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Gura Sahu Vs. Tangi Krishnamma and ors. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtChennai
Decided On
Reported inAIR1932Mad687
AppellantGura Sahu
RespondentTangi Krishnamma and ors.
Cases ReferredNataraja Naicker v. Ayyaswami Pillai
Excerpt:
- - if, no doubt, the bill or note is endorsed to a third party, it may be that the endorsee will not be able to bring an action on that bill or note against the other partner or even on the debt against the other party. the suit therefore must fail......petitioner obtained transfer of the promissory note by endorsement and instituted the suit. the suit note was insufficiently stamped. the petitioner therefore filed this application requesting that the plaint may be amended so as to make the suit one on the original consideration for the note and not on the note itself. two objections were taken to the amendment. the first objection was that the amendment, if allowed, would deprive the petitioner of his plea of limitation and so it should not be allowed. the decision of this objection would depend upon the question whether the endorsement of payment on the back of the promissory note dated 26th may 1927 is true or not. if true the suit would be in time; but the lower court did not decide this question; but disposed of the application.....
Judgment:
ORDER

Madhavan Nair, J.

1. This Civil Revision Petition arises out of an application for the amendment of plaint (I.A. No. 71 of 1928) made by the petitioner in S.C. No. 1055 of 1927. The suit is upon a promissory note executed by defendants 1 and 2 in favour of the father of defendants 3 and 4. The petitioner obtained transfer of the promissory note by endorsement and instituted the suit. The suit note was insufficiently stamped. The petitioner therefore filed this application requesting that the plaint may be amended so as to make the suit one on the original consideration for the note and not on the note itself. Two objections were taken to the amendment. The first objection was that the amendment, if allowed, would deprive the petitioner of his plea of limitation and so it should not be allowed. The decision of this objection would depend upon the question whether the endorsement of payment on the back of the promissory note dated 26th May 1927 is true or not. If true the suit would be in time; but the lower Court did not decide this question; but disposed of the application on the second objection, that the suit based upon the original consideration is not maintainable and therefore the question of amendment does not arise. The argument that is urged is this: that the endorsement does not pass title to the consideration but only to the bill or the note. The argument is not without force. It finds support in an obiter dictum of Srinivasa Ayyangar, J., in Shanmuganadha Chettiar v. Srinivasa Ayyar [1916] 40 Mad. 727. That was a suit on a promissory note executed by two out of three partners of a firm for money then advanced to the executants for purposes of the firm. In a suit on the note by the promisee it was held that even the third partner who did not execute the note was liable. In the course of the judgment Srinivasa Ayyangar, J., observes as follows:

If, no doubt, the bill or note is endorsed to a third party, it may be that the endorsee will not be able to bring an action on that bill or note against the other partner or even on the debt against the other party. Except for that difference, the debt is certainly payable by the partner who did not sign the bill.

2. The dictum of Srinivasa Ayyangar, J., has been followed in Maung Pho Mya v. Dawood and Co. A.I.R. 1921 L.B. 44 a decision of the Rangoon Court. But it has not been followed in the decision in Nataraja Naicker v. Ayyaswami Pillai [1917] 38 I.C. 339. In this case the rights of an endorsee to sue the other members of a family on a note executed by an younger member of the family has been recognized on proof that the debt for which the promissory note was executed was binding on the family. According to the decisions of this Court it is true that the indorser can no doubt maintain an action on the debt against the other members of the family on the ground of Hindu law liability; but is this a relevant consideration for determining the rights of an indorsee of a bill or note? Under Section 50, Negotiable Instruments Act, the endorsement of a negotiable instrument followed by delivery transfers to the indoor see the 'property therein....' It will be a question for consideration whether this provision means anything more than this, namely, that the indoor see is entitled to the amount specified in the bill or note by an action thereon for himself and in his own name. As the question raised in the Civil Revision Petition is an important one and as the two decisions of our Court abovementioned seem to take different views on it, I would refer this case to a Bench. (This case coming on for final hearing the Court delivered the following:)

3. The question whether an endorsee of a promissory note can ever sue in an appropriately framed plaint on the consideration does not really arise in this case. The plaint does not suggest, nor does the petition for amendment allege, that the debt and the execution of the promissory note were not contemporaneous. On the contrary their clear implication is that the debt and the execution of the note were contemporaneous. That being so, the debt can be proved only by the note, and the note, being insufficiently stamped, cannot be admitted in evidence. The suit therefore must fail. This petition is dismiased with costs.


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