GHANSHYAM DAS MARWARI Vs. RAGHO SAHU

JUDGEMENT

(1.) Ramadhin Sahu borrowed a sum of money from Sitaram Marwari for which he gave a hand-note. Sitaram Marwari sold the hand-note to Ghanshyam Das Marwari by a registered sale deed. Ghanshyam Das Marwari then sued the debtor for recovery of the value of the hand-note, basing his suit on the hand-note and also on the debt which had been transferred to him with the hand-note by means of the registered instrument. A plea of partial payment was put forward at the trial by the defendant which the Small Cause Court Judge disbelieved; and he would have decreed the suit except for the fact that he regarded the decision of this Court in Peary Pasi V/s. Gauri Lal AIR 1934 Pat 382 as prohibiting the transfer of a hand-note or of the debt based on it by any other means than by endorsement and delivery as described in the Negotiable Instruments Act. The case originally came before a Single Judge who referred it to a Division Bench. The Division Bench, doubting the correctness of part of the decision in Peary Pasi V/s. Gauri Lal AIR 1934 Pat 382, asked for a reference to a larger Bench.

(2.) In Peary Pasi V/s. Gauri Lal AIR 1934 Pat 382 the hand-note was executed not in favour of the person who advanced the consideration but in the name of a benamidar. The assignment, was made, not by the benamidar whose name appeared upon the note, but by the person who claimed to be the beneficial owner; and although it is to be noted that the benamidar expressly agreed to the assignment, it is also to be noted that in the case before the Bench, he alleged that the debt of which the note was evidence had been discharged. There is a current of decisions to the effect that where a hand-note is executed in favour of a benamidar, it is not open to the defendant to assert that the holder of the note is not the beneficial owner: Subba Narayan Vathiyar V/s. Ramaswami Aiyar (1907) 30 Mad 88; and conversely that if a suit is to be based on the hand-note it must be instituted by the holder whose name appears on the note, not by another person who alleges that the original holder is his benamidar and that he is the beneficial owner: Ram Das Sahu V/s. Chhota Lal Mander AIR 1928 Pat 24 and Harkishore Barna V/s. Gura Mia Chaudhuri . In the case Peary Pasi V/s. Gauri Lal AIR 1934 Pat 382, if the benamidar had endorsed the hand-note to the beneficial owner before transfer, or if the benamidar had himself executed a deed of transfer, the plaintiff's position would have been different. The transfer in that case was actually made not by the person whose name appeared upon the note but by the person who claimed to be the beneficial owner; but it appears that the rule regarding the manner in which negotiable instruments can be transferred was stated somewhat too broadly in the decision of that case, so that in the present case the learned Small Cause Court Judge considered that he was incapable of acting upon the transfer by a registered instrument which was executed by the original holder. We have to determine whether such a transfer confers upon the transferee the right to sue.

(3.) In Muthar Sahib Maraikar V/s. Kadir Sahib Maraikar (1905) 28 Mad 544 the Acting Chief Justice of the Madras High Court held that an assignment of promissory notes by a registered instrument gave the assignee the right to sue upon them in his own name, though the assignee in such circumstances acquired only the right, title and interest of his assignor, whereas the endorsee would have all the rights of a holder in due course. In 1912, in Muthukrishnier v. Veeraraghava Iyer AIR 1915 Mad 1031, Sir Arnold White, presiding over a Special Bench of the Madras High Court, held that where a promissory note had been mortgaged to the plaintiffs of that case without endorsement, the transferee was entitled to sue upon the note and was actually the only party entitled to sue. In Benode Kishore Goswami V/s. Ashutosh Mukhopadhya 16 CWN 666, where a promissory note had been transferred by a registered deed of gift, the transfer was held to be a valid assignment. It has been decided in Burma and in the Punjab that such an assignment could be made in more informal fashion and yet be effective. The Burma Chief Court in Palawan V/s. B.K. AIR 1921 LB 92 held that a negotiable instrument could be transferred so as to enable the transferee to maintain a suit thereon even without endorsement or a written assignment. In the Punjab it had been held by the Chief Court in Panna Lai Lachhman Das V/s. Hargopal Khubi Ram AIR 1919 Lah 85 that endorsement was not the only mode by which a negotiable instrument could be transferred; it can be assigned otherwise and the assignee could sue in his own name, the only difference being that the assignee would have only the right, title and interest of the assignor, while the endorsee would have all the rights of a holder in due course, following the decision in Muthar Sahib Maraikar V/s. Kadir Sahib Maraikar (1905) 28 Mad 544 to which reference has been made.