Alapati Venkata Krishniah vs Vemuri Manikyarau

Rajamannar, J.—The petitioner instituted a suit in the Court of the Subordinate Judge of Tenali to recover the principal and interest due on a

promissory note, dated 7th January, 1944, executed by the first defendant in favour of the second defendant and transferred to him for

consideration on 27th March, 1944. The third defendant is the son of the first defendant and the fourth defendant is the son of the second

defendant. The lower Court granted a decree to the plaintiff against his transferor, the second defendant, and his son, the fourth defendant, but

dismissed the suit against the first defendant, the third defendant having died before the suit. The petitioner seeks to revise the decree of the lower

Court in so far as it dismissed his suit against the first defendant, the maker of the promissory note.

The defence of the first defendant was that he had made payment of the entire amount of principal and interest due under the promissory note to

the second defendant and obtained a receipt, Ex. D-1 dated 19th May, 1944. Aware of the infirmity of his case that the alleged payment could not

have been endorsed on the promissory note and the promissory note itself was not returned to him, the first defendant alleged that the promissory

note was not available at the time to be delivered to him.

The learned Subordinate Judge held that the first defendant made the payment to the second defendant in accordance with Ex. D-1. The first

ground on which he held against the plaintiff so far as the first defendant was concerned, was that the plaintiff had not made a presentment of the

promissory note within a reasonable time. He referred to Sections 10, 74, 78, 82, 105 and 118 of the Negotiable Instruments Act. It is regrettable

that he failed, however, to refer to the only relevant section, namely, Section 64 of the Act, in which it is provided by the exception that:

Where a promissory note is payable on demand and is not payable at a specified place, no presentment is necessary in order to charge the maker

thereof.

Mr. K. Kotayya, the learned advocate for the first defendant-respondent, quite properly did not support the learned Subordinate Judge on this

point.

The other ground which, however, is not very clearly expressed but which has been developed by Mr. K. Kotayya in his argument before me is

that the plaintiff did not give notice of the assignment in his favour to the first defendant within a reasonable time. Actually, such notice was issued

by him on 19th February, 1945, nearly a year after the assignment in his favour. It was contended by Mr. K. Kotayya for him that between two

innocent parties like the plaintiff and the first defendant, the person who has enabled the other to sustain loss should bear it. According to him, the

loss sustained by the plaintiff was due to his negligence in not issuing a notice. I completely fail to see any negligence on the part of the plaintiff in

this case. He obtained a transfer towards the end of March, 1944. According to the first defendant, the payment by him was on 19th May, 1944,

less than two months of the transfer. Unless there is anything in law which males it incumbent on a transferee to issue a notice forthwith after the

date of the assignment, I cannot follow the argument that the plaintiff can be denied his right as a holder in due course, because he did not issue a

notice before the date on which the first defendant is alleged to have made the payment under Ex. D-1. There can be no rule of thumb to find out

what is a reasonable time within which the plaintiff should have intimated to the maker of the fact of the assignment. But there is certainly negligence

on the part of the first defendant. When he made the payment, it is clear that the promisee was unable to produce the promissory note and make

an endorsement of payment and even deliver it up to him cancelled. u/s 81 of the Negotiable Instruments Act, the first defendant was before

payment entitled to have the promissory note shown to him and on payment entitled to have it delivered up to him, or (as is now alleged by him), if

the instrument cannot be found, to be indemnified against any further claim thereon against him. This is what he should have done and if he did not

act as indicated in the section, he has to blame himself. In any event, his ultimate claim must be only against the promisee whom he had paid and he

cannot be allowed to plead any defence to an action by a holder in due course. The decision in Gopalan v. Lakshminarasamma ILR (1940) Mad.

382 on which Mr. M.S. Ramachandra Rao, the learned advocate for the petitioner, relies, is directly in point and the principle laid down therein,

when applied to the present case, will be a complete answer to the plea of the first defendant.

Mr. K. Kotayya suggested that a decree may be given against the second defendant in the first instance, and a decree against his client, the first

defendant, only in the alternative. There is no ground on which I can pass such a decree. In fact, the usual decree to be passed in a case like the

present is a decree primarily against the maker of the note, that is, the first defendant, and a decree against the second defendant only in the

alternative. The decree of the lower Court dismissing the suit against the first defendant is hereby set aside and there will be a decree with costs for

the amount found payable to the plaintiff against the first defendant also.

The civil revision petition is allowed with costs.