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Pakiathammal Vs. Vaiyapuri Udayan - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1935Mad880; 160Ind.Cas.417
AppellantPakiathammal
RespondentVaiyapuri Udayan
Cases ReferredSomu Naidu v. Sanyasayya
Excerpt:
.....is looked down upon. therefore, the explanation 1 to rule 14(b) of the impugned rules, treating a person acquitted on benefit of doubt, as a person involved in a criminal case, is only in tune with well settled principles applicable to service jurisprudence. a person discharged does not even have protection under section 300 of cr.p.c. and hence such a person cannot assail the explanation 1 to the impugned rule 14(b). -- section 10 & tamil nadu special police subordinate service rules, rule 14(b), clause (iv) explantion (1); - appointment to state police service - failure of a person to disclose in the application form, either his involvement in a criminal case or pendency of a criminal case against him - effect? - held, the failure of a person to disclose his involvement in a criminal..........this case it is said there is a conflict of decisions on the question whether a person who is the real payee can sue on a note whereon the name of another person appears as payee.2. the cases cited in favour of this view are : venkatarama reddiar v. valli akkal 1935 mad. 181. the observations of varadachariar, j., at p 84 are relied upon. there however that learned judge refused to express an opinion upon the question whether a person claiming to be real owner, though not named as payee in a promissory note, can under any circumstances maintain a suit on the note against the maker : subramania ayyar v. subban chettiar 1925 mad. 1130. that case turns on the fact that the payee is described as 'n. manager of s.c. & co.' the view was taken that he was so named as agent for a disclosed.....
Judgment:
ORDER

Stone, J.

1. In this case it is said there is a conflict of decisions on the question whether a person who is the real payee can sue on a note whereon the name of another person appears as payee.

2. The cases cited in favour of this view are : Venkatarama Reddiar v. Valli Akkal 1935 Mad. 181. The observations of Varadachariar, J., at p 84 are relied upon. There however that learned Judge refused to express an opinion upon the question whether a person claiming to be real owner, though not named as payee in a promissory note, can under any circumstances maintain a suit on the note against the maker : Subramania Ayyar v. Subban Chettiar 1925 Mad. 1130. That case turns on the fact that the payee is described as 'N. Manager of S.C. & Co.' The view was taken that he was so named as agent for a disclosed principal, that the general principles of the law of agency applied, and therefore the disclosed principal can sue : Sowcar Lodd Gobind Doss v. Muniappa (1908)31 Mad. 534. There the payee was described as 'Manager of K. Estate' which estate was in charge of the Court of Wards and the view was taken by Miller, J., that the real payee was the landlord (i.e., the Court of Wards after dispossession of the mortgagee landlord) by his agent, the Manager. This opinion appears to have been founded on the view that it was a case of agent payee for disclosed principal : Broja Lal saha v. Budh Nath Pyerilal & Co. 1928 Cal. 148 . There Chose, J., refused to follow the dicta in Subba Narayana v. Ramaswami Ayyar (1908) 30 Mad. 88, on the ground that those dicta were made by English lawyers 'dealing principally with what is taken to be English law,' and founding their view, according to Ghose, J., on the opinion that negotiable instruments were governed in this country as in England by the Law Merchant and that under the Negotiable Instruments Act, Section 78, it is not open to the defendant to plead that the holder of the instrument is not entitled to recover the money : Seva Ram v. Hoti Lal 1930 All. 108. There it was hold that Section 78 does not prohibit any person other than the holder of a promissory note from bringing a suit thereon, if that person be 'the true owner' and the bolder a benamidar for him. All that Section 78 provides is that a payment made to any person other than the holder shall not operate as a discharge of the maker in respect of his liability to the holder.

3. Before I pass to the consideration of the cases which support the view I hold it is necessary to remark that if Seva Ram v. Hoti Lal 1930 All. 108 is to be regarded as correctly stating the law the result will be that if a benamidar comes on the scene the person liable on the note cannot safely pay him. Therefore he would presumably not pay and would be sued. As was observed in Seva Ram v. Hoti Lal 1930 All. 108, a person so circumstanced is liable to be shot at twice: once by the person who is the 'real' holder and once by the person who is the holder within the meaning of the Negotiable Instruments Act. That difficulty was one of no practical importance in Seva Ram v. Hoti Lal 1930 All. 108, because each kind of 'holder' was before the Court, the 'real' holder as plaintiff and the statutory and ostensible holder as defendant 2. That is not so here. If this plaintiff succeeds the defendant will have to pay the plaintiff and will not thereby, in consequence of Section 78, have discharged his liability to the ostensible holder. The ostensible holder being dead his personal representative can sue and to that action there would be no defence (apart from limitation). That appears to me to be an impossible position and its existence is enough to decide this appeal. But I am prepared to go further and follow both the decision and the reasoning in Harikishore v. Gura Mia 1931 Cal. 387, and I adopt the language of Suhrawardy, J., at p. 759:

The Negotiable Instruments Act was enacted, for the benefit of trade and commerce and the principle underlying it is that promissory notes, bills of exchange, and cheques should be negotiable as apparent on their face without reference to secret title to them.

