Skip to content


Muthuveeran Chetty Vs. Govindan Chetty - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai High Court
Decided On
Case NumberCivil Revn. Petn. No. 798 of 1959
Judge
Reported inAIR1961Mad518
ActsNegotiable Instruments Act, 1881 - Sections 8 and 48; Transfer of Property Act - Sections 130
AppellantMuthuveeran Chetty
RespondentGovindan Chetty
Appellant AdvocateV.P. Raman, Adv.
Respondent AdvocateR. Rajagopala Iyer, Adv.
Cases ReferredVirappa v. Mahadevappa
Excerpt:
a partition in a joint hindu family does not operate as a transfer within the meaning of the transfer of property act (iv of 1882). even apart from the statutory position that section 130 of the transfer of property act does not apply to negotiable instruments, if the assignment of a promissory note at a partition to a member of the joint family does not amount to a transfer by act of parties, but by operation of law, no document in writing in support of the assignment is required under section 130 of the transfer of property act. ; where property in a promissory note gets transferred by operation of law, the special modes of transfer envisaged in the negotiable instruments act (xxvi of 1882), are not required, and a person to whom the property in the negotiable instrument stands.....srinivasan, j. 1. the question raised in this reference to the full bench is whether a member of a joint family to whom a promissory note is allotted at an oral partition among the members of that family can maintain an action on the promissory note as distinct from the debt, in the absence of an endorsement of transfer made on the promissory note or of a deed of assignment executed in respect of that note.2. this question arose in the revision filed by the plaintiff who was non-suited by the learned district munsif of pudukottai who upheld the contention of the defendant in the suit that the plaintiff obtained no rights in the promissory note without an assignment in his favour. the facts are that the defendant executed a promissory note for a sum of rs. 70/- in favour of the plaintiffs.....
Judgment:

Srinivasan, J.

1. The question raised in this reference to the Full Bench is whether a member of a Joint family to whom a promissory note is allotted at an oral partition among the members of that family can maintain an action on the promissory note as distinct from the debt, in the absence of an endorsement of transfer made on the promissory note or of a deed of assignment executed in respect of that note.

2. This question arose in the revision filed by the plaintiff who was non-suited by the learned District Munsif of Pudukottai who upheld the contention of the defendant in the suit that the plaintiff obtained no rights in the promissory note without an assignment in his favour. The facts are that the defendant executed a promissory note for a sum of Rs. 70/- in favour of the plaintiffs grandfather in 1937. The Payee-grandfatherdied, and at a partition which took place between the sons of the payee, that is, the plaintiffs father, and his brother the promissory note Was allotted to the plaintiff's father.

No endorsement was however made on the note. Subsequently, the defendant had been making various payments and appropriate endorsements of payment had been made on the Promissory note, On the death of the plaintiff's father, the right to this item of property survived to the plaintiff and his brother. The latter was given away in adoption so that the plaintiff became exclusively entitled to all the rights under the promissory note.

Originally the plaintiff's brother had been joined in the action as second plaintiff, but in view of his adoption, he was struck off the record. Apart from other contentions, where under the defendant sought to invoke the application of Madras Act IV of 1938, the further contention was advanced by the defendant, that in the absence of an assignment of the promissory note, the plaintiff was not entitled to any rights thereunder. It Was this issue that was found in favour of the defendant, against which the revision was filed in this Court.

3. Balakrishna Aiyar, J., noticed the existence of divergent views on this question. He referred to one line of decisions wherein it has been held thai there could be no valid transfer of a promissory note payable to order otherwise than by endorsement and delivery, and that an assignee of a negotiable promissory note cannot sue on the Promissory note as such unless it is endorsed to him, and further that if the suit was on the chose in action on foot of an assignment otherwise than by endorsement, such a transfer of the right could not be effected except by writing as required by Section 130 of the Transfer of Property Act.

In the other line of cases, the view found favour that there could be a valid transfer of a promissory note otherwise than by an endorsement, and that such a transfer did not stand excluded by any of the provisions of the Negotiable Instruments Act. Certain decisions have taken the view that such an assignment otherwise than by an endorsement could be spelt out of a reference to the allotment in a partition list. In view of this conflict of opinion, Balakrishna Aiyar, J., found it necessary to have the matter referred to the Full Bench.

