Nataraja Naicken vs Ayyasawmi Pillai and Another

The 1st defendant, the younger brother of the 2nd defendant with 3 other persons executed a pro-note to a third person. The major portion of

the debt was borrowed by the 1st defendant. This borrowing is found by the court of First Instance, and by Mr. Justice Coutts Trotter, to have

been made on behalf of and for the benefit of the joint family of the two defendants. We accept this conclusion. On this pro-note, the four

executants were sued: after decree the 1st defendant arranged with the plaintiff''s assignor that the decree should be satisfied by the latter; and as

consideration therefor, executed Ex. A the plaint note. The note was endorsed to one Vaithia-natha Aiyar who in turn endorsed it over to the

plaintiff. Plaintiff seeks to make the 2nd defendant liable on the ground that the debt was borrowed for family purposes. A number of contentions

were raised before us by Mr. Gopalaswami Mudaliar : we shall deal with the minor ones first. There is no authority for the proposition that the

promisee should not only lend for the benefit of the family, but that he should also see that the loan was applied for purposes binding on the family.

On the other hand Raghunathji Tarachand v. The Bank of Bombay ILR (1910) B. 72 is against that contention.

The burden of proof u/s 50 of the Negotiable Instruments Act, is on the promisor to show that a reservation of rights on a transfer was made by

express words. It was apparently not argued in the first Court, that the endorsement in this case restricts the endorsee to enforcing his rights only

against the person of the maker of the note. And certainly no issue was taken on the question. On reading the endorsement, we are satisfied that it

was not in the contemplation of the parties to the endorsement, that the endorsee should not have all the rights of the endorser.

The main question relates to the rights of the endorsee. It was contended by the learned Vakil for the appellant, that although u/s 130 of the

Transfer of Property Act, an assignment might convey to the assignee all the rights which the assignor had, an endorsement would confer only the

right of suing the promisor personally : we are unable to accept this contention. It is true that this proposition receives support from the judgment in

Seetharama Chetty v. Seshiah Chetty (1912) M.W.N. 1011. But we agree with Mr. Justice Coutts Trotter, that this decision is opposed to the

previous decisions of this Court, and is not justifiable on principle. The judgment does not give any reasons for the conclusion come to, and we are

not prepared to follow it.

Section 50 of the Negotiable Instruments Act says that property in the note passes by endorsement. This can only mean that the endorsee

stands in the shoes of the endorser, unless apt language is used to reserve to himself any specified rights.

As pointed out by Mr. Venkatarama Sastriar, Vakil for the respondent, the general rule is, that a transfer, whether it be by way of assignment,

passes all the interest which the transferor is capable of passing in the property, (Section 8 of the Transfer of Property Act) and we see no reason

for not applying that principle to Negotiable Instruments.

It was contended that the-liability of the Hindu family is not on the note, but on the debt. True; the transaction is one and the same whether, the

plaintiff is restricted in enforcing it to seeking his remedy against the person of the maker, or whether his right is enlarged by reason of the fact that

the maker is a member of a joint Hindu family and borrowed the debt for the benefit of the family. The contrary view would lead to extraordinary

results. There may be one suit on the note against the maker personally and another against the family members on the Hindu Law liability. We see

no reason for adopting a view which would lead to such an anomaly.

It was pointed out by Shephard, J. in Krishna Aiyar v. Krishnaswami Aiyar ILR (1900) M. 597 that even under the English Law a promissory-

note by a married woman would subject the husband to liability. The Married Woman''s Property Act only restricted the liability to the assets.

Similarly, under the Hindu Law, the liability of the other members is limited to the joint family property. We think Krishna Aiyar v. Krishnaswami

Aiyar ILR (1900) M. 597 is decisive on the question argued before us. The same view was taken in Ragunathji Tarachand v. The Bank of

Bombay ILR (1910) B. 72 and in Sanka Krishna Murthi, by guardian ad litem Sriram Lakshmikantham Vs. The Bank of Burmah, Limited, . In the

two latter cases, on a suit by the endorsee, it was held, that the coparceners were liable. Certain observations of Mr. Justice Srinivasa Aiyangar in

M.R.P.R.S. Shanmuganatha Chettiar and Others Vs. K. Srinivasa Aiyar and K. Subba Rao, were relied on. The observations were purely obiter,

and the learned Judge himself expresses no definite opinion on the question. As regards Thaith Ottathil Kutte Ammu Vs. Purushotam Doss Raggi

Seth, it is enough to point out that the Judicial Committee have held in Karmali Abdulla v. Karinji Jivanji ILR (1915) B. 261 : 28 M.L.J. 515, that

on a note by one of the partners, the others would be liable in so far as the operation was natural to the partnership and for the partnership. The

same observation would mutatis, mutandis apply to the present case. Having regard to this pronouncement of the Judicial Committee Thaith

Ottathil Kutte Ammu Vs. Purushotam Doss Raggi Seth, can no longer be regarded as good law. In Somasundaram v. Krishnamurthi (1907) 17

M.L.J. 126, no question of the money having been used for partnership purposes was raised or decided.

We are of opinion that Mr. Justice Courts Trotter is right in holding that the 2nd defendant is liable on the note executed by his younger brother.

The appeal fails and is dismissed with costs.