Palaniappa Chettiar and Others vs Shanmugam Chettiar and Others

Sir John Wallis Kt., C.J.—This is an appeal from a decree of Kumaraswami Sastri, J., in a suit brought by the Plaintiff on a promissory note

executed by the first Defendant describing himself as ''P.R.P.L.S. Hukdar,'' Plaintiff sought to make the first Defendant personally liable on the

note. The first Defendant pleaded that the suit was bad for non-joinder of the other members of the family who as he alleged were also hukdars of

the charity, that it was without consideration and that he was not personally liable. He died after the settlement of issues and the Plaintiff then

brought on the record not only his legal representatives but also the other members of the family to meet the objection of non-joinder and

additional issues were settled as to their liability.

The learned Judge found on the first issue that the promissory note was not without consideration or intended to be inoperative, and we see no

reason to differ from that finding.

The subsequent correspondence clearly shows the note was not intended to be inoperative. As regards consideration the note appears to have

been given in consideration of the Plaintiff''s relinquishment of his claim to a certain village in favour of the family charity. The village was not one of

those expressly dedicated to charity by the family. The Plaintiff''s father had claimed it and the Plaintiff himself had been enforcing his claim to it

with some success in the years preceding the execution of the promissory note. The appeal of Defendants Nos. 3 and 5 to 7 therefore fails and is

dismissed with costs of the Plaintiff.

The learned Judge has given to Plaintiff a decree against the charity properties in the hands of the Defendants Nos. 2 to 15 and the Plaintiff in his

memorandum of objections claimed that the first Defendant was personally liable on the suit note and that he was entitled to a decree against his

sons and grandsons. He asked in the plaint for a personal decree against the first Defendant and at the hearing of the appeal his vakil stated that if

this were granted him, he did not want a decree against the charity properties; Defendant No. 8 and the representatives of the deceased first

Defendant contended that the charity properties alone were liable, and that if this were not so, the other members of the family who had been

joined as Defendants were equally liable with them. The family charity was constituted in 1887 pursuant to exhibit K a letter addressed to the

P.L.R.M, firm at Madras in which it was stated that the family had set apart the three villages named and Rs. 50,000 for charity and the P.L.R.M,

firm were directed to credit Rs. 50,000 separately under the style of P.R.P.L.S. for the charity and carry on dealings separately for the choultry

under that style. The letter went on to say that only P.L. Palaniappa the first Defendant was to supervise the chatram and buildings and that the

P.L.R.M. firm were to honour the hundis drawn by the said person for the said matters and debit the accounts and to correspond with him.

The first Defendant was accordingly provided with a book of blank hundis like a cheque book on one of which he executed the suit hundi on

31st July 1906, ""In consideration of his abandoning his claim to the Seersenthamangalam village in favour of the chatram pay to Murayur

P.L.S.S.''s (the Plaintiff''s) order Rs. 17,000 with Nadappu interest from this date and debit it in P.R.P.L.S.''s account entering the payment."" The

words ''P.R.P.L.S. Hukdar'' were printed at the place for signature which the first Defendant completed by signing his name Palaniappa Chetti.

The instrument satisfies the definition of a bill of exchange in Section 5, and of a cheque in Section 6 of the Negotiable Instruments Act and the

first question is whether the learned Judge was right in holding that the first Defendant, the drawer, was not personally liable.

Under Sections 26 and 27 the drawer binds himself by drawing the bill himself or by his agent, and u/s 28 an agent who signs a bill without

indicating therein that he acts as an agent or that he does not intend to incur personal responsibility is liable personally. ''Agent'' however in these

sections means the agent of a person capable of contracting within the meaning of Section 26 and when the agent is not liable the principal is : A

person drawing a bill or making a note as trustee of a temple or charity is not acting on behalf of such a principal and cannot claim the benefit of

Section 28. Accordingly such trustees have been held personally liable by Subrahmanya Ayyar, J., in Pasupatia Pillai v. Sundarappier (1907) 17

M.L.J. 615, by Krishnaswami Ayyar, J., in Aiyathurai Aiyar v. Dharmasena Aiyar (1911) M.W.N. 143 and in Kasivasi Somasundra Thambiran v.

