# Seth Jag;ivan Afaiji Fithlani v. Jvlessrs. Ra11chhodrlas Meghji

- **Citation:** [1955] 1 S.C.R. 503
- **Court:** Supreme Court of India
- **Decided:** 1952-09-09
- **Case number:** Civil Appeal No. 31 of 1954
- **Bench:** Mehr Chand Mahajan C.J, S. R. Di1.s, V1v1AN BosE, Bhagwati, Venkatarama Ayyar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/seth-jag-ivan-afaiji-fithlani-v-jvlessrs-ra11chhodrlas-meghji-355
- **Pages:** 7

## Headnote

Negotiable
Instruments
Act, 1881 (XXV/ of 1881) ss. 7, 32,
61, 64, 78-Drawu, liability of-Acceptance-Bill payable at sight
'>
-Prese1ltment-Acceptance-Oral-W hether valid.
Under section 32 of the Negotiable Instruments Act, 1881, the
liability of the drawee arises only when he accepts the bill. There
is no provision in the Act that the drawee is as such liable on the
instrument, the only exception being under section 31 in the case
of a drawee of a cheque having sufficient funds of the customer in
his lands ; an<l even then, the liability is only
towards the drawer
im<l not the payee.
There is
no substance in the contention that section 61 of
0e :'-ct provides for presentmen~
for acceptance only when the
bill is payable after sight, and not when it is payable on demand.
In a bill
payable
after
sight, there
are
two distinct stages,
·~.54
Mr. 'G', a Senior
Advocate of tic<
Supreme Court.
v.
The Hon'ble Chief
Justice and Judges
of the Higle Court
of Judicature al
Bombay.
Bose J.
1954
May 2&.
1954
Seth Jag;ivan
Afaiji Fithlani
v.
Jvlessrs. Ra11chhodrlas Meghji
504
SUPREME COURT REPORTS
[1955J
1-irstly \.vhen it is
presented
for acceptance,
and later when it is
presented
tor
payi,ncnt.
Section
61
deals
'v1th
the
former,
and section 64 'vith the latter.
Presentment for
acceptance
must
ahvays and in every case precede presentment
for payment.
But
\vhen
the
bill
is payable on demand both the stages synchroni.se
and there is only one presentment, which is
both for
acceptance
und for pay1ncnt and therefore the person who is entitled to recci\ c
the payment under section 78 of the Act
is
the
person who is
entitled to present it for acceptance.
Section 7 of the Negotiable Instruments Act,
1881, follo\ving
the
English
L::nv, provides that the drawee
becomes an acceptor
\vhen he has signed his assent on the bill.
J\ccordingly
there c3n~
not be, apart from any mercantile
usage, an oral acceptance of the
hundi, much
less an acceptance
by
conduct,
where at
least JJO
question of cstoppel arises.
What is requisite
for fixing the drawees
with liability under
section 32 is the acceptance by them of the instrun1Cnt and not an
ackno\vlcdg1nent of liability.
As the law prescribes no
particular
form for acceptance, there should
be no difficulty in construing an
acknowledgment as
an acceptance ; but then, it must satisfy the
requirements of section 7, and inust appear on the bill and be
signed by the dra\vee.
Seth Khandas Narandas v. Dahibai (I.'-..R. 3 Born. 182), Ram
Ravji /anibhekar v. Prahladdas Subhakaran (I.I.. •. R. 20 Born. 133),
Bank of England v. Archer ((1843) 11 M. & W. 383) :ind Harvey, ..
Martin ((1808) I Camp. 425) referred to.
CIVIL
APPELLATE
JuRISDICTION : Civil
Appeal
No. 31 of 1954.
Appeal by Special Leave from the Judgment and
Decree dated the 9th September,
1952, of the High
Court of Judicature at Bombay in Appeal No. 811 of
1951 from the Original Decree arising from the Judgement and Decree dated
the
24th July,
1951,
of the
Bombay City
Civil Court at Bombay in Suit No. 2310
of 1950.
C. K. Daphtary, Solicitor-General for
India (f. B.
Dadachanji and Rajinder Narain, with him) for the
appellant.
S.
C. Isaacs
(S. S. Shukla, with him)
for
the
respondent.
1954. May 28.
The Judgment of the Court was
. delivered by
VENKATARAMA AYYAR J.-The suit out of which this
appeal arises was instituted by
the appellant on a
hundi for Rs. 10,000 dated 4th December, 1947, drawn
' ....
-
•
-
-
S.C.R.
SUPREME COURT REPORTS
505
in his favour by Haji Jethabhai Gokul and Co., of
Basra on the
respondents, who are merchants and
commission agents in Bombay. The hundi was sent
by registered post to the
appellant in Bombay,
and
was acmally received by one Parikh Vrajlal Narandas,
who presented it to the respondents on 10th December,
1947,
and received payment therefor.
It may be mentioned that the appellant had been doing business in
forward contracts through
Vrajlal as
his
commission
agent, and was acmally residing at his Pedhi. On 12th
January,
1948, the
appe

