1. This civil revision petition is filed as against the judgment and decree of the District Munsif of Tirupati in S. C. S. No. 741 of 1950 dismissing the plaintiff's suit on the ground that he had no right to sue on the promissory note, Ex. A. 6. The case of the plaintiff was that the first defendant and defendants 3 and 4 as sureties executed the suit promissory note on 17-3-1949 for Rs. 450 in favour of the Tamil Nad Commercial Fund Ltd., Kumbakonam, with its branch at Tirupati & that as all the assets and liabilities of the Tamil Nad Commercial Fund Ltd. were transferred to the second defendant, the Tirupati Commercial Fund Ltd., the second defendant became entitled to the amount due under the promissory note, and that as the second defendanttransferred the promissory note to the plaintiff, he was entitled to sue and recover the amount from defendants, 1, 3 and 4.
2. While the third defendant remained 'ex parte', defendants 1, 2 and 4 resisted the suit. The main contention of the first defendant and the fourth defendants was that as the promissory note was not endorsed by the Tamil Nad Commercial Fund Ltd., Kumbakonam, in favour of the Tirupati Commercial Fund Ltd., i.e., the second defendant, no title passed to the second defendant in the promissory note, and that the endorsement of the second defendant in favour of the plaintiff was of no avail. The District Munsif upheld the contention of the defendants, and held that the suit was not maintainable. He also held that if the promissory note was enforceable only a sum of Rs. 97-3-0 was due thereunder.
The plaintiff has filed the civil revision petition under Section 25 of the Provincial Small Cause Courts Act against the decree and judgment of the District Munsif.
3. The District Mutisif is wrong in holding that the agreement of transfer executed by the Tamil Nad Commercial Fund Ltd., in favour of the second defendant is not a completed transfer, and that the assets and liabilities have not been transferred to the second defendant. A reading of the terms of Ex. A.8 Clearly shows that all the assets and liabilities were transferred under the agreement which was duly given effect to. As a result of the transfer in writing, the second defendant has become entitled to the amount due under the promissory note. It is unnecessary for me to deal with the effect of Sections 130 and 137 of the Transfer of Property Act, as there is an agreement in writing evidencing the transfer.
4. The main contention of the learned advocate for the respondents was that as the promissory note was not duly endorsed by the Tamil Nad Commercial Fund Ltd., in favour of the second defendant, no title passed. He relied mainly upon the decisions reported in -- 'Pattat Ambadi v. Krishnan', 11 Mad 290 (A) and -- 'Abboy Chetti v. Ramachandra Rau', 17 Mad 461 (B), in support of his contention. It is no doubt true that in -- '11 Mad 290 (A)', it was held that without endorsement there could not be negotiation of a promissory note payable to order. This was followed in -- '17 Mad 461 (B)', Muthuswami Aiyar J. who was a party to the decision in -- '11 Mad 290 (A)', held in -- '17 Mad 461 (B)', that the ground of the prior decision was that a promissory note could not be negotiated by the mere execution of a deed of assignment.
In -- 'A. S. No. 1175 Of 1897 (C)', Shephard Offg. C. J. and Moore J. considered the effect of the decision in -- '11 Mad 290 (A)', and held as follows :
'According to English law it is clear that a promissory note may be assigned by the holder just like any other 'chose in action, the assignee taking the rights which his assignor has to convey and no more (-- 'Whistler v. Porster', (1863) 32 LJ (CP) 161 (D). He does not obtain the title according to law merchant which an endorsement would give him, nor could he, before the Judicature Act, sue in his own name, but the transfer is nevertheless valid as an equitable assignment. There is no reason why in this country an assignee of this particular sort of chose in action should not enjoy the rights which attach to the assignee of a debt and be allowed to sue in his own name. It is argued that, by the Negotiable Instruments Act, any other mode of transfer than by endorsement is excluded. We can see nothing in the Act to justify this contention.'
5. This decision is printed in the footnote at page 657 in -- 'Muhammad Khumarali v. Ranga-rao', 24 Mad 654 (E), and was followed by Bhashyam Aiyangar J. in -- '24 Mad 654 (E). The only important difference between a transfer by endorsement and a transfer otherwise than by endorsement of a negotiable instrument is, as pointed out by the learned Judge, that:
'in the latter case, the assignee will acquire in the bill or note as a chattel no more than the right, title and interest of his assignor, whereas in the former case the assignee by endorsement will have all the rights and advantages of a holder in due course of a negotiable Instrument.'
This decision was followed by Subramanla Aiyar J. in -- 'Muthar Sahib v. Kadir Sahib', 28 Mad 644 (P), wherein there is a clear and illuminating discussion of the matter. Having regard to these three Bench decisions of our court distinguishing --. '11 Mad 290 (A)', I think there is absolutely no force in the contention of the respondents.
6. The learned advocate for the respondents suggested that as there was a conflict between the Bench decisions reported in -- '11 Mad 290 (A)', and --'17 Mad 461 (B)' and -- '24 Mad 654 (E)' and -- '28 Mad 544 (P)', I might refer the matter to a Full Bench. He drew my attention to the judgment of Wallace J. in -- 'Narayana-moorthi v. Umamaheswaram', AIR 1930 Mad 197 (G).
The learned Judge no doubt referred to the two sets of decisions, but held that having regard to the particular facts of the case, it was unnecessary to refer the matter to a Full Bench. But, as pointed out by me, the decision in -- '11 Mad 290 (A)', has been rightly distinguished in the footnote case in -- '24 Mad 654 (E)', and ever since, it has been uniformly followed by our court. So, in the circumstances I think there is no necessity to refer the matter to a Pull Bench.
7. In -- 'Surathchandra Shah v. Narayan-chandra Chaudhuri' : AIR1934Cal549 , this question was considered, and the decision in --'28 Mad 544 (P)', was followed. To the same effect is the Full Bench decision of the Patna High Court reported in -- 'Ghanshayamdas Marwari v. Raghosahu', : AIR1937Pat100 (I). The decision of the Allahabad High Court referred to by the advocate for the respondents, namely, -- 'Jang Bahadur Singh v. Chander Bali Singh' : AIR1939All279 , has no bearing on the particular question, as it related only to the applicability of Section 43 of the Negotiable Instruments Act.
8. The next question that was argued by the advocate for the respondents was that even assuming that the second defendant was entitled to sue on the promissory note without an endorsement, he was not entitled to endorse it in favour of the plaintiff. If, as held by me, title passes to the second defendant by reason of the transfer deed executed by the Tamil Nad Commercial Fund Ltd., in favour of the second defendant, the second defendant becomes a holder within the meaning of Section 8, Negotiable Instruments Act. He is entitled to negotiate the promissory note and impart title to the plaintiff. No authority has been shown to me that if the second defendant fulfils the character of a holder, he is not entitled to endorse the promissory note in favour of the plaintiff. So, there is no force in the second contention of the learned advocate for the respondents.
9. The last question that remains to be considered is as to the amount due under the promissory note. The Court below held that only a sum of Rs. 97-3-0 was due. It misunderstood the rules contained in Ex. B.1, the Rules Book. Rule 14 Js quite clear that, the person who commits default is not entitled to the dividend amount. In the result, the plaintiff will be entitled to recover the amount for which he instituted the suit. The decree of the court below is set aside, and a decree is passed for the amount as claimed in the plaint upto the date of the decree and six per cent, therefrom upto the date of payment. The plaintiff will be entitled to costs both here and in the court below.