Venkata Narayana Pillai (1915) 26 I.C. 356 to which I was a party with Seshagiri Ayyar, J., and in Swaminatha Aiyar Vs. Srinivasa Aiyar and

Others, , where the personal liability of the temple trustee on the promissory note was not questioned. The decision of Sadasiva Ayyar, J., in

Sundresa Gurukal v. Sambasiva Aiyar (1915) 2 L.W. 188, which the learned Judge has followed is opposed to these rulings and is not in my

opinion supported by R.P. Koneti Naicker, and Others Vs. Jatu Gopala Aiyar and Another, or by Chapman v. Smethurst (1909) K.B. 1927 on

which it was based, as in those cases the question was whether the agent or the principal was personally liable on the bill. Sundresa Gurukal v.

Sambasiva Aiyar (1915) 2 L.W. 188 was no doubt referred to with approval by Kumaraswami Sastri, J., sitting with Sadasiva Ayyar, J., in

Ammalu Ammal v. Namagiri Ammal (1917) 33 M.L.J. 634 where Robinson''s settlement In re Gant v. Hobbs (1912) L.R. 1 Ch. 717 was

referred to as supporting it. That case, however, like the case from which it differed was not a case of a negotiable instrument but of a covenant in

a deed as to which other considerations are applicable. Moreover the observations in Ammalu Ammal v. Namagiri Ammal (1917) 33 M.L.J. 634

were obiter, the only question there being the right of recourse against the deceased''s estate on a promissory note executed by his executrix as to

which the executrix''s personal liability was not questioned. We have also been referred to Krishna Chettiar v. Nagamalli Ammal I.L.R.(1916)

Mad. 915. That was a case in which the estate of a minor was held liable on a promissory note executed by his mother who was also his guardian

but did not describe herself as such. The correctness of the decision in so far as it holds the minor''s estate directly liable has been questioned by

Sadasiva Ayyar, J., in Ammalu Ammal v. Namagiri Ammal (1917) 33 M.L.J. 634. It does not, as I understand it, decide that the mother was not

personally liable. The view I have taken is entirely in accordance with the English decisions. In Byles on Bills, 16th Edn., page 86, the learned

author says:

If persons who fill official situations as Churchwardens, Overseers, Surveyors, Commissioners, Managers of Joint stock banks, and Agents and

Secretaries to Companies give bills or notes on which they describe themselves in their official capacity they are nevertheless personally liable.

citing Rew. v. Pettet (1834) 1 Ad. & E. 196 the case of Churchwardens and other oases. Here the first Defendant described himself as

P.R.P.L.S. hukdar. ''P.R.P.L.'' was the vilasam of the whole family. ''S'' admittedly signifies chatram so that he described himself as hukdar of the

P.R.P.L. chatram, a description which would not, affect his personal liability on the note.

A further contention has however been raised that the use of the vilasam P.R.P.L.S. sufficiently indicated that he was acting as an agent within the

meaning of Section 28 for the whole family who are hereditary hukdars including himself. This would merely render the other members of the family

liable as well as himself.

I do not however think that any clear indication can be gathered from this signature of an intention to make any one liable but himself. When the

agent of a Chetti firm in executing a negotiable instrument prefixes the firm''s vilasam, this is a well-understood indication that he is acting only as an

agent and has been so recognized by the Courts. But when a man signs as hukdar prefixing the charity vilasam it appears to me that on the face of

the document there is no clear indication that he contracts for any one but himself. If it were otherwise, it would be necessary to find whether the

other hukdars had authorized him to draw hundis on their behalf. There is not even on the facts of the case any reason to find that he intended to

draw the hundi on behalf of any one else. He was supervising the chatram and in charge of its funds, and it was prima facie for him to arrange for

the payment of the money which the chatram had to pay to secure its title to the village.

