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R.M.A.R. Raman Chetty and ors. Vs. P. Nagarathna Naicker - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in15Ind.Cas.380
AppellantR.M.A.R. Raman Chetty and ors.
RespondentP. Nagarathna Naicker
Cases ReferredArunuchala Reddi v. Subba Reddi
Excerpt:
partners - suit on a pro-note--parties--promissory note--transfer--actionable claim--assignment--transfer of property act (iv of 1882), sections 130, 137. - .....succeed as a sole payee owing to the fact, as he alleged, that, subsequently to the making of the note, his partner had retired from the firm and he had become the sole owner of the firm, and he adduced evidence to that effect. thereupon, i allowed him to make the other member of the firm a party to the suit either as plaintiff or defendant and adjourned the case. when the case came on, no further argument was addressed to me nor evidence called by either side, and treating the case as undefended, i gave judgment, without assigning reasons, for the plaintiff, on the basis that the original plaintiff had become the sole owner of the note. the appellate court, considering that this question had not been sufficiently and distinctly raised, had directed a fresh trial of this issue. fresh.....
Judgment:

Wallis, J.

1. This is a suit brought by the plaintiff, R. M. A. R. Raman Chetty, on a promissory-note in a two-fold character of payee and indorsee of the note. At the trial, the claim of the plaintiff as indorsee broke down as he was unable to prove the authority of the agent who made the endorsement. And the plaintiff's Counsel then contended that he was entitled to succeed as a sole payee owing to the fact, as he alleged, that, subsequently to the making of the note, his partner had retired from the firm and he had become the sole owner of the firm, and he adduced evidence to that effect. Thereupon, I allowed him to make the other member of the firm a party to the suit either as plaintiff or defendant and adjourned the case. When the case came on, no further argument was addressed to me nor evidence called by either side, and treating the case as undefended, I gave judgment, without assigning reasons, for the plaintiff, on the basis that the original plaintiff had become the sole owner of the note. The Appellate Court, considering that this question had not been sufficiently and distinctly raised, had directed a fresh trial of this issue. Fresh evidence has been called and I have to decide the case upon that evidence and upon contentions of law which had been raised before me. The evidence of assignment is that of the first plaintiff who died before this issue was tried but whose evidence on the previous occasion is available as he was cross-examined and also the evidence of his partner. According to the evidence of the partner, the arrangement for his retirement was an oral one, that as the business was being conducted at a loss, he agreed to retire from it and leave all the liabilities and assets to his other partner. The evidence is not very satisfactory but is borne out to some extent by the fact that the present note was undoubtedly endorsed over to the present first plaintiff although the authority to do so could not be satisfactorily proved in the case owing to the terms of the Powers-of-Attorney. I am prepared to hold that the second plaintiff, as he now is really, did retire from the firm and that the agreement between the parties was that he should cease to have any interest in the note. But then the question arises whether a mere oral transfer, which is all the evidence proves, is sufficient, in the case of one partner retiring from a firm. The law, as laid down in Lindley on Partnership, is, that the proper parties to the suit are the members of the firm when the obligation was contracted, and that the fact that one of them has retired makes no difference and he is still a proper party to join the suit just as a fresh partner, who is brought in, would not be a proper party. Of course, a suit in the case of partnership may be instituted in the name of the partnership firm, and then those who are members of the firm at the time may be entitled to the benefits of judgment. But this is not a suit in the name of the firm. As this promissory-note was made at a time when the two present plaintiffs were partners, this suit ought properly to have been instituted in the name of both partners unless before suit there was a due and valid assignment of the chose in action from the partners to one of them, the second plaintiff having been added after the period of limitation. Now, there is only an oral assignment of the chose in action. There is no assignment of the promissory-note under the Negotiable Instruments Act, and the question is--Is such oral assignment good? The point is covered by the authority of the case Arunuchala Reddi v. Subba Reddi 17 M.L.J. 393 : 3 M.L.T. 7 to which I was a party, which is binding upon me, and from which I see no reason to recede. As is well known, the intention of Legislature in amending this Chapter of the Transfer of Property Act, was to bring the law in India generally into conformity with the law in England, which under the Judicature Act requires assignments of chose in action to be in writing, a provision which is, in my opinion, highly necessary for the benefit of the other party to the contract who ought not to be embarassed by mere oral allegations of transfer which may easily be distinguished and upon which it may be very difficult for him to act with any degree of safety to himself. Section 130 of the Transfer of Pro-piety Act provides: 'The transfer of an actionable claim shall be effected only by the execution of an instrument in writing signed by the transferor.' Then Section 137 says: 'Nothing in the foregoing section of this Chapter applies to stocks, shares or debentures or to instruments which are for the time being, by law or custom, negotiable or to any mercantile document/of title to goods.' All those kinds of actionable claims have their own proper methods of assignment under mercantile law and they constitute, perhaps, taken collectively, the most important classes of actionable claims, and to say that the effect of the section is that all these actionable claims, not only promissory-notes, but bills of lading payable to order and the whole of this class of actionable claims, unless there is any express statutory provision to the contrary, are capable of oral transfer in addition to the methods of transfer provided by the mercantile law, is to my mind a most startling conclusion, and a conclusion which it appears to me to a very large extent would defeat the intention of the Legislature. It does not appear to me to be necessary to give Section 137 of the Act any such extensive construction. It seems to me that if such action-able claims ought to be considered at all as capable of transfer otherwise than by the methods recognised by the mercantile law, it can only be by treating them as mere actionable claims within the meaning of Section 130 and ignoring their character as mercantile documents which have special methods of transfer of their own. In this case, there has been no assignment Under Section 130 by the two plaintiffs to the one plaintiff and, therefore, on this point, which was not argued before me on the previous occasion, the suit fails and is dismissed with costs.

2. There is another matter which I ought to mention. On the last occasion, the defendant was put into the box and in somewhat hesitating manner, and to my mind absolutely unmistakably, admitted the execution of the promissory note.

3. The Appellate Court left the matter to me. When the case came up again, the plaintiff was in a position to prove beyond any possibility of doubt that the promissory-note had been executed and I allowed the issue to be framed for that purpose; with the ill-fortune which has dogged the plaintiff all along, he did produce a witness and put him into the box to prove the execution of the note but subsequently he was not able to produce the witness for further cross-examination and so his evidence has become unavailable. On this part of the judgment of the Appellate Court, I take the evidence given at the first trial by the defendant to prove sufficient execution. However, on the other question, I am of opinion that the plaintiff's case fails and must be dismissed with costs.


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