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C.C. Sinha Vs. Bidhu Bhusan De and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKolkata High Court
Decided On
Case NumberSuit No. 3761 of 1952
Judge
Reported inAIR1955Cal562
ActsNegotiable Instruments Act, 1881 - Section 5
AppellantC.C. Sinha
RespondentBidhu Bhusan De and anr.
Appellant AdvocateA.K. Sen and ;Ramen Dutt, Advs.
Respondent AdvocateDipak Choudhury, Adv.
DispositionSuit dismissed
Cases ReferredFielder v. Marshall
Excerpt:
- g.k. mitter, j.1. this is a suit for the recovery of rs. 3316/8/- against two defendants on the basis of a document described in the plaint as a hundi dated 13-2-1952 for a sum of rs. 3,300/-.2. it is alleged in the plaint that the hundi was drawn by biswanath nath, defendant 2, and accepted by defendant 1 bidliu bhusan de at the plaintiff's place of residence at calcutta within, the jurisdiction of this court. it is further alleged that the hundi was duly presented to defendant 1 for payment on maturity but was dishonoured by nonpayment and notice thereof was duly given.3. defendant 2 did not enter appearance in this suit. defendant 1 put in his written statement on 1-9-1053. the suit having been filed under the provisions of order 37, civil p. c. an application was made for leave to.....
Judgment:

G.K. Mitter, J.

1. This is a suit for the recovery of Rs. 3316/8/- against two defendants on the basis of a document described in the plaint as a Hundi dated 13-2-1952 for a sum of Rs. 3,300/-.

2. It is alleged in the plaint that the Hundi was drawn by Biswanath Nath, defendant 2, and accepted by defendant 1 Bidliu Bhusan De at the plaintiff's place of residence at Calcutta within, the jurisdiction of this Court. It is further alleged that the Hundi was duly presented to defendant 1 for payment on maturity but was dishonoured by nonpayment and notice thereof was duly given.

3. Defendant 2 did not enter appearance in this suit. Defendant 1 put in his written statement on 1-9-1053. The suit having been filed under the provisions of Order 37, Civil P. C. an application was made for leave to defend. Such leave was given to defendant 1 but not to defendant 2 and the suit was decreed ex parte as against him. By his written statement defendant 1 denies that he accepted the Hundi as alleged in the plaint or at all.

He further states that the instrument was not a Hundi and that he was never under any liability under the said Hundi nor was it ever presented for payment. It is also contended that the document was not a bill of exchange within the meaning of Section 5, Negotiable Instruments Act and that the plaintiff has no cause of action as against defendant 1.

4. The document is made out on an embossed paper with Hundi stamp of ten annas on it and reads as follows:

'Rs. 3,300/- 10As.Sixty days after date without grace I promiseto pay to Mr. C.C. Sinha of No. 35A, SimlaStreet, Calcutta--6 or order the sum of Rupeesthree thousand and three hundred (Rs. 3300/-)only for value received in cash at Calcutta.Accepted.Bidhu Bhushan De Biswanath Nathof 2/A Camac St., of 35 Tangra RoadSuits No. 4 Calcutta 15Cal. 13/2/1952 13/2/1952.'

5. It appears that the word 'order' in the bodyof the instrument was put in later and the wordwhich formerly stood in its place was the wordbearer'.

6. The following issues were settled for determination:

1. Is the document in a suit a Hundi? Did defendant 1 De accept the said Hundi? Is he bound thereby?

2. Was the Hundi presented to defendant 1? Was it dishonoured by non-payment?

3. To what relief, if any, is the plaintiff entitled?

7. The plaintiff, went into the witness box first and he stated that there had been monetary transactions between him and the defendants and that he had lent out Rs. 3,300/- to the defendant Nath. In answer to Q. 5 he said 'Mr. Nath approached me along with Mr. De for a loan of Rs. 3,300/- and they made out a hundi for the said amount.' Witness then proved the document in suit. He said that it was drawn at his house, 35A Simla Street in his presence and that the acceptor Mr. De also signed it in his presence. Witness stated that sixty days after the date of the document i.e., on 13-4-1952, he had gone to the defendant De's place at 2/A Camac Street and asked him to honour it. According to the witness, the defendant De did not give him a direct answer as to whether he would onour the document or not but on the next day when the plaintiff called on him again, he was told that the defendant was not going to pay the amount mentioned in the document.

