DUMPALA VENKANNA Vs. VUTLA SUBBAYYA

JUDGEMENT

(1.) The petitioner is the defendant against whom a decree has been given on a promissory note for Rs. 60-10-0, dated 14 October, 1925, executed by him to one Ankamma, deceased/from whose widow, Seshamma (3 Defendant), the Plaintiff took an endorsement on 17 December, 1927, after her husband's death which took place in March, 1926. The defence was that the note had been discharged by execution of a fresh note to the payee. It appears that Ankamma, the payee, and his wife, 3 Defendant, Seshamma, who had no male issue, were bringing up two nephews, that Seshamma, with the assistance of one of the nephews who was siding with her, got possession of the suit note and other documents from her husband, that though the latter complained to the authorities he could get no assistance from them as the matter was declared to be a family quarrel, that thereupon Ankamma took a fresh note, Ex. I, from the Defendant on 5 March, 1926, in substitution and discharge of the suit note, and endorsed it to a daughter of the other nephew who was siding with him and that the Defendant paid off the amount of the new note to the holder of that note. There were also pleas questioning the bona fides and consideration of the endorsement to the Plaintiff. The District Munsif found the facts as above stated but also that the Plaintiff paid consideration to the widow for the endorsement of the suit note and took it without knowledge of the facts above stated. On these findings he had held that the Plaintiff is a holder in due course from the widow and that the 1 Defendant (petitioner) must pay the debt over again though he has already once paid it.

(2.) It appears to me that the District Munsif has fallen into the error of ignoring Section 60 of the Negotiable Instruments Act. That section (corresponding to Section 36(1) read with Section 59(1) of the Bills of Exchange Act) lays down that a negotiable instrument may be negotiated until payment or satisfaction by the maker, drawee or acceptor at or after maturity but not after such payment or satisfaction. This section carried out the fundamental principle that a negotiable instrument loses its character as such after the instrument (as distinguished from a party thereto) is discharged. A bill or other negotiable instrument is discharged in the words of Section 60 by payment or satisfaction by the maker, drawee or acceptor after maturity, or, as Section 59(1) of the English Act puts it, by payment in due course by or on behalf of the drawee or acceptor, which latter term includes the maker of a promissory note: see Section 89(1). Thus both enactments convey the same idea because payment according to the English Act need not be payment in cash. But the holder may receive satisfaction in any other form. See Chalmers Bills of Exchange Act, 9 Edn. pp. 233 and 234. On such payment or satisfaction at or after maturity by the maker of a promissory note it ceases to be negotiable. The consequence of that as settled more than a century ago is that if it subsequently comes into the hands of a holder in due course, he acquires no right of action on the instrument. [See Chalmers, p. 233 and cases cited in Note (d).]

(3.) But the learned advocate for the Respondent (plaintiff) has relied on two decisions of this Court, Duraisami Reddi V/s. Velu Asari (1916) 2 M.W.N. 107 and Ramanadan Chettiar V/s. Gunbu Aiyar (1928) 113 I.C. 456 and the decision of the Court of Appeal in Glasscock V/s. Balis (1889) 24 Q.B.D. 13 for the contentions that though a note is fully paid and discharged but left with the payee, it continues to be negotiable and that a holder in clue course can recover against the maker either on the ground that the note was not overdue and mere payment is not evidence of a demand and that payment was only an equity attaching to the note which would bind only those who were aware of it or on the ground of estoppel, that where one of two innocent parties has to suffer by the fraud of a third person he who facilitated the fraud by his neglect (in this case the omission to take back the note on- payment) must bear the loss.