1. The findings of fact are that the defendant received a sum of money from P.W. 5 for which she executed a promissory note, Ex. A, dated 17th January 1936. An endorsement on the back of the promissory note purporting to endorse the promissory note over to the plaintiff bears the date of 21st April 1936; and it is found that that was not the true date of the endorsement, and that it was written merely to avoid the application of Madras Act & of 1938. The first Court found that the suit was not maintainable, and so dismissed the suit with costs. The lower appellate Court, while upholding the finding of the District Munsif on questions of fact, found that the mere antedating of the note (despite the circumstances found by the learned Subordinate Judge) did not amount to forgery. The learned Subordinate Judge was prepared to consider the plaintiff -a woman-as an endorsee for collection; and so he decreed the suit to the extent that would have been permissible had the true owner of the note instituted the suit.
2. There can be no doubt at all that the endorsement is a forgery. It was made with the fraudulent intention of causing loss to the defendant by making him liable for an amount exceeding that which the law permitted; and as he made this false document with a dishonest intention it was a forgery. There can also be no doubt that although Section 58, Negotiable Instruments Act, does not directly apply to a case of this kind, Courts in India have held that the effect of a forged document in India is the same as in England and has therefore no legal effect whatsoever. The matter was discussed in Mercantile Bank of India v. Capt. Vincent L. D'Silva : AIR1928Bom436 , and decisions of other High Courts, (e. g., Hansraj v. Buttonji (1999) 24 Bom. 65; Jainarayan v. Mahbub Bakhsh 1928 All. 428 and Banku Behari v. Secy. of State (1909) 36 Cal. 239 were referred to as showing that there was a general consensus of opinion throughout India that a forged document could convey no title. Banku Behari v. Secy, of State (1909) 36 Cal. 239, in particular, dealt with a forged endorsement, which the learned Judge said was a nullity. If the forged endorsement is a nullity, then it will follow that the plaintiff had no title whatsoever to sue and that the only person who could sue on the note was the true owner, P.W. 5. The lower appellate Court relied on a decision of Ramesam J. in Nallaya Goundan v. Palani Goundan : AIR1926Mad1154 , a case not unsimilar to the case now under consideration. The learned Judge first considered the effect of Section 13, Clause 2, Bills of Exchange Act (the English Act); and he pointed out that antedating and postdating of a cheque was permissible. He therefore concluded that even a dishonest antedating was not an offence. He then went on to say that assuming that there had been an offence, the offence was one not between the transferor and transferee, but between them on the one hand and the maker on the other; so that Section 58, Negotiable Instruments Act, did not apply. There can however be no doubt that Section 13, Clause (2), English Act, was not intended to render forgeries valid, but only to give legislative approval to well-established commercial usage. Chalmers in his 'Bills of Exchange' quotes English cases in which it was held that postdating in order to commit a fraud and which amounted to forgery, would not be protected by Section 13, Clause (2), Bills of Exchange Act. It is true, as Ramesam J. points out, that Section 58, Negotiable Instruments Act, does not apply; but all the High Courts in India have applied the principle that a forged document is a nullity to negotiable instruments, despite the fact that this principle finds no mention in the Negotiable Instruments Act.
3. The appellant is also entitled to succeed on another ground, viz., that the transferor and the transferee did not intend title to pass by the endorsement. The plaintiff's case was that the promissory note was hers from the outset, that she had paid the consideration for the promissory note to the defendant, and that the endorsement was merely a piece of writing which would make it appear on the face of the note what was true even before the endorsement was made, viz., that the ownership of the note was in her. It was never her case that the promissory note belonged to P.W. 5 in the first instance and that he had endorsed it for consideration to her. The learned Subordinate Judge says that although she did not pay any consideration for this endorsement, she might be regarded as endorsee for collection. It seems ridiculous to regard a woman ignorant of the ways of the world and of commerce as an endorsee for collection for a money-lender accustomed to this kind of transaction and to Court procedure. Her name appeared on' this document for the sole purpose of enabling p. W. 5 to obtain a decree against the appellant for a sum larger than the law permitted. The plaintiff therefore had no title to the promissory note; and her suit could have been dismissed on this ground alone. The appeal is allowed, the decree of the lower appellate Court set aside, and the decree of the District Munsif restored. The appellant will receive his costs in this Court and in the lower appellate Court. The respondent has filed a memorandum of cross-objections with regard to the costs disallowed by the lower appellate Court. It has not been pressed in view of the above decision, and so is dismissed without costs.