4. It would be fairly obvious from the statement of the facts giving rise to this reference that the origin of the plaintiffs title to the promissory note is rested upon the incident of a partition in a joint family. The conflicting views presented before us in the course of the arguments were, on the one hand, that a partition in a join; family does not amount to a transfer of the nature envisaged in the Transfer of Property Act, and that it is the result of an operation of law, notwithstanding that it may be initiated by an act of parties, that the Negotiable Instruments Act is not a comprehensive enactment in so far as the transfer of rights in negotiable instrument is concerned, and that such rights can get transferred by operation of law, in which event the specialmodes of transfer contemplated in that Act are not rendered necessary and on the other, that partition involves a transfer and in the case of a negotiable instrument must be effected either by the special modes specified in the Act or in accordance with Section 130 of the Transfer of Property Act. The principal question for decision is thus which of these two views is correct.

5. The contention that an assignee of a negotiable promissory note cannot sue on the promissory note as such unless it is endorsed to him finds support in Arunachala Reddi v. Subha Reddi, 17 MLJ 393. In that case, the plaintiff claimed that the note had been assigned to him verbally at a partition. The managing member of the family in whose favour the note had been executed was also a party defendant in the suit and ho denied the assignment. The learned Judges did not examine the question whether the allotment to a member of the family of a promissory note in favour of the managing member would suffice to transfer the property in that promissory note. They observed;

'Assuming that the plaintiff would be entitled to sue on the chose in action if the note were assigned to him otherwise than by endorsement, he could not, in our opinion, when so suing, be regarded as suing on a negotiable instrument, and, therefore, would not come within the exceptions in Section 137 of the Transfer of Property Act. Consequently, the assignment of the chose in action on which he relies is bad for want of writing under Section 130 of the Transfer of Property Act.'

6. This decision however did not find favour in Venkatadri v. Lakshminarasimha Row, 21 MLJ 80. The view take' in 17 MLJ 393 that the assignment of a negotiable promissory note could not be recognised unless there is an endorsement was expressly dissented from in their later decision. With particular reference to Sections 130 and 137 of the Transfer of Properly Act, the learned Judge observed:

'Section 130 of the Transfer of Property Act, however, does not in our opinion, apply in view of Section 137 of the Act, which declares that section 130 among other sections does not apply to instruments which are for the time being, by law or custom, negotiable. At the time of the alleged transfer in this case, the promissory note was Certainly negotiable. It was no doubt he'd in 17 MLJ 393, that Section 130 of the Transfer of Property Act, applies when the claim is made under an assignment avid not by reason of an endorse-meat, the reason given being that when suing the plaintiff cannot be regarded as suing on a negotiable instrument. Such a view would require the importation of words into Section 137 of the Transfer of Property Act which are not to be found in it.'

It may he mentioned that in both these decisions, an earlier decision in Muhammad Khumarali v. Rangarao, ILR Mad 654 was relied upon which clearly laid down that though an endorsement on the note failed to be effective as such, it could yet be relied upon as an assignment, entitling the assignee to sue on the note.

7. The scope of the provisions of the Negotiable Instruments Act in so far as they deal withtransfer of rights' under a negotiable instrument was examined in Muthar Sahib v. Kadir Sahib, ILR Mad 544. In that case, the extreme con-tention was advanced that the provisions of the Negotiable Instruments Act did not permit any kind of transfer other than by endorsement, and that a Court trying an action on a promissory note-was precluded from traveling beyond the four coiners of the Act. The learned Judges repelled: this contention and observed:

''The fact that the note is negotiable does not make any difference except that it carries with it certain peculiar incidents attached to it by the law merchant. The rules in regard to these chooses, in action prior to the Act do not cease to be any the less applicable to them by the passing of the Act unless its provisions expressly or impliedly affect these rules. If we now turn to the Act, so far as one can see, no provisions there constrain one to come to any conclusion. The only provision of the Act which could, with any Plausibility, be relied on in, support of the contention under consideration is the definition therein of the term 'holder' and Mr. Krishnaswami Aiyar did lay stress on it. But the real import of this definition is that, to come within it, the party should be the owner at law of the negotiable instrument, i.e., according to the law merchant, whatever such party's position and liability in equity may be. But this in no way interferes with the due application of rules which are unaffected by that law and which are not to be ignored simply because the Negotiable Instruments Act does not refer to-them. The observation of Mr. Chalmers with reference to the English Bills of Exchange Act, 1882, may very well be applied to the Negotiable Instruments Act. He says at page 128 of his book of 'Bills of Exchange' that 'the act deals only with transfer by negotiation, that is, transfer according to the law merchant. It leaves untouched the rules of general law which regulate the transmission of bills by act of law and their transfer as choses in action or chattels according to the genera! law'. These, of course, are provisions inserted by way of caution only and do not mean that, but for them the rules of law referred to in those sections would have been unenforceable, though there was nothing in the other provisions of the Act itself to forbid their application. And surely the absence of similar provisions in the Indian Act docs not warrant that view that the Act abolished rules previously established even though they were in no way in-consistent with any of its provisions.... It is thus clear that the absence of an endorsement to the plaintiff is no bar to the suit.'

8. In Ulagappa Chetty v. Ramanathan Chetty, 3 Mad LW 171 : AIR 1917 Mad 512 (1)), Coutts-Trotter, J., noticed the conflict of authority hut chose to rely upon 17 MLJ 393 in holding that a person could not sue upon a promissory note which had not been endorsed to him. He observed ;

'Apart from Authority, I am very strongly of opinion myself that the case in Sowear Lodd Govinda Doss v. Muneppa Naidu, ILR Mad 534 cannot possibly be supported as it amounts protanto to a repeal of the Negotiable Instruments Act.'

In the Bench decision ILR Mad 534 CouttsTrotter J., deferred the question which arose whether promissory notes executed in favour of the manager of the Court of Wards by the tenants of the estate taken possession of by the Court of Wards could after the termination of such management, be sued upon by the person entitled to possession of the property, without there being any endorsement or assignment. In that case, the Court of Wards took over the property from the possession of the usufructuary mortgagee.

During the term of management by the Court of Wards, the tenants executed promissory notes for the rents in favour of the manager. On the death of the Zamindar the Court of Wards gave up its superintendence and replaced the plaintiff usufructuary mortgagee in possession and handed over the promissory notes to him. On suits laid on those promissory notes being dismissed, on the ground of the absence of an endorsement or an assignment, the matter came to the High Court in revision. One of the learned Judges observed:

'The promissory notes relating to the taluk were simply handed over to the plaintiff's father, because, on the death of the Ward the power of the Court of Wards having ceased, there was no one who could legally endorse the notes.... The Manager's powers as such, had determined. When the plaintiff's father died property in the notes again descended to the plaintiff by operation of law. I am of opinion that the plaintiff is entitled to sue on the suit notes.'

It was specifically held that Property in a note may also pass by operation of law. The judgment of Courts Trotter, J., wherein he differed from the decision of the Division Bench, was reversed in Ramanathan Chetti v. Katha Velan, ILR Mad 353 : AIR 1918 Mad 482 . The following observations of the learned Judges are of considerable importance:

'The possibility of transfer of right in the note by operation of law has not been the subject of judicial pronouncements to any considerable extent. In this presidency, apart from certain observations of Miller, J., in ILR Mad 534 the matter, is res integra.

The Negotiable Instruments Act only deals with transfers by negotiation. Under the English Bills of Exchange Act, the common law of the land is expressly saved (See Section 97). It is a pity that there is no such saving clause in the Indian enactment. Section 57 of the Act by implication, seems to contemplate that the legal representatives of a deceased person can negotiate a promissory note. The practice of allowing legal representatives in this country to sue on notes exerted to their predecessors is apparently founded on the principle that the Act does not abrogate rules of devolution of rights in the properties of the deceased.

If a son, as legal representative, can sue on a note executed to his father, there could be no impediment in principle to Other heirs or successors having a similar right. The case of trustee is, in some respects, stronger than that of other heirs. In the case of private trusts, Section 75 of Act II of 1882 enacts that the Property standing in the name of the predecessor shall vest in the successor.

