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2002 DIGILAW 137 (MAD)

Venkatachala Gounder and another v. TR. Soundaram

2002-02-21

PRABHA SRIDEVAN

body2002
JUDGMENT: The respondent filed O.S.No.8932 of 1983 for recovery of a sum of Rs.33,750 from the appellants and another (the third defendant). In the course of business transaction the third defendant had given to the appellants a cheque for Rs.25,000 dated 23.9.1980. On the same day since the appellants wanted money urgently they endorsed it in favour of the respondent and received the sum of Rs.25,000 requesting the respondent to present it after some time. Accordingly, the respondent presented the cheque on 9.2.1981. The cheque was dishonoured. She orally informed them of the dishonour and they sought for time. Then she issued the suit notice for which there was no response and therefore, went to Court. 2. The appellants admitted the receipt of the cheque from the third defendant and also the endorsement. But they denied that it was dishonoured on 19.2.1981. According to the appellants the respondent did not inform them of the dishonour not did she send them a written notice. The appellants did not promise payment. They in turn issued a notice to the third defendant asking him to repay the amount to the respondent. There is no contract to pay interest. The suit has to be dismissed. 3. The trial Court decreed the suit. 4. Mr.T.P.Manoharan, learned counsel for the appellant would submit that the suit cannot be decreed because the respondent had not given the notice of dishonour. He referred to Secs.30, 35, 40, 79, 80, 93, 94, 98 of the Negotiable Instruments Act (‘the Act’ in short) and would therefore, submit that the Act itself does not permit the holder to recover any amount if the notice of dishonour had not been given within the time set down in the Act. He would submit that if the appellants had been put on notice they would have in turn got back the money from the third defendant and now they are put to injury. He would therefore, submit that the appeal should be allowed. 5. Mr.R.Vijayan, learned counsel for the respondent on the other hand would submit that the appellants do not have a case either on law or on equity. They knew fully well about the dishonour of the cheque. The Act does not require a written notice of dishonour. It is sufficient if it is oral. Oral demands were made. 5. Mr.R.Vijayan, learned counsel for the respondent on the other hand would submit that the appellants do not have a case either on law or on equity. They knew fully well about the dishonour of the cheque. The Act does not require a written notice of dishonour. It is sufficient if it is oral. Oral demands were made. The evidence of P.W.1 shows that the suit notice had been issued but the appellant had not responded though it was sent to the correct address. There was no justification for denying the respondent his rightful claim. 6. The question is whether the respondent is entitled to recover the amounts due from the appellants who had endorsed the cheque, Ex.A-1 in favour of the respondent and for valuable consideration. 7. The appellant admit that the third defendant gave them the cheque for Rs.25,000 and that they had endorsed it in favour of the respondent. Therefore, there cannot be any dispute with regard to passing of consideration. Having received the amount of Rs.25,000 now the appellants want to evade the liability to pay the respondent the amounts so received. Though the printed judgment does not show that the defendant was examined the records would show the evidence of D.W.1 wherein he has stated that the amount was given only because the respondents trusted them. In the pleadings of the appellants have not raised the ground of absence of notice of dishonour. On the other hand, to the respondent’s case that inspite of several oral demands made on the appellants they did not repay, it has been pleaded that they had asked the third defendant to make good the amount. The learned trial Judge, has referred to this and had held that: The fact that it had been pleaded in the written statement that the third defendant was asked to repay the amount would show that the appellants knew that the cheque had been returned and had therefore, deliberately refused to receive Exs.A-2 and A-3. 8. Sec.30 of the Act deals with the liability of the drawer of the cheque in case of dishonour and this liability is subject to due notice of dishonour. Sec.35 of the Act deals with the liability of an endorser and this is also subject to due notice of dishonour. 8. Sec.30 of the Act deals with the liability of the drawer of the cheque in case of dishonour and this liability is subject to due notice of dishonour. Sec.35 of the Act deals with the liability of an endorser and this is also subject to due notice of dishonour. Sec.40 of the Act discharges the endorser’s liability when the holder of a Negotiable Instrument destroys or impairs the endorser’s remedy against a prior party. Sec.93 of the Act states that when an instrument is dishonoured by non-acceptance the holder must give notice for such dishonour to all the parties whom the holder seeks to make liable. Sec.94 of the Act deals with the mode of notice and Sec.98 of the Act sets down the instances where notice of dishonour is unnecessary and finally Secs.79 and 80 deals with the rate of interest when no rate is specified. 9. The appellant’s case is that by no issuing notice of dishonour the respondent had impaired the remedy of the appellant against the third defendant who had drawn the cheque and that when the Act sets down clearly even the time within which this notice should be given it has to be strictly followed. According to the appellant therefore, their liability was discharged for want of notice of dishonour. But in this case the appellants have not only clearly stated in the written statement that they had duly endorsed the cheque, Ex.A-1, they have also stated that they indicated to the third defendant that he alone is liable. The appellants had not furnished the date on which they intimated the third defendant. Therefore, it is clear that though the appellants had denied receipt of notices of dishonour they knew about it. Otherwise, there was no occasion for them to call upon the third defendants to pay the suit claim to the respondent. This shows that the ground raised now in the appeal regarding absence of notice of dishonour is not available. 10. Sec.98(a) states that no notice of dishonour is necessary when it is dispensed with by the party entitled thereto. The waiver of notice can be at any time before dishonour. It is the case of the respondent that she had called upon the appellants to make payment and they sought for time. 10. Sec.98(a) states that no notice of dishonour is necessary when it is dispensed with by the party entitled thereto. The waiver of notice can be at any time before dishonour. It is the case of the respondent that she had called upon the appellants to make payment and they sought for time. Apart from the bald denial of the averments in the plaint including receipt of notice which as has been seen above is demonstrated to be false, the appellants have not proved that they did not ask for time. In an English case which is referred to in Bhashyam and Adiga’s the Negotiable Instruments Act, 16th Edition it was held, “that when the drawer applied on behalf of the acceptor for time (it must be held) that he had authorized an arrangement for renewal dispensing with notice of dishonour and after dispensation no notice was necessary.” 11. For the following reasons this Court is unable to accept that the suit shall fail for want of notice of dishonour. (1) This ground was not taken specifically in the written statement. (2) The written statement shows that the appellants called upon the third defendant to make payment, so they must have had notice of dishonour. (3) Since the plaintiff’s case that the defendants had sought for time has not been proved wrong, it must be held that notice of dishonour had been dispensed with. (4) There is no evidence to disprove the oral notice of dishonour alleged in the plaint. (5) No issue has been framed regarding notice of dishonour. Therefore, this question had not been raised at the stage of trial. In this background it is not possible to set aside the judgment of the trial Court. And since the pleadings show that the appellant’s were aware of the dishonour but had not taken this ground in their written statement also go to show that the Trial Court had not erred in this regard. 12. In fact the issues framed also show that the question of notice of dishonour was never a point in controversy. When the endorsement is not denied nor the passing of consideration the appellants’ cannot succeed in this appeal. 13. As regards rate of interest too, there is no need for interference. 14. The appeal is therefore, dismissed.