Mr. 'G', a Senior v. Bombay

the appellant instituted the the City Civil Judge, present suit Bombay. In payment to Vrajlal was not binding on him, and that remained liable on the hundi. "the defendant-drawee" the authority The defendants, apart from of Vrajlal plaint did not disclose a cause of action against them, as there was no avcrment the hundi had been accepted by them. to grant discharge, also pleaded that relying on therein trial, the appellant gave evidence that Vrajlal At had received the hundi the registered cover containing in his absence, and collected the amount due thereunder without his knowledge or authority. The learned City Civil Judge accepted this evidence, and held Vrajlal had not been authorised to receive the amount of the hundi. He also held the plea of discharge the hundi put forward by the respondents had been accepted by them. the result, he decreed the suit. implied that In The defendants took up the matter in appeal to the High Court of Bombay, and that was heard by Chagla C.J. and Shah J. who held the appellant would 1954 Sdh Ja.gjiunn Mar; ji Vithlani v. Messrs. Ranchhod· das 1-\1eghji. Venkatarama Ayyar J. • 506 SUPREME COURT REPORTS [1955] the plaint did not allege them, have a right of action on the hundi against the respond ents only if it had been accepted by them, and it had been accepted them. the appeal, and dismissed They accordingly allowed this appeal on special the suit. The plaintiff prefers leave granted under article 136 of the Constitution. there was no cause of action against is not liable on There has been no serious attempt before us to chal the correctness of the legal position on which the judgment of the High Court is based, that the drawee of a negotiable instrument payee, unless he has accepted it. On the provisions of the Negotiable Instruments Act, no other conclusion is possible. Chapter III of that Act defines the obliga tions of parties instruments. Section 32 provides that, "In maker of a promissory note and the acceptor before maturity of a bill of exchange are bound to pay the apparent amount thereof at maturity according to tenor of the note or acceptance respectively, and acceptor of a bill of exchange at or after maturity 1s the holder on demand." the absence of a contract to the contrary, to negotiable the amount to pay thereof the bill. There Under this section, the liability of the drawee arises is no provision only when he accepts in the Act that the drawee is as such liable on the ins the only exception being under section 31 in trument, the case of a drawee of a cheque having sufficient funds in his hands ; and even liability is only towards the drawer and not the payee. This is elementary law, and was laid down by West ). in Seth Khandas Narandas v. Dahibai(1 ) in the following terms : the customer then, the · "Where there is no acceptance, no cause of action can have arisen to the payee against the drawee." there any substance in Nor is section 61 of acceptance only when the bill and not when it is payable on demand, as the contention that the Act provides for presentment for is payable after sight, is the suit (•) I.L.R. 3 Born. •8• at p. 183. -- ' • S.C.R. SUPREME COURT REPORTS 5('fl there are In a bill payable after sight, hundi. distinct stages, firstly when it is presented for accept ance, and for payment. later when it is presented Section 61 deals with the former, and section 64 with in Ram Ravji Jambhekar v. latter. As observed Pralhaddas Subkarn (1), for acceptance "presentment must always and in every case precede presentment is payable on demand, for payment." But when the bill is only one pre both the stages synchronise, and there sentment, which is both for acceptance and for pay it involves an acceptance ; the bill is paid, ment. When is really dishonoured for but when it is not paid, non-acceptance. But whether the bill is payable after signt or at sight or on demand, acceptance by drawee is necessary before he can be fixed with liabi lity on it. that establishes privity on It the payee and the drawee, and the instrument between the High Court we agree with the learned Judges of that unless there is such acceptance, no action on bill in maintainable by the payee against the drawees. is acceptance the bill and made payment received argument was that The main contention on behalf of the appellant was that such acceptance must be implied when the respond therefor. The the very act of the payment of the hundi to Vrajlal was an acknowledgment defendants were liable on the hundi to whosoever might be the lawful holder thereof. The answer to this con there was no valid presentment tention is, firstly, of the hundi for acceptance ; and secondly, that there was no acceptance of the same as required by law. 1954 Seth ]agjivtlJI Mavji V ilhfani v. Mm« Ranchhoti das Meghji. Venkataroma A»ar J. • - - the position On the question of the presentment