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2002 DIGILAW 611 (KER)

Indian Overseas Bank v. Global Marine Products

2002-09-17

K.A.MOHAMMED SHAFI, P.R.RAMAN

body2002
Judgment :- 1. The plaintiff Bank in O.S. 24 of 1988 on the file of the Subordinate Judge's Court, Alappuzha is the appellant. The judgment dated 12.8.1993 is under challenge. 2. The appellant/ plaintiff filed the above suit for recovery of the money advanced by it to the first defendant partnership firm on different counts. Defendants 2 to 4 are the partners of the firm and defendants 5 to 8 are the guarantors who furnished security for the loan by way of mortgage to the plaintiff. The 9th defendant is a Limited Company which is an export house in Delhi having arrangement with the first defendant to export the goods in their name. 3. The plaintiff claimed a total amount of Rs. 16,29,582.86/- with interest thereon at 16.5% per annum. 4. The fact that the appellant bank allowed the following facilities to the first respondent, partnership firm is admitted. 1. Packing credit facility 2. Term loan 3. Temporary Overdraft 4. Foreign demand bills purchase facility. 5. The appellant claimed Rs. 10,60,277.03/- towards packing credit facility due from the first respondent partnership firm from defendants 1 to 8. They also claimed Rs. 3,40,258.39/-, being the amount due under foreign demand bills purchase facility, jointly and severally from the defendants 1 to 9. The lower court disallowed the claim made by the appellant against the 9th defendant jointly and severally with the other defendants. The lower court disallowed the amount of Rs. 1,34,294/- and Rs. 4,50,617/- paid by the Export Credit Guarantee Corporation (hereinafter called 'ECGC') to the appellant after suit on packing credit facility and decree passed for the balance amount against respondents 1 to 8 and charged upon the plaint schedule properties. 6. The plaintiff has preferred this appeal challenging the decree and judgment passed by the lower court disallowing the joint and several decree against the 9th defendant with regard to the claim for foreign demand bills purchase facility and the amount of Rs. 5,84,913/- out of the total claim of Rs. 9,60,277.03/-due as per packing credit facility. 7. The appellant has contended that for the packing credit facility accorded by the appellant/ Bank to the first respondent partnership firm, an agreement evidenced by Ext. A65 dated 6.5.85 has been entered into between the appellant/Bank and the ECGC of India Ltd. Clause.18 of Ext. A65 Guarantee No. 5022/85 dt. 9,60,277.03/-due as per packing credit facility. 7. The appellant has contended that for the packing credit facility accorded by the appellant/ Bank to the first respondent partnership firm, an agreement evidenced by Ext. A65 dated 6.5.85 has been entered into between the appellant/Bank and the ECGC of India Ltd. Clause.18 of Ext. A65 Guarantee No. 5022/85 dt. 6.5.85 deals with recovery steps and sharing of recoveries, which reads as follows: "18(i). Upon payment by the Corporation of the amount of claim due hereunder to the INSURED, the INSURED shall take all steps which may be necessary or expedient or which the CORPORATION may at any time require to effect recoveries of the INSURED DEBT whether from the Exporter or from any other person from whom such recoveries may be made including if so required the institution of legal or other proceedings in a Competent Court of Law and shall carry such proceedings to final execution". ii) Upon recovery by the INSURED or by the CORPORATION of any amount in respect of the amount due by the Exporter to the INSURED, the amount recovered shall be divided between the INSURED and the CORPORATION in the proportion in which the claim has been settled. iii) The INSURED shall pay forthwith to the CORPORATION all sums which constitute the share of the CORPORATION in the said recoveries upon their being received by the INSURED or by any other person on its behalf. The INSURED shall receive and hold such sums in trust for the CORPORATION until such payment is made to the corporation." Therefore, it is clear that the appellant insured is liable to realise the amount from the exporter and to pay the ECGC the proportionate amount as per the agreement out of the amount of the claim made by the appellant insured and admitted and paid by the ECGC to the appellant. 8. It is not in dispute that the appellant/bank is the insured in this case. Clause.19 of Ext. A65 deals with the appropriation of the recovery expenses incurred by the insured for realisation of those amounts. According to the appellant, though they made a claim for the total loss of Rs. 1,57,995/-, made with the ECGC of India Ltd., they admitted only 85% of the loss and paid Rs. 1,34,296/- towards the first claim in respect of packing credit facility claimed in the suit, as evidenced by Ext. According to the appellant, though they made a claim for the total loss of Rs. 1,57,995/-, made with the ECGC of India Ltd., they admitted only 85% of the loss and paid Rs. 1,34,296/- towards the first claim in respect of packing credit facility claimed in the suit, as evidenced by Ext. A61 letter dated 31.1.89 sent by the ECGC of India Ltd. to the appellant. They have also contended that though the appellant claimed Rs. 6,75,925/- towards total loss of the 2nd consignment claimed in the suit, out of the packing credit facility, the ECGC of India Ltd. admitted only 66.66% of the claim and paid Rs. 4,50,617/- to the appellant as evidenced by Ext. A63 letter dt. 31.1.89 send by the ECGC of India Ltd. to the appellant. 