1958 (1) TMI 43 - HC - Indian Laws

Summary

Issues Involved:
1. Necessity of notice of dishonour for the hundi.
2. Validity of oral notice of dishonour.
3. Compliance of the written notice with legal requirements.
4. Timeliness of the sale of goods.
5. Binding nature of the sale on the defendants.
6. Proof of damages by the defendants due to belated sale.

Detailed Analysis:

1. Necessity of Notice of Dishonour for the Hundi:
The primary issue was whether a notice of dishonour was necessary when the hundi was dishonoured. The court examined Sections 91, 92, and 93 of the Negotiable Instruments Act. It was argued that these sections applied only to hundis payable after sight and not at sight. The court concluded that a bill of exchange payable at sight, when presented for acceptance and dishonoured, requires a notice of dishonour as per Sections 91 and 93. The court also discussed the interpretation of Section 30, concluding it is not a complete code and must be read in conjunction with Sections 91, 92, and 93.

2. Validity of Oral Notice of Dishonour:
The plaintiffs contended that an oral notice of dishonour was given in September 1943. However, the court found no evidence supporting this claim. The plaint relied solely on a written notice dated 1st October 1943, negating any previous oral notice.

3. Compliance of the Written Notice with Legal Requirements:
The written notice of dishonour was given on 1st October 1943, while the hundi was dishonoured on 2nd September 1943. Section 106 of the Negotiable Instruments Act requires the notice to be given within a reasonable time, which was not met in this case. The court found the notice given after 28 days to be unreasonable and not in compliance with Section 106. The plaintiffs' argument under Section 98(c) was dismissed as it was not pleaded in the trial court.

4. Timeliness of the Sale of Goods:
The court examined whether the sale of goods (matra and arhar) was conducted within a reasonable time. The goods were delivered on 12th September 1943, but the sales occurred in 1945 and 1946. The court found that the plaintiffs should have effected the sale within a reasonable time after the notice was given on 1st October 1943. The belated sales were not binding on the defendants.

5. Binding Nature of the Sale on the Defendants:
The court acknowledged that a pawnee is not required by law to sell pledged goods within a specific time. However, if the pawnee chooses to sell, it must be done within a reasonable time after notice. The court held that the plaintiffs' sales in 1945 and 1946 were not binding on the defendants due to the unreasonable delay.

6. Proof of Damages by the Defendants Due to Belated Sale:
The defendants did not provide evidence of the market rates for matra and arhar in 1945 and 1946. The court noted that without such evidence, the defendants could not prove the damages suffered due to the belated sale. Consequently, the court dismissed the argument regarding the necessity of a fresh notice for the sale in 1945 and 1946.

Conclusion:
The court dismissed the appeal, finding that the notice of dishonour was necessary and not given within a reasonable time, absolving the drawer of liability. The sales of matra and arhar were not binding on the defendants due to the unreasonable delay. The cross-objections were also dismissed, and each party was ordered to bear their own costs.