Patna High Court
Awadhbihari Singh And Ors. vs Sheoshankar Pandey on 27 August, 1954
Equivalent citations: AIR1955PAT451, AIR 1955 PATNA 451
Author: Chief Justice
Bench: Chief Justice
JUDGMENT Narayan, J.
1. The appeals and the Civil Revision have been heard together, because they raise common questions of law and fact. The Civil Revision is directed, against the decision of the Small Cause Court Judge, Arrah, made in Small Cause Court Suit No. 9/9 of 1951. The plaintiff Sheoshankar Pandey had sued the defendant Padumdeo Narayan Singh on the basis of a handnote dated 22-6-1950 alleged to have been executed by the defendant in his favour on a cash advance of Rs. 400/-.
The suits giving rise to the Second Appeals had also been instituted by the same Sheoshankur Pandey against Awadhbihari Singh and Balbhadra Singh, the brothers of Padumduo Narayan Singh (the defendant in Small Cause Court suit No. 9/9 of 1951) on the basis of handnotes executed on the same date on which Padumdeo had executed the handnote which was the basis of the claim against him. In these two suits also the plaintiff had alleged that on 22-6-1950 the handnotes were executed in his favour by the defendants after cash advances made by him.
In each of these two suits the claim was based on three handnotes, each of Rs. 400, executed by the defendants in favour of the plaintiff.
2. The defence substantially was that there had been no cash advance by the plaintiff 10 any of the defendants and, no handnote had been executed in his favour. According to the allegation of the defendants, the three brothers, Awadhbihari, Balbhadra and Padumdeo who are the members of a joint Hindu family, had purchased certain properties from one Ramasis Singh under a sale-deed dated 14-6-1950 for Rs. 14,000/-.
This sale-deed was registered on 21-6-1950, and out of the consideration Rs. 10,500 was to be paid in cash and Rs. 3,500 had to be left in deposit with the vendees for payment of certain prior encumbrances. The vendees were, however, notable to pay the entire amount of Rs. 10,500 and after having paid Rs. 7,700 they executed 7 handnotes of Rs. 400 each in favour of Ramasis. Three of the handnotes are by Awadhbihari, three by Balbhadra and one by Padumdeo.
It was further alleged by the defendants that when, they made over these handnotes to Ramasis the body of the handnotes had not been filled up, though it now appears that the body of the handnotes has been written out describing the plaintiff therein as the beneficiary.
3. The learned Small Cause Court Judge rejected his defence entirely and holding that there had been a cash advance by the plaintiff he decreed the Small Cause Court suit in full.
In the Money Suits the learned Munsif accepted the defence and came to the finding that there had been no transaction between the plaintiff and the defendants and that the handnotes had been executed in favour of Ramasis for the unpaid consideration money.
The learned Munsif was of opinion that even on the basis of the provisions contained in the Negotiable Instruments Act the plaintiff was not entitled to a decree in these two suits. In the result he dismissed the suits, and the plaintiff had to file appeals before the District Judge of Shahabad. The appeals were heard by the 2nd Additional Subordinate Judge, Arrah, who while agreeing with the learned Munsif in his finding that the handnotes had really been executed by the defendant in lieu of the unpaid consideration money held that the plaintiff being the holder of the instruments was entitled to a decree.
4. The defendants of the two Money Suits have, therefore, preferred these appeals, and the defendant of the Small Cause Court suit has filed this application in Civil Revision.
5. In my opinion, the appeals as well as the Civil Revision are absolutely without any merit, the question of law arising in this case and canvassed in the Courts below having been finally determined by authoritative decisions of this Court and other Courts. It is now a very well settled proposition of law that it is the holder of the promissory note who alone is entitled to maintain a suit on the note for the recovery of the money due thereon and that a true owner who is not a holder cannot maintain a suit on a promissory note even though the holder is his benamidar.
This is the conclusion which follows after a consideration of the relevant provisions of the Negotiable Instruments Act and, especially, Sections 8, 32 and 78.
According to Section 8, the "holder" of a promissory note 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. Section 32 lays down that in the absence of a contract to the contrary, the maker of a promissory note and the accepter before maturity of a bill of exchange are bound to pay the amount thereof at maturity, according to the apparent tenor of the note of acceptance respectively.
Section 78 is in stringent terms and says that subject to the provision ot Section 82, Clause (c), payment of the amount due on a promissory note, bill of exchange or cheque must in order to discharge the maker or acceptor, be made to the holder of the instrument. Section 82(c) says that the maker, acceptor or indorser respectively of a negotiable instrument is discharged from liability thereon to all parties thereto, if the instrument is payable to bearer, or has been indorsed in blank, and such maker, acceptor or indorser makes payment in due course of the amount due thereon.
In view of what is contained in Section 78 it is manifest that it is the holder of the promissory note who alone will be entitled to maintain a suit on the note, and we have, therefore, now a catena of authorities which lay down this Deposition.
The point was considered by the Calcutta High Court in -- 'Harkishore Barua v. Gura Mia Chaudhuri', AIR 1931 Cal 387 (A), and in that case it was held that a true owner who was not the holder could not maintain a suit on a promissory note even though the holder was admittedly his benamidar, and was made a party to the suit.
This ruling was referred to with approval by a Bench of this Court in a recent decision, --
'Sarjoo Prasad v. Smt. Rampayari Debi', AIR 1950 Pat 493 (B).
