Kishan Bahadur vs Sassaram Lime Ltd.

Kulwant Sahay, J.—This is an application in revision u/s 25 of the Provincial Small Cause Court Act. The petitioner was the plaintiff in the suit and he brought the suit for recovery of a sum of Rs. 89-11 besides interest on the basis of a cheque drawn by the defendant No. 1 in favour of the defendant No. 2. It appears that the defendant No. 2 was a contractor under the Sassaram Lime, Ltd., and that his contract was to throw earth work for construction of a road. The defendant No. 2 was given orders for the work on the 29th of October, 1921. Measurements used to be made and bills used to be submitted by the defendant No. 2 to Mr. Durant the Superintendent of the defendant No. 1 and payments were made from time to time. Advance payments appear to have been made before the measurements were made and the bills submitted, and final accounts used to be made up after the bills were checked, and the sums actually found due were paid. Up to the 14th of February, 1922, full payment appears to have been made to the defendant No. 2 by Mr. Durant for works done up to that date.

The plaintiff''s case is that on the 10th of March, 1922, Mr. Durant as Superintendent of the defendant company drew a cheque for Rs. 89-11 in favour of the defendant No. 2 for work done by the defendant No. 2. The defendant No. 2 endorsed the cheque in favour of the plaintiff on the 11th of March, 1922. He presented the cheque to the Bank of Bihar on the 18th of March, 1922. The cheque was dishonoured, and the present suit has been brought for recovery of the sum of Rs. 89-11 besides interest either from the defendant No. 1 or from the defendant No. 2 whoever may be held liable. The defendant No. 2 did not appear and contest the suit. The defendant No. 1 appeared and contested the suit on the ground that the amount payable under the cheque was in excess of the work done by the defendant No. 2, that Mr. Durant had been dismissed on account of his accounts not being satisfactory, and that the defendant No. 2 was asked to return the cheque and the Bank was also instructed to stop the payment thereof. The defendant No. 1, however, admits that a sum of Rs. 24/9 was due to the defendant No. 2 and alleges that the balance of Rs. 5-65 odd was in excess of the amount actually due. He further pleaded that the transfer of the cheque by the defendant No. 2 to the plaintiff was a collusive transaction. The learned Judge of the Court of Small Causes put down two issues for determination, first whether the cheque was issued without consideration, and second whether the plaintiff got the cheque from the defendant No. 2 for value paid.

As regards the first issue the learned Judge has come to a finding on a consideration of the evidence that the defendant No. 1 was liable for Rs. 24-9 only for work done between the 14th of February and 22nd of February, 1922, and that to this extent the cheque was for consideration. Upon the second issue the learned Judge has come to the conclusion that the plaintiff was not a bona fide endorsee of the cheque for value. He has accordingly dismissed the suit. The plaintiff has come up to this Court in revision against this decree of the Court below.

The cheque was payable to the defendant No. 2 or bearer, and u/s 9 "of the Negotiable Instruments Act the plaintiff would be a holder in due course," if he become the possessor of the cheque without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. u/s 118 of the Negotiable Instrument Act, the presumption is in favour of the plaintiff. Under Clause (a) of Section 118, it must be presumed that the cheque was drawn for consideration, and that the endorsement was made for consideration. Under Clause (g) of Section 118 it must also be presumed that the plaintiff is a "holder in due course". The presumption is rebuttable one, and it was open to the defendants to prove that the cheque was drawn without consideration, or that the endorsement was made without consideration, but so long as the presumption is not rebutted by evidence, it must be held that the cheque was drawn for consideration, and that the plaintiff is a "holder in due course". The defendant No. 2 does not appear in the case and does not adduce any evidence to rebut the presumption arising in favour of the plaintiff as regards the endorsement being for consideration, and the learned Judge in the Court below was clearly wrong in holding in the absence of any evidence whatever, that the transfer of the instrument by the defendant No. 2 to the plaintiff was a collusive transaction and1 without consideration. His finding is based on mere surmise and is not supported by an evidence whatsoever. I am therefore of opinion that it must be held that the plaintiff is a "holder in the course," and that as against the defendant No. 2 is clearly entitled to a decree.

As regards the defendant No 1 although the presumption is in favour of the plaintiff, it has been found by the learned Judge in the Court below on a consideration of the evidence on the record that the consideration failed to the extent of Rs. 65 odd, and that the cheque was for consideration to the extent of Rs. 24-9 only. Having regard to the principle involved in Sections 43, 44 and 45 of the Negotiable Instruments Act, I think that there is no reason why a decree to that extent should not be made in favour of the plaintiff as against the defendant No. 1.

I, therefore, set aside, the decree of the Court below, and decree the suit to the extent of Rs. 249 as against the defendant No. 1 and the balance Rs. 65-2 as against the defendant No. 2 with proportionate costs1 and interests. The petitioner is entitled to the cost in this Court as against the defendant No. 1, Hearing fee two gold mohurs.