Sailum Eshwarayya vs Thakur Devi Singh

Jaganmohan Reddy, J.—This is a reference by a Division Bench of this High Court involving a question as to the proper forum in which a suit on a negotiable instrument executed at Mancherial, where the Defendant resides, could be filed. It appears that the Plaintiff who is a timber merchant of New Bhoiguda, Sccunderabad, filed a suit before the Nazim-e-Zilla (District Judge), Secunderabad, against the Defendant, a wood contractor of Mancherial on the basis of a promissory note executed by the said Defendant in favour of the Plaintiff for H. Section Rs. 6,200/- at Mancherial. The amount claimed on the suit was a moiety of an amount of Rs. 12,400/ found due on accounts and the other moiety was discharged by the Defendant on the Plaintiff''s instructions by his executing another pronote for Rs. 6,200/- in favour of one W. Satyanarayan, a resident of Bhongir.

The Nazim-e-Zilla (District Judge), framed the following issues on the contentions of the parties:

(1) In connection with the "Chobina" transactions was a sum of H. Section Rs. 12.400/- due by the Defendant to the Plaintiff and did the Defendant execute the suit pronoto for its half share?

(2) Has this Court jurisdiction to try this suit?

(3) To what relief is the Plaintiff entitled? and after recording the evidence of the Plaintiff and three witnesses he held issue (1) in favour of the Plaintiff by finding that the balance of the Chobina transaction due by the Defendant to the Plaintiff was H. Section Rs. 12,400/- and the suit pronote was executed by the Defendant for its half share namely, Rs. 6,200/-. With respect to issue (2) which dealt with the jurisdiction of the Dis-trict Court to try the suit, he was of the view that since the Plaintiff admitted that the suit pro-note was executed at Mancherial and there was nothing in the said note to show that the amount would be paid at Secunderabad, the suit to enforce a claim based on such a promissory note cannot, therefore, be instituted at Secunderabad where Che Plaintiff resides, but that it should be filed in the Courts at Mancherial where the pronote in question was executed. In view of this finding, be directed the return of the plaint to the Plaintiff for presentation to the proper court having Jurisdiction.

Against this judgment, the Plaintiff filed an appeal to the High Court. The Division Bench having regard to the document being a promissory cote payable on demand and there being a conflict of opinion on the question as to the proper court in which a suit on such a document ought to be instituted, referred the case to a Full Bench. My learned Brother Ansari in his reference order with which Naik C.J., agreed, observed that the majority view among the High Courts in India is that:

the common law rule of the debtor seeking his creditor for payment of the debt does not apply to negotiable instruments, and the question being governed by Section 20 of the Code of Civil Procedure, which is similar to Sec. 15 of the Hyderabad Code of Civil Procedure, the suits should be instituted where the executant resides or where the particular document has been executed.

Before considering the application of the common law rule in India to Negotiable Instruments, it is necessary to examine the position as It exists under the English law. In Littleton 34C, Coke on Littleton 210 (b) and 690 (b) it is stated that the common law rule is that the debtor should seek the creditor in order to pay him if he be in England. In � Fessard v. Mugnier 18 CB (NS) 286(A), for the interpretation of the words "within the realm of England" the passage of Lord Coke in Co. Litt. 210 (b) was cited, namely, "For, if he be out of the realm of England, he is not bound to seek him, or to go out of the realm unto him". To the exception that if the creditor Is out of England no duty is cast on the debtor to seek him, recognised in the aforesaid case, has been superadded another exception by � Rilev v. William Holland & Sons Ltd. 1911 1 KB 1029 (B) which laid down that the rule is not applicable to large employers of labour who maintain: a regular pay day and pay office. Again in � Joachimson v. Swiss Bank Corporation 1921 3 KB 110 (C), it was decided that where money is standing to the credit of a customer on current account with a Banker, in the absence of a special agreement a demand by the customer was a necessary ingredient in the cause of action against the Banker for money lent.