It is not necessary to obtain a transfer by an instrument or by endorsement. We fail to see why this principle should not be extended to public trusts.'

After referring to Blyes on Bills% the Judges proceed: 'The cases quoted by the author in support of the above propositions show that the English. Bills of Exchange Act does not affect the common law right of devolution by operation of law. The same considerations are applicable to the construction of the Indian enactment.'

9. In Gopala Pillai v. Kothandarama Aiyar : AIR1934Mad529 the question was not specifically considered, but certain observations in that decision dearly establish that the legal representative of the deceased payee could maintain a suit On the promissory note as such, a view that can only be based on the proposition that the rights in the promissory note can devolve by operation of law. In that case, the payee died and the property in the promissory note was claimed by his brother and his widow. Ramesam, J., observed at page 851 (of Mad LJ) : (at P. 533 of AIR):

'In the present case, no assignment is needed, for on the evidence .....we must now assume that originally the suit note was executed for a debt due to the joint family but afterwards the brothers became divided in status and as a result the plaintiff and Natesa Aiyar's widow became each entitled to a half share ......... The plaintiff was always theowner of a half share of the debt and required no assignment. The third defendant inherits the other half share as the heir of Natesa Aiyar.'

Though the ultimate decision therein proceeded on other grounds, the court definitely held that the property in the Promissory note can devolve upon the legal representatives of the deceased payee by operation of law and that the absence of any endorsement or assignment did not affect the claim of the persons suing.

10. In Kalicharan Prasad v. Muhammad Ibrahim, 41 Cal WN 697 the Calcutta High Court had to consider the case where a receiver appointed in a partition suit sought to sue on certain promissory notes. The question arose whether the receiver was not entitled to sue because his name did not appear of the body of the document as the original payee of the Instrument. The learned Judges, in dealing with the question, observed ;

'But the question is whether the receiver could give a valid discharge. There seems to be no reason why he could not. Analogy may be drawn from the case of death of the holder of a promissory note and it is conceded that in such a case his heir or executor or administrator ..... could give a valid discharge and, therefore, would be entitled to sue. In other words, such a person could be the holder of the note. Section 57 prescribes how a note may be negotiated by the legal representative of a deceased person, but this is not the only method of passing title to & promissory note. It has been held in ILR Mad 353 : (AIR 1918 Mad 482) that a promissory note executed in favour of a trustee can be sued on by his successor without endorsement or assignment, the Negotiable Instruments Act not affecting devolution of rights by operation of law-In Surath Chandrg Saha v. Kripanath Chowdhury : AIR1934Cal549 it was held that a hand note has two characters; it is negotiableand it is also actionable and title may be transferred by the act of parties for example, by assignment, as also by the procedure prescribed in the Negotiable Instruments Act. In that case, the holder without endorsement sold his right, title and interest in the hand note to the plaintiff by a registered Kobala and it was held that the plaintiff was entitled to sue ....... It seems to us, therefore, that the terms of Section 8 of the Negotiable Instruments Act do not exclude the plaintiff as Receiver from being the holder of the promissory note and so he is entitled to bring the suit.'

11. Viswanatha Sastri J. summarised the position in the following words in Veerayamma v. Ammireddi, : (1949)1MLJ189 . That was a case where a promissory note was taken, in the name of the son on whose death the father a manager of the family gave discharge with reference to the son's widow. The widow sued to recover the debt due under the promissory note. The learned Judge observed :

'It has been held by our High Court that where the right to a debt evidenced by a promissory note vests by operation of law in a person different from the payee named in the note, as for instance, in a receiver in insolvency or a succeeding trustee, it is open to the persons in whom the right to the debt so vests to sue for the recovery even though they may not come strictly within the literal language of Section 8 of the Negotiable Instruments Act, as 'holders'. See the decisions in ILR Mad 534, and ILR Mad 353 : (AIR 1918 Mad 482). In the present case the debt being a family debt the father of the deceased Payee andthe manager of the family, to whom the debt survived in its entirety, could realise it and give avalid discharge of the debtor.'

