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Forbes, Forbes, Campbell and Co. Vs. the Official Assignee - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtMumbai
Decided On
Case Number Civil Extraordinary Application No. 289 of 1923
Judge
Reported inAIR1925Bom173; (1925)27BOMLR34
AppellantForbes, Forbes, Campbell and Co.
RespondentThe Official Assignee
Excerpt:
negotiable instruments act (xxvi of 1881), sections 50, 13 - hundi payable to payee or bearer -indorsement by payee in favour of third person only-hundi ceases to be payable to bearer.;where a hundi is drawn in favour of a payee or bearer and is indorsed by the payee to a named person, it ceases to be a bearer hundi and is payable only to the named peraon. - - the alternative prayer is clearly one which cannot be entertained by this court. and i am by no means satisfied that the case falls within the scope of section 115. having regard to the importance of the point involved in the case, and to the fact that it depends entirely upon the interpretation of the sections of the negotiable instruments act, we have heard the parties on the point. the character of the instrument, which was..........by the munim of one madhavdas keshavji to forbes forbes campbell & co ltd. it was treated as a hundi payable to bearer and the money was paid to madhavdas; keshavji's munim, this madhavdas keshavji was a third person in whose favour there is no indorsement on the hundi. the official assignee claimed the amount of this hundi as belonging to the insolvent raoji nanchand. the learned . chief judge of the small causes court, bombay, who heard the suit, passed a decree in favour of the plaintiff, holding that by the last indorsement, which was not an indorsement in blank, but an indorsement in full, the hundi ceased to be payable to the bearer, and that at the time of the presentation it was payable in law only to raoji nanchand or his order. there was an application to the full court,.....
Judgment:

Lallubhai Shah, Kt., Acting C.J.

1. This is an application under Section 115, Civil Procedure Code. It arises out of a suit filed by the Official Assignee, in whom the estate of Raoji Nanchand, who was adjudicated an insolvent, was vested, in respect of a hundi. The hundi in question was drawn in favour of one Ramdas Keshavji or bearer on Forbes Forbes Campbell & Co. Ltd, That hundi was indorsed on the back as 'sold by Ramdas Keshavji to Raoji Nanchand.' We are not concerned with the indorsement on the face of the hundi at the top. The hundi was presented by the Munim of one Madhavdas Keshavji to Forbes Forbes Campbell & Co Ltd. It was treated as a hundi payable to bearer and the money was paid to Madhavdas; Keshavji's Munim, This Madhavdas Keshavji was a third person in whose favour there is no indorsement on the hundi. The Official Assignee claimed the amount of this hundi as belonging to the insolvent Raoji Nanchand. The learned . Chief Judge of the Small Causes Court, Bombay, who heard the suit, passed a decree in favour of the plaintiff, holding that by the last indorsement, which was not an indorsement in blank, but an indorsement in full, the hundi ceased to be payable to the bearer, and that at the time of the presentation it was payable in law only to Raoji Nanchand or his order. There was an application to the Full Court, and the Full Court also came to the same conclusion and discharged the rule which was granted by that Court.

2. An application was made to that Court to make a reference to this Court under Section 69 of the Presidency Small Cause Courts Act; but the learned Judges constituting the Full Court apparently did not entertain any reasonable doubt as to the point and decided it against the defendants.

3. The defendants have now applied to this Court under our extraordinary jurisdiction, and have also prayed in the alternative that this application may be treated as an application under Section 45 of the Specific Relief Act for directing the Full Court to refer the case to this Court under Section 69 of the Presidency Small Cause Courts Act. The alternative prayer is clearly one which cannot be entertained by this Court. An application under a 45 of the Specific Relief Act would have to be made, not to this Court, but to a Court on the Original Side, and I do not desire to say anything as to whether an application under Section 45 of the Specific Relief Act could properly be made in a case of this kind.

4. We have to consider this application as falling under Section 115 of the Code. The first difficulty under that section is whether the point arising in the application is of such a nature as to bring it within the scope of Section 115. The question involved is purely one of law. It depends upon the interpretation of the provisions of the Negotiable Instruments Act; and I am by no means satisfied that the case falls within the scope of Section 115. Having regard to the importance of the point involved in the case, and to the fact that it depends entirely upon the interpretation of the sections of the Negotiable Instruments Act, we have heard the parties on the point. Without expressing any final opinion as to whether a point such as is involved in this case can be entertained under Section 115 or not, we consider it desirable under the circumstances to decide the point on the merits.

5. The argument on behalf of the defendants is that under Section 82, Clause (c), of the Negotiable Instruments Act, the defendants are discharged if the instrument is payable to bearer, or has been f indorsed in blank, and if the acceptor makes payment in due course of the amount due thereon. In the present case it is urged that the amount has been paid in due course, that the instrument was payable to bearer in the first instance and continued to be payable to bearer in spite of the indorsement and that, therefore, they were discharged. It is not disputed in the present case, and it cannot be disputed, that under the hundi the amount was payable to bearer in the first instance. The hundi was drawn in favour of Ramdas Keshavji or bearer. In the trial Court and before the Full Court apparently reliance had been placed upon explanation (ii) to Section 13 as now amended by Act VIII of 1919, as indicating that the real character of the instrument was determined by the only or last indorsement on the instrument. In the present case the last and only indorsement is not in blank. Section 13, however, defines what a ' negotiable instrument ' is, and it is clear that the hundi in question as drawn was a negotiable instrument within the meaning of the section, and continued to be negotiable, after the indorsement in question, according to explanation (i) of Section 13 as amended in 1919.

6. The contention on behalf of the defendants is that if it is once a negotiable instrument payable to bearer, by no subsequent indorsement its character of being payable to bearer can be altered. In support of this proposition no express authority has been cited But reference has been made to Section 54 of the Negotiable Instruments Act as indicating that if the legislature thought that such alteration in the nature of the instrument can be effected, the legislature would have made express provision to that effect, as is done with reference to cheques payable to order. It is further urged that Section 50 of the Negotiable Instruments Act refers only to negotiable instruments which are in the first instance made payable to order.

7. Section 50 of the Act appears to me to afford a complete answer to these contentions. There is nothing in the words of the section to justify the contention that it is limited to negotiable instruments payable to order. It applies to any negotiable instrument whether it is payable in the first instance to order or to bearer, and in fact the illustrations to the section make it clear that indorsements made on instruments payable to bearer can have a restrictive effect upon its negotiability. The learned counsel, realising the effect of these illustrations, has argued that the illustrations are really outside the scope of -the section, and must be rejected as being repugnant to the section. I am quite unable to accept this argument. The illustrations do not appear to be at all repugnant to the words of the section, and they fall within the scope of the section. Illustration (e) to Section 50 makes it clear that the character of the instrument before us, which was payable to bearer in the first instance, has been altered by the only indorsement in the present case in this sense that thereafter it became negotiable at the instance of Raoji Nanchand.

8. We are not concerned with the question whether it would be payable to Raoji Nanchand or his order, though under Section 13, explanation (i), it would be payable to his order. It is not the defendants' case that the money was paid to Raoji Nanchand's order. The character of the instrument, which was payable to bearer in the first instance, has been effectively altered by the subsequent indorsement, and under Section 50 of the Negotiable Instruments Act it can be so altered. The conclusion reached by the trial Court and the Full Court is right. We discharge the rule with costs.


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