HIGH COURT OF ORISSA
DAS, J., JJ.
Braja Kishore Dikshit
Versus
Purna Chandra Panda
Second Appeal No. 26/1953,
Decided On : 09-11-1956
NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 4, 9, 16, 53, 118 - TRANSFER OF PROPERTY ACT, 1882 - SECTION 130 - PROMISSORY NOTE - HOLDER IN DUE COURSE - ACTIONABLE CLAIM - DISCHARGE OF LIABILITY.
Fact of the Case:
Plaintiff filed a suit for recovery of Rs. 1,047 from defendant No. 1 on the foot of a hand-note (Ex. 1) executed by defendant No. 1 in favor of defendant No. 2 and subsequently endorsed in favor of the plaintiff (Ex. 1-A). Defendant No. 1 contended that he did not borrow any money from defendant No. 2, Ex. 1 is not a promissory note, and he had already discharged the liability by paying the amount to one Madhusudan Panda (D.W. 6) as per the instructions of defendant No. 2.
Finding of the Court:
The court held that Ex. 1 was not a promissory note as it lacked an unconditional undertaking to pay and was merely a deposit receipt. The court also found that the plaintiff was not a holder in due course as he did not pay consideration for the endorsement and had knowledge of the defense of payment raised by defendant No. 1. Furthermore, the court held that even if the document was a valid endorsement, it could not amount to a transfer of an actionable claim as the liability had already been discharged by payment to D.W. 6.
Issues: 1. Whether Ex. 1 is a promissory note within the meaning of the Negotiable Instruments Act, 1881? 2. Whether the plaintiff is a holder in due course? 3. Whether the transfer of the document by endorsement can be held to be an actionable claim enforceable in law?
Ratio Decidendi: 1. A document stating a particular sum of money deposited, to be returned on demand, is not a promissory note. 2. To be a holder in due course, the endorsee must become the holder for consideration, before the amount mentioned in the promissory note 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. 3. A transfer of an actionable claim cannot be held to be enforceable in law if the liability has already been discharged.
Final Decision: The court allowed the appeal, set aside the judgments of the lower courts, and dismissed the plaintiff's suit.
JUDGMENT :- This is an appeal by defendant No. 1 against the concurrent Judgments of both the Courts below decreeing the plaintiffs suit. The plaintiff filed the suit for recovery of a sum of Rs. 1,047 from defendant No. 1 on the foot of a hand-note dated 4-1-46 (Ex. 1). This handnote was executed by defendant No. 1 in favour of defendant No. 2. The plaintiff is the son of defendant No. 2. Defendant No. 2 died during the pendency of the appeal in the Court below and his widow, Mst. Rohini Pandiani, was impleaded as respondent No. 2. Defendant No. 1 is the son-in-law of an agnate of defendant No. 2.
The plaintiffs case was that defendant No. 1 borrowed the sum of Rs. 900 from defendant No. 2 on 4-1-46 and executed the suit-pronote promising to pay on demand. Defendant No. 2 subsequently endorsed this Ex. 1 in favour of his son on 6-9-48 (Ex. 1-A). As defendant No. 1 failed to pay in spite of repeated demands, plaintiff filed the present suit. Defendant No. 2 though served with notice did not appear when the suit was called. Defendant No. 1s defence, however, was that he did not borrow any money from defendant No. 2 and the document, Ex. 1 is not promissory note and further defendant No. 2 had not the capacity to advance the loan in question to him, he himself being a debtor to several other persons at the relevant date.
On the date of the execution of the handnote, i.e., 4-1-46, defendant No. 2 executed a sale-deed (Ex. C) in favour of defendant No. 1 for a sum of Rs. 1,700 in respect of one pie gountie right with appurtenant Bhogra lands covering an area of 2.50 acres. Out of this Rs. 1,700, defendant No. 2 kept in deposit Rs. 900 with defendant No. 1 for which he passed a receipt which is now described as a pro-note (Ex. 1). In about February 1946, defendant No. 2 requested defendant No. 1 to deposit that sum of Rs. 900 with one Madhusudan Panda (D.W. 6). This D.W. 6 on receipt of the said amount passed a receipt in favour of defendant No. 2 and his wife.
Therefore whatever liability the defendant No. 1 had, was thus discharged. Ex. 1 was not returned though the money was paid on the ground that it was misplaced somewhere, and defendant No. 1 being a relation of the family believed in the words of defendant No. 2 and did not press for it. A few months after the execution of the deed of sale, defendant No. 2 and his son trespassed into the land sold under (Ex. 1-C) and cut and carried away the paddy crops raised thereon which necessitated the filing of a Title Suit (No. 3/47) in the Court of the Subordinate Judge of Sambalpur by defendant No. 1 for recovery of possession and for mesne profits; which suit was decreed on 17-12-47. On account of this, defendant No. 2 transferred Ex. 1 in spite of the payment to D.W. 6 in favour of his son and thereafter he had filed the present suit.
2. The learned Subordinate Judge who heard the suit at the first instance, came to the conclusion that defendant No. 1 did not borrow Rs. 900 under Ex. 1. But he held Ex. 1 to be a promissory note. He accepted the defence version that defendant No. 1 had paid Rs. 900 to D.W. 6 at the direction of defendant No. 2 and D.W. 6 in his turn executed a receipt in favour of defendant No. 2 and his wife. He further found that the plaintiff had no knowledge of this deposit with D.W. 6 and he was a holder of the promissory note in due course.
He further found that defendant No. 1 failed to prove that the deposit with defendant No. 6 was the amount covered by Ex. 1. He also came to the finding that there was no evidence that the endorsement was without consideration and accordingly he decreed the suit. The learned District Judge on appeal concurred with all the findings of the learned Subordinate Judge stated above; but disbelieved the story of deposit with D.W. 6 by defendant No. 1 and accordingly dismissed the appeal. It is against this Judgment that the present second appeal is directed.
3. Mr. G.K. Misra, learned counsel appearing on behalf of the appellant, cont
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