Joseph vs Mathew and Another

M.S. Menon, J.—The plaintiff in O. S. No. 153 of 1952 of the Court of the District Munsiff, Ettumanoor, is the appellant in this second appeal. The facts of the case as summarized by the learned District Judge in the plaintiff''s unsuccessful appeal to the District Court of Kottayam-A. S. No. 37 of 1955 read as follows:

The second defendant drew five cheques on the Kottayam Bank Ltd., Ettumanoor branch, in the name of the first defendant who collected the amounts hereunder from the Ettumanoor Bank, the plaintiff being its proprietor. These cheques were dishonored by the drawee, whereupon the plaintiff sued defendants 1 and 2, for the amounts paid under the cheques with interest. Both the defendants resisted the suit, but the second defendant, dropped from the contest after filing a written statement. The principal defense to the suit was, that no notice of dishonor had been issued by the plaintiff. The District Munsiff at Ettumanoor, passed a decree against the second defendant, but dismissed the suit against the first defendant, without cost in the circumstances. The decree against the second defendant has become final. The plaintiff has preferred this appeal, for relief being granted against the first defendant".

Both the trial court and the learned District Judge in appeal held that the notices of dishonor alleged to have been given by the plaintiff were not proved, and in view of the concurrent finding on the subject, the only contention of the learned counsel for the appellant before us is that even in the absence of any notice of dishonor his client is entitled to succeed u/s 98 (c) of the Negotiable Instruments Act, 1881.

The learned District Munsiff discussed the evidence adduced and said:

Considering all the above facts and circumstances I find that the plaintiff has not given notice of dishonor to the 1st defendant and that such notice of dishonor to the 1st defendant is necessary since he is a person who could suffer damage for want of notice of dishonor

and the learned District Judge after going over the same grounds

I hold that the plaintiff has not sustained the onus of proof that no notice of dishonor is necessary to be given to the first defendant in the circumstances of this case.

A "cheque" as defined in section 6 of the Negotiable Instruments Act, 1881, is a "bill" of exchange drawn on a specified banker and not expressed to be payable otherwise than on "demand" and section 93 of the Act provides :

When a promissory note, bill of exchange or cheque is dishonored by non-acceptance or non-payment, the holder thereof, or some party thereto Who remains liable thereon, must give notice that the instrument has been so dishonored to all other parties whom the holder seeks to make severally liable thereon, and to some one of several parties whom he seeks to make jointly liable thereon. Nothing in this section renders it necessary to give notice to the maker of the dishonored promissory note or the drawee or acceptor of the dishonored bill of exchange or cheque.

Section 98 details the cases in which a notice of dishonor is unnecessary and operates as an exception to the general rule laid down in section 93.

Section 98 (c) of the Negotiable Instruments Act, 1881, provides that "no notice of dishonor is necessary when the party charged could not suffer damage for want of notice". As stated in I. L. R. 33 Allahabad 4:

If the plaintiff seeks to excuse the want of notice of dishonor, it lies upon him to establish that the party charged could not suffer damage for want of such notice.

To the same effect is A. I. R. 1929 Lahore 577:

It is the duty of the holder to prove that due notice was given, and if not given, he was excused from doing so for any of the reasons specified in S. 98. The omission to give due notice of dishonor has the effect of discharging the persons who are entitled to such notice.

We have been taken through the relevant evidence by the learned counsel for the appellant but are unable to say that the lower courts were wrong in holding that the burden has not been discharged. The indications in the evidence are that the financial position of the 2nd defendant was deteriorating and it is not possible to say that this is a case which comes within section 98 (c) of the Negotiable Instruments Act, 1881.

The five dishonored cheques involved in this case are :

Ext. A for Rs. 375/- dated 6-10-1951;

Ext. C for Rs. 250/- dated 13-10-1951;

AND

Ext. E for Rs. 350/- dated 18-10-1951;

Ext. G for Rs. 400/- dated 27-10-1951;

Ext. J for Rs. 300/- dated 3-11-1951.

Exts. B and D dated 16-10-1951 are the memoranda from the Kottayam Bank Ltd. regarding Exts. A and C. The memorandum relating to Ext. E is Ext. F dated 18-10-1951, to Ext. G is Ext. H dated 31-10-1951 and to Ext. J is Ext. K dated 5-11-1951. If the plaintiff had taken action on receipt of Exts. B and D the first defendant would not have accepted the subsequent cheques and the indebtedness of the 2nd defendant would not have been augmented to that extent.

In the light of our conclusion that the exemption provided by section 98 (c) is not available to the plaintiff the second appeal has to be dismissed and it is hereby dismissed with costs.