Though this decision did not in specific terms dealwith the question whether the father as the surviving member to whom the debt survived could institute an action on the promissory note, as such, such a conclusion appears to be inherent in the above passage.

12. It seems to us to be unnecessary to labour the point further. It is clear that in so far as themodes of transfer of negotiable instruments are concerned, the Negotiable Instruments Act is notexhaustive and does not prevent the passing of property in the note by operation of law. In the cases we have referred to, the property in the notes descended from father to son by operation of law and the son was held entitled to sue on the notes (see ILR Mad 534). Succeeding trustees were also held entitled to sue on a promissory note executed in favour of a Predecessor, though there was no endorsement or assignment, ILR Mad 353 : (AIR 1918 Mad 482).

A receiver appointed by court has been held entitled to sue, notwithstanding the absence of an endorsement or an assignment. In a recent decision of the Andhra Pradesh High Court in Venkataswami v. Noor Muhammad Begum, AIR 1956 Andhra 9 Chandra Reddi J. as he then was, sitting singly, examined the several decisions and concluded thatbesides the two modes of transfer indicated in the Negotiable Instruments Act, there are two other methods, by operation of law and transfer as a chose in action under Section 130 of the Transfer of Property Act by which a person may become entitled to sue on the note.

13. We accordingly reach the position that; in proper cases it is not necessary for the person suing on the promissory note to rely only on an endorsement or such other mode as is provided for in the Negotiable Instruments Act, and that a suit by a person on whom the right devolves by operation of law cannot be defeated for absence of the endorsement. The further question that we have to examine is whether in the event of allotment of the property in the promissory note at a partition of the joint family, it can be regarded as a devolution of right by operation of law.

14. We have already indicated the conflictingcontentions on this head. While one side claimsthat a partition does not amount to a transfer andthat the division in status is by operation of law andnot by an act of parties, the other side urges theopposite view. In Radhakristnayya v Sarasammal, : AIR1951Mad213 , Hiequestion arose whether a partition is a transfer within the meaning of Section 53-A of the Transfer Of Property Act and whether the doctrine of part performance could be invoked by a party claiming to bein possession by virtue of a partition under an -in-registered deed.

The question was extensively examined by the learned judges. The cases which expressed them-selves differently on this question were all considered, particularly in the light of the decision in Atrabennessa Bibi v. Safatulla Mia, ILR Cal 504 : (AIR 1916 Cal 645), on which both lines of decisions 'rested in coming to contrary conclusions. The learned Judges referred to Freeman on 'Cotenancy and Partition' and extracted the following passage:

'Partition between coparceners neither amounts to, nor requires, an actual conveyance. It is less than a grant. Its operation is not to pass the land by a fresh investure of the seisin, for parceners are supposed to be already in possession of the whole lands. Partition therefore, makes no decree. It only adjusts the different rights of the parties to the possession; each does not take her allotment by purchase; but is seized of its descent from the common ancestor, as she was of her undivided share before partition.'

and after an exhaustive discussion of the case law, came to the conclusion :

'Partition, therefore, is really a process in and by which a Joint enjoyment is transferred into an enjoyment in severally. Each one of the sharers had an antecedent title and therefore no conveyance is involved in the process as a conferment of a new title is not necessary.'

It is true that the opposing view was accepted by the learned fudges who decided Rasa Goundan v. Arunachala Goundan, : AIR1923Mad577 . This case was however considered in : AIR1951Mad213 and differed from.

15. Further weighty authority in support ofthis view that a partition is not merely the result of consensual act of parties but is really brought about by operation of law is found in the decision of the Privy Council in Mt. Parbati v. Naunihal Singh, 36 Ind App 71. Their Lordships of the Privy Council observe, after referring to Appovier v. Ramasuhba Aiyan, 11 Moo Ind App. 75 and Bal-kishendas v. Ramnarain Sahu, 30 Ind App. 139 :

'In both these cases, the members of a joint Hindu family, some of them being minors, acting by and through their parents, executed instruments in writing, providing in the first case that part, and in the second case that the whole, of the joint family property should belong to and he enjoyed by the different members of the family in specified shares. The effect of this was held to be that as to the property so dealt with, there was a division of rights; the status of the family was changed, the tenancy of the property severed and converted from something, to use the language of English law, like a joint tenancy into a tenancy in common, and the previously undivided family became by operation of law divided'.

