case the facts were very different from those in the present case. There, at the foot of the note was the rubber stamp of the company and under those words the defendant wrote the words J.H. Smethurst, managing Director. There, it was admitted the defendant had the company's authority to sign the note. The note was made in the name of the company by a person acting under the authority of the company, as allowed by Section 47 of the Companies Act, 1872. In Alexander v. Sizer (1869) L.R. 4 Ex. 102 where it was held that the man who signed the note was not personally liable, it was signed ' For (certain parties) John Sizer, Secretary'. Lindus v. Melrose (1858) 27 L.J. Ex. 326 was again, a very different case from this. There the note was signed by certain persons who described themselves as directors, and it was held that the note was binding on the company and that the directors were not personally liable. In Aggs v. Nicholson (1856) 25 L.J. Ex. 348 the two directors who signed the note, without additional words, described themselves in the body of the note as directors of the Society. They were held not personally liable. The case of Dutton v. Marsh (1871) L.R. 6 Q.B. 102 was held to be on the other side of the line, and the parties who signed were held personally liable. In that case though they described themselves as Directors in the body of the note, they did not promise to pay on behalf of the company and they signed the note without any addition to their signatures, though the company's seal was affixed at the corner of the note with ' witnessed by L.L.'

12. I do not propose to discuss further the numerous authorities cited in the able arguments which were addressed to us. So far as the English cases go, the weight of authority seems to me clearly on the side of the respondent. The question came before the late Mr. Justice Krishnaswami Aiyar in a case Aiyathurai Aiyar v. Dharmasiva Aiyar (1911) M.W.N. 1 p. 143. The learned judge held that tha man who signed the note was personally liable. In that case the indications on the note that the man who signed it did not intend to make himself personally liable would seem to have been stronger than the indications in the case before us.

13. It seems to me that, reading the note in question as a whole, on the construction of the instrument, and on authority, the maker is personally liable.

14. As to the minor point that the Munsif was wrong in framing an additional 'issue which raised the question of the liability of the 3rd defendant as maker of the note, I agree with Sadasiva Aiyar Justice, that it was open to the Munsif to do this.

15. A further point was taken that there was no consideration for the note as between the maker and the payee and that the only consideration for the transaction was the debt due to the payee by a third party. In the course which the case took before the Munsif this point did not arise and was not considered. I do not think we are called upon to consider it now.

16. I think the appeal should be dismissed with costs.

Ayling, J.

17. I agree. The point is not free from doubt, but on a careful consideration of the terms of the pro-note I am of opinion that there is no indication therein that the maker signed as an agent or did not intend to incur personal liability.

Old field, J.

18. I concur in the statement of the law contained in the judgment of the learned Chief Justice. With reference to the wording of the note it is material not only that the maker describes himself in a manner which does not imply any intention to incur personal responsibility, but also that his promise to pay is unqualified by any reference to his alleged principal. The appeal must be dismissed with costs.


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