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TMI Blog1958 (1) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... ded over to the plaintiffs one railway receipt under which 154 bags of matra and 50 bags of arhar had been booked. The hundi bore an endorsement on the back of it that the amount covered by the hundi may be paid on receipt of the railway receipt. The said hundi was presented to Messrs. Manohar Lal Ram Parshad through the Central Bank of India for acceptance and payment, but on 2-9-1943 the said firm dishonoured it. The plaintiffs received information regarding this fact on 8-9-1943 and obtained delivery of the goods covered by the railway receipt on 12-9-1943. On 1-10-1943 the plaintiffs sent a registered notice to the defendants informing them that the hundi had been dishonoured and that they had obtained delivery of the goods covered by the railway receipt and asking the defendants to pay the amount at once failing which the goods would be sold on the market rate and suit for deficiency would be filed against the defendants. The defendants replied to the said notice on 3-10-1943 disclaiming any interest in the goods and taking the plea that there had been an out and out sale of the goods covered by the railway receipt and that the defendants were no longer liable for any amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving been dishonoured by the drawees and that the sale made by the plaintiffs was much belated and was not binding on the defendants. The plaintiffs went up in appeal to the District Judge, Hissar, which was also dismissed practically on the same grounds. They have now come up to this Court in second appeal and the points urged before us on their behalf are as follows: 1. that no notice of dishonour in respect of the hundi was necessary in this case; 2. that an oral notice was given sometime in the middle of September 1943 after the delivery of the goods had been taken; 3. that the written notice dated the 1st of October complied with the requirements of law; 4. that the plaintiffs were not bound to make the sale immediately after giving notice for the said purpose; 5. that the sale made in this case was perfectly binding on the defendants; and 6. that in any case the defendants had not proved that they suffered any damages on account of the belated sale. 4. In support of the first point Mr. D.N Aggarwal, learned counsel for the appellants, raised two alternative arguments-- (a) that Sections 91, 92 and 93 of the Negotiable Instruments Act which dealt with the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary or not. We have read the relevant section of the Negotiable Instruments Act and have come to the conclusion that there is no provision in the Act making the notice of dishonour compulsory where a hundi payable at sight has been dishonoured." This ruling no doubt "supports the contentions of Mr. Aggarwal. 5. Mr. P.C. Mital, learned counsel for the defendants-respondents relied on the provisions of S 30 of the Negotiable Instruments Act and also on the rulings AIR 1929 Lah 577 (B); Ram Singh v. Gulab Rai-Mehr Chand, ILR 1 Lah 262: (AIR 1920 Lah 80) (C); Mohammad Rafi v. Qazi Mazhar Hussain, AIR 1936 Lah 796 (D); A. L. S. K. Kadappa Chetti v. R. S. S. T. Thiru-pathi Chetti, AIR 1925 Mad 444 (E); K. T. V. R. T. Veerappa Chetty v. Vellayan Ambalam, 52 Ind Cas 370: (AIR 1919 Mad 179) (P); and Ram Ravji Jambhekar v. Pralhaddas Subkarn, ILR 20 Bom 133 (Gi, and contended that the Pesha- war case referred to above did not lay down the law correctly, and that a notice of dishonour was necessary in every bill of exchange whether it was payable at sight or after sight. 6. A perusal of the various rulings mentioned above shows that the point as now raised before us has not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his ruling cannot therefore be of much use in deciding the present case. 52 Ind Cas 370: (AIR 1919 Mad 179) (F) was a case of a bill of exchange payable at sight and it appears from the judgment that the bill of exchange in that case had been presented for acceptance and had been dishonoured. The Division Bench of the Madras High Court deciding that case held that a bill of exchange payable at sight or on demands may in the option of the holder, be presented for acceptance and if it is not accepted by the drawee it will be said to have been dishonoured and the case would then be covered by Sections 91 and 93 of the Act. The learned Judges deciding this case have observed in very clear terms that there is nothing in law which precludes a bill payable on demand being presented for acceptance, although that may not be necessary and that if presentment is made and the bill is dishonoured, a notice of dishonour must be given to the drawee in order to make him liable. ILR 20 Bom 133 (G) was a case of a bill of exchange payable on a fixed date. At page 141 of the report, however, there are useful observations of Farran C. J., on bills of various types and they are as under: "In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bill for acceptance, for thereby he obtains, in the case of acceptance being obtained, the security of the acceptor's signature, or, in the case of acceptance being refused, the immediate liability of all previous parties to the bill and relief from the necessity of presentment for payment." In Chalmers' book on Bills of Exchange. Eleventh Edition, there is a mention of the compulsory and optional presentation of the various types of bills of exchange, and a perusal of the same clearly shows that certain types of bills of exchange, e. g., those payable after sight must be presented for acceptance, while the other types of bills of exchange, e.g., those payable at sight or on a fixed date may in the option of the holder be presented for acceptance. This is also clearly provided in paragraph 515 of Volume n of Daniel's book on Negotiable Instruments. Mr. D.N. Aggarwal relied on the provisions of Sections 61, 62 and 63 of the Act and contended that presentment for acceptance was necessary only in the case of bills of exchange payable after sight, I entirely agree with him in this respect. The other bills may, however, be presented for acceptance at the option ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e come to the following conclusions-- (1) that a bill of exchange payable after sight is required by law to be presented for acceptance and if it is dishonoured on being presented, the provisions of Sections 91 and 93 are attracted and a notice of dishonour becomes essential; (2) that a bill of exchange payable on a fixed date is not required by law to be presented for acceptance, but may at the option of the holder be presented for acceptance at any time earlier than the date fixed for its payment. If it is presented for acceptance and it is dishonoured a notice of dishonour becomes essential; (3) that a bill of exchange payable at sight is not required by law to be presented for acceptance only but when presented for payment it must be deemed to have been presented both for acceptance and payment. On its being dishonoured the provisions of Sections 91 to 93 of the Act would become applicable and a notice of dishonour under the said provisions will become essential; and (4) that Section 30 of the Act is not a complete Code in itself in regard to bills of exchange of every type. It only deals with the liability of the drawer and the words "as hereinafter provided" in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e party by surprise. If the Exception had been pleaded, it would certainly have been a question of fact and the parties would have been able to produce such evidence as they would have thought necessary. 9. As a result of the above discussion I find that a notice of dishonour was necessary in this case as the hundi had been presented for acceptance and had been dishonoured. I further find that the said notice having not been given by the plaintiffs in reasonable time after the hundi had been dishonoured, the drawer is not liable and the suit against him must, therefore, be dismissed. 10. The only other point that was argued before us relates to the validity or otherwise of sales of matra and arhar. 11. I have already pointed out that the delivery of the same was taken on 12-9-1943, but the sale of matra was effected in 1945 and that of arhar in 1946. The learned trial Judge has found that the notice of sale having been given on 1-10-1943, the plaintiffs should have effected the sale within a reasonable time and that the sales effected in 1945 and 1946 cannot be binding on the defendants. Mr. Aggarwal contends that the pawnee Is not required by law to effect the sale of the pled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w and I would therefore dismiss this appeal. In the circumstances of the case I would leave the parties to bear their own costs throughout. The cross-objections also are dismissed. G.L. Chopra, J. 14. I agree with my learned brother that notice of dishonour to the drawer in this case was necessary, and since the same was not given within a reasonable time the drawer was absolved of his liability on the hundi and the suit was rightly dismissed. My reasons for coming to this I conclusion are slightly different. The basis of the suit was a hundi payable at sight. The hundi is said to have been presented to the drawee for payment and dishonoured. 15. A bill of exchange payable at sight may be, though not necessarily required by law, presented by the holder to the drawee for acceptance. Where it is so presented, the holder must, if so required by the drawee, allow the drawee forty-eight hours (exclusive of public holidays) to consider whether he will accept it (Section 63 of the Negoitable Instruments Act, hereinafter referred to as the Act). Two consequences may then follow and they are: If the drawee upon being required to accept the bill of exchange makes default in so acceptanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o notice contain-ed in Section 30. The section says-- "30. The drawer of a bill of exchange or cheque is bound; in case of dishonour by the drawee or acceptor thereof, to compensate the holder provided due notice of dishonour has been given to, or received by, the drawer as hereinafter provided." Liability of Indorser is laid down by Section 35, which reads-- "35. In the absence of contract to the contrary whoever indorses and delivers a negotiable instrument before maturity, without in such indorsement, expressly excluding or making condi-tional his own liability, is bound thereby to every subsequent holder, in case of dishonour by the drawee, acceptor or maker to compensate such holder for any loss or damage caused to him by such dishonour, provided due notice of dishonour has been given to, or received by, such indorser as hereinafter provided. Every indorser after dishonour is liable as 'upon an instrument payable on demand." 18. The sections relate to the liability of drawer or indorser In case of dishonour of the bill of exchange by the drawee or acceptor there of. 'Dishonour1 in both these sections is used in its general and commercial sense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired to be given; the notice may be oral or written; it may not be in any particular form; but it must inform the party to whom it is given either tn express terms or by reasonable intendment that the instrument has been dishonoured and that he will be held liable thereon. ' The section further enjoins that the notice must be given within a reasonable time of the dishonour, at the place of business or (in case such party has no place of business) at the residence of the party for whom it is intended. Section 98 enumerates cases where no notice of dishonour would be necessary. The rules requiring notice to be given admit of no departure except in the cases enumerated in this section. The present is not a case falling under any of the exceptions. Section 106 states the time which shall be regarded as reasonable for giving notice of dishonour. Where the holder and the party to whom notice of dishonour is given carry on business or live (as the case may be) in different places, such notice is regarded as having been given within a reasonable time if it is despatched by the next post or on the day next after the day of dishonour. Section 30 is to be read as subject to these provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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