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Chinnakuzhandai Ammal Vs. Kuzhandai Veerasami Mudaliar and anr. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtChennai
Decided On
Reported inAIR1935Mad312; 159Ind.Cas.458; (1935)68MLJ713
AppellantChinnakuzhandai Ammal
RespondentKuzhandai Veerasami Mudaliar and anr.
Cases Referred and Tweddle v. Atkinson
Excerpt:
.....court ceases to be valid the moment the party is brought into court. if a sues c on a contract between b and c to which a is not a party, it is undoubtedly a perfect defence for c to state that a is not a party to the contract and that defence being good, it cannot cease to be so by bringing c into court along with b......similar position arises as regards the right of a person to sue on a contract to which he is not a party. b contracts to pay a a certain sum and subsequently c contracts with b to pay a, a not being privy to the latter contract. there was at one time a decision of this court that a could sue c on the latter contract by joining b as a co-defendant, one reason given being that all the parties being before the court it could do justice and such a course would avoid multiplicity of suits. that view has since been abanondoned and tweddle v. atkinson (1861) 1 b. and s. 393 : 121 e.r. 762 is conclusive that a party cannot sue on a contract to which he himself is not a party unless he is actually privy to the contract, i.e., unless the parties made it with the intention of making him a party to.....
Judgment:

Pakenham Walsh, J.

1. In this case the plaintiff sued on a promissory note executed by the first defendant in favour of the second defendant. The plaintiff's claim was that the promissory note was executed in favour of the second defendant benami for herself. The trial Court dismissed the suit as not maintainable, and against this order of dismissal the present Revision Petition has been filed.

2. No direct authority of this Court has been quoted to me but there is an obiter remark of a Full Bench in Subba Narayana Vathiar v. Ramaswami Aiyar I.L.R. (1906) Mad. 88 : 16 M.L.J. 508 which supports the view of the learned District Munsif. That was a suit in which the payee sued the maker of the note who pleaded that the note had been executed in plaintiff's favour only benami for one K and that it had been discharged by payment to the person really interested. It was held by the Bench that evidence to this effect could not be adduced by the defendant. That case is of course different from the present which comes directly under Section 78 of the Negotiable Instruments Act. The learned Judges in Subba Narayana Vathiyar v. Ramaswami Aiyar I.L.R.(1906)Mad. 88 : 16 M.L.J. 508 however, proceeded to remark.

We cannot find any English case in which an undisclosed principal has attempted to sue on a negotiable instrument, and we think that the decisions clearly established that an undisclosed principal could not be sued.

3. The petitioner relies on a case reported in Brojo Lai Saha Banikya v. Budh Naih Pyarilal and Co. I.L.R. (1927) Cal. 551, but unfortunately the remarks there are equally obiter. In that case one P.L. who was the holder of a promissory note sued thereon in the name of his firm and it was held that the names of the four persons who were partners of that firm might be taken to have been specifically stated in the plaint and all of them might be considered to have joined as plaintiffs, and that there was no objection to the suit merely because the plaintiff had joined the other partners with him. Ghose, J. at page 559 observes:

This is sufficient for the purpose of deciding the case. But I think it is right that I should express my opinion with regard to the point which has been dealt with by the Subordinate Judge, as the question has been very elaborately argued by the learned Advocates on both sides.

4. Turning to page 555 we find that the point dealt with by the learned Judge was whether the true owner of the money can also maintain the suit and he answered it in the affirmative. Ghose, J. then proceeds to consider this question and disagrees with the view taken in Subba Narayana Vathiyar v. Ramaswami Aiyar I.L.R. (1906) Mad. 88 : 16 M.L.J. 508 . But it may be noted that he does not go further than this position which he states at page 562:

I have already stated it will do no harm to anybody, if the real owner is held to be entitled to sue if he is capable of giving a good discharge to the debtor from the holder of the instrument. In the present case, the holder of the instrument, Puarilal Das, has given evidence that the money belongs to all the members of the firm, and it has been found that the defendant was aware of it. He was willing to give a discharge to the defendant.

5. In the case before me it is admitted that the plaintiff is not capable of giving a discharge to the first defendant the maker of the promissory note but the argument is that she could give a discharge by bringing the payee into Court along with the first defendant and getting an order from the Court. So that even the obiter remarks in Brojo Lai Saha Banikya v. Budh Nath Pyarilal anf Co. I.L.R.(1927) Cal. 551 do not go as far as the present petitioner requires the Court to proceed.

6. There is one case of a single Judge in Saruj Singh v. Deosaran Singh : AIR1930Pat313 which does go to this length. The only difference between that case and the present is that in that case the payee whose name appeared in the promissory note admitted the plaintiff's claim whereas in this present case he contests the claim. If the principle contended for by the petitioner is correct, this ought to make no difference, but it would on general principles seem obviously unfair that the maker of a pro-note should be dragged into Court on account of a quarrel between the payee named in the promissory note and some other person whose name was undisclosed at the time and of whom the maker knew nothing. This consideration indicates to my mind that the view in Sarjug Singh v. Deosaran Singh : AIR1930Pat313 is unsound.

7. As regards the Calcutta case (which does not go far enough for the Petitioner) apart from the fact that I should prefer to follow the obiter remarks of a Full Bench of this Court rather than the obiter remarks of a divisional Bench of the Calcutta High Court I apprehend that there is a very clear reason for not allowing a suit of this sort to be maintained, though it is a reason which might not apply to the obiter remarks in the Brojo Lai Saha Banikya v. Budh Nath Pyarilal and Co. I.L.R. (1927)Cal. 551 It is this, that what is a good defence to a claim made outside the Court cannot become a bad defence by bringing the defendant into Court and adding another defendant. Here if the plaintiff had demanded the money from the first defendant out of Court, the latter would undoubtedly have had a perfectly good defence by quoting Section 78 of the Negotiable Instruments Act, and even on the view taken in the Calcutta case, as the plaintiff could not have given first defendant a discharge the plaintiff had no cause of action against him. I fail to see how a defence which is perfectly valid if a party is not brought into Court ceases to be valid the moment the party is brought into Court.

8. A very similar position arises as regards the right of a person to sue on a contract to which he is not a party. B contracts to pay A a certain sum and subsequently C contracts with B to pay A, A not being privy to the latter contract. There was at one time a decision of this Court that A could sue C on the latter contract by joining B as a co-defendant, one reason given being that all the parties being before the Court it could do justice and such a course would avoid multiplicity of suits. That view has since been abanondoned and Tweddle v. Atkinson (1861) 1 B. and S. 393 : 121 E.R. 762 is conclusive that a party cannot sue on a contract to which he himself is not a party unless he is actually privy to the contract, i.e., unless the parties made it with the intention of making him a party to it. The reason for not allowing a person to sue on a contract to which he is not a party applies in the present case. If A sues C on a contract between B and C to which A is not a party, it is undoubtedly a perfect defence for C to state that A is not a party to the contract and that defence being good, it cannot cease to be so by bringing C into Court along with B.

9. For these reasons I hold that the lower Court's decision is correct and there is no reason for me to interfere in revision.

10. The petition fails and is dismissed.


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