Negotiable Instrument Act Cases

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Transcript of Negotiable Instrument Act Cases

ContentsContents................................................................................................................ 1 V.C. Jayaram Mudaliar vs C.M. Sivaram on 21/12/1962.........................................3 D. Sethuramalingeswara Rao vs Perla Pichaiah And Others on 8/10/1990..........10 M.C. Chegganmull Sowcar vs Desur Manicka Mudaliar on 15/10/1925................15

V.C. Jayaram Mudaliar vs C.M. Sivaram on 21/12/1962JUDGMENT

Ramakrishnan, J. 1. This appeal is filed by the plaintiff in O.S. No. 259 of 1956 on the file of the Fourth Assistant Judge, City Civil Court, Madras. 2. On 6th February 1953, the defendant C. M. Sivaram executed two hundis for Rs. 4,000 and Rs. 1000 respectively payable on 6th June 1953, in favour of Srimathi Rukmini Ammal or order, for value received in cash. These hundis according to the plaintiff were really promissory notes. The plaintiff got assignments of the above two hundis in his favour from Rukmini Ammal on 20th January 1956, for valid consideration. The suit was filed for recovery of the above amount with interest. 3. The plea of the defendant was that at the instance of a friend of his one T. S. Shanmugham, P. W. 2 in the case, for the purpose of accommodating the said Shanmugham, but without any receipt of consideration, the defendant affixed his signature on two blank hundis. However, the body of the two Hundies have been later on written up and it amounts to forgery. There was a further plea by the defendant that the Hundies, even if they were promissory notes executed for valid consideration, they were payable at a specified place, namely, Madras, that in such circumstances, under the provisions of Section 69 of the Negotiable Instruments Act, presentment at that place, was an obligatory requirement, but in this case, such a presentment had not been made, and therefore the suit was not maintainable. There was also a plea that the assignment to the plaintiff lacked consideration; and that the plaintiff was not a holder in due course. 4. The trial Court found that the defendant's plea, about the circumstances under which the suit hundies were executed, was not substantiated, and that the suit hundies were really promissory notes executed for valid consideration. It also found that the plaintiff was only a holder for collection, and not a holder in due course. Thirdly, the lower Court held that in the case of the suit promissory notes, presentment at Madras was necessary, and that therefore the suit should fail for want of such presentment as required In Section 69 of the Negotiable instruments Act. The suit was therefore dismissed, and each party was directed to bear his own costs. From the above decision the appeal is filed by the plaintiff.

5. Learned counsel appearing for the appellant attacked the finding of the lower Court, regarding presentment and urged that this is not a case where presentment is necessary under Section 69 of the Negotiable Instruments Act. Consequently, in view of the finding of the lower Court that the promissory notes were supported by consideration, the suit should have been decreed against the defendant, the maker of the promissory notes, as prayed for. 6. The point for consideration, in this appeal, is whether the suit is not maintainable, for want of valid presentment. The learned counsel for the respondent in this appeal tried to support the dismissal of the suit by the lower Court, by urging that the finding of the lower Court that the promissory notes were supported by consideration, was not correct. This will also lead to a further point for determination in the appeal, namely, whether the suit promissory notes are supported by consideration. 7. The two suit instruments are Exs. A-1 and A-2. They are both drawn up in more or less identical terms, and Ex. A-1 reads: "Due date 6-6-1953 Madras, 6-2-1953 (120) days after data without grace 1. C. M. Siva Ram, promise to pay Srimathi Rukmini Ammal, or order at Madras the sum of Rs. four thousand only for the value received. Rs. 4,000 Sd. C. M. Sivaram (attestors) Sd. V. Panchaksharan Sd. S. V. Sembiam. x x x x x x x x" It is clear that this instrument is a promissory note as defined in Section 4 of the Negotiable Instruments Act Involving an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person. It is not a Hundi, and this finding is not challenged by the respondent in this appeal. 8. The main finding of the lower Court on which the suit claim was negatived, was that the suit hundies were promissory notes payable at a specified place, within the meaning of Section 69 of the Negotiable Instruments Act, and that therefore, in order to charge the maker

thereof, namely, the defendant, it should be presented for payment at that place. There is no pleading and no proof that such a presentment had been made. Therefore the suit should fail even as against the maker. 9. Learned counsel for the appellant referred to a fine of decisions which show that the reference in a promissory note to a large city like Madras as the place of presentment would not bring it within the scope--of Section 69 of the Negotiable Instruments Act. (Firm) Sheik Mohamed v. Abdul Majid, AIR 1937 Lah 259 which has been referred to by the lower Court, dealt with a case where a promissory note was payable on demand at Lyalpur city in the Punjab. After referring to several earlier decisions, the Punjab High Court held: "a city, town or village at large, may be taken to be a specified place within the meaning of Sections 64 and 69 of the Negotiable Instruments Act, but its presentment there would only be necessary or indeed reasonably possible, if the maker has his residence or place of business there. In the absence of such residence or place of business the mere possession of the promissory note by the maker in the City, Town, or village, would be sufficient." 10. In that particular case, there was evidence that the contesting defendant did not reside at Lyalpur nor did he have a place of business there nor was he present there on the relevant date. It was held that presentment to him was not necessary, the promissory note being admittedly in the possession of the plaintiff at Lyalpur. For this view, the Punjab High Court relied upon certain observations in Corpus Juris under the American law. But, in a later decision of a Bench of the Calcutta High Court In Dungarmull v. Sambhucharan, , this decision of the Punjab High Court as well as an earlier decision of the Calcutta High Court in Shankar Lal v. Narayana Chandra, 47 Cal WN 658 were dissented from, and the Calcutta High Court held that Section 69 of the Negotiable Instruments Act, "presupposes that the place is defined with sufficient particularity to enable the holder of the note to go to that place and to present it for payment. The phrase "specified place" cannot be used to cover a town or a city. But it is a phrase intended to mean a place so described as would enable the holder of a note to go to it with a reasonable certainty or being able to find the drawer of the note to present the note to him. Where the note is payable in a large city presentation to the maker or drawer might be utterly impossible, and therefore it could never be the intention of the legislature that a large city or town or area should be regarded as a specified place."

