IMPORTANT POINT
A holder in due course is required to get the promissory note transferred in his own favour. Prior to such a transfer, he cannot demand ‘payment’.

Dr. G. Yethirajulu, J.—This is a revision petition filed by the defendant in O.S. No. 192 of 1990 on the file of the Principal Junior Civil Judge, Ongole.

The suit was filed by the plaintiff for recovery for the money. The suit was decreed by the Trial Court through the judgment dated 19.1.2000. Being aggrieved by the same, the defendant preferred A.S. No. 27 of 2000 on the file of IVth Additional District and Sessions Judge, Ongole and the said appeal was dismissed by confirming the judgment of the Trial Court. Being aggrieved by the same, the present appeal is preferred by contending that the plaintiff got the suit promissory note transferred for consideration from the original creditor. Later, he filed the suit against the defendant for recovery of the money. In the revision petition, the defendant took two grounds to convince this Court, that the suit itself is not maintainable as it was filed before the wrong Court, which has no jurisdiction to entertain the suit. It is further contended by the revision petitioner that even though there is a transfer endorsement in favour of the plaintiff, it was made subsequent to the demand made by the original creditor to the defendant through a registered notice. Therefore, the plaintiff cannot become the holder in due course. Therefore, he cannot have better rights than the transferor. Therefore, the suit filed at Ongole is not maintainable.

2. The point for consideration is whether the Court at Ongole has .jurisdiction to entertain the suit and whether the suit is liable to be dismissed?

3. It is an undisputed fact that the transferee of the promissory note issued a legal notice to the defendant on 24.8.1989 demanding the payment of the money covered by the suit promissory note and subsequent to the demand notice the pronote was transferred in favour of the plaintiff on 31.12.1989 though an endorsement for consideration. In order to get the status of holder in due course, the plaintiff has to get the transfer of the promissory note in his favour before making the demand for payment from the defendant.

4. Section 9 of the N.I. Act defines ‘holder in due course’ reads as follows:

“Holder in due course”—“Holder in due course” means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorse thereof, if payable to order, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.

5. According to this section there is a difference between a holder for collection and a holder in due course. A holder in due course is entitled to claim better rights than the transferor. Any defect in the title of the transferor will not affect the rights of the holder in due course. It is only where the transferee of the payee wants to claim higher rights than the transferor that he must satisfy the requirements of a holder in due course as laid down in Section 9. Basavaiah v. Venkamma.1

6. Section 9 mentions that when a consideration become payable to the possessor of the promissory note and before the amount becomes payable to the transferee becomes holder in due course. But, in the present case, in view of the legal notice issued by the transferor to the defendant on 24.8.1989, she has lost the status of holder in due course as the transfer/endorsement obtained by the plaintiff was only on 31.12.1989, which is subsequent to the date of legal notice. So far as the original creditor is concerned, it is an undisputed fact that the suit promissory note was executed at Kandukuru and the transferor belongs to Kandukuru so also the defendant. Therefore, the Kandukuru Court was the proper Court to present the plaintiff for the purpose of adjudication of the dispute. But, the plaintiff filed the suit at Ongole on the basis of endorsement that the consideration for the endorsement was paid at Ongole