Dealing with the peculiarities of the relationship of a Banker and Customer, Bankes L. J. observed at pages 119 and 120:

Having regard to the peculiarity of that relation there must be, I consider, quite a number of implied superadded obligations beyond the one specifically mentioned in � Foley v. Hill 1844 48 HLC 28 (D) and � Pott v. Clegg 1847 16 M & W 321 (E). Unless this were so, the banker, like any ordinary debtor, must seek out his creditor and repay him his loan immediately it becomes due�that is to say, directly after the customer has paid the money into his account - and the customer, like any ordinary creditor, can demand repayment of the loan by his debtor at any time and any place. It is only necessary in the present case to consider the one question whether there 4s, arising out of the relation of banker and customer, the implied obligation on the part of the customer to make an actual demand for the amount standing to his credit on current account as a condition precedent to a right to sue for that amount. I cannot find that the point has ever been discussed in any reported case. For the reasons I have already given, I consider that the point has never been decided and that it is open to this Court to decide it.

Similarly, the non-application of the rule to negotiable instruments is also obvious for the reason that the very nature of the negotiable instrument sigifies an instrument which may be transferred by assignment from one person to another or to his order or to the bearer of the note so as to vest a legal right to receive the amount specified therein; and is an exception to the general rule of common law that choses in action shall not be assignable. "Our law", observes Chitty (Jr.), on Bills, vol. I page 30,

will not permit a person not privy to a contract to found a legal claim or remedy thereon in his own name by assignment from the party with whom the obligation was entered into. It will not permit a person to become the creditor of another, without his consent; and the reason is, not only that there are wanting the mutuality and privity essential to constitute a contract, but that oppression and unjust litigation would be encouraged, if persons � strangers to the stipulating party � (and with whom, perhaps, he would not have contracted) could purchase causes of suit, and divest the original creditor of his legal right of action.

It is for this reason that the common law rule of debtor seeking the creditor would not apply to the negotiable instruments.

In � Hitchcock v. Humfrey 5 M & G 559 (F), it was argued that the above rule does not apply to the case of a bill in circulation as the acceptor must pay when the bill is presented. In note (a) to � Kepp v. Wiggett 6 CB 280 (G) it is stated that the aforesaid duty "would be one very difficult of performance on the part of the debtor, if choses in action were assignable. This may perhaps be one reason why such assignments are not allowed at common law". (See also Broom''s Commentaries on Common Law, 4th Ed. 1869, Note (i) pages 438, 439). The negotiable Instruments were, therefore, opposed to the principles of common law, but being creatures of the law merchant, the gradual recognisation of the mercantile custom judicially and by the Legislature has established an exception to the aforesaid rule. It is, therefore, obvious that the rule that debtor should seek his creditor is not applicable to the negotiable instruments which have an international currency and are likely to pass from hand to hand by endorsement, acceptance or the like. The holder of such instrument may be residing in any part of the country or the world and it is too much to expect that the debtor should in those circumstances seek out the creditor.

Both in India and in England, the Statuses have recognised the peculiarities of negotiable instruments as sanctioned by law merchant by enacting Negotiable Instruments Act and the Bill of Exchange Act respectively which govern most of the matters pertaining to the said instruments

u/s 77, Hyderabad Negotiable Instruments Act (corresponding to Section 78, Indian Negotiable Instruments Act) subject to the provisions of Section 81, CI. (c) (corresponding to Section 82 (c), Indian Negotiable Instruments Act) payment of the amount due on a promissory note, bill of exchange or cheque, must, in order to discharge the payment to the maker or acceptor, be made to the holder of the instrument. Section 80 (corresponding to Section 81, Indian Negotiable Instruments Act) provides that any person liable to pay, and called upon by the holder thereof to pay, the amount due on a promissory note, bill of exchange or cheque is before payment entitled to have it shown and is on payment entitled to have it delivered up to him, or, if the instrument is lost or cannot be produced to be indemnified against any further claim thereon against him. These sections clearly indicate a rule which is quite different from that of the common law rule of the debtor following the creditor. The sections referred to above adopted the law merchants as recognised by the common law, viz., that a person who demands payment of a bill must produce the bill and offer to deliver it on payment.

