THORAPPA DEVANAPPA Vs. UMEDMALJI

JUDGEMENT

(1.) His Lordship after setting out the facts of the case went on. The suit came on for hearing before me on March 28, 1923, and again on April 3, 1923, for a few hours on each day. On March 28 counsel for the plaintiffs read out the evidence recorded in the case, Counsel for the second defendant then addressed the Court. Counsel for the first defendant followed him. Though the second defendant filed a long written statement, he did not give any evidence in the case. Such being the case, it is difficult to say under what circumstances the hundi passed into his hands and whether he played any part in this nefarious affair. Nor was any evidence led on behalf of the first defendant. On April 3, at the close of the address of counsel for the first defendant, Mr. Lalji, who had already addressed the Court on behalf of the second defendant applied that the plaintiff may be re- called to give him an opportunity to cross-examine him as to whether the third defendant had given any authority to the plaintiff, express or implied, to remit the money due by the plaintiff to the third defendant by a hundi. The plaintiff, who resides and carries on business at Hyderabad, was in Bombay on March 29, but he left Bombay after that date, and he was not in Bombay on April 3. I refused the application. The first and second defendants had every opportunity of cross- examining the plaintiff when he gave his evidence before Kanga J. on November 18, 1921. On that day the plaintiff was cross-examined by counsel for the first defendant, but he was not cross-examined at all by counsel for the second defendant.

(2.) Upon these facts the question arises whether the first and second defendants or either of them is liable to the plaintiff. It is well established that if a party primarily liable on a negotiable instrument pays the amount thereof to a wrong person, who holds it under a forged indorsement, he remains liable to the true owner. The only exception to this is where the payee's indorsement on a cheque payable to order is forged. In such a case it is provided by Section 85 of the Negotiable Instruments Act, 1881, that the drawee is discharged if he pays the amount in due course. No holder of a negotiable instrument, though he may be a holder in due course, can acquire a title to the instrument through a forged indorsement. Section 85 of the Negotiable Instruments Act, which protects a holder in due course where a negotiable instrument has been obtained by means of an offence, does not apply to a case of forgery : Hunsraj V/s. Ruttonji (1899) I.L.R. 24 Bom. 65; Jai Narain V/s. Mahabub Bakhsh (1906) I.L.R. 28 All. 428; and Banku Behari Sikdar V/s. Secretary of State for India (1908) I.L.R. 36 Cal. 239. Such being the case the first defendant is clearly liable to the true owner for the amount of the hundi.

(3.) The second defendant is also liable to pay the amount of the hundi to the true owner. In the case of goods, if a man takes and sells them when he has no right the owner may waive the tort and recover the proceeds in an action for money had and received. And equally if a person wrongfully convert a bill and receive the amount, the owner of the bill may either sue in tort or may waive the tort and recover the money as received to his use. The second defendant who came into possession of the hundi through forged indorsements took no property in the hundi What was done by him amounted to a conversion of the hundi, and the proceeds of the hundi received by him are the moneys of the true owner : Arnold V/s. Cheque Bank (1876) L.R. 1 C.P.D. 578 and Heilbut V/s. Nevill (1870) L.R. 5 C.P. 478 482.