The plaintiff then went to the other defendant Nath but he also refused to pay. An attempt Was made to prove a copy of a letter served on the defendant De through the plaintiff's solicitor but ultimately no such document was proved. The witness was asked in cross-examination as to who wrote out the word 'accepted', which appeared over the signature of Bidhu Bhusan De and his answer was that he could not say in whose handwriting the word was written.

In answer to the next question, i.e., question 52, he said that he remembered having seen, Bidhu Bhusan De, the defendant putting his signature but he could not be sure as to who had written the word 'accepted'. With regard to the crossing out pf the word 'bearer' and putting in the word 'order' he said that it was done by the defendant Nath. There is nothing else of importance which came out in the cross-examination and the plaintiff was the only person who gave oral evidence in this case.

8. The main question in this case and one which is of some importance is whether the document is a bill of exchange within the meaning of Section 5 read with Section 17, Negotiable Instruments Act, By Section 5, Negotiable Instruments Act a bill of exchange is defined as

'An instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.'

Omitting paras. 2 and 3 of Section 5 which are not relevant for the purpose of this suit the last paragraph of the section reads as follows:

'The person to whom it is clear that the direction is given or the payment is to be made may be a 'certain person' within the meaning of this section and Section 4, although he is misnamed or designated by description only.'

Section 17. Negotiable Instruments Act provides as follows:

'Where an instrument may be construed either as a promissory note or bill of exchange the holder may at his election treat it as either and the instrument shall be thenceforward treated accordingly.'

Section 4, Negotiable Instruments Act defines a promissory note to be an

'Instrument in writing (not being a bank note or currency note) containing an unconditional undertaking, signed by the maker, to pay a certain gum of money only to, or to the Order, of a certain person, or to the bearer of the instrument.'

9. If one was to go by the definition of a bill of exchange as given in Section 5 alone, there can be little doubt that the document in suit is not a bill of exchange inasmuch as it does not in so many words direct any person to pay a certain sum of money to, or to the order of, a certain person,

10. It is contended, however, that acceptance of the defendant Bidhu Bhusan De in this case tills up the lacuna, if any, in the document and makes it a hundi or a bill of exchange within the meaning of Section 5 and reliance is placed on the judgment of a Divisional Bench of this Court reported in -- 'Jogesh Chandra v. Mahomed Ibrahim : AIR1930Cal697 .

11. Before dealing with that case, it may not be out of place to take note of a judgment of a Special Bench of this Court reported in -- 'Harsukdas Balkissendas v. Dhirendra Nath : AIR1941Cal498 . The bench was comprised of Derbyshire C. J., Panckridge and Nasim Ali JJ. The document which came up for construction by the Special Bench in that case, was expressed in the following terms:

Sixty days after date without grace we promise to pay Messrs. Harsookhdas Bulakissendas or order at Calcutta the sum of Rs. 2,500/- only for value received. Sd. Dhirendra Nath Roy, Girindra Nath Roy, and Birendra Nath Roy.'

Across this document was an endorsement 'accepted', Dhirendra Nath Roy, Girindra Nath Roy, Birendra Nath Roy'. It was contended on behalf of Harsookhdas Bulakissendas who had lent money to the Roys on the strength of this document that it was a hundi or a bill of exchange and as such outside the purview of the Bengal Money Lenders Act which sought to affect liability of debtors under promissory notes but not under bills of exchange.

The only difference between the facts in --'Harsookhdas's case (B)' and the case before me is that the same persons filled the roles of the drawers and the acceptors of the so called hundi in the Special Bench case whereas before me the drawer _ and the acceptor are different persons. Ignoring that aspect of the case for the time being, I proceed to consider the relevant portions of the Special Bench judgment.

12. Delivering judgment of the Special Bench, Derbyshire C. J. observed at page 500:

'To determine the character of the document, we must look to the provisions of the document itself. From the definitions of promissory note and bill of exchange it will be seen that the essential character of a promissory note is that' it shall contain a promise, and the essential character of/a bill of exchange is that it shall contain an order. In this particular case each one of these instruments contains a promise.