16. The respondent however purports to rely upon certain observations of Lord Westbury in 11 Moo Ind App 75, in support of his contention that a partition is not the result of an operation of law. We are unable to read any such clear expression of view in these observations. On the other hand, a distinction is drawn between a division of status and a division of the property itself by metes and bounds. In dealing with the contention that a deed agreeing to a division is ineffectual to convert the undivided property into divided Property, unless it had been completed by an actual partition by metes and bounds. Lord Westbury observed at Pages 89 and 90:

'Their Lordships do not mind that any such doctrine has been established; and the argument appears to their Lordships to proceed upon error in confounding the division of title with the division of the subject, to which the title is applied ......... But when the members of an undividedfamily agtea among themselves with regard to particular property, that it shall thenceforth b' the subject of ownership, in certain defined shares, then the character of undivided property and joint enjoyment is taken away from the subject matter so agreed to be dealt with; and in the estate each member has thenceforth a definite and certain share, which he may claim the right to receive and to enjoy in severally although the property itself has not been actually severed and divided.........It isnecessary to bear in mind the twofold application of the word 'division.' There may he a division of right, and there may be a division of property; and thus, after the execution of this instrument, there was a division of right in the whole property, although, in some portions, that division of right was not intended to be followed up by an actual partition by metes and bounds, that being postponed till some future time when it would be convenient to make that partition.'

17. We have referred earlier to ILR Cal 504 : (AIR 1916 Cal 645), which forms the starting point of the two lines of decisions, one holdingthat a partition amounts to transfer of property and the other taking the contrary view. In that decision, the question that arose was whether a benamidar could maintain a suit for partition of joint immoveable property. There the plaintiff took a conveyance in respect of an undivided share of joint family property and instituted a suit for partition and Joined her vendor as pro forma defendant. The defence was that the conveyance was a fictitious transaction and that the plaintiff being only a nominal owner was not entitled to maintain the suit.

This contention found favour with the trial court and the suit was dismissed. The learned Judges in dealing with the question referred to the distinction between suits for lands, suits for money claims and to the line of cases which denied the right of the benamidar to maintain a suit for land. According to the learned Judges, the substantial question that arose before them was whether a suit for partition fell within the class of the suits for land, or within the class of suits for money, they observe :

'In our opinions a suit for partition of immoveable property should, for our present purpose, be included in the same category as a suit for possession of lands. The object of a suit for partition is to alter the form of enjoyment of joint property by the co-owners: or, as has sometimes been said, partition signifies the surrender of a portion of a joint right in exchange for a similar right from the co-sharer. Partition is thus the division made between several persons, of joint lands which belong to them as co proprietors, so that each becomes the sole owner of the part which is allotted to him; the essence of partition is that the property is transformed into estates in severally and one of such estates is assigned to each of the former occupants for his sole use and as his sole properly.'

18. While one line of cases which held Partition not to be a transfer rested its conclusion an one part of the above extract, the cases which held to the contrary relied upon the statement that the partition amounted to a surrender and exchange. It seems to us that the Principle derivable from the above passage is certainly not different in content from that laid down in the two Privy Council decisions to which we have made reference.

19. Venkataramana Rao, J., in Sankaralingam, Pillai v. Veluchami Pillai : AIR1942Mad338 , in dealing with the rights of the adopted son to set aside an earlier partition observed.

'Mr. Rajah Aiyar contends that the partition must be put on the same fooling as a valid alienation, but I am not able to agree with his contention. Partition may no doubt in a sense be transfer but it is in substance an adjustment of the ownership of many persons in the joint family property by assigning particular portions of it to a several ownership. It cannot strictly be called an alienation of joint family property.'

To our minds, these observations do not lend any support to the contention of the respondent that a partition amounts to a transfer.