of the hundi stands thus : The person for acceptance, who presented it to the defendants was Vrajlal ; and it is difficult he had no authority to act in the matter, to see how he could be held to have acted on behalf of the plaintiff in presenting the hundi. There was only one single act, and the receipt of the amount due hundi by Vrajlal and thereunder. payment, he had no authority to present acceptance. there was no provision that was the presentment of If he had no authority receive the bill It was argued (I) I.L.R. 20 Bom. i33 at p. 14r. 14-878. C. India/59 1954 Seth Jagjivan MavJi Vithlani v. Messrs. Ranchhod das Meghji. Vtnkatarama AyyarJ. • 508 SUPREME COURT REPORTS [1955] there was, for bills payable after sight, in the Act requiring that bills payable at sight should be presented for acceptance by the holder or on his behalf, as in the case of section 61. But, as already pointed out, a bill payable at sight, both the stages for presentment for acceptance and for payment are rolled up into one, and, therefore, receive the payment under section 78 of the Act is the person, it for acceptance. Under the payment must be to the holder of the section 78, instrument; and if Vrajlal had no authority to receive there was no the amount on behalf of the plaintiff, valid presentment of the hundi by him for acceptance either. the person who is entitled is entitled to present the hundi there was a valid acceptance It has next to be considered whether, assuming that there was a proper presentment of acceptance, thereof. The argument of the appellant was that as the hundi had got into the hands of the defendants and was produced the very fact of its possession would be by them, sufficient to constitute acceptance. Under the common law of England, even a verbal acceptance was valid. Vide the observations of Baron Parke in Bank of England v. Archer ('). It was accordingly held that such acceptance could be implied when there was undue retention of the bill by Harvey v. Martin (•). But England by section 17(2) of the Bills of Exchange Act, invalid, 1882, which enacted that an acceptance was the bill and signed by the unless it was written on Instruments Act, drawee. Section 7 of the Negotiable following the English that the drawee law, provides becomes an acceptor, when he has signed his assent upon the bill. In view of these provisions, there cannot be, apart from any mercantile usage, an oral accept ance of the hundi, much less an ac.ceptance by conduct, where at least no question of estoppel arises. ( Vide Note law was altered the drawee. , .. • • ' But then, it was argued that the possession of the from which the only circumstance that there was the plea hundi was not acceptance could be inferred ; .... 1" .... (1) (1843) II M. & W. 383 at PP• 389, 390; 150 E.R. 850, 855. (2) (1808) I Camp. 425; 170 E.R. 1009. 1954 Seth Jagjivan Mardi Vithlani v. Messrs. Ra11ehhod· das Meghji. Venkatarama Ayyar]. S.C.R. SUPREME COURT REPORTS 509 that clearly they had discharged the hundi ; of the defendants imported an acknowledgment of liability on the bill, and was sufficient to clothe thereon. Assume that plaintiff with a right of action the plea of discharge of a hundi implies an acknow ledgment of liability thereunder-an assumption which we find it difficult to accept. The question still remains to fasten a liability on in law whether that is sufficient is requisite for the defendants on the hundi. What fixing the drawees with liability under section 32 is the acceptance by them of the instrument and not an law prescribes no acknowledgment of liability. As form for acceptance, particular sltould be no in construing an acknowledgment as an difficulty acceptance ; but then, it must satisfy the requirements of section 7, and must appear on the bill and be signed In the present case, the acknowledg by the drawees. ment is neither in writing; nor is a matter of implication arising from defendants. It is not sufficient instrument. That the discharge of the the defendants under section 32. to fix a liability on In conclusion, we must hold that there was neither a valid presentment of the hundi for acceptance, nor a valid acceptance thereof. it signed by In the result, the appeal fails, and is dismissed with costs. Appeal dismissed. 1954 May20 V ASHIT NARAIN SHARMA v. DEV CHANDRA AND OTHERS. [S. R. DAs, GHULAM HASAN and JAGANNADHADAS JJ.] Representation of the People Act, 1951 (Act XL/II of 1951), s. 100(1) (c)-Words "the result of the election has been materially affected"-lnterpretation of-Improper acceptance or rejection of a nomination paper-Election-Validity of-Onus of proving that the result has been materially affected-Finding of Election Tribunal based on speculation and conjecture-Mis direction in law. The words "the result of the election has been materially affected" in section 100(1) (c) of the Representation of the People - - '