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Benares Bank Limited Vs. Hormusji Pestonji and ors. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtAllahabad
Decided On
Reported inAIR1930All648
AppellantBenares Bank Limited
RespondentHormusji Pestonji and ors.
Excerpt:
- - this chapter consists of 17 sections ss, 61 to 77. out of these sections there are some which lay down that the instruments should be presented for certain purposes and also lay down the consequences of she failure to make the presentment. 450. 16. the only case in which a clearly different view appears to have been taken is the case of oudh commercial bank v. i fail to see how a holder can be liable to himself......this has caused a certain amount of confusion. sections 62, 64, 67, 68 and 69 deal with promissory notes. sections 6.1, 64, 68 and 69 deal with bills of exchange. sections 6l, 68, 72 and 73 deal with cheques. it will be noticed that the sections mentioned above provide certain consequences for non-compliance with the rule as to presentment. the other sections simply lay down how a presentment is to be made, and where it has to be made and where it need not be made at all. as a general principle it must be accepted that where consequences are provided for as flowing from non-presentment, it is not open to the courts to hold that besides the consequences provided for, by the law, other consequences, not mentioned by the law, are also to flow.5. with this general proposition in view let us.....
Judgment:

Mukerji, J.

1. The appeal is by the plaintiffs, who claimed to recover two Sums of money on two'hundis, dated respectively 3rd January 1925 and 2nd February 1925 for the sums of Rs. 5,000 and Rs. 3,000 respectively. The drawers of the hundis are defendants 1 and 2(respondents 1 and 2 here) and the drawee was defendant 3(respondent 3, Ramji Das, before us). Ramji Das accepted the two hundis. The plaintiff bank alleged that they presented the hundis for payment on due dates, but this allegation of theirs has been negatived by the Court below. Then it was argued before the Court below that under Section 64, Negotiable Instruments Act, the acceptor was liable even if there was no presentment for payment, The Court below did not accept this view of the law, and holding that the drawers and the acceptor were exempted from payment owing to want of presentment, it dismissed the suit as against defendants 2 and 3. Defendant 1 confessed judgment, and accordingly a decree was passed against him.

2. In this Court only one point has been urged, and it is this. Under Section 64, Negotiable Instruments Act, the result of non-presentment of the hundis for payment was not the exemption of the acceptor from liability, but the exemption of other parties to the hundis. We have to see how far this contention is correct.

3. A large number of cases have been cited before us, but before I proceed to examine the cases it will be useful to examine the provision of the law itself.

4. Chapter 5, Negotiable Instruments Act, deals with presentment. This chapter consists of 17 sections Ss, 61 to 77. Out of these sections there are some which lay down that the instruments should be presented for certain purposes and also lay down the consequences of She failure to make the presentment. In the scheme of the Indian Act, an attempt has been made to bring together the law on promissory notes, bills of exchange and cheques. This has caused a certain amount of confusion. Sections 62, 64, 67, 68 and 69 deal with promissory notes. Sections 6.1, 64, 68 and 69 deal with bills of exchange. Sections 6l, 68, 72 and 73 deal with cheques. It will be noticed that the sections mentioned above provide certain consequences for non-compliance with the rule as to presentment. The other sections simply lay down how a presentment is to be made, and where it has to be made and where it need not be made at all. As a general principle it must be accepted that where consequences are provided for as flowing from non-presentment, it is not open to the Courts to hold that besides the consequences provided for, by the law, other consequences, not mentioned by the law, are also to flow.

5. With this general proposition in view let us proceed to examine the several sections of Chap. 5. Section 61 deals with bills of exchange payable after sight. It provides that where, in the case of a bill of exchange of this nature, no time or place is specified for presentment, it must be presented to the drawee for acceptance. Then it provides that in case of default of such presentment, no party thereto shall be liable on it, to the person making such default. It will be noticed that this section provides for presentment in certain cases, and it also provides for the consequence. The consequence is put down in very wide terms, namely no party, whoever he may be, to the bill of exchange is to be liable to the person making the default. Section 62 deals with a promissory note payable at a certain period after sight. It again provides for presentment and further provides that in default of such presentment no party thereto will be liable to the person making the default. The words 'no party' are of very wide significance.

6. We can leave aside Section 63 which only provides for grant of time for deliberation. Coming to Section 64 we find that it provides that promissory notes, bills of exchange and cheques must be presented for payment. It provides that a promissory note must be presented for payment to the maker, bills of exchange must be presented for payment to the acceptor and cheques must be presented for payment to the drawee. Then Section 64, in keeping with Sections 61 and 62 and some other sections in Chap. 5 provides for the penalty for non-compliance with the rule of presentment. The penalty is provided in the following language, viz.,

in default of such presentment, the other parties thereto are not liable thereon to such holder.

