RAPPAYI Vs. COCHIN NAYAR BANK LTD

JUDGEMENT

(1.) The 2nd defendant firm, of which the 3rd defendant is the managing partner, had an overdraft account with the plaintiff Bank. As security for the balance due on this account the 3rd defendant endorsed a promissory note, Ext. E, for Rs. 4,400/-, executed in 1946 by the 1st defendant in favour of the second defendant firm. After that, plaintiff handed over the promissory note to the 3rd defendant for collection. A portion of the amount was collected ; and for the balance, Rs. 2,115-6-6 a renewed promissory note Ext. F was taken on 17-6-1949 in the name of the 2nd defendant. On 2-6-1950 a sum of Rs. 508-6-0 remained due on the latter promissory note. As per Exts. B and C, the 2nd defendant firm had assigned its interests in the abovesaid promissory notes to the plaintiff Bank towards discharge of its dues to the Bank. It is by virtue of that title that the plaintiff has instituted this suit for realisation of Rs. 508-6-0 remaining due under Ext. F from the 1st defendant, impleading the firm and its managing partner also as parties to the suit. The 1st defendant challenged the plaintiff's competency to sue. The Munsiff overruled the objection and decreed the suit and that was affirmed by the District Judge, on appeal. This Second Appeal is by the 1st defendant challenging the plaintiff's competency without an endorsement in its favour to sue on the promissory note.

(2.) Counsel for the 1st defendant relied on the rulings in Harkishore Barua v. Gura Mia Chowdhry (AIR 1931 Calcutta 387) Virappa Andandanepra Manvi v. Mahadevappa Basappa Katti (AIR 1934 Bombay 356) and Bacha Prasad v. Janki Rai (AIR 1957 Patna 380 F. B.) in which a strict view was taken as to the competency of a person, who is other than the payee or the endorsee, to institute a suit on a negotiable instrument. These rulings construed S.8 and 78 of the Negotiable Instruments Act to make it incompetent for any person other than the holder of a promissory note to sue on the same.

(3.) S.8 reads :