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K.T.V.R.T. Veerappa Chetty Vs. Vellayan Ambalam and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Judge
Reported in52Ind.Cas.370
AppellantK.T.V.R.T. Veerappa Chetty
RespondentVellayan Ambalam and ors.
Cases ReferredJeetun Lall v. Sheo Churn
Excerpt:
.....acceptor in the negotiable instruments act, and i do not see why it should not apply as much to a bill payable on demand as to a bill payable after sight or on a fixed date. that would apply as well to a bill payable on demand as to a bill payable after sight. it was held that there was a good cause of action and the learned judges observe at pages 141 and 142 that although the law does not require presentment for acceptance of a bill payable after a fixed date before such date has arrived, yet under the english law it was not only allowable but was strongly advisable to do so, and that the negotiable instruments act made no alteration in that respect. then they say when it is dishonoured by non-acceptance, as well as when it is dishonoured by nonpayment, the provisions of chapter viii..........argument is that these sections cannot apply to the present case inasmuch as this is not a bill payable after sight or after a fixed date, and, therefore, there can be no question here of acceptance or non-acceptance. section 92 which defines dishonour by non-payment only deals, it is said, with the default of the acceptor of the bill and not the default of the drawee in cases where the bill does not require to be accepted. but the effect of this argument, if sound, pushed to its logical conclusion must be that there was no dishonour at all in this case, and the suit must on that account fail, because the effect of section 30 of the act is that the drawer of a bill of exchange is bound to compensate the holder only in case of dishonour by the drawee or acceptor. we were referred.....
Judgment:

Abdur Rahim, J.

1. The suit which we are dealing with in this appeal was instituted with respect to a Hundi drawn by the 1st defendant, the appellant, on S.R.M.S. Ranganathan Chetty in Rangoon in favour of the 2nd defendant, who assigned it to 3rd defendant and the 3rd defendant assigned it to the 4th defendant's father, who assigned it to the plaintiff. Several defences were raised but we need not deal with all of them. We wish to deal with the questions of fact whether there was presentment of the Hundi and in due time, whether there was dishonour and notice of dishonour, if any, given to the drawer as required by law. The question whether the Hundi was discharged by payment has also been argued before us. The learned Advocate-General has also raised a rather interesting question of law based on the provisions of Sections 61 and 74 of the Negotiable Instruments Act read with Sections 91, 92, 93, and 94. The case cannot be said to have been tried as satisfactorily as it might have been; but we have to some to a conclusion upon the evidence on record. The whole evidence regarding presentment and dishonour and the alleged discharge is of a very unsatisfactory kind. No witness from the firm of the drawer was examined in support of the case of the plaintiff as to presentment and no explanation is forthcoming for this omission, Nor has there been any attempt to produce the books of that firm which, it is likely; would have contained some record as to the fact of presentment of this bill if it was actually presented as is spoken to by P. W. No. 2. The bill is alleged to have been sent at the request of the 4th defendant's father by a firm in Madura, called V.E.R.M. Firm, for collection. One of the men from that firm, the son of the proprietor, was examined as plaintiffs witness No. 5. He says that he received a letter saying that the bill had been presented for payment and that it was dishonoured. But no attempt was made to produce that letter, nor has any book of account or anything in writing been produced in support of the plaintiff's allegation. It was quite easy for the plaintiff to produce absolutely conclusive evidence on this point. It was argued by the learned Advocate-General that we ought to accept the evidence given by the plaintiff even though it is not the best evidence available, and such as it is, is unsatisfactory because the 'probabilities of the case, he contends, show that the allegations of the plaintiff are true. But the transaction to say the least was of a very peculiar character. We do not find any proper explanation for the fact that although the bill was presented some time in May or June 1913, if the evidence of the plaintiff is to be accepted on that point, it was noted on only in 1915 and no action was taken on the bill for two years. Then there is really no evidence that any notice of dishonour was given to the first defendant within a reasonable time after such dishonour. The plaintiff says that before instituting the suit, that is, some time in 1915 he ask ed the 1st defendant for payment and that he promised to pay. That seems to me to be an absolute untruth. The defense of the 1st defendant is that the bill had been long ago discharged. It is in-conceivable that, if the plaintiff made a demand upon him, he should have promised to pay. The learned Advocate-General has not really relied on the noting such as there is on this bill for the purpose of drawing any presumption of presentment and dishonour. It is a most peculiar entry by the Notary Public of Rangoon. All that it contains is 'noted for non-payment.' It does not give the date of dishonour as required by Section 99 of the Negotiable Instruments Act. Then there is no certificate of protest within the meaning of Sections 100 and 101 of the Act. It is only where there is a proper protest that Section 119 would apply requiring the Court to presume the fact of dishonour.

