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TMI Blog2001 (4) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... id bill of exchange. 5. In paragraph 5 of plaint the averment is that the said bill of exchange was duly presented by Britannia for payment but was dishonoured by nonpayment. Significantly enough the plaint is silent about the party to whom the said bill of exchange was presented for payment. 6. In paragraph 7 of the plaint it has been stated that despite repeated demands defendants have failed to pay Britannia the said sum of ₹ 1,00,000,00/- or any part thereof or any interest statutorily payable thereon. 7. In paragraph 8 of the plaint it has been made clear that the suit has been filed under Order XXXVII of the CPC. Admittedly leave under Order XXXV11 was not granted. 8. In paragraph 9 of the plaint the following averment has been made which is of some importance in the decision of this case and the same is set out verbatim as follows : The plaintiff is also entitled to claim on the said Bill of Exchange against one Lgee Enterprises, carrying on business at Bombay. This Hon'ble Court however has no jurisdiction to entertain a claim against the said Lgee Enterprises. The plaintiff accordingly prays for leave under Order 2 Rule 2 of the Code of Civil Proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit to that of the drawee and represents to all holders in due course or intending holder in due course or persons dealing with such bill (intending such representation to be acted upon) that such Bank or Financial institution or party though not named as drawee on such bill may be treated as if it or he had been named as drawee and had accepted such bill and further undertakes an obligation to make payment of the amount of such bill on it being presented for payment at maturity. 13. The said application for amendment was opposed by PN8 and ultimately a learned Judge of this Court by a Judgment and order dated 1st October. 1985 dismissed the said application for amendment. 14. While opposing the said application for amendment it was contended on behalf of PNB that by the said amendment application Britannia has given a go by to its original case in the plaint and in fact an entirely new case has been sought to be introduced against the defendant No. 1 by the proposed amendment. Accepting the said stand of PNB. the learned Judge while refusing to allow the amendment held: The proposed amendment seeks to introduce an entirely new cause of action which were not to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to acceptance and this fact has been proved by materials and evidence on record and also by the Reserve Bank circulars. In the instant case PNB after entering appearance applied for leave to defend and by an order dated 20th June, 1984 such application was allowed. 19. In the written statement PNB denied the case made out in the plaint. The specific stand is that the said bill was not drawn on PNB and was not accepted by it. It was also stated that A.B. Das was not authorized to accept the said bill on behalf of PNB. It was also stated that alleged co-acceptance by A.B. Das (hereinafter called, ABD) was fraudulent and not binding on PNB and such co-acceptance of the said Bill in Bombay by ABD was not in discharge of his official duty as a Branch Manager of the Zakaria Street branch, Calcutta. 20. It was also stated in the written statement that there is no provision for co-acceptance of a negotiable instrument under the Negotiable instrument Act. It is also denied that the High Court has no Jurisdiction to entertain the claim of the plaintiff against Lgee Enterprise. 21. In para 10 of the written statement PNB's stand has been stated in detail and particulars of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e presented by the plaintiff to the defendant No.1 for payment? 4. Was the alleged Bill of Exchange fraudulent and brought into existence by collusion and conspiracy between A.B. Das and the plaintiff and/or its officers and alleged drawers or Lgee Enterprise as alleged in paragraph 10 of the written statement? 5. Does the plaint disclose any cause of action on the alleged Bill of Exchange against the defendant No.1? 6. To what relief, if any, is the plaintiff entitled? 25. In support of their respective cases, both Britannia and PNB examined four witnesses each and various documents were exhibited. 26. On the first issue the learned trial Judge held that the said bill of exchange is a negotiable instrument. In coming to the said conclusion the learned Judge considered the provision of section 5 of Negotiable instrument Act (hereinafter called N.I. Act) as also section 13 of N.I. Act. The learned Judge also held that the bill of exchange satisfies all the requirements laid down under section 5. The learned Judge further held that since the document is payable 'to order'. It also satisfies the requirements of section 13(1) of the N.I. Act. 27. On issue No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ordinary prudence and would make such enquires which are obvious and most likely to be made in the facts of the case. The learned counsel further submitted that Britannia was parting with almost one crore of rupees in favour of Metropolitan Construction, which is not A company nor a party with any known track record nor an organization of repute in the corporate sector and more so when in the instant case the bill of exchange is