Paternott V. Monimpex Hungarian Foreign Trading Co.

1956 Present: Gunasekara, J., and Sinnetamby, J.

H. S. PATERNOTT et al., Appellants, and MONIMPEX HUNGARIAN FOREIGN
TRADING CO., Respondent

S. C. 542-D. C. Colombo, 17,976/8

Bill of exchange-Restrictive indorsement-Right of drawer to sue on bill thereafter- Bills of Exchange Ordinance, ss. 21 (3), 31 (1), 35 (2).

When a bill of exchange restrictively indorsed for collection is dishonoured on presentation for payment on maturity, the drawer to whom it is returned bearing an indorsement in blank by the indorsee is not entitled to sue upon it.

APPEAL from a judgment of the District Court, Colombo.

S. Sharvananda, for the defendants-appellants.

F. R. Dias, for the plaintiff-respondent.

Cur. adv. vult.

July 30, 1956. SINNETAMBY, J.-

At the conclusion of the arguments in this case we allowed the appeal with costs in both Courts and stated we shall give our reasons later. I now proceed to record my reasons for the decision.

The second and third defendants were sued in this case on a. Bill of Exchange drawn on them by the plaintiff company and made-payable to the National Bank of Hungary. The Bill which was made payable thirty days after sight was accepted by the defendants but was dishonoured when presented for payment on maturity by Grindlays Bank to whom the Bill had been endorsed. Both the Maker and the Payee are foreign companies and the Acceptor and Indorsee resident in Ceylon.

The Bill itself shows, and there is no contest on this point, that the Payee, viz., The National Bank of Hungary, restrictively endorsed it for collection to Grindlays Bank. The endorsement reads :

" For us to Grindlays Bank, Colombo. "

and is signed by the National Bank of Hungary. The Plaintiff in his plaint accounted for his possession of the Bill by stating that it was

returned to him. The Bill bears an endorsement in blank by Grindlays Bank. Having regard to these indorsements and to the presumption in regard to delivery created by Section 21 (3) of the Bills of Exchange Ordinance the only reasonable inference is that Grindlays Bank indorsed the Bill in blank and delivered it to the plaintiff company.

The question that immediately arises for consideration is whether the indorsement and delivery by Grindlays Bank to the plaintiff company confers on the latter any title on the Bill to enable them to sue upon it. Obviously it does not. The National Bank of Hungary by its indorsement authorised Grindlays Bank only to receive payment on their behalf. It is a restrictive indorsement and Section 35 (2) declares that such an indorsement gives the indorsee no power to transfer his rights.

Issues 6, 7 and 8 framed at the Trial dealt with this aspect of the matter and are as follows :-

Issue 6.-Did the plaintiffs by Bill of Exchange marked A request the defendants at 30 days after sight to pay to the order of the National Bank of Hungary, Board of Exchange, a sum of £12 2s. ed.

Issue 7.-Was the said Bill of Exchange endorsed and delivered by the National Bank of Hungary to Grindlays Bank Limited, Colombo, for collection.

Issue 8.-If issues 6 and 7 are answered in the affirmative, has the plaintiff any legal right or title to maintain an action on the said bill of exchange.

The learned District Judge answered issue 6 in the negative. Why he did so it is not possible to understand. The submissions on behalf of both plaintiff and defendant and the terms of the Bill itself required this issue to be answered in the affirmative. Issue 7 he answered in the affirmative but proceeded to answer issue 8 also in the affirmative. Presumably the learned Judge answered this issue in this way because of the view he took and expressed in regard to the common law rights of a Principal, who has employed an Agent, to sue in his own name. Obviously the learned Judge has misdirected himself on this question. We are here not concerned with common law rights but with

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