9. The appellant has contended that though the total loss claimed by the appellant was much more, the ECGC of India Ltd. admitted only lesser amount and paid the same. It is clear from Clause.18 of Ext. A65 agreement entered into between the appellant and the ECGC of India Ltd. that the amount paid by the Corporation to the appellant is on condition that the appellant should institute recovery proceedings against exporter or any other person from whom such recovery can be effected towards the insured debt and after recovery the amount as well as the cost incurred for recovery should be apportioned between the appellant and the ECGC of India Ltd. in accordance with the proportion stipulated in the agreement. Therefore the payments made by the ECGC to the appellant, being insured is only for the purpose of making good the proportionate loss admitted by the ECGC subject to recovery of the same under due process of law from the exporter or from any other person from whom such amount can be recovered and apportioned as per the ratio provided in the insurance agreement. Hence that amount paid by the ECGC to the appellant in terms of the insurance agreement cannot be credited to the account of the first defendant exporter from whom the amounts are due and to be recovered by the appellant towards the claim. 10. It is seen that the appellant had made debit entries with regard to be premium payable as per the insurance agreement to the account of the first defendant. 10. It is seen that the appellant had made debit entries with regard to be premium payable as per the insurance agreement to the account of the first defendant. But merely because of the fact that the premium payable by the appellant for the insurance agreement entered into with ECGC is debited to the account of the first defendant, the first defendant cannot contend that they are entitled to the amount due as per the insurance agreement entered into between the appellant and the ECGC. If at all if the premium amount is debited to the account of the first defendant/ partnership firm, by the appellant, either rightly or wrongly, the remedy, if any, available to the first defendant/ partnership firm is to claim that amount from the appellant. They cannot contend that in view of the fact that the premium amount payable by the first appellant to the insured is debited to their account they are entitled to claim the insured amount from the insurer. Therefore in view of the fact that the first defendant/firm is liable to pay the amount claimed as per packing credit facility, they cannot contend that the admitted amount paid by the ECGC to the appellant insured being the admitted amount out of the claims should be credited to the claim made by the appellant against the first respondent, partnership firm and the partnership is liable to pay only the balance amount claimed as per the packing credit facility since as per the agreement between the first respondent and the appellant, the first respondent partnership firm is liable to pay the entire amount to the appellant/Bank on that count and as per Ext. A65 agreement entered into between the appellant and the ECGC, the appellant has to realise the amount from the first respondent/ partnership firm and to repay the amount advanced by ECGC to the appellant in the proportion stipulated in the agreement, Ext. A65. 11. Therefore, the lower court was in manifest error in disallowing the total amount of Rs. 5,84,911/-received by the appellant after suit from ECGC towards the claim made under Packing Credit facilities in the suit against the first respondent/firm and decreeing the suit only for the balance amount on that count. Hence the finding of the lower court disallowing the claim for Rs. 5,84,911/-received by the appellant after suit from ECGC towards the claim made under Packing Credit facilities in the suit against the first respondent/firm and decreeing the suit only for the balance amount on that count. Hence the finding of the lower court disallowing the claim for Rs. 5,84,911/- and decreeing the suit for the balance amount out of the claim under packing credit facilities is liable to be set aside and the suit has to be decreed for the entire amount claimed on that count in the plaint. 