TaxTMI 
TaxTMI 
2001 (4) TMI 954
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....delivered to Britannia who thus becomes the endorsee and the holder of the said bill of exchange. 5. In paragraph 5 of plaint the averment is that the said bill of exchange was duly presented by Britannia for payment but was dishonoured by nonpayment. Significantly enough the plaint is silent about the party to whom the said bill of exchange was presented for payment. 6. In paragraph 7 of the plaint it has been stated that despite repeated demands defendants have failed to pay Britannia the said sum of Rs. 1,00,000,00/- or any part thereof or any interest statutorily payable thereon. 7. In paragraph 8 of the plaint it has been made clear that the suit has been filed under Order XXXVII of the CPC. Admittedly leave under Order XXXV11 was not granted. 8. In paragraph 9 of the plaint the following averment has been made which is of some importance in the decision of this case and the same is set out verbatim as follows : "The plaintiff is also entitled to claim on the said Bill of Exchange against one Lgee Enterprises, carrying on business at Bombay. This Hon'ble Court however has no jurisdiction to entertain a claim against the said Lgee Enterprises. The plain....
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....or financial institution or other party by co-accepting a Bill of Exchange adds its credit to that of the drawee and represents to all holders in due course or intending holder in due course or persons dealing with such bill (intending such representation to be acted upon) that such Bank or Financial institution or party though not named as drawee on such bill may be treated as if it or he had been named as drawee and had accepted such bill and further undertakes an obligation to make payment of the amount of such bill on it being presented for payment at maturity." 13. The said application for amendment was opposed by PN8 and ultimately a learned Judge of this Court by a Judgment and order dated 1st October. 1985 dismissed the said application for amendment. 14. While opposing the said application for amendment it was contended on behalf of PNB that by the said amendment application Britannia "has given a go by to its original case in the plaint and in fact an entirely new case has been sought to be introduced against the defendant No. 1 by the proposed amendment." Accepting the said stand of PNB. the learned Judge while refusing to allow the amendment held: "The....
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....as unnecessary. It is open to Britannia to contend that the co-acceptance of the said bill by PNB amounts to acceptance and this fact has been proved by materials and evidence on record and also by the Reserve Bank circulars. In the instant case PNB after entering appearance applied for leave to defend and by an order dated 20th June, 1984 such application was allowed. 19. In the written statement PNB denied the case made out in the plaint. The specific stand is that the said bill was not drawn on PNB and was not accepted by it. It was also stated that A.B. Das was not authorized to accept the said bill on behalf of PNB. It was also stated that alleged co-acceptance by A.B. Das (hereinafter called, ABD) was fraudulent and not binding on PNB and such co-acceptance of the said Bill in Bombay by ABD was not in discharge of his official duty as a Branch Manager of the Zakaria Street branch, Calcutta. 20. It was also stated in the written statement that there is no provision for co-acceptance of a negotiable instrument under the Negotiable instrument Act. It is also denied that the High Court has no Jurisdiction to entertain the claim of the plaintiff against Lgee Enterprise. ....
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....dant No.1 or is not binding on the defendant No.1 as alleged in the written statement? 3. Was the alleged bill of Exchange presented by the plaintiff to the defendant No.1 for payment? 4. Was the alleged Bill of Exchange fraudulent and brought into existence by collusion and conspiracy between A.B. Das and the plaintiff and/or its officers and alleged drawers or Lgee Enterprise as alleged in paragraph 10 of the written statement? 5. Does the plaint disclose any cause of action on the alleged Bill of Exchange against the defendant No.1? 6. To what relief, if any, is the plaintiff entitled?" 25. In support of their respective cases, both Britannia and PNB examined four witnesses each and various documents were exhibited. 26. On the first issue the learned trial Judge held that the said bill of exchange is a negotiable instrument. In coming to the said conclusion the learned Judge considered the provision of section 5 of Negotiable instrument Act (hereinafter called N.I. Act) as also section 13 of N.I. Act. The learned Judge also held that the bill of exchange satisfies all the requirements laid down under section 5. The learned Judge further ....
