Skip to content


Koyyalamudi Subbanna and anr. Vs. Koduri Subbarayudu and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Judge
Reported inAIR1926Mad390; 92Ind.Cas.805; (1926)50MLJ125
AppellantKoyyalamudi Subbanna and anr.
RespondentKoduri Subbarayudu and anr.
Cases ReferredFirm of Sadasuk Janaki Das v. Kishan Pershad
Excerpt:
negotiable. instruments act (xxvi of 1881), sections 28, 29 - pro-note executed by guardian of minor--personal liability, whether excluded--pro-note executed as executor--liability, extent of--sections 28 and 29, difference between. - .....themselves in the signature portion as 'guardians' of minor viswanatham'. this is a distinctive feature of this note and in this respect it differs from the promissory note ex. a just noticed. when we read the promissory-note bearing this feature in mind, the conclusion is irresistible that the executants have signed this note merely as guardians excluding thereby their personal liability. it, therefore, follows, that, on the language of this note, defendants no. 2 and 3 are not personally liable. as the construction that i am putting on the language of this promissory note is different from that given to it by the learned judge, the decision in second appeal no. 999 of 1921 must be set aside. the plaintiff in this case will only be entitled to a decree against the minor's estate.....
Judgment:

Venkatasubba Rao, J.

1. These three appeals have been filed against the judgment of Krishnan, J. Defendants Nos. 2 and 3 are the executants of the promissory notes in question. In some notes they described themselves as the guardians of the first defendant, in others as executors under his father's Will. The first defendant was and continues to be a minor. The second and third defendants are respectively the maternal uncle and the brother-in-law of the first defendant. The plaintiffs in these suits asked for a decree against the first defendant to the extent of the assets of his father's estate and against defendants Nos. 2 and 3 personally. It is not necessary to say what the decision of the Trial Court was but the Subordinate Judge dismissed the suits against defendants Nos. 2 and 3 and passed decrees against the first defendant to the extent of the assets of his father. The plaintiffs preferred second Appeals to the High Court and Krishnan, J., in all the three suits passed decrees against defendants Nos. 2 and 3. As the first defendant had not appealed to the High Court, the decree against him was not disturbed. Defendants Nos. 2 and 3 have filed the present Letters Patent Appeals. They contend that they axe not liable on the promissory notes.

2. On a negotiable instrument only the executant is liable. This proposition admits of no doubt. The question that has in each case to be determined is on a fair construction, who is the executant of the document? As Chalmers says, 'It is often difficult to determine whether a given signature is the signature of the principal by the hand of an agent, or the signature of the agent naming a principal'. Section 22, Law of Bills of Exchange, 8th Edition, page 91.

3. The law relating to negotiable instruments differs from the ordinary law of contracts in several respects. The liability must be determined on the wording of the note and in each case the question is: Is the instrument so drawn inform as to make the executant liable or the principal liable? In other words, who is the real executant of the document? Is the executant in truth the principal although the agent's signature appears on the bill or is the executant the agent although the principal is named?

4. So far as the Indian Law is concerned, Section 28 of the Negotiable Instruments Act enacts the rule of law applicable to agents. The material portion of the section runs thus:

An agent who signs his name to a promissory note...without indicating thereon that he signs as agent, or that he does not intend thereby to incur personal responsibility is liable personally on the instrument.

5. Under this section an agent signing the note prima facie is liable but he may exclude his liability by indicating on the note that he signs as agent or that he does not intend to incur personal liability. In each case the question is, are the words sufficiently unequivocal to indicate that the agent has not made himself personally liable?

6. Section 28 of the Indian Act is in one respect strikingly different from Section 26 of the Bills of Exchange Act, 1882. The English Act requires that the words indicating that the personal liability is excluded must be added to the signature itself. The Indian Act is less rigorous and from the whole of the instrument the intention may be inferred.