Lord Tenterdon in � Hansard v. Robinson 7 B & C 90 (H) observed:

Now the principle upon which all such actions are founded is the custom of merchants. The general rule of the English law does not allow a suit by the assignee of a chose in action. The custom of merchants considered as part of the law, furnishes in this case an exception to the general rule. What then is the custom in this respect? It is that the holder of the bill shall present the instrument, at its maturity, to the acceptor, demand payment of its amount, and upon receipt of the money deliver up the bill. The acceptor paying the bill has a right to flu possession of the instrument for his own security, and as his voucher and discharge pro tanto in his account with the drawer.

Similarly there are other sections in the Negotiable Instruments Act such as Section 69 (corresponding to Section 70 Ind. N. I. Act) which support this view. They provide that a promissory note or bill of exchange not made payable as mentioned in Section 67 & Section 68 must be presented for payment at the place of business (if any) or at the usual residence of the maker, drawee or acceptor there of

In England according to the Bills of Exchange Act, 1882 (45 and 46 Vict. C. 61) Section 45 provides that the bills of exchange and promissory notes must be duly presented for payment, except Where otherwise provided by Statute and Section 52 (4) lays down that it is the duty of the holder, when he presents an instrument for payment to exhibit it to the person from whom payment is demanded and on receiving payment to deliver it up to the party paying it.

We now propose to examine some of the authorities of this High Court and of other High Courts in India. In Hyderabad there are five cases on the point involved in the reference. The first case is that of the - London Trading Co. v. Madanlal 19 DLR 154 (I), in which a Division Bench of this High Court decided that the decree obtained on a promissory note by the Plaintiff in a suit filed by him at Bezwada, a town in British India, against the Defendant residing in the Nizam''s State was obtained from a competent court. When the Plaintiff filed a suit on the abov mentioned decree in the Hyderabad State Courts against the Defendant who having taken an objection that such a decree cannot be the basis of a suit within the meaning of Section 8 Hyderabad CPC in as much as it was passed by a Court which was not competent to award it, the question arose as to the proper forum in which such a suit ought to be filed. Their Lordships observed in that case that u/s 20 CI. (c), Indian CPC of 1908.. the suit of the Plaintiff should be filed in that Court where the cause of action wholly or partly arises, as such in a money suit when the parties admit that the Plaintiff was a resident of Bezwada, unless there was an agreement to the contrary, the amount due would be deemed to be payable at Bezwada and in these circumstances the Beswada Court had jurisdiction to entertain the suit.

In the first place, no authorities were either cited or discussed in support of their observations and in the second place, the observations are in our view obiter as being not necessary for the disposal of the appeal, inasmuch as the fact that there was a subsequent decision of the Bezwada Court on a review petition filed by the Plaintiff holding that the promissory note in fact stated that the amount would be paid at Bezwada, was taken into consideration in deciding that appeal. In fact their Lordships admitted the subsequent judgment as evidence in appeal as, in their view, the whole of the judgment both in review and previously should be read together, notwithstanding the fact that the judgment in review was pronounced after the appeal was filed in the Hyderabad High Court.

In these circumstances, the observation that the cause of action arose where the Plaintiff resides was made on the assumption that even if there was no judgment in review holding that the amount according to the promissory note was specifically payable at Bezwada, a cause of action would arise on the aforesaid principle. In considering the weight of a precedent, it is necessary to see that the judicial pronouncement which is sought to be made the precedent, was based on the material facts as found in the case. If a conclusion was not necessary on the particular facts as found, it is obvious that any principle enunciated which does not arise on the said facts can only be treated as an obiter dictum.