20. This question in a slightly different form came up for consideration in a Bench decision of this Court in M. K. Stiemann v. Commr. of Income tax, R.C. No. 49 of 1956. There, a father, the Kartha of joint family, purported to pool his self-acquired properties with the ancestral joint family property for subsequent division among the members of the coparcenary. The question arose whether there was a transfer of assets within the meaning of Section 16(3)(a)(iv) of the Indian Income-tax Act, it was observed :

'Where the self acquired properties of a coparcener --in this case the coparcener was the father of the other coparceners and the kartha of the coparcenary -- are pooled with joint family property and partitioned, there are three distinct stages. First the self-acquired properly of the coparcener is impressed with the character of the joint family property of the coparcenary. The next stage is the disruption of the coparcenary. The members thereafter became divided in status. The next stage after that is the actual division between the divided members of what had been the Property of the joint family. Each of these stages may be separated from the succeeding one by an interval of time, considerable or otherwise. The length of the interval however does not affect the principle in deciding the question, was there a transfer of property at any stage. Obviously, no question of transfer of assets can arise when all that happens is separation in status though the result of such severance in status is that the property hitherto held by the coparcenary is held thereafter by the separated members as tenants in common. Subsequent partition between the divided members of the family does not amount either to transfer of assets from that body of the tenants-in-common to each of such tenants-in-common ...... Severance in statuswith the resulting change in the nature of the ownership of the property is one of the incidents of a coparcenary. The property held by the coparcenary vests in the separated members as tenants in common after the severance in status. That result can be brought about by the unilateral exercise of the volition of the separating member Or members of the family. At that Point of time, the property, which had up to then been impressed with the character of joint family or coparcenary property, becomes impressed with the character of property held in severally by the tenants-in-Common......... Coparcenary property ceasing to be joint family property of the coparceners on a division in status between them and becoming thereafter the property held in severally by the divided members, and the property of a coparcener Ceasing to be his and becoming the property of the coparcenary of which he continues to be a member are both incidents of a coparcenary governed by the Mitaksbara School. Either can be brought about by the unilateral action of the coparcener concerned. Neither transaction amounts to a transfer of properly from one juristic entity to another. A transfer is essentially a contract, a bilateral transaction. The transaction by which a property ceases to be the Property of a coparcener and becomes impressed with the character of coparcenary property does not itself amount to a transfer. No transfer need Precede the change. No transfer ensues either.'

21. It should thus follow that where a division in status is brought into existence at a partition, such division, though it may be initiated by the unilateral volition of a member of 'the joint family, nevertheless alters the character of the possession of the family properties by members thereof, a result which is undoubtedly a consequence of the operation of the rules governing the coparcenary under the Mitakshara school of law. No transfer of property is involved thereby.

The conclusion seems to us to be irresistible, that where a change in the character of possession brought about by such means, whether or not it is followed up by an actual division of the properties in metes and bounds, such a change is the result of an operation of law, and the interest acquired by the members of the family as a result of such a partition is brought about by operation of law and not otherwise.

22. Amir Bibi v. Arokiam, 45 Ind Cas 813 ; (AIR 1919 Mad 1113) dealt with the case of an oral award under which a hypothecation bond was al-lotted to the holder. The maintain ability of the suit by the person to whom the hypothecation bond was allotted was attacked on the ground that even if the award was true, it was not followed up by the execution of a conveyance. The learned Judges took it to be settled law that an award may be oral and that an oral award is as binding on the parties as a written award. They further proceeded to hold on the basis of earlier decisions that partition were enforceable even in the absence of any writing or registration to evidence such a partition and that oral dedications of property to an idol were also valid and that

'the Transfer of Property Act is not exhaustive of all modes of transfer and if there is a transfer of property which would not come within the special modes discussed in the Transfer of Property Act the conditions as to writing and registration Prescribed by the Act have no application. The mode of transfer by an award is not dealt with by the Transfer of Property Act. Consequently, the decision of the arbitrators by which they are said to have given the mortgage bond to the present plaintiff is enforceable between the parties, if there is an oral award. In this view, also, the plaintiff would acquire a title to sue upon the hypothecation bond.'

