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Brojo Lal Saha Banikya Vs. Budh Nath-pyari Lal Das - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Reported inAIR1928Cal148
AppellantBrojo Lal Saha Banikya
RespondentBudh Nath-pyari Lal Das
Cases ReferredRameshwar Mandal v. Ram Chand Roy
Excerpt:
- .....suit brought by a person other than the holder for the recovery of any money due on a promissory note. the learned advocate for the appellant has relied on certain cases. the first case which he refers to was firm of sadasuk janhi das v. kishan pershad a.i.r. 1918 p.c. 146. that was a case in which the plaintiffs sued a person as defendant for recovery of a certain sum of money due on a promissory note on the allegation that the drawer was an agent for the defendant. that suit was held by their lordships of the privy council as not maintainable. this is cited as an authority for the proposition that no person other than the one who appears as a party to the instrument is entitled to sue for the money. it seems to me that it is asking us to hold that the converse of the proposition laid.....
Judgment:

B.B. Ghose, J.

1. This appeal arises out of a suit brought against the defendant by the firm in the name and style of Budh Nath Peari Lal Das for recovery of Rs. 21,562 2-0 alleged to have been lent to the defendant for which a promissory note was given by the defendant in favour of Pyari Lal Pas, dated 21st January 1921. The defendant raised various pleas in his defence, but the question with which we are mainly concerned in this appeal is whether the suit has been properly brought by the plaintiff firm or, in other words, whether the plaintiff has the right to sue for the debt. Other defences were raised in the Court below, but' Sir Provash, appearing for the defendant who is the appellant before us, has candidly stated to us that, upon the materials on the record, it would be difficult for him to attack the judgment of the Subordinate Judge on the other facts found by him against the defendant. The Subordinate Judge made a decree in favour of the plaintiff mainly upon this ground:

The Negotiable Instruments Act nowhere lays down that the real owner of the money lent to a per on on a primissory note cannot sue its maker and get any money from him if his name be disclosed to the maker; it simply lays down that the holder of the document is entitled to get the money and give a. discharge to the maker: even a benamidar or trustee, if he be the holder, can sue and get a decree. The right of of the real owner is not affected by this Act, if his name be disclosed to. the maker of the instrument and if the maker does not make any payment to the holder and. get a discharge from him.

2. The learned advocite for the appellant raises two points in his appeal : the first is that the plaintiff' firm was incompetent to maintain the suit, having regard to the provisions of Section 78, Negotiable Instruments Act, 1881, read with Section 8 of Act. Secondly, if the suit is considered to be base upon the consideration paid to the defendant, the suit is barred, having been brought more than three years after the time when the loan was advanced. Under the promissory note the loan was payable to Pyari Lal Das or to his order after thirty days from the date of its. execution. The present suit was brought on the 16th February 1924. If the suit is considered to have been brought on the promissory note it is within time. But it is contended, on behalf of the appellant, that, if the suit is considered to have been brought for the original consideration, then it is barred by limitation. It is further urged on behalf of the appellant that, on a true reading of the plaint it must be held that the plaintiff did not bring the suit upon the original consideration, but based his claim only upon the promissory note. This last argument can hardly be advanced on appeal. It will appear that in the Court below issues were framed as regards the consideration. Issue 2 runs thus:

Did the plaintiff firm advance Rs. 16,700 to defendant in the benami of Bai Pyari Lal Das. Bahadur as alleged in the plaint

3. Issue 3 is this:

Can the plaintiff firm recover the amount in suit or any amount as alleged in the plaint

4. From these issues it seems to me that it is quite clear that both the parties understood that the suit was based on the promissory note as well as on the original consideration paid to the defendant. The learned Counsel for the respondent, Mr. Bose in answer to the first contention of the appellant that the suit is not maintainable because the holder of the promissory note has not sued, urges that, as a matter of fact, the holder of the note is one of the plaintiffs in the cause and the objection raised by the defendant is not maintainable. He also contends that the opinion of the Subordinate Judge, that the true owner of the money can also maintain the suit, is the correct view to take. Lastly, he urges that the suit upon the consideration is not barred by limitation.

