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L. Narayanaswami Vs. T. Kanagarathinam - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1980)1MLJ238
AppellantL. Narayanaswami
RespondentT. Kanagarathinam
Cases ReferredS.N.C. Shandurain v. Tin. Tuti Elec. Supply Co. Ltd.
Excerpt:
- .....point to be considered is, whether the plaintiff has bought or was trafficking in an actionable claim. actionable claim is defined in section 3 as meaning a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the possession, either actual or constructive, of the claimant, which the civil courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent. this is a claim to recover a debt and, therefore, the transaction falls within the scope of the definition of 'actionable claim' mentioned above. the expression 'buy' used in section 136 of the transfer of property act would.....
Judgment:

V. Sethuraman, J.

1. The second defendant in O.S. No. 209 of 1974 in the Court of the Subordinate Judge of Cuddalore is the appellant. The plaintiff filed a suit for recovery of a sum of Rs. 29,301 said to be due on two promissory notes dated 15th April, 1971 and 3rd July, 1971, respectively executed for Rs. 13,001 and Rs. 15,000 carrying interest at 12 per cent. per annum. The said promissory notes were executed in favour of one Nataraja Gramani who assigned them for collection to the plaintiff on 12th March, 1974. The plaintiff is an Advocate practising in Cuddalore. He claimed that there was an endorsement of payment of Rs. 300 on 27th September, 1971 on the promissory note dated 3rd July. 1971, marked as Exhibit A. 2. He claimed to have issued a notice subsequent to the assignment in his favour and as there was no reply, he filed the present suit. The first defendant remained ex parte. The second defendant contended that the promissory notes had been concocted with the aid of printed promissory note forms given for a different purpose. According to the second defendant, he and the wife of the first defendant were partners in a firm called Venus Movies and when the firm was functioning in the year 1969, the second defendant alleged that he put his signature on 10 paise revenue stamps affixed to printed promissory notes which were given to the first defendant to be used in case of necessity. The case of the second defendant is that these forms have been used for concocting Exhibits A-1 and A-2. He denied any consideration having passed under these promissory notes and he disputed the plaintiff being an assignee for consideration. There was also a plea of bar of limitation in respect of these promissory notes.

2. The trial Court held that Ex. A-1 promissory note dated 15th April, 1971 could not form the basis of an action as it was barred by limitation. As regards the other promissory note, marked as Ex. A-2, on a consideration of the evidence it was held that the promissory note was true and it had not been prepared under the circumstances alleged by the 2nd defendant. It was also found that the promissory note, Ex. A-2, was supported by consideration and the plaintiff was not a holder in due course, but only an assignee for collection. The result was that the suit was decreed as prayed for with costs and against the 1st defendant and as regards the 2nd defendant he was held to be liable for Rs. 16,600 due under Ex. A-2. It is this decree that is now challenged by the second defendant.

3. Mr. K.N. Balasubramanian, learned Counsel for the appellant, took before me three points. The first was that the promissory note cannot be enforced in a Court of law in view of Section 136 of the Transfer of Property Act; the second was that the trial Court had no jurisdiction and the 3rd was that the promissory note was not supported by consideration. I shall go into each one of these points in seriatim.

4. Ex. A-2 promissory note is for a sum of Rs. 15,000/-carrying interest at 12 per cent per annum. There is a reference to an earlier promissory note executed on 15th April, 1971 for Rs. '13,001 It is stated that the amount due under that promissory note remains unpaid. The promissory note bears three 10 paise revenue stamps. There is a seal affixed on the revenue stamps 'for Venus Movies, Managing Partner'. There are two executants. One is Narayanaswami and the other is the 1st defendant, A. Kannan. It is above the signature of A. Kannan 'For Venus Movies' appears and he is described by the rubber stamp as Managing Partner. Narayanaswami has signed on one of the revenue stamps and 'for Venus Movies' appears in all the three revenue stamps. It is at the back of this promissory note, there is an endorsement of payment of Rs. 300/- by A. Kannan (1st defendant) on 27th September, 1971. On 12th March, 1974 this promissory note has been endorsed for collection in favour of the plaintiff. The promisee under this promissory note, M. Varadarajan, has signed the endorsement. There are two witnesses. One is named V. Natarajan. There is no address of this person. The other is one Thangavelu of Manjakuppam. He is himself the scribe. The first question is, whether this transaction is hit by Section 136 of the Transfer of Property Act?