None of them contains an order. They, therefore, satisfy the definition of a promissory note, but do not satisfy the definition of a bill of exchange.

It is contended however that the word 'accepted' over the signature of the makers changed the character of the document from a promissory note to a bill of exchange. Certainly it is not usual for the maker of a promissory note to write 'accepted' across it, but it is sometimes the case that the maker of a bill of exchange writes 'accepted' across it.

But that in my view is not conclusive. The word 'accept' simply means, with regard to bills of exchange, to take responsibility for or to agree to meet. That is according to common language.

In Section 7, Negotiable Instruments Act where reference is made to the acceptor of a bill of exchange it is provided:-- 'After the drawee of a bill has signed his assent upon the bill or if there are more parts than one, upon one of such parts, and delivered the same, or given notice of such signing to the holder or to some person on his behalf, he is called the 'acceptor''.

That indicates what acceptance means according to the Negotiable Instruments Act. It means assent, but it means assent on the part of the drawee. Here there is no drawee because there is no order. The effect of the word 'accepted', if it has any effect at all, which I very much doubt, is simply to add the assent of the maker of the note to the promise which he has already given.

In other words, it repeats the promise the promisor has already made. That can have no further legal effect. In my view, it is clear from the definition of 'promissory note' and 'bill of exchange' that these particular documents are nothing but promissory notes.'

13. His Lordship then referred to two English decisions which I shall deal with later and came to the conclusion that the instruments in question were promissory notes and not bills of exchange. Unfortunately, no reference was made in this case to the judgment of the Division Bench in : AIR1930Cal697 .

14. The document which called for construction in the case of : AIR1930Cal697 was couched in the following terms:

'Forty-five days after date without grace we jointly and severally promise to pay to the order of Babu Jogesh Chandra Dhar, Chittagong, the sum of Rs. 1000/- only for value received in cash & that with interest, 3 per cent. per annum after due date.

Prasanna Kumar Gupta

Ram Kamal Gupta.'

15. In a corner of this document at the top was an endorsement 'accepted payable on due date 23rd September.' Below this endorsement were two signatures of defendant 3, Mahammad Ibrahim, one for self and the other for Makbool Ahmed and Sons. Defendant 3 Mahammad Ibrahim contested the suit. Defendants 1 and 2 did not appear.

16. Delivering judgment of the Division Bench Mitter J. observed at page 698:

'We have no doubt that if is a bill of exchange as defined in Section 5, Negotiable Instruments Act, and even if there is any ambiguity about its being either a promissory note or a bill of exchange, the holder of the bill is entitled to treat it as either having regard to the provisions of Section 17, Negotiable Instruments Act which enacts that where an instrument may be construed either as a promissory note or a hill of exchange, the holder may at his election treat it as either and the instrument shall be thenceforward treated accordingly.'

His Lordship then discussed the case of -- 'Lloyd v. John Edward Oliver', (1852) 18 QB 471 (C). The document in that case was in the following terms:

'London, July 17, 1851, 99. 15s.

Two months after date I promise to pay Mr. T.R. Lloyd or order the sum of ninetynine pounds fifteen shillings for value received.

John Edward OliverBirmingham Sd/- Henry Oliver.'

Across this document was written 'Accepted, payableSpooner Attwood and Co., Bankers' London, EdwardOliver.'

17. In the view of his Lordship Mitter J. the document in that case might be treated as a bill of exchange as against Henry Oliver the drawer, even before acceptance. As against the defendant, it was clearly a bill of exchange. His Lordship observe at page 699:

'Lord Campbell did not rest his decision on the ground that J.E. Oliver's name was placed where, according to mercantile usage, the name of the drawee would be placed. It is true Erle J. referred to it, but neither Lord Campbell nor Crompton J. referred to mercantile usage, from which it could be inferred that there was an implied request to J.E. Oliver to pay.'

18. I have looked into the judgments in --'Lloyd v. John Edward Oliver (C)' carefully, and with great respect to his Lordship, I am unable to accept his views. Lord Campbell certainly did observe that the instrument might be treated as a bill of exchange as against Henry Oliver, the drawer, even before acceptance. But he went on to add that

'as against the defendant it is clearly a bill of exchange. It is directed to John Edward Oliver, that must mean that John Edward Oliver is requested to pay the sum mentioned at two months after date, although there are no express words of request.

