NATARAJA NAICKEN Vs. AYYASAWMI PILLAI

JUDGEMENT

(1.) The 1st defendant, the younger brother of the 2nd defendant with 3 other persons executed a pro-note to a third person. The major portion of the debt was borrowed by the 1st defendant. This borrowing is found by the court of First Instance, and by Mr. Justice Coutts Trotter, to have been made on behalf of and for the benefit of the joint family of the two defendants. We accept this conclusion. On this pro-note, the four executants were sued: after decree the 1st defendant arranged with the plaintiff s assignor that the decree should be satisfied by the latter; and as consideration therefor, executed Ex. A the plaint note. The note was endorsed to one Vaithia-natha Aiyar who in turn endorsed it over to the plaintiff. Plaintiff seeks to make the 2nd defendant liable on the ground that the debt was borrowed for family purposes. A number of contentions were raised before us by Mr. Gopalaswami Mudaliar : we shall deal with the minor ones first. There is no authority for the proposition that the promisee should not only lend for the benefit of the family, but that he should also see that the loan was applied for purposes binding on the family. On the other hand Raghunathji Tarachand v. The Bank of Bombay (1910) I.L.R. 84 B. 72 is against that contention.

(2.) The burden of proof under Section 50 of the Negotiable Instruments Act, is on the promisor to show that a reservation of rights on a transfer was made by express words. It was apparently not argued in the first Court, that the endorsement in this case restricts the endorsee to enforcing his rights only against the person of the maker of the note. And certainly no issue was taken on the question. On reading the endorsement, we are satisfied that it was not in the contemplation of the parties to the endorsement, that the endorsee should not have all the rights of the endorser.

(3.) The main question relates to the rights of the endorsee. It was contended by the learned Vakil for the appellant, that although under Section 130 of the Transfer of Property Act, an assignment might convey to the assignee all the rights which the assignor had, an endorsement would confer only the right of suing the promisor personally : we are unable to accept this contention. It is true that this proposition receives support from the judgment in Seetharama Chetty v. Seshiah Chetty (1912) M.W.N. 1011. But we agree with Mr. Justice Coutts Trotter, that this decision is opposed to the previous decisions of this Court, and is not justifiable on principle. The judgment does not give any reasons for the conclusion come to, and we are not prepared to follow it.