not backed by any invoice or by any trade document. Apart from that there 19 nothing known about Lgee Enterprises which is the acceptor. Britannia had never dealt before either with Lgee Enterprises or with Metropolitan. The only person who came to Britannia in connection with the said bill was one Ntitin Joshi. a broker to ascertain whether Britannia was interested to discount a bill of ₹ 1,00,000,00/-. This happened some time in the last week of December, 1982. Then again Nitin Joshl the said broker came with ABD, Manager, PNB, Zakaria Street, Calcutta Branch. It is alleged that this time Am it Dutta and Raghunath Dutta, the defendant Nos. 3 4 came and they met Mr. D.B. Joshi and Mr. Venkatraman two officers of Britannia and certain discussions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executing a document dated 15.2.83 with the stamp of a branch of PNB, Calcutta. The said document also refers to the power of attorney on the basis of which ABD allegedly co-accepted the said bill inasmuch as it appears from a perusal of exhibit D that the said power of attorney was enclosed. From exhibit 'D' it appears Britannia was informed that the said bill was co-accepted by us against properties, assets, mortgage to us as under . 31. The learned counsel submitted that the so called description of the property given in ext. D is absolutely vague and devoid of any particulars. No address of the properties were even mentioned. There is no address of the theatre named 'Lali'. There is no address either of property of the theatre named 'Shelly'. There is no address even of the land given at VIP Road allegedly measuring about 25 kottas. There is absolute no particular of the deposits with the bank. 32. The learned counsel submitted that unless Britannia, or its officers are in collusion and fraud with ABD, who by the way is one of the dishonest officer of the bank and against whom several proceedings were initiated by the West Bengal Bureau of investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act in furtherance of the interest of PNB. In the instant case, by allegedly co-accepting the said bill, the interest of PNB has not at all been served. In fact, the interest of Metropolitan has been served. It has further stated that at the point of time when the entire negotiation took place between ABD and the officers of Britannia, Metropolitan was not even a customer of PNB. Admittedly Metropolitan became its customer on 16th February. 1983. The negotiation in respect of the said bill took place in Bombay and was completed on or before 15th February, 1983. This according to the learned counsel was a very unusual state of affairs. It is further stated that the said power of attorney was given to ABD to act for and on behalf of the said bank. But in the instant case, it is clear that ABD acted for and on behalf of Metropolitan and carried on the negotiation with Britannia by virtually representing Metropolitan Construction for most part of the negotiation. The defendant Nos. 3 and 4, the two alleged partners of Metropolitan were kept out of such negotiation and were asked to wait at ihe reception. Furthermore, the said power was given to ABD to act as true and lawful attorney of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttorney may have been appointed. The learned counsel further stated that clause 1(j) of the said power of attorney authorizes a person to accept cheques, drafts, hundis or bill of exchange and other negotiable instruments in the name and on behalf of the said bank. But in the instant case, admittedly the ADD has co-accepted the said bill of exchange. The learned counsel submits that co-acceptance is not acceptance and there is nothing known as co-acceptance under the N.I. Act. Therefore, co-acceptance of the satd bill by ABD is wholly unauthorized. 36. The learned counsel further submitted that from the trend of evidence adduced in the case by the witnesses of Britannia, it is clear that the said co-acceptance has been treated by Britannia by way of a guarantee to be furnished by FNB. Such power of giving guarantee on behalf of the said bank can only be exercised with another power of attorney holder of the said bank and this is clear from clause 2 of the said power of attorney. So the purported acts of ABD as the sole power of attorney holder is totally illegal and cannot bind PNB, The learned counsel further submitted that the power of attorney in this case must be construed s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Construction as a partnership firm. It was also urged that since an account was opened in PNB in favour of the said partnership firm namely Metropolitan Construction and the said account was regularly operated and various transactions took place, it is clear that defendant No. 2, Metropolitan is an existing firm. The further stand taken on facts is that non-existence of Metropolitan or Lgee has not been proved by appellant from the materials on record. It is further urged that in any event both the firms existed at least between 15.2.83 and 18.2.83 and its subsequent non-existence, is of no consequence. It has been also stated that an account was opened in favour of Metropolitan on 16.2.83 in the Zakarta Street Branch, Calcutta of PNB and ABD introduced the said firm on that date. Therefore, it is clear that the said firm existed as on 16.2.83. 