The giving and taking of a negotiable security operates as conditional payment unless agreed otherwise, and notice of dishonour should inform the party of their liability.

1. This is an action for the recovery of the sum of Rs. 5, 421-14-10, being the balance alleged to be due on accounts for goods sold and sums lent from time to time, by the plaintiff to the 1st defendant. The 1st defendant admitted his liability only to the extent of Rs. 521-3-2 and objected among other items to his having been debited by the plaintiff with the several sums of Rs. 1,547-4-9, 1,500-0-0, 1,765-8-3, and 1,100-0-0, being the amounts of 4 hundis drawn by the 1st defendant in favour of the plaintiff, which were dishonoured by the drawee at Rangoon. The Subordinate Judge overruled the defendants objection, and gave a decree in favour of the plaintiff as sued for The defendants appeal against that decree and urge in support of their appeal that the plaintiff having accepted the hundis in discharge of the debt due to him, he cannot sue upon the consideration for the hundis, and that his remedy, it any, is upon the hundis Apparently, the 1st defendant contended in the Court below that the hundis had not only been accepted in discharge of the debt, but that the same were accepted as cash payment in consideration of a discount of 2 1/2 per cent, on the amount of the hundis, and that, therefore, the plaintiff had no cause of action against him either on the original debt or upon the hundis, he, the plaintiff, having taken the risk of their being dishonoured by the drawee. Upon the evidence in the case, we are clearly of opinion that the 1st defendant has entirely failed to establish that the hundis were treated and accepted as cash payment. As we understand the learned pleader for the appellants, his contention in this Court is only that the hundis were taken as absolute payment and that the plaintiff cannot therefore sue upon the original consideration. He argues that unlike a promissory note, the giving of a bill or hundi prima facie operates as absolute payment of the debt and that the onus is upon the party affirming the contrary to show that the parties intended it to operate only as a conditional payment. We think that there is no distinction in this respect between a note and a bill, and no authority has been cited to us in support of such a distinction.

2. Whether it be a note or a bill, it is a question of fact in either case, whether the parties intended the same as absolute or conditional payment, and the presumption is that the effect of giving and taking a note or bill is that the debt is conditionally paid. As stated by the Master of the Rolls in In re Romer and Haslam (1893) 2 Q.B. 296 it is perfectly well known law, which is acted upon in every form of mercantile business, that the giving of a negotiable security by a debtor to his creditor operates as a conditional payment only, and not as a satisfaction of the debt, unless the parties agree so to treat it.

3. It is next urged that the evidence in the case shows that the parties intended the hundis to operate as absolute payment of the debt, and in support of this contention reliance is chiefly placed upon the plaintiff having been allowed a discount of 2½ per cent upon the amount of the hundis in addition to interest from the date of the hundis, at the current rate prevailing in Rangoon, which it is shown was higher than the local current rate

4. The 1st defendant in his written statement expressly relied upon this circumstance in support of this contention, and on this point also cross-examined the plaintiffs 6th witness who was plaintiffs agent at that time. The witness sated that discount was allowed to cover risks in connection with the realization of the hundis and that it is allowed in every case.

5. The evidence given by the 1st defendant on this point was that for cashing Rangoon hundis the highest discount is 3/4 per cent., but that he consented to pay 2 1/2 per cent, in regard to the hundis in question, because the plaintiff was to have the risk in case Kadar Ravathan (the drawee) proved insolvent. I here was no cross-examination of the 1st