HRIDAYSINGH Vs. KAILASH SINGH

JUDGEMENT

(1.) This appeal is by the plaintiff from a decision of the Additional District Judge of Patna reversing a decision of the Munsif. The appeal arises out of a suit on a hand- note dated 12 June 1930, and expressed to be for Rs. 1000. Across the stamps of the hand-note are these words in the handwriting of the defendant, Sahi Kailash Singh ek hazar rupaiya qarza leli wo handnote likhdeli se sahi bakalam khas." The case of the defendant was that this endorsement was made by him on a blank piece of paper and was intended to operate as collateral security for a loan advanced by one Shamnandan Prasad Singh to Dhanukdhari Singh, a relation of the plaintiff. The name of the payee in the instrument is that of the plaintiff and not of Shamnandan Prasad Singh. The defence explained this by asserting that when the defendants assigned the instrument it was blank and that Shamnandan Prasad Singh subsequently caused the body of the instrument to be written out and inserted the name of the plaintiff as payee instead of his own. The Court of appeal below has dismissed the plaintiff's suit holding that the transaction was one between the defendant and Shamnandan Prasad Singh and not between the defendant and the plaintiff.

(2.) The effect of assigning a paper stamped in accordance with the law relating to the negotiable instruments is dealt with in Section 20, Negotiable Instruments Act, 1881, which provides that where a person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments, then in force in British India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. It is contended on behalf of the defendant-respondent that this Section does not authorize the person to whom the stamped and signed paper is delivered to insert in it as payee the name of anyone but himself. In this connexion reference was made to Section 4 of the Act which defines a promissory note as an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking signed by the maker to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.

(3.) The promissory note in question does, of course, promise to pay the sum mentioned unconditionally to a certain person, namely, the plaintiff, and I can see nothing in that Section which in any way curtails the general authority conferred by Section 20 on the person to whom a stamped and a signed paper is delivered to convert it into a negotiable instrument payable to any specified person. This appears also to be the law in England. In Cruchely V/s. Clarance (1818) 2 M & S 90 the facts were that a bill of exchange was drawn in Jamaica upon one Henry Man of London leaving a blank for the name of the payee. This bill was negotiated in England by one Vashon who endorsed it to the plaintiff in payment of an old debt. The plaintiff inserted his own name as the payee.