39. While refuting the allegation of the appellant that the Britannia got the bank draft of ₹ 91,56,146.86p ready on 15.2.83 when the said bill was not finalized, the learned counsel for Britannia submitted that on 15.2.83 ABD promised that he would come back within a day or two after having the said bill registered in the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned counsel however admitted if it is proved that an organization with clear knowledge of suspicious circumstances did deliberately shut its eyes and made no further enquiry lest such enquiry will unearth fraudulent circumstances, it is only in such a situation, one can assume the existence of fraud, but mere carelessness or negligence does not constitute fraud. 42. The learned counsel for the appellant urged that in so far as the power of attorney is concerned the same must be read subject to the chart of financial power under which the Branch Manager, Zakaria Street Branch, Calcutta, a 'C' class branch, cannot under any event co-accept a bill of exchange of ₹ 1 crore. According to the learned counsel the limit of financial power of ABD is ₹ 20,000/-, The learned counsel further submits that even the Managing Director of PNB cannot on his authority co-accept of the alleged bill amounting to ₹ 1 crore. 43. The learned counsel for Britannia however, urged that the power chart relating to financial power is an internal document of the bank. Assuming such power chart exists, a third party can have no notice of such power chart and such third pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of exchange has not been proved, the suit must fall. 45. The learned counsel for the Britannia however, further submitted that the bill of exchange has been annexed as a part of the plaint. Therefore, the whole of the bill of exchange must be deemed to a part of the plaint. According to him the plaint must be read as if the whole of the said bill has been set out in the plaint. In that view of the matter the bill of exchange need not be proved separately. 46. Counsel for the appellant further urged that admittedly the said bill has not been presented for acceptance by Britannia before the acceptor, the Lgee Enterprise. But under section 64 of N.I. Act, presentment of the bill of exchange to the acceptor is a must. So there is a total non-compliance with the requirements of section 64 of the N.I. Act. The learned counsel appearing for Britannia on the other hand contended that presentment is unnecessary in view of the provision of section 76(b) of the N.I. Act Jt has further been argued that in default of presentment of the said bill to Lgee Enterprise, the suit against PNB must fail. The learned counsel for Britannia however, suggested that there is no issue to that effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on 15th February, 1983 (question No. 493). In cross-examination, the said wit-ness was further asked whether he knew whether the said document was executed in Bombay. The witness answered I do not know where it was executed, but it was a complete document when it was brought on 15th February, 1983 , He was further asked whether the stamp impression on the document was there. To that the witness answered 'No' (Qs. 493 and 494). On being further questioned on that document, the witness replied That has been the normal practice in the market We believe the document (Q. 502)) when the witness was further asked whether any enquiries were made by him about its genuineness, the witness replied we had no suspicion (Q.504). About acceptance of the said bill when the said witness was questioned about any enquiry being made, the witness answered No I did not make. It seems to be the truth given by them for this acceptance (Q.507). 51. Relying on this evidence, the learned counsel for the appellant submits that none of the appellant's witnesses has proved the said document inasmuch as none of the witnesses has seen that the document was signed when it was initially made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said decision, the question of proof of a document was not an issue, so the passing observations made by the learned Judge to the effect that annexure to the pleadings are part of the pleadings does not answer the question with which the Court is concerned in the present case. Those observations cannot be said to be an authority for the proposition that if any document is annexed to the plaint that operates as a waiver of proof of the document in question and especially when its proof has been seriously questioned. 56. The next case cited in this connection is also another single bench Judgment of Rajasthan High Court in the case of Bhagaban Das v. Goswami Brijesh Kumnrji and Ors. In that case, the learned Judge was faced with the question under Order 7, Rule 11 Clause(a) of Civil Procedure Code namely whether a plaint discloses a cause of action. In that context, the learned Judge observed that in a case where the plaint is based on a document, the said document can be considered alongwith the plaint for deciding whether the plaint discloses any cause of action or not. The learned Judge however immediately added that such question has to be considered by looking at the face ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnexure to the plaint or an exhibit in the case. 63. The principle of section 67 of the Evidence Act is very clear on this point. 64. Section 67, shorn off unnecessary details, in this context runs thus: If a document is alleged to be signed ..... by any person, the signature, as is alleged to be in that person's handwriting must be proved to be in this handwriting . 