5. The first point taken on behalf of the respondent by the learned counsel does not appear to have been dealt with in the Court below. But the point may be, shortly stated to be this. Although the plaintiff's name is described as the firm of Budh Nath Pyari Lal Das, as a matter of fact, all the members of the firm should be considered as plaintiffs in the cause. It is not disputed that Pyari Lal Das, the holder of the promissory note, is a member of the firm. As a matter of fact Pyari Lal Das has signed the plaint, on the allegation that he is a partner on behalf of the firm Budh Nath Pyari Lal Das and he has also verified the plaint himself. The question, therefore, resolves itself into this : Whether the plaintiff firm Budh Nath Pyari Lal Das is a separate entity or a legal person different from Pyari Lal, or is it a comprehensive name for a number of persons, including Pyari Lal as a plaintiff. If the name of the firm is really the name of Pyari Lal with the addition of the names of certain other persons who are partners of the firm, then it is contended by, the learned advocate that the holder of the promissory note is the plaintiff in the cause, and the fact that he has joined other persons with him in bringing the suit cannot defeat the suit. The only question would be, if we do not accept the second branch of his argument in support of the finding of the Subordinate Judge, that the decree requires to be slightly amended by making it only in favour of Pyari Lal Das. This argument requires to be properly examined. Order 30, Rule 1, Sub-rule (1), Civil P.C., which is a new addition to the Code of 1908, runs thus:

Any two or more persons claiming or being liable as partners and carrying on business in British India may sue or, be sued in the name on the firm...

6. It is unnecessary for me to recite the other portions of the rule. From this provision it appears to me that, if several persons who cirry on a business as partners want to sue, the short method of describing them has been provided under, this order. So far as I am aware it has not been considered that a partnership entered into by two or more persons is considered to be a legal person. As far as I have been able to find, that has not been considered to be so even in England, although the rule seems to be different in Scotland. Our attention has been drawn by the learned advocate for the respondent to the observations made by: Lord Justice Lindley in the case of Western National Bank v. Perez [1891] 1 Q.B. 304 which runs thus:

When a firm's name is used, it is only a convenient method for denoting those persons who compose the firm at the time when that name is used, and a plaintiff who sues partners in the name of their firm in truth sues them individually, just as much as if he had set out all their names.

7. Similar observations were made by Farwell, L.J., in the case of Sadler v. Whiteman [1910] 1 K.B. 868, where the Lord Justice observes that when a firm is sued, all the members of the firm are to be considered as parties. Similar observations were also made in the case of Heinemann v. Hale [1891] 2 Q.B. 83. It is contended on behalf of appellant that the observations which were made in those cases were with reference to different enactments and should not be applied to the present case. It is, no doubt, true that those observations were made with reference to different Acts, but the sole question is; whether the firm is a separate personality as such and, in my judgment, the observations of the learned Judges familiar with the laws of partnership are of great assistance in arriving at a conclusion on the question. Those observations were followed in this Court by my learned brother Mr. Justice Page in the case of Seodoyal lihemlca v. Joharmull Manmull : AIR1924Cal74 the learned Judge ob-observes:

A partnership under Section 239, Contract Act, is a relationship which subsists between parsons; but a firm is not a person; it is not an entity; it is merely a collective name for the individuals who are members of the partnership. It is neither a legal entity, nor is it a person.

8. With this observation I entirely agree (Some of the authorities cited in support of this observation have been referred to J by me already. That being so, assuming that the first contention raised on behalf of the appellant, that no suit is maintainable by any person other than the holder is sound, in my judgment the suit cannot be thrown out on the ground that the holder of the promissory note is not a plaintiff. As I have already stated, Pyari Lal Das is a partner, and along with him there are several other persons who are partners of the firm, and we may take this to be the fact that these persons were joined in their individul capacity in the suit along with Pyari Lal Das. Sir Provash, on behalf of the appellant, Contends, that the firm is a separate entity in this particular case is a question of fact, because Pyari Lal Das in his evidence stated that he had got separate funds from his other partners. But this is not a question of fact. The names of the four persons who are partners of the firm may be taken to have been specifically stated in the plaint and all of them may be considered to have joined as plaintiffs.

