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Daulatram Kundunmal Vs. Nagindas Ranchhoddas Shroff - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 551 of 1912
Judge
Reported in(1913)15BOMLR333; 19Ind.Cas.789
AppellantDaulatram Kundunmal
RespondentNagindas Ranchhoddas Shroff
Excerpt:
.....never be made good ground for such an estoppel as that the plaintiff now wishes to raise against nagindas. nagindas has certainly complained that the two additional entries which were allowed to go in in the course of the plaintiffs examination were never disclosed and although in general terms the plaintiff in his affidavit of documents does rely upon this khata, he refused right up to the trial to allow the defendant inspection of anything more than the mere transfer entry showing that when he became possessed of the hundi he credited belasirai & co. for were it so held upon the evidence, then the ground upon which the plaintiff's claim could be resisted would not really be that the pre-existing debt was not good consideration but that as privy to the fraud he could be in no better..........m that inconsequence of a suit against him by one nanalal decided in march 1912, he applied to the firm of belasirai. & cp., to whom he had given a great number of promissory notes signed in blank, for the return of those notes. ramkisson, representing the firm of belasirai & co., insisted is a condition of returning those signed blank notes that nagindas should execute this promissory-note for rs. 2,500 payable thirty days after date and a further note of hand for rs. 1,200 (with which i have at present nothing to do) and should farther give a letter of acknowledgment to the firm of belasirai &'co., admitting his indebtedness of this promissory note and three others of like amount and the note of hand for rs. 1,200. thus on the 20th of march 1912 the defendant stagiridas executed the.....
Judgment:

Beaman, J.

1. The plaintiff sues as holder in due course to recover from the defendants the maker and the first holder of a promissory-note payable thirty days after sight, made on the 20th of March I9:12. A decree has been already obtained against the first defendant Ramkisson who was the first holder. The plaintiff new sues the maker Nagindas Ranchhoddas on his note.

2. The defence is that Ramkisson obtained the note for unlawful consideration and therefore it lies upon the plaintiff to prove that he gave consideration for it before he can enforce his remedies as a holder in due course.

