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Kunju Pillai and ors. (L.Rs.) Vs. Periasami - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1969)2MLJ148
AppellantKunju Pillai and ors. (L.Rs.)
RespondentPeriasami
Cases ReferredMothireddy v. Pothireddy
Excerpt:
- .....against the defendant on the foot of a promissory note, of which he secured an assignment from the original payee. the assignment, however, was for purposes of collection and that this is so, is not in dispute. the original payee died after such endorsement in favour of the petitioner. after the death of the original payee, the petitioner instituted this suit on the foot of such an assignment of the promissory note exhibit 1 in his favour. the suit was resisted on the ground that since the original payee died, the endorsee has no further cause of action, as the agency which was expressly created by such an endorsement should be deemed to have been terminated by the death of the original payee.3. the learned district munsif accepted the contention of the defendant that on the death of the.....
Judgment:

T. Ramaprasada Rao, J.

1. The plaintiff was the petitioner in this Court. After filing the Civil Revision Petition, he died on 22nd January, 1966, and on an application by his legal representatives, they were brought on record as the present petitioners in Civil Miscellaneous Petition No. 4412 of 1966. It is significant that at the time when the legal representatives of the original petitioner desired to bring themselves on record, there was no opposition by the respondent.

2. The petitioner instituted the action against the defendant on the foot of a promissory note, of which he secured an assignment from the original payee. The assignment, however, was for purposes of collection and that this is so, is not in dispute. The original payee died after such endorsement in favour of the petitioner. After the death of the original payee, the petitioner instituted this suit on the foot of such an assignment of the promissory note Exhibit 1 in his favour. The suit was resisted on the ground that since the original payee died, the endorsee has no further cause of action, as the agency which was expressly created by such an endorsement should be deemed to have been terminated by the death of the original payee.

3. The learned District Munsif accepted the contention of the defendant that on the death of the original payee, the endorsement made prior to his death by the original payee, which according to him, created a power equivalent to that of an agent terminated with the death of the original payee within the meaning of Section 201 of the Indian Contract Act. He, therefore, dismissed the suit mainly basing his reasoning on the ground that the relationship between the original payee and the endorsee is that of principal and agent and such agency having been terminated by the death of the principal, the agent can no longer institute an action on the strength of such an endorsement. The original petitioner came up in revision before this Court attacking this reasoning of the learned District Munsif. As already stated during the pendency of the Civil Revision Petition the legal representatives of the original petitioner were brought on record and they are the contesting petitioners before me. I shall consider the question whether such contesting petitioners have a cause of action to continue and agitate the relief in this Civil Revision Petition by themselves at a later stage. It is, however, necessary to dispose of the primary question, whether the relationship between the original payee and the endorsee is that of principal and agent and whether the reasoning of the learned District Munsif is correct.

4. I do not agree that a holder of negotiable instrument, who secures the same by endorsement in a manner known to law loses his right of action by reason of the death of the original payee. In fact by such an endorsement, he secures the title to the instrument, which title is enforceable by him in a manner ordinarily known to law. Such a title so vested in him cannot be divested by reason only of the fact that the original payee died soon after such an endorsement and that the suit itself was brought on the foot of such an endorsement by the endorsee after the death of the original payee. In fact a case reported in Raman All v. Vellaswamy Pille 8 IND.CAS. 967, on all fours has been cited before me by Mr. T. R. Ramachandran, the learned Counsel for the contesting petitioners. In that case a promissory note was drawn by one R in favour of M or to his order. M indorsed it and handed it over to V for collection. After M's death, V sued on the note. It was contended in defence that as the note did not pass to V for consideration and as V's authority ceased on M's death, he could not recover the money without having obtained letters of administration or a succession certificate. The learned Judge repelling such a contention held, that the note being negotiable, its indorsement followed by delivery pasted the property in it to V and he became holder of it and that, therefore, the payment had to be made to him. To a similar effect is the ratio in the decision reported in Mothireddy v. Pothireddy : AIR1963AP343 . There, Chandra Reddy, C.J., held a similar view and expressed in these terms at page 344:

The payment to the holder of the instrument which includes an endorsee for collection, gives a discharge to the maker of the promissory note. That being the real position, in my view, the right based on the endorsement survives notwithstanding the death of the endorser and the endorsee could continue the suit. The endorsement having been made for a specific purpose, namely, collection of the amount, it will be valid till that purpose is served.

Even otherwise the sections in the Negotiable Instruments Act, which relates to the subject-matter under consideration are too clear to sustain the contention of the learned Counsel for the contesting petitioners that the original petitioner in this Civil Revision Petition did have cause of action to file the suit, as he did notwithstanding the death of the original payee or endorsee. Section 8 of the Negotiable Instruments Act, defines a holder of a negotiable instrument as follows:

The ' holder ' of a promissory note, bill of exchange or cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto.

Where the note, bill or cheque is lost or destroyed its holder is the person so entitled at the time of such loss or destruction.

From the definition itself, it is clear that any person, who is holding a note in his name and is in custody or possession thereof is a holder of such an instrument. Section 50 dealing with the effect of indorsement provides as follows:

The indorsement of a negotiable instrument followed by delivery transfers to the indorsee the property therein with the right of further negotiation but the indorsement may by express words, restrict or exclude such right, or may merely constitute the indorsee an agent to indorse the instrument, or to receive its contents for the indorser of for some other specified person.

This section itself contemplates that the indorsement may, by express words, constitute the indorsee an agent to receive its contents. Therefore, the special provisions of the Negotiable Instruments Act, which enables an indorsee to sue on the instrument on the foot of such an indorsement creates an exception to the ordinary law of agency and the principles adumbrated in the Indian Contract Act in so far as agency in general, is concerned and in particular Section 201 therein cannot be telescoped into this enactment so as to interpret its intendment.

5. In my opinion the cause of action which the indorsee has by virtue of the indorsement is available to him notwithstanding the death of the indorser.

6. One other question that is argued before me by Mr. K. Gopalachari, the learned, Counsel for the respondent, is that even if it were to be conceded that the Civil Revision Petition as filed originally by the original petitioner is maintainable, it cannot be continued by the contesting petitioners, after they brought themselves on record. His main contention is that the original petitioner being merely an indorsee for collection the cause of action cannot be deemed to survive so as to enable the contesting petitioners in this case to continue the Civil Revision Petition eo nomine in their own right. I do not agree. If the original petitioner had in him and in the eye of law, the right to institute the suit as a regular holder and as a person in whom the title in the promissory note or the negotiable instrument vested, under the special law, such a cause of action on the foot of which, the original petitioner came to Court survives on his death to his legal representatives, under the common law. I do not think that any exception can be taken to this proposition, which has necessarily to follow the course of events. It is also significant, as already stated, that the legal representatives, when they were brought on record were not even interdicted by the respondent at that time, on the ground that they could not be brought on record as they cannot claim a survival of the cause of action in them. This apart, I am of the view that as the original petitioner had the title in him to sue on the promissory note such a title passed by death to his heirs and it is such heirs, who are now brought on record and who are before me as contesting petitioners. This contention also fails.

7. In the result, the Civil Revision Petition is allowed with costs and the suit is decreed with costs.


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