MUTHU REDDI ALIAS DURAISWAMY REDDI Vs. VELU ASARI

JUDGEMENT

(1.) The point for decision is whether it is open to the maker of a promissory note payable on demand to plead, against a holder in due course, that he paid the money to the payee before the endorsement. The learned Vakils who appeared on either side argued the question ably before me. The note in question is dated the 12th August 1912 and is for Rs. 200. Certain payments made towards it are endorsed on it. It is alleged by the defendants that some other payments made by them were, by mistake, not entered on the back of the note. The endorsement to the plaintiff was. on the 26th of August 1914. The defence to the suit was that the note was fully discharged before the endorsement and that the assignment was fraudulent. The Subordinate Judge framed no issue on the second plea. He held that on the date of the endorsement, nothing was due on the note and dismissed the plaintiff s suit against the makers.

(2.) I am unable to agree with the Subordinate Judge. Mr. Natesa Sastriar, who appeared for the defendants, relied upon Section 60 of the Negotiable Instruments Act and on Commundun Mohideen Saib v. Oree Meerah Saib 7 M.H.C.R. 271. It is true that Section 60 prohibits negotiation by the payee after payment or satisfaction. This does not affect a holder in due course. By Section 59 the holder is affected only if be acquired the note after dishonour.

(3.) There is no reference to payment or satisfaction in this section. Section 9 makes a person whc has paid consideration a holder in due course", if he became the possessor of the note before the amount mentioned on it became payable. The language is not, before the amount was paid. Under Section 10 payment must be according to the apparent tenor of the instrument. It further provides that there must be good faith and absence of negligence. To my mind where the maker fails to secure the note after discharging it, he cannot be said to have acted in good faith and without negligence". Section 82, which deals with the discharge of the maker, says that the payment must have been made in due course. My conclusion is that as there was no payment in due course as defined in Section 10, the maker is not discharged from liability.