Krishnappa Chetty V. Carpen Chetty

Present: Lascelles C.J. and Wood Renton J.

KRISHNAPPA CHETTY v. CARPEN CHETTY.

93-D. C. Kandy, 21,155.

Post-dated cheque-Not invalid-Stamp Ordinance, No. 22 of 1909, s. 64.

A cheque is not invalid by reason of its being post-dated.

An endorsee of a cheque, who knew at the time of the endorsement that the cheque was post-dated, may nevertheless maintain an action on the note.

APPEAL from a judgment of the District Judge of Kandy (F. B. Dias, Esq.). The facts are set out in the judgment.

H. A. Jayewardene (with him Balasingham), for the defendant-appellant.-A cheque is a bill" of exchange (see section 73 of the Bills of Exchange Act). The law imposes a penalty on any one who issues a post-dated cheque (see section 64 of " The Stamp Ordinance, 1909 "). Where the law imposes a penalty the act is illegal. See Peris v. Fernando, 1 Melliss v. The Shirley Local Board, 2 Wells v. Higgins,3 Annamalai v. Perera,4 and Gye v. Fallout.5 The cheque in this case is post-dated and therefore illegal. It cannot be sued upon. The plaintiff knew when he took the cheque that it was a post-dated cheque.

Under the Stamp Ordinance of 1861 it was held that the holder of a post-dated cheque who took it with knowledge that it was post dated could not sue on the cheque. Chartered Mercantile Bank v. Silva & Co.6 As the term " cheque " is included in the term " bill of exchange, " that judgment is applicable to section 64 of the present Ordinance.

A post-dated cheque is not, really speaking, a cheque, but a bill of exchange, as it is not payable on demand; a cheque must be payable on demand. A post-dated cheque, being a bill of exchange payable on a certain day, should be stamped as a bill of exchange.

1 (1905) 1 Bat. 199.                                                 4 (1902) 6 N. L. R. 108, at page 111.

2 (1885) 16 Q. B. D. 461.                                      5 (1813) 14 Taunt. 881.

3 (1911) 14 N. L. R. 131.                                       6 Ram. (1863-88) 199.

The intention to defraud the revenue, which is necessary to establish the offence under section 64, is inferred from the fact that the cheque is post-dated. The defrauding of the revenue is the direct and inevitable consequence of the act of issuing a post-dated cheque, and the person who issues a post-dated cheque must be presumed to have intended to defraud the revenue.

Samarawickreme (with him Cooray), for respondent.-Section 64 of the Stamp Ordinance does not refer to cheques. The word "cheque" has been purposely omitted. The term " bill of exchange " is used in two senses in the Ordinance: the wider including notes and cheques, and the narrower mercantile usage. In section 64 it is used in the narrower sense.

A cheque has not to be stamped as a bill of exchange because it happens to be postponed; a document has to be stamped according to its character on the face of the instrument (Bull v. 0'Sullivan1). Even if section 64 applied to cheques, the party may be liable to the penalty prescribed, but the cheque would not be invalid. The mere fact that an act is penalized does not necessarily invalidate a contract.

The Chartered Mercantile Bank v. Silva & Co. 2 is no authority now, as the section which was interpreted in that case is not identical with the present section.

H. A. Jayewardene, in reply.-As the cheque was not payable on demand when it was drawn, it was not, strictly speaking, a cheque. The case in Ramanathan's Reports is applicable, if the cheque is to be treated as a bill of exchange.

[Lascelles C.J.-Is not the English law applicable to this case? Under the Bills of Exchange Act a cheque is not invalid by reason of its being post-dated.] The Bills of Exchange Act, though applicable to Ceylon, cannot over-ride our Stamp Ordinance. [Lascelles C.J.- There is nothing in our Stamp Ordinance inconsistent with the Bills of Exchange Act. The Ordinance does not say that a post dated cheque or bill is

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