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1991 DIGILAW 179 (KER)

B. Ranganathanv v. Khashiraj

1991-04-12

K.BALAKRISHNAN NAIR

body1991
JUDGMENT K. Balakrishnan Nair, J. 1. The plaintiff in a suit on pronote for realisation of Rs. 4,000 with interest thereon is the appellant in the second appeal. 2. The plaintiff alleged that the first defendant on 1st March 1978 executed Ext. A-1 pronote in favour of the 2nd defendant and the second defendant on 16th October 1979 endorsed it in favour of the plaintiff for valid consideration. The plaintiff later sent notice to the defendant demanding payment. They did not send any reply. The plaintiff filed the suit for realisation of the amount. 3. The first defendant filed written statement contending that Ext. A-1 pronote was not executed by him and it was concocted by the plaintiff with the help of second defendant. 4. The second defendant filed written statement alleging that he had not endorsed any pronote in favour of the plaintiff and Ext. A-1 pronote was a fraudulent document created by the plaintiff and the first defendant. 5. Plaintiff got himself examined as P.W. 1 and marked the pronote as Ext. A-1. P.W. 2 was examined and proved the endorsement made by the first defendant in favour of the plaintiff and the endorsement was got marked as Ext. A-1(a). The first defendant was examined as D.W. 1 and he deposed that Ext. A-1 pronote is not genuine. The second defendant did not adduce any evidence. The trial court held that execution of Ext. A-1 and the endorsement in Ext. A-1(a) are not proved and, therefore, the suit was dismissed, however; without costs. The plaintiff filed A.S.No. 33 of 1984 before the District Court, Ernakulam and the District Court confirmed the finding of the trial court. The District Court has also observed that execution of Ext. A-1 is not properly proved and the suit pronote is not supported by consideration. These findings are challenged in this second appeal. 6. According to the plaintiff Ext. A-1 pronote was executed by first defendant in favour of the second defendant on 1st March 1978 and the second defendant on 16th October 1979 endorsed it in favour of the plaintiff after accepting consideration. Both the defendants disputed genuineness of Ext. A-1 pronote. But, it is pertinent to note that the second defendant who allegedly endorsed the pronote in favour of the plaintiff did not adduce any evidence in support of his contention. Both the defendants disputed genuineness of Ext. A-1 pronote. But, it is pertinent to note that the second defendant who allegedly endorsed the pronote in favour of the plaintiff did not adduce any evidence in support of his contention. He filed a written statement denying the alleged endorsement in favour of the plaintiff. He contended that Ext. A-1 pronote was concocted by the plaintiff in collusion with the first defendant. The proceedings in this case show that the second defendant after filing the written statement did not participate in the trial of the suit. The plaintiff examined two witnesses. The plaintiff as P.W. 1 deposed that he paid valid consideration to the second defendant and got endorsed Ext. A-1 pronote. P.W. 2 deposed that he wrote Ext. A-1(a) and thus, Ext. A-1(a) is proved. Both P.Ws. 1 and 2 were not cross examined by the second defendant. So, the evidence of these two witnesses regarding Ext. A-1(a) endorsement is unchallenged. The lower appellate court found fault with the plaintiff for not examining second defendant as a witness of the plaintiff. It is true that in a case where the indorser supported the indorsee regarding the execution of the pronote, his evidence would be material. But this is a case where the indorser specifically alleged that the pronote is a concocted document and that he did not endorse it in favour of the plaintiff. Therefore, the non-examination of the second defendant, the indorser, is of no significance. 7. The short question that arises for consideration is whether in the circumstances and nature of this case the plaintiff is entitled to a decree as prayed for in the suit. The trial court did not discuss the evidence of P.Ws- 1 and 2. The lower appellate court also was obsessed with the idea that the plaintiff failed to examine the second defendant. However, it is important to note that the evidence of P.Ws. 1 and 2 would satisfactorily prove the endorsement in Ext- A-1(a) and that clearly established that the plaintiff after having paid valuable consideration got endorsed Ext. A-1 pronote from the second defendant and thus he became a holder in due course as regards Ext. A-1 pronote. The evidence in this case clearly shows that the plaintiff became the possessor of Ext. A-1 pronote from the second defendant and thus he became a holder in due course as regards Ext. A-1 pronote. The evidence in this case clearly shows that the plaintiff became the possessor of Ext. A-1 pronote 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. Under the scheme of the Negotiable Instruments Act a holder in due course is entitled to certain special privileges. S.120 of the Negotiable Instruments Act, State that no maker of a promissory note, and no drawer of a bill of exchange or cheque and no acceptor of a bill of exchange for the honour of the drawer shall, in a suit thereon by a holder in due course be permitted to deny the validity of the instrument as originally made or drawn. So also under S.121 of the Negotiable Instruments Act, “no maker of a promissory note and no accepter of a bill of exchange (payable to order), shall, in a suit thereon by a holder in due course, be permitted to deny the payee's capacity, at the date of the note or bill, to endorse the same. Another important section relevant for the purpose of this case is S.122 of the Negotiable Instruments Act which reads as follows:"No indorser of a negotiable instrument shall, in a suit thereon by a subsequent holder, be permitted to deny the signature or capacity to contract of any prior party to the instrument." Going by the above provisions it is clear that it was not open to the second defendant to contend that the first defendant did not sign Ext. A-1 pronote. Ext. A-1(a) endorsement is proved by satisfactory evidence as the evidence of P.Ws. 1 and 2 is not challenged by the second defendant. So, once Ext. A-1(a) endorsement is proved the contention of the second defendant that Ext- A-1 pronote was not signed by the first defendant is only to be rejected. So, in a suit of this nature the plaintiff need only prove that the endorsement made in his favour is true and valid and he paid valid consideration for the same and he became the possessor of the instrument before the amount mentioned in it became payable and that he believed that no defect existed in the title of the assignor. That has been established in this case. The plaintiff being holder in due course, is entitled to the privilege conferred on him by the statute. So, by virtue of provisions 120 to 122 of the Negotiable Instruments Act, the dismissal of the suit is illegal and unsustainable in law. The appellant plaintiff has satisfactorily proved the endorsement in his favour and he became the holder in due courseIn the result, I set aside the decree and judgment of the courts below and the suit is decreed as prayed for against both the defendants with costs throughout. Second appeal is allowed.