3. The fist question to be answered, then, is whether as (Jetwfcen Nagindas Ranchhoddas and Ramkisson the latter sxtorted the note of the 20th of March from the former so that in law whatever consideration might be said to have been given for it was an unlawful consideration. Upon this point share is (only the evidence of the defendant Nagindas himself. His story m that inconsequence of a suit against him by one Nanalal decided in March 1912, he applied to the firm of Belasirai. & Cp., to whom he had given a great number of promissory notes signed in blank, for the return of those notes. Ramkisson, representing the firm of Belasirai & Co., insisted is a condition of returning those signed blank notes that Nagindas should execute this promissory-note for Rs. 2,500 payable thirty days after date and a further note of hand for Rs. 1,200 (with which I have at present nothing to do) and should farther give a letter of acknowledgment to the firm of Belasirai &'Co., admitting his indebtedness of this promissory note and three others of like amount and the note of hand for Rs. 1,200. Thus on the 20th of March 1912 the defendant Stagiridas executed the promissory-note which is the subject-matter of this suit in favour of Belasirai & Co., and he also wrote the letter dated the and of March, Ex. 2 in this case,. If this story be true, then first turning to the definition of... ' consideration' in the Contrast Act, and next to what is-defined to be 'lawful consideration' and applying those definitions to Section 118 of the Negotiable Instruments Act, the Court would have no doubt in holding that the defendant Nagindagi. had made good the first step of his-defence for the only consideration moving from Belasirai & Co. to the defendant Nagindas for this note would be the restoration of about 75,000. worth of promissory notes signed in blank and that is really no lawful consideration at all since the firm of Belasirai & Co. had no right whatever to withhold those notes from the defendant Nagindas. The question is whether the story told by Nagindas is true. It was strongly contended on behalf of. the plaintiff that the letter Ex. 2, dated-the 22nd March 1912, merely sets forth a true statement of the actual indebtedness of Nagindas to the firm of Belasirai & Co. on that date. This argument starts from the allegation that in the previous December Nagindas or his representative Wamanrao Bhai Thakore had met the creditor-firm of Belasirai & Co. in the offices of Messrs. Mulla & Co. and settled the then existing indebtedness at about Rs. 21000 in part discharge of which the defendant Nagindas had given a cheque of Rs. 10,000. This would leave just as much indebtedness over as is acknowledged in the letter of the 22nd March 1912. However plausible that argument at first sight may appear, it labours under one fatal defect. The amount due in 1911 includes the sum of Rs. 3700 which certainly could not has been' due until the 20th of March 1912. On the other hand every circumstance appears to me to pain conclusively to the truth of Nagindas's stary. It is almost incredible that with the result of the suit decided in March fresh incredible should have immediately recommenced the same course of dealing which had there resulted so disastrously; and it is clear from the letter of the 22nd Marefe to which the plaintiff takes no exception, that the firm of Belasum & 1 Co. did restore to Nagindas roughly some Rs. 75000 worth of promissory-notes for which Nagindas had received no value. It appears to me, therefore, antecedently probable in a the highest degree that the firm of Belasirai &-Co. exacted as the price of That restoration the sum of Rs. 3700 whit included these Uttwdi now Ist dispute. Of the remaining three Hundies which Nagindas has the acknowledge under the- letter of the 22nd of March, one only is now admitted as genuine. The r reason why the other two were included may be conjectured to be that Belasirai & Co. had actually sold them and therefore required the defendant Nagindas to acknowledge their genuineness. However that may be, having regard to the previous history of Nagindas as revealed in the former case and not disputed here, to the termination of that case, and to the fact that this Hundi was undoubtedly drawn almost immediately afterwards and that contemporaneously with it Nagindas received back almost all the other Hundis in respect of which he had good reason to fear he might be defrauded, I have little hesitation in holding that the account he has given of this Hundi and the manner in which he came to make it is true. That being so, it lies upon the plaintiff to prove that he is a holder in due course and is in a better position than his transferor who would have certainly not been able to recover the amount of the Hundi (if my view be correct) from the defendant Nagindas. At the close of the plaintiff's case, his counsel suggested that the defendant Nagindas was estopped from alleging against plaintiff that the Hundi was obtained for unlawful consideration. This argument rests upon the me assertion that on the 3rd April 1912 the plaintiff gave Nagindas notice that the firm of Belasirai & Co. had transferred this Hundi to him. And since the defendant Nagindas did not at once inform the plaintiff in reply to that notice of all the circumstances in which the Hundi had been extorted from him, he is now estopped from doing so. The short answer to that is that the alleged notice of April 3rd, 1912, is not proved. There is no evidence before me of its existence. Then, the plaintiff falls back upon his attorneys' letter of the 23rd of April, but I think that mere neglect to answer the attorneys' letter peremptorily enforcing a claim of this kind could never be made good ground for such an estoppel as that the plaintiff now wishes to raise against Nagindas.

