SHAHABUDDIN SAHIB Vs. TOTA VENKATACHALAM CHETTIAR

JUDGEMENT

(1.) The facts which had led up to this revision may be briefly stated. One Anthonimuthu owed some money to Gnanaprakasam Pillai for which the latter had secured two decrees against the former. The defendant was an agent to the aforesaid Gnanaprakasam Pillai for the purpose of collecting his outstandings. When he went to realise the debts due to Gnanaprakasam Pillai he discovered that Anthonimuthu could give useful evidence in a case which he intended to institute against some third person, with whom I am not concerned here. An arrangement was thus arrived at between the defendant on the one hand and Anthonimuthu on the other, under which the latter promised to depose in the defendant's favour and the former agreed to discharge the debts due to Gnanaprakasam Pillai by the latter. It appears that the defendant was not in a position to pay the debts due to Gnanaprakasam Pillai at the moment. He consequently paid a sum of Rs. 100 only in cash and after deducting Rs. 50 which would have been due to him for his commission on realisation of the debts due from Anthonimuthu, he executed a promissory note on 29 August, 1935 (Ex. A) in favour of Gnanaprakasam for Rs. 580. Gnanaprakasam agreed to this and released Anthonimuthu from his decrees and certified payment to the Court. Gnanaprakasam then served the defendant with a notice on 7 September, 1935 (Ex.1) under which he was asked to discharge his liability by the 15 of September, failing which, it was so mentioned in the notice, the promissory note would be assigned. It appears, however, that the promissory note was assigned in favour of the plaintiff a day before the time given in the notice for payment, i.e., on 14 September, 1935 and the assignee filed this suit on its basis, which was decreed by the lower Court. The defendant has now come up to this Court and has urged the dismissal of the suit on the grounds that the plaintiff was not a holder in due course and inasmuch as the promissory note was executed for an illegal consideration, it could not be enforced in a Court of Law.

(2.) Three reasons were given by Mr. Pocker to show that the plaintiff was not a holder in due course; (1) that as the promissory note was payable on demand, it should be deemed to have matured on the date on which it was executed and an assignment on a subsequent date would not place the plaintiff in a position better than that of his assignor; (2) as a demand was made by Gnanaprakasam Pillai on 7 September, 1935, an assignment subsequent to that date could be of no avail to the plaintiff, who would be subject to such equities as existed at the time of transfer; and (3) as a notice of dishonour was given by the defendant to Gnanaprakasam Pillai on 13 September, the holder took the instrument subject to the vice with which the bill was tainted at the time of the transfer.

(3.) The learned Counsel for the petitioner has placed his reliance on Section 9 of the Negotiable Instruments Act in support of his first objection. It is true that the language of the section lends some support to the argument advanced by him; but I do not think it would be seriously contended that the promissory notes, which are payable on demand could not be negotiated in such a manner as to make their holders to be holders in due course under any circumstances. It would come as a rude shock to the commercial community in India, if they discovered that the legal position in regard to such promissory notes happens to be what has been contended for before me. The contention raised by Mr. Pocker is based on the supposition that promissory notes of this kind must be taken to have matured on the date on which they are executed. The date on which limitation would start in regard to these notes could not be a safe guide to come to a conclusion that even for this purpose they should be presumed to have matured on the date on which they were executed. There is nothing in the Negotiable Instruments Act which would warrant such a conclusion. On the contrary, the ordinary presumption under Section 118(d) of the Negotiable Instruments Act is that every transfer of a Negotiable Instrument was made before its maturity and there is no reason why this presumption should not be extended to promissory notes which are payable on demand. I am therefore of the opinion, that for this purpose a promissory note which is payable on demand cannot be regarded as having matured on the date on which it came into existence. The dale of its maturity would, I feel, depend upon the circumstances of each case. In tlie case of such a promissory note, as has been mentioned above; one of the safe guides would be to ascertain if a demand had been made and refused. The length of the time for which the prbrhissory note has not been paid would also be a relevant factor in order to ascertain if the promissory note was a stale one. If it has been in the hands of the holder for an unreasonable length of time, the transferee may be considered to be put1 on; enquiry, but if there is nothing which may give any legitimate cause for suspicion, the ordinary presumption referred to above would have to be raised in his favour. The date of the execution of the promissory note in suit and the date of its transfer to the plaintiff are therefore material and it is highly improbable that the plaintiff could suspect that during an interval of sixteen days, which had passed between the date of the execution of the promissory note and its transfer to the plaintiff, a demand was made by his assignee and refused by the defendant. I would therefore hold that the promissory note in suit could not be considered to have matured on, the date on which it was transferred to the plaintiff.