11. That particular case dealt with a promissory note payable at Calcutta. At the top of the promissory note there appeared an address. It was held that this address did not form part of the contract as to the place of payment, and that the promissory note did not fall within Section 69 of the Negotiable Instruments Act. 12. In Chegganmull Sowcar v. Manicka Mudaliar, 50 Mad LJ 242 : (AIR 1926 Mad 792) this High Court referred to a promissory note which mentioned, "Madras or any other place where you (the creditor) have your shop as the place of payment". That decision did not specifically go into the question whether the description of the place of payment as a large city like Madras, would be adequate for the purpose of Section 69. It held that the word "place" must be construed as including "places...... and if more than one place is mentioned, there must be presentment at one or other of those places. But, however, the suit was ultimately decided on the ground, that the defendant did not raise a plea about want of presentment, but only raised a plea about absence of jurisdiction. This Madras decision was referred to by the Bombay High Court in Dorabji Nowrosji v. Jamshedji Pestonji, ILR 60 Bom 796 : (AIR 1936 Bom 218) where the question of applying Section 69 of the Negotiable Instruments Act, arose in regard to a promissory note where the amount was expressed to be payable at "Poona, Bombay or elsewhere". That decision also does not go into the question specifically, whether, reference to a large city like Poona or Bombay, would suffice for the purpose of Section 69, But relied on the circumstance that besides Poona and Bombay, other unspecified places were also added in the promissory note as place of payment and that therefore the case did not fall under Section 69. The decision in 50 Mad LJ 242 : (AIR 1926 Mad 792) was quoted by the Bombay High Court, because that decision also referred to a promissory note mentioning "Madras or any other place" but it distinguished the Madras decision, on the ground that the reference to "any other place", though apparently, general in nature, was qualified by the words "creditor having a shop" and that amounted to a sufficient specification for the purpose of Section 69. As mentioned above, none of the cases, either of the Bombay High Court or of the Madras High Court went into the question, whether a reference to a large city line Madras or Calcutta, will attract Section 69 of the Negotiable Instruments Act.

13. A perusal of the several of the sections included in Chapter V of the Negotiable Instruments Act shows that they form a self-contained set of provisions in regard to the presentment. When a question about presentment arises in courts in India, it is these provisions that have to be applied. On an analysis of these sections, it is seen that some of these sections refer to presentment alone, without adding a charging section. But other sections combine a provision for presentment with a provision for charging one or the other of specified parties with liability. Sections 65 and 66 are instances of the former category. Sections 62, 68 and 69 are instances of the latter category. Section 64, after referring to the necessity for presentment, as provided in the succeeding sections of chapter V lays it down that the penalty for such non-presentment is to make "other parties not liable to the holder". "Other parties" for the purpose of Section 62 have been held to be, in the case of a promissory note, a person other than the maker, Vide Ramakrishnayya v. Kassim, ILR 13 Mad 172, followed in Phulchand v. Ganga Ghulam, ILR 21 All 450 and Manik Ratan v. Prakash Chandra, . It has to be mentioned that In ILR 13 Mad 172, the necessity for presentment arose under Section 66 of the Act, which, as mentioned above, merely requires the presentment, but contains no clause for charging a party. It was held by this Court. "seeing that in all these Sections (62, 68 and 69) the penalty that is to be entailed by default in presentment is expressly declared. I think the inference may be fairly drawn that express language would have been used if the same penalty was intended to ensue a default of the presentment which Section 66 enjoins". 14. In view of this, it was held that there was no Intention to alter the pre-existing law, and that the language of the Act did not justify the contention that the maker of the note was discharged by the holder's failure to present it at the due date. ILR 21 All, 450 followed the abovementioned Madras case, and applied it to a case where the question of presentment arose under Section 69. But in the present case, the question of presentment has arisen under Section 69 of the Act, where, in addition to the provision for presentment a provision for charging the maker, only in the event of such presentment, is superadded. I am unable to accept the argument of the learned counsel for the appellant that under Section 64 of the Negotiable instruments Act, the liability of the maker is kept unaffected, and that the requirement of the presentment under Section 69 will not apply, when the maker is proposed to be charged with liability. Therefore the question that has now arisen must be dealt with

