B. Lentin and Mrs. Sujata Manohar, JJ.
Bank of India .... Appellants.
Versus
Laffans India Exports Private Ltd. and another .... Respondents.
Appeal No. 175 of 1986 in Suit No. 243 of 1978, decided on 25-2-1988.
Advocates appeared :
S.H. Doctor with T.R. Andhyarujina i/b. Little Co., for the appellants.
Anil Mehta with G.J. Desai i/b Panchmatia Co., for respondent No. 1.
R.A. Kapadia with D.H. Mehta i/b AMbubhai Diwanji, for respondent No. 2.

Headnote:Practice of-Payments under reserve understood in banking transaction to mean that recipient of money may not deem it as his own but must before passed to return it on demand.

       Article 34 - See, Negotiable Instruments Act, 1881, Section 21.

       NEGOTIABLE INSTRUMENTS ACT, 1881

       Section 8-Bill of exchange-Holder of-To maintain suit thereon actual possession not necessary-Where plaintiff not in possession of bill of exchange at date of suit and endorses returned it afterwards but before hearing of suit, it would not be fatal-For constituting a person a holder actual possession not essential-Person to be entitled to possession.

       The respondents contend that the appellant-Banks suit must fail because on the date when the suit was filed the appellant-Bank was not in possession of the Bills of Exchange. The Bills of Exchanges were returned to the appellant Bank by Mellon Bank international some time after the suit was filed but long prior to the hearing and final disposal of the suit. Held, that this is not a fatal defect. The appellants were entitled to possession of the Bills when the suit was filed and in fact obtained possession much before the suit was heard. Under section 3 of the Negotiable Instruments Act the bolder of a bill of exchange means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. The section goes on to say that where the bill is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction. So actual physical possession is not essential to constitute a person a bolder. He must be entitled to possession. At the date when the suit was filed the appellant. Bank was entitled to possession of the Bills of Exchange in its own right and to recover the amounts due thereon. The appellant Bank, therefore, was holder of these Bills of Exchange at all material times.

       Section 8 - Meaning of holder of bill of exchange-Endorsement of bill by A in favour of.

       Without payment it was returned by B-Necessity or re-endorsement in favour of A-Held, such re-endorsement not necessary-For purposes of suit thereon A would be holder of bill of exchange.

       Section 15-What is negotiation of bill of exchange by endorsement-?

       Held.

       What is negotiation of a bill of exchange by endorsement? Under

       Section 15 of the Negotiable Instrument Act when the holder of a negotiable instrument signs the same for the purpose of negotiation on the back or face thereof he is said to indorse the same and is called the indorser. Under Section 14 when a bill of exchange in transferred to any person so as to constitute that person the holder thereof, the instrument is said to be negotiated. In the present case, when the appellant. Bank signed the bills of Exchange on the back, it was not for the purpose of constituting Mellon Bank International as the holder of these Bills of Exchange. Mellon Bank International was the drawer of the Bills of Exchange and there could have been no question of drawer becoming the holder of the negotiable instrument. Therefore, the Bills of Exchange were not negotiated by the appellant-Bank in favour of Mellon Bank International by indorsement.

       Section 21 - Limitation Act, 1963, Article 34 - Limitation-Computation of Meaning of term 90 days sight for purpose of.

       Section 21 of the Negotiable Instruments Act, 1881 defines the expression at sight and after sight. In a bill of exchange the expression "at sight" means "on demand" while after sight means after acceptance or nothing for non-acceptance or protest for non-acceptance. The Bills of Exchange have been made payable 90 days sight. This can only mean 90 days after sight because the Bills are clearly made payable on the expiry of 90 days after a specific point of time. To read the expression 90 days at sight would convey to meaning because if the Bills of Exchange are payable at sight, there is no question of their becoming payable 90 days thereafter. Plain grammer demands that the expression should be read as 90 days after sight. According to the respondents, the Bills are payable 90 days after date. The expression used in the Bills, however, is not after date but sight. The term sight coupled with 90 days clearly indicates that payment is to be made 90 days after sight. The Bills of Exchange, therefore, become payable 90 days after acceptance of the bills. In the present case the date of acceptance in respect of 2 Bills was 25th September, 1974 while the date of acceptance in respect of 3 other Bills was 3rd October, 1974. The due dates of payment would be 90 days after these dates of acceptance viz. 24th December, 1974 and 1st January, 1975 respectively. Under Article 34 of the Limitation Act, 1963 on a Bill of Exchange payable at a fixed time after sight the period of limitation is 3 years from the date when the fixed time expires. Since the period of limitation is 3 years from the above due dates (when the fixed time of 90 days expires), suit, which is filed on 17th December, 1977, is within the period of limitation.

       Under Section 93 of the Negotiable Instruments Act when a bill of exchange is dishonoured by non-acceptance or non-payment, the holder thereof or some party thereto who remains liable thereon, must give notice that the instrument has been so dishonoured to all other parties whom the holder seeks to make liable thereon. It is not necessary that notice should be given only by the holder. It can be given by a party thereto who remains liable on the bill of exchange. The 1st respondents have received notice of dishonour from the 2nd respondent. Moreover, under Section 98, subsection (c) no notice of dishonour is necessary when the party charged could not suffer damage for want of notice.