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TMI Blog2011 (6) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... ts by name Palanivel, who is also a respondent, in some of the appeals, borrowed money and for the purpose of defeating the rights of Palanivel, as per the advise given by Muthu Gounder, the plaintiff in O.S.Nos.141 of 1983 and 29 of 1983, these promissory notes were created as if the other defendants borrowed money from the plaintiffs and no consideration was passed and to defeat the rights of Palanivel, the defendants put their signatures in blank promissory notes and also affixed thumb impression in the front and back so as to make it appear that there was an endorsement and after the disputes between the family members of the defendants was over, the respondents did not get back the promissory notes from Muthu Gounder and taking advantage of the blank promissory notes, the said Muthu Gounder has filed these suits through his son, daughter and other relatives as if the respondents/defendants executed promissory notes in their favour for consideration stated therein and therefore, they are not liable to make any payment. 5. At the time of admission, the following substantial questions of law were framed:- 01. Whether the plaintiffs/appellants are entitled to the benefits un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumed that the documents were executed for consideration when the defendants admitted the signatures. He further submitted that the case of the defendants about the reason for singing in the blank promissory notes cannot be accepted and no attempt was made by the defendants to prove the circumstance under which the documents were alleged to have been executed by them. 9. He further submitted that under section 20 of the Negotiable Instruments Act, the holder of the promissory note is empowered to fill inchoate instruments even assuming that the blank promissory note was signed by the defendants as alleged by them and therefore, the plaintiffs are entitled to sue on those promissory notes and without appreciating all these aspects, the Lower Appellate Court presumed that the promissory notes were not executed for consideration and the defendants have only put their signatures and thumb impressions and dismissed the suits. 10. In support of his contention, the learned counsel appearing for the appellants relied upon the following judgments:- 01. AIR 1998 (Mad) 23 = 1997(2) MLJ 147 in the case of P.Taalamalai Chetty vs. Rathinasamy 02. 2001(1)CTC 281 = 2001(1) MLJ 371, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sri Khetramohan Ray vs. Udayanarayan Panda and another. 03. AIR 1976 ALLAHABAD 23, in the case of Ch.Birbal Singh vs. HarphoolKhan and another. and contended that when the defendant admitted his signature only in the promissory note and contended that he puts his signature on a blank promissory note, that will not amount to execution and presumption about the execution of the document cannot be drawn under section 118 of the Negotiable Instruments Act. 14. Heard both sides. 15. To appreciate the contention of the learned counsel appearing for the appellants/plaintiffs, we will have to see the definition of 'payee' as defined under section 7, 'holder' as defined under section 8 and 'holder in due course' as defined under section 9 and they are as follows:- Payee-The person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called the payee. 'Holder'- The holder of a promissory note, bill of exchange or cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. Where the note, bill or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the advise of Muthu Gounder, the defendants put the signatures in blank promissory notes and it was entrusted with Muthu Gounder and after the settlement of family dispute and partition was effected, they failed to get back the said blank promissory notes from Muthu Gounder and Muthu Gounder made use of the promissory notes by filing those blank promissory notes. 21. To prove that there was a family dispute during the relevant period and they entered into a family partition, which was written later, no evidence was let in except the oral testimony of the defendants. 22. Further the story alleged by the defendants cannot be accepted. According to the defendants, Muthu Gounder was the family friend and at his instance, the promissory notes were signed by the defendants for the purpose of showing that the family had incurred some debts. It was not stated why those blank promissory notes were allowed to be kept in the custody of Muthu Gounder and why no attempt was made by the defendants after the dispute was over, to get back the documents from Muthu Gounder. No explanation was forthcoming and as a matter of fact, there was an attempt by the defendants to prove their case by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otes, the plaintiffs are not entitled to the benefits of section 20 of the Negotiable Instruments Act, in my opinion, that argument cannot be accepted in the light of the provisions of sections 7, 8 and 9 as stated supra. 26. As per section 20 of the Negotiable Instrument Act, where one person signs and delivers to another a person a paper stamped in accordance with the law relating to negotiable instruments then in force, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. 27. It is further stated that a person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount. It was also provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder. Therefore, as per section 20 of the Negotiable Instruments Act, authority was given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e suits on the ground that the promissory notes were executed in their favour by the defendants and they filed the suits in the capacity of 'payee' and not in the capacity of 'holder in due course'. The plaintiffs in O.S.No.29 of 1983 also filed the suit as the legal-heirs to the payee and the plaintiff in O.S.No.219 of 1984 only filed the a suit as a holder in due course. 32. As per the judgment rendered in 1982(1)MLJ 431, which was followed in AIR 1992 MADRAS 346, a person who puts his name as payee cannot become the holder in due course. Though, the other judgments referred to above took a different view, even according to the judgment reported in 1982(1)MLJ 341, a person who makes himself as a payee by filling blank promissory note will not become the holder in due course unless he is able to prove that he became the holder in due course by paying consideration. According to me, the judgment reported in AIR 1982-1-MLJ 341 and AIR 1992 MADRAS 346 can be applied only when it was admitted or proved that the defendants gave blank promissory notes with their signature only. But in this case, it was not proved and therefore, the contents in the judgment reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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