only under Section 69, after a proper interpretation of the term "specified place" found in that section. 15. Precise language is used in several sections of Chapter V of the Negotiable Instruments Act and these sections had to be construed strictly. When we have the term "specified place" in Section 69, the place must be described with the sufficient precision to enable the holder to seek out the maker, and present the document to him for payment. When the place is described as a large city like, Madras, it would pre-suppose either a knowledge on the part of the holder of the maker's place of residence or place of business in Madras city, or would necessitate an enquiry on his part for that purpose. But such knowledge or obligation to make an enquiry cannot be spelt out as part of the contract itself. A requirement of presentment "at the place of business or at the usual residence of the maker" is contained in Section 70. Therefore, when the Legislature had contemplated including a provision of the above Kind of presentment at the place of residence or business of the maker, it has provided for it specifically in Section 70, When we wish to find out the meaning of the term "specified place" in Section 69, we cannot import the provisions contained in Section 70, regarding the place of residence or place of business. Therefore, when a specifies place is referred to in Section 69, it must have been intended to refer not to a vast area in general terms, like a big city, but a place indicated with sufficient precision to enable the person, who wants to charge the maker with liability, to resort to him readily. Therefore I respectfully agree with the Calcutta High Court's view, above mentioned, and hold that the suit promissory notes having referred to a large city like Madras do not require presentment, as they do not fall under Section 69. 16. So far as the finding about consideration for the promissory notes is concerned, there is a presumption under the Negotiable Instruments Act, about payment of due consideration. It is for the party pleading want of consideration to prove it. The only interest on behalf of the defendant to support his plea is himself. According to him, he affixed his signature in some blank hundies, and handed them over to one T. S. Shanmugham. It is in evidence, that the payee Rukmini Ammal, a Malayalee lady, was living with T. S. Shanmugham, in his house and they were very friendly. It is not necessary for this case, to find out whether they were actually married or not. According to T. S. Shanmugham, P. W. 2, this Rukmini Ammal is his second wife, and that he was giving her considerable funds for her maintenance, and that it was her money that was lent for the suit promissory notes.

The defendant admits that T. S. Shanmugam is a well-to-do man and he does not deny the close association of Shanmugham and Rukmini Ammal. Therefore there is every probability in the suit promissory notes being supported by consideration as claimed by the plaintiff. The defendant has not adduced any reason why T. S. Shunmugham, after getting the defendant's signature on blank hundies on the representation that they were required for the purpose of being offered as security, should subsequently defraud him. I therefore uphold the finding of the lower court that the suit promissory notes are supported by consideration, 17. In the result, I allow the appeal with costs and decree the suit of the plaintiff with costs (but with six per cent interest on the principal as restricted on the appeal).

D. Sethuramalingeswara Rao vs Perla Pichaiah And Others on 8/10/1990JUDGMENT

Abdul Hadi, J.

1. The plaintiff died after the judgment in the suit and before filing this appeal. Of his legal representatives, his son has preferred this appeal and his wife and daughters are respondents Nos. 2 to 7 in this appeal. The first respondent in this appeal is the defendant.

2. The deceased plaintiff was the indorse of two promissory notes (1) exhibit A-1, dated September 11, 1971, for Rs. 11,250 with interest at 12 per cent. per annum, executed by the defendant in favour of one G. Subramaniam, and (2) exhibit A-2 of the same date of Rs. 4,200 with interest at 12 per cent. per annum, executed by the defendant in favour of one P. Lakshmiah. According to the plaintiff, both the promissory notes were indorsed by the above said promisees, G. Subramaniam and Lakshmiah, respectively, in favour of the plaintiff at Madras on September 6, 1974. The relevant endorsement are respectively marked as exhibits A-3 and A-4. The suit is for recovery of the sums due under the said promissory notes. But the suit was dismissed by the trial court on the ground that (1) the plaintiff was not a holder in due course; (2) the promissory notes were not supported by consideration; (3) the abovesaid alleged indorsements were not true; (4) in any case, the indorsements were not made at Madras; and (5) the trial court at Madras has no jurisdiction to try the suit. The trial court also held that the defendant was entitled to the benefits of the Debt Relief Act (4 of 1938).

3. If the trial court has no jurisdiction to try the suit, then it should not have gone into the merits of the case. Therefore, let me first of all consider whether the finding of the court below that it has no jurisdiction to try the suit is correct. The defence in this regard is that the indorsements are not true and even assuming they are true, they were not made at Madras. The further defence is, payment under the promissory notes has to be made only at Gudalur in Andhra Pradesh and so the trial court at Madras has no jurisdiction to try the suit. Now, so far as this jurisdiction issue is concerned, as per section 20, Civil Procedure Code, even if any part of the cause of action for the suit arose at Madras, that is, within the jurisdiction of the trial court (City Civil Court, Madras) then the suit can be tried by the said court. So, if it is proved that the payment of the sums due under the promissory notes has to be made at

Madras, the suit could be filed in the trial court. Even if it is not so, if the abovesaid indorsements were proved to have been made at Madras, then also, the suit could be entertained at by the trial court, Madras (vide Mangamma v. Sathya Raju [1916] 31 MLJ 816).

