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2021 (12) TMI 326 - HC - Indian LawsDishonor of Cheque - applicability of time limitation - cause of action for filing the suit present or not - Whether the person sueing on behalf of the plaintiff's firm has proved that he is the partner of the said firm? - HELD THAT - The 1st defendant had even at the very outset contended that K. Venkatesh is not a partner of the plaintiff firm, since the plaintiff firm in the Criminal Proceedings before the Judicial Magistrate No. II, Erode, in C.C. No.584 of 2004, is represented by one Mr. Anbalagan who is described as the partner of the plaintiff firm. Though the defendants has taken out a categoric defence that the said Venkatesh is not a partner the plaintiff has not chosen to prove the same by producing a copy of the list of partners as registered with the Registrar of Firms. The non-production of the said document compels this Court to draw an adverse inference against the plaintiff. The finding of the Trial Court in this regard does not require any interference. Whether the cheques have been endorsed in favour of the plaintiff as per the provisions of the Negotiable Instruments Act? - HELD THAT - As per section 50, the endorsement of a Negotiable Instrument followed by its delivery gives a right to the endorsee for further negotiation. The effect of an endorsement of a Negotiable Instrument with the endorsements as illustrated above has the effect of transferring to the endorsee the property therein with the right to further negotiate. However, the endorsement may expressly restrict or exclude such a right or merely constitute an endorsee right of further negotiation - the plaintiff has not proved the endorsement in the manner known to law and the Judgment of the Trial Court which has elaborately considered this issue does not require any interference. Whether the Judgment and Decree of the Trial Court calls for any interference? - HELD THAT - The plaintiff has not made out any case to find fault with the findings of the Trial Court and its consequent Judgment. Appeal dismissed.
Issues Involved:
1. Whether the plaintiff's firm is a registered one and K. Venkatesh its partner. 2. Whether the plaintiff is the holder in due course of the suit cheques and entitled to collect the suit amount on the cheques. 3. Whether proceedings before the Honourable Judicial Magistrate No. II, Erode in C.C. Nos. 584 and 585 of 2004 have a bearing on the present suits. 4. Whether the plaintiff is maintaining true and correct accounts in the normal course of business. 5. Whether the suit cheques are not truly drawn but forged. 6. Whether the suits are barred by limitation. 7. To what relief is the plaintiff entitled to in the suits. Detailed Analysis: Issue 1: Registration and Partnership of the Plaintiff Firm The plaintiff firm was represented by Mr. K. Venkatesh, who was described as a partner. The 1st defendant contested this claim, asserting that Venkatesh was not a partner, citing that Mr. Anbalagan represented the plaintiff firm in prior criminal proceedings. The plaintiff failed to produce a list of partners registered with the Registrar of Firms, compelling the court to draw an adverse inference against the plaintiff. The trial court's finding that Venkatesh was not proven to be a partner was upheld. Issue 2: Holder in Due Course and Endorsement of Cheques Section 9 of the Negotiable Instruments Act defines a holder in due course as a person who for consideration becomes the possessor of a cheque. Section 15 defines endorsement, and Section 16 elaborates on endorsements in blank and in full. The trial court found that the cheques in question did not contain endorsements as required by the Act. The cheques merely had a seal and a signature without express words acknowledging the endorsement. Citing precedents, the court noted that without proper endorsement, the plaintiff could not be considered a holder in due course. The lack of endorsement and failure to prove the passing of consideration led to the conclusion that the plaintiff was not entitled to collect the amounts on the cheques. Issue 3: Impact of Criminal Proceedings The court considered whether the findings in the criminal proceedings (C.C. Nos. 584 and 585 of 2004) had a bearing on the civil suits. It was noted that the criminal proceedings ended in acquittal, with the court finding that the plaintiff failed to prove the passing of consideration. This finding was upheld by the High Court, reinforcing the trial court's decision in the civil suits. Issue 4: Maintenance of True and Correct Accounts The trial court observed that the plaintiff failed to prove that it maintained true and correct accounts in the normal course of business. The plaintiff's inability to substantiate its claims with proper documentation further weakened its case. Issue 5: Authenticity of the Cheques The 1st defendant argued that the suit cheques were not truly drawn but forged. The trial court found that the plaintiff could not prove the authenticity of the cheques or the alleged transactions with the 2nd and 3rd defendants. The summons issued to the 2nd and 3rd defendants were returned with the endorsement "no such addressee," supporting the 1st defendant's claim that the plaintiff had no direct knowledge about the defendants 2 and 3. Issue 6: Limitation The 1st defendant contended that the suits were barred by limitation. The trial court's findings on this issue were not explicitly detailed in the judgment summary, but the dismissal of the suits implies that the limitation argument may have been considered. Issue 7: Relief Entitlement Given the findings on the above issues, the trial court dismissed the suits, and the High Court upheld this decision. The plaintiff was not entitled to any relief. Conclusion: The appeals were dismissed, and the judgment and decree of the I Additional District Judge, Erode, in O.S. Nos. 48 of 2007 and 50 of 2007 were confirmed. The court found no fault with the trial court's findings, and there was no order as to costs.
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