JANG BAHADUR SINGH Vs. CHANDER BALI SINGH

JUDGEMENT

(1.) This is a civil revision by a plaintiff against a decree of the Small Cause Court dismissing his suit. On 1 July 1933 a promissory note was executed by defendant 1, Chander Bali Singh, in favour of defendant 2, Ranbaj Singh, purporting to be for Rs. 200 in cash. On 14 February 1936 defendant 2 executed a sale deed of this promissory note in favour of the plaintiff but no endorsement was made by defendant 2 in favour of plaintiff on 4ho back of the note and no endorsement of any kind. The defence was as follows : Ranbaj Singh has a daughter, Mt. Phulbasi Kunwar, who was married to the brother of defendant 1 and the brother is apparently dead. There are two daughters, issues of this marriage. A suit was brought by Mt. Phulbasi Kunwar for maintenance against defendant 1 and a compromise was executed in that suit by which defendant 1 agreed to maintain Mt. Phulbasi Kunwar. It is found, and is common ground that 1, or 8 days before this compromise the promissory note in suit was executed by defendant 1 in favour of defendant 2. The case for defendant 1 was that he executed this promissory note not for any cash consideration but as security that he would carry out the compromise of maintenance of Mt Phulbasi Kunwar and the compromise agreeing to meet the expenses of the marriages of her two daughters. The Court below has found that this defence is correct and that the promissory note in suit was not executed for any cash consideration but was merely executed as security. The Court therefore dismissed the suit of the plaintiff. In revision the ground is taken that plaintiff was a holder in due course and was entitled to a decree even if the promissory note was without consideration. This argument is based on the provisions of Section 43, Negotiable Instruments Act, 26 of 1881. That Section provides as follows: A negotiable instrument made, drawn, accepted indorsed or transferred without consideration, or for a consideration which fails, creates no obligation of payment between the parties to the transaction. But if any such party has transferred the instrument with or without indorsement to a holder for consideration, such holder, and every subsequent holder deriving title from him, may recover the amount due on such instrument from the transferor for consideration or any prior party thereto.

(2.) The question arises whether it can be said that the plaintiff is a holder for consideration. Learned Counsel relies on Section 8. In Section 8 it is laid down as follows: The holder of a promissory note, bill of exchange or cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. Where the note, bill or cheque is lost or destroyed its holder is the person so entitled at the time of such loss or destruction.

(3.) But this Section merely states what are the rights of a holder and does not tell us how a holder comes into existence. For the creation of a holder we must refer to Secs.14 and 15 which provide as follows: Section 14. When a promissory note, bill of exchange, or cheque is transferred to any person, SO as to constitute that person the holder thereof, the instrument is said to be negotiated. Sction 15, When the maker or holder of a negotiable instrument signs the same otherwise than as such maker for the purpose of negotiation, on the back or face thereof, or on a slip of paper annexed thereto, or so signs for the same purpose ;t damped paper intended to be completed as a negotiable instrument, he is said to indorse the mime, and is called the indorser.