4. Now, regarding the place of payment, exhibit A-2 no doubt states that the payment should be made at Gudalur. But exhibit A-1 is silent about it. Learned counsel for the appellant, in this connection brought to my notice sections 68 to 70 of the Negotiable Instruments Act. Sections 68 and 69 run as follows :

"68. A promissory note, bill of exchange or cheque made, drawn or accepted payable at a specified place and not elsewhere must, in order to charge any party thereto, be presented for payment at that place.

69. A promissory note or bill of exchange made, drawn or accepted payable at a specified place must, in order to charge the maker or drawer thereof, be presented for payment at that place".

5. So, section 68 covers the case where the promissory note, etc., is payable "at a specified place and not elsewhere", while section 69 covers the case where it is payable "at a specified place". So, the present case, so far as exhibit A-2 is concerned is covered by section 69 and hence the promissory note must be presented for payment at Gudalur in Andhra Pradesh and so, this part of cause of action arises not at Madras, but at Gudalur, Andhra Pradesh.

6. The decision in V. C. Jayaram Mudaliar v. C. M. Sivaram, , cited by learned counsel for the appellant, holding that the term "specified place" in section 69 must have been intended to refer not to a vast area in general terms like a large city as Madras, will have no application to the present case since Gudalur cannot be termed as such a large city. So far as exhibit A-1 promissory note is concerned, section 70 of the Negotiable Instruments Act would operate, which runs as follows :

"A promissory note or bill of exchange not made payable as mentioned in sections 68 and 69, must be presented for payment at the place of business (if any) or at the usual residence, of the maker, drawee or acceptor thereof, as the case may be".

7. So, according to section 70, exhibit A-2 must be presented for payment at the place of business or at the usual residence of the defendant, which is admittedly, Kavali, Andhra Pradesh. The plaint itself describes the defendant as residing at Kavali, Andhra Pradesh. So, relating to this part of the cause of action, viz., payment of the sum due under the promissory notes, the plaintiff cannot bring the suit in the trial court at Madras.

8. Now, let me consider whether the other part of the cause of action, viz., the alleged indorsements would give the plaintiff the right to file the suit in the trial court. Here, as earlier indicated, it has to be seen first of all, whether the indorsements alleged were true and if so, whether they were made at Madras. The case of the defendant is that the indorsements were not true and were not for consideration and at any rate were not made at Madras. The trial court no doubt finds that the contention of the defendant that the promisees simply signed in blank on the reverse of exhibits A-1 and A-2 and sent them to the plaintiff and that the same were later filled up by, or at the instance of the plaintiff as if indorsements were duly made by the promisees in his favour, is not at all rendered improbable in this case. But, the trial court erred to note that under section 16 of the Negotiable Instruments Act, a mere signing by the promisee in the promissory note can be a proper indorsement, so, the indorsements in the present case are true.

9. Then the question is whether the indorsements made on September 6, 1974, were made at Madras. On the said question, no doubt the trial court has held that in view of the difference in the evidence given by PW-1 (plaintiff) and PW-2 (who typed exhibits A-3 and A-4) on the one hand and PW-3, the attestor of exhibits A-3 and A-4 on the other hand, the indorsements were not actually made at Madras on September 6, 1974. But the trial court failed to note that despite the said difference, both deposed that the indorsements took place only at Madras. Further, even though DW-1, the defendant deposed that on September 6, 1974, the promisees did not go to Madras, he did not say so in exhibit B-1 dated September 7, 1974, the lawyer notice sent by him to the plaintiff. He only stated in exhibit B-1 that the plaintiff colluded with the other persons and his relatives and was trying to drag the defendant to a court of law at Madras unnecessarily with a view to trouble the defendant. If really the promisees were not at Madras at all on September 6, 1974, but were at Kavali on that date, as deposed by him, he would have stated so in exhibit B-1 itself. So, the version of the defendant as DW-1 in this regard cannot be believed. Further, even to PW-2 there was no suggestion that indorsements were not made at Madras at all. Therefore, I hold that the indorsements were made at Madras and the trial court has jurisdiction to try the suit.

10. Then, coming to the merits of the case, there is no difficulty in holding that exhibits A-1 and A-2 promissory notes were executed by the defendant for consideration, in view of the following admissions of the defendant as DW-1 :

"I have borrowed monies from them under promissory notes or handloans apart from exhibits A-1 and A-2. There is no enmity between me and these promisees. We are on good terms with each other even today .... exhibits A-1 and A-2 are in my handwriting ..... There is the signature of Singaiah as an attesting witness for exhibits A-1 and A-2. Singaiah's family and my family are close for three generations ..... There is no enmity between me and Singaiah ..... In exhibit A-9, I have mentioned that I owe Rs. 22,000 to Subramaniam and Rs. 4,200 to Lakshmiah. In exhibit A-15, also I have mentioned above Subramaniam also. But, I cannot say whether Rs. 22,250 refers to Subramaniam's debt due from me."

