SHEIKH JARU BEPARI Vs. AGPETERS

JUDGEMENT

(1.) This appeal by the plaintiff arises out of a suit for the recovery of Rs. 3500 from defendant 1 under a receipt dated 7 March 1932 or in the alternative from defendant 2 as damages. The plaintiff's case shortly stated was : That defendants 1 and 2 were partners in a jute business, that for constructing some structures in connexion with the business they purchased timber from defendant 3 and for the price thereof amounting to Rs. 3700, defendant 1 alone executed a receipt in favour of defendant 3. That defendants 1 and 2 then fell out with each other and in order to harass defendant 1 and teach him a lesson on 21 November 1932, defendant 2 purchased for Rs. 3000 the reoeipt in the benami of the plaintiff (Ex. 1) and took from him on the same day a promissory note for Rs. 3000 by way of security : That subsequently defendants 1 and 2 made up their differences and defendant 2-then assigned the promissory note to defendant 1 and defendant 1 on the strength of it instituted Money Suit No. 126/35 and secured a decree against the plaintiff for Rs. 3500 notwithstanding his contention that no consideration was paid for the promissory note and it was executed merely as security for the receipt purchased in his benami, Ex. 1: That defendant 2 did not appear in order to contest the suit but on the contrary colluded with defendant 1: That the plaintiff thus suffered loss and injury not being able to sue upon Ex. 1 and also being made liable on account of the promissory note in Suit No. 126/35 by the fraudulent conduct of the defendants: That consequently the plaintiff instituted the present suit in September 1936 for the recovery of the amount due on the basis of Ex. 1 and in case this claim was found to be barred by limitation for damages to the extent of the amount decreed against him in Suit No. 126/35.

(2.) The defence inter alia was that the plaintiff was not the benamdar of defendant 2 in respect of Ex. 1, that in fact he paid the consideration money for Ex. 1 with the money borrowed from defendant 2 upon the handnote : that the suit was barred by limitation and res judicata; that there was no fraud on the part of the defendants. In the trial Court, it was conceded by the plaintiff that the suit was barred by limitation as well as byres judicata so far as defendant 1 was concerned but it was contended that so far as defendant 2 was concerned there was no question of limitation in respect of his fraud in connexion with the decree in Suit No. 126/35 nor was there any bar of res judicata as the question of the benami of Ex. 1 and the security given by the handnote in connexion therewith were not relevant to that suit having regard to the nature and the scope of the suit and the provisions of Section 43, Negotiable Instruments Act. The trial Court accepted these contentions and passed a decree as against defendant 2 only, dismissing the claim as against defendant 1. From the decision defendant 2 appealed and the lower appellate Court while agreeing with the trial Court as regards the liability of defendant 1, dismissed the claim as against defendant 2 as well holding that there was no fraud in connexion with Suit No. 126/35 in respect of the handnote. The plaintiff thereupon preferred the present appeal. It is urged by the learned advocate on behalf of the appellant that the Court of appeal below misapprehended the plaintiff's case and that the findings recorded were insufficient for the disposal of the appeal inasmuch as the Court below had omitted to consider the question of the benami of Ex. 1 and the security given by the hand-note which were specifically raised in issue 3, which ran as follows: Did defendant 2 purchase a receipt from Mona. Sheik (D-3) in the benami of the plaintiff and take a hand-note from the plaintiff by way of security?

(3.) On this issue, the Court of first instance came to the conclusion that defendant 2 purchased the receipt in the benami of the plaintiff and that he took the hand-note from the plaintiff by way of security. A finding on this point is essential for the purpose of disposal of this case; but unfortunately, the Court of appeal below did not advert to this matter at all. If defendant 2 purchased the receipt in the benami of the plaintiff and if the hand-note from the plaintiff was taken by defendant 2 only by way of security, then the very fact that defendant 2 transferred this hand-note to defendant 1, thus entitling the latter to have a decree against the plaintiff on that hand-note, would be a fraud which will sustain the claim of the plaintiff for damages in the present-suit. Further, if this was the real nature of the transaction, then it is difficult to see why the plaintiff would think of suing defendant 1 on the strength of the receipt. He was a mere benamidar and there is nothing on the record to show that he had any reason to suspect that defendant 2 was thinking of putting him to trouble by transferring the sham hand-note to defendant 1. The learned Additional District Judge disposes of the plaintiff's claim on two alternate suppositions. He seems to reason that either the plaintiff was a benamidar in respect of the purchase of the receipt or he was the real owner. If a benamidar, then he had no right to realise the amount due under that receipt and, therefore, by not realising the hand-note he did not suffer any loss. If the real purchaser, he should have sued defendant 1 on this receipt in due time. If he did not do that, he was to blame for it and consequently even if he has suffered any loss on this account, that loss was caused to him by his own fault. The learned Judge failed to see that if the transaction was benami one, the plaintiff suffered loss not by non-realization of the amount due under the receipt, but by a decree having been made against him on the sham hand-note which was a part of the same benami transaction.