1956 Supreme(Raj) 40

Rajasthan High Court
Wanchoo C.J. & Modi, J.
Kanhyalal - Appellant
Versus
Ratnkumar - Respondents
Civil Regular Second Appeal Nos. 52, 53, 54, 55, 56, 57, 58, 59 and 60 of 1954 54
Decided On : February 06, 1956

Headnote:(a) Negotiable Instruments Act, sec. 15—Endorsement—Sign—Writing name at some other place than at end.(b) Negotiable Instruments Act, sec. 43—Consideration—Person arranging advance of money.(c) Arbitration Act, secs. 8 and 25—Provision applicable to arbitration without intervention of court—Court may supersede arbitration if arbitrator declines.(d) Negotiable Instruments Act, sec. 61—Provisions as to presentment and notice of dishonour—Applicability to places where Act not in force.(e) Negotiable Instruments Act, sec. 76-—Drawer could not possibly suffer any damage—Drawer and drawee same.(f) Negotiable Instruments Act, sec. 35—Notice of dishonour—Act not in force— Notice essential.(g)—Civil P.C., O.6, R. 4—Particulars—Suit based on negotiable instrument—Particulars as to notice of dishonour.

       It is not necessary that the signature in order to be binding should be at the foot of an endorsement. It may be in the beginning or middle of it. The question always is, whether the party, not having signed it regularly at the foot, yet meant to be bound by it as it stood, or whether it was left, so unsigned because he refused to complete it. There is not the slightest suggestion in the present case that K. had refused to put own his signature at the foot of the endorsement because he wanted to leave it unfinished for any particular reason. On the other hand, their is no doubt whatsoever on the evidence led in this case as well as from the conduct of K. that he had put the very endorsements on the hundies to authenticate their sale in favour of the plaintiff. In such a case what matters is the substance and not the outward form of the wording, and so long as the debtors name has been affixed on the document in question in such a way as to make it appear that the document is his and that he is the real author of it, it does not matter what the form of signature is nor is it necessary that the signature must appear in any particular part of the document, and it may appear in any part provided that the intention of the parties is to acknowledge the instrument to be his. (para 7)

       The defendant appellant and his father, were in need of funds and they had contacted the plaintiff for the purpose. The plaintiff, however, was not willing to provide the defendant with funds except on some kind of security and defendant Kanhyalal was the person who stood as surety. This arrangement was effectuated by Hazarilal executing certain hundies upon his own firm, Kanhyalal being the rakhia, and these hundies were then and there endorsed by Kanhyalal in the plaintiffs favour although this round about method was adopted by the parties for certain reasons which were best known to themselves. This arrangement clearly imports two things : (I) that consideration had passed from the plaintiff to the defendant Hazarilal through the instrumentality of Kanhyalal and that Kanhyalal had certainly undertaken the position of a surety or an endorser. This would also be the liability attaching to Kanhyalal in consonance with the principle underlying sec. 37 of the Negotiable Instruments Act. (Para 8)

       Sec. 8 occurs in Chapter II which deals with arbitration without interven-tion of a court, the procedure as to arbitration in suits is contained in Chapter IV and sec. 25 thereof provides that the provisions of the other chapter shall, so far as they can be made applicable, apply to arbitration under this Chapter. There is, however, a proviso to this section, which clearly states that in any of the circumstances mentioned in sec. 8 and certain other sections the court may, instead of filling up the vacancies or making the appointments, make an order superseding the arbitration and proceed with the ;suit. (Para 9)

       The burden of proving that the drawer could not possibly suffer any damage is extremely slight and is easily discharged in a case where the drawer and the drawee are one and the same person. Want of presentment in such a case obviously cannot put the drawer to any loss because he must be deemed to know that the hundi was executed and a certain date was the due date of payment thereunder and that no payment had been made at maturity. (Para 12)

       The provision as to adequacy of time for notice of dishonour are in the nature of technical provisions and a strict compliance thereof need not be called for where the Negotiable Instruments Act in terms does not come into operation. The only requirement which may be insisted upon as a matter of principle is that such notice must be given within "reasonable time" having regard to the circumstances of a particular case and the nature of the instrument involved and the usual course of dealing with respect thereto. But the point of importance is that a notice of dishonour must be given so far as the endorser is concerned, which is a matter of principle and not a mere technicality and failure to give a notice of dishonour within reasonable time must absolve the endorser from all liability to the holder. That is the principle which underlies s. 35 of the Negotiable Instruments Act and must be enforced in the case of bundles even though the Act may not, in terms, be applicable to them. This rule is in perfect accord with justice, equity and good conscience because if such a requirement were not to prevail, the endorser may come to know of the dishonour only at such time as the holder may choose to fix at his own sweet-will and pleasure and then it may be impossible for the endorser to do anything to protect his own interest as against the drawee. (Para 17)

       The plaintiff in a suit based on a negotiable instrument where he is the endorsee must state clearly in his plaint that a notice of dishonour was sent to the endorser and must give the particulars thereof or where he considers that he is exempt from giving this notice, he should allege the facts which exempt him from giving such notice. The notice may be oral or written but it is necessary that it must have been given within a reasonable time The notice must also clearly intimate that payment was demanded from the drawee but refused and that the holder holds the person notified liable on the instrument. The importance of this requirement lies in the consideration that the giving of a notice of dishonour is a part of the plaintiffs cause of action and is a condition precedent for making the endorser liable and in the absence of such a notice, his liability to the endorsee must stand extinguished. (Para 23)