65. Reference in this connection may be made to an old decision in the case of Stamper versus Griffin. 1856, 20 Ga 312 at 320 in which Justice Bennlng said A writing of itself is not evidence of one thing or the other. A writing of itself is evidence of nothing, and therefore. Is not, unless accompanied by proof of some sort, admissible as evidence . 66. The aforesaid passage has been expressly approved as illustrating the principle expressed in section 67 Sarkar On Evidence (15th Edition. 1114). 67. It has not been, as it obviously could not be, contended on behalf of Britannia that the said bill is a public document within the meaning of Evidence Act. Since it is a private document, its 'mere production' will not suffice. Something more than production is required in the case of priva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty, Bombay, reported in AIR 1961 SC 1316. Justice Subba Rao (as His Lordship then was) speaking for the Court and while considering the provision of section 118 of N.I. Act held that initially the burden rests on the plaintiff to prove that the promissory note was executed by the defendant. His Lordship held as soon as the execution of promissory note is proved the rule of presumption laid down in section 118 of Negotiable instrument Act helps him (meaning the plaintiff) to shift the burden to the other side . 74. The said principle has been followed subsequently also by Allahabad High Court in the decision in Ch. Birbal Slngh v. Harphool Khan . In paragraph 7 of the Judgment the learned Judge held that in a case based on promissory note, the initial burden lies on the plaintiff to prove the execution of the promissory note. When this burden is discharged, it is only then that the Court shall raise a presumption in favour of the plaintiff by holding that the promissory note was for consideration and it is for the defendant to rebute the presumption. 75. In view of the aforesaid discussion, this Court is of the opinion that having regard to the facts of this case, Britan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Exhibit D dated 15.02.83 does not give any particulars of the properties which are said to be offered as alleged securities and alleged to be pledged with PNB by the drawer, even though on 15.2.83 the drawer admittedly was not even a customer of PNB. But even then Britannia did not make any enquiries about exhibit 'D'. 10. Even though the said bill was not completed and ready on 15.2.83, but on Britannia's instruction a bank draft of ₹ 91,56,146.86p. was made ready on 15.02.83 by its banker, Syndicate Bank and was debited from Britannia's account Thus Britannia acted with undue haste to part with the money on a transation in which time was never the essence and thus unnecessarily sustained a loss of interest on the aforesaid amount for a couple of days. This is not consistent with normal business transaction by an experienced business house like Britannia. 77. The question is what should be the attitude of the Court in such a situation? Whether the Court should accept Britannia as an innocent purchaser of the bill without any notice of 'vice' in the bill and the absence of enquiry by Britannia would be considered by Court as a case of ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing wrong and if I ask question and make further enquiry, it will no longer be my suspecting it but my knowing it, and then he shall not be able to recover, I think that is dishonestly . (Page 629 of the report)(Underlined for emphasis) 82. The learned Judge reached those general conclusions by relying on good sense and reason. Another learned Judge. Lord O'Hagan delivering his speech in Jeese Jones (supra) at page 621 of the report observed that there are two substantial questions which fell for consideration in that case. His Lordship formulated the first point is whether the circumstances under which the bills were drawn and accepted tainted them with fraud and secondly whether the person discounting the bill with such notice is entitled to recover. Factually these are also the basic questions in this case. In such a situation Lord O'Hagan. pointed out what tests should be followed. In the following words: Could any man of intelligence,--any commercial man,--any man conversant with bill transactions.--have failed to believe that the offer of such terms was clouded with suspicion and suggestive of fraud? Could any honest trader, disposed to realize advantage o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the bill has been allegedly co-accepted by PNB cannot be accepted as securities by any person of ordinary commercial prudence. The properties are without any particulars and there is no whisper about Metropolitan's title over those properties. It is a mere paper security or even worse than that. It may also be mentioned that on 15.02.83 neither Metropolitan nor Lgee was even a customer of Zakaria Street Branch of PNB. 87. In view of these undisputed facts, this Court has no hesitation to hold that total absence of enquiry about Exhibit 'D' and the parting of ₹ 91,86,146.56p. on that very day i.e. 15.02.83 by Britannia in a hurry, coupled with other admitted facts mentioned above clearly demonstrate dishonesty on the part of Britannia and by taking the said bill under those circumstances. Britannia had taken it 'at its peril'. 