11. Then coming to the question whether the indorsements in question were for consideration and whether the plaintiff was a bona fide holder in due course, I find that no doubt PW-1, the plaintiff has deposed that on payment of consideration, the indorsements, exhibits A-3 and A4 were made. There is also the presumption under section 118(a) of the Negotiable Instruments Act that the negotiable instrument was indorsed for consideration. But, I think in the present case, it has to be concluded that the said presumption has been rebutted in view of the fact that despite several demands made at several stages by the defendant, the plaintiff did not produce the account books of the promisees for the period around September 6, 1974, the date of indorsements and the plaintiff has also not examined the promisees. Therefore, adverse inference has to be drawn against the plaintiff in this regard. In paragraph 5 of the written statement dated August 4, 1976, itself the defendant demanded the production of the accounts of the promisees for the relevant period. Even earlier, in November, 1974, itself at the time of the application for leave to defend also such a demand was made. The plaintiff, as PW-1 also admitted thus :

"The defendant had called upon me in his leave to defend application to produce the account books even in November, 1974."

12. PW-1 also admits that "since suggestions were put that no amount was advanced by the promisees during trial of the suit" he asked the promisees to produce the account books. Even in exhibit B-3 notice dated August 29, 1977, long before the trial in January, 1978, the said account books were asked to be produced. DW 1 also admitted thus : "I received exhibit B-3 on September 6, 1977". But, they were not produced at all. Even exhibits A-16 and A-18 the account books which were produced only on January 20, 1978, did not relate to the period around the indorsement date September 6, 1974, but relate only to the period 1971-72.

13. Learned counsel for the respondent cited the decision in Kundan Lal Rallaram v. Custodian, Evacuee Property, AIR 1961 SC 1316. There it has been held as follows :

Section 118 lays down a special rule of evidence applicable to negotiable instruments, and the court as per section 118 shall presume, inter alia, that the negotiable instrument or endorsement was made for consideration. In effect section 118 throws the burden of proving failure of consideration on the maker or the endorser of the note as the case may be. The evidence required to shift this burden need not necessarily be direct evidence, that is, oral or documentary evidence or admissions made by the opposite party; it may comprise circumstantial evidence and presumption of law or fact. The plaintiff therein says that he has sold certain goods to the defendant, that the promissory note was executed as consideration for the goods, that he is in possession of the relevant account books to show that he was in possession of the goods sold and that the sale was effected for a particular consideration. Then he should produce the said account book. If such a relevant evidence is withheld by the plaintiff, section 114, Evidence Act enables the court to draw a presumption to the effect that, if produced, the said account books would be unfavourable to the plaintiff. This presumption, if raised by a court, can under certain circumstances, rebut the presumption of law raised under section 118 of the Negotiable Instruments Act.

14. In view of this decision of the Supreme Court, I think there is force in the argument of learned counsel for the respondent that the presumption under section 118(a) has been rebutted by the defendant. Therefore, I hold that the abovesaid indorsements in question were not for consideration. Even exhibit A-7 account book of the plaintiff, though mentions that the plaintiff paid the consideration to the promisees for exhibits A-3 and A-4 on September 6, 1974, does not mention about the payment of court fee for the suit, which comes to about Rs. 1,500 which is not a small sum. Further mere entries in the plaintiff's own account book exhibit A-7 by themselves would not prove passing of consideration for the indorsements in question. The Supreme Court has held in Chandradhar Goswami v. Gauhati Bank Ltd. as follows (at page 111 of 37 Comp Cas) : "..... no person can be charged with liability merely on the basis of entries in book of account, even where such books of account are kept in the regular course of business. There has to be further evidence to prove payments of the money which may appear in the books of account in order that a person may be charged with liability thereunder, except where the person to be charged accepts the correctness of the books of account and does not challenge them". 15. For all these reasons, I hold that the plaintiff is not a bona fide holder as defined in section 9 of the Negotiable Instruments Act, under which, only an indorsee for consideration can be a holder in due course.

16. In the result, the appeal is dismissed. But, in the circumstances of the case, there will be no order as to costs.

M.C. Chegganmull Sowcar vs Desur Manicka Mudaliar on 15/10/1925JUDGMENT

Ramcsam, J.