2. As regards the question of discharge, it is one of the pleas of the 1st defendant. Of course the onus lies upon him to prove it. His allegation is that this bill was drawn in order to pay the price of some diamonds which he bought from the 2nd defendant. He says that at his instance the 3rd defendant pledged these diamonds as well as some of his own jewels with one Puduvayal firm and that the 3rd defendant retained this Hundi as a sort of security, although afterwards he (1st defendant) paid off the Puduvayal firm and redeemed the jewels by raising the money from one Thenappa Chetty. This Thenappa Chetty has not been examined, although he was present in Court being brought up under warrant. Nor is there any receipt to show payment either to the 2nd defendant or to the Puduvayal firm. While I am not prepared to say that the entire story of the defence in this connection is unfounded since there is no explanation forthcoming as to why no action was taken nearly two years after the alleged dishonour, at the same time the onus being on the 1st defendant to prove this plea it cannot be said that the evidence, such as it is, has made it out. However, the 1st defendant seems to be entitled to succeed on the other points which I have dealt with.

3. Then the learned Advocate-General drew our attention to the unhappy wording of Sections 91 to 94 of the Negotiable Instruments Act, Section 91 defines dishonour by non-acceptance, Section 92 defines dishonour by non-payment and says: 'A promissory note, bill of exchange or cheque is said to be dishonoured by non-payment when the maker of the note, acceptor of the bill or drawee of the cheque makes default in payment upon being duly required to pay the same.' Section 93 provides for notice being given in case of dishonour by non-acceptance or non-payment. The learned Advocate-General's argument is that these sections cannot apply to the present case inasmuch as this is not a bill payable after sight or after a fixed date, and, therefore, there can be no question here of acceptance or non-acceptance. Section 92 which defines dishonour by non-payment only deals, it is said, with the default of the acceptor of the bill and not the default of the drawee in cases where the bill does not require to be accepted. But the effect of this argument, if sound, pushed to its logical conclusion must be that there was no dishonour at all in this case, and the suit must on that account fail, because the effect of Section 30 of the Act is that the drawer of a bill of exchange is bound to compensate the holder only in case of dishonour by the drawee or acceptor. We were referred to Section 37 as also defining the liability of the drawer. That section only says that the drawer of a bill of exchange until acceptance is liable as principal debtor. But if the argument of the Advocate General is right, there could be no question of acceptance in this case and Section 39 would have no application.

4. Apart from that, I do not think that the Legislature intended to lay down that in the case of a bill payable at sight or on demand there can be no dishonour by non-payment. In fact such a position seems to me to be so untenable that the Court would not be justified in imputing any such intention to the Legislature, if it could be helped. As is well known, the Negotiable Instruments Act was based on the principles of English Law. The drafting of some of these sections seems to be rather loose, especially as regards the collocation of certain important phrases. For instance Section 93, paragraph 2, is to this effect: 'Nothing in this section renders it necessary to give notice to the maker of the dishonoured promissory note or the drawee or acceptor of the dishonoured bill of exchange or cheque.' Now if we were to proceed on the line of interpretation suggested by the learned Advocate-General, then we will have to apply the word acceptor to cheques, while in the case of cheques there could hardly have been any question of acceptance within the contemplation of the Legislature. Similar wording occurs in other sections as well. For instance, Section 99 says: 'When a promissory note or a bill of exchange has been dishonoured by non-acceptance or nonpayment, the holder may cause such dishonour to be noted by a Notary Public upon the instrument;' surely the Legislature could not have intended non-acceptance to be applicable to promissory notes and not to bills of exchange, although that will be the result of the order in which the words are allocated. I think the difficulty suggested by the arguments on behalf of the respondent may be met at least in two ways. Section 30 lays down that a drawee is liable to compensate the holder in case of dishonour, provided due notice of dishonour has been given as provided by the Act. Then Section 93 says that in case of non-acceptance or non-payment of a promissory note, bill of exchange or cheque, the holder must give notice that the instrument has been dishonoured. I take it that what the Legislature meant was that notice of dishonour should be given either of non-acceptance or non-payment, whichever may be the case in the transaction in question. Then Section 91 lays down that such notice must be given within a reasonable time after dishonour. Section 93 indicates the parties to whom notice is to be given in oases where there is a succession of indorsers. But Section 30 is specifically applicable to the case of a drawer, and that read with Section 94 would be sufficient, so far as the liability of the drawer is concerned, to show that notice of dishonour is to be given in reasonable time. But it seems to me to be quite reasonable on the other hand to go further and say that Sections 91, 92 and 93 were intended to be applicable to a bill payable on demand. It is quite true that the law does not require that in case of such bills there should be a presentment for acceptance. But if the drawee of a bill payable on demand refused to accept it, its practical effect is refusal to pay and becomes dishonour by non-payment. That is to say, there is nothing in law which precludes a bill payable on demand being presented for acceptance, although that may not be necessary. The word 'acceptance' is not defined but acceptor' is: the drawee becomes the acceptor when he has signed his assent upon the bill. The English Statute, Bills of Exchange Act, defines acceptance as the signification by the drawee of his assent to the order of the drawer. That is clearly what is implied in the definition of the word acceptor in the Negotiable Instruments Act, and I do not see why it should not apply as much to a bill payable on demand as to a bill payable after sight or on a fixed date. Section 18 of the English Act says that a bill may be accepted when it is overdue. That would apply as well to a bill payable on demand as to a bill payable after sight. Section 30 of the same Act corroborates this interpretation. It says that in the case of a bill payable after sight presentment for acceptance is necessary in order to fix the maturity of the instrument, but in no other case is presentment for acceptance necessary in order to render liable any party to the bill. That implies that there may be presentment for acceptance of a bill payable on demand although it is not required by the law. The Negotiable Instruments Act does not expressly lay down that bills payable on demand or bills other than those payable after sight need not be presented for payment. But this undoubtedly followed from Sections 61 and 64 which describe the bills that are required to be presented or payment or acceptance.

