Andhra Pradesh High Court
Kanneganti Venkata Subbayya (Died) - Appellant
Versus
P.Ranga Rao Tobacco Co - RESPONDENT
Decided On: 07-03-70
Dishonour of a negotiable instrument can occur not only due to non-payment upon presentment but also in other contingencies where payment is refused. The requirement of presentment is a privilege given to the maker, and its non-insistence amounts to a waiver. In such cases, the indorser's liability under Section 35 is still attracted.
Headnote:
NEGOTIABLE INSTRUMENTS ACT - PROMISSORY NOTE - DISHONOUR - PRESENTMENT - WAIVER - SECTION 35, 64, 76, 92 - Dishonour of a negotiable instrument can occur not only due to non-payment upon presentment but also in other contingencies where payment is refused. The requirement of presentment is a privilege given to the maker, and its non-insistence amounts to a waiver. In such cases, the indorser's liability under Section 35 is still attracted.
Fact of the Case:
An assignee of a promissory note sued the maker and the indorser for non-payment. The maker avoided receiving the registered notice demanding payment, and the indorser denied liability due to the absence of presentment of the promissory note.
Finding of the Court:
The court held that dishonour of a negotiable instrument can occur not only due to non-payment upon presentment but also in other contingencies where payment is refused. The requirement of presentment is a privilege given to the maker, and its non-insistence amounts to a waiver. In such cases, the indorser's liability under Section 35 is still attracted.
Issues: 1. Whether the endorsement of the postman on the returned registered notice is admissible in evidence without the testimony of the Postman. 2. Whether there was a dishonour of the promissory note in the absence of presentment of the promissory note by the holder to the maker.
Ratio Decidendi: 1. The endorsement of the postman on the returned registered notice is admissible in evidence without the testimony of the Postman as it is an official act presumed to have been done in the proper exercise of the official function. 2. Dishonour of a negotiable instrument can occur not only due to non-payment upon presentment but also in other contingencies where payment is refused. The requirement of presentment is a privilege given to the maker, and its non-insistence amounts to a waiver. In such cases, the indorser's liability under Section 35 is still attracted.
Final Decision: The revision petition was allowed, and a decree was passed against the indorser, who was also ordered to pay the costs in the court below.
( 1 ) THIS revision petition arises out of a suit brought by an assignee of a promissory note. The defendants 2 and 3 were carrying on business in partnership in the name and style of "sri Ranga Rao Tobacco Co. " The partnership firm is cited as the 1st defendant. The 2nd defendant incurred a liability on behalf of the partnership firm and executed a promissory note for the price payable by the firm on account of goods supplied by the 4th defendant. The promissory note in favour of the 4th defendant bears the date 27-8-1964. The note was subsequently assigned by the 4th defendant to the plaintiff for due consideration on 4-12-1964. Four days later, on 8-12-1964, the plaintiff got a registered notice issued calling upon the maker of the promissory note to pay the amount due thereon. Thereupon, the plaintiff, gave notice of dishonour to the 4th defendant as per Ex. B-5 dated 18-12-1964. Nearly four months later, the 4th defendant replied to the notice under Ex. B-6 repudiating his liability. Upon this, the suit followed.
( 2 ) THE additional Subordinate Judge, Guntur, granted a decree against the defendants 1 to 3 i. e. , the firm and the partners (the makers of the promissory note), but declined to grant a decree against the assignor. The plaintiff has preferred this revision petition challenging the correctness of the dismissal of the claim against the 4th defendant.
( 3 ) THE Subordinate Judge was the opinion that the avoidance of the receipt of the registered notice by the maker of the promissory note is not tantamount to a dishonour of the negotiable instrument by the non-payment. Accordingly, the lower Court came to the conclusion that the 4th defendant is not liable.
( 4 ) TWO questions have been formulated in the course of the argument in this revisions petition. The first point on which the argument turned, is whether the endorsement of the postman on Ex. A-4. the returned registered notice is admissible in evidence in the absence of the testimony of the Postman. The contention that is urged on behalf of the respondent is that there is no proof of the refusal of the registered notice by the addressee. There is clear authority to the effect that, notwithstanding the absence of the evidence of the Postman. the endorsement made by him is admissible in evidence. The authority in Bapayya v. Venkataratnam, AIR 1953 Mad 884, is clear. It lays down unequivocally that the admissibility of the endorsement of refusal made by the postman does not depend upon the oral testimony of the person making the endorsement. It is in the discharge of his official duties that the Postman makes the endorsement of refusal. And, an act done in an official capacity is presumed to have been done in the proper exercise of the official function. The presumption consequently is that it is a valid act. It is therefore, incumbent on the person call in gin question the effectiveness of the official act to make out the plea affirmatively. In the case referred to above, the question arose with reference to a notice under Section 106. Transfer of Property Act. It was held that the statutory obligation as to notice was duly complied with by the production of the registered notice bearing the endorsement of the Postman about the refusal of the addressee to receive it. I am of opinion that the endorsement on Ex. A-4 is sufficient to prove that a demand for the payment of the money due under the promissory note was made and that it was not met.
( 5 ) THE second point debated before me was, whether it can be said that there was a dishonour of the promissory note inasmuch a there was no presentment of the promissory note by the holder to the maker of the promissory note. Learned Counsel for the respondent relied upon Section 92 of the Negotiable Instruments Act, which reads as follows:---"a promissory note, bill of exchange or cheque is said to be dishonoured by non-payment when the maker of the note, acceptor of the bill or drawee of the cheque