PAKIATHAMMAL Vs. VAIYAPURI UDAYAN

JUDGEMENT

(1.) In this case it is said there is a conflict of decisions on the question whether a person who is the real payee can sue on a note whereon the name of another person appears as payee.

(2.) The cases cited in favour of this view are : Venkatarama Reddiar V/s. Valli Akkal 1935 Mad. 181. The observations of Varadachariar, J., at p 84 are relied upon. There however that learned Judge refused to express an opinion upon the question whether a person claiming to be real owner, though not named as payee in a promissory note, can under any circumstances maintain a suit on the note against the maker : Subramania Ayyar V/s. Subban Chettiar 1925 Mad. 1130. That case turns on the fact that the payee is described as "N. Manager of S.C. & Co." The view was taken that he was so named as agent for a disclosed principal, that the general principles of the law of agency applied, and therefore the disclosed principal can sue : Sowcar Lodd Gobind Doss V/s. Muniappa (1908)31 Mad. 534. There the payee was described as "Manager of K. Estate" which estate was in charge of the Court of Wards and the view was taken by Miller, J., that the real payee was the landlord (i.e., the Court of Wards after dispossession of the mortgagee landlord) by his agent, the Manager. This opinion appears to have been founded on the view that it was a case of agent payee for disclosed principal : Broja Lal saha V/s. Budh Nath Pyerilal & Co. 1928 Cal. 148 at p. 560. There Chose, J., refused to follow the dicta in Subba Narayana V/s. Ramaswami Ayyar (1908) 30 Mad. 88, on the ground that those dicta were made by English lawyers "dealing principally with what is taken to be English law," and founding their view, according to Ghose, J., on the opinion that negotiable instruments were governed in this country as in England by the Law Merchant and that under the Negotiable Instruments Act, Section 78, it is not open to the defendant to plead that the holder of the instrument is not entitled to recover the money : Seva Ram V/s. Hoti Lal 1930 All. 108. There it was hold that Section 78 does not prohibit any person other than the holder of a promissory note from bringing a suit thereon, if that person be "the true owner" and the bolder a benamidar for him. All that Section 78 provides is that a payment made to any person other than the holder shall not operate as a discharge of the maker in respect of his liability to the holder.

(3.) Before I pass to the consideration of the cases which support the view I hold it is necessary to remark that if Seva Ram V/s. Hoti Lal 1930 All. 108 is to be regarded as correctly stating the law the result will be that if a benamidar comes on the scene the person liable on the note cannot safely pay him. Therefore he would presumably not pay and would be sued. As was observed in Seva Ram V/s. Hoti Lal 1930 All. 108, a person so circumstanced is liable to be shot at twice: once by the person who is the "real" holder and once by the person who is the holder within the meaning of the Negotiable Instruments Act. That difficulty was one of no practical importance in Seva Ram V/s. Hoti Lal 1930 All. 108, because each kind of "holder" was before the Court, the "real" holder as plaintiff and the statutory and ostensible holder as defendant 2. That is not so here. If this plaintiff succeeds the defendant will have to pay the plaintiff and will not thereby, in consequence of Section 78, have discharged his liability to the ostensible holder. The ostensible holder being dead his personal representative can sue and to that action there would be no defence (apart from limitation). That appears to me to be an impossible position and its existence is enough to decide this appeal. But I am prepared to go further and follow both the decision and the reasoning in Harikishore V/s. Gura Mia 1931 Cal. 387, and I adopt the language of Suhrawardy, J., at p. 759: The Negotiable Instruments Act was enacted, for the benefit of trade and commerce and the principle underlying it is that promissory notes, bills of exchange, and cheques should be negotiable as apparent on their face without reference to secret title to them.