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Kottan Vs. K.V. Kannan and anr. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtChennai
Decided On
Case NumberCivil Revn. Petn. No. 789 of 1948
Judge
Reported inAIR1951Mad632
ActsNegotiable Instruments Act, 1881 - Sections 64, 74 and 93
AppellantKottan
RespondentK.V. Kannan and anr.
Appellant AdvocateA. Achuthan Nambiar, Adv.
Respondent AdvocateK. Vittal Rao, Adv.
DispositionRevision allowed
Cases ReferredHartley v. Richard
Excerpt:
.....note - sections 64, 74 and 93 of negotiable instruments act, 1881 - whether endorsee of simple on demand promissory note entitled to decree against endorser without proof of presentment for payment and without notice of dishonour - notice of demand on behalf of holder would not amount to sufficient presentment since promissory note could not be sent along with notice - it must be proved that person making demand had promissory note with him for presentment on payment - section 93 makes it incumbent on holder of dishonoured promissory note to give notice that instrument has been so dishonoured to all parties whom he seeks to be severally liable - to make endorser liable fact of presentment and issue of notice of dishonour should be made clear in plaint itself as notice of dishonour..........liable.5. in this connection it is necessary to consider whether in the case of a simple on demand promissory note the presentment for payment should be made and the note produced when the demand is made. it is argued relying, on 1938-1 m. l. j. 4 that a registered notice of demand by a pleader demanding payment is not a presentment in law. the learned judges relied on decisions in mohamed rowthan v. mohamed hussain, 22 mad. 337 : 9 m. l. j. 135 and simulu ebrahim rowthan v. abdul bahiman mohamed, 8 m. l. j. 182, but there the question of the manner or method of presentment did not arise. even in 1938-1 m. l. j. 4, when i looked into the original judgment i find that it was a case which arose under the stamp act. but however the learned judges observed with reference to a letter.....
Judgment:
ORDER

Krishnaswami Nayudu, J.

1. The point for determination in this revision petition is whether an endorsee of a simple on demand promissory note will be entitled to a decree against an endorser without proof of presentment for payment to the maker and without notice of dishonour to the endorser.

2. The suit was on a promissory note for Rs. 240 executed on 12-8-1944 by defendant 1 in favour of defendant 2. On 14-4-1944, defendant 2 endorsed in favour of the plaintiff for consideration. The suit was filed on 13-2-1947. The allegation in the plaint is that the defendants failed to pay the amount on several oral demands and the registered notice sent to the defendants by the plaintiff on 10-2-1946 proved of no avail and hence the plaintiff was constrained to file this suit. Defendant 1 was ex parte. Defendant 2 pleaded that the moneys paid under the promissory note belonged to the plaintiff and that he was a name lender to the promissory note and that at the request of the plaintiff it was endorsed over to him. A decree was passed against both defendants.

3. The counsel for the petitioner argues that there was no presentment of the pronote for payment and no notice of dishonour in order to make the endorser liable. This plea was not raised in the written statement, but, however, this appears to have been raised in arguments and the lower Court simply referred to SECTIONS 35, 93 and 106, Negotiable Instruments Act, and the decision in Jagannath Beddiar v. Lakskmana Beddiar, 47 M. L. J. 475 : A.I.R. 1925 Mad. 182 which held that the liability of the endorser of a promissory note was not governed by Section 35, Negotiable Instruments Act, and that in order to make the endorser liable it must be presented for payment within a reasonable time after the endorsement, but, however, did not deal with the question whether notice of dishonour was necessary or was given in order to make defendant 2 liable. The lower Court finds that there was a written demand made by the plaintiff to the endorser, defendant 2 and also found that there were several demands now and then to the defendants in respect of the promissory note. There is no evidence of any oral demand; but I am not prepared to go behind the finding of the lower Court that there were several demands in view of the failure of defendant 2 to deny the allegations in the plaint where the plaintiff specifically stated that he made several demands on the defendants. It is, however, to be considered whether there was presentment for payment and notice of dishonour in order to make the endorser liable on the pronote.

4. In my view of my accepting the finding of the lower Court that there were several oral demands and also that there was a written demand, Ex. A-2, it is to be examined whether the oral demands about which there was no evidence as to when they were made and under what circumstances, and Ex. A-2 would be sufficient to satisfy the requirements of presentment for payment and notice of dishonour as provided in the Negotiable Instruments Act. Under Section 74, Negotiable Instruments Act, a negotiable instrument payable on demand must be presented for payment within a reasonable time after it is received by the holder. There is, however, no evidence to that effect in this case, excepting some demands made without any further particulars. Section 64 lays down that promissory notes, bills of exchange and cheques must be presented for payment to the maker, acceptor or drawee thereof respectively by or on behalf of the holder as hereinafter provided. In default of such presentment the other parties thereto are not liable thereon to such holder. The learned counsel for the petitioner, referred me to Uppalapati Hemadri v. K. Seshamma : AIR1931Mad113 where it was held that such presentment for payment under Section 64 was necessary if the endorser is to be made liable. But the question is in what manner the presentment is to be made. Primal facie it appears to me, reading the language of the sections that the presentment must be made personally and the note has to be produced. In this case the learned counsel for the respondent argues that when there is an oral demand it must be presumed that he must hare had the promissory note ready with him to be discharged when demand was made by the maker. I would be inclined to accept this contention if only there was some evidence in the case that an oral demand was made at a particular time and the circumstances under which it was made. Further to satisfy the requirements of Section 74, it is necessary that the negotiable instrument which was in this case a promissory note must be presented for payment within a reasonable time. In the absence of evidence it is impossible to say whether it was presented, if so, within a reasonable time. I do not think, therefore, that the note was presented for payment to the maker in order to make the endorser liable.

