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Surath Chandra Saha Vs. Kripanath Chowdhury and ors. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtKolkata
Decided On
Reported inAIR1934Cal549,150Ind.Cas.925
AppellantSurath Chandra Saha
RespondentKripanath Chowdhury and ors.
Cases ReferredWhittler v. Forster
Excerpt:
- .....j.1. the document upon which this case turns is described as a hand-note. the maker of the hand-note, kripa nath chowdhury, was the father of defendants 1, 2 and 3. the holder was banwari lall shaha, the father of the pro forma defendants 5 to 8. the note was given in exchange for a loan of rs. 325 and was payable on demand. the holder without endorsing it, sold his right, title and interest in the hand-note along with other property to the plaintiff by a registered kabala. the main point for decision was whether the plaintiff could sue the defendants and recover the amount of the hand-note. both courts below have dismissed the suit, on the ground that the rights arising upon such a document can be transferred only by endorsement and delivery.2. the hand-note is promissory note,.....
Judgment:

Lort-Williams, J.

1. The document upon which this case turns is described as a hand-note. The maker of the hand-note, Kripa Nath Chowdhury, was the father of defendants 1, 2 and 3. The holder was Banwari Lall Shaha, the father of the pro forma defendants 5 to 8. The note was given in exchange for a loan of Rs. 325 and was payable on demand. The holder without endorsing it, sold his right, title and interest in the hand-note along with other property to the plaintiff by a registered kabala. The main point for decision was whether the plaintiff could sue the defendants and recover the amount of the hand-note. Both Courts below have dismissed the suit, on the ground that the rights arising upon such a document can be transferred only by endorsement and delivery.

2. The hand-note is promissory note, and a promissory note is a written acknowledgment of debt with a promise to repay. It is also a memorandum of contract, and evidence of a chose in action or actionable claim. Thus, it may be transferred by assignment, and the assignee thereby gets such title as the assignor had in the note, and, in addition the right to have the endorsement of the assignor. In India, this has always been held to include the right to sue on the assignment in his own name; cf. Gour's Law of Transfer, 6th Edn., p. 2157. The assignment transfers the legal right to the chose in action to the assignee with power to give a good discharge. It passes all legal and other remedies for the chose in action, but subject to all equities A promissory-note is also a negotiable instrument, and according to the law merchant, as codified in the English Bills of Exchange Act, 1882, and the Negotiable Instruments Act, 1881, it is transferable merely by endorsement and delivery. As such, it is clothed with certain incidents intended to facilitate the business of merchants.

3. Owing to some confusion of thought, it has been suggested that the Negotiable Instruments Act in some way has affected the transferability of such a document by assignment as a chose in action. This contention was shown to be fallacious in Muther Sahib v. Kadir Sahib (1905) 28 Mad 544; Binode Kishore v. Asutosh Mukhapadhya (1912) 14 IC 720 and Akhoy Kumar v. Haridas Bysack AIR 1914 Cal 566. But in the later cases there occur observations in the nature of obiter dicta which seem to suggest the contrary view with the result that in Broja Lal v. Budh Nath Pyrialal and Co. : AIR1928Cal148 ; Har Kishore v. Guru Mia : AIR1981Cal387 ; Reoti Lal v. Manna Kunwar AIR 1922 All 70; Suhha Narayan Vathiyar v. Ramaswami Aiyar (1907) 30 Mad 88; Sewa Ram v. Hoti Lal : AIR1931All108 and Sarjug Singh v. Deosaran Singh, AIB 1930 Pat 313, confusion has arisen again from time to time.

4. These decisions are however irrelevant to the issue raised in the present case, because in them there were no assignments, and they turned upon the question whether a person whose name did not appear on a negotiable instrument had the right to sue upon it in the absence of an assignment. The wording of Sub-section 8 and 78, Negotiable Instruments Act, seems to have been the cause of the confusion to which I have referred. Section 8 provides:

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.

5. Section 78 provides:

Subject to the provisions of Section 82, Clause (c) payment of the amount due on a promissory note, bill of exchange or cheque must in order to discharge the maker or acceptor, be made to the holder of the instrument.

6. It has been suggested that the effect of Section 78 is to prevent an assignee, such as the plaintiff in the present case, from suing because he does not come within the definition of 'holder' in Section 8, and therefore cannot discharge the maker or acceptor, as contemplated in Section 78. This argument seems to be erroneous. The plaintiff is within the definition of 'holder' in Section 8. He can sue in his own name, and he is entitled in his own name to possession, and to receive or recover the amount due on the hand-note from the parties thereto.

7. The difference between a transfer by assignment, and a transfer by endorsement and delivery is, that in the former case the transfer is subject to all equities whereas in the latter it is not. The scope of the rule has been explained by Willis, J., in Whittler v. Forster (1863) 14 CB (NS) 248. In the present case, no equities have arisen and the plaintiff is entitled to a decree. The appeal is allowed with costs here and below. The judgments of both the lower Courts are set aside. Defendants 1 to 4 must pay into the Court of first instance the amount claimed to the extent of any assets inherited by them from Kripa Nath Choudhury and defendants 5 to 8 must endorse the note in favour of the plaintiff. When that has been done, the amount; thus paid into Court will be paid out to the plaintiff. In case any difficulty arises in carrying out this decree there will be liberty to apply.

M.C. Ghose, J.

8. I agree.


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