Hridaysingh vs Kailash Singh and Others

Aarwala, J.—This appeal is by the plaintiff from a decision of the Additional District Judge of Patna reversing a decision of the Munsif. The appeal arises out of a suit on a hand-note dated 12th June 1930, and expressed to be for Rs. 1000. Across the stamps of the hand-note are these words in the handwriting of the defendant, ''Sahi Kailash Singh ek hazar rupaiya qarza leli wo handnote likhdeli se sahi bakalam khas." The case of the defendant was that this endorsement was made by him on a blank piece of paper and was intended to operate as collateral security for a loan advanced by one Shamnandan Prasad Singh to Dhanukdhari Singh, a relation of the plaintiff. The name of the payee in the instrument is that of the plaintiff and not of Shamnandan Prasad Singh. The defence explained this by asserting that when the defendants assigned the instrument it was blank and that Shamnandan Prasad Singh subsequently caused the body of the instrument to be written out and inserted the name of the plaintiff as payee instead of his own. The Court of appeal below has dismissed the plaintiff''s suit holding that the transaction was one between the defendant and Shamnandan Prasad Singh and not between the defendant and the plaintiff.

The effect of assigning a paper stamped in accordance with the law relating to the negotiable instruments is dealt with in Section 20, Negotiable Instruments Act, 1881, which provides that where a person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments, then in force in British India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. It is contended on behalf of the defendant-respondent that this Section does not authorize the person to whom the stamped and signed paper is delivered to insert in it as payee the name of anyone but himself. In this connexion reference was made to Section 4 of the Act which defines a promissory note as an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking signed by the maker to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.

The promissory note in question does, of course, promise to pay the sum mentioned unconditionally to a certain person, namely, the plaintiff, and I can see nothing in that Section which in any way curtails the general authority conferred by Section 20 on the person to whom a stamped and a signed paper is delivered to convert it into a negotiable instrument payable to any specified person. This appears also to be the law in England. In Cruchely v. Clarance (1818) 2 M & S 90 the facts were that a bill of exchange was drawn in Jamaica upon one Henry Man of London leaving a blank for the name of the payee. This bill was negotiated in England by one Vashon who endorsed it to the plaintiff in payment of an old debt. The plaintiff inserted his own name as the payee.

In a suit on the bill the defence was that the plaintiff had no right to insert his own name in the bill. Lord Ellenborough C.J., disposed of this defence in the following words:

As the defendant has chosen to send the bill into the world in this form, the world ought not to be deceived by his acts. The defendant by leaving the blank undertook to be answerable for it when filled up in the shape of a bill.

Bayley J. said:

The signing the bill in blank without the name of the payee was an authority to a bona fide holder to insert the name.

Twomey J., in M.N.P.L. Firm v. Kirwan Gyan (1912) 5 Bur LT 162 also held that

a payee can fill in a blank inchoate instrument and sue on it himself after filling it or endorsing it to some one.

This case was referred to by Dhavle J. in Brijbhusan Pande v. Ramjanam Kuer AIR (1932) Pat 324. Mr. Sarjoo Prasad on behalf of the defendants-respondents contends that u/s 20, Negotiable Instrumerits Act, Shamnandan Prasad Singh must toe taken to have been authorized by the defendant only to execute an instrument of surety for the debt of Dhanukdhari. In my view, the defendant cannot be heard to challenge the authority of Shamnandan Prasad Singh on that particular ground in view of the endorsement which he himself wrote across the stamps on the instrument in which he described the document as a hand-note. He chose to send this instrument into the world in a form showing that the document was a hand-note and therefore he is answerable for it.

Mr. Sarjoo Prasad also referred to two decisions of this Court dealing with the question of the onus of proof in oases where it is admitted or proved that the thumb impression or signature on hand-note is that of the defendant. In Chulhai Lal Das v. Kuldip Singh AIR (1931) Pat 266 it was held that when the execution of a hand-note is admitted, the onus of proof of showing that no consideration passed is thrown entirely on to the defendant. In Ramlakhan Singh v. Gog Singh AIR (1931) Pat 219 it was held that an admission by a defendant regarding the putting of a signature or a thumb mark on a document, while he maintains that the paper when he signed it was blank, is not such an admission of the execution of the document as to throw the burden of proving his case upon him and it is for the plaintiff in such a case to prove primarily the due execution of the document relied upon by him. This case must be distinguished from the present where the defendant in his own handwriting described the document as a hand-note. There is also a decision of a single Judge of this Court in Sahdeo Mauar v. Fulesar Nonia AIR (1930) Pat 598 in which it was held that in a suit on a hand-note where the defendant admits that he put his thumb mark on a blank piece of paper but asserts that it was intended that a kabuliyat should be written out on the paper, the burden of proof lies on the defence to explain how the handnote bearing the defendant''s thumb impression came into existence.

For the reasons which I have given above I would hold that on the facts of this case the defendant is not entitled to deny that the document is a hand-note and the onus of proof does not lie on the plaintiff in such a case.

As in my view the instrument with which we are concerned is a negotiable instrument it is not open to the defendant to plead that the holder of the note, namely the payee, is not the person entitled to recover on it, that is to say the defendant cannot plead that the person to whom the money is due is not the plaintiff, who is the specified payee Shamnandan Prasad Singh, (Subha Narayan Vathiyar v. Bamaswami Aiyar (1907) 80 Mad 88. Kulwant Sahay, J. sitting singly, disagreed with this decision in Sarjug Singh v. Deo Saran Singh AIR (1980) Pat 313 but the decision of Kulwant Sahay, J. was disapproved by a Division Bench in Pearey Pasi v. Gauri Lal AIR (1934) Pat 882. Although this last mentioned Case has been overruled on another point by the Full Bench in Ghanshyam Das v. Ragho Sahu AIR (1987) Pat 100 it is still good authority for the view that the decision in Sarjug Singh v. Deo Saran Singh AIR (1980) Pat 313 is not good law. In the result I would allow the appeal of the plaintiff and restore the decision of the Munsif. The plaintiff will have his costs throughout. The defendant in the present suit also pleaded that he had made certain payments to Shamnandan Prasad Singh in respect of the amount for which he is now sued. In a suit by the payee of a hand-note against the drawer the defence that payments have been made to some one who is not the payee cannot be taken into consideration : see Section 78, Negotiable Instruments Act. We are therefore not concerned with the truth of the defendant''s allegations regarding these payments.

Rowland, J.

I agree.