88. In trying to wriggle out of such tainted circumstances, learned counsel of Britannia urged that there is no case of fraud made out against Britannia tn the written statement of PNB. But this Court finds that in paragraph 10 of the written statement detailed reference to these suspicious circumstances has been given and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in paragraph 55 of Federal Bank (supra) held that Court ought not to grant injunction to restrain encashment of bank guarantee or loss of credit except in two situations namely (a) in case of fraud and (b) in case of irretrievable damage. In that context, fraud means a clear case of fraud of which banks also have notice. This principle, after discussion the case law on the point, has been elaborated by the learned Judges in paragraph 57 of the Judgment to the extent that it is not only enough to allege fraud but it must be clearly established and the evidence must be clear both on the factum of fraud and also on the bank's clear knowledge of such fraud. Those observations have been made by the Hon'ble Supreme Court after noting in para 3 of the Judgment that there is no allegation of fraud/forgery against the negotiating bank. But in the present case, paragraphs 10 and 11 of the written statement contain the allegations of fraud and forgery. 94. Those principles given in a different state of pleading and fact situation are not at all attracted to the facts of this case. In the case of Federal Bank (supra) there were regular commercial transactions between the parties an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of avoiding knowledge. This position has been explained by the learned author in the following words: It may be that inquiry might not have brought out the truth; but a man who abstains from inquiry where inquiry ought to have been made, cannot be heard to say so and to rely on his ignorance. [Kerr, page 254] 99. In such a situation, the evidence, which will prove fraud, can be circumstantial. This has also been explained by the learned author by observing if suspicion is aroused and no inquiries are made for fear of learning the truth fraud may be presumed and this doctrine has been further elaborated by the same learned author at page 672 of the treatise as follows: It is not, however, necessary, in order to establish fraud, that direct affirmative or positive proof of fraud be given. Circumstantial evidence Is not only sufficient, but in many cases It is the only proof that can be adduced. In matters that regard the conduct of men the certainty of mathematical demonstration cannot be expected or required. Like much of human knowledge on all subjects, fraud may be inferred from facts that are established. Care must be taken not to draw the conclusion hastily f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve. The facts in Bharat Barrel(supra) are also totally different In that case the parties to the litigation had regular business dealings and transactions with regard to Import of steel. There was an offer and acceptance for Import of 10.160 metric tones of steel drum sheets from U.S.A. The total price of the goods to be Imported under the Import license was about ₹ 55,33,000/-. The plaintiff represented through its director that until and unless any assurance and guarantee Is given that the delivery of the said steel would be given In time, the letter of credit will not be opened by the plaintiff. So the plaintiff Insisted that defendant should either give a guarantee or provide some security for due performance by the defendant of Its obligations and it was suggested that defendant should execute a promissory note for a sum of ₹ 6,20,000/- by way of collateral security for payment to the plaintiff of damages, in the event of plaintiff suffering such damages as a consequence of non-supply of goods. The defendant executed a promissory note for the aforesaid amount. Then on the defendant's failure to pay the amount, the plaintiff filed a suit under Order XXXVII of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name of W. T. M'Kinlay. Requiring funds, they commissioned their father, the late James M'Klnlay, horse-dealer in Glasgow, to obtain them an advance of 1000. He entered into communication with John E. Walker, coach proprietor in Glasgow, the result being that Mr. Walker signed as drawer a bill bearing date the 25th of May, 1874. for 1000 at twelve months, addressed to Messrs. Wm. Thos. M'Kinlay. wood-merchants, Strabane, which he handed to James M'Klnlay,. The latter sent it to his sons in Ireland, who returned it duly accepted in their firm's name. James M'Klnlay then wrote his own signature across the back of the bill, and handed it to Mr. Walker, who remitted its amount, less discount, to the drawees. In March, 1875, Mr. Walker discounted the bill with the National Bank of Scotland, but W. T. M'Kinlay falling to pay It when due, he retired it. James M'Kinlay died In September, 1874, and his representative is the Respondent Alexander M'Kinlay. J.E. Walker died in September, 1875, and the Appellants are his trustees. Several questions arose between the parties In Scotland, and there was an action and a counter-action, which were hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 113. The learned Judge has thereafter explained what Is meant by an endorsement. The said concept has been explained by Lord Blackburn* In page 772 of the report where the learned Judge has held : An Indorsement In general Is a transfer In writing by the holder of the bill to a new holder on whom the property Is thereby conferred; and It Is clear that J. M'Klnlay was not such an Indorser. 