9. This is sufficient for the purpose of deciding the case. But I think it is right that I should express my opinion with regard to the point which has been dealt with by the Subordinate Judge, as the question has been very elaborately argued by the learned advocates on both sides. It is contended, on behalf of the appellant, as I have already said, that Section 78 read with Section 8, Negotiable Instruments Act, bars any suit brought by a person other than the holder for the recovery of any money due on a promissory note. The learned advocate for the appellant has relied on certain cases. The first case which he refers to was Firm of Sadasuk Janhi Das v. Kishan Pershad A.I.R. 1918 P.C. 146. That was a case in which the plaintiffs sued a person as defendant for recovery of a certain sum of money due on a promissory note on the allegation that the drawer was an agent for the defendant. That suit was held by their Lordships of the Privy Council as not maintainable. This is cited as an authority for the proposition that no person other than the one who appears as a party to the instrument is entitled to sue for the money. It seems to me that it is asking us to hold that the converse of the proposition laid down by their Lordships is true. I am not prepared to hold that.

10. The principle which has obviously been laid down is that, when credit is given to one person by the plaintiff, he cannot say that the credit is really given to another. Some other cases which have been cited by the appellant do not require any examination because they are really not in point with regard to the, question now before us. That case, on which great stress was laid by the appellant, is the case of Subba Narayana Vathiyar v. Ramaswami Aiyar [1907] 30 Mad. 88. The actual decision of the case itself is not in point. The question in that case was whether a defendant was entitled to give evidence to show that a promissory note executed by him was not really executed in favour of the plaintiff although he was the payee named in the note, in support of the plea that the note had been discharged by payment to the person really interested.

11. The learned Judges held that he was not so entitled and that is quite within the provisions of Section 78, Negotiable Instruments Act, as it is enacted there that the payment of the amount due on a promissory note must, in order to discharge the maker or the acceptor, be made to the holder of the instrument. But the difficulty has been increased by the fact that the learned Judges made some observations with regard to the right of a person to bring a suit, who is not named therein as the holder. These observations appear at p. [91 of 30 M.] of the report. The obiter dicta are entitled to the greatest respect as the learned Judges who compose 1 the Bench were English lawyers dealing principally with what is taken to be English law. But the difficulty arises when the learned Judges give their reasons for their dicta that negotiable instruments were governed in this country as in England by the Law Merchant. I should have been very glad to follow the dictum in that case although it was obiter, if I were not of the opinion that, where I am not bound by authority, I must decide a point according to my own judgment, and with very great respect, I feel that the dicta do not commend themselves to me. The first thing that I have to observe is that the Law Merchant of England was never applied in the mofussil, while the Negotiable Instruments Act is SJ applicable; and in order to construe the Negotiable Instruments Act it would be travelling too far if we go to see what the Law Merchant was. The preamble to the Negotiable Instruments Act states distinctly that it is an Act for the purpose of defining and amending the law relating Ito promissory notes, bills of exchange and cheques. Therefore, I do not think that in order to construe the Act it would be proper for us to find out what the Law 'Merchant' was before this Act was enacted. Such a procedure was disapproved by the House of Lords in the case of Bank of England v. Vagliano [1891] A.C. 107 and by the Privy Council in the case of Norendra Nath Saroar v. Kamalbasini Dasi [1896] 23 Cal. 563. We must, therefore, construe the Act as it stands. In my judgment the effect of Section 78 of the Act is this that it is not open to the defendant to plead that the holder of the instrument is not entitled to recover the money. If any third person sues the maker or acceptor of the promissory note, it would be a very good defence for him to say that he has been discharged by the holder of the instrument. Further, it would also be a very good defence to say that, unless the plaintiff in the suit gets him a discharge from the holder of the instrument, he is not bound to pay. But it would be going too far to say that that section prohibits any person other than the holder to bring a Suit, if that person is the true owner. If that were the intention of the legislature, it seems that it would have been quite simple to state that:

no person, except the holder, would be entitled to institute any suit on the instrument.