## Text

-
S.C.R.
SUPREME COURT REPORTS
503
of these letters an<l so was aware of the fact that orders
had
been issued.
As a matter of fact, we have ' seen
the originals of the High Court's office files and find
that the names
of the three members of the Tribunal
are in the Chief Justice's handwriting with his
initials
underneath. That is an additional record of the making
of the order.
We hold that an order recorded in the
manner set out above is sufficient for the purposes of
sections 10(2)
and 11(2) of the Bar Councils Act and
hold that the Tribunal was validly appointed.
Mr. G's next point is that there was no "complaint"
to the High Court and so it had no jurisdiction to refer
the matter to the Tribunal. This ignores the fact that
the High Court can refer a matter of this kind "of its
~..
own motion" under section 10(2) of the Bar Councils
Act.
We have dealt with the merits in the connected case.
This petition is dismissed but, here again, we make
no order about costs.
Petition dismissed.
SETH JAGJIVAN MA VJI VITHLANI
ti.
MESSRS RANCHHODDAS MEGHJI.
[MEHR CHAND MAHAJAN C.J., S. R. Di1.s, V1v1AN BosE,
BHAGWATI and VENKATARAMA AYYAR JJ.]
Negotiable
Instruments
Act, 1881 (XXV/ of 1881) ss. 7, 32,
61, 64, 78-Drawu, liability of-Acceptance-Bill payable at sight
'>
-Prese1ltment-Acceptance-Oral-W hether valid.
Under section 32 of the Negotiable Instruments Act, 1881, the
liability of the drawee arises only when he accepts the bill. There
is no provision in the Act that the drawee is as such liable on the
instrument, the only exception being under section 31 in the case
of a drawee of a cheque having sufficient funds of the customer in
his lands ; an<l even then, the liability is only
towards the drawer
im<l not the payee.
There is
no substance in the contention that section 61 of
0e :'-ct provides for presentmen~
for acceptance only when the
bill is payable after sight, and not when it is payable on demand.
In a bill
payable
after
sight, there
are
two distinct stages,
·~.54
Mr. 'G', a Senior
Advocate of tic<
Supreme Court.
v.
The Hon'ble Chief
Justice and Judges
of the Higle Court
of Judicature al
Bombay.
Bose J.
1954
May 2&.
1954
Seth Jag;ivan
Afaiji Fithlani
v.
Jvlessrs. Ra11chhodrlas Meghji
504
SUPREME COURT REPORTS
[1955J
1-irstly \.vhen it is
presented
for acceptance,
and later when it is
presented
tor
payi,ncnt.
Section
61
deals
'v1th
the
former,
and section 64 'vith the latter.
Presentment for
acceptance
must
ahvays and in every case precede presentment
for payment.
But
\vhen
the
bill
is payable on demand both the stages synchroni.se
and there is only one presentment, which is
both for
acceptance
und for pay1ncnt and therefore the person who is entitled to recci\ c
the payment under section 78 of the Act
is
the
person who is
entitled to present it for acceptance.
Section 7 of the Negotiable Instruments Act,
1881, follo\ving
the
English
L::nv, provides that the drawee
becomes an acceptor
\vhen he has signed his assent on the bill.
J\ccordingly
there c3n~
not be, apart from any mercantile
usage, an oral acceptance of the
hundi, much
less an acceptance
by
conduct,
where at
least JJO
question of cstoppel arises.
What is requisite
for fixing the drawees
with liability under
section 32 is the acceptance by them of the instrun1Cnt and not an
ackno\vlcdg1nent of liability.
As the law prescribes no
particular
form for acceptance, there should
be no difficulty in construing an
acknowledgment as
an acceptance ; but then, it must satisfy the
requirements of section 7, and inust appear on the bill and be
signed by the dra\vee.
Seth Khandas Narandas v. Dahibai (I.'-..R. 3 Born. 182), Ram
Ravji /anibhekar v. Prahladdas Subhakaran (I.I.. •. R. 20 Born. 133),
Bank of England v. Archer ((1843) 11 M. & W. 383) :ind Harvey, ..
Martin ((1808) I Camp. 425) referred to.
CIVIL
APPELLATE
JuRISDICTION : Civil
Appeal
No. 31 of 1954.
Appeal by Special Leave from the Judgment and
Decree dated the 9th September,
1952, of the High
Court of Judicature at Bombay in Appeal No. 811 of
1951 from the Original Decree arising from the Judgement and Decree dated
the
24th July,
1951,
of the
Bombay City
Civil Court at Bombay in Suit No. 2310
of 1950.
C. K. Daphtary, Solicitor-General for
India (f. B.
Dadachanji and Rajinder Narain, with him) for the
appellant.
S.
C. Isaacs
(S. S. Shukla, with him)
for
the
respondent.
1954. May 28.
The Judgment of the Court was
. delivered by
VENKATARAMA AYYAR J.-The suit out of which this
appeal arises was instituted by
the appellant on a
hundi for Rs. 10,000 dated 4th December, 1947, drawn
' ....
-
•
-
-
S.C.R.
SUPREME COURT REPORTS
505
in his favour by Haji Jethabhai Gokul and Co., of
Basra on the
respondents, who are merchants and
commission agents in Bombay. The hundi was sent
by registered post to the
appellant in Bombay,
and
was acmally received by one Parikh Vrajlal Narandas,
who presented it to the respondents on 10th December,
1947,
and received payment therefor.
It may be mentioned that the appellant had been doing business in
forward contracts through
Vrajlal as
his
commission
agent, and was acmally residing at his Pedhi. On 12th
January,
1948, the
appellant sent a notice to the
respondents repudiating the authority of V rajlal to act
