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TMI Blog1956 (3) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... atter expressed his inability to repay the amount found due. Thereupon the old khata was squared up, a sum of ₹ 8/7/- was paid in cash by the defendant, and as for the balance of ₹ 9700/- he executed a promissory note in favour of Mst. Gulabkanwar, and this amount was stated in the promissory note to have been received by the defendant in cash. It was further stipulated in the promissory note that the defendant would pay interest at the rate of 7 3/4 annas per cent per mensem. The plaintiffs eventually brought a suit for the recovery of ₹ 9700/. principal and ₹ 75/3/- as interest and ₹ 673/9 3/4-as arrears of rent, amounting in all to ₹ 10448/12 3/4-. As was subsequently made clear by Mst. Gulabkanwar, the debt covered, by the promissory note (and the kothas) had fallen to the share of Nauratanmal at a family partition, and on his death his minor grand-sons Sampatchand and Suratsingh (their father Dhanpat Singh having predeceased Nauratanmal) became the owners thereof and the promissory note had been executed in Mst. Gulab-kanwar's name because her sons were minors and she was their natural guardian. Mst. Gulabkanwar also stated in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minor plaintiffs is concerned, learned counsel for the appellant based his argument on Section 78, Negotiable Instruments Act. That section reads as follows: Subject to the provisions of Section 82, Clause (c) payment of the amount due on a promissory note, bill of exchange or cheque must in order to discharge the maker or acceptor, be made to the holdur of the instrument. We may mention straightway that Section 82(c) has no relevance to the case before us and, therefore, it is the application of the rest of the section Which we have to consider. The argument of learned counsel is that it is only the holder of the promissory note who is entitled to bring a suit in accordance with the section quoted above, and no other person, even if he be the true owner is competent to do so. Reliance was also placed in this connection on Section 8, Negotiable Instruments Act which reads as follows: 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 cheque is lost or destroyed, its holder is the person so entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . What it really enacts is a rule for the protection of the debtor and provides that the parts who can give an effective discharge to the maker or acceptor of a promissory note or bill of exchange or cheque is the holder thereof. According to this view, a suit brought by the true owner where the holder is a mere benamidar is competent and need not and should not be thrown out provided that the true owner can secure an effective discharge to the maker or the acceptor in respect thereof. 8. We do not propose to examine these cases individually, and before we proceed to examine, for ourselves, the principle underlying them, we consider it proper to refer to two decisions of the Privy Council which have been referred to in some of the cases mentioned above and have been treated as having some bearing, on a proper decision of the question under consideration. 9. In Sadasuk Janki Das v. Kishen Pershad AIR 1918 PC 146 their Lordships observed that it was of the utmost importance that the name of a person or firm to be charged upon negotiable document should be clearly stated on the face or on the back of the document so that the responsibility is made plain and can be instantly r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions are legal so far as this country is concerned unless they are hit by any positive rule of law. The point that We Wish to make is that so far as these two decisions of the Privy Council are concerned, they do not directly govern the question which has arisen for determination before us and cannot be considered to be conclusive on it. 10. The question then is what is the true effect of Section 78 read with Section 8, Negotiable Instruments Act. Do these sections in their cumulative effect lay down that the holder alone and nobody else can bring a suit on the basis of a promissory note for recovering a sum due thereon, for, that appears to us to be the basic consideration underlying the decisions in Harkishore v. Gura Mia (F) and other cases following that opinion. We have given this matter our very careful and anxious consideration and, with respect, we have come to the conclusion that it would be going too far to hold that the sections under consideration or the scheme of the Negotiable Instruments Act preclude anybody except the holder of the promissory note or bill of exchange or cheque from filling a suit based thereon. Section 78 does not say so in clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scharge to the maker according to Section 78, Negotiable Instruments Act, and consequently the debtor would be entitled to insist that before he can be called upon to pay to the true owner, the latter must secure to him a lawful discharge from the holder. If this essential requirement envisaged in Section 78 is not fulfilled, it is obvious that the maker or the acceptor would be exposed to a real risk on account of his liability subsisting still to the holder within the meaning of Section 78, and we see no justification for adopting a view which would lay him open to such an unnecessary risk involving a double liability. 12. Considering the matter, therefore, from the combined operation of these two principles, we now proceed to examine certain kinds of cases which may arise and to see how the principles we have stated above would work out in relation to them. 13. The first class of case is where the holder brings a suit himself without impleading the beneficial owner. ' There is no difference of opinion as regards such a case. Such a suit would be perfectly good and if the holder obtains a decree upon the instrument against the maker, the beneficial owner thereafter c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to say that the decretal amount shall be paid to or to the credit of the holder who was the plaintiff's benamidar, and it was further provided that it shall not be recoverable except on obtaining a discharge from the holder in respect of the liability of the main defendant under the promissory note in suit, and a provision was also made that if the decretal amount was deposited in court or was brought to it in execution of the decree, it shall enure to the credit of the holder. 15. We further think that in a case of the aforesaid category where the holder is a co-plaintiff, the position is still simpler. In such a case the interest of the defendant maker can be easily safeguarded without any difficulty whatever as the holder is also in the same array of parties as the true owner, and there can be no objection to passing a suitable decree so as to give a lawful and an effective discharge to the maker. Such a suit must be held to be competent because the holder is undoubtedly a party to it as a co-plaintiff. Reference may be made in support of this view to Rishabkumar Mohanlal v. Motilal Kasturchand (N) where the learned Judges said that they were prepared to accept that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the suit on the side of the plaintiffs is concerned. We, therefore, hold that the suit as brought by Mst. Gulabkanwar on behalf of her minor sons is competent and that it is not hit by Section 78, Negotiable Instruments Act as it would be perfectly competent to her being a co-plaintiff to give a discharge to the defendant in this very suit on the claim arising under the promissory note executed by the defendant in her favour. 18. Upon the view which has commended itself to us and we undoubtedly consider it to be essentially just and equitable and therefore the better view -- we are further of opinion that the next question raised by learned counsel for the defendant as to consideration is bereft of all force. In this view the suit as brought by the sons is maintainable even if they are not the holders and the holder is their mother who is also a party to the suit. The correct approach, in our opinion, is to look at the suit as a whole. It is not disputed even by the defendant that consideration followed from the grand-father of the minor plaintiffs, whose heirs the latter undoubtedly are, and that provides excellent support as to consideration for the suit brought b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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