5. I am fortified in my interpretation of the Act with respect to this matter by a decision of the Bombay High Court in Barn Ravji Jambhekar v. Pralhaddas Subkarn 10 Ind. Dec. 647. That was a case of a bill payable after a fixed date, but it was presented for acceptance before the expiry of that date although the Negotiable Instruments Act does not contemplate such presentment. The drawee refused to accept the bill and it was never presented for payment afterwards. It was held that there was a good cause of action and the learned Judges observe at pages 141 and 142 that although the law does not require presentment for acceptance of a bill payable after a fixed date before such date has arrived, yet under the English Law it was not only allowable but was strongly advisable to do so, and that the Negotiable Instruments Act made no alteration in that respect. They point out that presentment for acceptance must always and in every case precede presentment for payment, and that the drawer of a bill contracts that whenever a bill is duly presented, it will, subject to the provisions of Section 63, be accepted. Then they say when it is dishonoured by non-acceptance, as well as when it is dishonoured by nonpayment, the provisions of Chapter VIII (in which Sections 91 to 94 occur) come into play. They point out: It is true that there is no explicit declaration of the law upon this subject as in Section 43 of the English Act. But the whole scope and tenor of Chapter 'VIII of the Indian Act appear to contemplate the same result as is there declared to follow from non acceptance.' I may also refer to a ruling of the Calcutta High Court in Jeetun Lall v. Sheo Churn 2 W.R. 214, which was before the passing of the Negotiable Instruments Act. It shows that the provisions of the Negotiable Instruments Act are really based on the principles of the English Common Law relating to mercantile instruments, and there can be no doubt whatever that, as pointed out there, the law has always been both in England and in India that there must be dishonour and notice of dishonour given within reasonable time in order to sustain an action against the drawee or any other holder of the bill.

6. The appeal of the 1st defendant must, therefore, be allowed and the decree of the Subordinate Judge as against him will be set aside and the suit against him dismissed with coats here and in the Court below.

Oldfield, J.

7. I agree with my learned brother's decision on the questions of fact and of law.

8. As regards the latter I wish to add only that the law of negotiable instruments is, as it has been described cosmopolitan: and in the present case, where we have no special considerations arising with reference to the circumstances of Indian business we are justified in endeavouring to read the Statute, if it is possible to do so, conformably to the provisions of the English Law, which follows the general commercial law of the rest of the world. There is no dispute that under the English Law the argument of the learned Advocate-General would be absolutely unsustainable, and a reference to the Bills of Exchange Act is sufficient to show that. In those circumstances it is our duty to scrutinize the language used in the Negotiable Instruments Act most carefully, and I am glad to be able to hold that the refusal to pay referred to in Section 92 includes the refusal to accept such as is contemplated in Section 91, which is a possible, though not an invariable or obligatory, preliminary to payment being demanded at all. That is shortly the ground on which I agree with my learned brother.


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