12. The appellant has contended that the 9th defendant/9th respondent is liable for the amount due to the appellant under the foreign demand bills purchase facility in this case as per the transaction with the 1st defendant/1st respondent. As already noted it is the common case that the 9th respondent is an Export House in Delhi having arrangement with the 1st defendant-firm to export the goods of the 1st defendant in their name and it is a private limited company. According to the appellant, an amount Rs. 3,40,259.39 being the value in Indian rupee of US $ 12,600/- outstanding payment by the foreign buyer of the goods exported by the 1st respondent through the 9th respondent is due. It is the case of the appellant that out of the total amount of US $ 62,600/- due from the foreign buyers M/s. Amsea Farms Inc., New York, US $ 50,000/- is paid and the balance amount of US $ 12,600/- remains unpaid. The appellant has contended that the bill of lading evidenced by Ext. A13 dated 22.2.1985 with regard to that consignment of goods is drawn jointly by the 1st respondent and the 9th respondent being the consignor to the foreign consignee Amsea Farms Inc. Ext. A12 is the invoice by the 9th respondent to the consignee as per Ext. A13 raised on the New York Bank. Ext. A11 is the demand bill of exchange drawn by the 9th respondent to the US buyer to be paid to the appellant for value received. It is the case of the appellant that on receipt of Exts. Al to A13 documents full amount as per Ext. A11 of exchange is credited to the account of the 1st respondent and sent the documents for collection to the New York Bank. The US buyer dishonoured the bill of exchange and the documents were returned to the appellant. It is the case of the appellant that on receipt of Exts. Al to A13 documents full amount as per Ext. A11 of exchange is credited to the account of the 1st respondent and sent the documents for collection to the New York Bank. The US buyer dishonoured the bill of exchange and the documents were returned to the appellant. Therefore, the claim of the appellant against the 9th respondent is based on Ext. A11 bill of exchange. 13. It is the admitted case that subsequently US $ 50,000/- paid by the US buyer to the appellant is credited to the account of the 1st respondent. In the above suit the appellant is claiming the balance amount. The appellant has also contended that the 9th respondent has admitted its liability as per Exts. A15 and A16. Ext. Al is the letter dated 22.9.1986 sent by the 9th respondent to the appellant seeking to extend the period of realisation of the balance amount of US $ 12,600/-. Ext. A16 is the letter dated 29.12.1987 sent by the 9th respondent to the appellant requesting to issue foreign inward remittance certificate in respect of US $ 50,000/- already paid. The appellant has contended that under S.30 of the Negotiable Instruments Act the 9th respondent who is the drawer of Ext. A11 bill of exchange is liable to pay the amount in case of dishonour. They have also contended that the appellant is entitled to the presumptions available under S.118 of the Negotiable Instruments Act with regard to the transaction evidenced by Exts. A11 to A13. 14. The 9th respondent has contended that the appellant purchased bill of exchange and gave credit to the amount evidenced by Exts. A11 to A13 to the 1st respondent firm and there is absolutely no privity of contract or privity of consideration between the appellant and the 9th respondent. The 9th respondent has also contended that there was only an agreement between the 1st respondent and the 9th respondent-company that the goods of the 1st respondent will be exported as if the 9th respondent is the exporter. The 9th respondent has also contended that there was only an agreement between the 1st respondent and the 9th respondent-company that the goods of the 1st respondent will be exported as if the 9th respondent is the exporter. They have further contended that the appellant has treated the bill of lading and the other documents belonged to the 1st respondent alone and purchased the bill of exchange, credited the amount to the account of the 1st respondent with full liberty to draw and appropriate the amount and when the amount was not realised from the foreign buyer of the goods, the appellant debited the amount to the account of the 1st respondent who is the customer of the appellant - Bank. They have further contended that the fact that the appellant has caused to send the suit notice to defendants 1 to 8 alone and no notice is sent to the 9th respondent, also establish that the transaction was between the appellant and the 1st respondent and there is absolutely no privity of contract or privity of consideration between the appellant and the 9th respondent. They have further contended that there is no admission of liability in Exts. A15 and A16 letters sent by the 9th respondent to the appellant. The 9th respondent has also contended that after the appellant treating the 1st respondent as the owner of the goods, purchasing the bill of exchange as per the agreement between the appellant and the 1st respondent, crediting the amount as per the bill of exchange to the account of the 1st respondent, debiting the same amount to the account of the 1st respondent on non-realisation of the amount from the foreign buyer and crediting a portion of the amount subsequently realised from the foreign buyer to the account of the 1st respondent, cannot now claim the balance amount from the 9th respondent apart from the 1st respondent. The 9th respondent has also contended that it is clear that the consideration for Ext. A11 bill of exchange is the price of goods and not something else and therefore, the appellant cannot take any claim against the 9th respondent. 15. The facts that Ext. A13 bill of lading is drawn by respondents 1 and 9 as consignors, Ext. A12 invoice is drawn by the 9th respondent and Ext. A11 bill of exchange is drawn by the 9th respondent, are not in dispute. 