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Jambu Chetty and anr. Vs. N.P.L. N. Palaniappa Chettiar - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtChennai
Decided On
Reported in(1903)13MLJ252
AppellantJambu Chetty and anr.
RespondentN.P.L. N. Palaniappa Chettiar
Cases ReferredDavies v. Reilly
Excerpt:
.....at madura after he received information of the hundis having been dishonoured, and the evidence of the 3rd witness as to what passed between him and the 1st defendant at rangoon in reference to these hundis after they had been dishonoured when the 1st defendant went to rangoon, clearly go to show, that the plaintiff accepted the hundis unconditionally, with the intention of enforcing his remedies thereunder, if the same should be dishonoured and not with the intention of suing the 1st defendant upon the original consideration. we may also add that the evidence to which our attention has been drawn is far from making out clearly any of these exceptions......pleader for the appellants, his contention in this court is only that the hundis were taken as absolute payment and that the plaintiff cannot therefore sue upon the original consideration. he argues that unlike a promissory note, the giving of a bill or hundi prima facie operates as absolute payment of the debt and that the onus is upon the party affirming the contrary to show that the parties intended it to operate only as a conditional payment. we think that there is no distinction in this respect between a note and a bill, and no authority has been cited to us in support of such a distinction.2. whether it be a note or a bill, it is a question of fact in either case, whether the parties intended the same as absolute or conditional payment, and the presumption is that the effect of.....
Judgment:

1. This is an action for the recovery of the sum of Rs. 5, 421-14-10, being the balance alleged to be due on accounts for goods sold and sums lent from time to time, by the plaintiff to the 1st defendant. The 1st defendant admitted his liability only to the extent of Rs. 521-3-2 and objected among other items to his having been debited by the plaintiff with the several sums of Rs. 1,547-4-9, 1,500-0-0, 1,765-8-3. and 1,100-0-0, being the amounts of 4 hundis drawn by the 1st defendant in favour of the plaintiff, which were dishonoured by the drawee at Rangoon. The Subordinate Judge overruled the defendant's objection, and gave a decree in favour of the plaintiff as sued for The defendants appeal against that decree and urge in support of their appeal that the plaintiff having accepted the hundis in discharge of the debt due to him, he cannot sue upon the consideration for the hundis, and that his remedy, it any, is upon the hundis Apparently, the 1st defendant contended in the Court below that the hundis had not only been accepted in discharge of the debt, but that the same were accepted as cash payment in consideration of a discount of 2 1/2 per cent. on the amount of the hundis, and that, therefore, the plaintiff had no cause of action against him either on the original debt or upon the hundis, he, the plaintiff, having taken the risk of their being dishonoured bv the drawee. Upon the evidence in the case, we are clearly of opinion that the 1st defendant has entirely failed to establish that the hundis were treated and accepted as cash payment. As we understand the learned pleader for the appellants, his contention in this Court is only that the hundis were taken as absolute payment and that the plaintiff cannot therefore sue upon the original consideration. He argues that unlike a promissory note, the giving of a bill or hundi prima facie operates as absolute payment of the debt and that the onus is upon the party affirming the contrary to show that the parties intended it to operate only as a conditional payment. We think that there is no distinction in this respect between a note and a bill, and no authority has been cited to us in support of such a distinction.

2. Whether it be a note or a bill, it is a question of fact in either case, whether the parties intended the same as absolute or conditional payment, and the presumption is that the effect of giving and taking a note or bill is that the debt is conditionally paid. As stated by the Master of the Rolls in In re Romer and Haslam (1893) 2 Q.B.296 it is perfectly well known law, which is acted upon in every form of mercantile business, that the giving of a negotiable security by a debtor to his creditor operates as a conditional payment only, and not as a satisfaction of the debt, unless the parties agree so to treat it.

3. It is next urged that the evidence in the case shows that the parties intended the hundis to operate as absolute payment of the debt, and in support of this contention reliance is chiefly placed upon the plaintiff having been allowed a discount of 2 1/2 per cent upon the amount of the hundis in addition to interest from the date of the hundis, at the current rate prevailing in Rangoon, which it is shown was higher than the local current rate

4. The 1st defendant in his written statement expressly relied uppn this circumstance in support of this contention, and on this point also cross-examined the plaintiff's 6th witness who was plaintiff's agent at that time. The witness sated that discount was allowed to cover risks in connection with the realization of the hundis and that it is allowed in every case.

5. The evidence given by the 1st defendant on this point was that for cashing Rangoon hundis the highest discount is 3/4 per cent., but that he consented to pay 2 1/2 per cent. in regard to the hundis in question, because the plaintiff was to have the risk in case Kadar Ravathan (the drawee) proved insolvent. I here was no cross-examination of the 1st defendant on this point nor was any explanation elicited in the re-examination of the plaintiffs 6th witness. The allowing of 3/4 per cent, discount may be regard ed as a reasonable compensation for the trouble to be taken in realizing at Rangoon the amount of a hundi drawn. and given in Madura. but 2 1/2 per cent, cannot reasonably be regarded merely as such compensation, and it clearly shows that the plaintiffs calculated upon making a clear profit of about 2 per cent, by taking the bill in discharge of the debt, without at the same time running any real risk, inasmuch as he would have his remedy against the 1st defendant, upon the bills, if the same were dishonoured at Rangoon. And it is fairly certain that the plaintiff's action would have been based upon the hundis, but for his having been probably advised that such action would be sure to fail for want of due notice of dishonour.