5. It may be mentioned here that this objection was not taken in the written statement and did not form an issue. However, being a purely legal point, which does not require any investigation of facts, I think it proper to allow it to be urged at this stage. Section 136 of the Transfer of Property Act runs as follows:

No Judge, legal practitioner or officer connected with any Court of Justice shall buy or traffic in, or stipulate for, or agree to receive any share of, or interest in, any actionable claim, and no Court of Justice shall enforce, at his instance, or at the instance of any person claiming by or through him, any actionable claim, so dealt with by him as aforesaid.

The object of this section is plain. It is to see that officers attached to a Court should not be placed in a position in which they may be tempted to use the influence or the information which they may have acquired by virtue of their possible connection with the transaction of business in a Court, to the prejudice of persons who might have to resort to it for the adjudication of actionable claims. The point to be considered is, whether the plaintiff has bought or was trafficking in an actionable claim. Actionable claim is defined in Section 3 as meaning a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the possession, either actual or constructive, of the claimant, which the civil Courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent. This is a claim to recover a debt and, therefore, the transaction falls within the scope of the definition of 'actionable claim' mentioned above. The expression 'buy' used in Section 136 of the Transfer of Property Act would postulate cases purchase of an actionable claim for consideration. Though in the plaint there is some reference to the plaintiff being an assignee for consideration, still it is clear from the endorsement, and this is no longer in dispute that the plaintiff is only an assignee or agent for collection. Therefore, there is no question of any purchase of a negotiable instrument or an actionable in claim at this case. The expression 'traffic in' would comprehend cases where the person concerned trades in actionable claims or carries on commerce in actionable claims. The word 'traffic' as per the Concise Oxford Dictionary means 'trade (in commodity lit. & fig.), carry on commerce.' The plaintiff is not a person who is actually trafficking in any actionable claim. He does not deal with any actionable claim in the course of any trade. I do not, therefore, find any substance in the contention of the learned Counsel for the appellant that the plaintiff being a legal-practitioner is prevented from enforcing the instrument in the present case. As he has neither bought an actionable claim nor is trafficking in any such claim, he is not barred by the provisions of Section 136 of the Transfer of Property Act from enforcing the instrument. It is unnecessary in this view to go into the question as to whether Section 136 of the Transfer of Property Act would apply to negotiable instruments.

6. The next question, as indicated already, is whether the trial Court had jurisdiction. The question of jurisdiction was sought to be raised in the following way. There is nothing in the endorsement to show that the endorsement was made in any place other than Pondicherry. As the plaintiff is admittedly not a person who is an assignee for consideration, the ruling of this Court in Manepalli Mangamma and Ors. v. Maneplli Sathiraju (1917) 31 M.L.J. 866 : 5 L.W. 246 would not apply. In that case it was held that the assignee of a promissory note could sue in the Court having jurisdiction where the assignment in his favour was made. As this is not a case of assignment for any consideration, the place of assignment would not give jurisdiction. In these circumstances the Court that has jurisdiction would be only the place where the promissory note was executed or where the defendant resided. According to the learned Counsel for the appellant, neither of these conditions are satisfied in the present case. The learned Counsel for the respondent vehemently objected to the contention being urged at this stage.

7. But for the fact that Mr. K.N. Balasubramaniam appeared to raise this point somewhat seriously, I would not have felt it necessary at all to discuss it in any detail. However, having heard his argument in some detail, I think it proper to pronounce on it by reference to decided cases which lay down a uniform view. In Kiran Singh v. Chaman Paswan : [1955]1SCR117 , the Supreme Court laid down the principle applicable to objections to jurisdiction as follows:

The policy underlying Section 11 of the Suits Valuation Act, as also of Sections 21 and 99 of the Civil Procedure Code is that when a case has been tried by a Court on the merits and judgment rendered, it should not be liable to be reversed purely on technical grounds unless a failure of justice has resulted. The policy of the legislature has been to treat objections as to jurisdiction both territorial and pecuniary, as technical and not open to consideration by an appellate Court, unless there has been prejudice on the merits.

