DITTAKAVI VENKATA NARAYANA Vs. CHENNURI VENKATESWARA RAO

JUDGEMENT

(1.) The appellant is the plaintiff. He laid the suit on the basis of Ex. A.2 transfer for consideration of the payment of the promissory note, Ex A.1, dated July 20, 1975, to recover the suit debt. The suit notice was issued on Feb. 4, 1978, and reply thereto Ex. A.4 dated March 1, 1978 was issued denying the liability thereof. The defence raised by the respondents is that A.1 is not supported by consideration. It was executed only as a collateral security to another transaction, and, therefore, he is not a 'holder in due course'. Since the appellant is only a 'holder' for collection, the Court below has no territorial jurisdiction to entertain the suit. The Trial Court framed appropriate issues and negatived the respondents' contention that it is not supported by consideration and held that the promissory note (Ex. A.1) is supported by consideration but it held that the appellant is not a "holder in due course" under Ex. A.2, dated Feb. 1, 1978. Since the endorsement was made at Pamarru, the Court below has no jurisdiction to entertain the suit. On that premise, dismissed the suit.

(2.) Shri Venkat Rao, the learned counsel appearing for the appellant has strenuously contended that even assuming that the appellant is not a 'holder in due course', he is a "holder" within meaning of Sec. 8 of the Negotiable Instruments Act, 1881 (Act No. XXVI of 1988) for short 'the Act'. The Court below has to consider not only the effect of the endorsement but also the failure of justice. Unless these two facts are considered, the suit cannot be dismissed. Ultimately, it has to be transferred only for presentation to the proper Court. That recourse was not adopted by the Court below. Thereby, the decree of the Court below is vitiated. The question, therefore, is whether the appellant is a 'holder' within the meaning of Sec. 8 of the Act. The specific case of the appellant is that he is a 'holder in due course' having obtained the endorsement by paying the consideration. Sec. 9 of the Act defines 'holder in due course' thus :

(3.) It is seen that the Court below found, and, in fairness, it was not disputed across the bar, that the appellant has laid the suit on July 17, 1978, in his own right as a 'holder in due course'. It is now found as a fact that no consideration has been paid under the endorsement, Ex. A.2. Thereby, he is not a 'holder in due course'. When the appellant came to the Court in his own right as a 'holder in due course' undisputed, then it is not open to him to fall back upon the plea that he is still continuing to be 'holder' as a beneficial owner, for the benefit of the original owner, promisee, under Ex. A.1. This stand was not taken earlier nor pleaded in the plaint and thee was no opportunity for the respondent to contest this stand. Under these circumstances, having become unsuccessful in his stand that he is a 'holder in due course', it is not open to him to fall back upon the plea that he continues to be a 'holder', namely, beneficial owner for the benefit of the original promisee under Ex. A.1. Promissory note - on that premise, the second question, namely, whereas, the suit should be transferred to the Court having pecuniary jurisdiction is redundant. Accordingly, I need not go into that question.