7. The word 'other' has been used to show that there is a difference between Section 64 and Sections 61 and 62, where the words used are no party.' It cannot be said that the word 'other' has been used by mistake or oversight. The word has been there since 1881, and it has never occurred to the legislature that it was redundant and should not have found place in the section. The use of the expression 'other parties' gives a clear and intelligible meaning to the section. This would mean that the parties who are mentioned in the section may be liable, but other parties to the several documents are not to be liable. For the present we shall leave out of consideration the exception to Section 64. In my opinion it is slightly out of place, and this is the reason why it has caused some trouble in the interpretation of the main Section 64.

8. Sections 65 and 66 describe, the former the hours of presentment, and the latter the date of presentment. As they do not provide for any broad rule of presentment and the consequences of default, we need not consider them. Section 67 again provides for presentment and records the effect of non-presentment. It deals with a promissory note alone but a promissory note which is payable by instalments.

9. Section 68 deals with all kinds of instruments, namely a promissory note, a bill of exchange and a cheque. It provides that where these are drawn or accepted payable at a specified place and not elsewhere, they must, in order to charge any party thereto, be presented for payment at that place. It provides, therefore, for presentment in a particular manner and also provides for the consequence of non-presentment in that manner.

10. Section 69 deals with a promissory note and a bill of exchange of a certain kind, namely payable at a specified place and lays down that if the rule is not complied with, the mater or the drawer, as the case may be, will be discharged. Sections 70 and 71 go together. Section 70 lays down where the presentment is to be made, and Section 71 lays down what is to be done where the rule in Section 70 cannot be complied with.

11. Section 72 deals with a cheque. It lays down that a cheque must be presented at the bank upon which it is drawn within a certain time and provides that the consequence of non-presentment would be to discharge the drawer. Section 73 deals with a cheque and defines the time of presentment, and provides for the consequence, namely discharge of all the parties thereto except the drawer. Section 74 deals with presentment of negotiable instruments generally and does not provide for a penalty. 8. 76 goes with Section 74 and need not be discussed. Section 75-A deals with delay. Section 76 defines where non-presentment is not necessary. Section 77 deals with liability of a banker.

12. It will be noticed, therefore, that some of the provisions of Chap. 5 lay down presentment as necessary and the manner of presentment, and the others provide for the penalty or the consequence of non-presentment. We have, therefore, to see whether there is any provision which lays down that the consequence of non-presentment for payment of a bill of exchange of the kind before us, is the discharge of the acceptor. No such rule can be found within the four corners of Chap. 5. Section 64 is the only section which has been relied upon, and I have shown that it does not say that the circumstance, namely non-presentment of a bill of exchange for payment, gives a discharge from liability to the acceptor.

13. Let us now consider the exception to Section 64. It is not the case that in the case of all promissory notes no presentment is necessary. Sections 62, 64, 67, 58 and 69 deal with promissory notes and provide for presentment and record the consequence of non-presentment. The exception to Section 64 deals with a promissory note payable on demand, and the proper place of the exception would have been below Section 74, which deals with negotiable instruments payable on demand. The exception to Section 64 deals with a promissory note alone and says that where it is payable on demand but is not made payable at a specified place, no presentment is necessary. The fact, therefore, that exception to Section 64 deals with the consequence of non-presentment cannot be taken as enlarging the natural meaning of Section 64. The true method of providing an exception is to take a case which but for the exception would fall within the general rule, but it is impossible to do this in this particular case. If Section 64 stands as it does the exception must be taken as going to contradict it. What are then we to do? We cannot read the exception as controlling the plain language of Section 64. Section 64, therefore, in my opinion, should be given its plain meaning and the exception to it must be read as more or lease an independent rule of law.

14. Now I would consider a few cases decided by the High Courts. In this Court the earliest case that has been cited before us is Farzand v. The Agra Savings Bank [1896] A.W.N. 201. This was a case on a bill of exchange, and there was no presentment. It was held, in view of the provisions of Section 64, that the acceptor who is the principal debtor in the ease of a bill of exchange (see Section 37, Negotiable Instruments Act) was not exempted. This ruling and a case decided in the Madras High Court, Ramakistnayya v. Kassim [1890] 13 Mad. 172, were followed by this very Court in Phulchand v. Ganga Ghulam [1899] 21 All. 450. In the case of Gaya Din v. Sri Ram [1917] 39 All. 364 some doubt was thrown on the correctness of the ruling in Phulchand's case. That was a case in which the holder of a hundi sought to make the drawer liable. The Court of first instance dismissed the suit against all the parties except the drawer, but the lower appellate Court dismissed the suit altogether on the ground that the note had not been presented. This decision was upheld by the High Court, the appeal being dismissed. The consequence of non-presentment, as described in Section 64, would be that the drawer would be exempted from liability, The same result was arrived at by the High Court in this case but on somewhat different grounds. Section 64 was quoted and the case in Phulchand v. Ganga Ghulam [1899] 21 All. 450 was cited. There is no discussion of Section 64 although it might appear that the case in Phulchand v. Ganga Ghulam [1899] 21 All. 450 was doubted. We cannot treat the case of Gayadin v. Sri Ram [1917] 39 All. 364 as any authority for the proper reading of Section 64, Negotiable Instruments Act. As I have pointed out, the result would have been the same if Section 64 had been applied to the same case. In the two other cases that were cited before us as coming from this High Court, namely Pachkauri Lal v. Mulchand A.I.R. 1922 All. 279 and Jhandu Lal Mithu Lal v. Wilayti Begam : AIR1925All442 , there is not much which can be relied upon by the appellant. In Pachkauri v. Mulchand A.I.R. 1922 All. 279 the drawer and the drawee of the hundi were one and the same person, and it was held that no presentation on due date was necessary in that case. There is no discussion of Section 64, and all that does appear is a mention of the section. In the case in Jhandu Lal v. Wilayti Begam : AIR1925All442 it was held that where the drawer and acceptor of a hundi are one and the same person, it is open to the holder to treat the document as a promissory-note. The case was decided mainly on the basis of Section 76, Negotiable Instruments Act. Coming to cases decided in other Courts we have got, besides the case in Ramakistnayya v. Kassim [1890] 13 Mad. 172 already referred to, the case of Ardeshir Sorabsha Mcos v. Khushaldas Gokul Das [1908] 32 Bom. 247 the relevant remarks appearing at p. 253.

15. In the Lahore High Court there is a very recent case Ghaniya Lal v. Karim Chand A.I.R. 1929 Lah. 240. In this case a Division Bench of the High Court has accepted entirely the view which was taken by this Court in Phulchand v. Ganga Ghulam [1899] 21 All. 450.

16. The only case in which a clearly different view appears to have been taken is the case of Oudh Commercial Bank v. Gurdin [1920] 23 O.C. 364. In this case the learned Judicial Commissioner sitting singly held that in view of the exception to Section 64 the meaning of that section was that every party to the instrument was discharged except the holder himself. This reading of Section 64 reduces it to an absurdity. I fail to see how a holder can be liable to himself. The holder cannot sue himself for the amount of the negotiable instrument. For this reason and for the reasons given above, 1 find myself in entire disagreement with this case.

17. The result is that my reading of Section 64 and the preponderance of judicial authority is in favour of the appellants' contention. In the result, I would dismiss the appeal against respondent 2, who is one of the drawers of the bills of exchange and would allow the appeal and give a decree with costs in both the Courts against respondent 3, who is the acceptor of the hundis.

Bennet, J.

18. I agree with the judgment of my learned brother. I desire to mention an additional reason, which seems to me of some weight, in arriving at the interpretation of Section 64, Negotiable Instruments Act, at which he has arrived, that is that under that section in default of presentment for payment, the maker of a promissory-note, the acceptor of a bill of exchange and the drawee of a cheque are liable to a holder, but other parties are not liable. The question in issue is whether the words 'the other parties thereto' refer to parties other than the maker of a promissory-note, the acceptor of a bill of exchange and the drawee of a cheque or whether the words refer to parties other than the holder.

19. The Court of first instance followed:

Oudh Commercial Bank v. Gurdin [1920] 23 O.C. 364 where the latter interpretation has been laid down chiefly based on the argument that Section 64 must be interpreted in the light of the exception to that section. That exception states:

Where a promissory-note is payable on demand and is not payable at a specified place, no presentment is necessary in order to charge the maker thereof.

20. If this is an exception to the rule embodied in Section 64, then Section 64, should provide that in general the maker of a promissory-note is not liable if there is no presentment for payment. Therefore, it is argued as regards a promissory note the words 'the other parties' in Section 64 must include the maker and not mean parties other than the maker. By analogy in the case of bills of exchange and cheques, the words 'the other parties' would include acceptors and drawees.

21. Now on this interpretation in the case of a cheque, the drawee would not be liable in default of 'presentment as hereinafter provided.' But under 'Section 84(3), illustration (a), a bank on which a cheque is drawn retains a liability on a cheque not presented within a reasonable time of its issue. Accordingly this method of interpretation breaks down in the case of a cheque. By analogy, therefore, this interpretation cannot apply in the case of promissory-notes and bills of exchange, and I consider the interpretation which has been placed on Section 64 by my learned brother is the correct interpretation.


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