A.L.S.K. Kadappa Chetti vs R.S.S.T. Thirupathi Chetti

Venkatasubba Rao, J.—The 1st defendant drew the Hundi in question, in favour of the 2nd defendant, the drawee being one Suppiah

Chetty of Rangoon. The 2nd defendant endorsed the Hundi in favour of the plaintiff, who instituted the present suit. The claim was made against

the 1st defendant on the ground that he was the drawer and against the 2nd defendant, on the ground that he was the endorser.

The first question that arises for determination is, ""was this Hundi presented for acceptance or payment to the drawee at Rangoon?

The learned Subordinate Judge has found that the plaintiff has not proved that the bill was duly presented for payment and has dismissed the suit

against the 2nd defendant.

The Hundi bears the date, 29th April, 1916. It was endorsed in favour of the plaintiff, on 7th May 1916. The plaintiff says that he sent the Hundi

to one Malayandi Chetti of Rangoon, requesting him to present it to the drawee for payment. Malayandi has not been called. But the plaintiff has

relied on a letter, which purports to have been written to him by Malayandi. It refers to Malayandi having presented the Hundi and the drawee

having refused to pay the amount.

The questson is,

Can this statement of Malayandi Chetty be received in evidence?

The learned vakil for the plaintiff refers to Section 32 of the Evidence Act:

Statements made by a person, whose evidence cannot be procured without an amount of delay or expense, which under the circumstances of the

casa appears to the Court unreasonable, are themselves relevant facts, when the statement was made by such a person in the ordinary course of

business.

This is the relevant portion of the section with which we are concerned. Granting for a moment that the statement was made by Malayandi ""in

the ordinary course of business"" the question still remains:

Is the evidence of Malayandi Chetti not procurable without an amount of delay or expense, which under the circumstances appears unreasonable.

This is purely a question of fact. An application was made to the Court, on 18th December, 1920, for the issue of a warrant to this Malayandi

Chetti. The Court ordered only the issue of summons. A subpoena was taken out, for the hearing fixed on the 11th March, 1921, and it was

served on Malayandi on the 12th January 1921. It is said that Malayandi left for Rangoon, before he could be called to give evidence and

therefore Section 32 could be invoked, on behalf of the appellant. It does not appear that any further steps were taken, to get the evidence of

Malayandi. There was no application for the issue of a warrant, nor was an application made to take his evidence on commission. The mere fact

that a witness happens to live at Rangoon is not a ground for holding that his evidence cannot be procured without unreasonable delay or expense.

We overrule the contention that the statement in the letter in question is admissible u/s 32.

It is also noticeable that the drawee of the note, Subbiah Chetti, has not been examined. The plaintiff himself is not personally aware, either of

demand having been made, or refusal to pay or accept. In these circumstances, we must hold, that the bill was not duly presented for acceptance

or for payment.

On this finding, what is the result? Several sections of the Negotiable Instruments Act have been referred to; but in my opinion, Sections 35

and 91 have a direct bearing, on the question that arises. Section 35 refers to the liability of an endorser. ''It says that, in the absence of a contract

to the contrary, the endorser of a Negotiable Instrument is bound to a subsequent holder, in case of dishonour by the drawee. There cannot

generally be any dishonour by the drawee, without presentment of the bill to him for acceptance or for payment. Dishonour by the drawee is a

condition precedent u/s 35, for the coming into existence of the liability of the endorser. As the plaintiff''s case is that the bill was presented to the

drawee and that he dishonoured if, if we find that there was no presentment, it follows that there was no dishonour and the plaintiff''s case must fail.

Section 91 says, a bill of exchange is said to be dishonoured, by non-acceptance, when the drawee makes default in acceptance, upon being

duly required to accept the bill, or where presentment is excused and the bill is not accepted. There is no allegation here, that the presentment was

excused and the plaintiff must, therefore, prove that the drawee was required to accept the bill and that he dishonoured it by non-acceptance. On

our finding, the plaintiff is out of Court.