The words 'I promise to pay' need not be rejected; they are to be construed as an expression of what otherwise would be implied, namely that the maker will pay if the acceptor do not. The instrument is ambiguous and might, no doubt, if the plaintiff chose, be treated as a promissory note. That is the effect of the decision in -- 'Edis v. Bury, (1827) 6 B & C 433 (D).'

Mr. Justice Erle observed:

'We must construe the language of the document according to known mercantile usage. It has always been the custom, in treating bills of exchange, to place the name of the party to whom the bill is directed in that part of the instrument where, in the present case, the name John Edward Oliver, of the defendant, is placed. According to the same rule the word 'accepted' followed by a signature as in the present instrument, implies acceptance of the bill by the party signing.'

According to Crompton J. :

'The instrument contains a clear direction to John Edward Oliver to pay and a clear acceptance by him. It is therefore a bill of exchange.'

19. It is, therefore, to be 'seen that although Erle J. refers to mercantile usage, according to both Lord Campbell C. J. and Crompton J. there was a clear direction in the instrument to John Edward Oliver to pay and a clear acceptance by the latter. In the case before me there is no such direction although there is acceptance by the defendant De. The question, therefore, is whether even in the absence of a direction to De contained in the document, to pay, the document can be construed as a bill of exchange.

20. Mitter J. also referred to the case of --'Gray v. Milner, (1819) 8 Taunt 739 (E): The document in this case read as follows:

'Two months after date, pay to me, or my order, the sum of thirty pounds two shillings. W. Sustanance. Payable at No. 1 Wilmot Street, opposite the Lamb, Bethnal Green, London.'

Across this was written: 'Accepted, Charles Milner' and Sustanance had endorsed it to the plaintiff. Dallas C. J. who delivered judgment obsarved:

'The instrument was clearly a bill of exchange and could be declared upon as such; that it was not necessary that the name of the party who afterwards accepted the bill should have been inserted, it being directed to a particular place, which could only mean to the person who resided there; and that the defendant, by accepting it acknowledged that he was the person to whom it was directed.'

21. This case was commented upon in the case of -- 'Davis v. Clarke', (1844) 6 QB 16 (F). In this case the document ran as follows:

'To Mr. John Hart

Twelve months after date pay to me or my order hundred pounds, value received.

Sd. John Hart.'

Across the face of the instrument was written 'Accepted H.J. Clarke, payable at 319 Strand.' It is clear that the person accepting was not the personto whom the document was directed. Lord DenmanC. J, observed:

'There is no authority, either in the English law or the general law merchant, for holding a party to be liable as acceptor upon a bill addressed to another.'

Patterson J. observed:

'In 'Gray v. Milner (E)' no party was named in the address; and I must say that the decision in that case appears to me to go to the extremity of what is convenient. It may be considered as having been decided on the ground that the acceptance was not inconsistent with the address, so that the acceptor might be deemed to have admitted himself to be the party addressed. But here another person, the drawer himself is named in the address.'

Williams J. observed:

'The only question is whether the defendant is such an acceptor as is described in the declaration; that is of a bill of exchange directed to him. No doubt this could be so only where he is the drawee; but here the bill is not addressed to the defendant at all. This is, therefore, not an acceptance within the custom of merchants.'

Coleridge J. held:

'The sale course is to adhere to the mercantile rule that an acceptance can be made only by the party addressed, or for his honour. Here the last is not pretended; and the first cannot be presumed. If the John Hurt addressed is different from the John Hurt who draws, there is still no acceptance; if the same, then the instrument is a promissory note and not a bill of exchange.'

22. In -- 'Peto v. Reynolds', (1854) 9 Ex 410 (G) the document sued upon read as follows:

'At sight of this my third of exchange, thefirst and second of the same tenor and date beingunpaid, please to pay to Mr. Peto Esq. or order, thesum of two hundred pounds sterling for value received, and place the same, as by letter of adviceof 3rd September, to the account of Alfred Righton.'

