NILGIRI TRADING CO Vs. K SIMRATHMULL

JUDGEMENT

(1.) THIS is an appeal by defendants 1 to 7 and 9 to 11 in O. S. No. 250 of 1951 in the court of the Subordinate Judge of Octacamund against a decree passed against them. The suit was to recover a sum of Rs. 7271, being the principal and interest due under four hundis, two of them dated 5-9-1948 for Rs. 500 and Rs. 2000 respectively, and two other hundis dated 27-10-1948 for Rs. 1500 and Rs. 2000 respectively executed by the 11th defendant as the managing partner of the first defendant company, namely, the Nilgiri Trading Co. , in favour of one Seth sunderdas Harbhaghavandas, and the principal and interest due on a promissory note dated 28-11-1948 executed by him in favour of the same Sunderdass for Rs. 300. Defendants 2 to 10 are other partners of the defendant company. The due date for the first two hundis dated 5-9-1948 was 3-12-1948 and for the other two hundis the due date was 25-1-1349. Of these four hundis, three of them were endorsed by the said Sunderdass in favour of the Bank of Mysore and the fourth in favour of the Indian Overseas Bank. As the defendants failed to honour the humdis on the due dates, Seth Sunderdass was compelled by the banks to make payments, and on payment Seth Sunderdass obtained the four hundis back with the endorsement ''payment received". Thereafter Seth Sunderdass endorsed the four hundis to the plaintiff who has instituted the suit to recover the amounts due under them. So far as the promissory note is concerned, which was also similarly endorsed to the plaintiff there is no dispute in this appeal.

(2.) THE main plea raised in defence was that the plaintiff was not entitled to sue on the four hundis as such and the suit was not maintainable otherwise because the suit was based only on the hundis. The plea was that as there were endorsements of payment by the banks on the hundis and there were no re-endorsements by the respective banks to Seth Sunderdass, he had no power to negotiate and endorse them in favour of the plaintiff. This contention was based on the Explanation to section 51 of the Negotiable Instruments Act. That section declares that every sole maker, drawer, payee or endorsee, or all of several joint makers, drawers, payees or indorsees of a negotiable instrument may, if the negotiability of such instrument has not been restricted or excluded as mentioned in Section 50 indorse and negoliate the same. It is really on the Explanation that Mr. Ramaswami Aiyangar for the appellant laid stress. That runs thus: ''nothing in this section enables a maker or drawer to indorse or negotiate an instrument, unless he is in lawful possession or is holder thereof, or enables a payee or indorsee to indorse or negotiate an instrument unless he is holder thereof". The argument ran thus. Seth Sunderdass no doubt was a payee; but he could not negotiate because he was not a holder of the hundis on the date on which he purported to indorse them in favour of the plaintiff. Section 8 of the Negotiable instruments Act defines a holder. In so far as it is material, the definition runs thus: "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". The learned Subordinate Judge held that Seth Sunderdas would fall within the scope of this definition and therefore he could endorse the hundis to the plaintiff.

(3.) THE only question in this appeal is whether Seth Sunderdass on the undisputed facts in this case, can be held to be a holder of the hundis when he made the endorsements in favour of the plaintiff. Mr. Ramaswami Aiyangar, learned counsel for the appellants, was unable to cite any decided case which in any way would support his contention. On the other hand, we consider that the question has been sufficiently answered by Subramania Aiyar, O. C. J. in Muthar Sahib Maraikayar v. Kadir Sahib Maraikayar, ILR 28 Mad 544 (A ). The facts of that case were as follows: the defendants who traded under the name and style of S. M. P. M. K. obtained twenty five negotiable promissory notes from different persons and endorsed the same to one Meyyappa Chetti who again indorsed them to the Bunk of Madras. On presentation to the makers the notes were dishonoured. Thereupon the said Meyyappa Chetti paid Bank and obtained return of the promissory notes. Subsequently Meyyappa Chetti assigned his right to the notes by an instrument to the plaintiff. The defendants on demand failed to pay the amount and the suit was filed for the recovery of the amount due in respect of the promissory note. Various defences were raised; but the lower appellate court accepted one of the pleas in defence, namely, that as the promissory notes had not been indorsed over to the plaintiff he could not sue on them. The learned Judges held that the absence of an endorsement in favour of the plaintiff was no bar to the suit. The argument pressed upon the learned Judges in that case was that the property in the notes should be taken as still residing in the last indersee, the Bank of Madras (corresponding to the Bank of Mysore and the Overseas Bank in the present case), and, therefore, the instrument of assignment relied on by the plaintiff conferred on him no right whatever to the notes. Dealing with this arguments Subramania ayyar O. C. J. observed thus: