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HIGH COURT OF CALCUTTA
K. C. DAS GUPTA, DEBABRATA MOOKHERJEE
MANIK RATAN GUIN - Appellant
Versus
PRAKASH CHANDRA - Respondent
A. F. O. D. 1937 Of 1949
Decided On : JANUARY 28, 1954
NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 64 - Interpretation of 'other parties' - Liability of drawer and acceptor in case of non-presentation of bill of exchange - Section 76(e) - Waiver of presentment - Knowledge of non-presentation - Burden of proof - Section 80 - Interest on bill of exchange - Date from which payable.
Fact of the Case:
The plaintiff, the holder of two hundis, sued the defendants, the drawees and acceptors of the hundis, for the amount due on the hundis with interest. The defendants raised several defenses, including that the transfer of the hundis was void as it was against the order of the High Court, that it amounted to fraudulent preference in favor of some of the debtors, that there was no presentation of the bills to the acceptors in accordance with the provisions of Section 64, Negotiable Instruments Act, and that no interest was payable as there was no presentation.
Finding of the Court:
The court held that the transfer of the hundis was not void as it was not against the order of the High Court, that it did not amount to fraudulent preference as it was not a payment but an adjustment of dues, that the drawer was not liable as there was no presentation of the bill and he did not have knowledge of the non-presentation, and that interest was payable from the date of maturity of the hundis.
Issues: 1. Whether the transfer of the hundis was void as it was against the order of the High Court? 2. Whether the transfer amounted to fraudulent preference in favor of some of the debtors? 3. Whether there was no presentation of the bills to the acceptors in accordance with the provisions of Section 64, Negotiable Instruments Act? 4. Whether the drawer was liable as there was no presentation of the bill and he did not have knowledge of the non-presentation? 5. Whether interest was payable from the date of maturity of the hundis?
Ratio Decidendi: 1. The court interpreted the order of the High Court as allowing the company to satisfy the claims of its creditors by adjustment against dues of the company from its debtors without any limitation. 2. The court held that the transfer of the hundis did not amount to fraudulent preference as it was not a payment but an adjustment of dues, and that Section 231, Companies Act, which deals with fraudulent preferences, applies only to payments and not to adjustments of dues. 3. The court interpreted the words 'other parties' in Section 64, Negotiable Instruments Act, as meaning parties other than the maker of a promissory note or the acceptor of a bill, and held that the drawer of a bill of exchange is not liable if the bill is not presented for payment. 4. The court held that the drawer was not liable as there was no presentation of the bill and he did not have knowledge of the non-presentation, and that the burden of proof of knowledge of non-presentation is on the one who relies upon a waiver. 5. The court held that interest was payable from the date of maturity of the hundis as the amount became payable at once on the expiry of the period of time specified in the instrument.
Final Decision: The court allowed Appeal No. 137 of 1949 and set aside the judgment and decree passed by the learned Subordinate Judge as against Manick Ratan Guin, and dismissed the suit against him. The court affirmed the decree passed against the other appellant subject to the directions as regards installments mentioned above. The court dismissed Appeal No. 136 of 1949 with costs, subject to the directions as regards installments mentioned above. The court dismissed the cross-objections without any order as to costs.
( 1 ) THESE two appeals are by the defendants in two suits against whom the claim of the holder of two hundis in whose favour they had been endorsed by the payee of hundi, the Midnapur Branch of the Bank of Calcutta, for the amount due on the hundi with interest had been allowed.
( 2 ) IN Appeal No. 136 of 1949 the appellants Manick Ratan Guin and Nakul Ratan Guin were the drawees, of the hundi, the drawer being Krishna Charan Guin. They were accepted by Manick Ratan and Nakul Ratan on the very date the hundi was drawn and it was transferred by the payee hank on 18-4-1947. In Appeal No. 137 of 1949 Manick Ratan is the drawer of the hundi while the other appellant Prosanta Kumar Sen Gupta is the drawee who accepted it on the same date. This also was transferred by the Bank on 24-5-1947. The transfer in both the cases was by wav of adjustment against dues of the transferees against the Bank on account of several deposits. Of the several defences taken, we are concerned with only a few now. The first of these is that the transfer was altogether void as it was against the order of the High Court in proceedings before the Original Side of the Court. The second defence is that in any case this amounted to fraudulent preference in favour of some of the debtors and so was invalid under Section 231, Companies Act. Thirdly, it was contended that there having been no presentation of the bills to the acceptors in accordance with the provisions of Section 64, Negotiable Instruments Act, the consequence of the provision in that section is that neither the drawer nor the acceptor is liable. Lastly, it was contended that no interest is payable as there was no presentation.
( 3 ) IT has been contended before us on behalf of the appellant that this Court by its order dated 27-3-1947 directed the Bank of Calcutta not to pay off more than 60 per cent of the due of any creditor, whether by way of adjustment or otherwise. The relevant portion of the order is in these words:"it is ordered that the two applications under Sections 277n and 162, Companies Act, 1913-36 be and the same are hereby adjourned for three months from the date hereof and it is further ordered that the interim moratorium already be and same is hereby extended by three, months from the date hereof on the same terms and conditions as mentioned in the said orders dated the twenty-sixth day of November one thousand nine hundred and forty-six except that liberty is given to the said Company to make payments to its creditors upto 60 per cent, of their, respective claims as appearing in the books of the said Company on the said twenty-sixth day of November one thousand and nine hundred and forty-six within the said period of three months without any remuneration as to the maximum amount of Rupees five thousand as formerly provided in the said order dated 26th day of November one thousand nine hundred and forty six and it is further ordered that the said Company do carry out the directions given by the Registrar of Joint Stock Companies Bengal in this letter dated the 14th day of March instant which is annexed to the said affidavit and it is further ordered that the said Company be at liberty to make such payments to its creditors or to satisfy their respective claims by adjustment against dues of the said Company from its debtors or otherwise. "
( 4 ) IT has been contended on behalf of the appellant that the result of his order was that payments either in cash or by way of adjustment could be made only upto 60 per cent of a creditor's dues. In my judgment, this is not a correct interpretation of the order. It seems clear to me that a distinction was being made in the order between payments of dues of creditors and adjustment of dues of creditors and while as regards the payment of the claims of creditors it was being allowed upto only 60 per cent, satisfaction of claims by adjustment against dues of the Company from its debtors was being permitted without any lim
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