RAI RAM KISHORE Vs. RAM PRASAD MISHIR

JUDGEMENT

(1.) This is a plaintiff's second appeal arising out of a suit brought for the recovery of money on the basis of four promissory notes executed by the defendant-respondent. The facts admitted or found proved by the lower Courts are that the plaintiff Rai Ram Kishore formed a joint Hindu family with his brothers, Rai Amar Nath and Rai Ram Charan. There was a joint family firm under the name and style of "Piru Mal Radha Rawan" through which this joint family used to carry on money lending business. The respondent used to borrow money from this joint family firm. The present suite relates to four promissory notes executed by the respondent in the name of Rai Amar Nath as payee in the years 1935 and 1936. The first, promissory note was executed on 2-2-1935, for a sums of Rs. 541, the second on 25-2-1935 for Rs. 175 and the third and the fourth on 8-2-1936, for Rs. 2920 and Rs. 330 respectively. All these promissory notes were renewals of previous loans which has been taken by the respondent originally during the years 1930 and 1931. Rai Amar Nath was the karta of the joint Hindu family, being the eldest brother, and the money, which was advanced came out of the joint family funds. On 3-11-1932 before the execution of these renewed promissory notes which are the basis of the suit, but after the original loans had been advanced to the respondent, one Rai Krishnaji was appointed as arbitrator without intervention of the Court to partition the joint family property between the three brothers. The arbitrator gave his award on 21-12-1933 and the Court was moved to make this award the rule of the Courts During the proceedings in Court a statement was made by all the parties that they would abide by the order of the Presiding Officer, viz., Sri Ratan Lal, Civil Judge, who was authorised as arbitrator to make the partition. Sri Ratan Lal, Civil Judge, gave his decision on 29-4-1937, and passed a decree in terms of his decision. By this decree the renewed promissory notes in suit which had already come into existence during the partition proceedings fell to the share of Rai Ram Kishore, On 14-5-1937, the counsel for Rai Amar Nath filed these promissory notes in Court with an application that they may be delivered to Rai Ram Kishore in whose share they had fallen and making further request that all other property may be given in possession of the parties to whom it had been allotted by the decree. At the time whom these promissory notes were filed in Court Sri A.N. Sinha, counsel for Rai Amar Nath, put his initials on the back of all these promissory notes. The promissory notes were taken back from the Court by Rai Ram Kishore and he then instituted this suit for recovery of the money due under them. The suit was contested by the respondent on various grounds of which only one need be mentioned here as that is the only ground with which this Bench is concerned. It was pleaded by the respondent that Rai Ram Kishore plaintiff in the suit was not the holder of any of these promissory notes and consequently he had no right to institute a suit which was not maintainable. The other points of contest between the parties were also decided by the trial Court though the suit was dismissed on a decision of this point against the plaintiff. It was held that the suit at the instance of the plain, tiff was not maintainable. In appeal the lower appellate Court considered this question of law only, and since it held that the suit was not maintainable it dismissed the appeal and confirmed the decree of the trial Court. Other points of contest which were decided by the trial Court were not considered by the lower appellate Court as they did not arise when the suit was dismissed on the decision of this question against tbe plaintiff. Both the lower Courts held that Rai Ram Kishore was not the holder of the promissory notes and consequently he had no right to institute a suit for recovery of money on their basis. The only point that falls for determination in this appeal, therefore, is as to whether on the facts mentioned above Rai Ram Kishore had the right to institute the suit. This second appeal came up for hearing before a learned single Judge who referred it to a Division Bench. The Division Bench was of the view that it involved a very substantial question of law and thought it desirable that it should be decided by a Full Bench. The case was, therefore, referred to a Full Bench. Rai Ram Kishore, the original plaintiff of the suit, is dead and the present appellants are his legal representatives. For the sake of convenience, however, we shall refer to Rai Ram Kishore as the plaintiff.

(2.) Before the Division Bench, as appears from the referring order, the contention on behalf of the plaintiff was that, though the promissory notes in suit were executed in the name of Rai Amar Nath as payee, his name was put in as manager of the joint Hindu family from whose assets the loans were advanced. Rai Amar Nath was, therefore, only the ostensible holder whereas under the Hindu law the real holders were he as well as his two brothers, including the plaintiff. In the partition effected by the decree of the Court the promissory notes fell to the share of Rai Ram Kishore and consequently he became entitled to the money due under them. He was, therefore, the owner of that money and the holder of the promissory notes and was entitled to institute the suit for its recovery against tbe respondent. The contention on behalf of the respondent on the other hand was that the provisions of Hindu law could not override the special provisions of the Negotiable Instruments Act and it was only Rai Amar Nath, the ostensible holder, who could institute the suit for recovery of money on the basis of the promissory notes. A large number of authorities were cited before tbe Bench in support of the proposition that only the holder of a promissory note could institute a suit to recover money on its basis and consequently this suit by Rai Ram Kishore plaintiff was not maintainable. On behalf of the appellant also a number of cases were referred to where it had been held that money due under promissory notes could be recovered even by a person whose name did not appear on the promissory notes as a payee or holder in due course. There was also an additional plea that there was an indorsement in blank on all these promissory notes by Rai Amar Nath the payee because they had all been initialled by Sri A.N. Sinha, his counsel, when he filed these promissory notes in Court. This latter contention was repelled by the lower Courts and we think rightly. It appears from the promissory notes that Sri A.N. Sinha had initialled them only for the purpose of indicating that he was filing them in Court on behalf of his client, Rai Amar Nath. For an indorsement to bind the payee or the holder of a promissory note, it must be made either by the payee or the holder himself or by a duly authorised agent acting in his name under Section 27, Negotiable Instruments Act. In the present case Sri A.N. Sinha, counsel for Rai Amar Nath in the partition suit, had no such authority to make an indorsement on behalf of Rai Amar Nath and consequently, even if these initials of Sri A.N. Sinha be treated as having been made for the purpose of indorsement, there would be no valid indorsement binding on Rai Amar Nath. It cannot, therefore, be held that these promissory notes had been indorsed in blank and the right of the plaintiff to institute the suit on their basis has to be decided independently of these initials of Sri A.N. Sinha.

(3.) It was contended in these circumstances on behalf of the plaintiff that, though Rai Ram Kishore may not be the holder in due course of the promissory notes, he was at least the holder, because after the decree in the partition suit the right to the money secured by these promissory notes vested in him. Considerable argument was advanced on behalf of both the parties on the question as to whether Rai Ram Kishore could or could not be held to be the holder of the promissory notes as a result of the decree in the partition suit after the finding that the money advanced under the promissory notes had belonged to the joint Hindu family on partition of which the promissory notes had fallen to the share of Rai Ram Kishore. In our opinion, it is not necessary for the purpose of deciding this second appeal to give any definite finding as to whether Rai Ram Kishore did or did not become the holder of the promissory notes after the partition. There can be no doubt at all that, after the partition had been effected by the decree, Rai Amar Nath, the payee of the promissory notes, no longer had any right in the money due under them. Further the promissory notes were given by the Court in the possession of Rai Ram Kishore plaintiff and thereafter Rai Amar Nath had no right to claim possession thereof. Under Section 8, Negotiable Instruments Act, the holder of a promissory note, bill of exchange or cheque has been defined to mean :