Chidambara Pathar vs K.R. Mani Asari

M. Chockalingam, J.—This second appeal is directed against the judgment of the learned II Additional District Judge, Tiruchirapalli, made in

A. S. No. 79 of 1992, affirming the Judgment of the trial Court dismissing a suit on a promissory note.

The appellant, as plaintiff filed the suit for recovery of money, based on an assignment, made in his favour by the promisee of Ex.A1 promissory

note. According to the plaintiff, the defendant executed Ex. A1 promissory note on 22-11-1986 in favour of the assignor, in consideration of Rs.

10,000/-, agreeing to pay the principal along with interest at 12% per annum, and the promisee under the promissory note one Shanmugam made

an assignment on 27-7-1987 in favour of the plaintiff, and despite many a demand, no response was forthcoming, and hence, the suit for recovery

of money.

The suit was resisted by the respondent/defendant stating that there was no consideration for the promissory note; that there was no occasion

for the defendant to borrow any amount from one Shanmugam; that it was a bond executed in favour of Shanmugam, whereby the third parties

were sent to foreign countries, and the defendant stood by way of surety; that no consideration passed that time, and hence, the suit was to be

dismissed.

The trial Court framed the necessary issues, tried the suit and dismissed the same. An appeal at the instance of the plaintiff also met the same

fate. Hence, this second appeal at the instance of the plaintiff.

At the time of admission, the following substantial question of law was formulated by this Court:

Whether the Courts below are right in dismissing the suit on the ground that the plaintiff is not a holder in due course or endorsee for collection

after holding that the pronote is genuine and supported by consideration?

This Court heard the learned counsel for the appellant and also the learned counsel for the respondent on those contentions.

This Court is unable to see any merit in this second appeal.

Both the Courts below have recorded a concurrent finding that Ex. A1 promissory note was executed by the defendant in favour of the said

Shanmugam, and it was supported by consideration. But, both the Courts have disagreed with the plaintiffs case, by stating that there was no

proper assignment in the eye of law and found that there was no passing of consideration, as found in the document, for the assignment in question,

and taking into consideration the evidence, adduced and the recitals, found in the document, the transfer lacks good faith, and hence, the suit could

not be decreed. The learned counsel for the appellant with vigour and vehemence would submit that both the Courts have taken an erroneous

view; that there was a proper transfer in good faith; that it is true that the transfer must be supported by consideration; that it is not required in law

that the recital as to the assignment, should also speak about the payment of consideration by the assignee to the assignor; that both the assignor

and the assignee, examined on the side of the plaintiff, have clearly spoken to the fact that there was a consideration that passed, and hence, the

views taken by both the Courts, have got to be set aside, and a decree be granted in favour of the appellant. Section 9 of the Negotiable

Instruments Act defines ""holder in due course"" as the person, who for consideration becomes the possessor of a promissory note, bill of exchange

or a cheque payable to the bearer. Needless to say that the holder in due course means (1) He must be a holder for consideration; (2) The

instrument must have been transferred to him before it became payable; and (3) He must be a transferee in good faith. In the instant case, a perusal

of Ex. A2, the assignment, does not speak about the passing of the consideration.

As rightly pointed out by the learned counsel for the appellant, the law does not require that it should be specifically stated as to what was the

actual consideration and whether the consideration also passed. It is true that there has been an assignment. Both the witnesses, examined on the

side of the plaintiff, have spoken to the fact that consideration had passed from the hands of the assignee to the assignor, which resulted in the

assignment. Needless to say, in cases like this, a duty is cast upon the plaintiff to show that the transfer was made in good faith. Now, at this

juncture, it becomes necessary to look into the pleadings, put forth before the trial Court by the plaintiff. What are all stated in the plaint Is as

follows :

(Vernacular matter omitted...... Ed.)

But, it does not whisper about the passing of the consideration, and thus, the pleading lacks in that regard. The Court is of the view that any

amount of evidence that was marched before the trial Court, was of no use, and thus, it would cast a doubt as to the good faith, as required by

law. Hence, both the Courts below were perfectly correct in rejecting the case of the plaintiff. There is nothing to interfere in the concurrent

findings, recorded by both the Courts. 10, For the foregoing reasons, this second appeal fails, and the same is dismissed, confirming the Judgments

and decrees of the lower Courts and leaving the parties to bear their costs.