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....was also the highest. Therefore, the learned counsel submitted that it was expected that Britannia would act as a business organisation of ordinary prudence and would make such enquires which are obvious and most likely to be made in the facts of the case. The learned counsel further submitted that Britannia was parting with almost one crore of rupees in favour of Metropolitan Construction, which is not A company nor a party with any known track record nor an organization of repute in the corporate sector and more so when in the instant case the bill of exchange is not backed by any invoice or by any trade document. Apart from that there 19 nothing known about Lgee Enterprises which is the acceptor. Britannia had never dealt before either with Lgee Enterprises or with Metropolitan. The only person who came to Britannia in connection with the said bill was one Ntitin Joshi. a broker to ascertain whether Britannia was interested to discount a bill of Rs. 1,00,000,00/-. This happened some time in the last week of December, 1982. Then again Nitin Joshl the said broker came with ABD, Manager, PNB, Zakaria Street, Calcutta Branch. It is alleged that this time Am it Dutta and Raghunath Du....
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....,000/- 4. Deposits etc. at Bank Rs. 50,00,000/- Rs. 3,10,00,000/- (RUPEES THREE CRORES AND TEN LAKHS ONLY [RUPEES THREE CRORES AND TEN LAKHS ONLY] Yours faithfully, For Punjab National Bank Sd/-" 30. Referring to the said document the learned counsel urged that admittedly ABD was in Bombay on 15th February, 1983 but the said document which is exhibit 'D' dated 15th February, 1983 shows the stamp of PNB, Zakaria Street, Calcutta. This shows that the plaintiff was aware that even though ABD was in Bombay on 15.2.83, he is executing a document dated 15.2.83 with the stamp of a branch of PNB, Calcutta. The said document also refers to the power of attorney on the basis of which ABD allegedly co-accepted the said bill inasmuch as it appears from a perusal of exhibit D that the said power of attorney was enclosed. From exhibit 'D' it appears Britannia was informed that the said bill was "co-accepted by us against properties, assets, mortgage to us as under". 31. The learned counsel submitted that the so called description of the property given in ext. D is absolutely vague and de....
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.... Britannia suffers a loss of interest for those days inasmuch as immediately on its instructions, the bankers have debited that amount of Rs. 91,56,146.86p. from the account of Britannia. So Britannia started loosing interest on the said amount from 15th February, 1983. The learned counsel submitted that this is also not consistent with normal business transactions. 34. The learned counsel for the appellant further submitted that the power of attorney (exhibit. A) did not authorize ABD to co-accept the bill of exchange. It has also been stated that the power of attorney holder can only be authorized to act in furtherance of the interest of PNB. In the instant case, by allegedly co-accepting the said bill, the interest of PNB has not at all been served. In fact, the interest of Metropolitan has been served. It has further stated that at the point of time when the entire negotiation took place between ABD and the officers of Britannia, Metropolitan was not even a customer of PNB. Admittedly Metropolitan became its customer on 16th February. 1983. The negotiation in respect of the said bill took place in Bombay and was completed on or before 15th February, 1983. This according to t....
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....hat the said bank has several branches all over the india and in many of the branches, the accountants or Branch Managers are having such powers of attorney. That does not mean that a Branch Manager of Cuffe Parade Branch in Bombay or of Nariman Point Branch in Bombay can act on behalf of the branch of the bank in Zakarla Street. In order to prevent such anomalous position, it has been made clear in the power of attorney that such power can be exercised by the power of attorney holder in respect of the places where the banks may have established its offices or agencies or to which persons holding such power of attorney may have been appointed. The learned counsel further stated that clause 1(j) of the said power of attorney authorizes a person to accept cheques, drafts, hundis or bill of exchange and other negotiable instruments in the name and on behalf of the said bank. But in the instant case, admittedly the ADD has co-accepted the said bill of exchange. The learned counsel submits that co-acceptance is not acceptance and there is nothing known as co-acceptance under the N.I. Act. Therefore, co-acceptance of the satd bill by ABD is wholly unauthorized. 36. The learned counsel....
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....en Metropolitan and Lgee Enterprises nor is it called upon to make any enquiry whether consideration passed between Metropolitan and Legee. It is also not required to enquire about the existence and signature of the drawer, accepter or any other prior party. The learned counsel supported the said submission by relying on the provisions of section 118(a)(g) and section 122 of N.I. Act. Apart from referring to these legal questions, the learned counsel further submitted on facts that it is clear from the record that the two Duttas, defendant Nos. 3 and 4 carried on business under the name and style of Metropolitan Construction as a partnership firm. It was also urged that since an account was opened in PNB in favour of the said partnership firm namely Metropolitan Construction and the said account was regularly operated and various transactions took place, it is clear that defendant No. 2, Metropolitan is an existing firm. The further stand taken on facts is that non-existence of Metropolitan or Lgee has not been proved by appellant from the materials on record. It is further urged that in any event both the firms existed at least between 15.2.83 and 18.2.83 and its subsequent non-ex....