15. The facts that Ext. A13 bill of lading is drawn by respondents 1 and 9 as consignors, Ext. A12 invoice is drawn by the 9th respondent and Ext. A11 bill of exchange is drawn by the 9th respondent, are not in dispute. It is also not disputed that on presentation of Exts. A11 to A13 the appellant-bank credited the amount to the amount of the 1st respondent-firm. It is the admitted fact that the transaction in credit facilities is between the appellant and the 1st respondent-firm and 9th respondent has only exported the goods of the 1st respondent on the basis of an arrangement between them and the 1st respondent. Therefore, the vehement contention of the 9th respondent is that even though the name of the 9th respondent also figured on those documents, since the agreement is between the appellant and the 1st respondent and the entire transaction in crediting the amount and debiting the same for non-realisation from the foreign buyer, again crediting the part payment to the account of the 1st respondent, go to show that there is absolutely no connection between the appellant and the 9th respondent in the transaction involved in this case. 16. But the contention of the appellant is that since the transaction involved in this case is with regard to the negotiable instrument Ext. All bill of exchange the 9th respondent, drawer of the bill is liable for the dishonour of the bill of exchange by the drawee under S.30 of the Negotiable Instruments Act. 17. In para 9 of the plaint the plaintiff has put forward their case against the 9th defendant with regard to the above claim. The only case put forward by the appellant is that the 9th respondent is liable for the amount as the drawer of the bill of exchange. 18. In the written statement filed by the 9th respondent in the suit the case of the appellant is met in Para.3, 5, 8 and 9. The only case put forward by the appellant is that the 9th respondent is liable for the amount as the drawer of the bill of exchange. 18. In the written statement filed by the 9th respondent in the suit the case of the appellant is met in Para.3, 5, 8 and 9. It is stated in the written statement that the plaintiff has no cause of action against the 9th defendant, that the 9th defendant does not have any account with the plaintiff and never requested or applied for any credit facility to the plaintiff, that there is no privity of contract between the plaintiff and the 9th defendant for the purpose of granting any credit by way of discounting the invoice raised by the 9th defendant against the foreign buyer, that the 9th defendant never requested to grant credit facility to the 1st defendant by discounting the bail raised by the 9th defendant, that the act of the plaintiff in discounting the invoice by the 9th defendant and crediting the amount to the account of the 1st defendant is unauthorised and unwarranted, that the said action is contrary to the specific instruction of the 9th defendant and that the consignment was with the specific instruction to present the bill for payment to the bankers of the foreign buyers and after collecting the payment to credit the same to the account of the 1st defendant. 19. There is absolutely no evidence regarding any such specific instruction given by the 9th respondent to the appellant regarding collection of the amount and crediting the same as stated in the written statement. Ext. All bill of exchange is ex facie an order to pay the money to the appellant. There is no direction in Exts. A11 to A13 or anywhere to collect and credit the amount to the account of the 1st respondent nor any iota of evidence in that regard. The bill of exchange, bill of lading and the invoice are sent to the appellant by respondents 1 and 9 jointly. Therefore, the contention of the 9th respondent that Exts. A11 to A13 were sent to the appellant with the specific direction to present the bills to the bankers of the foreign buyer, collect and credit the proceeds to the account of the 1st respondent, is not tenable. 20. Therefore, the contention of the 9th respondent that Exts. A11 to A13 were sent to the appellant with the specific direction to present the bills to the bankers of the foreign buyer, collect and credit the proceeds to the account of the 1st respondent, is not tenable. 20. The 9th respondent has contended that since this facility for the bank regarding endorsement of the bill of lading, invoice and bill of exchange is as per the agreement between the appellant-bank and the 1st respondent, the appellant has looked to the 1st respondent alone as the title holder of the goods and therefore there was no privity of contract or privity of consideration between the appellant and the 9th respondent. They have further contended that consideration for the money paid by the appellant to the 1st respondent as per the bill of exchange is the price of goods covered by those documents and not something else. They have further contended that the bill of lading is endorsed by the 1st respondent to the appellant-bank and the appellant discounted the bills in favour of the 1st respondent. Hence the appellant is purchaser for value of the bill of exchange from the 1st respondent and title holder of the same. Therefore, the appellant cannot claim any amount