Making liable endorser of promissory not u/s 65 or us 93 of the Act.

The plaintiff is the appellant. His suit on a promissory note against the two defendants was decreed by the trial Court and in appeal the learned District Judge granted a decree against the first defendant only and dismissed the suit as against the second defendant.

The suit promissory note was for Rs.3,500 executed by the first defendant in favour of the second defendant on 2nd July, 1944, Exhibit A-1. On nth July, 1945, the second defendant indorsed the promissory note in favour of the plaintiff. The suit was instituted against both the defendants. The defence on behalf of the second defendant among others was that there was no presentment and no notice of dishonour as required under the Negotiable Instruments Act and the second defendant cannot therefore be made liable. This contention was accepted by the learned District Judge who restricted the decree as against the first defendant alone.

In so far as the plea as to want of presentment and notice of dishonour was concerned, the view taken by the lower Court is not seriously challenged. But it is contended that no presentment is necessary in this case as by virtue of the endorser ment, there is contract by the second defendant to pay notwithstanding non-presentment, and that section 76(b) of the Negotiable Instruments Act would be applicable to the case. The endorsement is in the following terms:

“Assignment made by AR.M. Meyyappa Chettiar, merchant, Dindigul, to M.M. Sundara Nadar Avergal, merchant, Dindigul, for the amount due to you on accounts by me, I am assigning to you this promissory note in Dindigul.

If the amount due on the aforesaid pronote is not realised as aforesaid I will myself be liable for the same. on the part of the second defendant to pay the amount, if the note is duly presented and a proper notice of dishonour was given.

Reliance is placed on a decision of a Bench reported in Punjab Co-operative Bank, Lahore v. Md. Yusuf1, where an endorsement in similar terms was considered. It was held that in such circumstances, no presentment was necessary. The endorsement there was as follows:

“Endorsers state, if the drawer does not pay we will pay at the request of the manager”.

This was held to import a promise to pay within the meaning of section 76(b) of the Act.

The effect of the present endorsement would be that the second defendant made himself liable to pay the amount in any event. No doubt his liability to pay the same exists if the amount is not realised as aforesaid. But if the intention was that the second defendant’s liability should be restricted to the endorsement, under the Negotiable Instruments Act in the case of dishonour by the executant, there was no deed for the additional clause as appears in the suit promissory note. There is an unconditional undertaking to pay the amount notwithstanding what might happen to the realisation or otherwise by the first defendant. It is in the nature of a guarantee to pay, but incorporated in the promissory note itself as part of the endorsement and not by a separate letter.

The case of a letter of guarantee in these terms was the subject of consideration in an early English case reported in Murray v. King2, Abbot, G.J., in his judgment observed:

“Now, in that character, if no bond had been given, it is clear they would have been liable, in case the formalities stated in the pleas had been complied with; and if the only object of the bond had been to give the plaintiff a security of a higher nature, and to make the party liable in case those formalities had been complied with, I think we should have found it so expressed in the condition and not finding that, I therefore conclude that the parties meant to engage to pay the bill at all events, as sureties for the acceptor, in case he did not pay it.”

The only difference between the above case and the facts of this case is, that in the English decision the endorsement is by a separate bond, but here, the undertaking appears in the bond itself. But that does not