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....nst Britannia in the written statement. Learned counsel further submitted that in such cases onus is always cast upon the defendant to prove its case of fraud and in the instant case the said onus has not been discharged. The learned counsel further submitted that fraud in such cases must by clearly established and it must also be established that the circumstances are not only fraudulent but Britannia against whom such fraud is alleged, must also have the knowledge of that fraud. Mere suspicion or doubt cannot be taken as proof of fraud. Mere lack of enquiry is not sufficient to make out any case for fraud. The learned counsel however admitted if it is proved that an organization with clear knowledge of suspicious circumstances did deliberately shut its eyes and made no further enquiry lest such enquiry will unearth fraudulent circumstances, it is only in such a situation, one can assume the existence of fraud, but mere carelessness or negligence does not constitute fraud. 42. The learned counsel for the appellant urged that in so far as the power of attorney is concerned the same must be read subject to the chart of financial power under which the Branch Manager, Zakaria Stree....
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....itannia is based on the bill of exchange in question. The said bill of exchange has not been proved. The said bill of exchange has been made an exhibit under objection and the said objection was throughout maintained. The learned counsel submitted that nobody has seen the execution of the said bill of exchange. Nobody has seen anyone signing on behalf of the Metropolitan to the said bill of exchange nor anyone has seen anyone signing on behalf of the Lgee Enterplrse to the said bill of exchange. This is admittedly the nature of evidence. So the contention is that since the bill of exchange has not been proved, the suit must fall. 45. The learned counsel for the Britannia however, further submitted that the bill of exchange has been annexed as a part of the plaint. Therefore, the whole of the bill of exchange must be deemed to a part of the plaint. According to him the plaint must be read as if the whole of the said bill has been set out in the plaint. In that view of the matter the bill of exchange need not be proved separately. 46. Counsel for the appellant further urged that admittedly the said bill has not been presented for acceptance by Britannia before the acceptor, the....
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..... Joshl answered 'not in his presence" (Q. 190). In view of the aforesaid evidence of the witness the said document was "tendered and marked Exhibit E" but the same was tendered "subject to objection". 50. Mr. R. Venkataraman who was the vice-president of Britannia was cross-examined before the Court and was also confronted with the said bill at Exhibit E. He was asked in cross-examination about the execution of the said document at Exhibit E and in answer, the said witness stated "I do not know whether it was execcuted, but it was a complete document-when it was brought on 15th February, 1983" (question No. 493). In cross-examination, the said wit-ness was further asked whether he knew whether the said document was executed in Bombay. The witness answered "I do not know where it was executed, but it was a complete document when it was brought on 15th February, 1983", He was further asked whether the stamp impression on the document was there. To that the witness answered 'No' (Qs. 493 and 494). On being further questioned on that document, the witness replied That has been the normal practice in the market We believe the document (Q. 502)) when the witness was furth....
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....udge of this Court arose out of Company Application No. 64 of 1971. In the said Judgment, the question of proof of a document was not in issue and the learned Judge in the said case was merely to see whether a prima facie case was made out by the creditor for investigation in the winding up proceedings and the learned Judge took the view that the creditor has made out such a prlma facie case. While taking the said view the learned Judge observed in para 22 of the said Judgment in Podam. Tea (supra) that an application for directing a company to be wound up is not a suit. In the said decision, the question of proof of a document was not an issue, so the passing observations made by the learned Judge to the effect that annexure to the pleadings are part of the pleadings does not answer the question with which the Court is concerned in the present case. Those observations cannot be said to be an authority for the proposition that if any document is annexed to the plaint that operates as a waiver of proof of the document in question and especially when its proof has been seriously questioned. 56. The next case cited in this connection is also another single bench Judgment of Rajasth....
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....the said bill of exchange annexed to the plaint is an alleged document brought into existence by practicing fraud and collusion and the same is not valid and binding on the defendant. This stand has been repeatedly taken throughout in the written statement. In view of the aforesaid pleading, it is incumbent upon Britannia to prove the said bill of exchange. 62. In the instant case the onus of proving the genuineness of the said bill lies squarely on Britannia and this Court holds that the said onus is not discharged by merely producing the bill of exchange or making it an annexure to the plaint or an exhibit in the case. 63. The principle of section 67 of the Evidence Act is very clear on this point. 64. Section 67, shorn off unnecessary details, in this context runs thus: "If a document is alleged to be signed ..... by any person, the signature, as is alleged to be in that person's handwriting must be proved to be in this handwriting". 65. Reference in this connection may be made to an old decision in the case of Stamper versus Griffin. 1856, 20 Ga 312 at 320 in which Justice Bennlng said "A writing of itself is not evidence of one thing or the other. A wr....
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....orresponding to Clauses (a), (b), (c) (d), (e) and (g) of section 118 of N.I Act. 72. But while considering the effect of presumption under aection 118 of N.I. Act, it must be taken note of that there is no presumption of the execution of the document. So the presumption under section 118 would arise only when the execution is proved. If the execution has not been proved, as in instant case, the claim of presumption under section 118 would be of no avail. 73. Reference in this connection may be made to the Judgment of Supreme Court in the case of Kundan Lal Rallaram v. Custodian Evacuee Property, Bombay, reported in AIR 1961 SC 1316. Justice Subba Rao (as His Lordship then was) speaking for the Court and while considering the provision of section 118 of N.I. Act held that initially the burden rests on the plaintiff to prove that the promissory note was executed by the defendant. His Lordship held "as soon as the execution of promissory note is proved the rule of presumption laid down in section 118 of Negotiable instrument Act helps him (meaning the plaintiff) to shift the burden to the other side". 74. The said principle has been followed subsequently also by Allahabad Hi....
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....ough both Lgee and Britannia are carrying on business in Bombay. 7. There is no evidence of any worthwhile interaction between Britannia and alleged partners of Metropolitan (namely the Duttas) about the nature of business carried on by Metropolitan whose main office is also in Bombay. Most of the time in the course of negotiation, Duttas were kept out and were in the reception in Britannia's office. 8. it is highly suspicious on the part of Britannia to part with the amount of Rs. 91,56,146.86p. on the basis of alleged securities of the drawer mentioned in the letter signed by ABD on 15.2.83--Exhibit D. 9. Exhibit D dated 15.02.83 does not give any particulars of the properties which are said to be offered as alleged securities and alleged to be pledged with PNB by the drawer, even though on 15.2.83 the drawer admittedly was not even a customer of PNB. But even then Britannia did not make any enquiries about exhibit 'D'. 10. Even though the said bill was not completed and ready on 15.2.83, but on Britannia's instruction a bank draft of Rs. 91,56,146.86p. was made ready on 15.02.83 by its banker, Syndicate Bank and was debited fro....
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....age 628 of the report) 81. The learned Judge further explained by saying if the was honestly blundering and careless and so took a bill of exchange or a bank note when he ought not to have taken it still he would be entitled to recover. But if he facts or circumstances are such that the Jury, or whoever has to try the question, came to the conclusion that he was not honestly blundering and careless, but he must have had a suspicion that there was something wrong. and he refrained from asking question, "not because he was an honest blunderer or a stupid man, but because he thought in his own secret mind-- I suspect there is something wrong and if I ask question and make further enquiry, it will no longer be my suspecting it but my knowing it, and then he shall not be able to recover, I think that is dishonestly". (Page 629 of the report)(Underlined for emphasis) 82. The learned Judge reached those general conclusions by relying on good sense and reason. Another learned Judge. Lord O'Hagan delivering his speech in Jeese Jones (supra) at page 621 of the report observed that there are two substantial questions which fell for consideration in that case. His Lordship form....
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....Enterprise and this is not a case of foolishness or honest blundering on the part of Britannia--a corporate house with sufficient experience of bill discounting business over the years. 86. The most striking absence of enquiry is in respect of Exhibit 'D'. The said exhibit is dated 15.02.83 and had the alleged stamp of PNB, Zakaria Street Branch, Calcutta whereas the officers of Britannia knew that ABD the Branch Manager of PNB of Zakarla Street Branch, Calcutta was in Bombay on that day. This should have immediately struck the officers of Britannia, an experienced business house. Apart from that, the properties which are mentioned as securities and against which the bill has been allegedly co-accepted by PNB cannot be accepted as securities by any person of ordinary commercial prudence. The properties are without any particulars and there is no whisper about Metropolitan's title over those properties. It is a mere paper security or even worse than that. It may also be mentioned that on 15.02.83 neither Metropolitan nor Lgee was even a customer of Zakaria Street Branch of PNB. 87. In view of these undisputed facts, this Court has no hesitation to hold that total a....
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....ined. 91. On those facts, the Hon'ble Supreme Court, allowing the appeal of the negotiating bank, held that the issuing banking bound to reimburse. 92. In that case the question of 'fraud' came up for consideration in the context of Articles 15 and 16 of UCP which were incorporated in the letters of credit between the parties. Article 15 enjoins on the bank to take reasonable care. Once 'reasonable care' has been taken by the bank, it has to be reimbursed by party who has given such authority. The learned Judges also held that the concept of reasonable care is a Common Law principle. 93. Thus stating the law on the subject, the learned Judges in paragraph 55 of Federal Bank (supra) held that Court ought not to grant injunction to restrain encashment of bank guarantee or loss of credit except in two situations namely (a) in case of fraud and (b) in case of irretrievable damage. In that context, fraud means a clear case of fraud of which banks also have notice. This principle, after discussion the case law on the point, has been elaborated by the learned Judges in paragraph 57 of the Judgment to the extent that it is not only enough to allege fraud but it mus....
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....rther observed that if a man of ordinary prudence has actual notice of circumstances sufficient to put him on an enquiry the knowledge which he might, by exercise of due diligence and enquiry, have obtained will be imputed to him by Court and such presumption of the existence of knowledge is so strong that it cannot be allowed to be rebutted [see the speech of Lord Chelmsford in 2 Appeal Cases, page 632]. 98. This doctrine has further been developed by Kerr to the extent that this doctrine of constructive notice is applied with considerable force where the Court is satisfied that the person who can be legitimately put to such notice has abstained from inquiry for the purpose of avoiding knowledge. This position has been explained by the learned author in the following words: "It may be that inquiry might not have brought out the truth; but a man who abstains from inquiry where inquiry ought to have been made, cannot be heard to say so and to rely on his ignorance." [Kerr, page 254] 99. In such a situation, the evidence, which will prove fraud, can be circumstantial. This has also been explained by the learned author by observing "if suspicion is aroused and no inquir....
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....e in the facts of this case. Here the conscience of the Court Is more disturbed by the apparent dishonesty in the tainted transaction between the drawer, acceptor and the holder. So it is not so much a case of fraud as IS understood In the case of Chaturbhat Patel (supra). 103. The learned counsel for Britannia also relied on a Judgment of the Supreme Court in the case of Bharat Barrel and Drum Manufacturing Company v. Amin Chandra Payarelal. reported In . Reliance was placed on that Judgment for the purpose of showing how the Court should Interpret the provisions of section 118(a) of N.I. Act and consider the purpose and intent of provision of the said Act In Its correct perspective. The facts in Bharat Barrel(supra) are also totally different In that case the parties to the litigation had regular business dealings and transactions with regard to Import of steel. There was an offer and acceptance for Import of 10.160 metric tones of steel drum sheets from U.S.A. The total price of the goods to be Imported under the Import license was about Rs. 55,33,000/-. The plaintiff represented through its director that until and unless any assurance and guarantee Is given that the delivery....
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.... promissory note has not been proved here. Therefore, this Court Is of Ihe opinion that the ratio In the case of Bharat Barrel (supra) is not applicable to the facts of this case. 107. The learned counsel for Britannia has, however, argued that in any event PNB as an Indorser Is bound to accept Its liability under the said bill and In support of the said contention the learned counsel has relied on another decision of the House of Lords In the case of Steele and Ors. v. M'kinlay reported in 5 Appeal Cases, 754. The facts of that case are set out below: "In 1874, William and Thomas M'Kinlay commenced business as timber-merchants at Strabane, Ireland, under the name of W. & T. M'Kinlay. Requiring funds, they commissioned their father, the late James M'Klnlay, horse-dealer in Glasgow, to obtain them an advance of 1000. He entered into communication with John E. Walker, coach proprietor in Glasgow, the result being that Mr. Walker signed as drawer a bill bearing date the 25th of May, 1874. for 1000 at twelve months, addressed to "Messrs. Wm. & Thos. M'Kinlay. wood-merchants, Strabane," which he handed to James M'Klnlay,. The latter sent it to his son....
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....ng even If he had expressly written 'Accepted, J. M'Klnlay, he could not have been so treated according to English Law. (Page 770 of the report) 110. In support of the said proposition, the learned Judge has referred to another old English case, namely In the case of Jackson v. Hadson which has been cited by the learned counsel for the appellant in this case. 111. In Jockson v. Hadson, Lord Ellenborough satd 'the acceptance of the defendant is contrary to the usage and custom of merchants. A bill must be accepted by the drawee or falling him by someone for the honour of the drawer". 112. These are also the principles enunciated under section 33 of the N.I. Act. 113. The learned Judge has thereafter explained what Is meant by an endorsement. The said concept has been explained by Lord Blackburn* In page 772 of the report where the learned Judge has held : "An Indorsement In general Is a transfer In writing by the holder of the bill to a new holder on whom the property Is thereby conferred; and It Is clear that J. M'Klnlay was not such an Indorser." 114. Lord Watson, another member of the Bench In the said decision also expressed the same view ....
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....of the Negotiable Instrument Act" (Para 2, page 246). 119. In this case PNB is admittedly neither the payee nor the holder of the said bill and there is no evidence that PNB was duly authorized either by Metropolitan. Elgee or Britannia to act as its agent. 120. It may be mentioned that the finding of the learned trial Judge that PNB was acting as the agent of Metropolitan and Elgee is not based on any evidence and is totally unsustainable. That is not even the case made out by Britannia either in the plaint or in the course of evidence. 121. The learned counsel also sought to rely on the second part of section 43 of N.I. Act In order to urge that PNB is liable to Britannia in respect of the said bill. 122. Section 43 of the said Act Is In the following terms: "Negotiable Instrument made, etc., without consideration.--A negotiable instrument made, drawn, accepted, Indorsed, or transferred without consideration, or for a consideration, which fails, create no obligation of payment between the parties to the transaction. But if any such party has transferred the instrument with or without endorsement to a holder for consideration, such Holder, and every subsequent holder d....
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....ia and had been dismissed. This has been taken specifically as a ground of appeal [ground No.21] In this appeal by the PNB. 127. Now coming back to the contention raised by the learned counsel for Britannia that co-acceptance by PNB shall be treated as acceptance docs not find favour with this Court for various reasons. Even though the learned trial Judge, accepted the aforesaid contention advanced on behalf of Britannia, it Is contrary to the case made in the plaint. The plaint case Is that PNB is the acceptor. After receiving the written statement filed by PNB, Britannia wanted to Introduce (he case of co-acceptance by PNB. It has already been noted above that the case of co-acceptance which Britannia wanted to Introduce by way of amendment has not been allowed by the Courts right up to Supreme Court. But unfortunately, the learned trial Judge has delivered his Judgment by accepting the case of Britannia that co-acceptance by PNB amounts to acceptance. This error has been committed by the learned trial Judge despite the fact that the said case has not been made out In the plaint and when the said was case sought to be introduced by the amendment that has also been rejected by ....
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....f a bill be drawn upon one man, it may be accepted by two". The learned Judge further held "a bill must be accepted by the drawee, or falling him, by some one for the honour of the drawer". Section 33 of the N.I. Act quoted above is based on this principle. 133. It may be noted here that the aforesaid decision in Jackson and Hudson has been followed and approved In 5 Appeal Cases. 616 noted above. 134. Reliance was also placed on another Judgment in the case of Dauls and Henry John Clarke, reported In 115 English Report, 6. In that case. Lord Denman, Chief Justice held that there Is no authority either in the English Law or the General Law Merchant for holding a party to be liable as acceptor upon a bill addressed to another. While saying so, the learned Chief Justice relied on the principles formulated in Jackson and Hudson. 135. In this connection, reference may be made to the provisions of section 117 of Evidence Act. The relevant portion of the section is to the following effect: "No acceptor of a bill of exchange shall be permitted to deny that the drawer had the authority to draw such bill or to Indorse It". In the instant suit, the acceptor who is fastened with a st....
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....882. The observation was "mercantile usage is the raw material, mercantile law Is the manufactured article". So when this law was codified, It is presumed that it has taken into account all the prevalent mercantile usage and any usage contrary to the provision of the Act cannot be given effect to In a Court of Law. 139. Factually also no case has been made out by Britannia that the said bill has been validty co-accepted by PNB. In support of Its case, that the alleged co-acceptance Is an established practice, Britannia disclosed certain documents namely Exhibit 'K' series. But a perusal of those documents would show that they are all trade bills and particulars of invoices have been given there. But the said bill is devoid of all such particulars. 140. Curiously enough none of the banks, namely Bank of Baroda, Honkong and Shanghai Banking Corporation. Bank of Maharashtra were called to depose on the so called practice of co-acceptance. If Britannia wanted to establish the practice of co-acceptance by bank, it should have cited witnesses from those banks to establish such practice. The bill discounting register of Britannia Exhibit 'M' shows a very large member....
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....f attorney as it appeared from Exhibit 'A' itself. From clause 1(1) of the clause in the said power of attorney. It is clear that the power of attorney holder can, apart from doing various other things 'accept* bills of exchange and other negotiable Instruments in the name and on behalf of the said bank. But in the Instant case, admittedly ABD has not accepted the bill in question. But he has allegedly co-accepted the same. Co-acceptance is not a known concept under N.I. Act. In any event, acceptance and co-acceptance cannot be equated as has been discussed above and since ABD has not been authorized to co-accept the so called co-acceptance by ABD on behalf of the power of attorney dated 1st November, 1976 Is not valid. 146. It may be mentioned here that In 1976 when the power of attorney was granted in favour of ABD by PNB, the so called undesirable practice of co-acceptance was noticed by RBI and in Its circular dated 20.1.76 (Exhibit 3) and RBI found that such transactions are 'In the nature of guarantee executed by banks' and such practice should not continue. Therefore, alleged co-acceptance by ABD Is certainly not acceptance permitted under clause 1(1) ....
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....the case of Bryant, Powis, and Bryant, Limited and La Banque Du Peulle and another reported in 1893 appeal cases page 170. In the Judgment of Bryant (supra) their lordships quoted with approval the observation in the case of Stagg and Elliot reported in 12 CB (NS) 373 at 381. The said proposition was elaborated by Lord Macnghten by holding that powers of attorney are to be construed strictly. That is to say, where the act purporting to be done under a. power of attorney is challenged as having been done in excess of authority conferred by the power, it Is necessary to show that on a fair construction of the whole instrument that the authority in question is to be found within the four corners of the instrument either in express terms or by necessary implication (page 177 of the report). 151. Therefore, going by those standards, this Court finds that It Is difficult for the Court to hold that on the basis of the said power of attorney Issued In 1976, ABD could co-accept the said bill and specially, when co-acceptance is an unknown term under N.I. Act. 152. Apart from that in the instant case, it has been contended by the learned counsel for both the parties that co-acceptance ....
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....re restricted to what Is necessary for the proper performance of the particular acts. (c) General words do not confer general powers, but are limited to the purpose for which the authority Is given, and are construed as enlarging the special powers only when necessary for that purpose. (d) The deed must be construed so as to include all incidental powers necessary for its effective execution." 157. On the basis of the aforesaid clause and the passage from Bowstead, the learned counsel submitted since there Is the aforesaid general power, the alleged giving of guarantee by ABD alone by allegedly co-accepting the bill is a mere irregularity and does not vitiate his act and specially, when he has the power to do It Jointly. 158. This Court Is unable to accept this contention for the various reasons. 159. A power to do something Jointly with another person Is an express and specific power and power of a totally different character. This cannot be termed as power Incidental to a power by which a person can do something singly. To hold otherwise would amount to altering the Intention of the donor of the power. Thus no Court can do by an Interpretative process. ....
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....ase, admittedly the bill has not been presented to Lgee, the named acceptor In the bill. The consequence Is 'other parties thereto' will be totally absolved of their liability and In the case of a bill of exchange 'other parties thereto' will be any party other than the named acceptor. A Division Bench of Calcutta High Court In deciding the case of Manik Ratan Guin and Prakash Chandra () construed the expression "other parties thereto' in section 64 of N.I. Act to the above effect, see para 8 of the judgment. In 1988, a learned single Judge of Delhi High Court followed the Division Bench Judgment of Calcutta High Court in Manik Ratan (supra). The Delhi High Court Judgment is . 165. The mandatory nature of the requirement of presentation of the bill of exchange was considered in an old Judgment of the Division Bench of Calcutta High Court In the case of Sagar Mal v. Bhudan Sahu, reported In 19 Indian cases (1913) page 251. In that case the plaintiff even without proving presentment got a decree against endorser and drawer. Against such decree only Indorser filed an appeal, the drawer did not file an appeal. But the Appellate Court dismissed the whole suit agai....