ALAPATI VENKATA KRISHNIAH Vs. VEMURI MANIKYARAU

JUDGEMENT

(1.) THE petitioner instituted a suit in the Court of the Subordinate Judge of Tenali to recover the principal and interest due on a promissory note, dated 7th January, 1944, executed by the first defendant in favour of the second defendant and transferred to him for consideration on 27th March, 1944. The third defendant is the son of the first defendant and the fourth defendant is the son of the second defendant. The lower Court granted a decree to the plaintiff against his transferor, the second defendant, and his son, the fourth defendant, but dismissed the suit against the first defendant, the third defendant having died before the suit. The petitioner seeks to revise the decree of the lower Court in so far as it dismissed his suit against the first defendant, the maker of the promissory note.

(2.) THE defence of the first defendant was that he had made payment of the entire amount of principal and interest due under the promissory note to the second defendant and obtained a receipt, Ex. D -1 dated 19th May, 1944. Aware of the infirmity of his case that the alleged payment could not have been endorsed on the promissory note and the promissory note itself was not returned to him, the first defendant alleged that the promissory note was not available at the time to be delivered to him.

(3.) THE other ground which, however, is not very clearly expressed but which has been developed by Mr. K. Kotayya in his argument before me is that the plaintiff did not give notice of the assignment in his favour to the first defendant within a reasonable time. Actually, such notice was issued by him on 19th February, 1945, nearly a year after the assignment in his favour. It was contended by Mr. K. Kotayya for him that between two innocent parties like the plaintiff and the first defendant, the person who has enabled the other to sustain loss should bear it. According to him, the loss sustained by the plaintiff was due to his negligence in not issuing a notice. I completely fail to see any negligence on the part of the plaintiff in this case. He obtained a transfer towards the end of March, 1944. According to the first defendant, the payment by him was on 19th May, 1944, less than two months of the transfer. Unless there is anything in law which males it incumbent on a transferee to issue a notice forthwith after the date of the assignment, I cannot follow the argument that the plaintiff can be denied his right as a holder in due course, because he did not issue a notice before the date on which the first defendant is alleged to have made the payment under Ex. D -1. There can be no rule of thumb to find out what is a reasonable time within which the plaintiff should have intimated to the maker of the fact of the assignment. But there is certainly negligence on the part of the first defendant. When he made the payment, it is clear that the promisee was unable to produce the promissory note and make an endorsement of payment and even deliver it up to him cancelled. Under Section 81 of the Negotiable Instruments Act, the first defendant was before payment entitled to have the promissory note shown to him and on payment entitled to have it delivered up to him, or (as is now alleged by him), if the instrument cannot be found, to be indemnified against any further claim thereon against him. This is what he should have done and if he did not act as indicated in the section, he has to blame himself. In any event, his ultimate claim must be only against the promisee whom he had paid and he cannot be allowed to plead any defence to an action by a holder in due course. The decision in Gopalan v. Lakshminarasamma, I.L.R. (1940) Mad. 382 on which Mr. M.S. Ramachandra Rao, the learned advocate for the petitioner, relies, is directly in point and the principle laid down therein, when applied to the present case, will be a complete answer to the plea of the first defendant.