In � Kanyalal v. Shiv Narayan 29 DLR 630 (J) a single Bench held, that where in a promissory note there is no mention of the place of payment, it is the duty of the debtor to seek out the creditor and pay the amount. If the debtor does not discharge this obligation of his, then a cause of action will be deemed to have partly arisen in the place where the creditor resides. These observations are again, I venture to suggest, obiter inasmuch as upon a careful reading of the report, it appears that the basis of learned judge''s decision was that the cause of action arose in Aurangabad because the promissory note sets out the place" of its execution as Aurangabad where the transac-tion took place coupled with the fact that Plaintiff resides,and carries on his business at Aurangabad. After deciding the place where the cause of action arose, he then went on to add that not only does the cause of action arise where the transaction took place, but also it will be deemed to partly arise where the creditor is to receive his debt. There is no indication in the whole of the judgment as to how the common law presumption of the debtor following the creditor came to be adopted in the Hyderabad State and on what authority.

At any rate, whatever may have been the justification for the adoption in British India of the English common law rule of the debtor following the creditor and whatever may be the historical genesis of the importation or intermixture of this and other English rules of common law with those laws of British India, there appears to be no justification for the acceptance of this rule in so far as what was then H. E. H. the Nizam''s Dominions (Hyderabad State).

The rule of law which governs the filing of suits in Courts having competent jurisdiction to entertain them has been statutorily laid down in Section 15, Hyderabad Code of Civil Procedure, (corresponding to Section 20, Indian Civil P. C). It is provided under the aforesaid provision that every suit shall be instituted in a Court within the local limits of whose jurisdiction, (a) the Defendant, or each of the Defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or (b) any of the Defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the court is given, or the Defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or (c) the cause of action, wholly or in part, arises. We shall deal presently with the question as to where the cause of action wholly or in part arises, as that is the only provision which requires consideration on the facts of this case, inasmuch as it is admitted that the Defendant neither resides nor carries on business, nor personally works for gain within the jurisdiction of the Secunderabad District Court.

We have already seen that the common law rule of debtor following the creditor is not applicable even in England to negotiable instruments. In these circumstances, the two cases of the Hyderabad High Court reported in the Deccan Law Reports as enunciating the principle that the rule is applicable to negotiable instruments are not a binding authority for the said proposition even apart from the question of the observations being obiter.

Another Bench of this High Court in a recent case of � Lakshminarayan v. Sultan Jehan Begum AIR 1951 Hyd 132 (K), also held that the principle that debtor must find his creditor is applicable to the negotiable instrument. In that case, a promissory note was executed by one Sultan Jehan Begum, residing outside the jurisdiction of the City Civil Court, in favour of the Plaintiff Lakshminarayan, residing at Ghasi Bazaar within the jurisdiction of the City Civil Court and the question arose whether the suit could be filed in the City Civil Court against the Defendant inasmuch as the Plaintiff''s address was given in the promissory note as residing at Ghasi Bazaar. Khaliluzzaman Siddiqi J., held that the intention of the parties was that unless the Plaintiff made some order in favour of somebody which was at his option, the amount was payable to him at Ghasi Bazaar and under the very terms of the promissory note the place, that is where the amount was to be paid, would be the place of residence of the creditor, viz., Ghasi Bazaar.

After citing the observation of Beaumont C.J., in � Jivatlal Purtapshi Vs. Lalbhai Fulchand Shah, leading to the conclusion that in his opinion in a suit founded on a promissory note it is not permissible to go into the question of consideration for the note, and to read into the note something founded on the circumstances which gave rise to it as that would be a dangerous principle to apply to negotiable instruments, he observed, at page 133 without assigning any reasons for disagreeing with the aforesaid observations of Beaumont C.J., or of distinguishing them, as follows:

The way we are inclined to look at the suit document is that under that document a promise is made to pay the amount to the creditor who resides at Ghasi Bazaar on demand or at his order. It is admitted before us that in the present state of the document, the amount is payable to the creditor and not to anybody else In view of that promise it is evident, that the performance of this contract exists in payment of the amount mentioned in the promissory note by the debtor to the creditor.