from the 9th respondent. In support of the contention that since the appellant-bank on receipt of the documents of title from their customer, the 1st respondent, has credited the value thereof to the account of the 1st respondent and permitted them to withdraw the amount and therefore, the appellant is the holder of the bill of exchange for full value and as such it cannot reverse the credit entry made in favour of the 1st respondent when the drawee of the bill of exchange dishonoured the same, the 9th respondent relied upon the decision in Dena Bank v. M.P.N.T. Corpn. Ltd. (AIR 1982 M.P. 85) wherein a Division Bench of the Madhya Pradesh High Court has observed as follows: "From this evidence, it is amply clear that the defendant Bank was not only a collecting agent of the documents presented to it by the plaintiff company but the documents on presentation were discounted by the Bank and the value was credited to the account of the plaintiff immediately without waiting for its collection from the drawee. These facts and circumstances clearly make out a case that the Bank was purchaser of title documents and it was holder thereof for full value and therefore it was the responsibility of the Bank itself to collect the amount of the bills from the drawee to reimburse itself and if the drawee refused or the documents were dishonoured or the drawee could not be found to present the documents back to the drawer and collect the value thereof either in cash or by reversing the credit entry by debiting the same amount in the plaintiff's account and not otherwise". 21. In this case even though the appellant-bank on receipt of the documents of title and the bill of exchange credited the amount to the account of the 1st respondent before the actual collection of the bill of exchange by presenting to the drawee, on the refusal by the foreign buyer to accept the goods and honour the bill of exchange, a debit entry was made to the account of the 1st respondent and on realisation of US $ 50,000/- from the foreign buyer it was credited to the account of the 1st respondent, Exts. A15 and A16 letters written by the 9th respondent go to show that the 9th respondent is vitally interested in the realisation of the amount as per the bill of exchange by seeking item for realisation of the balance amount of US $ 12,600/- and seeking remittance certificate in respect of US $ 50,000/- paid. It is also pertinent to note that no evidence is adduced by the respondents, especially the 9th respondent with regard to the contentions raised by them regarding presentation, endorsement, discounting and collection of the amounts as per the bill of exchange in this case. It is also pertinent to note that in the above decision relied upon by the 9th respondent it is clearly stated that the question whether the bill is taken from a customer for collection or as security or discounted for him is a question of fact which is to be established in evidence and the Division Bench of the Madhya Pradesh High Court after considering the evidence on record in that case made the observations noted above. 22. 22. In this case in the absence of any evidence adduced by the 9th respondent regarding the nature of the transaction whether the documents were presented to the appellant for collection or as security or for discounting etc., the 9th respondent cannot take shelter under the above judgment of the Madhya Pradesh High Court. On the other hand, Ext. A11 bill of exchange with direction to pay the amount to the appellant drawn by the 9th respondent along with the bill of lading endorsed by the 1st respondent to the appellant and the invoice prima facie go to show that there was no direction to collect and credit or to discount the bill of exchange or to keep the same as security for payment. 23. As against the contention of the 9th respondent that there is no privity of contract or privity of consideration between the appellant and the 9th respondent in this case, the appellant has contended that S.30 of the Negotiable Instruments Act casts privity of contract between the appellant and the 9th respondent under law. S.30 of the Negotiable Instruments Act lays down that in case of dishonour of the bill of exchange by the drawee, the drawer is liable to compensate the holder. Even if Ext. A11 bill of exchange is drawn by the 9th respondent in favour of the appellant as surety for the 1st respondent - firm the consignor of the goods, the 9th respondent is liable under the bill of exchange since the liability of the surety is co-extensive and co-terminus with the principal debtor. The contention of the 9th respondent that they are not liable on the bill of exchange since the consideration for the bill of exchange is the price of goods consigned in this case, is not tenable since there is absolutely no evidence on record adduced by them to substantiate that contention. 24. It is also clear from Exts. A15 and A16 letters sent by the 9th respondent to the appellant that the 9th respondent was conscious about their liability as per the bill of exchange and requested for extension of time for realisation of the balance amount and issuance of Foreign Inward Remittance Certificate in respect of the amount realised out of the amount due under the bill of exchange. Even though the 9th respondent contended that Exts. Even though the 9th respondent contended that Exts. A15 and A16 do not constitute any admission of liability, a clear reading of Exts. A15 and 16 along with the attendant circumstances clearly establish that Exts. A15 and A16 constitute admission of liability by the 9th respondent. 