7. The most useful case on the subject is Firm of Sadasuk-Janki Das v. Kishan Pershad 50 Ind. Cas. 216 : 46 C. 663 : 29 C.L.J. 340 . Their Lordships of the Judicial Committee point out that as the document passes from hand to hand it is of the utmost importance that the responsibility is made plain and can be instantly recognised. The English theory of bills, as Chalmers observes in his introduction to the work already quoted, is the banking or currency theory and in England, bills have developed into a perfectly flexible paper currency. It follows, therefore, that as the note passes from hand to hand the real name of the person liable upon it must be disclosed.

8. In the light of this principle, I shall first examine the promissory note in Letters Patent Appeal No. 66 of 1924. The note is signed by the two guardians. Their representative character is not disclosed in the signature. In regard to the body of the note, the following points are no doubt in favour of the appellants:

(1) The debt is mentioned as having been originally due by the minor's father.

(2) It is stated that their ward is a minor and that they were appointed guardians.

9. But the language in the opening portion of the note is ambiguous It is susceptible of two meanings; literally it means that the guardians are executing the note because their ward is a minor. What may be said to be the idiomatic meaning is, that the guardians are executing the note on behalf of the minor.

10. In the operative part of the note, they make themselves unconditionally liable. They said 'We shall pay, either of us on demand'. Who are referred to by this word 'We'? The words in the preamble being doubtful and there being no ambiguity in regard to the signature, the proper view to take is, that any one reading the note will reasonably connect the word 'we' with the names appearing at the bottom of the note.

11. It is true that the debt of the minor's father is mentioned in the body of the document. But, on this, does it necessarily follow that the executants are not personally liable? Supposing the guardians bad been pressed for payment of the debt and they undertook to pay the amount personally themselves, can it be said that such a note as the present could not have been passed? In my opinion, a mere allusion to the pre-existing debt does not clinch the question. On the whole, I think that the wording does not clearly and unequivocally exclude the personal liability of the executants and that Krishnan, J.'s decision in regard to this note must be upheld. Before passing on to the next note, I desire to make one observation. Unlike Section 26 of the English Act which deals generally with the liability of persons signing in any representative capacity, Section 28 of the Indian Act in terms applies only to the single case of agents and principals. But it seems to me that there is no reason to make the scope of the section so narrow and indeed their Lordships of the Judicial Committee in the case already quoted, Firm of Sadasuk-Janici Das v. Kishan Pershad 50 Ind. Cas. 216 : 46 C. 663 : 29 C.L.J. 340 : 17 A.L.J. 405 first state the principles as of general application and then proceed to say that the sections of the Negotiable Instruments Act contain nothing inconsistent with those general principles. In Ramasivami Mudaliar v. Muthuswami Ayyar 30 Ind. Cas. 481 and the unreported Appeal No. 306 of 1922 on the file of the High Court, the principle of Section 28 is tacitly assumed to be applicable to cases of guardian and ward.

12. Now I pass on to the note in Letters Patent Appeal No. 65 of 1921. This bears a very close resemblance to the note which I have just dealt with. But there is a striking difference in one particular, that in the signature portion it is made to appear that the guardians are signing the note on behalf of the minor. The point is thus left no longer in doubt, and on a construction of the note, I find that the guardians have clearly indicated that they did not intend to incur personal responsibility. In. my opinion, therefore, Krishnan, J.'s decision in regard to this note is wrong, and cannot be supported.

13. I shall next deal, with the promissory notes in Letters Patent Appeal No. 61 of 1924. To my mind, these present no difficulty. The appellants do not describe themselves as guardians but as executors and the section that applies is Section 29 of the Negotiable Instruments Act. The relevant portion of that section is as follows:

A legal representative of a deceased person who signs his name to a promissory note...is liable, personally thereon unless he expressly limits his liability to the extent of the assets received by him as such.

14. The language of Section 29 is widely different from that of Section 28. In the first place, under Section 28 it is sufficient to indicate that personal liability is excluded. Under Section 29 there must be express words limiting the liability. Secondly, under Section 28 the agent's liability may be altogether excluded but under Section 29 the executor's liability can only be limited to the extent of the assets.