4. I should regard it as no less than lamentable if any party to a negotiable instrument might, owing to the state of the law, find himself at peril because two rival claimants appeared, the one founding on the fact that he was entitled to be paid under the instrument and because his name appears on the f instrument, the other because of some t secret arrangement de hors the instrument. If that were possible it would t most seriously interfere with trade. There is no need to strain the law to avoid injustice All that the person claiming to be interested need do is to I require his benamidar to lend his name as plaintiff. This is the common case in England where insurance offices having paid their assured for an accident sue (as persons subrogated) the person liable for causing the accident in the name of the assured As a rule this right is derived from the terms of the policy. If the policy does not confer the right the office, if wise, takes what is called a subrogation receipt which gives the right. If a proper subrogation receipt is not taken and the person paid refuses to lend his Dame he may, by appropriate action, be compelled to give it. It has never been held that the office can sue in its own name as being the person really interested. Here the person who makes this kind of secret arrangement can protect his interest by making a contract with the benamidar whereby the benamidar is required to lend his name in any proceeding necessary to enforce payment. To make it possible for the real holder to sue direct would make it necessary for the maker to contest a matter, viz., the relationship between benamidar and real' holder about which be could not possibly know anything. This right to have the use of the name of the person who must be the plaintiff often arises in favour of some other person and if the person who must be the plaintiff refuses either to sue, or lend his name, equity can, and will, compel him so to lend his name so that the suit can be properly constituted and the money recovered by the person really interested.

5. That in my opinion is the proper procedure It is not necessary nor desirable to create rights that will enable two persons in two separate capacities to sue the same person for the same thing and I respectfully agree with Harikishore v. Gura Mia 1931 Cal. 387, that though perhaps the mischief is mitigated where as in Seva Ram v. Hoti Lal 1930 All. 108, both claimants are before the Court, one as plaintiff and one as defendant, still, in principle, that is not the proper course to pursue. The proper course, is, I think that which I have indicated. That leaves the maker of the note exactly in the position he would have been in had there been no secret arrangement. He has no more burden imposed upon him. He has no need to disprove the secret arrangement If the method approved in Seva Ram v. Hoti Lal 1930 All. 108 is adopted a simple case on a note might become extremely complicated on the facts.

6. I have arrived at the above conclusion, without, and deliberately without, referring to Subba Narayana v. Ramaswami Ayyar (1908) 30 Mad. 88 and Somu Naidu v. Sanyasayya 1934 Cal. 391; for as the point is of importance, had I entertained any doubt at this stage, I should have considered it my duty to refer the matter to a Bench in view of the fact that the views expressed in Subba Narayana v. Ramaswami Ayyar (1908) 30 Mad. 88 have been treated in Broja Lal saha v. Budh Nath Pyerilal & Co. 1928 Cal. 148 as obiter see also Surajman Prasad v. Sadanand Misra 1932 Pat. 346, Seva Ram v. Hoti Lal 1930 All. 108 and Somu Naidu v. Sanyasayya 1934 Cal. 391 which is the decision of a single Judge, Subba Narayana v. Ramaswami Ayyar (1908) 30 Mad. 88 decided that in a suit on a negotiable instrument by a payee (or indorsee) the defendant cannot defend on the ground that the payee is not the 'real' payee but only a benamidar. That decision does not decide the present point, but it shows the difficulty a defendant would be in if he can be sued both by the ostensible and the 'real' holder. Against the ostensible holder it; would be no defence to prove the existence of a 'real' holder. Against the 'real' holder it would, as in this case if this appeal succeeded, be no defence to show that the 'real' holder was not the ostensible holder. As against the ostensible holder payment to the 'real' holder would be no defence. I propose therefore to do as Curgenven, J. did in Somu Naidu v. Sanyasayya 1934 Cal. 391 and dismiss this Civil Revision Petition with costs.


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