1. This appeal arises out of a suit to recover money due on two promissory notes. The plaintiff is the appellant before us, the learned trial Judge having dismissed the suit except as to Rs. 800 admitted due by the defendant and deposited by him in Court. The suit was filed on the 24th of January, 1923, under the summary procedure. The defendant applied for leave to defend in February. Leave was granted on the 5th of March and the written statement of defendant was filed on the 15th of March. The two suit promissory notes are dated 17th December, 1921 (Ex. B) and 22nd December, 1921 (Ex. A)and carry interest at the rate of Rs. 2-13-0 per cent per mensem. The plaintiff and defendant ordinarily reside at Tindivanam in the South Arcot District. On the 22nd of April, 1922, the plaintiff through his Madras vakil Mr. Mahadeva Aiyar sent 2. notice demanding the balance due on Ex. B(Ex. V). Two days after, the same vakil issued another notice, Ex. D, in which he mentions that he was really instructed by his client to demand the amount due on both the promotes but that one of them was omitted from the first demand by mistake and the mistake having been detected the second notice was sent. In the second notice he mentions that two amounts of Rs. 1,000 each were paid on 3rd February and 16th April. The defendant In his reply notice Ex. VI, dated 1st May, 1922, and in his written statement pleaded that besides the payments admitted by the plaintiff he made two other payments, viz., a sum of Rs. 1,000 on, 5th-January, 1922 and another sum of Rs. 700 on 22nd April, 1924. I shall first deal with the payment of Rs. 700. The defendant examined himself (D.W.1) and D, Ws. 2, 3 and 4 to prove this payment. D.W. 2 is Krishnaswami Aiyar, a clerk in the Firm of Srinivasa Aiyangar and Sons. He says his firm lent Rs. 1,200 to the defendant and that the defendant wanted it to give to some Marwari whose name he does not remember. D.W. 3 is Subramania Aiyar, a clerk in the Official Assignee's Office. He saw payment of some amount in hundred-rupee notes by the defendant to plaintiff at the gate of the High Court and he and D.W. 4 were present. D.W. 4 corroborates him. He does not know the number of notes, but he saw the counting by the plaintiff who said it was 7. Defendant himself swears that Rs. 700 was paid on 22nd April out of the Rs. 1,200 borrowed from Srinivasa Aiyangar and Sons. He sent word to the plaintiff who was living at St. Thomas Mount. The plaintiff has not gone into the box. His clerk produced the account books which will be referred to later on and he does not know anything personally about these transactions. The defendant's ledger (Exs. 1 and l-A) supports him. The result is, we must believe the evidence adduced for the defendant and find that this payment of Rs. 700 has been proved. It follows that the plaintiff is not an honest man.

2. The other payment of Rs, 1,000 is admitted by the plaintiff before us and also in the Court below at the time of trial. But his contention with respect to it is, that it was credited by him towards a third pro-note executed by the defendant to the plaintiff on 5th November, 1921, for Rs. 1,000 carrying interest at 2 per cent. The defendant in his affidavit (dated 23rd February, 1923) which he filed for obtaining leave to defend mentioned in para. 5: " The account-book of the plaintiff himself may, if produced, substantiate the payment of the said sum of Rs. 1,700." In the counter-affidavit of the plaintiff, para. 2, the plaintiff said: "I deny that the defendant paid the sums of Rs. 1,000 and Rs. 700 referred to in paragraphs 4 and 5 of the affidavit and say that the said payments are absolutely false. " This statement of the plaintiff is now sought to be explained by his Advocate as meaning that the payments towards the suit pro-notes were meant to be denied and not the fact of payment itself so far as the payment of Rs. 1,000 is concerned. Even with this explanation, as far as the payment of Rs. 700 is concerned, I have already found that the statement must be false. As to the other payment, seeing that the defendant who sent the amount through his son, who signed in the plaintiff's account book, and who must have informed his father of the entry, refers to the fact of entry in the account book in paragraph 5 of his affidavit and that the plaintiff himself relied on such account books at the trial to prove the credit towards another pro-note, I find it difficult to believe that the plaintiff, assuming that he is dishonest, meant to deny the payment of Rs. 1,000 on 5th March, 1923. It seems to me unlikely that he meant to deny both payments on 5th March and afterwards in August during the time of trial meant to admit one of them. It seems to me that the affidavit of the plaintiff who is a Marwari was drafted for him by a careless pleader or pleader's clerk and signed by him without realising its full import. I make these remarks not for the purpose of establishing that the plaintiff is an honest man and with the other finding he cannot be made honest.

3. but merely to know what the probability is. Whatever it may be, we have got the fact that he admits payment of Rs. 1,000 and the only question is, whether there is a legally binding appropriation of the payment towards another pro-note. This other pro-note was mentioned to the defendant in his cross-examination and he was asked to produce his day book of that date. But he said he has not got it. The day book produced by him begins from 21st November, but its non-production is immaterial. He admitted the pronote after he was shown the entry in the plaintiff's book signed by the defendant's son He said: " This pronote amount was not borrowed for my business. You may look into my account. The entry is signed by my son Ramalingam. I might have borrowed another amount from the plaintiff on 5th November, 1921 (By Court): I did borrow it. I have been keeping separate ledgers. There is a ledger prior to the one! I have filed in Court but it belongs to my own business while the one I have filed belongs to the joint business. Prior to November, 1921, I have got a day book for my own business. There is also a ledger page maintained for my dealings with the plaintiff for that period. The balance due on that ledger has been brought over to this ledger. It would have been entered in all other ledgers like that. That is paddy business, joint business, and this is ground-nut business. In regard to my own business there would have been nothing there prior to November, 1921, and so it would not have been brought forward." This deposition shows