15. These notes purport to have been executed by the appellants in their capacity as executors. When Section 29 specifically deals with the case, it is not permissible to invoke the principle of Section 28. The appellant's, learned Vakil has contended that his clients were not in fact executors because the minor's father could not have made a valid appointment of executors. Granting this to be so, it does not, in my opinion, make the slightest difference. We are concerned not with the fact whether they are executors but only whether they have described themselves as executors. It is not to be expected that when the paper passes from hand to hand every successive holder is to satisfy himself as regards the truth of the statement in the note; and I am not prepared to accept the contention that the section has no application unless the executant happens to be in fact a legal representative. I am, therefore, of the opinion that Krishnan's judgment in regard to this note is right-and must accordingly be confirmed.

16. I feel that it is necessary that I must add one word. The lower Court has passed a decree against the minor and he has not filed an appeal challenging its correctness. We are, therefore, not concerned with the propriety or otherwise of the decree against the minor. But nevertheless it seems to me that although the agent is personally liable on the note, there is nothing to prevent the Court from passing a decree against the minor himself provided that the plaint is framed in an alternative form suing the guardian on the note and the minor alternatively on the consideration : see Firm of Sadasuk-Janki Das v. Krishan Pershad 50 Ind. Cas. 216 29 C.L.J. 340 and Krishna Ayyar v. Krishnasami Ayyar 8 Ind. Dec. 819. This question, however, does not here arise and need not be pursued further.

17. I may state in conclusion that Mr. Alladi Krishnaswami Iyer, the learned Vakil for the appellants, desired to raise a new point, one relating to rule of election as laid down in French v. Howie (1996) 2 K.B. 674 and Moore v. Flanagan (1920) 1 K.B. 919 : 89 L.J.K.B. 417 but that we did not permit him to raise this point as he did not raise it before Krishnan, J., and attempted to do so for the first time before us.

18. The result is that Letters Patent Appeals Nos. 64 and 615 of 1924 are dismissed with costs and Letters Patent Appeal No. 65 of 1924 is allowed and the suit dismissed with costs throughout against defendants Nos. 2 and 3.

Madhavan Nair, J.

19. These Letters Patent Appeals are directed against the decision of Krishnan, J., in three second appeals which arose out of suits instituted by the plaintiffs for the recovery of the money due to them on promissory notes executed by defendants Nos. 2 and 3. The first defendant is the minor son of one Veeranna who died leaving debts. Though the property belonging to him is joint family property, Veeranna nevertheless executed a Will naming defendants Nos. 2 and 3 as executors. Though the document is invalid so far as it purported to deal with joint family property, defendants Nos. 2 and 3 entered upon the management under the Will and executed the various suit promissory notes to Veeranna's creditors. The plaintiffs in these suits claimed decrees against defendants Nos. 2 and 3 personally as the makers of the promissory notes and against the estate of the first defendant. The District Munsif gave a decree against defendants Nos. 2 and 3 personally and dismissed the suits against the minor's estate. Both the plaintiffs and defendants Nos. 2 and 3 preferred appeals to the Subordinate Judge who gave decrees against the estate of the minor dismissing the suits against defendants Nos. 2 and 3. The minor, i.e., the first defendant, did not appeal to the High Court but the plaintiffs preferred second appeals claiming personal decrees against defendants Nos. 2 and 3. The learned Judge, Krishnan, J., set aside the decrees passed by the Subordinate Judge with the result that the plaintiffs in the High Court,, succeeded in obtaining decrees against defendants Nos. 2 and 3 personally.

20. The question for determination, in all these Letters Patent Appeals is the same, namely, whether defendants Nos. 2 and 3 are personally liable under the suit promise sory notes.

L.P.A. No. 64 of 1924.