With great respect, it appears to us that these observations are not based on a consideration of the full implications of the nature and obligations arising out of negotiable instruments. The learned Judge states that it is admitted that as the document then stands the amount is payable to the creditor and not to anybody else. The implication is that the presumption is only applicable to the actual promisor and promisee of a negotiable instrument and to those who hold the instrument or to whom the amount becomes payable.

Vithal Rao Deshpande J., considered some of the cases of conflict in India and observed that for purposes of CI. (c) of Section 20, CPC as to where the sause of action wholly or partly arises in suits on promissory note, the common law rule that the debtor must find his creditor applies where the place of payment is not fixed and in such a case the cause of action arises where the Plaintiff resides and he ordinarily carries on business. He referred the two cases of Hyderabad High Court reported in � 19 DL R 154 (I)'' and � 29 DL R 630 (J)'' and he was of the view that when these cases have laid down that the principle of debtor following the creditor is applicable even to negotiable instruments, there is no ground for differing from that opinion. We have already discussed the two cases in the Dec. L. Reports cited by Vithal Rao Deshpande J., and have apart from the larger question of whether these authorities are binding upon this High Court after the Constitution, given our reasons as to why we do not consider them as binding authorities.

It may be said with great respect to the learned Judges who decided the above referred three cases that they did not also consider the matter on the provisions of Hyderabad Negotiable Instruments Act as already noticed which makes payments due under a promissory note, unless there is a contract to the contrary, payable, at the usual place of business of the maker or at his residence.

The cases of � Dhondeba v. Tuka Ram 32 DLR 226 (M) and � Nagayya v. Chogganlal 28 DL R 606 (N) do not relate to suits on negotiable instruments; as such we do not wish to deal with them, though we may observe in passing that these judgments do not consider the common law rule at any detail nor on any authority.

There are two cases of the Privy Council one of � Bansilal Abirchand v. Ghulam Mahbub Khan, AIR 1925 PC 290 and the other AIR 1927 156 (Privy Council) . which refer to the presumption of a debtor following the creditor. In � Bansilal Abirchand v. Ghulam Mahbub Khan, AIR 1925 PC 290 ''. Lord lanesburgh dealing with the question whether there was any obligation for the debtor residing in the Nizam''s State to pay the money due to the creditor residing at Secunderabad, then a British administered area, Observed:

But there is no implied promise to repay it at Secunderabad. Even by British law the duty of a debtor to and and pay his creditor is only imposed upon him when the creditor is within the realm. And the Plaintiff has not contended that if there be any such duty at all imposed by Indian law upon a debtor it extends in this respect further than in England.

This passage would indicate a doubt in their Lordships'' minds as to whether the principle of common law of the debtor following the creditor applies to India. In the next case of � AIR 1927 156 (Privy Council) , Viscount Sumner after considering the cases of � Motilal v. Surajmali 30 Bom 167 (Q); � Dhumjisha Nusserwanji v. A.B. Fforde 11 Bom 649 (R) and � Puttappa Manjaya v. Virabhadrappa 7 Bom LR 993 (S), and also the case of � Bansilal Abirchand v. Ghulam Mahbub Khan, AIR 1925 PC 290 observed:

Their Lordships do not think that in this state of the authorities it is possible to accede to the present contention that Section 49 of the Indian Contract Act gets rid of inferences, that should justly be drawn from the terms of the contract itself or from the necessities of the case, involving in the obligation to pay the creditor the further obligations of finding the creditor so as to pay him. The rule in Section 49 is one which it was intended should apply both to the delivery of goods and to the payment of money, to which obviously different considerations apply from those applying in a case like the present, where the question is one of jurisdiction, and their Lordships are satisfied that an intention is shown in the contract that payment should be made in Rangoon.

Both the aforesaid cases of the Privy Council were not dealing with suits on negotiable instruments, but even then the Privy Council was entertaining doubts as to the applicability of the common law rule to India and at any rate did not venture to pronounce specifically on it.

