K.G. Krishnappa Chetti vs Pachiappa Goundan and Others

Mack, J.—This petition raises a point of negotiable instrument law, which does not appear to be covered by any definite authority in case

law. The undisputed facts before me are these. The petitioner is the plaintiff, who on 24-2-1948 took an assignment for consideration from one

Parasuramathasari, third defendant, of a pronote for Rs. 220 executed in the latter''s favour by defendants 1 and 2, who were ex parte throughout.

The learned Small Cause Judge declined to pass any decree against the third defendant on the ground that the plaintiff waited for an unreasonably

long time before making a valid presentment and demand for payment and did not send the notice of dishonour in a reasonable time.

It is common ground that the plaintiff demanded payment from defendants 1 and 2 in December 1943 by notice Ex. A. 3 dated 23-12-1948

receipt of which was acknowledged by the second defendant on a postal acknowledgment, Ex. A. 5. There was no response from defendants 1

and 2. Plaintiff then sent the promisee a notice of dishonour Ex. A. 2 dated 5-1-1949. u/s 74 of the Negotiable Instruments Act, a negotiable

instrument payable on demand must be presented for payment within a reasonable time after it is received by the holder. u/s 105, in determining

what is a reasonable time for presentation for acceptance or payment, for giving notice of dishonour and for noting, regard shall be had to the

nature of the instrument and the usual course of dealing with respect to similar instruments, and in calculating such time, public holidays shall be

excluded. The law makes a wide distinction between what may be called commercial negotiable instruments like Bills of exchange, hundies and

cheques, and pronotes, which are resorted to particularly in this country for all sorts of purposes. In -- ''Bahadurchand v. Gulab Rai'', AIR 1929

Lah 577 (A), a delay of 27 days in giving notice of dishonour in the case of a hundi was held to be an unreasonable delay .

In the case before me, there are two delays alleged, which call for consideration. The first delay is ten months by the plaintiff in presenting the

pronote for payment. Without such presentation, u/s 64 of the Act, parties other than the makers cannot be made liable to the holder. Even in

England, it has been rightly observed by Bhashyam and Adiga in their Negotiable Instruments Act, 9th Edn., at page 482, a distinction has been

drawn between bills of exchange payable on demand and promissory notes payable on demand, the latter not being intended for immediate

payment and being treated as continued securities, while bills are not so treated. They also observe, and I think rightly that there is nothing in the

Act to show that such distinction is recognised in India. But Section 105 gives a wide discretion to courts to distinguish in the same manner

between commercial negotiable instruments and pronotes, particularly those as between parties who are not merchants. It is common ground that

the plaintiff and defendant 3 are not traders and merchants. This is a case in which the plaintiff in order to accommodate third defendant appears to

have taken this pronote for consideration.

In the circumstances, it is extremely difficult to hold that a period of ten months is an unreasonable time within which the plaintiff should have

presented the pronote to the makers within the meaning of Section 74 read with Section 105 of the Act.

Then coining to the notice of dishonour that was issued on 5-1-1949, there was no response to Ex. A. 3, sent by post on 23-12-1948, the

postal acknowledgment signed by the second defendant is dated 27-12-1948, and presumably reached the plaintiff 1 or 3 days after that. There

was therefore only at the most a delay of 6 or 7 days in issuing the notice of dishonour. This delay, while it may have been fatal in the case of a bill

of exchange or hundi, cannot, I consider, be held to be an unreasonable delay in the case of a pronote of this kind executed by non-commercial

persons mutually accommodating each other. I do not consider that the lower court was correct in declining in this case to make the third

defendant jointly liable with defendants 1 and 2 on this pronote.

The petition is allowed with costs throughout. Petition allowed.