S MARUTHAMUTHU NAICKER Vs. PKADIR BADSHA ROWTHER

JUDGEMENT

(1.) This is a reference under Order 46, Rule 1 of the Civil P. C., by the Subordinate Judge of Tanjore in a suit on a promissory note. The note was executed by the first and second defendants in favour of one Ponnusami Naicker who indorsed it to the plaintiff. The two sons of the second defendant who constitute with him an undivided family have been made defendants, as it is sought to make them liable on the ground that the debt was incurred for family purposes by the second defendant in his capacity of managing member. The sons having raised the plea that the plaintiff as the indorsee is not entitled to sue them on the strength of the indorsement of the instrument, the Subordinate Judge has referred to us this question: Whether an indorsee of a promissory note executed by the managing member is entitled to recover the debt from the property of the non-executant coparceners on the ground of their liability under the Hindu Law or whether he is limited to the remedy available on the note.

(2.) It is a fundamental principle of the law relating to negotiable instruments that no one whose name does not appear on the instrument can be held liable thereon, but this principle has unfortunately been lost sight of in some of the cases which have come before this Court. Before examining the reports which have been quoted to us in the course of the arguments I wish to refer to a decision of the Privy Council and to two English cases as the law is to be found there clearly stated. The decision of the Judicial Committee is that in Firm of Sadasuk Janki Das V/s. Sir Kishan Pershad (1918) 36 M.L.J. 429 : L.R. 46 I.A. 33 : I.L.R. 46 Cal. 663 (P.C.) which was an appeal arising out of a suit on a hundi. Lord Buckmaster in delivering the judgment observed: It is of the utmost importance that the name of a person or firm to be i charged upon a negotiable document should be clearly stated on the face or on the back of the document, so that the responsibility is made plain and can be instantly recognised as the document passes from hand to hand.

(3.) Later in the judgment, Lord Buckmaster said: Their Lordships attention was directed to Secs.26, 27 and 28 of the Negotiable Instruments Act of 1881, and the terms of these sections were contrasted with the corresponding provisions of the English Statute. It is unnecessary in this connection to decide whether their effect is identical. It is sufficient to say that these sections contain nothing inconsistent with the principles already enunciated, and nothing to support the contention, which is contrary to all established rules, that in an action on a bill of exchange or promissory note against a person whose name properly appears as party to the instrument, it is open either by way of claim or defence to show that the signatory was in reality acting for an undisclosed principal.