25. The contention of the 9th respondent that the transaction between the appellant and the 1st respondent in this case was an advance against clean bill and the consideration for the bill of exchange was the price of goods and since the documentation in this case was not perfect as there was no endorsement of the bill of lading to the 1st respondent and by the 1st respondent to the appellant, the appellant-Bank turned to the 1st respondent alone for realisation of the amount by sending registered notice to the 1st respondent-firm and respondents 2 to 8, its partners and guarantors. The above contention is not sustainable since the appellant has based their claim against the 9th respondent on the bill of exchange drawn by the 9th respondent alone and the liability of the drawer of the bill of exchange to compensate the holder under S.30 of the Negotiable Instruments Act. 26. The 9th respondent has contended that the drawer of the bill of exchange cannot be held liable for the dishonour of the same by the drawee unless and until due notice of dishonour has been given to the drawer. Therefore, they have contended that as it is the admitted case that no notice of dishonour of Ext. A11 bill of exchange is given to them, they cannot be held liable to pay the amount since the bill of exchange is dishonoured by the foreign buyer. 27. S.30 of the Negotiable Instruments Act reads as follows: "30. Liability of drawer:- 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". 28. It is well settled law that notice of dishonour to the drawer is mandatory and unless and until notice is given the holder has no cause of action against the drawer of the cheque or bill of exchange under S.30 of the Negotiable Instruments Act unless and until notice to drawer is exempted under S.98 of the Act. 28. It is well settled law that notice of dishonour to the drawer is mandatory and unless and until notice is given the holder has no cause of action against the drawer of the cheque or bill of exchange under S.30 of the Negotiable Instruments Act unless and until notice to drawer is exempted under S.98 of the Act. Therefore, the 9th respondent has contended that since there is no plea of any notice of dishonour given to them and no exemption is claimed by the appellant in the plaint from giving notice of dishonour, the above claim is not sustainable against them. 29. But the appellant has contended that since the 9th respondent was aware of the dishonour of the bill of exchange and they have not suffered any damage for want of notice in this case, no notice of dishonour to them is necessary as provided under clause (c) of S.98 of the N.I. Act. S.93 of the Negotiable Instruments Act stipulates that the holder must give notice that the instrument has been dishonoured, to all parties the holder seeks to make severally liable thereon. In this case the appellant has given notice of dishonour only to the 1st respondent. The liability of the drawer of the cheque under S.30 of the N.I. Act arises only on notice of dishonour being given to him unless and until the notice is exempted under S.98 of the N.I. Act. S.94 of the N.I. Act provides the mode in which notice may be given. S.98 of the N.I. Act provides when notice of dishonour is unnecessary. 30. The appellant in this case relies upon clause (c) of S.98 of the N.I. Act to contend that no notice of dishonour is necessary to the 9th respondent. Clause (c) of S.98 of the N.I. Act reads as follows: Status Approve Pending "98. When notice of dishonour is unnecessary:- No notice of dishonour is necessary? (a) (b) (c) when the party charged could not suffer damage for want of notice; xxxxxxxxxxxxx" 31. The 9th respondent has vehemently contended that since notice of dishonour to the drawer of the bill of exchange is mandatory, even if the contention of the appellant that the 9th respondent had knowledge of dishonour is accepted, mere knowledge of dishonour is insufficient to fasten the liability upon the drawer as provided under S.30 of the N.I. Act. The 9th respondent has vehemently contended that since notice of dishonour to the drawer of the bill of exchange is mandatory, even if the contention of the appellant that the 9th respondent had knowledge of dishonour is accepted, mere knowledge of dishonour is insufficient to fasten the liability upon the drawer as provided under S.30 of the N.I. Act. They have further contended that the exemption relied upon by the appellant should be pleaded and proved by the appellant in the suit. Therefore, according to them, in the absence of a specific notice of dishonour to the 9th respondent and the appellant pleading and proving exemption under clause (c) of S.98 of the N.I. Act, the appellant is not entitled to claim the amount due as per the bill of exchange from them by invoking S.30 of the N.I. Act. 32. It is clear from the facts and circumstances of the case, the contentions raised by the appellant and the 9th