MUTHUKRISHNIEN Vs. VIRARAGAVA IYER

JUDGEMENT

(1.) A question of law of some importance has been raised for decision in this case. The plaintiffs sued to recover the amount due on a mortgage bond, Exhibit A, executed by the 1st defendant to one Muthuswamy Iyer, the father of the plaintiffs. The bond hypothecated certain immoveable property and certain debts due to the 1st defendant under a promissory-note and two simple mortgage documents. All these three documents were apparently handed over to the plaintiff s father along with Exhibit A. The mortgage bonds were returned to the 1st defendant to enable him to realise the monies due under them and pay the same towards the amount due on Exhibit A.

(2.) The plaintiffs allege that no payment was really made by the, defendants, and the 1st defendant s plea that he paid Rs. 100 has been negatived by the lower Courts. The light to enforce payment of the promissory note, which was executed by a third party in first defendant s favour, became barred by limitation while it was in plaintiff s custody.

(3.) It was contended that the plaintiff should be debited with the amount due on the note as he was bound to recover it from the maker. This contention has been upheld by both the lower Courts. Plaintiffs appeal and the question for decision is whether the plaintiff was bound to collect the amount due on the promissory-note. Exhibit A, dated 26th October 1902, states: "As I have received Rs. 600 from you by mortgaging the following, i.e., the house and...and the promissory-note mentioned as 2 in the Schedule...for Rs. 500 executed by my brother Sankara Subbier on the 21st November 1907.... I promise to re-pay the said sum of Rs. 600 with interest thereon at one par cent, per month within a year from the date hereof, failing which I shall re-pay the principal and interest aforesaid with interest thereon at if per cent, per month and add the interest to principal every year and re-pay the same with compound interest at the rate aforesaid, failing which you may proceed against the mortgaged properties, other properties or personally for the collection thereof. The promissory-note was not transferred to the plaintiff s father according to the terms of Exhibit A. The note was payable to the 1st defendant or order at sight or on demand. It was not endorsed over by the payee to Muthuswamy Iyer when Exhibit A was executed or at any time subsequently. The contention of the respondent here, which is the same as in the lower Court, is that the mortgage of a debt, when possession of the bond or other instrument evidencing it is handed over to the mortgagee, amounts in law to an assignment of it, that although the pro-note was not endorsed over to Muthuswamy Iyer, Exhibit A was sufficient to transfer the right to the note as a chose in action to Muthuswamy Iyer ; and that Muthuswamy Iyer was entitled and bound to do everything in his power to realise the amount due on it, failing which he was debitable with the loss caused by his omission to do so. After full consideration, I am unable to uphold these contentions. I am of opinion that Muthuswamy Iyer and the plaintiffs were not entitled to sue the maker of the note for the recovery of the amount due under it and even if they were entitled to do so, they were not bound to do so.