G. Balakrishnan vs The Official Assignee and Another

M.M. Ismail, C.J.—This is an appeal against the order of Ramaprasada Rao, J., as he then was, dated 1st July, 1977. The facts are not in

dispute. The insolvent drew a cheque on 8th December, 1970, but post-dated it as 15th December, 1970 and gave it to one Venkateswara

Movies with whom he had transactions in film trade. Venkateswara Movies (mistakenly referred to in the order as ''drawee'') discounted the

cheque with the appellant, on 29th December, 1970 and according to the appellant, Venkateswara Movies obtained consideration from him.

However, the appellant was not permitted to present the cheque for payment from time to time at the instance of Venkateswara Movies and

ultimately when the cheque was presented after a period of six months, it was dishonoured. It is thereafter the appellant preferred a claim before

the Official Assignee. The Official Assignee rejected the claim holding that the appellant was not a holder in due course and the cheque was not

supported by consideration. Against this order of the Official Assignee, an appeal was preferred before the learned Judge in Appln. No. 274 of

1977. The learned Judge, while disagreeing with the Official Assignee on the two points mentioned above still upheld the rejection of appellant''s

claim on the ground that the appellant not having presented the cheque within a reasonable time, namely, six months, according to the usual custom

in mercantile practice, having been hand-in-glove with the payee was not entitled to claim the amount in insolvency though he could have a cause of

action against the payee. It is the correctness of this conclusion that is challenged before us.

The learned Judge, for holding that the appellant cannot make a claim against the insolvent, relied on Section 84 of the Negotiable Instruments

Act, dealing with the consequence when a cheque was not duly presented within the reasonable time. However, what the learned Counsel for the

appellant contended before us is that u/s 73 of the Act a drawer is not absolved of his liability because the cheque is not presented within a

reasonable time. Section 73 read as follows--

A cheque must in order to charge any person except the drawer be presented within a reasonable time after delivery thereof by such person.

Section 83 reads as follows:

Where a cheque is not presented for payment within a reasonable time of its issue, and the drawer or person on whose account it is drawn had

the right, at the time when presentment ought to have been made, as between himself and the banker, to have the cheque paid and suffers actual

damage through the delay, he is discharged to the extent of such damage, that is to say, to the extent to which such drawer or person is a creditor

of the banker to a larger amount than he would have been if such cheque had been paid.

In determining as to what is a reason able time, regard shall be had to the nature of the instrument, the usage of made and of bankers, and the

facts of the particular case.

The holder of the cheque as to which such drawer or person is so discharged shall be a creditor, in lieu of such drawer or person, of such

banker to the extent of such discharge and entitled to recover the amount from him.

The learned Counsel for the appellant contends that Section 84 applies only when the drawer has suffered damage, and in the present case, there

was no proof of damage. Consequently, the learned Counsel contends that u/s 73 the drawer is not absolved of the obligation if the cheque is not

presented within a reasonable time.

In our opinion Section 73, having regard to the language in which it is couched, does not permit of such a contention being advanced. In fact, we

asked the learned Counsel to tell us whether there is any decision to cover the case as we have on hand. The learned Counsel represented to the

Court that he was solely relying upon the language of Section 73, and nothing more. We are of the opinion that in the absence of any further light

thrown, having regard to the fact that the appellant was hand-in-glove with the payee in not presenting the cheque within the time allowed for the

purpose and known to the mercantile practice, the appellant has lost his right to have recourse against the drawer. Consequently, we see no reason

to interfere with the order of the learned Judge and dismiss the appeal.