( 1 ) THIS is a defendant's further appeal against an affirming decree of the lower appeal Court for Rs. 1,200/-passed on the foot of a promissory note dated 14 september 1958 which he admittedly executed in favour of one Shivlal for Rs. 1,670/ -.

( 2 ) IT is common ground that Shivlal, a money-lender, had advanced money to the defendant and the latter executed a promissory note dated 7 October 1955 for Rs. 1,200/ -. Subsequently, on 14th September 1958 to be more precise, accounts were made and Rs. 1,670/-, inclusive of interest, was found due from the defendant who then executed a fresh promissory note for Rs. 1,670/- and promised to repay that amount with interest at 1 per cent, per month. The creditor, Shivlal, died in February 1960 leaving behind him surviving three sons and two daughters, Premlata and Rajmati.

( 3 ) THE three sons of Shivlal initiated the action, out of which this appeal arises, on the averment that, upon the death of Shivlal, Premlata and Rajmati had transferred their interest in the money-lending business inherited by them along with their brothers to the latter The plaintiff claimed Rs. 1,670/-as principal and rs. 601-20 on account of interest.

( 4 ) THE defendant resisted the claim on several grounds. He denied that the daughters of Shivlal had transferred their interest in their father's money-lending in the manner alleged and pleaded that the suit was not maintainable without impleading them as parties. He further pleaded that he had repaid Rs. 1,200/towards the loan. According to him, even the earlier promissory note dated 2 october 1955 was executed for old debts consisting mostly of interest and that, since Shivlal was a money-lender and he had advanced the original loan in the course of his business, he was not entitled to any interest and costs of the suit, because he had failed to comply with the provisions of the Money-Lenders Act, 1934.

( 5 ) BOTH the Courts below held that Premlata and Rajmati were not necessary parties because they gave up their interest in favour of their brothers. They concurred in passing a decree for Rs. 1,200/- after disallowing all interest claimed subsequent to 7 October 1955 for the failure of Shivlal to comply with the provisions of the Money-lenders Act.

( 6 ) HAVING heard the counsel, I have formed the opinion that the appeal should be allowed. The rules of law contained in Sections 8 and 78 of the Negotiable instruments Act are not applicable to cases where a promissory note, a bill of exchange or any other negotiable instrument devolves by operation of law or is transferred to another by assignment. So, Broomfield J, observed in Shantaram vithal v. Shantaram Bhagwan, AIR 1938 Bom 451 : "but if the holder is dead, his legal representatives must, I think, be entitled to sue. . . . . In my opinion, there can be no doubt about it. There is nothing in the cases cited, nor in the Act itself, as far as I can see, which is inconsistent with it. The Act regulates the issue and negotiation of bills, notes and cheques, but does not provide for the transmission of rights in such Instruments by operation of law or by transfer. " (Page 452)In Zujya Pascol v. Manmohandas Lallu-bhai, AIR 1940 Bom 164, Wassoodew J. , observed :

"the Act does not expressly exclude the doctrine of representative action. If a holder named is dead, a person claiming representation to his estate can bring a suit to recover the debt upon a promissory note in the name of the deceased. "

(Page 166)In Gulabgir v. Nathmal, 27 Nag LR 327 = (AIR 1932 Nag 23 ). Bose A. J. C. (as he then was) stated : "what the Negotiable Instruments Act does is to prohibit negotiation except in the manner specified by it but not to prohibit assignment in any of the several ways allowed by law. " (Page 330) (of Nag LR) = (at p. 25 of AIR ). It is, therefore, clear, and is also not now disputed, that, upon the death of the holder Shivlal, his heirs became entitled to sue for recovery of loan evidenced by the