The next point dealt with by the Subordinate Judge, whether there was notice of dishonour, does not in this view arise. The appeal, therefore,

fails and is dismissed with costs.

Srinivasa Aiyangar, J.

I agree with my learned brother that the appeal should be dismissed with costs.

I may, however, mention that reference has been made in the course of the argument to a case, reported in Veerappa Chetty v. Vellayan

Ambalam (1919) 10 L.W. 39. In that case, the learned Judges would seem to have considered that even with respect to the bills of exchange,

payable at sight or on demand, Sections 92 and 64 of the Negotiable Instruments Act would be applicable. It seems to me that Section 92 could

possibly have no application whatever to such a case, because, it has reference only to cases of dishonour by non-payment and Section 92

provides that the bill of exchange is said to be dishonoured by non-payment, only when the acceptor of the bill makes default in payment, upon

being duly required to pay the same. The learned Judges considered that the drawee of a bill of exchange may well be deemed to be the acceptor

in such a case. The term acceptor is itself defined in the Negotiable Instruments Act and every section in a statute ought to be read as it stands;

instead of the word of which a definition is provided the very words contained in the defining clause were reproduced. There can, therefore, be no

acceptor of any bill of exchange, until and unless the drawee has, according to Section 7 of the Act, signed his assent upon the bill. Similarly, with

reference to Section 64, the bill of exchange is required to be presented to the acceptor; but the word acceptor being a term defined by the

Negotiable Instruments Act, it is impossible to construe the section giving to the term ''acceptor'' a meaning different to the definition of the word as

given in the Act itself.

I agree that the only section of the Act, which is applicable to the present case, is Section 35. It is that section, which creates the obligation of

the endorser and the condition for the obligation to arise, is laid down, in the section. Dishonour has got to be proved. Dishonour as commercially

understood involves a proper demand for payment and a wrongful refusal. A proper demand for payment would certainly involve the presentment

of the bill of exchange to the drawee, so that he might have a reasonable opportunity of satisfying himself that the instrument is one, which he is

bound to comply with. Apart altogether from Section 35, and assuming that there is no special provision of the Act applicable to such a case as

this, there can be little doubt whatever, that the implied contract in such a transaction as the present one, would be this : the drawer of a bill of

exchange contracts that on presentment of the bill to the drawee the amount will be paid and we may also go further and say that the drawer

assumes an obligation to pay the amount, if the amount of the bill should not be paid by the drawee. Similarly, in the case of the endorser, the

obligation undertaken by him cannot possibly be further than that, if the bill should not be paid by the person on whom it is drawn, he would be

liable to pay it. Therefore, the liability of the endorser can only arise, on the happening of the condition, viz., that there has been a presentment for

payment of the bill of exchange on the drawee and a default committed by the drawee in payment of the bill. In the absence, therefore, of any legal

proof that such presentment took place or such a demand was made, it is impossible to hold that the endorser is liable to the endorsee. The

learned vakil for the appellant applied at the conclusion of the argument that an opportunity should be afforded him to call evidence, regarding

proper presentment of the bill, at Rangoon. If we were satisfied, that there has been failure of justice, in the case, by reason of absence of proof on

a technical aspect of the case, we should no doubt have been inclined to consider such an application. But it seems to me that the whole case is

fraught with suspicion and the Subordinate Judge in coming to the conclusion said that in what he did he was impelled by a feeling, or by a

consciousness that there was some sort of fraudulent dealing with the young man, the 2nd defendant, in this case, the alleged endorser of the

instrument. The only way in which the Subordinate Judge could have given effect to this feeling was apparently by coming to the conclusion, to

which he did, on the question of the presentment of the bill. It is very strange that the endorsement by the 2nd defendant should be in blank and it

seems to me that the blank endorsement of the bill of exchange is more consistent with the story regarding it, as given by the 2nd defendant, than

with the story that it was given to the plaintiff, in the course of an ordinary commercial transaction.

I am not, therefore, inclined to accede to the request of the learned vakil for the appellant that he should now be afforded an opportunity to call

evidence that has not been placed before the lower Court.