6. The inference to be drawn from the comparatively high rate of discount is strengthened by the evidence of the plaintiff's 6th and 3rd witnesses. The former says that the 1st defendant sometimes paid the plaintiff's firm in cash and sometimes by a bill, the amount of which was credited to him in the plaintiff's account.

7. If the bill were dishonoured the 1st defendant would pay the amount of the bill or he would be debited with the amount thereof, and the plaintiff's account clearly shows that the 1st defendant was first credited with the accounts of the four hundis in question, and afterwards debited with the same after the plaintiff failed to realise them. The evidence of this witness as to the interview he had with the 1st defendant at Madura after he received information of the hundis having been dishonoured, and the evidence of the 3rd witness as to what passed between him and the 1st defendant at Rangoon in reference to these hundis after they had been dishonoured when the 1st defendant went to Rangoon, clearly go to show, that the plaintiff accepted the hundis unconditionally, with the intention of enforcing his remedies thereunder, if the same should be dishonoured and not with the intention of suing the 1st defendant upon the original consideration.

8. We cannot accede to the appellant's contention that the fact of the plaintiff having negotiated two of the hundis shows that the hundis were given and taken as absolute payment, nor can we accede to the respondent's contention that the giving by the 1st defendant of certain bundles of cloth to the plaintiff as collateral security for the hundis, the bundles of cloth being deliverable to the drawee only after the hundis were honoured by him, is inconsistent with hundis having been accepted as absolute payment. The negotiation of the hundis is equally consistent with their having been given and taken as absolute payment or as conditional. payment, and as, at the commencement of the action, the two hundis were not outstanding in the hands of third parties, but were in the plaintiff's possession, who was thus in a position to hand over the bills to the defendant, he could bring an action on the consideration, if the bills in this case were taken as conditional payment Davies v. Reilly 1898 (1) Q.B. p. 1.

9. The giving of additional security for the hundis is a circumstance not inconsistent with their having been accepted as absolute payment, but rather tends to confirm the. inference that they were given and taken as such. For these reasons, the conclusion we have come to is, that the four hundis in question were accepted as absolute payment of the debt, and that the plaintiff therefore cannot sue upon the original debt even in the view that they were given and taken as conditional payment of the debt. the plaintiff cannot maintain this action as he was guilty of laches in respect of the same, and they must therefore be treated as absolute payments, and as between the 1st defendant the debtor and the plaintiff the creditor the debt is discharged.

10. We cannot accede to the respondent's contention that inasmuch as the drawee did not accept the bills, and the 1st defendant, the drawer, therefore was primarily liable, the plaintiff was under no obligation to give notice of dishonour to the 1st defendant. Section 94 of the Negotiable Instruments Act, 1881, recognises that the person to whom notice of dishonour is given; should be informed not only that the instrument has been dishonoured, and in what way, but also ' that he will be held liable thereon.'

11. Upon the evidence of the plaintiff's 6th and 3rd witnesses, we hold that notice of dishonour was not given either in express terms or by reasonable intendment by informing the 1st defendant that he would be held liable there on, and we also hold that such imperfect notice as was given was not given within a reasonable time after dishonour (vide Sections 105 and 106, Negotiable Instruments Act; also; S.A. No. 967 of 1900). The result, therefore, is that the plaintiff cannot sue the 1st defendant for the debt any more than on the bills. The respondent's pleader relies upon para. 12 of the Judgment of the Subordinate Judge and on Clauses a, c and g, of Section 98 of the Negotiable Instrument Act, and contends that no notice of dishonour was necessary. If the plaintiff relied upon any of these three exceptions to the general rule as to the necessity of giving notice of dishonour, he ought to have made the necessary averments in the pleadings and established the same. Neither in the pleadings nor in the issues has he relied either generally or specially upon all or any of these three exceptions, and we cannot permit him to raise them now, as each of them involves questions of fact which can be satisfactorily tried only by framing additional issues. We may also add that the evidence to which our attention has been drawn is far from making out clearly any of these exceptions. In the view, however, which we have taken of the main question involved in the case, viz., that the bills were given and taken as absolute payment, it becomes unnecessary to remit such additional issues for trial, even if we were otherwise disposed to do so.

12. The Subordinate Judge's view that the provisions of the Negotiable Instruments Act are not, or at any rate, ought not, to be strictly applied to natives is manifestly unsound and untenable. If any local usage relating to bills and notes in an Oriental language, the operation of which usage is saved by Section 1, though such usage may be at variance with the Act, be relied upon, such usage should be alleged and established by the party relying upon it.

13. The appeal, therefore, is allowed with costs and the decree appealed from varied accordingly.

14. Both parties agree that the plaintiff should have a decree for Rs. 521-3-9, the amount admitted by the defendants in the court below, with interest at 6 per cent from date of plaint till payment. Each party will pay and receive proportionate costs in the court below,


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