Across this document was written -- 'accepted,Samuel Reynolds, Shearn Lane, Bedminister.' Toquote from the judgment of Baron Parke in thatcase:

'I cannot help observing that, with the exception of -- 'R. v. Hawkes' (1838) 2 Mood CC 60 (H) there is no case in which it has ever been decided that an instrument could be a bill of exchange where there was not a drawer and a drawee. With respect to that case, it does not seem to me entitled to the same weight of authority as a decision pronounced in the presence of the public and on reasons assigned after hearing an argument in public.

I must own that, hut for that case, I should have no doubt that the law merchant required that every bill of exchange should have. .......a drawer and a drawee. This instrument though in the form of a bill is not addressed to anyone, for I think it impossible to consider the acceptance as an address, but I do not see why the instrument may not be treated as a promissory note, because upon the face of it, there is a promise to pay the amount written in the name of Samuel Reynolds.' -

Baron Alderson who had delivered judgment in 'R. v. Hawkes (H)' said:

With respect to the question whether the instrument is or is not a bill of exchange, the case of R. v. Hawkes (H)' is undoubtedly in point. I must own, however, that I now think that I was wrong on that occasion. The case seems to have been decided on the ground that 'Gray v. Milner (E)' governed it; and the fact was not adverted to, that 'Gray v. Milner (E), may be thus explained; that a bill of exchange, made payable at a particular place or house, is meant to be addressed to the person who resides at that place or house.

Therefore in that case, the bill was on the face of it directed to some one; and the Court held that inasmuch as the defendant promised to pay it, that was conclusive evidence' that he was the party to whom it was addressed. But in the case of 'R. v. Hawkes (H)' the instrument was addressed to no one. I concur with my Brother Parke, that if the instrument in this case is not a bill of exchange, it is clearly a promissory note.'

Baron Martin was of the same opinion. With regard to the case of 'Gray v. Milner (E)', the learned Baron observed:

'I should have doubted whether the making of the bill payable at a particular place was a sufficient address. However, assuming that in this case too the defendant made an absolute promise to pay, why may not this instrument be treated as a promissory note?'

23. It is clear therefore, from this case that both Baron Alderson and Baron Martin seemed to doubt the correctness of the decision in 'Gray v. Milner (E)' Baron Alderson indeed had the courage to admit that his previous decision in 'R. v. Hawkes (H)' was not correct. Baron Parke was content to say that 'R. v. Hawkes (H)' was not argued fully and was not decided in the way it should nave been done.

24. In the result, the learned Judges directed a new trial. The decision in the new trial is to be found reported in -- 'Reynolds v. Peto', (1855) 11 Ex 418 (I). I do not think it necessary to say anything about this second judgment except to quote from the judgment of Coleridge J.:

'There was no evidence of acceptance and so the question whether it was a bill of exchange or not was not considered.'

25. The judgment of the House of Lords in the case of -- 'Steel v. M'Kinlay', (1880) 5 AC 754 (J) also seems to me to be against the view taken by the learned Judge Mitter J. in 'Jogesh Chandra Dhar v. Muhammad Ibrahim (A)'. There Lord Watson observed (at p. 779):

'Save in the case of acceptance for honour or per procuration, no one can become a party to a bill qua acceptor, who is not a proper drawee or an addressee.'

26. It therefore appears to me that the deduction which Mitter J. drew from the English cases is not borne out by those decisions. The only instance where a document which was not addressed to anybody or in which the address of an acceptor did not appear but which was treated as a bill of exchange was in the case of 'R. v. Hawkes (A)' and Baron Alderson who decided that case himself went to the length of saying that his judgment was not sound,

27. It seems to me, therefore, that in view of the judgments of the Special Bench in 'Harsukdas Balkissendas (B)' and in view of the English decisions which I have referred to the document before me cannot be described as a bill of exchange or a hundi within the meaning of Section 5, Negotiable Instruments Act. Nor can I accept the suggestion that there is some ambiguity in the document and as such, the holder is entitled to treat the document as a bill of exchange.

The document can, undoubtedly in view of the judgments in 'Peto v. Reynolds (G)', be treated as a promissory note even so far as Bidhubhusan De was concerned but that is not the case before me and it appears to me, therefore that I cannot hold that Bidhubhusan De is bound by that document as on a Hundi or a bill of exchange.