4. There remains, therefore, the second part of the case to be considered, namely, whether the plaintiff without being aware of the taint affecting the Hundi became a holder in due course. The plaintiffs case is that as a result of about two years' dealings with the firm of Belasirai & Co. that firm was indebted to him at the opening of the year 1912 to the extent of about Rs. 2700. On the 5th of January 1912 the plaintiff further advanced to the firm of Belasirai & Co. Rs. 3000 in gash, In February 1912, Belasirai & Co. repaid Rs. 2,500 in cash; and on the 22nd of March 1912 paid in this Hundi against their remaining indebtedness to the plaintiff of Rs. 3200. I do not think that the defendant Nagindas has been able to show that there was no pre-existent indebtedness on the part of Belasirai & Co. to the plaintiff-firm at the time the Hundi was transferred to the plaintiff. Nagindas has certainly complained that the two additional entries which were allowed to go in in the course of the plaintiffs examination were never disclosed and although in general terms the plaintiff in his affidavit of documents does rely upon this Khata, he refused right up to the trial to allow the defendant inspection of anything more than the mere transfer entry showing that when he became possessed of the Hundi he credited Belasirai & Co. with Rs. 2500 and debited the defendant Nagindas with that amount. I see no reason, however, to doubt the correctness of the plaintiffs sworn evidence supported by his book-entries, and I must, therefore, hold that on the 22nd of March when this Hundi was transferred to him by Belasirai & Co., Belasirai & Co. were overdrawn in the plaintiff's books to an amount larger than that of the note. The Question, then, is of pure law, whether the mere existence of an antecedent debt is consideration within the meaning of Section 118 of the Negotiable Instruments Act. In this connection I have gone over all the leading cases commencing with Watson v. Russell (1862) 3 B. & S. 34; Belshaw v. Bush (1851) 11 C.B. 191; De La Chau-mette v. Bank of England (1829) 9 B. & C. 208; Currie v. Misa (1875) L.R. 10 Ex. 153; (in appeal Misa v. Currie (1876) 1 App. Cas. 554 where the decision of the House of Lords rested upon a totally different ground); and M'lean v. Clydesdale Banking Company (1883) 9 App. Cas. 95. If this had been a cheque payable on demand instead of what it is, a bill payable thirty days after date, and if I had considered the question still open, I think I should have found it impossible to escape the conclusion, supported by such cogent reasons, reached by the Chief Justice in his dissentient judgment in Currie v. Misa (1875) L.R. 10 Ex. 153. Except for the theoretical interest of the discussion, however) it must have become early apparent that there is absolutely no divergence amongst the authorities or room for argument Where the disputed instrument is, as it is in this case, a bill of exchange payable after date, for in the case of Currie v. Misa Lord Coleridge grounded the whole of his reasonings he distinction which he thought ought to be carefully maintained between instruments payable on demand such as cheques, and instruments which had to mature before the money could be recovered. The reason for that becomes obvious when we turn to the discussion to be found in all these cases, of what amounts to consideration and as such improves the title of a holder of a negotiable instrument thus giving him rights superior in law to those of his transferor. It was always thought that there was a solid distinction between bills payable after date and bills or cheques payable on demand for the purposes of that discussion ; because it is obvious that a creditor accepting in discharge of a pre-existing debt a bill which had not yet matured must by implication be taken to have contracted to forbear enforcing his remedy until the date of maturity had arrived. This distinction, however, did not commend itself to the majority of the Judges in the Exchequer who decided the case of Currie v. Misa. They appeared to have favoured the view that the true origin of consideration in all such cases was that the bill or cheque was a conditional discharge of debt, the condition being that if the bill or cheque yielded nothing, the former debt revived. It would be easy in a merely theoretical argument to suggest considerations telling against the soundness of that view, but there can, I think, be no question that where an instrument is a bill payable after date and transferred before maturity, the law has been uniform and settled beyond all possibility of disturbance that the transfer of such an instrument in discharge of a pre-existing debt makes the creditor a holder in due course. The whole law expressed concisely in Section 118 of the Negotiable Instruments Act may be found more amply and exactly stated by Blackburn J. in the case of M'lean v. Clydesdale Banking Company (1883) 9 App. Cas. 95; and the effect of these decisions taken together appears to me to leave absolutely no doubt of the correctness of the proposition that where a negotiable instrument of any sort is handed over by a debtor to his creditor in discharge of a pre-existing debt, the creditor becomes a holder in due course. It is only where, as in the case of De La Chaumette v. Bank of England (1829) 9 B. & C. 208 and other cases falling under the same principle, the transfer of the negotiable instrument is not for the purpose of extinguishing a pre-existing debt but can upon the facts be found to be given as between principal and agent merely for collection by the latter, that the rule will not apply. But then it becomes clear that the ground of it is cut away, for where a debtor hands a negotiable instrument to another to collect for him merely as his agent even though he happened at that time to be indebted to that agent, there is no intention of giving the negotiable instrument as payment of the debt.

5. In the present case I may entertain my own suspicions as to the privity existing between the plaintiff and Ramkisson, I may even doubt whether when the note was given to the plaintiff on the 22th of March he was as wholly ignorant of its character and the manner in which it had been procured as he professes to be, but that opens up an entirely new set of considerations; for were it so held upon the evidence, then the ground upon which the plaintiff's claim could be resisted would not really be that the pre-existing debt was not good consideration but that as privy to the fraud he could be in no better position than the first fraud-feasor. to take advantage of it. And I do not think that there is any evidence in this case which would warrant me in saying more than that I do entertain suspicions of this kind. In any event, it would be ~'1 extremely difficult to obtain proof of them and there is really no proof on the record of this case.

6. I must, therefore, hold that on the facts proved before me (1) the promissory-note was obtained by Ramkisson from the defendant Nagindas for unlawful consideration; (2.) the defendant Nagindas Ranchhoddas is not estopped from raising that defence ; (3) plaintiff is a holder in due course, and, therefore, entitled to recover.

7. I must, therefore, now decree the plaintiff's claim against the defendant Nagindas Ranchhoddas with all costs.


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