Jagannadha Reddiar vs Lakshmana Reddiar

Ramesam, J.—This revision petition arises out of a suit on a negotiable promissory-note (dated 24th December, 1915) payable on demand

by the endorsee of the note against the maker (1st defendant) and the endorser (2nd defendant). The Subordinate Judge gave a decree against

both the defendants.

The 2nd defendant filed this petition. In his written statement, he raised the question of limitation. The second point for determination stated by

the Subordinate Judge is whether the 2nd defendant is liable. I presume that it was intended to include the question of limitation also, though the

Subordinate Judge has not discussed it.

The liability of the 2nd defendant arises out of the indorsement and not on the note. The cause of action against him cannot arise earlier than the

indorsement (dated 19th March, 1918). A payment of one rupee by the 1st defendant was endorsed on it and signed by the 1st defendant on 20th

December, 1918. This saves limitation as against persons liable on the note and has nothing to do with persons liable on the indorsement. The suit

is filed on 20th December, 1921. If the cause of action arises before 20th December, 1918, the suit is barred by limitation.

The extent and nature of the liability of the endorser of note payable on demand is not governed by Section 35 of the Negotiable Instruments

Act. We have to deal with the case of a note payable on demand which has been negotiated by indorsement before it is overdue and has been

dishonoured. Sivaramakrishna Pattar v. Moideen Musaliar (1909) ILR 33 M 34 : 1909 19 MLJ 509. According to Section 86 of the Bills of

Exchange Act "" Where a note payable on demand has been indorsed, it must be presented for payment within a reasonable time of the

indorsement. If it is not presented, the endorser is discharged."" The law in India must be, by analogy, (1) to the same effect, or (2) subject to a

contract to the contrary, or (3) the indorser is not liable at all. Taking the most lenient view in favour of the plaintiff, in this case, the note can be

regarded as presented for payment only on 20th December, 1918, when one rupee was paid by the 1st defendant and not earlier. It cannot be

said that it was presented within a reasonable time after the indorsement. I do not think it should be in the option of the indorsee by waiting for an

unreasonable length of time to postpone the cause of action as he likes. Notice of dishonour is also necessary as a condition precedent to the

liability of the 2nd defendant, (Section 93) and it also ought to be sent within a reasonable time. (See Section 94 and Sections 105 and 106 of the

Negotiable Instruments Act). It is admitted that the notice of dishonour was given to the 2nd defendant only just before suit. The plaintiff cannot be

in a better position than if he presented the note for payment within a reasonable time after indorsement and gave notice of dishonour within a

reasonable time after dishonour.

I find the suit is barred by limitation as against the 2nd defendant and I doubt if he is liable at all. The Revision Petition is allowed and the suit is

dismissed with costs throughout against the 2nd defendant. The decree against the 1st defendant will stand.