In � Tusliman Bibi Vs. Abdul Latif Mia, , the Calcutta High Court citing and relying on the Privy Council decision in � AIR 1927 156 (Privy Council) '' held that:

A suit on a contract can be instituted in the court which has territorial jurisdiction over the place where the contract has to be performed and that the place of performance must be taken to be the place where the Plaintiff is residing. On the principle that when the creditor is residing in the realm, the debtor must follow the creditor and pay him unless there is a different contract between them and that Section 49 of the Indian Contract Act does not get rid of inferences that should justly be drawn from the terms of the contract itself and the necessities of the case involving in the obligation to pay the creditor the further obligation of finding the creditor, so as to pay him.

It is not necessary for us to examine this case further for two obvious reasons, viz., that it was a case of a suit on a contract and not a negotiable instrument and secondly it places reliance on the Privy Council decision in � AIR 1927 156 (Privy Council) supporting the proposition laid down by it. As we have already observed, the Privy Council is itself doubtful as to whether such a presumption exists in India and in both the cases, the Privy Council made certain assumptions with respect to the application or non-application of that common law principle to India. In the case of Bansilal Abirchand v. Ghulam Mahbub Khan, AIR 1925 PC 29, the decision rested on the ground that even assuming that the common law rule applied, the debtor resided outside British India and in AIR 1927 156 (Privy Council) the Privy Council held that although there was no express provision in the contract as to the place where moneys were paid, it was to be implied from the terms of the contract that they were to be paid in Rangoon giving the Rangoon Court jurisdiction.

In the case of � Srilal Singhania Vs. Anant Lal Mondal, Lort-Williams J., relying on � Raman Chettiayar v. Gopalachari 31 Mad 223 (V) and approving the decision in � Tusliman Bibi Vs. Abdul Latif Mia, '' and � AIR 1927 156 (Privy Council) held

that Section 49 has no application to a pronote which is payable on demand and is silent as to the place of repayment. Consequently ''a fortiori'' the common law rule applies and it being necessary for the debtor to seek out his creditor and pay him in the absence of any agreed place for payment, the place for repayment must be deemed to be the place where the creditor resides, and therefore, a Court at that place has jurisdiction to entertain the suit on the pro-note.

As already pointed out neither � Tusliman Bibi Vs. Abdul Latif Mia, '' nor � AIR 1927 156 (Privy Council) were cases decided on promissory notes and we have given reasons why we do not consider these cases to be authorities for the application of the principle that a debtor should follow the creditor to negotiable instruments. Reliance was placed by Lort-Williams J., on the afore-mentioned case of Shrilal Singhania, and on the case of � 31 Mad 223 (V) for the proposition that Section 49 of the Contract Act was not applicable to the case of a promissory note, because that section does not apply where money is to be paid on demand.

A close reading of that decision would show that it was concerned with reference to illustration (b) to Section 17, Code of Civil Procedure, 1882 which is textually identical to illustration (b) appended to Section 20, Code of Civil Procedure, 1908 which is as follows:

A resides at Simla, B at Calcutta, and C at Delhi. A, B and C being together at Benares, B and C make a joint promissory note payable on demand, and deliver it to A. A may sue B and C at Benares, where the cause of action arose. He may also sue them at Calcutta, where B resides, or at Delhi, where C resides; but in each of these cases, if the non-resident Defendant objects, the suit cannot proceed without leave of the Court.

This illustration (b) in the case of illustration (b) of Section 20, Code of Civil Procedure, 1908 would clearly indicate that the common law rule of the debtor following the creditor is not applicable to suits on promissory notes. Actually the ratio of this case does not support the decision in � Srilal Singhania Vs. Anant Lal Mondal, ''.

