Alagappa Chetty vs Alagappa Chettiar and Another

The suit in which this second appeal has arisen was instituted by the endorsee of a hundi in order to enforce the payment of the hundi. The case

is pressed Only against the second defendant who is the endorser. The hundi itself is not forthcoming but the defendant in his written statement

admitted that such a hundi had been issued, but that it was made payable to bearer on demand and as such it was an invalid document by virtue of

Section 26 of the paper Currency Act. That section is absolutely clear and there can be no doubt that it applies to a hundi of this character. The

point is settled by a ruling of this Court in Chidambaram Chettiar v. Ayyasami Thevan 3 Ind. Cas. 74 . But it was argued by Mr. Anantba krishna

Aijar, that the endorser is estopped from denying the validity of his instrument. The authority for the proposition is an observation of one of the

learned Judges in Arunachalam Chettiar v. Narayanan Chettia 51 Ind. Cas. 300 That observation is purely by way of obiter and no authority is

cited in support of the proposition. It is well established that there can be no estoppel against a clear injunction of a statute. If we were to accept

the contention of the appellant, we should be virtually abrogating Section 26 of the Paper Currency Act which prohibits altogether the issue of any

document like this except in the case set out in the proviso.

Mr. Anantbakrishna Aiyar also argued that the endorser second defendant ought to be treated as a banker, apparently on the ground that the

hundi was drawn on him and he endorsed it to somebody else. There is no basis for this suggestion.

The second appeal is dismissed with costs of the first respondent)