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S.V.R. Veerappa Chetty Vs. I.N.K.R. Muthuraman Chetty and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Judge
Reported in58Ind.Cas.508
AppellantS.V.R. Veerappa Chetty
Respondenti.N.K.R. Muthuraman Chetty and ors.
Cases Referred and Nachimuthu Chetty v. Andiappa Pillai
Excerpt:
paper currency act (ii of 1910), section 26 - hundi drawn payable to bearer on demand, legality of. - - 3. it is unnecessary, under these circumstances, to give a final opinion on the question whether the particular ground on which the lower appellate court dismissed the suit, namely, that plaintiff could not sue on the hundi because he had entered the name of periannan chetty on it and had not got periannan chetty to endorse it bask in plaintiff's favour, whether this particular ground is also a good defense to the suit. 8. if this negotiable instrument was not for other reasons bad, i should be inclined to allow the plaintiff to make the necessary: but as he must fail on the other point, it becomes unnecessary to remand the suit for further trial......to deposits of money in the hands of the bankers, shroffs or agents. this is not such a case. the suit hundi, therefore, offends against section 26 of the paper currency act and following chidambaram chettiar v. ayyasaami thevan 36 ind. cas. 741 ; arunachalam chettiar v. narayanan chettiar 51 ind. cas. 300 and nachimuthu chetty v. andiappa pillai 42 ind. cas. 706 this suit, being based on such a hundi, is not maintainable and the appeal must be dismissed with costs.7. in this view it becomes unnecessary to decide the rather technical objection that plaintiff could not maintain the suit without; first obtaining an indorsement from periannan chetty. the plaintiff is the holder of the negotiable instrument which, when drawn, was payable to bearer. he is not an indorser as he did not sign.....
Judgment:

Sadasiva Aiyar, J.

1. I think that the hundi sued on is illegal, as contravening Section 26 of the Indian Paper Currency Act Nachimuthu Chetty v. Andiappa Pillai 42 Ind. Cas. 706 Spencer and Krishnar, JJ.. The Subordinate Judge's view that a loan becomes a deposit with the debtor 'after the loan become pay. able by the expiry of the time provided in the document of loan' and if the debtor happened to be a banker, the proviso to Section 26 of the Paper Currency Act will apply, cannot be accepted as sound.

2. The lower Appellate Court's decree dismissing the suit must, therefore, be confirmed on the above ground which was the ground on which the District Munsif properly dismissed it.

3. It is unnecessary, under these circumstances, to give a final opinion on the question whether the particular ground on which the lower Appellate Court dismissed the suit, namely, that plaintiff could not sue on the hundi because he had entered the name of Periannan Chetty on it and had not got Periannan Chetty to endorse it bask in plaintiff's favour, whether this particular ground is also a good defense to the suit. I shall content myself by saying that my present view is that a plaintiff who is suing only the drawer of a hundi and who is honestly in possession of that hundi which is made payable to bearer (and the presumption is that every holder is an honest holder in due Course) is entitled to deal with the endorsements and writings on the bank of the hundi in any manner he likes, provided that his so dealing does not subject the defendant (the drawer) to a greater liability than he would be under, if there had been no endorsements at all and the hundi had been left in its original state. This principle had been applied in the Muthar Sahib Maraikayar v. Kadir Sahib Maraikayar 28 M. 544 in favour of the plaintiff in that case, who was the bolder of a hundi and who was also an indorser who got back the hundi, but I do not think that his having been an endorser also in that case has anything to do with the customs and conveniences of Mercantile Law on which the governing principle of that decision rests. If the plaintiff in the case was entitled to score out, and had soured out Periannan Chetty's name, from the back of the hundi, the result would be the same as if Periannan had never been its holder. Periannan could thereafter not sue on it and the plaintiff as bearer would be the only person entitled to sue thereon. Of course, even though the names or endorsements on the back had not been actually dealt with by a plaintiff (including the souring out names on the back) in the manner favourable to him, before he brought the suit, he could ask the Court to treat the hundi as if he had so dealt with them in any manner he was entitled to deal with them. I have (it will be seen) dealt with a case in which the drawer alone is sought to be made liable. It goes without saying that other considerations might arise, if an individual indorser is sought to be made liable as he will not be bound by alterations which would prejudice his right to proceed against the previous endorsers or the drawer, etc.

4. In the result the Second appeal fails and is dismissed with costs.

Spencer, J.

5. In my opinion the District Munsif was right in holding that the suit was not maintainable on the hundi Exhibit A, on the ground that it contravened Section 26 of the Paper Currency Act, and the Subordinate Judge was wrong in thinking that this was an exception to the prohibition contained in that section. The Subordinate Judge gives three reasons for his opinion, and each of them on examination appears to be erroneous. First he says that the words 'on demand' do not appear on Exhibit A: but Section 26 does not require that those words should be expressed in the instrument. No time for payment was specified and the hundi was made payable to the person presenting it. It was thus evidently a hundi payable to the bearer on demand. Next the Subordinate Judge refers to the exception in Section 1 of the Negotiable Instruments Act in favour of instruments written in an oriental language. This exception only provides against the provisions of that Act that override local usage in respect of instruments written in the vernaculars. It does not prevent the operation of the provisions of the Paper Currency Act, which is quite a different Act., Lastly, the Subordinate Judge tries to bring the case within the proviso to Section 26 by saying that though the amount was a loan in the first instance, it became a deposit after the date of payment, It is clear from the evidence of Sathappa Chetty (plaintiff's witness No. 1) that the gum of Rs. 1,000 in question represented a debt due to 1st defendant by one Kassim and that no cash was deposited with the witness by lat defendant.

6. The proviso to Section 26 only applies to deposits of money in the hands of the bankers, shroffs or agents. This is not such a case. The suit hundi, therefore, offends against Section 26 of the Paper Currency Act and following Chidambaram Chettiar v. Ayyasaami Thevan 36 Ind. Cas. 741 ; Arunachalam Chettiar v. Narayanan Chettiar 51 Ind. Cas. 300 and Nachimuthu Chetty v. Andiappa Pillai 42 Ind. Cas. 706 this suit, being based on such a hundi, is not maintainable and the appeal must be dismissed with costs.

7. In this view it becomes unnecessary to decide the rather technical objection that plaintiff could not maintain the suit without; first obtaining an indorsement from Periannan Chetty. The plaintiff is the holder of the negotiable instrument which, when drawn, was payable to bearer. He is not an indorser as he did not sign the instrument (see Section 15 of the Negotiable Instruments Act) but he wrote an order to pay Periannan Chetty above the signatures of 2 indorsers and thus under Section 49 he converted the indorsement which was in blank into an indorsement in full; under Section 46 the hundi become negotiable by Periannan Chetty when it was indorsed, and delivered to him. When the instrument returned into the possession of the plaintiff, there was nothing, so far as I can see, to prevent the plaintiff from canceling the indorsement which he had written in favour of Periannan Chetty and from recovering the amount due thereon.

8. If this negotiable instrument was not for other reasons bad, I should be inclined to allow the plaintiff to make the necessary: correction and to proceed with this suit. But as he must fail on the other point, it becomes unnecessary to remand the suit for further trial.


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