Walsh and Sundar Lal, JJ.
1. The plaintiff in this case sues to recover a sum of Rs. 609, due on a hundi dated the 7th of July, 1909, drawn by Lal Das Kedar Nath on Ram Gopal Bhagwan Das of Delhi, payable sixty-one days after date. The payee is a firm consisting of the defendants of the first party. The hundi was endorsed by the payee to the plaintiffs on the 11th of May, 1914. The plaintiffs endorsed it to Khub Chand Salig Ram, who endorsed it to Kanhaya Lal Brij Lal. The hundi was never presented to the drawers for acceptance, but some time on the 10th of July, 1914, it was presented by the holder for payment. In the meantime the firm of the drawers failed somewhere about the 8th to the 10th of July, 1914. The drawees refused to pay the amount. The last holder therefore demanded repayment from his endorser and obtained it. In the same way the plaintiffs, in their turn, had to pay to their endorsee, and in their turn they now claim payment from the defendants of the first set (their endorsers) as well as the drawers. The courts below have given a decree against the drawers, but have dismissed the suit against the payees. The decree against the drawers is perhaps of but little value as their business has failed. The plaintiffs therefore have appealed to this Court with the object of obtaining a decree against their endorsers. The hundi was never presented for acceptance by any one, and payment was refused when it was presented for payment on the 10th of July, 1914. The question in the case is whether the payees who endorsed over the hundi to the plaintiffs are responsible for the amount claimed.
2. Under Section 35 of the Negotiable Instruments Act (XXVI of 1881), in the absence of a contract to the contrary, whoever endorses and delivers a negotiable instrument before maturity, without in such endorsement excluding or making conditional his own liability, is bound thereby to every subsequent holder, in case of dishonour by the drawee, acceptor, or maker, to compensate such holder for any loss or damage caused to him by such dishonour, provided due notice of the dishonour has been given to or received by such endorser as hereinafter provided.
3. Again, under Section 37, 'the drawer of a bill of exchange until acceptance, and the acceptor are, in the absence of a contract to the contrary, respectively liable as principal debtors, and the other parties thereto are liable thereon as sureties for the drawer or acceptor as the case may be.' Section 38, however, lays down that 'as between the parties so liable as sureties, each prior party is, in the absence of a contract to the contrary, also liable thereon as a principal debtor in respect of each subsequent party.'
4. Under these sections the defendants payees are liable to the plaintiff, provided notice of the dishonour has been given to, or received by, them as provided by the Act. In paragraph 5 of the plaint, the plaintiff alleges the giving of such notice, which is not denied in Hira Lal's written statement. The grounds on which the defendants or respondents seek to repudiate their liability are:
(1) that the hundi was not presented at proper time for acceptance;
(2) that the last purchaser of the hundi did not give notice of non-acceptance to the contesting defendant at the proper time;
(3) that Khub Chand and Kalian Das, after purchasing the hundi, took discount two months in advance from the drawers and gave them two months further time to pay the hundi and did not send it for acceptance to the drawee.
5. In the case of a hundi like this, payable sixty-one days after date, the payee or endorsee is not bound to present it for acceptance at once, though it would be prudent for him to do so. Non-presentation for acceptance therefore does not relieve the defendants from responsibility. The defendants themselves might have presented it for acceptance before endorsing it over to the plaintiffs. They, however, did not do so, nor did they make it a condition of their liability that presentment for acceptance should be made within a specified time. We come now to the second point raised by the defence. Every bill of exchange, which is not expressed to be payable on demand, at sight, or on presentment is at maturity on the third day after the day on which it is expressed to be payable (vide Section 22 of the Act). A bill of exchange payable at a specified period after date must be presented for payment at maturity (Section 66 of the Act). The period of sixty-one days expired on the 7th of July, 1914, and the bill was at maturity on the 10th July, 1914. The presentment for payment on the 10th of July was therefore correctly made. It is said that the business of the drawers failed on some date between the 8th and the 10th of July, 1914, The lower appellate court has not found the exact date on which the business of the drawers failed, but the endorsees were, however, not bound to present it for payment before the 10th of July, 1914. The delay in presentment for payment does not relieve the defendants' from liability. Section 94 lays down that notice of dishonour must be given within a reasonable time, and the party receiving such notice, in order to make a prior party liable, should give notice of such dishonour within a reasonable time (Section 95). The learned Judge has recorded no finding on the point. The view of the law taken by him is entirely erroneous. Neither court has recorded any finding on the third point. We cannot at this stage determine the case finally. The learned Subordinate Judge has, on an erroneous view of law, held that the respondents are not liable, and has disposed of the case on a preliminary point. We would allow the appeal, set aside the decree of the lower appellate court and remand the case under Rule 23 of Order XLI to the lower appellate court with directions to restore the appeal to the file of pending appeals and hear and dispose of the same according to law, Costs here and hitherto incurred will abide the result.