Anathabandhu Sahu vs Babu Lal

Chatterji, J.—This is an application for revision of a decree passed in a Small Cause Court suit. The suit was brought by Babu Lal, minor through his father and guardian Chunilal Josi for recovery of Rs. 64-2-11 due on khata accounts and Rs. 133 due on a handnote. The handnote was executed by defendant 1 in favour of the plaintiff''s father Chunilal Josi. Defendant 1 is the karta of the joint family consisting of himself and defendants 2 and 3, and these two defendants were impleaded as being benefited by the transactions sued upon.

The suit was contested by defendant 1 on various grounds, one of them being that the handnote in suit not being in favour of the plaintiff, he had no right to sue. The learned Small Cause Court Judge, overruling all the defences, decreed the suit on contest against defendant 1 and ex parte as against defendants 2 and 3. Defendant 1 has presented this application for revision against that decree. The point raised on behalf of the petitioner is that the plaintiff has no right to maintain the suit so far as it is based on the handnote, because the handnote is not in his favour. Reliance is placed on Section 78, Negotiable Instruments Act, and also on certain observations in Ghanshyam Das Marwari Vs. Ragho Sahu and Others, a case decided by a Special Bench of this Court. Section 78, Negotiable Instruments Act, runs thus:

Subject to the provisions of 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.

The object of this Section is obviously to secure a valid discharge to the maker or acceptor of the instrument. It has accordingly been held in some cases that none but the holder of a promissory note is entitled to sue to recover the money due on it. But Section 78 does not mean that where the suit on the promissory note is brought not by its ostensible holder but by the real beneficiary and the ostensible holder is a party to the suit and in his presence it is proved that the plaintiff is the real beneficiary, the suit shall still be held to be not maintainable. Such a suit has been held to be maintainable in several cases of this Court, Sarjug Singh v. Deosaran Singh AIR 1930 Pat. 313, Surajram Prasad v. Sadanand Misra AIR 1932 Pat. 346 and Ramnagina Prashad v. Biswanath Prasad AIR 1934 Pat. 85. In each of these cases the ostensible holder was impleaded as a defendant and it was expressly stated in the plaint that the plaintiff was the real beneficiary.

In the present case the position is much stronger. The ostensible holder is not only the next friend of the minor plaintiff, but he comes on behalf of the plaintiff and deposes that the money due on the handnote belongs to the plaintiff. To hold that u/s 78, Negotiable Instruments Act, the present suit is not maintainable will be sacrificing the spirit of the Section to its form. The observation in Ghanshyam Das Marwari Vs. Ragho Sahu and Others, on which reliance is placed is as follows:

There is a current of decisions to the effect that where a handnote is executed in favour of a benamidar, it is not open to the defendant to assert that the holder of the note is not the beneficial owner, Subba Narayana Vathiyar v. Ramaswami Aiyar 30 Mad. 88 and conversely that if a suit is to be based on the handnote, it must be instituted by the holder whose name appears on the note, not by another person who alleged that the original holder is his benamidar and that he is the beneficial owner--Ram Das v. Chhote Lal AIR 1928 Pat. 24 and Harkishore Barua Vs. Gura Mia Chowdhry and Another, .

The actual point for decision before the Special Bench was whether a negotiable instrument can be transferred otherwise than by endorsement and delivery and whether an assignee of a promissory note under a registered instrument has a right to sue upon it in his own name. The above observation is apparently in the nature of an obiter dictum and cannot, therefore, be regarded as overruling the decisions in Sarjug Singh v. Deosaran Singh AIR 1930 Pat. 313, Surajram Prasad v. Sadanand Misra AIR 1932 Pat. 346 and Ramnagina Prashad v. Biswanath Prasad AIR 1934 Pat. 85. These decisions of which the last two are decisions of Division Bench are not even referred to in the Full Bench case. The case in Ram Das v. Chhote Lal AIR 1928 Pat. 24 to which reference is made in the above observation is a decision of a single Judge, and even there the point now under consideration did not arise, because it was conceded that the plaintiff who was not the holder of the handnote sued upon could not maintain the suit under the Negotiable Instruments Act and the actual point for decision was whether the holder of the hand-note who had been impleaded as defendant 2 could on his application be joined as a co-plaintiff after the expiry of the period of limitation. In my opinion the decision of the Court below is correct. The application is, therefore, dismissed with costs.