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1926 (9) TMI 2 - HC - Indian Laws

Issues Involved:

1. Validity of the promissory note and the right to sue.
2. Vendor's lien on the property for unpaid purchase money.
3. Limitation and acknowledgment of liability.
4. Effect of benami transactions on legal rights and obligations.

Issue-wise Detailed Analysis:

1. Validity of the Promissory Note and the Right to Sue:
The central issue was whether the promissory note executed by the defendant in favor of the second plaintiff was valid and who had the right to sue on it. The court examined whether the note was delivered to the second plaintiff, the named payee, or whether it was held by the first plaintiff, who was alleged to be the beneficial owner. The judgment concluded that the second plaintiff, as the named payee, was the only person entitled to sue on the promissory note, regardless of whether she was a benamidar for the first plaintiff. The court emphasized that a person whose name does not appear on the promissory note cannot sue on it by alleging that the payee was a benamidar for himself.

2. Vendor's Lien on the Property for Unpaid Purchase Money:
The court addressed whether the execution of the promissory note extinguished the vendor's lien on the property for the unpaid purchase money. It was argued that the lien persisted unless a complete novation occurred, which would constitute a "contract to the contrary" under Section 55 of the Transfer of Property Act. The court held that since the promissory note was a negotiable instrument and the vendor was disabled from suing on it, the lien was lost. The vendee's liability to the vendor was substituted by the liability to the third party (second plaintiff), and the lien was extinguished.

3. Limitation and Acknowledgment of Liability:
The question of whether the suit was barred by limitation was considered, with the plaintiffs relying on the defendant's deposition as an acknowledgment to save limitation. The court analyzed the deposition and concluded that it amounted to an acknowledgment of a subsisting liability, as the defendant did not deny the liability under the promissory note and his statement implied that the note was real and subsisting. The court found that the suit was not barred by limitation based on this acknowledgment.

4. Effect of Benami Transactions on Legal Rights and Obligations:
The court examined the implications of benami transactions, particularly in the context of the promissory note and the vendor's lien. It was argued that the second plaintiff was a benamidar for the first plaintiff, and the note was executed for the first plaintiff's benefit. However, the court held that the legal right to sue on the note resided with the second plaintiff as the named payee, and the vendor's lien was extinguished due to the execution of the negotiable instrument. The court noted that the vendee's awareness of the benami nature could affect the contractual obligations, but no such awareness was pleaded in this case.

Conclusion:
The judgment concluded that the second plaintiff was entitled to a personal decree for the amount due under the promissory note, as she was the named payee and had ratified the delivery of the note. The vendor's lien was extinguished due to the execution of the promissory note, and the suit was not barred by limitation due to the acknowledgment of liability by the defendant. The court set aside the mortgage decree for sale and replaced it with a personal decree in favor of the first plaintiff, as consented by the second plaintiff. Each party was directed to bear its own costs in the appeal.

 

 

 

 

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