With the greatest respect for the arguments advanced before us by Mr. Kailash Rai, the counsel for the appellants and the petitioner, I should like to point out that these handnotes which are certainly negotiable instruments were never actually negotiated. The handnotes were executed in favour of the plaintiff or if only the execution portion was written by the executants and the body was written later on, even then under Section 20, Negotiable Instruments Act, it was open to the holder of the instrument to complete the document by writing the body of it.
The decision of this court in -- 'Hridaysingh v. Kailash Singh', AIR 1940 Pat 377 (C) is a Bench decision which lays down after a consideration of the previous authorities on the subject that the holder of a blank but stamped and duly signed paper described as a handnote by the drawer in his own handwriting can convert it into a negotiable instrument payable to any specified person and not necessarily to himself.
In this case their Lordships cited certain very important observations made in English cases, and because of the submissions made before us by the learned counsel for the appellants I should like to intention in this judgment also the following quotations:
"Lord Ellenborough C.J. in -- 'Cruchely v, Clarance', (1813) 2 M & S 90 (D) disposed of this defence in the following words:
As the defendant has chosen to send the bill into the world in this forms the world ought not to be deceived by his acts. The defendant by leaving the blank undertook to be answerable for it when filled up in the shape of a bill."
Bayley J. said:
"The signing the bill in blank without the name of the payee was an authority to a bona fide holder to insert the name. Twomey J. in -- 'M. N. P.L. Firm v. Kirwan Gyan', 17 Ind Cas 915 (E) also held that a payee can fill in a blank inchoate instrument and sue on it himself after filling it or endorsing it to some one."
This Bench decision was followed by Fazl Ali J. (as he then was) in -- 'Hari Kant Jha v. Nathu Choudliury', AIR 1941 Pat 504. (F), and his Lordship held that Section 20, Negotiable Instruments Act, gives a general authority to a person to whom a stamped and signed paper is delivered to convert it into a negotiable instrument payable to any specified person and that accordingly it is open to a person receiving a blark inchoate instrument to complete it in favour of any person besides himself.
These decisions are binding upon us, and even if it has been found as a fact that the documents had not been completed when they were made over to Ramasis or the plaintiff, the claim as based on these notes cannot be dismissed. As a matter of fact, I am not at all able to agree with the learned counsel for the appellants that the finding of fact in this case is that the documents were incomplete and that only the execution portion of the instruments had been written out on the date which the handnotes bear.
The conclusion at which the learned Subordinate Judge has arrived is expressed by him in these terms:
"In agreement with the learned Munsif I hold that no loan was advanced by the plaintiff to the defendants and that the handnotes were really executed by the defendants in lieu of the unpaid consideration money for the sale deed executed by Ramasis in favour of the defendants which was registered on 21-6-50."
Mr. Rai submitted that on this question the learned Subordinate Judge has accepted the finding of the trial Court and that the finding of the trial Court was that only the execution portion of the document had been written on 22-6-1950. But even in the judgment of the trial Judge I find the following observation:
"On a consideration of the entire evidence and the circumstances discussed above I hold that there had been no dealing between the plaintiff and defendants but there had been transaction between the defendants and Ramasis as stated by the defendants and the defendants executed the handnotes to Ramasis for the unpaid consideration money."
It is true that he has discussed Section 20, Negotiable Instruments Act, but on reading his judgment I am not able to say that in fact his definite finding was to the effect that the handnotes were incomplete when they were passed to the beneficiary or the benamidar. In any view of the case, therefore, the decision of the Courts below does not call for any interference on our part. This Court has also taken the view that if a handnote mentions one kind of consideration but it is found that there is a consideration of a different nature, the suit is not liable to be dismissed for this reason alone. See -- 'Bachamdeo Singh v. Kari Singh', AIR 1936 Pat 498 (G).
In fact, if the position in law is that on a proper construction of the provisions of the Negotiable Instruments Act it is the holder of the note who alone can maintain the claim on the basis of the note, even though he is not the real beneficiary, the present plaintiff who is, according to the findings of fact, a benamidar for the real owner will be entitled to maintain the suit.
6. There are two other points which were faintly raised by Mr. Rai, but I do not think that they deserve any serious consideration. The learned Small Cause Court Judge decreed the claim of Sheoshankar Pandey against Padumdeo Narain Singh on 29-3-1952, and before that the appellate Court had decided the suits filed by Sheoshankar against Awadhbihari and Balbhadra. The learned counsel submitted that the findings of fact which have been arrived at by the learned Subordinate Judge, that is the findings to the effect that the handnotes were really executed by the defendants for unpaid consideration money, should have been taken by the learned Small Cause Court Judge as binding upon him.
I do not think it can be urged with any show of reason that Section 11, Civil P.C. will apply in this case and that the bar of res judicata prevented the Small Cause Court Judge from going into the question of fact again. The claim as made in the two Money Suits, was on handnotes different from the one on which the claim was made in this small cause court suit, and it cannot, therefore, be said that the two litigations were between the same parties or between parties under wkom they or any of them, claimed; nor can it be said that they were litigating under the same title.
In a case like this there cannot also be constructive res judicata, and the decision in -- 'Mrs. Gertrude Oates v. Mrs. Millicent D'Silva', AIR 1933 Pat 78 (H) cited by the learned counsel has got no relevance whatsoever. The other submission of Mr. Rai was that the handnotes should be taken to be a collateral security. There is no reason for holding that the handnotes were collateral security. They were given for the unpaid consideration money, and instead of being executed in favour of Ramasis they were executed in favour of the plaintiff.
7. In the result, therefore, I would dismiss the appeal as well as the Civil Revision with costs. Hearing fee in the Civil Revision Rs. 48/-.
Imam, C.J.
8. I agree.