The main legal point established in the judgment is that the indorsee of a promissory note executed by the managing member of a Hindu family is limited to his remedy on the note, unless the indorsement is so worded as to transfer the debt as well and the stamp law is complied with.

Alfred Henry Lionel Leach, C.J.

1. This is a reference under Order 46, Rule 1 of the Code of Civil Procedure, by the Subordinate Judge of Tanjore in a suit on a promissory note. The note was executed by the first and second defendants in favour of one Ponnusami Naicker who indorsed it to the plaintiff. The two sons of the second defendant who constitute with him an undivided family have been made defendants, as it is sought to make them liable on the ground that the debt was incurred for family purposes by the second defendant in his capacity of managing member. The sons having raised the plea that the plaintiff as the indorsee is not entitled to sue them on the strength of the indorsement of the instrument, the Subordinate Judge has referred to us this question:

Whether an indorsee of a promissory note executed by the managing member is entitled to recover the debt from the property of the non-executant coparceners on the ground of their liability under the Hindu Law or whether he is limited to the remedy available on the note.

2. It is a fundamental principle of the law relating to negotiable instruments that no one whose name does not appear on the instrument can be held liable thereon, but this principle has unfortunately been lost sight of in some of the cases which have come before this Court. Before examining the reports which have been quoted to us in the course of the arguments I wish to refer to a decision of the Privy Council and to two English cases as the law is to be found there clearly stated. The decision of the Judicial Committee is that in Firm of Sadasuk Janki Das v. Sir Kishan Pershad (1918) 36 M.L.J. 429 : L.R. 46 IndAp 33 : I.L.R. 46 Cal. 663 (P.C.) which was an appeal arising out of a suit on a hundi. Lord Buckmaster in delivering the judgment observed:

It is of the utmost importance that the name of a person or firm to be i charged upon a 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 recognised as the document passes from hand to hand.

3. Later in the judgment, Lord Buckmaster said:

Their Lordships attention was directed to Sections 26, 27 and 28 of the Negotiable Instruments Act of 1881, and the terms of these sections were contrasted with the corresponding provisions of the English Statute. It is unnecessary in this connection to decide whether their effect is identical. It is sufficient to say that these sections contain nothing inconsistent with the principles already enunciated, and nothing to support the contention, which is contrary to all established rules, that in an action on a bill of exchange or promissory note against a person whose name properly appears as party to the instrument, it is open either by way of claim or defence to show that the signatory was in reality acting for an undisclosed principal.

4. In Lewin v. Edwards (1842) 9 M. & W. 720 : 152 E.R. 304, it was held that where the drawer of a bill indorses it in blank, and delivers it to another, who passes it without a fresh indorsement to a third person, the latter cannot maintain an action of debt against the drawer. The contract transferred by the delivery of the bill being only the contract on the bill the holder could not sue the drawer with whom he had no privity of contract. In In re Soltykoff : Ex parte Margrett (1891) 1 Q.B.D. 413, Lord Esher, M.R., had to consider the claim of an indorsee of bills of exchange accepted by a minor. It was said that the bills were accepted for necessaries supplied to the minor. Lord Esher in deciding that the petitioner was not entitled to hold the minor liable said:

He supplied no necessaries to the infant; he is only the indorsee of some bills of exchange accepted by him. As regards an indorsee of a bill of exchange it is immaterial whether there was any consideration for the bills as between the drawer and the acceptor; he can sue the acceptor as the indorsee of the bills, and nothing