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1980 DIGILAW 1052 (ALL)

Banwari Lal v. Chamman Lal Bhatia

1980-11-12

DEOKI NANDAN

body1980
JUDGMENT Deoki Nandan, J. 1. THIS is a plaintiff's second appeal-in a suit for recovery of Rs. 1700/- plus Rs. 600/- as interest thereon, total Rs. 2300/- on account of unpaid price of an oil engine sold through the defendants. 2. THE plaintiff had originally purchased the engine in question from the company Hardmen Engineers Private Ltd., defendant-respondent no. 3, of which the defendant-respondent no. 1 is the Managing Director and defendant-respondent no. 3 was the Manager of its Kanpur Branch at the relevant time. Having found the engine to be defective, the plaintiff returned it to the defendant-respondents' Kanpur Branch from where it was taken to its Calcutta Branch and sold there for Rs. 1700/- to a person, whose name remains undisclosed, and thereafter the defendant-respondents gave the plaintiff a cheque dated 1st October 1962 drawn on a Delhi Bank, but the cheque rebounded with the remark 'refer to drawer'. The plaintiff served a notice dated 23rd October, 1962 on the defendants but with no result. Even a criminal complaint was filed by the plaintiff against the first two defendants. That was said to be pending when the suit was filed on 1st October, 1965 for recovery of the amount of the cheque with interest. The defence was that the cheque had been given to the plaintiff on a representation made by him at Delhi on 11th August, 1962, that the price of the engine had been realised by the defendant-respondents' Calcutta office from the purchaser to whom the engine had been sold on the plaintiff's instructions, as his agents, but it later transpired that payment had not been received from the purchaser, and the defendant-respondents did not arrange for payment of the cheque. 3. FOLLOWING were the issues on which the parties went to trial:- "(1) Whether the oil engine was sold by any of the defendants on behalf of the plaintiff? (2) Whether the defendants or any of them received Rs. 1700/-as price of the oil engine, if not, its effect ? (3) Whether the cheque was obtained by the plaintiff, by misrepresentation of fact as alleged by the defendants ? (4) Whether the plaintiff is entitled to interest ? If so at what rate ? (5) Whether the Court has jurisdiction to try the suit ? (6) To what relief, if any, is the plaintiff entitled and against which of the defendants ?" 4. (4) Whether the plaintiff is entitled to interest ? If so at what rate ? (5) Whether the Court has jurisdiction to try the suit ? (6) To what relief, if any, is the plaintiff entitled and against which of the defendants ?" 4. THE trial court took up issues nos. 1 and 2 together for consideration and held that since the defendants did not receive Rs. 1700/- from the purchaser at Calcutta they were not liable to pay the amount to the plaintiff. On issue no 3 it held that the plaintiff had obtained the cheque on making a false representation on issue no. 4, that since the plaintiff was not entitled to recover the amount of Rs. 1700/- there could be no question of awarding any interest on issue no. 5 that the Kanpur Courts had jurisdiction to try the suit on the finding that the cheque was made over to the plaintiff at Kanpur and also on the ground that the plaintiff had purchased the oil engine at Kanpur and therefore, a part of the cause of action did definitely arise at Kanpur and on issue no. 6, that the plaintiff was not entitled to any relief. In the result the trial court dismissed the suit with costs. The lower appellate court confirmed the same hence the second appeal in this court. The principal point raised by the learned counsel for the plaintiff-appellant was that the two courts below approached the case from an entirely wrong view point. They completely missed the presumption of law under Section 118 of the Negotiable Instruments Act, which operated in the plaintiff's favour, and illegally placed the burden of proof of issue no. 3 on the plaintiff. The result was that although the plaintiff was clearly entitled to a decree for recovery of the amount claimed on admission of the fact that the cheque for Rs. 1700/-had been passed on by the defendants to the plaintiff on the 11th August, 1962, though it was post-dated to 1st October, 1962, and was dishonoured by the defendant's bankers, the two courts below considered the case from a wrong view point and came to wrong conclusions, which were vitiated in law and opposed to sound practice of the Courts. 5. 5. HAVING heard learned counsel, I find that there is force in the contentions raised on behalf of the appellant, and the findings arrived at by the two courts below, though concurrent findings of fact are yet such as cannot be maintained even in a second appeal under Section 100 of the Code of Civil Procedure. 6. THE passing of the cheque was admitted. Its dishonour was proved. A cheque is a negotiable instrument. The Negotiable Instruments Act defines it, vide Section 6, as "a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand". A cheque is thus not expressed to be payable on demand, but it cannot also be expressly made payable otherwise than on demand, that is to say on a specified date or on the expiry of a specified period of time after presentment. It is thus payable on demand when presented. Clause (b) of Section 118 of the Negotiable Instruments Act raises a presumption of law that "every negotiable instrument bearing a date was made or drawn on such date." Under the British Bills of Exchange Act, 1882 while sub-section (1) of Section 13 raised the same presumption about the date of drawing of a bill of exchange, sub-section (2) of Section 13 thereof further provided that: "A bill is not invalid by reason only that it is ante-dated or post-dated