5. In this connection it is necessary to consider whether in the case of a simple on demand promissory note the presentment for payment should be made and the note produced when the demand is made. It is argued relying, on 1938-1 M. L. J. 4 that a registered notice of demand by a pleader demanding payment is not a presentment in law. The learned Judges relied on decisions in Mohamed Rowthan v. Mohamed Hussain, 22 Mad. 337 : 9 M. L. J. 135 and Simulu Ebrahim Rowthan v. Abdul Bahiman Mohamed, 8 M. L. J. 182, But there the question of the manner or method of presentment did not arise. Even in 1938-1 M. L. J. 4, when I looked into the original judgment I find that it was a case which arose under the Stamp Act. But however the learned Judges observed with reference to a letter of demand written by the vakil to the maker of the promissory note that 'this is not good presentment unless the note or instrument ia actually shown or exhibited to the person required to pay or to honour it, merely making a demand cannot be said to be equivalent to presentment. '

No doubt this seems to be the meaning of the word 'presentment' under Sections 64 and 74. It is no doubt correct that a notioe of demand on behalf of the holder would not amount to sufficient presentment since the promissory note could not have been sent along with the notice. The following passage from Bhashyam and Adiga's Commentaries on Negotiable Instruments Act may be cited:

'It is, however, not necessary that the presenter should carry the instrument in his hand at the time of the demand, provided the bill is in fact near andaccessible, though not in his personal custody. In fact, it seems that a demand otherwise valid is not vitiated, simply because the note or bill is not exhibited, unless the maker or the acceptor should refuse to pay on that account.'

That passage appears to have been taken from Parson's Book on Negotiable Instruments, Vol. I, p. 368. I am inclined to agree with this view. If only it is shown that demand was made and the person making the demand was in possession of the note and was in a position to hand it over on payment, it should be sufficient for a presentment for payment especially in the case of on demand promissory note. It must be proved in such a case that there has been a demand and the person making the demand had the promissory note with him or was in a position to produce it on payment being made. That does not, however, arise in this case where there is no evidence as to the oral demand having been made within a reasonable time after endorsement.

6. The next point argued by the learned counsel for the petitioner is whether there was any notice of dishonour. The lower Court relies on Ex. A-2 but, however, does not say it amounts to a notice of dishonour. I do not think that the terms of that notice would be sufficient to be a notice of dishonour as required by law. Section 93, Negotiable Instruments Act, makes it incumbent on the holder of a promissory note which has been dishonoured by non-payment to give notice that the instrument has been so dishonoured to all other parties whom the holder seeks to make severally liable thereon and in this case the endorser.

7. The learned counsel for the petitioner relied on the decision in Desouza v. Coles, 3 M. H. C. R. 384 where the question arose as to the place of cause of action, the learned Judges observed that the obligation of the maker of promissory note, or of the endorser of bill of exchange and probably of the acceptor also, is not complete without delivery of the instrument to the payee, endorsee, or drawer; and in a suit against the maker, or endorser, or acceptor, the whole cause of action does arise where the complete contract is made but not elsewhere, subject to this qualification as regards actions against endorsers, in which notice of dishonour is necessary, that such notice is also a material part of the cause of action and must also be given within the jurisdiction. In Hartley v. Richard Jesson Case, The younger, (1825) 107 E. R. 1085 : 3 L. J. K. B. O. S. 262 it was held that a notice of a dishonour of bill of exchange must contain an intimation that payment of the bill has been refused by the acceptor, and, therefore, a letter merely; containing a demand of payment was held not to be a sufficient notioe. The following passage from the judgment of Abbot C. J. will be relevant.

'There is no precise form of words necessary to be used in giving notice of the dishonour of a bill of exchange, bat the language used must be such as to convey notice to the party what the bill is, and that payment has been refused by the acceptor.'

In this case apart from the oral demands reference is made in the plaint to the notice EX. A-2 dated 10-12-1946. It is only a notice calling upon both the maker and the endorser to make the payment. There is also a reference in it that whenever the demand was made the amounts, principal and interest, were not paid and that defendants were saying that it will be given and that they were evading. The learned counsel wants me to assume from these words that there must have been oral demands, presentment of the promissory note should have been made and the fact of dishonour should also have been intimated to the endorser. I am unable to imply all these from the language of Ex. A-2. Moreover as pointed out by Abbot C. J. in Hartley v. Richard, Jesson Case, The younger, (1825) 107 E. R. 1085 : 3 L. J. K. b. O. S. 262 there should be something to indicate in the notice itself that there has been failure of payment on presentment and therefore dishonour of the promissory note. There is no such indication in Ex. A-2 to that effect. It is no doubt correct that the notice of dishonour need not be in writing because Section 94 states that a notice of dishonour may be oral or written. But there is no such proof of even a oral notice of dishonour in this case. It is, therefore, necessary that in case where the endorsee of a promissory note seeks to make the endorser liable, the fact of presentment and issue of notice of dishonour should be made clear in the plaint itself as notice of dishonour has been held to be a material part of the cause of action. There is no such allegation in the plaint nor ia there any proof of the same. In the circumstances, I think, the judgment of the lower Court cannot stand and I allow the petition but in the circumstances without costs.


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