BACHA PRASAD Vs. JANKI RAI

JUDGEMENT

(1.) This application by defendant No. 4 arises out of a suit instituted by the plaintiff-Opposite Party No. 1 on the basis of a handnote alleged to have been executed by Kamdeo, since deceased, father of the petitioner, on the 15th of November, " 1946, in the name of defendant No. 5, who is opposite party No. 2, on the allegation that the plaintiff was the real beneficiary under the hand note as the money was advanced by him and that defendant No. 5 was merely his benamidar. Defendant no. 5 did not file any written statement, but gave evidence in the suit on, behalf of the plaintiff and supported his claim. The suit was contested by the petitioner on various' grounds one of which with which only we are concerned in this application was that it was not maintainable at the instance of the plaintiff. It was contended that the plaintiff, not being the holder of the handnote, could not sue on it, and no decree could be passed in his favour even though the person, in whose name the handhotes stood, was made a party to the suit and he supported the claim of the plaintiff. A question was also raised with regard to the liability of defendants 1 to 3 who are the other members of the family of Kamdeo. They "were sought to be made liable on the ground that Kamdeo was the karta of the 'joint family. The trial court held that Kamdeo was not the karta of the family and, therefore, the loan was not binding on defendants 1 to 3. It, however, overruled all other objections raised in defence, and decreed the suit as against the petitioner only. On appeal by the petitioner, the lower appellate- court affirmed the finding of the trial court and dismissed the appeal. Defendant No. 4, thus being aggrieved, made an application in revision to this court. In view of the conflicting decisions of this court as regards the maintainability of such a suit, this case, which was first placed for hearing before a single judge of this court, was referred to a division Bench, which, for the same reasons, referred the same to a larger Bench.

(2.) In this court the finding of the courts below regarding the genuineness of the hand-note and the liability of the petitioner under it have not been challenged. It may also be noted that, admittedly, the suit is based only on the handnote and not on the original consideration. The only question, therefore, that has been raised before us is whether the plaintiff could sue as a beneficiary for recovery of money due under the handnote executed in the name of defendant, No. 5 whom he alleges to be his benamidar. Mr. Verma appearing for the petitioner has contended that in view of the provisions of Section 78 read with Section 8 of the Negotiable Instruments Act, hereinafter to be referred to as the Act, the plaintiff had no right to maintain the suit. His contention is that the plaintiff, not -being the holder of the handnote in question, was not entitled in law to institute a suit on its basis. The argument seems to be we'll founded. Section 78 of the Act lays down that subject to the provision of Section 82, Clause (c), payment of the amount due on a promissory note, bill of exchange or cheque must, in order to discharge the maker or acceptor, be made to the holder of the instrument. It is admitted that clause (c) of Section 82 has no application to the present case. Therefore, under this section, a discharge could be given in this case to the maker of the promissory note only by making, a payment to the holder thereof. The term holder . of a promissory note, bill of exchange or cheque has been defined in Section 8 of the Act to mean 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 use of the words "any person entitled in his own name" is very significant. They were inserted by the legislature with a view to prevent any one from claiming the rights of a holder under the Act, on the ground that the ostensible holder is his benamidar. Thus, a beneficiary cannot be called a holder of the instrument and a payment to him cannot discharge the maker thereof. The plaintiff in the present case is not entitled in his own name to the possession of the handnote in question and to receive or recover the amount due thereon from the petitioner. Therefore, no valid discharge could be given to the maker of the note by making payment to him and thus he not being in a position to give a valid discharge, cannot be entitled to recover the debt and sue for its recovery.

(3.) As against this, counsel for the plaintiff-opposite party has put forward an argument that in view of benami transaction prevalent in this country, the words "in his own name" should be treated as conveying no special meaning. This argument is barren of substance. The law relating to negotiable instruments is the law of commerce in general and contains mercantile usages which require that the contract appearing on the face of the instrument should be taken as the real contract and the application of the doctrine of benami will introduce an element of uncertainty greatly hampering the free circulation of negotiable instruments. It is, therefore, as already observed, that the legislature used those words purposely to aviod benami transaction in this respect.