Moratorium adjustment, fraudulent preference, and non-presentment rules clarified under company and negotiable instruments law.

A High Court moratorium order limiting cash payment to 60 per cent did not bar adjustment of creditors' claims against the company's debts, because the restriction applied only to payment in cash. A transfer by adjustment was not a fraudulent preference under the Companies Act, as the relevant statutory conditions and period were not satisfied. On negotiable instruments, non-presentment of a bill relieved parties other than the acceptor from liability unless a valid waiver was proved by showing knowledge of the omission and intentional relinquishment of the objection; that burden was not met. Interest on an instrument payable on a fixed date was properly allowed from maturity.

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Issues: (i) Whether the High Court moratorium order restricted adjustment of creditors' claims to 60 per cent. (ii) Whether the transfer by adjustment amounted to a fraudulent preference under the Companies Act. (iii) Whether non-presentment of the bills absolved the drawer and acceptor from liability, including the effect of waiver. (iv) Whether interest was payable from the date of maturity.

Issue (i): Whether the High Court moratorium order restricted adjustment of creditors' claims to 60 per cent.

Analysis: The order distinguished between payment of creditors' dues and satisfaction of claims by adjustment against the company's debts. The limitation of 60 per cent was confined to cash payments, while adjustment of claims against dues of the company was permitted without such limit.

Conclusion: The restriction to 60 per cent did not apply to adjustment of claims; the contention was rejected.

Issue (ii): Whether the transfer by adjustment amounted to a fraudulent preference under the Companies Act.

Analysis: Section 231 of the Companies Act applies only where the impugned act would amount to fraudulent preference if done by an individual in insolvency. Reading it with the insolvency law, only transfers or payments within the relevant statutory period and with the requisite preferential effect fall within the mischief of the section. As the transfers were outside that period, the provision did not operate.

Conclusion: The transfers did not constitute a fraudulent preference.

Issue (iii): Whether non-presentment of the bills absolved the drawer and acceptor from liability, including the effect of waiver.

Analysis: Section 64 of the Negotiable Instruments Act was read to mean that, in the case of a bill of exchange, the other parties besides the acceptor are not liable if presentment is not made. The argument that liability survived by reason of waiver under Section 76(e) required proof that the drawer had knowledge of the absence of presentment and had knowingly waived the objection. The burden of establishing such knowledge lay on the party asserting waiver, and no sufficient foundation was shown.

Conclusion: The drawer was not liable for want of presentment, and the plea of waiver failed.

Issue (iv): Whether interest was payable from the date of maturity.

Analysis: Under Section 80 of the Negotiable Instruments Act, where no rate of interest is specified, interest runs from the date when the amount ought to have been paid. For an instrument payable on a fixed date, the amount becomes payable on maturity, and interest may properly be allowed from that date.

Conclusion: Interest was rightly allowed from the date of maturity.

Final Conclusion: The appeals were disposed of by upholding the decree against one appellant group, setting aside the decree against one drawer in the connected appeal, and affirming the award of interest, with the decree modified as to instalments.

Ratio Decidendi: A statutory limitation on cash payment does not automatically restrict payment by adjustment where the order expressly permits adjustment without such limitation; non-presentment under the Negotiable Instruments Act defeats liability of the other parties unless valid waiver is proved by showing full knowledge and intentional relinquishment of the right; and interest on an instrument payable on a fixed date runs from maturity under the Act.

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