that the defendant admitted the pronote of 5th November, 1921, after some hesitation, but suggests that it is connected with some joint business which is a paddy business. He does, not say who the other partner is, nor does he say that the pronote was signed by himself and the other partner. Nor does he say that the plaintiff knew it was a business joint between defendant and another. I do not suggest by referring to his hesitation that the defendant is dishonest. I am satisfied that he has been honest throughout this case. But he hesitated at first probably because he was afraid that the entry signed by his son may bind him as an appropriation towards the other note. The defendant's son was examined as D.W. 5. He was in school in the year 1921. He says his father gave him Rs. 1,000 and he paid it to the plaintiff but did not get any document or pronote. In cross-examination he admits his signature under the entry in plaintiff's day book, Ex. C, which shows that the amount of Rs. 1,000 was credited towards the pronote of 5th November, 1921. He was then asked: "Q. You told your father what you wrote here? A. No." This question suggests that he wrote the whole entry. It is true that the question is a double question and that double questions are not generally fair to witnesses. But seeing that the question was not objected to either by the witness or by his vakil Mr. Govindachari and seeing it is a very simple question which is not apt to confuse a witness, I think it is clear to me that neither the witness nor the defendant's vakil meant to suggest that the entry was not written by the witness. The only other alternatives are that the entry was written by some other person but signed by the defendant's son or there was no entry then but the bare signature of the witness taken then and there was an interpolation afterwards. There is no re-examination of the witness suggesting such interpolation. Nor did Mr. Govindachari seriously suggest before us, though 1 put the suggestion to him, that the entry was interpolated afterwards. I cannot imagine that the Judge and the practitioners on either side were thinking that they were exhibiting the signature of the witness only as an exhibit, for, such exhibit is of no use in the case. I think all understood in the Court below that the whole entry with the signature was meant to be exhibited and that effect of the entry made by the plaintiff but not communicated to the defendant. Mr. Tirunarayana-chari, the learned Advocate for the plaintiff, contended that the notice, Ex. D, may be taken to be a notice of appropriation towards the note of 5th November. But this contention cannot be accepted. Ex. D makes no reference to the pro-note of 5th November. It is true that, in that notice, the payment of Rs. 1,000 on 5th January was not mentioned as a payment towards the suit notes. But it cannot be necessarily inferred from this that the amount must have been credited towards the third note. There are other alternatives. The amount might have been kept in suspense or one might imagine that it was a mere piece of omission as Ex. D already shows that the vakil committed other mistakes. In Ex. VI the defendant mentions to plaintiff that that amount was sent towards the suit pronotes. This is the first occasion on which an appropriation known to both parties is stated. Mr. Tirunarayana-chari contends that a debtor can intimate the appropriation he desires only along with the payment or so immediately after it as to form part of the same transaction and cannot make his appropriation long after the payment. It is true that if the defendant does not intimate his wishes along with the payment there is a chance of the creditor making an appropriation and intimating to the debtor and thus shutting the mouth of the debtor for ever. But supposing the creditor has not made any appropriation, can it be said that the debtor cannot make the appropriation which he wishes, some reasonable time after, say, a week or a

month or three months, It may be said that whenever he intimates such a wish after a reasonable interval it formed part of the same transaction as the payment. But should it be immediately after the payment? I do not see why it should be immediately after a payment. The words " with an intimation " in Section 59, Indian Contract Act, are not inconsistent with an intimation after a reasonable interval. So long as both have not made an appropriation, I do not see why the debtor cannot intimate the appropriation he wishes to the creditor later on. Mr. Tirunarayanachari, though he had first denied that a debtor cannot do this, practically conceded this in his argument. In such a case, he said, the creditor leaves it open. If once so much is conceded it follows that the essence of an appropriation is that it should be known to both parties and if not communicated by the creditor that it is left open, for, if we hold an uncommunicated entry in an account-book effective, an entry in an informal note-book or a loose piece of paper or even a piece of paper put in an envelope and secreted or even a bare mental resolution to appropriate in a particular way (sworn to by the creditor) would bind the debtor. In the case of regular account-books generally an extract of the accountbook is sent to the opposite party according to the custom in commercial circles. In The Mecca (1) cited by the appellant Lord Herschell said at page 292:

It is clear that if the appellants had merely entered in their own books an account such as was transmitted, it would not have amounted to any appropriation by them, and they would still have been at liberty to appropriate the payment as they pleased. It is equally clear, however, that when once they had made an appropriation and communicated it to their debtors, they would have no right to appropriate it otherwise. What, then, was the effect of bringing the items of debt into a single account, and transmitting it to their debtors in the manner they did?

4. This quotation shows that so long as the appropriation was not communicated to the debtor, the creditor can alter it afterwards, thereby showing that an uncommunicated appropriation is not complete as between both parties. If it is so complete, one cannot alter it. There seems to be an analogy between this, and the communication of an acceptance of an offer of a contract or a revocation. The principle seems to be that unless both parties have known the entry it is not complete as between both the parties. It is difficult to see why an uncommunicated appropriation in an account-book should be binding on the debtor but the creditor may be at liberty to alter it. At page 294 Lord Macnaghten says:

But it has long been held and it is now quite settled that the creditor has the right of election up to the very last moment,' and he is not bound to declare his election in express terms. He may declare it by bringing an action or in any other way that makes his meaning and intention plain. Where the election is with the creditor, it is always his intention expressed or implied or presumed, and not any rigid rule of law that governs the application of the money. The presumed intention of the creditor may no doubt be gathered from a statement of account, or anything else which indicates an intention one way or the other and is

communicated to the debtor, provided there are no circumstances pointing in an opposite direction.