''Raman Chettiar''s case (V) was one where the note sued on was executed within the local limits'' of jurisdiction of the Tanjore Court. The note was payable on demand and was not payable at any specific place. The efendant resided at Tanjore and the Plaintiff resided at Kumbakonam and brought his suit in Kumbakonam Court. The question Sir Arnold, C.J., put is, has the Kumbakonam Court jurisdictioni. He thought the matter is governed by Section 17, CPC which provides that a suit must be instituted in the court within the local limits of whose jurisdiction the cause of action arose. Dealing with the observations of the District Judge, viz., ''if the Defendant proposed to act in the ordinary course of business, he would pay Plaintiff, where Plaintiff was at Kumbakonam, admittedly his residence he observed:

I think the Judge had only in mind the ordinary rule that a debtor should follow his creditor. I do not think this general rule can be relied on as controlling the express words of a statute prescribing the conditions which gave a court local jurisdiction.

This view would seem to be in accordance with the principle of the decision of the House of Lords in � dd 1898 AC 524 (W). The other view would involve the proposition that unless the contract or the circumstances in which the contract was made give rise to a contrary implication a creditor may sue in any Court within the local jurisdiction of which he happens to be when his right to sue arises. This seems to me to be quite inconsistent with the express provisions of Section 17.

Illustration B to the section throws some light on the intention of the legislature. If the Plaintiff''s place of residence gave rise to an implication as to the place where the money to which the suit relates was payable, A would have been entitled to sue B and C at Simla.

As in the present case, the only fact either on the reference to the terms of the contract, or with reference to the circumstances in which the contract was made, which can be said to raise an implication that the money was to be payable at Kumbakonam is the fact that the Plaintiff resides there and as this fact is not sufficient in my view to raise this implication. I am of opinion that the Kumbakonam Court had no jurisdiction to entertain the suit.

Miller J. who agreed with this view observed:

The money is payable on demand and the natural inference is that it is payable where the demand is communicated to the debtor. Beyond the fact that the creditor is described as residing in Kumbakonam from which it seems to me nothing can be implied, there is no word in the pronote suggesting Kumbakonam as the place of payment nor are there any circumstances conveying this suggestion. The money was not sent from Kumbakonam to Tanjore, it is not alleged that the debts which were transferred to the Plaintiff were payable in Kumbakonam and no part of the negotiation is shown to have taken place in Kumbakonam. The case, therefore, is one in which the place of payment is not specified either expressly or by implication, and it seems to me necessarily to follow that sub-division III of Explanation III does not apply. Are we not entitled to apply the general rule of law? I think not- Section 49 of the Contract Act cannot govern this case for here the money is payable on demand and not without application by the promisee. I am, therefore, of opinion that the Kumbakonam Court had no jurisdiction to try the present suit.

Beaumont C.J. in � Jivatlal Purtapshi Vs. Lalbhai Fulchand Shah, at p. 255 (L) dealing with the observations of Lord Williams J. in � Srilal Singhania Vs. Anant Lal Mondal, '' that if the promissory note is payable on demand, that takes the case out of Section 49 because of the opening words ''when a promise is to be performed without application by the promisee said:

I am hot prepared to accept that view because in my opinion, it is well settled law that a promissory note payable on demand does not imply that a demand must be made. The words ''on demand'' only mean that the note is payable immediately or at sight, and in my view the words ''on demand'' do not themselves take the promissory note out of the terms of Section 49 But it seems to me very difficult to hold on the language of Section 49 that it applies at all to negotiable instruments In my view, Section 49 is one of those provisions of the Contract Act which have no application to matters governed by the law merchant which is contained, for the most part, in the Negotiable Instruments Act.

In the case of � Subba Narayana Vathiyar v. Ramaswami Iyer 1 M LT 377 (FB) (X), Sir Arnold White C.J., dealing with the application of the rule of common law that an undisclosed principal could sue and be sued was not applicable to negotiable instruments, observed at p. 380:

We think this rule was not extended to bills and notes not so much because of their analogy to deeds as because they were governed by the law merchant representing the usage of merchant throughout the western world, and because in the case of instruments intended to be negotiable and to pass from hand to hand usage and policy alike required that the real contract should appear on the face of the instrument. We do not think that the general provisions of the Indian Contract Act, 1872, as to the rights and liabilities of undisclosed principals were intended to alter well-established rules as to negotiable instruments which in our opinion continued to be governed by the law merchant based on general mercantile usage.