or that it bears date on a Sunday." There is no prohibition under the Indian Negotiable Instruments Act against post-dating of cheques. The mere fact that the date of payment of a cheque is postponed to a future date, by post-dating it, does not make the cheque payable otherwise than on demand. It remains a negotiable [instrument payable on demand on presentment on or after the date it is made to bear-See Partab Chand Raton Chand v. Gilbert, AIR 1934 All. 695. In point of law it makes no difference whether a cheque is ante-dated or post-dated it is still payable on presentment at any time after the date it bears. The cheque passed on by the defendants to the plaintiff in the present case was thus a valid negotiable instrument in law even on the date on which it was passed, although it was post-dated. The presumption raised by Section 118 (a) fully applied to it. The cheque passed on by the defendants to the plaintiff in the present case was thus a valid negotiable instrument in law even on the date on which it was passed, although it was post-dated. The presumption raised by Section 118 (a) fully applied to it. The plaintiff could not have been called upon to prove that it was made or drawn for consideration. It was for the defendants to prove, if they could, that it was not made or drawn for consideration. Leaving aside the judgment of the trial court, this is what the lower appellate court said in the reasons for its findings against the plaintiff;- "Learned counsel for the appellant contended that the respondents should have examined some person of their Calcutta Branch and should have produced their account books to prove that the payment of the price of the machine had not been received by them. I fail to agree. It was the appellant who came to the court with the allegation that the engine entrusted to the respondents had been sold by them. He claimed a relief of recovery of the price of the machine sos old by the respondents. It was, therefore, for the appellant to have adduced evidence of the act that the machine had been sold and the price thereof had been received by the respondents. The burden did not lie on the respondents and it was not mandatory for them to have adduced evidence about it." The whole approach is wrong. It completely ignores the presumption of law which the Court is bound to raise that the cheque was passed for good consideration, unless the contrary was proved. It was for the defendant-respondents to prove the contrary. The learned District Judge says that they did not produce their account books. They had the account books, but did not produce them. Even the Managing Director, defendant no. 1, did not appear in the witness box. The defendant no. 2, who appeared, had not drawn the cheque. According to his case he had ceased to be the Manager since 1964 and was not liable. His statement that the cheque was given at Delhi was disbelieved by the trial court. Instead it was held that the cheque was given at Kanpur by the first defendant. Moreover, the defendants were men of business. According to his case he had ceased to be the Manager since 1964 and was not liable. His statement that the cheque was given at Delhi was disbelieved by the trial court. Instead it was held that the cheque was given at Kanpur by the first defendant. Moreover, the defendants were men of business. They had postponed the payment of the price of the engine for almost six months. It is impossible to believe the story that the Managing Director of the defendant company was so naive a person as would pass on the cheque to the plaintiff on faith of his, the plaintiff's representation that the amount of the price of the engine had been realised by the defendant's office at Calcutta, and would on coming to know later that the amount was not realised, take no steps to cancel or to stop payment of the cheque or would not even give notice of the same to the plaintiff, but would quietly wait and let the cheque be dishonoured, and then would not even care to retort back when the plaintiff served a notice on him. The whole story of the defendants is improbable in the extreme. The two courts below ought not to have accepted it, but having done so they were, in my opinion, clearly in error. 7. IN view of the above conclusion arrived at by me, the other consideration on which the two courts below have non-suited the plaintiff recede into insignificance. Yet I must say that having perused the entire material evidence on the record in the light of the pleadings of the parties, I am satisfied that the findings arrived at by the two courts below on the first three issues on the merits of the case were all wrong, and I reverse the same. I need not burden this judgment with a detailed appraisal of the evidence in the light that I have seen it, for the above discussion on the effect of the presumption under Sec. 118 of the Negotiable Instruments Act, which ignored by the two Courts below, is sufficient in law for giving the plaintiff a decree. 8. AND I think the plaintiff must also have interest at the rate of 6 per cent p. a. from the due date of the cheque viz. 8. AND I think the plaintiff must also have interest at the rate of 6 per cent p. a. from the due date of the cheque viz. 1/10/1962, upto the date of recovery of the amount of the price of the engine sold, under Sec. 61 (2) (a) of the Sale of Goods Act. In the result the appeal succeeds and is allowed. The decree under appeal in set aside. Instead, the plaintiff's suit shall stand decreed for recovery of the sum of Rs. 1700/- with interest at the rate of 6 per cent p. a. thereon from the 1st October 1962, upto the date of suit, and pendentelite and future at the same rate until recovery of the entire decretal amount, with costs throughout, against all the three defendants. Appeal allowed.