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Bansidhar Lachhminarayen Vs. Jwalaprasad Gayaprasad - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 1219 of 1912
Judge
Reported inAIR1914Bom239; (1914)16BOMLR434; 13Ind.Cas.52
AppellantBansidhar Lachhminarayen
RespondentJwalaprasad Gayaprasad
DispositionSuit dismissed
Excerpt:
.....of a shah jog hundi is, in the event of the hundi turning out to be a false, fraudulent, stolen or forged hundi, bound to refund the amount of the hundi with interest unless he produces the actual drawer or the person who committed the fraud.;the shah does not guarantee the solvency of the drawer, he guarantees the genuineness of the hundi. a drawee will not pay a hundi unleag ho has funds in his hands belonging to the drawer, or is willing to give him credit. and he will not pay on presentation of a shah jog hundi to a shah unless he is satisfied as to -the respectability of the shah as ho looks to him in case of anything afterwards going wrong with the hundi. the respectability of the shah is a matter only for the drawee to consider, as it is difficult to conceive that a defendant..........a shah jog hundi is, in the event of the hundi, turning out to be a false, fraudulent, stolen or forged hundi, bound to refund the amount of the hundi with interest unless he produces the actual drawer or the person who committed the fraud.14. the plaintiffs have proved so far as proof is possible in this case that there was no such person as ramlal ramprasad of jhansi, and that this hundi was therefore a forgery. if the custom set up is binding on the parties, the plaintiffs were entitled to call upon the 1st defendant to produce ramlal or refund the rs. 3,000 with interest.15. but the first issue raised by the 1st defendant must be disposed of before this question can be discussed, namely, whether the hundi as such was paid on the responsibility of the 1st defendant as a shah and in.....
Judgment:

Macleod, J.

1. The plaintiffs seek to recover from the defendants the sum of Rs. 3000 with interest from the 10th June 1912 under the following circumstances :-

2. On the 10th June the 1st defendant received from the second defendant a hundi for Rs. 3000 purporting to be drawn by one Ramlal Ramprasad in favour of the 2nd defendant on the plaintiffs payable at sight to a Shah.

3. The hundi is Ex. C. Over an one anna stamp at the top is written 'hundi is sent for collection by Manilal Gayaprasad (2nd defendant) to Bhai Jwalaprasad Gayaprasad (1st defendant). There had been dealings to a conciderable extent between 1st and 2nd defendants. The hundi was presented the same day to the plaintiffs but, as they had received no advice regarding it, payment was refused.

4. On the 11th June the plaintiffs received a letter, Ex. A, purporting to be written from Harpalpur by one Ramlal Ramprasad enclosing a railway receipt for 300 bags linseed which was to be sold at a profit. Notice was given that two hundis for Rs. 3000 each had bean drawn in favour of Manilal Gayaprasad on the plaintiffs payable at sight which plaintiffs were requested to accept and pay. The following address was given ;-

Ramlal Ramprasad of Jhansi.

C/o Manilal Gayaprasad.

Harpalpur.

5. The railway receipt is Ex. B written on a form used by the Great Indian Peninsula Railway Company marked A.G. 65 13. It purports to be a receipt by the Station Master at Ranipur Road for 300 bags linseed consigned by Ramlal Ramprasad to the plaintiffs in Bombay, and is numbered 64 out of book 1166.

6. The plaintiffs on the 11th June handed over this receipt in performance of a contract to one Killachand Devchand, receiving Rs. 5,600.

7. Thereupon they paid Rs. 3000 with one day's interest to the 1st defendant who endorsed the hundi as paid.

8. Killachand was unable to obtain delivery of the goods from the Railway Company and returned the railway receipt to the plaintiffs on the 6th August when he got back his money.