21. As there is some difference in the language of the promissory notes in the various suits and as the argument advanced by the learned Vakils on both sides had reference to the language it will be useful to refer to these promissory notes at the very commencement. Exhibits A, B, E and P are the four promissory notes in this Letters Patent Appeal against Second Appeal No. 998 of 1921. Exhibit A states in its preamble that it is 'executed by Subbanna and Satyanarayana (defendants Nos. 2 and 3) jointly as executors appointed in accordance with the registered Will of the late Chinna Veeranna, his son Viswanathan being a minor.... ' In its body it states, 'on demand we promise to pay to you or to your order the sum of Rs. 113-2-0 only the amount borrowed to serve our need, i.e., the amount we have agreed to pay on behalf of the aforesaid Chinna Veeranna.... ' This promissory note is signed by the two defendants without the qualification as executors being added, to their signatures. Exhibit B is similar to Ex. A except that in its body the statement 'the amount we have agreed-to pay on behalf of the aforesaid Chinna Veeranna' is absent. It simply says, 'on demand we promise to pay to you or to your order the sum of Rs. 585-10-6 only the amount borrowed to serve our need, i.e., the amount of principal and interest on the promissory note executed by the late Chinna Veeranna.' The preamble of Exs. E and F are similar to those of Exs. A and B, with this difference that in the preamble of Ex. P his son Viswanatham being a minor' is absent. In the body of these two promissory notes, Exs. E and F, we find the expression 'We both individually promise to pay to you or to your order the sum of Rs....which does, not appear in Exs. A and B. These promissory notes run thus: 'We both. individually promise to pay to you of to your order the sum of Rs....on the promissory note executed by the late Chinna Veeranna.' In the signature portion of all these promissory notes the names of defendants Nos. 2 and 3 appear without any qualification. Though these promissory notes thus present some special features, they agree in this respect that each of them is stated in the preamble to have been executed by defendants Nos. 2 and 3 'as executors' and signed by them without disclosing their representative capacity.

22. Mr. Krishnaswami Iyer, the learned 'Vakil for the appellants argues that the language used in these promissory notes distinctly shows that the appellants have not undertaken any personal liability to pay the promissory note debts and that the learned Judge was wrong in applying Section 29 of the Negotiable Instruments Act in deciding this case, inasmuch as it is clear that defendants Nos. 2 and 3 cannot in law be considered executors as the deceased Veeranna had no power to execute a Will, the property being joint family property. Section 29 being inapplicable' and the language of the documents showing that there was no personal liability, the learned Vakil argues on the analogy of various decisions which he has brought to our notice that in this case, the only decree that could be passed is one against the estate of the deceased Veeranna.

23. The important question for consideration is whether Section 29 of the Negotiable Instruments Act applies to this case. Section 29 runs as follows: 'A legal representative of a deceased person who signs his name to a promissory note, Bill of Exchange or cheque is liable personally thereon, unless he expressly limits his liability to the extent of the assets received by him as such.' The term 'legal representative' includes executors or administrators. If this section is applicable, defendants Nos. 2 and 3, are liable personally on these promissory notes, as they say in the preamble of the notes that they have executed them 'jointly as executors appointed in accordance with the registered Will of the late Ghinna Veeranna.' The argument that defendants Nos. 2 and 3 are not, strictly speaking, executors and, therefore, Section 29 is inapplicable, cannot be accepted; for we are dealing with promissory notes and it is well known that those are intended to pass freely from hand to hand and a party who takes a negotiable instrument of the class we are dealing with is not expected to decide for himself whether the person who has executed the instrument in his capacity as an executor is really an executor in the eye of the law or not, before accepting the note. If this principle is not given effect to, the very object of a negotiable instrument would be defeated, Defendants Nos. 2 and 3 having described themselves as executors, persons dealing with them on the promissory notes win naturally treat them, as executors and the promissory notes will be passed on from hand to hand distinctly on that Understanding. It is, necessary, therefore, that Section 29 should be applied in a case like the present one; and if so; defendants Nos. 2 and 3 are clearly liable personally, unless they are able to show that they have expressly limited their liability in original to the extent of the assets received by them as such. The language of the promissory notes that I have already referred to speaks with no uncertain voice. In none of them is the liability of the executants expressly limited in any way to the extent of the assets received by them as such while in all of them there is a distinct promise to pay made by the executants The cases cited by Mr. Krishnaswami Iyer in this connection need not be considered in detail, as most of them deal with the question how far can recourse be had to the estate on notes executed by an executor or guardian of fl minor, or trustee of a property. The decisions in Padma Krishna Chettiar v. Nagamani Ammal 30 Ind. Cas. 574 ; Batchu Ramajogayya v. Vajjula Jagannadham 49 Ind. Cas. 872 : 42 M. 185 and Ammalu Ammal v. Namagiri Ammal (1918) M.W.N. 110 and the other cases cited by him do not deal with the question with which we are here concerned. As the executants of the promissory notes in question have not in any way expressly limited their liability to their extent of the assets received by them I must hold that Section 29 of the Negotiable Instruments Act applies to this case and that the decision of the learned Judge is right. I dismiss this Letters Patent Appeal with costs.

