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IN THE HIGH COURT OF BOMBAY
(NAGPUR BENCH)
Kharche S.T., J.
Rambilas Dinaram Shivlal another .... Appellants.
Versus
Shantadevi Sitaram Agrawal others.... Respondents.
Second Appeal Nos. 71 224 of 1988, decided on 19-8-2003.
Advocates appeared :
K.R. Lambat, in S.A. No. 71, for appellant S.A. No. 224/1988, for respondent No. 1.
D.C. Daga, in S.A. No. 71/1988, for respondent Nos. 1 (a to f) in S.A. No. 224/1998, for appellant.
S.C. Mehadia, in S.A. Nos. 71 224/1988, for respondent Nos. 2 3.
On close scrutiny it would emerge that the Appellate Court has considered the provisions of law and has arrived at a finding that, the plaintiff would be entitled to recover the amount with interest @ 6% p.a. and this finding cannot be said to be not based on appreciation of evidence. There is no error of law in the observations of the Appellate Court, so far as this point of granting interest @ 6% p.a. is concerned, and therefore, no substantial question of law is involved in second appeal which deserves dismissal and is hereby dismissed with no costs
Negotiable Instruments Act, 1881 - Section 118 - Endorsed cheque, holder is lawful owner. - Under Section 118 of the Act, whenever a negotiable instrument is endorsed in favour of third person unless contrary is proved. There is presumption that endorsee is the holder in due course and lawful owner.
Civil Procedure Code, 1908- Section 100 - Second appeal - Substantial question of law - Money lending transaction - Cheque transac- tion - Point not raised before Courts below - Cannot be permitted to be raised for first time in second appeal. - Point of money lending transaction has not been raised in the trial Court or before the Appellate Court. In that view of the matter, it is obvious that the said point cannot be allowed to be agitated for the first time in this second appeal.
Contract Act, 1872 - Section 8 - Endorsement of a negotiable instrument. - When a negotiable instrument is endorsed favouring third party, then unless contrary is proved, there is presumption that it is endorsed for consideration and endorsee is the holder in due course and a lawful owner.
Negotiable Instruments Act, 1881 - Sections 13, 15 and 27 - Lia- bility on a negotiable instrument. - As per Sections 15 and 27 of the Act a cheque is negotiable instrument and it can be transferred by negotiation to any person. Defendant 3 obviously acted as agent of defendant 2 and endorsed it validly in favour of plaintiff, hence contention is liable to be reject
Negotiable Instruments Act, 1881 - Sections 79, 80 and 138 - Dis- honour of cheque - Grant of interest - No rate is specified in instrument - Provisions of Section 79 of Act not attracted - Provisions of Section 80 attracted - Rate of interest on amount due shall be calculated at rate of 6% p.a. from time that he receives notices of dishonour. - Section 79 of the Negotiable Instruments Act, 1881, (hereinafter referred to as N.I. Act, for short) lays down that when interest at a specified rate is expressly made payable, then interest shall be calculated at the rate specified. In the present case such rate of interest was not specified in the instruments i.e. Cheque (Exh. 41). So provisions of Section 79 are not attracted and therefore the Appellate Court also considered the provisions of Section 80 of the N.I. Act. Section 80 of the N.I. Act, deals with the cases of grant of interest when no rate is specified in the
instrument, then the rate on the amount due shall be calculated at the rate of 6% per annum from the date at which the sum ought to have been paid by the party charged till realization of the amount due or until such date after the institution of a suit to recover such amount as the Court directs. The explanation of the section lays down that when a party charged is the endorser of the instrument dishonoured by non-payment he is liable to pay interest only from the time that he receives notices of the dishonour
2. The plaintiff is a businessman carrying the business of bankers and brokers and he accepts the cheques from businessman and pays them in cash. The defendant Nos. 1 and 2 are the businessmen and the defendant No. 3 is a munim to defendant No. 2. On 9th November, 1978 the defendant No. 3 brought cheque of Rs. 4510/- issued by the defendant No. 1 in favour of defendant No. 2 and obtained the amount of Rs. 4510/- by endorsing the cheque on its back in favour of the plaintiff. The defendant No. 3 used to encash the cheque in this way previously also. This cheque was presented on 9-11-1978, by the plaintiff, but it was returned with an endorsement "refer to drawer". The fact of dishonour of cheque was informed by the plaintiff to the defendant Nos. 1 and 2, and on their request it was again presented to the bank on 24-3-1979, but it was again returned for the same reason. The defendant No. 3 allowed the commission of Rs. 2.30 to the plaintiff on the date of accepting the payment, but the plaintiff did not receive the payment of the said cheque together with interest inspite of notice dated 19-10-1981 served on the defendant, and ultimately the plaintiff was compelled to file suit for recovery of amount of Rs. 6,995/- with interest and cost, together with notice charges.
3. The defendant combated the claim of the plaintiff by filing written statement. However, the defendant No. 1 admitted that cheque for Rs. 4,510/- was issued by him in favour of the defendant No. 2 and it was endorsed by the defendant No. 3 in favour of the plaintiff. He further contended that he never assured the plaintiff regarding payment of the cheque. He contended that there is no privity of contract between him and the plaintiff, and therefore, he is not responsible for payment to the plaintiff. The defendant No. 1 further contended that the cheque was issued against the price of the delivery of some goods from the defendant No. 2, and on failure by the defendant of making delivery of the goods the cheque was not accepted, and it was dishonoured.
4. The defendant No. 2 did not appear in the trial, and the suit proceeded ex parte against him.
5. The defendant No. 3 admitted that he had carried the cheque to the plaintiff and endorsed it for defendant No. 2 in favour of the plaintiff, and contended that he is personally not liable to pay the amount for the endorsement put by him on the reverse of the cheque, negotiating the cheque in favour of the plaintiff.
6. The trial Court on appreciation of the evidence adduced by both the parties, had decreed the suit and directed the defendant Nos. 1 and 2 to pay Rs. 6995/- with interest at the rate of 18% p.a. to the plaintiff and dismissed the suit against defendant No. 3. The Appellate Court found that the rate of interest for which the decree has been granted directing the defendant Nos. 1 and 2 to pay interest @ 18% p.a. was quite exorbitant and hence the Appellate Court was of the view that the plaintiff would be entitled to recover interest @ 6% p.a. This finding has been challenged by the plaintiff in Second Appeal No. 71 of 1988.
7. Further the Appellate Court has also recorded the finding that the plaintiff was a holder in due course, on considering the various provisions of Negotiable Instrument Act and consequently granted decree in favour of the plaintiff for the amount of Rs. 4510/- with interest @ 6% p.a. by allowing the appeal partly. This finding has been challenged by the defendant No. 1 in Second Appeal No. 224 of 1988.
8. Mr. Lambat, the learned Counsel for the plaintiff vehemently argued that there was no reason for the Appellate Court to reduce the rate of interest @ 6%. He contended that the transaction between the parties was a commercial transaction and the parties are businessmen, and therefore, the Appellate Court ought not t
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