The main legal point established in the judgment is that the transfer of negotiable instruments can be effected by means other than endorsement, and the absence of an endorsement to the plaintiff was not a bar to the suit.

S. Subramania Aiyar, C.J.

1. The plaintiffs case in short is as follows. The defendants Nos. 1 to 6 traded in Ceylon under the name and style of S.M.P.M.K., and, while so trading, the firm obtained twenty-five negotiable promissory notes from different persons and indorsed the same to one Meyyappa Chotty, who again indorsed them to the Bank of Madras at Colombo. On the presentation of the notes on behalf of the bank to the makers the notes were dishonoured. The said Meyyappa Ohetty paid the bank and obtained a return of them. The defendants firm gave the said Meyyappa Chetty three other promissory notes payable to him or to his order which were indorsed by Meyyappa Chetty in I favour of the bank and similarly returned to him on his payment to the bank after they also had been dishonoured. Subsequently, in consideration of Rs. 1,500 paid by the plaintiff to him, Meyyappa Chetty assigned in Ceylon his right to the notes by an instrument, dated the 9th April 1901. The defendants on demand failed to pay the amount due by them upon the notes. The present suit is for the recovery of the amount due in respect of five out of the promissory notes made payable to the firm and one out of those made by the firm itself.

2. Various defences were raised which it is not necessary now to state. The District Munsiff gave a decree to the plaintiff. On appeal, the District Judge reversed the decree and dismissed the suit on the technical ground that the notes not having been indorsed over to the plaintiff he could not sue on them.

3. The ratio decidendi involved in the actual decision in Pattat Ambadi Marar v. Krishnain I.L.R. 11 M. 200, and Abboy Chetty v. Ramochandra Rau I.L.R. 17 M. 461, which the District Judge followed, has not been accepted as sound in subsequent cases. In Ramachandra Rao v. Abeeb Rowtharn I.L.R. 24 M. 657, Shephard and Moore, JJ., held that there was nothing in the Negotiable Instruments Act to restrict the transfer of negotiable instruments to transfer by indorsement only, that such choses in action may be otherwise assigned, and that an assignee under an assignment of the latter class may sue in his own name. This was followed in Mahomed Khumer Ali v. Ranga Rao I.L.R. 24 M. 654, and the authorities in support of this view of the law will be found referred to and considered in the judgment of Bhashyam Aiyangar, J., in that case, where it is pointed out that" the important difference between transfer by indorsement and transfer otherwise than by indorsement of a negotiable instrument is that in the latter case the assignee will acquire in the bill or note, as a chattel, nothing more than the right, title and interest of his assignor, whereas in the former case the assignee by indorsement will have all the rights and advantages of a holder in due course of a negotiable instrument" (at page 656). Story also states the law on the point thus :-" If a promissory note is originally payable to a person or his order, then it is properly transferable by indorsement. We say properly transferable because in no other way will the transfer convey the legal title to the holder so that he can at law hold the other parties liable to him ex directo, whatever may be his remedy in equity. If there be an assignment thereof without indorsement, the holder will thereby acquire the same rights only as he would acquire upon an assignment of a note not negotiable" (Story on Promissory Notes, 7th Edition, Section 120, page 153).

4. Mr. Krishnaswami Aiyar on behalf of the respondents, in effect, contended not only that the provisions of the Negotiable Instruments Act do not permit of any kind of transfer other than by indorsement, but went the length of urging that in cases like the present we are precluded from travelling beyond the four corners of the Act. Before proceeding to examine the provisions of the Act, it is best to point out the fallacy underlying such an extreme contention-a contention possible only when the true nature of the inst