Skip to content


P. Balavenkatarama Chettiar and ors. Vs. Maruthamuthu Chettiar and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1943Mad247; (1942)2MLJ742
AppellantP. Balavenkatarama Chettiar and ors.
RespondentMaruthamuthu Chettiar and anr.
Cases ReferredPalaniappa Chettiar v. Shanmugam Chettiar
Excerpt:
- .....upon the belief that the temple alone would be made liable, and held that they were protected from personal liability under section 28 of the negotiable instruments act. the learned district judge who refers to this finding of the trial court does not say whether or not he agrees with it. but he held in all' the cases following the decision of this court in palaniappa chettiar v. shanmugam chettiar : (1918)35mlj90 that section 28 of the negotiable instruments act could have no application to promissory notes executed by trustees and accordingly passed decrees against those defendants personally who executed the notes and against the joint family properties in their hands including the shares of their sons who were also impleaded in the suits.3. mr. rajah aiyar for the appellants.....
Judgment:

Patanjali Sastri, J.

1. These second appeals arise out of three suits brought for amounts due respectively on three promissory notes. Two of them, O.S. Nos. 92 and 93 of 1936, were tried together and dismissed by the trial Court. The other O.S. No. 260 of 1937 was decreed. On appeal to the lower Court, the first respondent succeeded in obtaining decrees in all the suits. It may be mentioned here that in O.S. No. 260 of 1937 out of which S.A. No. 765 of 1939 arises the respondent also sought a decree against the temple of which the defendants who executed the promissory notes were trustees at the time of such execution, but this part of the claim was dismissed in both the Courts below and no question now arises with reference to it.

2. The promissory notes on which the two earlier suits were brought contained no reference to the trusteeship of the executants and the amounts were stated to have been borrowed 'for expenses in connection with our trade'. It appears however that the first respondent knew that they were the trustees of the temple and borrowed the amounts for the purposes of the temple. The learned District Munsiff found that though the executants did not sign their names as trustees of the temple, they were induced to execute the notes upon the belief that the temple alone would be made liable, and held that they were protected from personal liability under Section 28 of the Negotiable Instruments Act. The learned District Judge who refers to this finding of the trial Court does not say whether or not he agrees with it. But he held in all' the cases following the decision of this Court in Palaniappa Chettiar v. Shanmugam Chettiar : (1918)35MLJ90 that Section 28 of the Negotiable Instruments Act could have no application to promissory notes executed by trustees and accordingly passed decrees against those defendants personally who executed the notes and against the joint family properties in their hands including the shares of their sons who were also impleaded in the suits.

3. Mr. Rajah Aiyar for the appellants contended that though Section 28 did not in terms cover promissory notes executed by trustees, the principle underlying the provision applied to such cases and that therefore the learned District Judge should have recorded a finding on the question whether the executants were induced to sign the instruments upon the belief that the temple alone would be held liable, as a finding on that point in favour of the executants would absolve them from personal liability on the notes. In the other appeal S.A. No. 765 of 1939 his contention was that in the promissory note there in question the executants having described themselves in the preamble as 'managers of Sri Kannika Parameswari Devasthanam', there was sufficient indication, according to the recent Pull Bench decision of this Court in Sivagurunatha v. Padmavathi : AIR1941Mad417 , dealing with a case under Section 28, that they did not intend to incur personal liability. It will thus be seen that in all the appeals the main point for determination is whether Section 28 of the Negotiable Instruments Act or the principle on which it is said to be based is applicable to promissory notes executed by persons as trustees or managers of a temple.

4. It is plain that Section 28 deals only with the liability of agents executing promissory notes and does not in terms refer to trustees signing such instruments, but it is urged that the section is based upon a principle of wider application, namely, that a person can, by indicating on the instrument that he is signing only in a representative character exclude his personal responsibility, and that if a trustee accordingly uses appropriate language in a promissory note to indicate that he is executing it only as trustee he will not be personally liable on the note. I find it difficult to accept this contention. It has to be remembered that a promissory note is an unconditional undertaking to pay a certain sum of money and when such an instrument is given it necessarily involves a promise to pay by or on behalf of some person who is capable of binding himself by such promise. When a duly authorised agent executes the note in the name of the principal, the principal is of course the person bound by the unconditional undertaking to pay, and Section 28 provides that it is open to the person signing as agent to exclude his personal responsibility by appropriate words indicating that he does not intend thereby to incur such liability. But in the case of a trustee or manager of a charity borrowing money on a promissory note, the undertaking to pay which such execution necessarily imports can be imputed only to the executant, as there is no principal who can be bound by such undertaking, and it is difficult to see how such a person can borrow on a promissory note without incurring thereby personal liability. To attribute to the parties in such cases an intention to exclude the personal liability of the executant would in effect be to nullify the unconditional undertaking contained in the instrument. Hence it is, I apprehend, that Courts have always inclined to the view that trustees or managers borrowing money on promissory notes incur personal liability, and, in fact, Mr. Rajah Aiyar was unable to bring to my notice any case where a trustee executing a promissory note was held not liable personally. On the other hand, the decision in Palaniappa Chettiar v. Shanmugam Chettiar : (1918)35MLJ90 relied on for the respondent supports the view that a person making a note as trustee of a temple or other charity cannot claim the benefit of Section 28 as he cannot be said to be acting on behalf of a person capable of being bound by the undertaking or promise to pay. This decision has never been questioned and I have no hesitation in following it.

5. As the appellants have applied for relief under Madras Act IV of 1938 and the claim is contested the applications C.M.P. Nos. 544 and 545 of 1942 will be sent to the trial Court for enquiry and report, and final orders will be passed in S.A. Nos. 763 and 764 of 1939 on receipt of such report. S.A. No. 765 of 1939 is dismissed with costs of the 1st respondent. Leave refused.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //