Chinnakuzhandai Ammal vs Kuzhandai Veerasami Mudaliar and Another

Pakenham Walsh, J.—In this case the plaintiff sued on a promissory note executed by the first defendant in favour of the second defendant.

The plaintiff''s claim was that the promissory note was executed in favour of the second defendant benami for herself. The trial Court dismissed the

suit as not maintainable, and against this order of dismissal the present Revision Petition has been filed.

No direct authority of this Court has been quoted to me but there is an obiter remark of a Full Bench in Subba Narayana Vathiar v. Ramaswami

Aiyar ILR (1906) Mad. 88 : 16 M.L.J. 508 which supports the view of the learned District Munsif. That was a suit in which the payee sued the

maker of the note who pleaded that the note had been executed in plaintiff''s favour only benami for one K and that it had been discharged by

payment to the person really interested. It was held by the Bench that evidence to this effect could not be adduced by the defendant. That case is

of course different from the present which comes directly u/s 78 of the Negotiable Instruments Act. The learned Judges in Subba Narayana

Vathiyar v. Ramaswami Aiyar I.L.R.(1906)Mad. 88 : 16 M.L.J. 508 however, proceeded to remark.

We cannot find any English case in which an undisclosed principal has attempted to sue on a negotiable instrument, and we think that the decisions

clearly established that an undisclosed principal could not be sued.

The petitioner relies on a case reported in Brojo Lai Saha Banikya v. Budh Naih Pyarilal and Co. ILR (1927) Cal. 551, but unfortunately the

remarks there are equally obiter. In that case one P.L. who was the holder of a promissory note sued thereon in the name of his firm and it was

held that the names of the four persons who were partners of that firm might be taken to have been specifically stated in the plaint and all of them

might be considered to have joined as plaintiffs, and that there was no objection to the suit merely because the plaintiff had joined the other

partners with him. Ghose, J. at page 559 observes:

This is sufficient for the purpose of deciding the case. But I think it is right that I should express my opinion with regard to the point which has been

dealt with by the Subordinate Judge, as the question has been very elaborately argued by the learned Advocates on both sides.

Turning to page 555 we find that the point dealt with by the learned Judge was whether the true owner of the money can also maintain the suit

and he answered it in the affirmative. Ghose, J. then proceeds to consider this question and disagrees with the view taken in Subba Narayana

Vathiyar v. Ramaswami Aiyar ILR (1906) Mad. 88 : 16 M.L.J. 508 . But it may be noted that he does not go further than this position which he

states at page 562:

I have already stated it will do no harm to anybody, if the real owner is held to be entitled to sue if he is capable of giving a good discharge to the

debtor from the holder of the instrument. In the present case, the holder of the instrument, Puarilal Das, has given evidence that the money belongs

to all the members of the firm, and it has been found that the defendant was aware of it. He was willing to give a discharge to the defendant.

In the case before me it is admitted that the plaintiff is not capable of giving a discharge to the first defendant the maker of the promissory note

but the argument is that she could give a discharge by bringing the payee into Court along with the first defendant and getting an order from the

Court. So that even the obiter remarks in Brojo Lai Saha Banikya v. Budh Nath Pyarilal anf Co. I.L.R.(1927) Cal. 551 do not go as far as the

present petitioner requires the Court to proceed.

There is one case of a single Judge in Sarjug Singh Vs. Deosaran Singh and Another, which does go to this length. The only difference between

that case and the present is that in that case the payee whose name appeared in the promissory note admitted the plaintiff''s claim whereas in this

present case he contests the claim. If the principle contended for by the petitioner is correct, this ought to make no difference, but it would on

general principles seem obviously unfair that the maker of a pro-note should be dragged into Court on account of a quarrel between the payee

named in the promissory note and some other person whose name was undisclosed at the time and of whom the maker knew nothing. This

consideration indicates to my mind that the view in Sarjug Singh Vs. Deosaran Singh and Another, is unsound.

As regards the Calcutta case (which does not go far enough for the Petitioner) apart from the fact that I should prefer to follow the obiter

remarks of a Full Bench of this Court rather than the obiter remarks of a divisional Bench of the Calcutta High Court I apprehend that there is a

very clear reason for not allowing a suit of this sort to be maintained, though it is a reason which might not apply to the obiter remarks in the Brojo

Lai Saha Banikya v. Budh Nath Pyarilal and Co. ILR (1927)Cal. 551 It is this, that what is a good defence to a claim made outside the Court

cannot become a bad defence by bringing the defendant into Court and adding another defendant. Here if the plaintiff had demanded the money

from the first defendant out of Court, the latter would undoubtedly have had a perfectly good defence by quoting Section 78 of the Negotiable

Instruments Act, and even on the view taken in the Calcutta case, as the plaintiff could not have given first defendant a discharge the plaintiff had no

cause of action against him. I fail to see how a defence which is perfectly valid if a party is not brought into Court ceases to be valid the moment

the party is brought into Court.

A very similar position arises as regards the right of a person to sue on a contract to which he is not a party. B contracts to pay A a certain sum

and subsequently C contracts with B to pay A, A not being privy to the latter contract. There was at one time a decision of this Court that A could

sue C on the latter contract by joining B as a co-defendant, one reason given being that all the parties being before the Court it could do justice

and such a course would avoid multiplicity of suits. That view has since been abanondoned and Tweddle v. Atkinson (1861) 1 B. and S. 393 :

121 E.R. 762 is conclusive that a party cannot sue on a contract to which he himself is not a party unless he is actually privy to the contract, i.e.,

unless the parties made it with the intention of making him a party to it. The reason for not allowing a person to sue on a contract to which he is not

a party applies in the present case. If A sues C on a contract between B and C to which A is not a party, it is undoubtedly a perfect defence for C

to state that A is not a party to the contract and that defence being good, it cannot cease to be so by bringing C into Court along with B.

For these reasons I hold that the lower Court''s decision is correct and there is no reason for me to interfere in revision.

The petition fails and is dismissed.