1. I feel no hesitation in holding that there was no valid endorsement contained in Exhibit A-2.
2. This purports to be an acknowledgment of the payment of Rs. 631 and odd and is signed by Ampu who is one of the three alternative payees under Exhibit A.
3. This is not either an endorsement in full or an endorsement in blank as defined in Section 16 of the Negotiable Instruments Act. It is not the former as there is no direction to pay the amount in the instrument to a specified person and it is not the latter as it does not consist only of the signature of the indorsee's name.
4. The District Judge dismissed the suit for another reason also. Re held that Exhibit A was not a negotiable instrument as it was executed before the passing of the Act V of 1914. That Act in its preamble declared that it was expedient to amend the Act of 1881 so as to remove doubts as to the validity of the making and endorsing of negotiable instruments in certain forms. These words might lead to the supposition that the law was really the same before the Act was passed and that all that was needed was to remove uncertainty as to the validity of negotiable instruments drawn in favour of joint payees or alternative payees.
5. But in fact it does not appear that negotiable instruments drawn in favour of alternative payees would have been treated as valid if a case of one of them had come before an Indian Court before 1914 and an authoritative ruling obtained.
6. In England it was held so long ago as 18 9 that a note whereby the maker promised to pay a specified sum to A or to B and I was not a valid promissory note under the Statute of Anne See Blanckenhagen v. Blundell 2 B. & A Id. 417.
7. It was not till the Bill of Exchange Act of 1882 was introduced that a bill was allowed to be nude payable in the alternative to one of two or one or same of several payees. Chalmers in his commentary on Section 7(2) of that Act observes that this sub-section materially altered the previous law. Thus, when the Negotiable Instruments Act of 1881 was passed in India the English Law did not recognize alternative payees.
8. When the Indian Act was enacted it may be taken to have embodied the law prevailing in England at the time, when it defined in Section 4 a 'promissory-note' as an instrument in writing containing an unconditional under- taking to pay a certain sum of money only to or to the order of a certain person or to the bearer of an instrument.
9. The omission to include a provision resembling Section 7(2) of the English Act was not rectified till 1914.
10. Joint payees were recognised even before the amendment of the Negotiable Instruments Act of 1881. See Section 51 of that Act and Muhammad Khumarali v. Ranga Rao 28 M. 544 but not payees in the alternative. I consider, therefore, that the District Judge was justified in his refusal to treat Exhibit A as a negotiable instrument.
11. The appellant's Counsel relies on Muthar Sahib Maraikar v. Kadir Sahib Maraikar 15 M.L.J. 384 and argues that the endorsement Exhibit A-2 may be upheld as effecting an assignment of an actionable claim under Section 130 of the Transfer of Property Act. The objection to so doing is the complete absence of operative words of transfer.
12. The second appeal fails and is dismissed with costs.
13. Mr. Madhavan Nair, Counsel for the respondent, contends that the Act of 1914 (V of 1914) is not retrospective and, therefore, that if the date of execution of the promissory note in question is subsequent to the Act (which is admitted) it must fall within the previously existing law. Now the Negotiable Instruments Act came into force on 1st March 1882 and the English Statute (45 and 46, vic., Ch. 61) of 1882 came into force on 18th August 1882. The latter contains, in Section 7(2), a provision that a bill may be made payable to two or more payees jointly or it may be made payable in the alternative to one of two or one or some of several payees. But this provision was not incorporated by the Legislature into the Indian Law till the Act of 1914 and there seems no authority for saying that it was incorporated into the Indian Law by any judicial decision between 1882 and 1914. There is no doubt that the Act of 1914 is an Amending Act. It distinctly says that it is (section I) and does not say that it is only declaratory of the existing law. Now Section 4 of the Negotiable Instruments Act defines a promissory note and states that it contains an unconditional undertaking to pay a certain sum of money only to or to the order of a certain person--a certain person is an ascertained person and it was held as long ago as 1819, in the leading case of Blanckenhagen T. Blundell 2 B. & A Id. 417 , that a note wherein the maker promised to pay to A. or to B. and C. is not a promissory note within the Statute of Anne and that an action could not be maintained upon it.
14. It, therefore, seems to me that the document sued on is not a negotiable instrument within the Negotiable Instruments Act 1881, as it was made before 1914. I am inclined to think that Mr. Madhavan Nair is also right in his second contention, i.e., that the so called endorsement (Exhibit A-(2) doss not fall within the provisions of Section 16 of the Negotiable Instruments Act. Section 15 of the Act defines endorsement as, when the maker or holder of a negotiable instrument signs the same, otherwise than as such maker for the purpose of negotiation on the back or face thereof,
15. Section 16 sets out the different sorts of endorsements, e.g., 'in blank' and 'in full.' Here, in Exhibit A-2, all we have is an acknowledgment of the receipt of Rs. 631-6-5 'being the principal and interest under this pro note' signed by one of the alternative payees of the suit note. There is nothing to show that the money was not received on account of the maker; at any rate, it appears clearly not to be such an endorsement as would fall within Section 15 and Section 16 of the Act. This is quite apart from the question as to whether one of several alternative payees under the Act of 1914 could validly endorse--a question which, in the face of my finding as to the invalidity of Exhibit A as a promissory-note, does not arise in the present case.
16. On the point as to whether Exhibit A-2 can be a transfer of an act on able claim under Section 130 of the Transfer of Property Act several cases have been referred to. It is clear that Exhibit A-2 contains no words of assignment as such. In Muhammad Kumarali v. Ranga Rao 24 M. 654 it was held that, thought there could not be endorsement by one joint payee to another, yet the endorsement might be relied on as evidence of an assignment by way of release in favour of the endorsee. In that case it was expressly stated (page 653) that the suit was maintainable 'by reason of the other joint payee haying transferred his interest therein to him.' It further would appear that in this case the endorsement was in the shape of an order or request to the maker to pay the amount of the note to the endorsee though this is not clear from the report. In any case, it seems no authority for the present case which is that of a receipt by one of the payees and signed by him.
17. As laid down in Muthar Sahib Maraikar v. Kadir Sahib Maraikar 28 M. 544, endorsement is not the only mode by which negotiable instruments may be assigned; but the difficulty in the present case is that there are no words of assignment or any expression of intention to transfer the lights of Ampu to the plaintiff. A direction in writing to pay the amount due on an instrument endorsed on such instrument by the payee thereof, coupled with delivery of the instrument so endorsed to the person to whom the payment is directed, is an assignment within Section 130 of the Transfer of Property Act. This was laid down in Rama Iyen v. Venkatachellam Patter 30 M. 75. There is no such direction to pay here. These are the cases relied on by Mr. Mir Zynuddin, Counsel for the appellant, and, as already stated, they do not, in my opinion, bear upon this case. I, therefore, agree with the learned District Judge that Exhibit A-2 does not constitute a valid assignment under Section 130 of the Transfer of Property Act.
18. I agree with my learned brother and would dismiss this second appeal with costs.