Palaniappa Chetty vs Arunachellam Chetty and Others

The question in the appeal is whether the hundi, Exhibit B, for Rs. 1,000 was accepted by the plaintiff in part satisfaction of the amount due. The

established rule is that a bill of exchange or hundi given for a debt operates only as a conditional discharge of the debt see Jambu Chetty v.

Palaniappa Chettiar ILR (1903) M. 526 although it might be proved that in any particular case it was taken unconditionally in satisfaction of a debt.

In this case the hundi was drawn by the defendant on his uncle in favour of a third person to whom the plaintiff had to pay money. That person was

under no obligation to present it for payment to the drawee nor is there any evidence that when the hundi was drawn he discharged the plaintiff

from the liability to pay him his debt. It is extremely improbable that the plaintiff would unconditionally accept the hundi in part pajmentof the debt

under these circumstances. No doubt the fact that payment of Rs. 1,000 was endorsed on the original pro-note executed by the defendant''s father

to the plaintiff is in favor of the view that the hundi was accepted unconditionally. But it has been held that the execution of a formal receipt for the

amount carried by a bill of exchange is not sufficient to rebut the presumption of the discharge being only conditional. See Stedman v. Gooch

(1793) 1 Esp. p. 5; In re Romer and Haslam (1893) 2 Q.B. 296. An endorsement of receipt on the pro-note in this case cannot stand on a higher

footing. There is no case in which the hundi in favor of a third party who might or might not present it for payment has been held to be an

unconditional discharge. We must modify the decree of the lower court and give the plaintiff a decree as prayed for in the appeal. The plaintiff is

entitled to his costs of the appeal and to the whole of his cases in the lower court. The 1st defendant must pay his own costs throughout.