Sinnachami Chettiar vs Ramasami Chettiar (deceased) and Others

Pandrang Row, J.—This is an appeal from the order of the Subordinate Judge of Dindigul dated 11th March, 1936, setting aside the decree

of the District Munsif of Periakulam dated 28th February, 1935, in O.S. No. 70 of 1934 and remanding the suit for fresh disposal after deciding

certain issues framed by the Subordinate Judge.

The suit was by an indorsee of a promissory note executed by the defendant in favour of one Subbayyan Chettiar, the endorser. The issues

framed by the District Munsif were:

(1) Is the full discharge pleaded true?

(2) Is the plaintiff not a bona fide holder in due course?

(3) Is the defendant entitled to raise the plea of discharge as contended in his written statement?

In substance, the defence was that the promissory note had been executed in favour of Subbayyan Chettiar as a benamidar, the beneficiary and

the person who lent the money under the promissory note being Ramalingam Chettiar, the brother-in-law of Subbayyan Chettiar. The plaintiff and

his brother Ramalingam were members of a joint Hindu family of which Ramalingam was the manager. The defendant pleaded two payments to

Ramalinga Chettiar the earlier of which was admitted by the plaintiff in his plaint, but the latter was not referred to at all in the plaint. It was

contended on behalf of the plaintiff that the subsequent payment also being one alleged to have been made not to Subbayyan Chettiar, the payee

under the note, but to Ramalinga Chettiar, the payment could not be pleaded as a discharge of the suit claim.

The District Munsif after considering the cases bearing on the point and in particular the Full Bench decision in Subba Narayana Vathiyar and

Others Vs. K. Ramasami Aiyar, came to the conclusion s that the defendant could not plead a discharge by a payment made to the beneficiary

under a promissory note, the payee of I which is a benamidar. In accordance with this conclusion, he was of opinion that it was unnecessary to

decide whether the subsequent alleged payment was made or not, and he accordingly made a decree in favour of the plaintiff. On appeal, the

learned Sub-Judge while not disagreeing with the District Munsif on his conclusion on the point of law in so many words, nevertheless thought that

it was open to the defendant to put forward a plea that the promissory note itself could not be sued upon by the payee or his indorsee because

there was no delivery of the promissory note to the payee by the maker thereof, though it was admitted in the written statement of the defendant

that there was a delivery by the maker to the beneficiary who advanced the money. Some argument about the execution of the promissory note to

Ramalinga Chettiar as an agent of Subbayyan Chettiar and a subsequent ratification of the same by Subbayyan Chettiar appears to have been

addressed to the Court below, and it was in consequence of these arguments that the learned Subordinate Judge was of opinion that the decision

of the District Munsif could not be supported unless certain issues relating to these new points were decided, namely:

(1) Was the promissory note, Ex. A, delivered to Subbayyan Chettiar and did the transaction become complete in his favour?

(2) If there was no delivery to Subbayyan Chettiar, is plaintiff a holder, and if so, a bona fide holder in due course?

(3) If the promissory note was not delivered to Subbayyan Chettiar, did he ratify the transaction as per Ex. A? When was such a ratification, and if

it was after the alleged payment in May, 1931, does not that bind him?

and so on. These questions did not really arise in the present case and I am of opinion that the Subordinate Judge erred in coming to the conclusion

that the decree of the District Munsif could not be supported unless these points were decided in the present suit. This is a suit brought by the

indorsee of the payee of a promissory noteagainst the executant, and it is obvious that the claim by the payee or his indorsee cannot be questioned

by the maker of the promissory note on the ground that the payee was only a benamidar. The present attempt seems to be to avoid the Full Bench

decision in Subba Narayana Vathiyar and Others Vs. K. Ramasami Aiyar, by raising a point about delivery of the promissory note which really

had never been thought of all these years in cases of this kind. The delivery contemplated by Section 46 of the Negotiable Instruments Act, no

doubt, must be a delivery by the maker or by some one authorised on his behalf. It need not necessarily be to the person whose name is given in

the note as payee. So long as there is delivery made by the maker the note is valid and complete. In this case, the note was admittedly handed over

to Ramalingam Chettiar, the beneficiary under the note, according to the defendant. There was thus a delivery which was a sufficient delivery for

the purpose of completing the transaction evidenced by the promissory note. No authority has been quoted to me in support of the proposition that

delivery must be to the person whose name is given in the promissory note as the payee or to any agent authorised by him in that behalf. So long as

there is delivery - as in this case - with the intention of completing the transaction to the person who actually advanced the money under the

promissory note, it is, in my opinion, futile to argue that there was no delivery and that the promissory note is not a completed transaction. In many

cases of benami promissory notes, the benamidar may not even know of the transaction and if this argument were to be accepted, the promissory

note given and taken in exchange for cash would be a worthless document. I have no doubt that there is really no substance in the point about want

of delivery and that the point as regards a subsequent ratification by the benamidar or the promissory note executed in his name is equally without

foundation. The relationship between the beneficiary and the benamidar is not that of a principal and agent. The relation between them is the result

of a trust arising by implication of law between the two. No question, therefore, of ratification can arise as between them.

In these circumstances, I am of opinion that the issues framed by the lower appellate Court for determination by the first Court are not necessary

for the disposal of the suit and that, in any case, there was no justification whatever for the lower appellate Court, to have set aside the decree of

the trial Court simply because certain issues had to be determined. This is a plain and simple case in which the decree of the District Munsif who

heard the suit was obviously right and it should not have been interfered with in any manner by the lower appellate Court.

The appeal is therefore allowed and the decree of the trial Court restored subject to any alteration that may have to be made as the result of any

application made to it u/s 19 of the Madras Agriculturists'' Relief Act. This condition is necessary because the learned Counsel for the defendant-

respondent represents that his client is an agriculturist and would be entitled to certain benefits under the Madras Agriculturists'' Relief Act. No

actual application is made nor is any affidavit filed to the effect that the defendant-respondent is an agriculturist within the meaning of the Act.

Under these circumstances, the best course seems to be to give the defendant-respondent liberty to apply to the trial Court for such reliefs as he

would be entitled to under the Madras Agriculturists'' Relief Act. The appellant is entitled to have his costs in this Court and in the lower appellate

Court from the defendant-respondent who will bear his own.

Leave to appeal is refused.