Chunduru Krishnayya vs Kolluri Subba Rao and Another

Raghava Rao, J.—In this case two interesting questions of law have been argued before me at some length, viz., (1) whether a promissory

note executed by a lawful guardian of a minor for a debt binding on his estate can itself be sued upon or only the debt evidenced thereby can be

sued for, and (2) whether an endorsee of such a promissory note can without any assignment of the debt sue on the promissory note for the

recovery of the debt evidenced thereby.

The Courts below dismissed the suit out of which this second appeal arises. The plaintiff has appealed. The ground of the dismissal of the suit by

the Courts below is that although by means of an amendment of the original plaint the plaintiff has raised the case of relief on the basis of the debt

quite apart from and in addition to the promissory note basis, the endorsement of the promissory note does not per se carry with it the right to

recover without an assignment of the debt itself which there is not. It is common ground before me that if this suit is to be decreed the case must go

back to the lower appellate Court for a determination of the exact amount due on an application of the Madras Agriculturists'' Relief Act which

was not done by the Courts below.

On the first point the appellant''s learned counsel relies on the observations in the judgment of a Full Bench of this Court delivered by Ramesam

J. in a case reported in Satyanarayana v. Mallayya, 58 Mad. 735 : A. I. R. 1935 Mad. 447. The observations are at p. 742 of the report and are

as follows:

It was suggested that in such a case the suit should be on the debt and not on the note. But this seems to be a merely verbal distinction and not

one of substance; Padma Krishna Chettiar v. Nagamania Ammal, 39 Mad. 915 : A I. R. 1916 Mad. 677. A note is only evidence of a debt. It is

true that in the case of insufficiently stamped promissory notes parties are not allowed to fall back upon the debt where the debt and the making of

the note were simultaneous. Such a principle is necessary to protect the interests of public revenue. It is not necessary to extend the principle

beyond such a case.

The respondent''s learned counsel relies, as against the appellant''s argument founded on these observations, on the adverse comment made on

them by Varadachariar J. in Narayanarao v. Venkatapayya, I. L. R. (1937) Mad. 299: A. I. R. 1937 Mad. 182, to the effect that it seemed to his

Lordship too sweeping to say that for all purposes the distinction. was unsubstantial. To take one instance, his Lordship stated, the difference

would be very material when the Court is called upon to apply the provisions of Sections 120 and 121 of the Negotiable Instruments Act. The

learned advocate for the respondents has also drawn my attention to the ruling of a Full Bench of five Judges of this Court in Sivagurunatha v.

Padmavati, I. L. R. (1941) Mad. 513 : A. I. R. 1941 Mad. 417 as shaking the authority of the Full Bench of three Judges reported in

Satyanarayana v. Mallayya, 58 Mad. 735 : A. I. R. 1935 Mad. 447.

With reference to the first of these submissions of learned counsel, I am of opinion that although the proposition of Ramesam J. does require

qualification in certain cases as instanced by Varadachariar J. the Court must, where such a qualification is not called for, accept the proposition as

a rule of sound commonsense and substantial justice. Understood in this sense the view of Ramesam J. is not, in my opinion, liable to rejection

merely because of the observations of the learned Chief Justice in the Full Bench decision reported in Pundarikakshayya v. Sreeramulu, I. L. R.

(1916) Mad. 242 : AIR 1946 Mad. 1 on which strong reliance has been placed for the appellant. I may point out in this connection that the

decision in Satyanarayana v. Mallayya, 58 Mad. 735 : A. I. R. 1935 Mad. 447 is referred to at p. 252 of the report of the case in

Pundarikakshayya v. Sreeramulu, I. L. R. (1946) Mad. 242: AIR 1946 Mad. 1, but without any disapproval whatsoever.

With reference to the second of the submissions made by Mr. Umamaheswaram, I am perfectly clear that it is erroneous because what the Full

Bench of five Judges did in Sivagurunatha v. Padmavathi, I. L. R. (1941) Mad. 513 : A. I. R. 1941 Mad. 417 was to over-rule Satyanarayana v.

Mallayya, 58 Mad. 735 : AIR 1935 Mad. 447 not at all on the point at present under discussion but on another point altogether, viz., whether the

Court can look into the surrounding circumstances when deciding whether the maker of a promissory note has executed it as the agent or

representative of another so as to exclude personal liability on his own part.

So much with reference to the first question in this appeal on which I do not find it necessary, however, to express my final opinion in view of the

conclusion which I have arrived at on the second question.

On this second question Mr. Umamaheswaram for the respondent urges that a Full Bench of this Court has ruled in Maruthamuthu Naicker v.

Kadir Batcha Rowther, I. L. R. (1938) Mad. 568 : A. I. R. 1938 Mad. 377 that the endorsee of a promissory note executed by the managing

member of a joint Hindu family is limited to his remedy on the note and is not entitled to sue the non-executant coparceners on the ground of their

liability under the Hindu law, unless the endorsement is so worded as to transfer the debt as well, and the stamp law is complied with and that since

the wording of the endorsement in the present case does not cover the debt as apart from the promissory note and the endorsement does not

comply with the requirements of the stamp law, the plaintiff must of necessity fail. There is nothing in principle which renders the analogy of the Full

Bench ruling inapplicable to the present case which is one of a suit by the endorsee of a promissory note executed by the guardian de jure of a

minor; and the only question is whether the actual wording of the endorsement, Ex. P-1 (a) precludes relief to the plaintiff on the basis of the debt,

apart from the promissory note. In my opinion, the wording is susceptible, although perhaps by a slight stretch which I am prepared to make, if

necessary, in the interest of justice, of the view which I am taking, viz., that the parties intended thereby that the debt should stand assigned so that

it might be recovered from the party liable and that the liability not merely on the promissory note but on the debt evidenced thereby as well should

be enforced by the endorsee. Mr. Umamaheswaram contends that could not be the intention because the endorsement bears no stamp such as is

required in law for the debt to be validly assigned. I do not consider that circumstance by any means conclusive. That can only involve the

appellant in the necessity to pay the requisite stamp duty and penalty on Ex. P-1 (a) which the appellant is quite ready and willing to do. The

amount will be found by the appellant within a month peremptorily failing which the second appeal will be dismissed with costs. On his doing so,

there will be a remittal of the case to the trial Court for the due scaling down of the debt and for the passing of a fresh decree. The trial Court when

hearing the case under this order of remittal that I am making will make due provision for the costs of the proceeding that has to take place before

it for the purpose of determining the amount due as on a scaling down.

Each party shall bear his own costs in all the three Courts. No leave. (The case having been posted to be mentioned this day the Court passed

the following order:)

Court-fee paid on the memorandum of second appeal as also on the memorandum of appeal to the lower appellate Court will be refunded.

Since the endorsement of the promissory note falls under Article 50 of the schedule to the Stamp Act a fixed stamp duty of Rs. 7-8-0 shall be

collected together with the penalty due. Time for payment will be one month from today.