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Sree Kristo Jana Vs. Sitanath Bera - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtKolkata
Decided On
Reported inAIR1937Cal753
AppellantSree Kristo Jana
RespondentSitanath Bera
Cases ReferredBrojo Lal Saha v. Budh Nath
Excerpt:
- .....father-in-law) embodying the terms of the loan and made it over to him. plaintiff has filed the hand-note along with the plaint. the suit however is not based on the hand-note but on the original consideration, namely the loan. defendant 2 has not appeared, though duly summoned. one of the defences of defendant 1 is that the suit is not maintainable by the plaintiff. the hand-note which was executed by defendant 1 is payable on demand to defendant 2 or order. it has not been endorsed or assigned by defendant 2. (2) the point of law on which the munsif entertains doubt is whether the suit is maintainable by the plaintiff. (3) the opinion of the munsif is that the suit is not maintainable. (4) decision: the reason for the munsif's doubt is that although a division bench of this court.....
Judgment:
ORDER

1. This is a reference under Order 46, Rule 1, Civil P.C., by the Munsif of Danton arising out of S.C.C. Suit No. 359 of 1936 now pending before him. The facts of the case are: The plaintiff in the suit seeks to recover from defendant 1 Rs. 30 as principal and Rs. 19 as interest. His case is that defendant 1 borrowed from him Rs. 30 on 13th October 1933 in the house of defendant 2, that he promised to repay the sum with interest on plaintiff's demand and that on that very date defendant 1 executed a promissory note in the name of defendant 2 (plaintiff's father-in-law) embodying the terms of the loan and made it over to him. Plaintiff has filed the hand-note along with the plaint. The suit however is not based on the hand-note but on the original consideration, namely the loan. Defendant 2 has not appeared, though duly summoned. One of the defences of defendant 1 is that the suit is not maintainable by the plaintiff. The hand-note which was executed by defendant 1 is payable on demand to defendant 2 or order. It has not been endorsed or assigned by defendant 2. (2) The point of law on which the Munsif entertains doubt is whether the suit is maintainable by the plaintiff. (3) The opinion of the Munsif is that the suit is not maintainable. (4) Decision: The reason for the Munsif's doubt is that although a Division Bench of this Court consisting of two Judges in Harkishore Barua v. Guramia Choudhury : AIR1931Cal387 has held that a suit on the hand-note by the real owner is not maintainable and that the suit on the hand-note can be brought only by the holder of the note, one of the Judges composing that Bench in his judgment observed that the real owner could succeed if he based his suit on the consideration and not on the note.

2. In Brojo Lal Saha v. Budh Nath : AIR1928Cal148 the hand-note was taken in the name of one of the partners of the plaintiff's firm. The suit was based on the promissory-note as well as on the original consideration. The trial Court decreed the suit. In the appeal by the defendant to this Court, two points were raised before this Court: (1) that the claim on the hand-note was not maintainable. (2) That the claim on the original consideration was barred by limitation. So far as the first point is concerned, Ghose, J. held that the suit was maintainable as the holder of the note was a partner of the plaintiffs' firm and as the suit was instituted by the firm it must be taken to be a suit by the holder also. The learned Judge then observed at page 559:

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... 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.

3. The learned Judge then expressed this opinion: The effect of Section 78, Negotiable Instruments Act, is that it is not open to the defendant to plead that the holder of the instrument is not entitled to recover the money. That section did not prohibit any person other than the holder to bring a suit if that person was the true owner, and that there was nothing in the Act to show that no person except the holder would be entitled to institute any suit on the instrument. The second point raised in that case assumed that the claim on the original consideration was maintainable. The question whether a suit based on such a claim is maintainable or not was neither debated in that case nor decided. In HarkishoreBarua v. Guramia Choudhury : AIR1931Cal387 the plaintiff who lent money to defendant 1 in that suit took the hand-note in the benami of defendant 2 as in the present case and based his suit on the hand-note and not on the original cause of action. The question whether such a suit was maintainable directly arose for decision in that case and the learned Judges held that only the holder of the promissory note, viz. defendant 2, though merely a benamidar could maintain the suit and that the suit by the true owner was not maintainable though the holder was a party thereto and admitted that he was a benamidar. Patterson, J. made the following observations in the concluding portion of his judgment:

4. 'It may be that the suit would have succeeded if it had been based on the consideration and not on note'. The question whether a suit based on the original consideration was maintainable did not and could not arise for decision in that case. The observations of Patterson, J. are therefore obiter. There is therefore no decision of this Court on the point raised by the Munsif in his reference.

5. As a rule a creditor may always sue for the original consideration if the pro-note is not paid, provided there are no circumstances which keep intact the liability of the maker under the pro-note. A debtor cannot be made to pay twice. 'It would be a very good defence to say that unless he has been discharged by the holder of the instrument he is not bound to pay': per B.B. Ghose, J. in Brojo Lal Saha v. Budh Nath : AIR1928Cal148 referred to above. Payment of the amount due on a promissory-note in order to discharge: the maker must be made to the holder of the instrument though he may be a benamidar. So long as that is not done, the liability of the maker continues. It is true that the holder of the note is a party to the suit. He has not however appeared in the suit. His conduct in the suit cannot bring about discharge of his makers liability under the note by raising estoppel against him as the only method of discharge is indicated in Section 78, Negotiable Instruments Act, and there can be no estoppel against the provisions of a statute. If a decree is passed in favour of the plaintiff in the present suit, and defendant 1 pays the money to him, his liability under the pro-note to defendant 2 will still continue. The present suit is therefore not maintainable. Let a copy of this judgment be transmitted to the Munsif of Danton through the District Judge of Midnapur.


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