This decision was followed by Ramanujam, J., in Jagan Mohan Rao v. Swarun : (1972)2MLJ77 . The learned Judge observed that in such cases the appellant having allowed the lower Court to proceed to decide on the merits of the case and taken a chance of having a decision in his favour from the lower Court, is prevented from raising the question of jurisdiction at the appellate stage. Later on, a Bench of this Court in S.N.C. Shandurain v. Tin. Tuti Elec. Supply Co. Ltd. : AIR1975Mad103 pointed out after referring to Section 21 of the Civil Procedure Code, that if by an act or omission or commission the defendant in a particular cause having raised the plea as to jurisdiction and particularly an objection as to the place of suing participates in the trial Court, does not even ask for trial of the issue, on such jurisdiction as a preliminary issue, and being aware of the framing of such an issue does not press for it in a manner known to law but allows the trial to go on in the usual course on all the issues, he is bound by his own conduct. It is added that he should be deemed in such circumstances to have waived his objection as to jurisdiction and that he cannot risk a full trial with bald chance of success on merits and having so risked and having had the benefit of a full trial, it was unreasonable to hold that he is prejudiced at the end of the trial if he finds his cause unsuccessful before the trial Court. It was pointed out that he should be alert as to press for such a decision at the appropriate time before the forum in which, according to him, the lis has been wrongly instituted and thus avoid prejudice on all sides to all parties, and that if he did not, he cannot at the appellate stage approbate and reprobate and attempt to reopen a rather closed issue.

8. Section 21 of the Civil Procedure Code, provides that no objection as to place of suing shall be allowed by any appellate or revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues are settled at or before such settlement, and unless there has been a consequent failure of justice. In the present case, there is no reference to any objection to jurisdiction in the written statement filed. There is no issue on this point and there is no proof of any failure of justice either. In these circumstances, this plea as to jurisdiction has absolutely no merit in it and is, therefore, rejected.

9. The last contention raises the point as to the passing of consideration in respect of the promissory note. The promissory note being a negotiable instrument, the onus lies on the person who disputes the passing of consideration thereunder. In the present case, evidence in this behalf has been given by D.Ws. 1 to 3. D.W. 1 has spoken to the circumstances under which he handed over blank promissory notes in printed forms to the first defendant for the purpose of raising loan for the firm. Curiously enough, the firm consists of the 2nd defendant and the first defendant's wife. The present suit has been filed against the two executants namely, Kannan and Narayanaswami. I have already referred to the way in which the rubber stamp has been affixed. The rubber stamp shows that the 2nd defendant was the Managing Partner of Venus Movies. However, the promissory note does not on its face show that it is a borrowal for Venus Movies. The plaintiff or his assignor could not have affixed his seal 'For Venus Movies'. There is nothing to show that this rubber stamp was affixed after execution of the promissory note as contended by the learned Counsel for the appellant. The three revenue stamps appear in a row and the signature of the first defendant is on one of the revenue stamps and the seal 'For Venus Movies' appears in all the three revenue stamps. I do not, therefore, consider that the seal has been affixed only with some ulterior motive and that it was not affixed at the time when the promissory note was signed. The affixing of the seal is consistent with its being descriptive of the 2nd defendant. As the first defendant is admittedly not a partner, there is no question of his affixing his seal with reference to the promissory note. Though the 2nd defendant himself has stated that he had given some blank promissory notes to the 1st defendant, still there is no proof of his having done so, except his own statement from the witness-box. His evidence is obviously interested and in the absence of any independent testimony supporting his version, it is not possible to accept the description of the circumstance under which the blank promissory notes were left with 1st defendant as proper or correct. Some reference was made to the fact that the plaintiff's assignor is a businessman and he has not produced his books. The plaintiff's assignor has been examined as P.W. 1. He has stated that this transaction does not appear in his books. In view of the statement that this transaction does not find a place in his books, the non-production of his books is not likely to be of any significance in this case. It is for the defendants to show that no consideration had passed. There is no acceptable evidence in this behalf. The result is that the decree, as passed by the trial Court, is confirmed and the appeal is dismissed. There will be no order as to costs.


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