5. The use of the words " express, implied or presumed, " " communicated, " " indicates an intention " show that a concealed or secreted entry cannot satisfy the requirements laid down by Lord Macnaghten. In Simson v. Ingham 2 Barnewall and Cresswell, p. 65, 107 ER 307 at 310 Bayley, J. observed:

If, indeed, a book had been kept for the common use of both parties as a pass-book, and that had been communicated to the opposite party, then the party making such entries would have been precluded from altering that account.

6. See also Friend v. Young (1897) 2 Ch 421 at 437 and Smith v. Betty (1903) 2 KB 317 at 324 and Chitty on Contracts, pp. 851 and 852. In the present case, up to 1st May, 1922, neither party communicated his intention to the other. For the first time in Ex. VI the defendant mentioned that he paid the amount towards the suit notes. Within four months after the payment he repeated this in his affidavit of February, 1923. The plaintiff does not contradict it up to the trial. I do not see that we must infer that he accepted the defendant's wishes, for he was pressing his suit, but it seems to be a piece of foolish and meaningless cleverness in not stating his own appropriation up to the trial. Though I am not able to infer that the payment must be taken to be appropriated by the creditor towards the suit notes under the circumstances existing on 5th January, 1922, within the meaning of Section 59 of the Contract Act see Rameswar Koer v. Mahomed Mehdi Hossein (1898) ILR 26 Cal 39 (pc) all the later circumstances up to the trial, I think, justify me in rejecting the plaintiff's earlier concealed appropriation as ineffective and in holding that the defendant's intimation in Ex. VI was reasonable in the circumstances and binds both the parties. This conclusion is not inconsistent with the expressions of Lord Macnaghten in The Mecca (1) or of Vaughan Williams, Romer and Stirling, L. JJ. in Seymur v. Pickett (1905) IKB 715 for the question whether the debtor may intimate if the creditor has left it open, did not arise and was not considered in these cases. At first I thought this conclusion is hard on the plaintiff for the suit on the other note would now be barred. On the other hand Mr. Govindachari pointed out that a suit for contribution by him against his partner will now be barred. The result is I excluded all questions of hardship from my mind in dealing with the case especially as I have no sympathy with the plaintiff. But I may now point out that suit on the other note by him will not be barred as the defendant's deposition in August 23 is an acknowledgment' of that note. Anyhow the plaintiff is not now entitled to recover Rs. 1,000. I have dealt with the case at great length just as the argument also took a little more than the usual time a case of this kind ought to have taken, because I was anxious to deal with the facts and the law only on the merits uninfluenced by the opinion which we have formed about plaintiff's honesty with reference to the other payment. It is admitted that the interest due to plaintiff is still due. The

amount of interest was admitted also in Ex. VI in May, 1922. No arrangements were made for paying it up to the date of suit and even after the suit defendant deposited only the principal amount of Rs. 800 and not the interest, thus necessitating the appeal. But Mr. Govindachari contends for the defendant that the suit does not lie in Madras. He refers to Sections 68 and 69 of the Negotiable Instruments Act, and the suit notes mentioned " in Madras or any place where you have your shop as the place of payment". The only specified place is Madras. But the other clause might cover a number of other places. Mr. Tirunarayanachari argued that Sections 68 and 69 do not apply as more than one place is mentioned. But the word "place" must be construed as including "places" as it would be anomalous to require presentment if one place is mentioned but none if two places are mentioned. If more than one place is mentioned there must be presentment at one or other of those places. The demand by Ex. D does not amount to a presentment. The result is strictly the plaintiff has no right of action to sue without presentment but the defendant did not take the point in this shape, namely, that the plaintiff has no right to sue but raised only the question of jurisdiction. I do not see how these sections can help the defendant on the particular plea he has taken. The object of presentment seems to be to give the defendant an opportunity to pay, and until presentment no right to sue arises. But the Negotiable Instruments Act does not provide that after presentation at one of several places that one place to the exclusion of others is the place which determines jurisdiction for a suit. Nor do I find any such provision in the corresponding English Law, Section 87 of the Bills of Exchange Act. The section of the Civil Procedure Code which mentions the place of performance of the contract also as giving jurisdiction stands and is unaffected by Sections 68 and 69 of the Negotiable Instruments Act, an Act which has nothing to do with the questions of jurisdiction. I must, therefore, disallow the plea of the defendant, a plea which is important only on the question of costs. If the defendant's plea had been upheld we would disallow all costs to plaintiff while giving a decree for interest, but as it is by the defendant's waiver of plea of right of suit that the plaintiff is able to get a decree for the balance of principal and interest I must disallow plaintiff's costs in the Court below. But the defendant's omission to admit the interest or deposit has necessitated the appeal. I therefore award plaintiff proportionate costs on the amount of interest in appeal only. The result is, the plaintiff will have a decree for the amount of interest due up to the date of deposit of Rs. 800 in Court with further interest on it from the date of the Lower Court's decree at 6 per cent up to date of payment. Plaintiff will have proportionate costs in appeal only on such amount. He will pay defendant's costs on the rest of his claim throughout Phillips, J.: I. agree. On the question of jurisdiction I entertain some doubt, but I am not prepared to differ from my learned brother's opinion. I accordingly concur in the order proposed by him.