9. Meanwhile the Company instituted an inquiry regarding the railway receipt which was suspected of having been forged.

10. On the 4th August, Kashinath, senior clerk in the office of the Goods Superintendent, Wari Bunder, started for Govna as it had been ascertained that a Book numbered 1166 had been issued to that station. On the 7th August he was at Jhansi where he was joined by Purshotam Raghavji, the plaintiffs' Goomasta. On the 10th August they were at Ranipur and went on the same day to Harpalpur. The result of this inquiry was as follows :-

11. The railway receipt for the 300 bags linseed had never been issued from Ranipur. The form had been stolen apparently out of a book numbered 1166 which had been despatched with a lot of other unused books of forms from Atara to Jhansi, and the details entered in it forged. The person suspected was Kamlaprasad, the Station Master at Harpalpur. His father's name was Manilal and he had a son called Gayaprasad; so that there was some reason for suspecting that the 2nd defendant's firm of Manilal Gayaprasad which had a pehdi at Harpalpur was owned by Kamlaprasad. No person of the name of Ramlal Ramprasad could be discovered at Harpalpur, Jhansi, or any of the neighbouring towns.

12. Soon after Kamlaprasad disappeared into Harpalpur territory, and it seems most probable that he was the author of the fraud practised on the plaintiffs and 1st defendant. The plaintiffs were unable to serve the summons on the 2nd defendants, so they were struck out.

13. The plaintiffs contend that according to the well-established custom among Shroffs relating to Shah Jog Hundis the Shah who obtains payment of a shah jog hundi is, in the event of the hundi, turning out to be a false, fraudulent, stolen or forged hundi, bound to refund the amount of the hundi with interest unless he produces the actual drawer or the person who committed the fraud.

14. The plaintiffs have proved so far as proof is possible in this case that there was no such person as Ramlal Ramprasad of Jhansi, and that this hundi was therefore a forgery. If the custom set up is binding on the parties, the plaintiffs were entitled to call upon the 1st defendant to produce Ramlal or refund the Rs. 3,000 with interest.

15. But the first issue raised by the 1st defendant must be disposed of before this question can be discussed, namely, whether the hundi as such was paid on the responsibility of the 1st defendant as a Shah and in accordance with the custom alleged.

16. I think this issue was raised owing to a misunderstanding regarding the actual practice of Shroffs when dealing with hundis, whether shah jog or not. The Shah does not guarantee the solvency of the drawer, he guarantees the genuineness of the hundi. A drawee will not pay a hundi unless he has funds in his hands belonging to the drawer, or is willing to give him credit, and he will not pay on presentation of a shah jog hundi to a Shah unless he is satisfied as to the respectability of the Shah as he looks to him in case of anything afterwards going wrong with the hundi: see remarks of Arnould J. in Daulatram Shriram v. Bulakidas Khem-chand (1869) 6 B.H.C.R. 24. Therefore this issue is somewhat meaningless. The respectability of the Shah is a matter only for the drawee to consider, as it is difficult to conceive that a Shah would repudiate his liability to refund on the ground that he was not a respectable person.

17. The custom set up by the plaintiffs was held to be proved by Arnould J. in Davlatram's case. The head-note runs as follows :-

According to mercantile usage amongst Hindus, where a hundi, drawn 'payable to holder ' (shah jogi), is paid at maturity by the drawee to the shah or holder of the hundi, and such hundi afterwards turns out to be forged, the shah, though a bona fide holder for value, is bound to repay to the drawee the amount of such hundi with interest from the date of payment, provided the drawee has been guilty of no laches in discovering the forgery and communicating the fact of such forgery to the shah.

The shah, however, relieves himself from such liability by producing the actual forger.

18. So far as I know this custom has never since been disputed. It was referred to with approval as well-established by Bayley (Acting) C.J. and Farran J. on a reference from the Small Cause Court in Ganesdas Ramnarayan v. Lachminarayan I.L.R. (1894) 18 Bom. 570, and therefore I was of opinion that there was no necessity for the plaintiffs to call evidence to prove that the custom was still followed by Shroffs, though the 1st defendant was at liberty to call evidence to show that the custom was either no longer followed or had been altered by later usage. I find that this was the view taken by the Small Cause Court in the above case, where an attempt was made without success by the defendants to prove that the custom had been altered : see Ganesdas' case I.L.R. (1894) 18 Bom. 570.