L.P.A. No. 65 of 1924.

24. The language of the promissory notes in these appeals is different from the language of the notes already examined. The preamble speaks of these notes as promissory notes executed by guardians under the Will of the late Veeranna; as Viswanatham happens to be a minor.

25. In L.P.A. No. 66 the body of the note, amongst other things, contains the statement that 'On demand the amount of principal and interest accrued upto date...will be paid by either of us'. In this appeal the two executants signed the promissory note with their names without describing themselves as guardians. The language of the promissory note, Ex. A, which I have noticed above distinctly shows that the executants intended to incur personal liability on this note. Though' there is no specific provision in the Negotiable Instruments Act regarding the liability of a guardian on a promissory note executed by him, it seems to me that the principle underlying Section 28 regarding the liability of an agent signing a promissory note may well be applied to such a case. Section 28 of the Act deals only with the case of agents and principals, in this respect differing from Section 26 of the English Act which deals generally with the liability of persons signing in a representative capacity. In two decisions of this Court the principle underlying Section 28 of the Negotiable Instruments Act has been applied in deciding on the liability of a guardian executing a promissory note on behalf of the minor. In Ramcunuami Mudaliar v. Muthuswami Iyar 30 Ind. Cas. 481 the second defendant in the case was described in the body of the note as the guardian of the first defendant who was at its date a minor, and the necessity for borrowing was stated in it as arising from the first defendant's father's debt. The learned Judges state, 'Wearenot, however, prepared to treat these facts alone as sufficient to indicate that second defendant signed as first defendant's guardian or did not intend to incur personal liability'. The second defendant was, therefore, held liable on the promissory note. The extract from the judgment shows that the learned Judges in deciding the case have assumed that the principle of Section 28 of the Negotiable Instruments Act is applicable to the case of the guardian and ward. (See also the unreported decision in A.S. No. 306. of 1922 on the file of the High Court). The decision of the Privy Council in Firm of Sadasuk Janaki Das v. Kishan Pershad 50 Ind. Cas. 216 29 C.L.J. 340 supports the view that a general application can be given of the principle underlying Section 28 of the Negotiable Instruments Act. Defendants Nos. 2 and 3 in this case have not indicated that they signed the promissory note as agents or that they did not intend to incur personal liability. On the other hand, the language of the promissory note, in my opinion, distinctly shows that they are personally liable. The decision of the learned Judge is, therefore, right and this Letters Patent Appeal No. 66 should be dismissed, with costs.

In L.P.A. No. 65 of 1924.

26. In this appeal the language used in the preamble and in the body of the promissory note indicating the liability of defendants Nos. 2 and 3 is like the language, in the promissory note in Letters Patent Appeal No. 66, but the executants in signing the promissory note describe themselves in the signature portion as 'guardians' of minor Viswanatham'. This is a distinctive feature of this note and in this respect it differs from the promissory note Ex. A just noticed. When we read the promissory-note bearing this feature in mind, the conclusion is irresistible that the executants have signed this note merely as guardians excluding thereby their personal liability. It, therefore, follows, that, on the language of this note, defendants No. 2 and 3 are not personally liable. As the construction that I am putting on the language of this promissory note is different from that given to it by the learned Judge, the decision in Second Appeal No. 999 of 1921 must be set aside. The plaintiff in this case will only be entitled to a decree against the minor's estate and not against the guardians personally. This Letters Patent Appeal is allowed with costs throughout.

27. As pointed out by my learned brother, we have not allowed the learned Vakil for the appellants to argue a, new point which he desired to raise in these appeals.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //