TaxTMI 
TaxTMI 
1974 (6) TMI 62
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....onsideration endorsed these cheques to the plaintiff. These were sent for collection by the plaintiff to the Canara Bank Limited, but they were dishonoured and returned to the plaintiff. The plaintiff therefore claims the amount of the cheque together with the interest and also the amount collected by the Bank from the firm as discount. 3. The suit was contested by the first defendant firm. Its case was that the cheques were issued as security on a promise by the second defendant to supply pepper to the first defendant and the understanding was that the cheques were to be cashed only after such supply. The case is that the goods were not actually supplied, but nevertheless second defendant collusively endorsed the cheques in favour of the plaintiff. In short, the plea is that the cheques are not supported by consideration and the plaintiff is not a holder in due course. There was further contention that the plaintiff was not a registered firm and the person who has filed the suit as managing partner was not a partner at all. 4. On the evidence, the court found that the cheques must be found to be supported by consideration and the plaintiff was a holder in due course, but neverth....
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....alue which in the presidency towns, is not of a kind specified in Section 19 of the Presidency Small Cause Courts Act, 1882, or, outside the presidency towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act. 1887, or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim." This is not claimed to be a suit against a firm or against any person alleged to be or to have been a partner in the firm. Evidently therefore Section 69 (1) is not applicable. Reliance is placed on Section 69 (2). According to learned counsel for the first defendant the suit on the dishonoured cheques must be found to be a suit to enforce a right arising from a contract instituted against a third party and such a suit would not lie in a Court unless the firm is registered and further the persons suing are or have been shown in the Register of Firms as partners in the firm. There is controversy on the question whether the firm is registered. Though plaintiff averred in the plaint that it was registered and the first de-defendant categorically refuted it in the written statement and an issue had been framed in the suit....
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....rights to such instruments in accordance with law. It may be necessary, in this context, to refer to certain provisions of the Negotiable Instruments Act relating to cheques. Section 30 of the Act defines the liability of a drawer. It provides that a drawer of a bill of exchange or cheque is bound, in case of dishonour by the drawee or acceptor thereof, to compensate the holder, provided due notice of dishonour has been given to, or received, by the drawer as provided in the Act. Section 36 defines the liability of prior parties to the holder in due course and Section 37 concerns the liability of a maker of a cheque. Section 36 provides that every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is duly satisfied. Section 37 provides that the maker of a promissory note or cheque, the drawer of a bill of exchange until acceptance, and the accepter are in the absence of a contract to the contrary, respectively liable thereon as principal debtors, and the other parties thereto are liable thereon as sureties for the maker. Section 92 of the Act relates to dishonour by non-payment. It defines that a cheque is dishonoured by non-paym....
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....ko, 1963 (1) Ker LR 443. That was a case where a similar suit on a cheque was found to he sustainable since it was said that it did not arise out of a contract. But there is no discussion on this question in that decision. 11. Having found that the suit would not be bad for the reason found by the Court below, we have necessarily to consider the objections urged by the defendant to the findings in the judgment under appeal which are against him. According to him the Court was not right in holding that the cheques were supported by consideration. Counsel for the respondent urges that the Court ought to have found that the evidence in the case indicated that the cheques were issued not as price of any goods supplied nor in satisfaction of any money received, but purely as an arrangement by way of advance towards the value of goods agreed to be supplied in due course and these could have been presented only after such supplies were made. These questions have been urged before the Court below. But we may state here that both parties adduced very little evidence on this in the lower Court. Oral evidence is only that of the managing partner of the plaintiff firm as PW1 and the manager o....