19. The plaintiffs, however, did prove that both the Marwari Panch Shroff Association and the Marwari Association, which number amongst their members most of the Marwari Shroffs in Bombay, have a rule to the effect that in the case of fraud the payee of a hundi who has received the amount as shah jog shall produce the drawer, and if he does not do so shall pay to the person from whom the amount of the hundi has been received, with interest from the date the money was paid.

20. It was contended for the 1st defendant that the Shah was duly bound to produce the person who sent the hundi, not the drawer, but apart from the finding in Davlatram Shriram v. Bulakidas Khemchand (1869) 6 B.H.C.R. 24 to the effect that the Shah could only relieve himself from responsibility by producing the actual forger, the evidence of 1st defendant's witnesses, Parbhudayal Hurkissonlal and Pratab Rai Ranchidas, conclusively showed that the words ' manjal pohochana' in Rule 16 meant ' trace the hundi to the drawer.'

21. The rule had not been officially translated, but I was informed by the interpreter that the dictionary meaning of the words is, 'arrive at the last stage.'

22. It was suggested that these witnesses after having told the 1st defendant's solicitors that they would give evidence to the effect that the words meant 'trace out the person who sent the hundi' had been got at by the plaintiffs, but whatever promises they may have made before they were called, I was satisfied that they gave to those words the interpretation which they thought was commonly accepted by the members of the two Associations.

23. Arnould J. in Davlatram v. Shriram Bulakidas Khemchand (1869) B.H.C.R. 24 said : ' The substantial requisite in case of a forged hundi is that the drawer of the forged hundi, or the person of whom the forged hundi has been bought, should be pointed out.' For this he relied on the evidence of the Moonim of Shi vial Motilal' the Shah must point out the responsible person.'

24. But at p. 30 he referred to the evidence of the same Moonim 'the Shab, or person to whom the money has been paid, must point out the responsible person (the drawer), and, if he do not, he is responsible himself.'

25. Therefore it is not quite clear how the learned Judge arrived at the conclusion that' the responsible person' was either the drawer, or the person from whom the hundi was bought.

26. In any event the person who sends a hundi for collection is not the person from whom the hundi is bought.

27. But the evidence in this case is conclusive that it is the duty of the Shah in the case of a forged hundi to produce the drawer or refund the money. Even if the custom were as alleged by the 1st defendant it cannot be said that they ever made the slightest attempt to produce Manilal Gayaprasad.

28. But, as stated by Arnould J. at p. 31, 'if the discovery of communication to the Shah of the fact of the forgery is delayed by the laches or negligence of the drawee...he can, in such case, claim a refund from the Shah.

29. It is contended by the 1st defendant that the plaintiffs have been guilty of laches. Now it is clear that Purshotum Raghowji, the plaintiff's Goomasta, must have ascertained by the 10th or 11th August that the hundi was a forgery and yet no demand was made upon the 1st defendant until the 25th September. This was due to the absence of the plainff from Bombay from the 9th July until the 23rd September. He said he returned to Bombay inconsequence of information. He was not asked when he received information; but in any event he ought to have been informed immediately by Raghowji that Ramlal could not be traced, and if Raghowji delayed in informing his master, his master must be held responsible for the consequences.

30. In my opinion the claim to a refund against a Shah who has received payment of a hundi, on the ground that the hundi was a forgery, must be made as soon as possible after the forgery has been discovered, so as to enable the Shah to protect himself, and the plaintiff in this case was guilty of such delay, namely, over a month without any reasonable excuses as to disentitle him from recovering. It was suggested that the 1st defendant had notice in August that the Police were making inquiries as the sub-inspector visited their shop; but I do not think that that can be considered as a communication by the plaintiff to the 1st defendant of the forgery and there certainly was no claim to a refund. It is necessary that all notices involving responsibility on mercantile documents should be clearly, precisely, and directly given.

31. The suit must be dismissed but without costs.


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