These observations were approved in �''Jivatlal''s case (L) which was a suit on a promissory note payable on demand for Rs. 22,500/- at the rate of six per cent per annum, executed at Ahmedabad in favour of Jivatlal, Bombay. The question was whether the Court at Bombay had jurisdiction to entertain the suit which was based entirely on the pronote and not on the consideration arising out of the accounts in respect of transactions between the parties. It was held that from the express terms of the pronote, one could not extract any inference as to (1) place of payment; (2) the fact that the promisee was described in the note as resident of Bombay or that the transactions forming the consideration of the pronote took place at Bombay and the Plaintiff carried on business at Bombay were not enough to found a right to payment in Bombay, (3) the common law rule that a debtor must seek out his creditor in order to pay him did not apply to negotiable instruments and since no place of payment was mentioned in the pronote expressly or by implication, the place where the pronote was executed or the place where the pronote was delivered to the promisee was the place where the Court would have jurisdiction to try the suit. The place where the debtor, that is the maker of the note, ordinarily resided or carried on business would also be the place which would give the court of that place jurisdiction to try the suit. Consequently, the Court at Bombay had no jurisidiction.

Beaumont, C.J. after distinguishing � AIR 1927 156 (Privy Council) � Chunilal Mayachand Vs. E.E. Millard, (Y) and dissenting from Srilal Singhania Vs. Anant Lal Mondal, (U)'' and agreeing with � Sewaram Gokaldas Vs. Bajrangdat Hardwar Potdar, (Z), observed at p. 256:

That brings me to the really substantial question whether the common law rule, that a debtor must seek out his creditor in order to pay him, applies to Negotiable Instruments, and it seems curious that there is no binding authority upon that question. The only case which is directly in point to which we have been referred is the case in � Srilal Singhania Vs. Anant Lal Mondal, (U) in which Lort-Williams J., held that the common law rule did apply to the case of a promissory note. In that case the promissory note did not specify any place of payment. It had not been made within the jurisdiction of the Calcutta Court, but the learned Judge held that the Calcutta Court would have jurisdiction to entertain a suit upon it, because at the time when the suit was instituted the promisee, who had ceased to be holder of the note, and who had, therefore, no interest in the proceedings resided in Calcutta. That, to my mind, is not a very convincing reason for the application of the rule.

In the case of � ''Dalsukh Nathmal Firm v. Motilal Balchand AIR 1938 Nag 262 (Z 1-2), Vivian Bose J., dealing with the applicability of the rule to negotiable instruments had also taken the view that the common law rule of debtor following the creditor does not apply to negotiable instruments because of the provisions of Negotiable Instruments Act which prescribe different rules.

In the latest case of � Piyara Singh v. Bhagwan Das AIR 1951 P&H 33 (Z3), Harnam Singh and Kapur JJ., have after a full review of the case law came to the same conclusion and held that in India the common law rule that the debtor should seek his creditor is not applicable in the case of the promissory notes, and in particular to the promissory notes payable on demand. We do not propose to deal with this case in detail, nor consider all the cases cited by them. Kapur J. however, at page 41 after dealing with the application of the principle of debtor following the creditor in relation to negotiable instruments, went on to discuss the applicability of the said principle to India generally, even though he was of the view that it is not necessary to deal with this case at any very great length since that case was purely confined to the applicability of the rule to negotiable instruments. We do not, however, propose to extend the scope of our discussion to the �general question as it does not arise on the facts of this case. It is, in our view, clear that the weight of the authority is against the view that the common law rule of the debtor following the creditor applies to promissory notes. Having considered all these cases, we are also of the same view for the reasons stated by us.

In the result, the appeal is dismissed and the order of the lower Court directing the plaint to be filed in the proper Court is affirmed.