114. Lord Watson, another member of the Bench In the said decision also expressed the same view about indorsement and Indorser at page 782 of the report and the same is set out below: No doubt a proper Indorsement can only be made by one who has a right to the bill, and who thereby transmits the right, and also Incurs certain well-known and well-defined liabilities. But it Is perfectly consistent with the principles of the law merchant that a person who writes an Indorsement with Intent to become party to a bill, shall be held--notwithstanding he has not and therefore cannot give any right to its contents--I fail to see upon what principle James M'Klnlay can be interpolated as a party to the bill In question between the drawer and the acceptor. To hold that a stranger to the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid bill. 122. Section 43 of the said Act Is In the following terms: Negotiable Instrument made, etc., without consideration.--A negotiable instrument made, drawn, accepted, Indorsed, or transferred without consideration, or for a consideration, which fails, create no obligation of payment between the parties to the transaction. But if any such party has transferred the instrument with or without endorsement to a holder for consideration, such Holder, and every subsequent holder deriving title from him may recover the amount due on such instrument from the transferor for consideration or any prior party thereto. 123. A perusal of the second part of section 43 after omitting the irrelevant parts, would mean: when any party to a negotiable instrument has transferred the instrument with endorsement to a holder for consideration, such holder or every subsequent holder deriving title from him may recover the amount due on such instrument from the transferor for consideration or any prior party thereto. 124. Learned counsel for Britannia submits any prior party thereto would include PNB. This cannot be accepted by this Court. 125. Under no circumstances PNB is the prior par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritannia wanted to Introduce by way of amendment has not been allowed by the Courts right up to Supreme Court. But unfortunately, the learned trial Judge has delivered his Judgment by accepting the case of Britannia that co-acceptance by PNB amounts to acceptance. This error has been committed by the learned trial Judge despite the fact that the said case has not been made out In the plaint and when the said was case sought to be introduced by the amendment that has also been rejected by all the Courts throughout holding that Britannia is trying to make out a completely new case. 128. Reference in this connection may be made to the Judgment of the Supreme Court In the case of M/s. Trojan Company v. RM. N.N, Nagappa Chettiar, . In paragraph 22 of the Judgment the learned Judges of the Supreme Court were pleased to lay down It is well settled that a decision of a case cannot be based on grounds outside the pleadings of the parties and it Is the case pleaded that has to be found . 129. In that case, the learned Judges held that without an amendment of the plaint, the Court is not entitled to grant the relief not prayed for in the original plaint. In the Instant case, as noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a bill addressed to another. While saying so, the learned Chief Justice relied on the principles formulated in Jackson and Hudson. 135. In this connection, reference may be made to the provisions of section 117 of Evidence Act. The relevant portion of the section is to the following effect: No acceptor of a bill of exchange shall be permitted to deny that the drawer had the authority to draw such bill or to Indorse It . In the instant suit, the acceptor who is fastened with a statutory estoppel has not even been made A party. So the attempt made by Britannia to put PNB in the shose of the named acceptor in the bill Is wholly contrary to the aforesaid principles enunciated under section 117 of the Evidence Act. The estoppel created under section 117 of the Evidence Act has a purpose. It amounts to an undertaking by the acceptor to pay to the order of the drawer. The acceptor, who Is the principal debtor. Is thus precluded from denying to a holder in due course or a holder for consideration that the drawer had the authority to draw or endorse the bill, Britannia's suit in the absence of the acceptor is not properly framed and is not maintainable. 136. The plea advanced by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. But the said bill is devoid of all such particulars. 140. Curiously enough none of the banks, namely Bank of Baroda, Honkong and Shanghai Banking Corporation. Bank of Maharashtra were called to depose on the so called practice of co-acceptance. If Britannia wanted to establish the practice of co-acceptance by bank, it should have cited witnesses from those banks to establish such practice. The bill discounting register of Britannia Exhibit 'M' shows a very large member of bills but they are all trade bills without an exception. But In case of instant bill why a departure has been made has not been explained by any of the witnesses of Britannia. 