12. No such thing has been stated in any portion of the Act. Speaking of the procedure in England it is quite true that there are passages in text-books here and there that no person who is not a party to, the instrument can be sued or 'bring a suit.' But I have not been able to find any authoritative decision in support of the statement contained in the books, that no such person can sue. The learned advocate for the appellant has stated to us that, although he endeavoured to find a decision to that effect in the English reports he has not been able to find any. But his argument is that it would appear from the text-books that that was the accepted view of law in England and, therefore, the draftsman of the Negotiable Instruments Act did not think it necessary to put the express prohibition in the Act itself. The surmise of the learned advocate may be true, but, whatever may be the law in England, I do not see any reason why we should construe the Act' in the way proposed by the learned advocate and, as I have already stated, it will do no harm to any body, if the real owner is held to be entitled to sue if he is capable of giving a good discharge to the debtor from the holder of the instrument. In the present case, the holder of the instrument, Pyari Lal Das, has given evidence that the money belongs to all the members of the firm, and it has been found that the defendant was aware of it. He was willing to give a discharge to the defendant. It may be observed in this case that if Pyari Lal Das had taken the precaution of endorsing the instrument to the firm, there would have been no trouble. There is another case which I ought to refer to and which was cited on behalf of the appellant. It is the case of Beoti Lal v. Manna Kunivar A.I.R. 1922 All. 70. That case is directly in favour of the appellant's contention. In that case the real owner brought the suit on the allegation that the holder of the instrument was her benamidar who was dead at the time without leaving any heir. It was not possible for her to get any transfer from the holder. She brought the suit in her own name. The learned Judges held, reversing the decree of the lower Court, that the suit was not maintainable. The learned Judges professed to follow the observations in the case of Subta Narayana Vathiyar v. Ramaswami Aiyar [1907] 30 Mad. 88, which I have already dealt with. No other reasons have been given except that Section 78, Negotiable Instruments Act, bar the suit. I have made my observation on the construction of the section, and, with great respect, I am unable to accept the conclusion of the learned Judges in that case. This contention on behalf of the appellant, therefore, fails.

13. Apart from what I have said with regard to the construction of Section 78 above, it may be observed that, where the suit is brought by the true owner and not by the holder of the instrument, the special rules of evidence contained in Ch. 13, Negotiable Instruments Act, would not evidently apply; and in this case the defendant was allowed to raise various pleas as to no receipt of consideration and so forth in his defence.

14. Lastly, I have to deal with the question whether the suit may be said to have been based upon the consideration advanced to the defendant. The learned advocate for the appellant contends that the plaint is ambiguous, but, as I have already pointed put, issues were raised in the Court below, from which it appears that the question was raised whether plaintiffs were entitled to claim the money advanced apart from the promissory note.

15. Next arises the question of limitation for such a suit. Mr. Bose, for the respondent, contends that in the plaint it is stated that the agreement was to pay the money after 30 days of its being advanced. This averment in the plaint has not been challenged by the defendant and, therefore, it must be taken to be an uncontroverted fact. That being so, the article of the Limitation Act which applies to the case is Article 115. Sir Provash, for the appellant, however, answers that in the plaint it is only stated that the agreement to pay after 30 days was contained in the promissory note. If the promissory note is wiped out, then there is no evidence in support of the allegation that that was that contract and, therefore, the cause of action accrued from the date of payment. Having regard to the fact, in my opinion, that the suit was also based on the consideration, it may be taken that the plaint mentions the agreement to pay after 30 days as a fact apart from the promissory note. That being so, Article 115, Lim. Act, would be applicable and the cause of action would accrue from the date of the breach. That is how this article has been construed in the case of Rameshwar Mandal v. Ram Chand Roy [1884] 10 Cal. 1033, which has been followed in other cases.

16. The appeal, therefere, fails on all the points that have been raised and must be dismissed with costs.

Roy, J.

17. I agree.


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