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Singheshwar Mandal v. Smt. Gita Devi AIR 1975 Pat. 81

Singheshwar Mandal v. Smt. Gita Devi AIR 1975 Pat. 81

 

FACTS-

  • Dhir Narain Chand, the plaintiff’s father i.e., Holder of the hand note, expressed his desire in presence of the  defendant that the amount in respect of this loan would go to the plaintiff-respondent alone to which the defendant ( widow’s of Dhir Narain Chand) expressly consented.
  • But no endorsement was made on the handnote in favour of plaintiff-respondent.
  • Money suit filed by plaintiff-respondent for recovery of Rs. 1541/15/- annas based on a handnote executed by defendant on 4.7.1959.
  • Defendant No. 1 contested the suit, arguing that the plaintiff, not being the holder of the handnote, had no right to sue.
  • The trial court, accepted the defence and dismissed the suit. However, on appeal, the learned Additional Subordinate Judge has decreed the same.
  • In the second appeal, The learned Additional Subordinate Judge, has held that the plaintiff‟s father did make such an arrangement according to which this debt was made realisable by the plaintiff alone.
  • Hence, the present appeal before HC

ISSUE-

  • Whether the plaintiff, not being the holder of the handnote but an heir of the holder, has the right to institute the suit.

RULE-

  • Under Section 78 of the Negotiable Instruments Act, payment must be made to the holder of the instrument or the endorsee as provided under Section 82(c) of the Act.
  • The term "Holder" is defined in Section 8 of the Act, meaning a person entitled in their name to the possession of the instrument and to receive or recover the amount due.

HELD-

  • The handnote in question is neither endorsed in favor of the plaintiff-respondent nor indicates the creditor's intention for payment to the plaintiff-respondent.
  • The plaintiff-respondent does not meet the criteria of a "holder" as defined under Section 8 of the Act.
  • Transfer of an actionable claim requires a written instrument signed by the transferor or their authorized agent, as per Section 130 of the Transfer of Property Act.
  • The learned Additional Subordinate Judge erred by considering alternative arrangements by the plaintiff's father and family members, which did not comply with the legal requirement of a written instrument for transfer.
  • The plaintiff-respondent does not have the right to institute the suit.
  • The appeal is allowed, setting aside the judgment and decree of the lower appellate court and restoring the dismissal order passed by the trial court.

COMMENTARIES RATIO/NOTE-

 

  • 43.4 Rebuttal of presumption

 

43.4.3 Who can enforce

In V.K. Velappu v M.J. Varu, the Kerala High Court held that it is a well-settled principle that no person can sue on a negotiable instrument unless he is named therein as the payee or becomes entitled to it as the endorsee or the bearer. In a suit on a negotiable instrument by the payee or the endorsee or the bearer, it is not open to the maker to plead that the holder is a mere benamidar. In such a case the beneficial owner who is not the holder of a negotiable instrument cannot maintain a suit for recovery of the money. It has been held that no person can sue on a negotiable instrument unless he is named therein as the payee or unless he is entitled to it as endorsee [Joseph Zacharia v Joseph Kuriakose, AIR 1992 Ker 103].

In Karupiah Palukki v Periasami,  the Court considering the effect of endorsement held that the endorsee can sue even after the death of the endorser. Right to sue survives on death of endorsee to his legal representatives. A holder of a negotiable instrument who secures the same by endorsement does not lose his right of action by reason of the death of the original payee. In fact, by such an endorsement, he secures the title to the instrument which title is enforceable by him in a manner ordinarily known to law. Such title vested in him cannot be divested by reason only of the fact that the original payee died soon after such an endorsement and the suit itself is brought on the foot of such an endorsement. In case endorsee dies, his legal representatives can sue on the promissory note.