Judgment

VENKATARAMA AYYARJ, : The suit out of which this appeal arises, was instituted by the appellant on a hundi for Rs. 10,000 dated 4-12-1947, drawn in his favour by Haji Jethabhai Gokul and Co. of Basra on the respondent, who are merchants and commission agents in Bombay. The hundi was sent by registered post to the appellant in Bombay, and was actually received by one Parikh Vrajlal Narandas, who presented it to the respondents on 10-12-1947, and received payment therefor.

It may be mentioned that the appellant had been doing business in forward contracts through Vrajlal as his commission agent, and was actually residing at his Pedhi. On 12-1-1948the appellant sent a notice to the respondents repudiating the authority of Vrajlal to act for him and demanding the return of hundi, to which they sent a reply on 10-2-1948 denying their liability and stating that Vrajlal was the agent of the appellant, and that the amount was paid to him bona fide on his representation that he was authorised to receive the payment.

2. On 9-12-1950 the appellant substituted the present suit in the Court of the City Civil Judge, Bombay. In the plaint he merely alleged that the payment to Vrajlal was not binding on him, and that "The defendant-drawee" remained liable on the hundi. The defendants, apart from relying on the authority of Vrajlal to grant discharge, also pleaded that the plaint did not disclose a cause of action against them, as there was no averment therein that the hundi had been accepted by them.

3. As the trial the appellant gave evidence that Vrajlal had received the registered covered containing the hundi in his absence, and collected the amount due thereunder without his knowledge or authority. The learned City Civil Judge accepted this evidence, and held that Vrajlal had not been authorised to receive the amount of the Hundi. He also held that the plea of discharge put forward by the respondents implied that the hundi had been accepted by them. In the result, he decreed the suit.

4. 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 that the appellant would have a right of action on the hundi against the respondents only if it had been accepted by them, and that as the plaint did not allege that it had been accepted by them, there was no cause of action against them. They accordingly allowed the appeal, and dismissed the suit. The plaintiff prefers this appeal on special leave granted under Article 136 of the Constitution.

5. There has been no serious attempt before us to challenge the correctness of the legal position on which the judgment of the High Court is based, that the drawee of a negotiable instrument is not liable on it to the payee, unless he has accepted it. On the provisions of the Negotiable Instrument Act, no other conclusion is possible. Chapter III of that Act defines, the obligations of parties to negotiable instruments. Section 32 provides that,

"In the absence of a contract to the contrary, the maker of a promissory note and the acceptor before maturity of a bill of exchange are bound to pay the amount thereof at maturity according to the apparent tenor of the note or acceptance respectively, and the acceptor of a bill of exchange at or after maturity is bound to pay the amount thereof to the holder on demand,"

Under this section, the liability of the drawee arises only when he accepts the bill. There is no provisions in the Act that the drawee is as such liable on the instrument, the only exception being under section 31 in the case of a drawee of a cheque having sufficient funds of the customer in his hands; and even then the liability is only towards the drawer and not the payee. This is elementary law, and was laid down by West, J. in --- Khandas Narandas v. Dahiabhai , 3 Bom 182 at p. 183 (A) in the following terms :

" Where there is no acceptance, no cause of action can have arisen to the payee against the drawee."

6. Nor is the