Drawee-acceptor liability on bills of exchange affirmed where conduct and documents showed acceptance on own account.

Sections 7, 32 and 33 of the Negotiable Instruments Act were applied to hold that a party may be the drawee and valid acceptor of bills of exchange even where the instrument names "MMTC A/c Calcutta Steel Co. Ltd.", if the surrounding documents, acceptance, procurement of documents and taking delivery of goods show it acted on its own account. Section 92 of the Evidence Act did not bar reliance on contemporaneous commercial conduct to ascertain the true arrangement. On that basis, liability as acceptor was affirmed. The Court also held that declaratory and injunctive relief under Section 34 of the Specific Relief Act is discretionary and should be granted cautiously in commercial matters; here, the relief was unjustified because it would defeat admitted bill liability.

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Issues: (i) Whether the respondent company was the drawee and valid acceptor of the bills of exchange, notwithstanding the description "MMTC A/c Calcutta Steel Co. Ltd." on the instruments. (ii) Whether the decree for declaration and injunction granted in favour of the respondent was justified in the exercise of discretionary relief.

Issue (i): Whether the respondent company was the drawee and valid acceptor of the bills of exchange, notwithstanding the description "MMTC A/c Calcutta Steel Co. Ltd." on the instruments.

Analysis: Section 7 of the Negotiable Instruments Act, 1881 defines the drawer, drawee and acceptor, while Section 32 fastens liability on the acceptor and Section 33 permits acceptance only by the drawee, except in recognised cases. On the admitted facts, the respondent arranged the import, opened the letter of credit, received the documents, endorsed acceptance on the bills and took delivery of the goods. The surrounding conduct and the tenor of the transaction showed that MMTC was named only to satisfy exchange-control requirements and the respondent undertook the liability on its own account. Section 92 of the Indian Evidence Act, 1872 did not prevent the Court from reading the accepted bills with the contemporaneous documents and conduct to ascertain the true commercial arrangement.

Conclusion: The respondent company was the drawee and valid acceptor of the bills of exchange, and was bound by the acceptance.

Issue (ii): Whether the decree for declaration and injunction granted in favour of the respondent was justified in the exercise of discretionary relief.

Analysis: Section 34 of the Specific Relief Act, 1963 makes declaratory relief discretionary and requires the Court to act on sound principles of justice and fair play. In commercial matters, the grant of such relief must be scrutinised with circumspection, especially where it would unsettle admitted commercial arrangements and impede mercantile certainty. On the facts, the respondent had acted upon the bills and obtained the goods, yet sought to avoid the liability flowing from the accepted instruments. The decree of declaration and injunction was therefore found to be unjustified.

Conclusion: The discretionary decree of declaration and injunction in favour of the respondent was not sustainable.

Final Conclusion: The respondent was held liable as the drawee-acceptor on the bills, and the declaratory relief granted by the High Court was set aside; the suit stood dismissed with costs.

Ratio Decidendi: Where the surrounding documents and conduct conclusively show that a party accepted a bill of exchange on its own account, that party is the drawee-acceptor and cannot avoid liability by relying only on the facial description of the instrument.

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