respondent in the suit as well as the evidence on record that the 9th respondent was aware of the dishonour of the bill of exchange by the foreign buyer and the subsequent part payment thereof and they sought extension of further time for payment of the balance amount and certificate for the amount paid from the appellant as evidenced by Exts. A15 and A16. Therefore, in view of the fact that the 9th respondent was well aware of the dishonour of the bill of exchange and they have acted on the basis of the dishonour of the bill of exchange, the failure to issue the statutory notice as contemplated under S.30 of the N.I. Act will not cause any prejudice to the 9th respondent in this case. Therefore, the contention of the 9th respondent that they are not liable for the amount due under the bill of exchange since no notice of dishonour as provided under S.30 of the N.I. Act is given to them, is not sustainable and the appellant is entitled to claim exemption of notice to the 9th respondent under clause (c) of S.98 of the N.I. Act. 33. The 9th respondent has contended that by the endorsement of the bill of lading by the 1st respondent to the appellant the title in the goods passed to the appellant-bank and therefore, the appellant is only a purchaser of the bill of exchange for value. 33. The 9th respondent has contended that by the endorsement of the bill of lading by the 1st respondent to the appellant the title in the goods passed to the appellant-bank and therefore, the appellant is only a purchaser of the bill of exchange for value. They have also contended that the fact that the appellant has purchased the bill of exchange for value of the goods consigned is evident from the fact that the appellant has discounted and credited the amount to the account of the 1st respondent. Therefore, it is contended that the appellant-bank who is the purchaser is liable to collect the amount from the drawee and not the drawer. 34. It is true that under certain circumstances by the endorsement of the bill of lading the title in the goods passed to the endorsee. But it is not so under all circumstances. The consignor of the goods may endorse the bill of lading to the bank for collection of the proceeds from the foreign buyer and to credit the amount in favour of the seller or as security or for discounting. All these facts will depend upon the contract or agreement or arrangement between the consignor and the bank. In this case the appellant has produced Ext. A14 agreement of hypothecation of the goods executed by the 1st respondent in favour of the appellant. Ext. A14 creates a lien on the goods consigned in favour of the appellant-bank with the right to sell the goods and realise the money. Absolutely no evidence is adduced by the 9th respondent to show that the consideration for the bill of exchange is the price of the goods consigned. Under the circumstances the contention of the 9th respondent that the appellant is the purchaser of the bill of exchange for the value of the goods consigned cannot be accepted in the absence of evidence adduced by the 9th respondent to establish that there was such an agreement. On the other hand, Ext. A14 would go to show that the appellant bank is entitled to a lien on the consigned goods and not its ownership. Under the circumstances the above contention raised by the 9th respondent is also not tenable. 35. On the other hand, Ext. A14 would go to show that the appellant bank is entitled to a lien on the consigned goods and not its ownership. Under the circumstances the above contention raised by the 9th respondent is also not tenable. 35. From the foregoing discussions it is clear that the appellant is entitled to a decree against the 9th respondent also for the balance amount of US $ 12,600/- due as per Ext. A11 bill of exchange and the lower court was in manifest error in not decreeing the suit jointly against the 9th respondent also in favour of the appellant. 36. Even though no interest is specified in Ext. A11 bill of exchange, S.80 of the Negotiable Instruments Act provides that when no rate of interest is specified in the instrument, the interest shall be calculated at the rate of 18% per annum from the date on which the same was drawn by the party charged until tender or realisation of the amount thereon or until such date after the institution of a suit to recover such amount as the court directs. In this case the appellant has claimed interest only at 16.5% per annum and the same is allowed by the lower court. Therefore, the appellant is entitled to interest at 16.5% per annum for the amount due as per Ext. A11 bill of exchange from the respondents-defendants including the 9th respondent-9th defendant. Hence we allow the appeal, modify the decree and judgment passed by the lower court and decree the suit for the balance amount of Rs. 5,84,911/- with interest thereon at 16.5% per annum from the date of plaint which is disallowed by the lower court under the packing credit facility account and a joint and several decree is passed against the 9th respondent 9th defendant also for the amount decreed under the count foreign demand bill purchase facility. Considering the facts and circumstances of the case we direct the parties to bear their respective costs in this appeal.