Ramnagina Prasad vs Bishwanath Prasad and Others

Kulwant Sahay, J.—The questions raised in this case are concluded by authority. The suit was for recovery of a sum of money advanced by the joint family of the plaintiff and the handnote was taken in the name of defendant 6, the mother of the plaintiff, who was then acting as the guardian of her minor sons. There were two transactions of loans advanced in the name of the mother, but as regards one of these transactions the handnote was subsequently renewel in the name of the plaintiff. Therefore as regards the claim under this renewed handnote no question arises and the claim of the plaintiff has been decreed. The only question raised is whether the plaintiff can maintain a suit on the handnote which stands in the name of the mother. The mother, defendant 6, is a party to the present litigation and it is sought to be determined in her presence that the plaintiff is entitled to realise the debt although the handnote stands in the name of the mother.

The question was directly raised in Sarjug Singh v. Deosaran Singh AIR 1950 Pat 313 and it was held there that Section 78, Negotiable Instruments Act, did not debar the real beneficiary under the promissory note from suing on the basis of the note if he can give a discharge to the maker of the promissory note. This case was followed by a Division Bench of this Court in Surajman Prasad Misra Vs. Sadanand Misra and Others, . There also the handnote on which the suit had been instituted stood in the name not of the plaintiff but of defendant 4 who was alleged to be a mere benamidar of the plaintiff. The suit was dismissed on the ground that u/s 78, Negotiable Instruments Act, the holder was the only person who could give a discharge to the drawer and, therefore, no other person was entitled to maintain the suit.

It was held by the Division Bench that although as a rule a beneficiary cannot maintain a suit on a promissory note without any reservation or restriction, yet, where the suit is in form on behalf of the beneficiary, but in reality and substance on behalf of the holder, and the plaintiff is in a position to give a discharge to the drawer through the holder, in such circumstances different considerations arise and the suit is maintainable at the instance of the beneficiary. The principle involved in these two decisions is that if the plaintiff is in a position to give a valid discharge the fact that the promissory note does not stand in his name will not disentitle him to a decree in the suit.

If the person in whose name the document stands is a party to the litigation and does not dispute the plaintiff''s right to recover the loan and give a valid discharge there seems to be no reason why the suit should not be maintainable and why a decree should not be made in favour of the plaintiff. It is unnecessary to refer to the decisions of other Courts cited on behalf of the respondents as most of them were referred to in the cases just mentioned. In any event we are bound to follow the decision of the Division Bench of this Court unless we are satisfied that that decision is incorrect and unless a reference is made to a Full Bench. I am not prepared to say that the decisions in the two cases just referred to of this Court were incorrect. I would allow this appeal and decree the suit with costs throughout. Respondent 6, the mother, stated at the outset that she did not contest the plaintiff''s claim. There will be no order for costs as against her.

Courtney-Terrell, C.J.

I agree.