23. This decision would certainly support the conclusion that title could pass on foot of an oral award untrammelled by any of the requirements of the Transfer of Property Act, that is to say, the transfer must necessarily be by operation of law. The case of an oral partition can in no wise be different. A case almost directly in point was decided by Pand-rang Row, J., in Subbarayadu v. Subbarayadu : AIR1935Mad473 . There, as a result of an award, the suit promissory note was allotted to the plainliff and actually delivered to him. The question arose whether the suit was maintainable In the absence of an assignment. The learned Judges said :

'The award which is relied upon by the plaintiff operated in my opinion as a transfer inter alia of the suit promissory note from defendant 2, the payee mentioned therein to the plaintiff....there can be no doubt that the effect of the award, whichallotted the suit promissory note among other thingsto the share of the plaintiff, was to transfer the property in the suit promissory note to the plaintiff, and the plaintiff is therefore entitled as the owner to maintain the suit on the promissory note.'

24. The learned Judge in coming to this conclusion did not consider it necessary to refer to anycases other than the one referred to earlier 45 Ind Cas 813 : (AIR 1919 Mad 1113) which dealt with the effect of an award.

25. Though not directly in point, there is adecision: of our High Court in Santhamma v. Neelamma, (S) AIR 1956 Mad 642, where in dealing with the constitutionality of the Madras Aliyasanthana Ant of 1949, the learned Judges had to determine the nature of a partition. After dealing with certain decisions learned Judges held :

'This decision and the passage extracted above show that the expression 'inheritance' or 'succession' as used in the Regulations and the other Parliamentary and Indian enactments is not to be understood as confined to cases of a 'Devolution' in the strict sense or a passing of interest of property from the dead to the living but as comprehending also the adjustment of the rights and obligations that subsist between the parties governed by the Hindu law...... We might add that we do not also seeany sufficient reason why in framing these lists the Parliament should have thought fit to take away the law relating to partition in joint families from the jurisdiction of the Indian legislature. We therefore consider this argument....... regarding the wide import of the expression 'devolution' and 'succession' and as to the words being apt to cover partition in a Hindu family, well founded.'

26. In the view expressed in these decisions, it follows that the law as laid down in : AIR1923Mad577 viz, that a partition among members of a joint Hindu family is a transfer to which the provisions of Section 53 of the Transfer of Property Act will be applicable, is no longer good law.

27. The last case to which we need refer is the decision of the Bombay High Court in Virappa v. Mahadevappa, : AIR1934Bom356 . In that case, also, a promissory note which was originally executed in favour of the son was allotted to the father on an arbitrator's award and a decree which followed it. When the father sued upon the note making his son as a defendant, it was held that the facts did not amount to an assignment by operation of law. While the learned Judges conceded the position that there are three possible kinds of transfer conceivable, viz, by endorsement, by assignment as a chose in action and by operation of law, on the facts they appear to have held that the suit could not be maintained. They observe :

'..... The appellant cannot succeed on record, for the promissory note has not been endorsed in his favour, and it is not mentioned as going to his share in the award, and all there is to infer from that he is the beneficiary is the acquiescence of his son, the payee, in the plaint, which clearly is not enough on any view of the law on the point.' Considering the narrow ground on which the ultimate decision in this case was rested, it is not possible for us to accept this decision as an authority for the position that the transfer of the interest in the promissory note following an award at a partition cannot amount to a transfer by operation of law, the more so in the light of other cases more directly in point to which we have earlier made reference.

28. It accordingly follows that a partition in a joint Hindu family does not operate as transfer within the meaning of the Transfer of Property Act. Even apart from the statutory position that Section 130 of the Transfer of Property Act does not apply to negotiable instruments, if the assignment of a Promissory note at a partition to a member of a joint family does not amount to a transfer by art of parties but by operation of law, no document in writing in support of the assignment is required under Section 130 of the Transfer of Property Act. Where property in a promissory note gets transferred by operation of law, the special modes of transfer envisaged in the Negotiable Instrument Act are not required, and a person to whom the property in the negotiable instruments stand so transferred is entitled to sue on the note as such.

29. The reference is answered accordingly.

(This case coming on for final hearing before Srinivasan J. on 9th March 1961, the Court delivered the following


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