076-NLR-NLR-V-40-PALANIAPPA-CHETTIAR-v.-WEERASINGHE-et-al.pdf
MAARTENSZ J.—Palaniappa Chettiar v. Weerasinghe.
287
1938Present: Maartensz J.
PALANIAPPA CHETTIAR v. WEERASINGHE et al. '
78—C. R. Matara, 22,097.
Promissory note—Note not given as security for a loan—Action by endorsee—Failure to give particulars—Money Lending Ordinance, No. 2 of 1918.s. 10 CD-
Where an action was brought by the endorsee of a promissory notewhich was not given by the maker as security for a loan,—
Held, that the failure to indicate the particulars required by section10 (1) of the Money Lending Ordinance did not render the noteunenforceable even though the endorsement was made as security for a.loan.
Sanithamby v. Nogan (26 N. L. R. 217) followed.
PPEAL from a judgment of the Commissioner of Requests, Matara.
C. V. Ranawaka (with him Koattegoda), for plaintiff, appellant.
No appearance for defendant, respondent.
August 2, 1938. Maartensz J.—
– Plaintiff appeals from a dismissal of his action for the recovery of a sum.due on a promissory note dated December 19, 1931, made by the firstdefendant in favour of the second defendant and endorsed by the latterto the plaintiff.
The first defendant contested the claim and the' action was tried on thefollowing issues: —
What amount, if any, is due to the plaintiff by way of principal
and interest?
Is the writing sued upon valid as a promissory note?
If not, is the assignment regular?
Is the cause of action prescribed?
The action was brought just within 6 years and the claim was, therefore,not prescribed.
The learned Commissioner dismissed the action because the notedid not comply with the provisions of section 10 (1) of the Money LendingOrdinance of 1918, in that it did not separately and distinctly set. forthon the document the capital sum actually – borrowed, and the amountif any, deducted as interest, premium, charges or advance, and the rate ofinterest payable in respect of the loan.
Now, section 10 is applicable to a promissory note given as securityfor the loan of money. It is clear, however, from the evidence of the-second defendant in this case, that the note was given to the second-defendant not as security for the loan but because the first defendantowed him about Rs. 55.50 on account of survey fees.
The learned Commissioner therefore held, and I entirely agree with him,that the absence of marginal particulars did not invalidate the note asbetween the two defendants. He, however, further held that the note
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MAARTENSZ J.—Palaniappa Chettiar v. Weerasinghe.
was endorsed by the second defendant as security for a loan alreadyadvanced and that the particulars required by section 10 should havebeen separately endorsed on the note, and therefore dismissed theplaintiff’s action. I am not inclined to agree with that view of thelearned Commissioner. It is clear that the particulars required bysection 10 should be set forth on the note when it is made as securityfor a loan. But, if it was not given as security for a loan, section 10does not apply aind it will nqt apply even when the note is endorsed over,although the endorsement had been made as security for a loan, from theendorsee to the payee. The reason is this: that the endorsee of a noteis entitled to recover from the maker the amount payable on the noteregardless of the amount which he gave to the endorser—see the case ofSanithamby v. Nogan In that case, the mote was made for a sum ofRs. 400 in consideration of paddy supplied to the value of Rs. 210. Thepayee endorsed the note to the plaintiff. It was held that the MoneyLending Ordinance did not apply to this transaction, and that the Courtcould not inquire into the question of the adequacy of considerationand grant relief under the Ordinance, and that the plaintiff was entitledto judgment for the full amount of the note.
The judgment appealed from is, therefore, set aside and judgmententered for plaintiff against the first defendant, as prayed for, with costs.
Appeal allowed.
i (1924) 26 N. L. R..217.