PEARY PASI Vs. GAURI LAL

JUDGEMENT

(1.) This is a petition for revision of a decree by a Small Cause Court in favour of the plaintiff upon a handnote. Defendant No. I borrowed money from his aunt since deceased. He executed a handnote for the sum borrowed with interest dated May 28, 1930, in favour of defendant No. 2 who was the aunt's man of affairs. The aunt in consideration of a sum of money, assigned the handnote (with others of a like nature) to the plaintiff. Defendant No. 2 executed a document acknowledging that the lady was the real beneficiary of this and the other notes and that he had no interest in them and assented to the assignment. Defendants Nos. 1 and 2 gave evidence (which was disbelieved) to the effect that defendant No. 1 had paid the amount of the note to defendant No. 2 and produced a receipt which was held to be collusive. The name of the plaintiff does not appear upon the handnote. The Munsif decreed the suit. Defendant No. 1 takes the point that the plaintiff had-no title to sue on the note. It is contended that he is neither the payee nor a holder in due course, which is certainly true. The note is made payable to defendant No. 2, it is not payable to bearer and therefore any transfer to constitute the transferee a holder in due course must be by indorsement and delivery according to Section 9 and Section 46, Negotiable Instruments Act.

(2.) There has been some discussion in the Courts as to the right of a person other than the holder in due course to sue on a negotiale instrument. The matter was argued in Subba Narayan V/s. Ramaswami Aiyar 30 M 88 : 16 M L J 508 : 1 M L T 377, before a Full Banch and it was held that Secs.8 and 78, Negotiable Instruments Act are a reproduction of the English Law merchant. In that case the defendant sought to defend on the ground that the holder of the note sued on was a mere benamindar. The plea was rejected and the Court said: We cannot find any English case in which an undisclosed principal has attempted to sue on a negotiable instrument, and we think that the decisions clearly establish that an undisclosed principal could not be sued...in the case of instrument intended to be negotiable and to pass from hand to hand, usage and policy alike required that the real contract should appear on the face of the instrument.

(3.) Towards the close of the judgment, however, the Court said: We think it unnecessary to discuss the more recent decisions of this Court holding that the assignee of a negotiable instrument to whom it has been assigned otherwise than by indorsement may, when in possession of the instrument, sue in his own name, as there are considerations in such a case which do not arise here.