The Plaintiff does not desire to have recourse to the trust property and there is no need to consider whether it could properly be made liable in

the present suit. The memorandum must be allowed and the decree varied by releasing the charity properties and making Defendants Nos. 3 to 10

liable to the extent of the joint family properties in their hands with costs of the Plaintiff, first Respondent. Time for tender and execution of sale-

deed is extended by three months from this date.

Spencer, J.

I entirely agree. I have no doubt that the first Defendant made himself personally liable under the hundi (Exhibit A) and that the decree must be

amended by releasing the charity properties and making the joint family assets in the hands of Defendants Nos. 3 to 10 liable. To the authorities of

Pasupathi Pillai v. Sundra Aiyer (1907) 17 M.L.J. 615, Aiyathurai Aiyer v. Sharmasiva Aiyer (1911) (I) M.W.N. 143, Koneti Naicker v. Gopala

Aiyer I.L.R (1915) Mad. 482, I would add that of Sri Yerruganti Chinna Verikatanarayanan v. Kotagiri Venkata Narasimha (1913) M.W.N.

1005. I do not think that Sundaresa Gurukkal v. Samhasiva Aiyer (1915) 2 L.W. 188 was correctly decided. The learned Judge, who decided it

in quoting Koneti Naicker v. Gopala Aiyer I.L.R.(1915) Mad. 482 may have been misled by the clerical error consisting in the accidental omission

of the ''not'' between the words ''intention'' and to incur personal responsibility'' in the judgment of oldfield, J., as reported both in the Law Journal

and in the authorized reports.

I am prepared to follow Krishna Chettiar v. Nagamani Ammal I.L.R.(1916) Mad 915 which does not appear to me to be inconsistent with

Sanka Krishnamurthi v. The Bank of Burma ILR (1912) Mad. 692 as it decided upon principles of Hindu Law, that a mother could make her

minor son''s estate liable for a debt incurred for purposes binding upon him but that there could be no personal decree against the Defendant who,

in that case, was the minor. I think that cases of guardians and managers of joint Hindu families signing promissory notes on behalf of minors should

be distinguished from cases of agents, trustees and executors who sign on behalf of principals, trusts, or estates of deceased persons. The

observations of the Judicial Committee in Konwar Doorganath Roy v. Ram Chunder Sen (1877) ILR 2 Cal. 341 (P.C.) to the effect that the

manager of a debutter estate had an analogous right to that of the manager of an infant heir was not made with reference to a negotiable instrument.

The signature of the guardian of a minor or of the manager of an infant''s estate to a contract is a substitute for the signature of the ward or

infant who is himself incapable of contracting and it has the effect of making the minor''s estate liable when the contract is made for necessary

purposes but the minor cannot be made personally liable thereby; See Sanka Krishnamurthi v. The Bank of Burma (1912) 35 Mad. 692. I do not

understand Krishna Chettiar v. Nagamani Ammal I.L.R.(1916) Mad. 915 as going beyond this.

The case of agents signing negotiable instruments is especially provided for in Section 23 of the Negotiable Instruments Act (XXVI of 1881).

Cases of trustees, executors, churchwardens, etc., who sign promissory notes on behalf of inanimate objects such as trusts, temples, estates of

deceased persons and parish vestries, etc., fall into a different class. In such cases there is a very strong presumption that the trustee, executor or

churchwarden intended to incur an individual responsibility because he does not represent any other person in law. An incorporated company is

however both in England and in India a distinct person and therefore the case of a Director of a company signing a promissory note in the name of

the company is on a different footing again. So we find Section 89 of the Indian Companies Act VII of 1913 raising a presumption that a person

acting under the authority of a company and signing a promissory note in the name of the company means to make the company liable. In the

present case not only is there no indication in the hundi that Palaniappa Chetty (first Defendant) did not intend to incur personal responsibility but

the fact that he signed as hukdar to the chatram makes it clear that he must be liable for the chatram debt, as the chatram, itself has no personal

liability. First Defendant�s legal representatives are also liable to the extent of the family properties in their possession.