28. It is curious that the judgment in the case of -- 'Mason v. Lack', (1929) 45 TLR 363 (K) decided in the year 1929, the year in which the case of 'Jogesh Chandra Dhur v. Muhammad Ibrahim (A)' was decided, was not taken notice of in the latter case. This was a case directly in point and it seems to go against the contention of the plaintiff in this case. The document in this case ran as follows:

'On December 31, 1928, pay to my order the sum of one hundred and twenty five pounds seven shillings and tour pence for value received.'

Written across the lace of the bill were the words:

'Accepted payable at Lloyds Bank Ltd., High Street Branch, Shoreditch, London, E. C. 2, John K. Lack.'

It appears that at the time when the defendant Lack accepted it, there was no other name, upon it, the only indication being that it was payable at a certain bank at which, in fact, the defendant had no account. Humphreys J. delivering judgment in this case observed (at page 364 of the report) as follows :

I now come to the main defence, which depends upon the form of the instrument. When it was accepted by Mr. Lack there was no other name upon it at all. There was no name, and there was only an indication of a name in this sense, that the bill is payable at the Lloyds Bank, High Street, Shoreditch, but the bill was not addressed to any person.

At a subsequent date Mr. Mason, the plaintiff, put his name to the bill as drawer. In these circumstances, it is submitted that this instrument is not a bill of exchange within the meaning of Section 3(1) of the Bills of Exchange Act, 1882.'

As the definition of a Bill of Exchange in the English Act is practically identical with that in the Indian Act, I do not think it necessary to quote that definition. The learned Judge went on to add:

''Now in the last edition of Chalmers' Bills of Exchange, as a note to Section 6, Sub-section (1) of the Act of 1882, it is stated by way of illustration; 'Instrument in the form of a Bill, but addressed to no one. B writes an acceptance thereon, This is not a bill and B is not liable as an acceptor; but B may be liable as the maker of a note'. Reference is there marie to the case of 'Peto v. Reynolds (G)'.

The decision in that case is clearly no authority for that proposition, because the learned Judge in the Exchequer Chamber expressly refrained from deciding that question. But when one looks at the report of the case in the Court below '(1854) 9 Ex 410 (G)' it does appear that some of the Judges expressed a tolerably strong view that a bill which is not addressed to anybody was not a bill of exchange according to the law as it existed at that date in 1854.'

The learned Judge then quoted from the judgments of Baron Parke and Baron Alderson in 'Peto v. Reynolds (G)'. He observed at p. 364 (right hand column):

'Now that case is not of any assistance to the plaintiff in this case, because the bill in question here is made payable at Lloyds Bank, High Street, Shoreditch, where it was proved that the defendant had no account at all. Therefore, it was not addressed to any place which could be said to be the address of the defendant.

There is one other case, that of -- 'Fielder v. Marshall', (1861) 30 LJ CP 158 (L) where the decision was to the effect that the document there sued upon was not given as a bill of exchange, but was valid as a promissory note.

All that the Judges said was that it was right to treat that document as a promissory note, and that judgment might properly be asked upon it as a promissory note: but it seems to me that that decision assumes that that document was not valid as a bill of exchange. It had a drawer and an acceptor, but no addressee.

'Under those circumstances it appears to me that the document in the present case would not have been held to be a bill of exchange under die Bills of Exchange Act, 1882.'

29. In view of the above, the answers to the issues raised must be as follows:

1. The document in suit is not a hundi if by the definition of hundi, a bill of exchange is sought to be included. There is no definition of the word 'hunch' in the Negotiable Instruments Act. I must further hold that the defendant De did not accept any hundi or a bill of exchange and he is not bound by the document as the acceptor of a bill of exchange.

2. I have no doubt that the document was presented to defendant 1. The cross-examination of the plaintiff has not impressed me at all and as the defendant De did not come into the witness-box, I see no reason to disbelieve the plaintiff that the document was presented to him and that the defendant De did not make any payment when he was called upon to do so.

3. As the defendant De has been sought to be made liable as the acceptor of a bill of exchange, I must hold that the suit against him as framed is bound to fail, but there can be no doubt that the defendant De would have been liable if the case had been differently presented.

30. In this view of the case, I shall dismiss thesuit but make no order as to costs.


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