141. V.S. Gopalan, the only witness produced by Britannia to depose of the practice of co-acceptance of bills by bank has adduced evidence which has virtually contradicted the case of Britannia. Gopalan, who retired from Chartered Bank In 1987, deposed that before co-accepting bills of customers, bankers invariably fix credit limits of such customers for various facilities of which co-acceptance of bill Is one and bill amount must be within that credit limit (Answer to Q. No. 8 and 12). But In this case before Metropolitan b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 1st November, 1976 Is not valid. 146. It may be mentioned here that In 1976 when the power of attorney was granted in favour of ABD by PNB, the so called undesirable practice of co-acceptance was noticed by RBI and in Its circular dated 20.1.76 (Exhibit 3) and RBI found that such transactions are 'In the nature of guarantee executed by banks' and such practice should not continue. Therefore, alleged co-acceptance by ABD Is certainly not acceptance permitted under clause 1(1) of the power of attorney. But if it Is guarantee on behalf of the bank in that case for giving such guarantee, ABD cannot act singly. In this connection the learned counsel for the appellant has urged that power of attorney calls for a strict construction. In support of the said submission, the learned counsel has relied on Halsbury's Laws of England. (4th Edition) para 730 and 731. The relevant portion from the said paragraph is set out below: A power of attorney is construed strictly by the Courts, according to well-recognised rules, regard first being had to any recitals which, showing the general object, control the general terms In the operative part of the deed. 147. The aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her in express terms or by necessary implication (page 177 of the report). 151. Therefore, going by those standards, this Court finds that It Is difficult for the Court to hold that on the basis of the said power of attorney Issued In 1976, ABD could co-accept the said bill and specially, when co-acceptance is an unknown term under N.I. Act. 152. Apart from that in the instant case, it has been contended by the learned counsel for both the parties that co-acceptance of the said bill for and on behalf of PNB would amount to a guarantee. This would also appear from the Reserve Bank of India's circular dated 30th January, 1975 referred to above. 153. But It is clear from the said power of attorney that such guarantee cannot be given by person Individually and the same can only be done by the said authorized attorney jointly with another power of attorney holder of the said bank. When ABD acts with another power of attorney holder Jointly, then only he can give guarantee and execute Indemnity on behalf of and In the name of bank In accordance with clause 2(h) of the said power of attorney (exhibit 'A'). (Underlined for emphasis) 154. Admittedly in the Instant ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This Court Is unable to accept this contention for the various reasons. 159. A power to do something Jointly with another person Is an express and specific power and power of a totally different character. This cannot be termed as power Incidental to a power by which a person can do something singly. To hold otherwise would amount to altering the Intention of the donor of the power. Thus no Court can do by an Interpretative process. The passage from Bowstead also does not suggest such a construction. Such a construction of equating sole power with Joint power overriding specific provisions is contrary to all cannons of construction. 160. Apart from that such a construction Is contrary to the express provision of 27 of N.I. Act which Is set out below: A general authority to transact business and to receive and discharge debts does not confer upon an agent the power of acceptlng or Indorsing bills of exchange so as to bind his principal. An authority to draw bills of exchange does not of Itself import an authority to Indorse. (Underlined for emphasis) 161. In view of the aforesaid provision under section 27 of N.I. Act, the contention of the learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Division Bench of Calcutta High Court In the case of Sagar Mal v. Bhudan Sahu, reported In 19 Indian cases (1913) page 251. In that case the plaintiff even without proving presentment got a decree against endorser and drawer. Against such decree only Indorser filed an appeal, the drawer did not file an appeal. But the Appellate Court dismissed the whole suit against both the endorser and drawer. 166. On an appeal to the High Court, It was held that as proof of presentment was essential to the plaintiffs case before he could recover Judgment, the first appellate Court rightly dismissed the whole suit against both drawer and endorser notwithstanding the fact that the drawer did not file an appeal against the judgment. 167. To counter this position, learned counsel for Britannia relied on section 76(b) of the N.I. Act. Section 76(b) of the N.I. Act Is set out below: When presentment unnecessary.--No presentment for payment is necessary, and the instrument Is dishonoured at the due date for presentment, in any of the following cases: (b) As against any parry sought to be charged therewith, If he has engaged to pay notwithstanding non-presentment; 168. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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