for him and demanding the return of the hundi, ro
which they sent a reply on 10th February, 1948, denying their liability and stating that Vrajlal was the
agent of the appellant, and that the amount was paid
to him bona fide on his representation that he was
authorised to receive the payment.
On 9th December, 1950, the appellant instituted the
present suit in the Court of the City Civil Judge,
Bombay.
In
the
plaint he merely alleged that
the
payment to Vrajlal was not binding on him, and that
"the defendant-drawee" remained liable on the hundi.
The defendants, apart from relying on the authority
of Vrajlal to grant discharge, also pleaded that the
plaint did not disclose a cause of action against them,
as there was no avcrment therein that the hundi had
been accepted by them.
At the trial, the appellant gave evidence that Vrajlal
had received
the registered cover containing the hundi
in his absence, and collected the amount due thereunder
without his knowledge or authority. The learned City
Civil
Judge
accepted this
evidence,
and
held
that
Vrajlal had not been authorised to receive the amount
of the hundi. He also held that the plea of discharge
put forward by the respondents implied that the hundi
had been accepted by them. In the result, he decreed
the suit.
The defendants took up the matter in appeal to the
High Court of Bombay, and that was heard by Chagla
C.J. and Shah J. who held that the appellant would
1954
Seth Jagjivan
Mavji Vit!ilani
v.
llfessrs. Ranchhoddas 1lfegl!ji.
V e11katarama
A_!'yar J.
1954
Sdh Ja.gjiunn
Mar;ji Vithlani
v.
Messrs. Ranchhod·
das 1-\1eghji.
Venkatarama
Ayyar J.
•
506
SUPREME COURT REPORTS
[1955]
have a right of action on the hundi against the respondents only if it had been accepted by them, and that
as the plaint did not allege that it had been accepted
by them, there was no cause of action against them.
They accordingly allowed the appeal, and dismissed
the suit. The plaintiff prefers this appeal on special
leave granted under article 136 of the Constitution.
There has been no serious attempt before us to challenge the correctness of the legal position on which the
judgment of the High Court is based, that the drawee
of a negotiable instrument is not liable on it to the
payee, unless he has accepted it. On the provisions of
the Negotiable Instruments Act, no other conclusion
is possible. Chapter III of that Act defines the obligations of parties to negotiable
instruments. Section 32
provides that,
"In the absence of a contract
to the contrary, the
maker of a promissory note and the acceptor before
maturity of a bill of exchange are bound to
pay
the
amount thereof at maturity according to the apparent
tenor of the note or acceptance respectively, and the
acceptor of a bill of exchange at or after maturity
1s
bound to pay the amount thereof to the holder on
demand."
Under this section, the liability of the drawee arises
only when he accepts the bill. There is no provision
in the Act that the drawee is as such liable on the instrument, the only exception being under section 31 in
the case of a drawee of a cheque having sufficient funds
of the customer in his hands ; and even then, the ·
liability is only towards the drawer and not the payee.
This is elementary law, and was laid down by West ).
in Seth Khandas Narandas v. Dahibai(1 ) in the following
terms :
"Where there is no acceptance,
no cause of action
can have arisen to the payee against the drawee."
Nor is there any substance in the contention that
section 61
of the Act provides for presentment for
acceptance only when the bill is
payable after sight,
and not when it is payable on demand, as is the suit
(•) I.L.R. 3 Born. •8• at p. 183.
--
'
•
-
-
S.C.R.
SUPREME COURT REPORTS
5('fl
hundi. In a bill payable after sight, there are two
distinct stages, firstly when it is presented for acceptance, and
later when it is presented for payment.
Section 61 deals with the former, and section 64 with
the latter. As observed
in Ram Ravji Jambhekar v.
Pralhaddas
Subkarn (1),
"presentment for
acceptance
must always
and in every
case precede presentment
for payment." But when the bill is payable on demand,
both the stages synchronise, and there is only one presentment, which is both for acceptance and for
payment. When the bill is paid, it involves an acceptance ;
but when it is not paid, it is really dishonoured for
non-acceptance.
But whether the bill is payable after
signt or at sight or on demand, acceptance by the
drawee is necessary before he can be fixed with liability on it. It is
acceptance that establishes privity on
the instrument between the payee and the drawee, and
we agree with the learned Judges of the High Court
that unless there is such acceptance, no action on the
bill in maintainable by the payee against the drawees.
The main contention on behalf of the appellant was
that such acceptance must be implied when the respondents
received
the bill and
made payment therefor.
The
argument was that the very act of the payment of
the hundi to Vrajlal was an acknowledgment thar the
defendants were liable on the hundi to whosoever might
be the lawful holder thereof. The answer to this contention is, firstly, that there was no valid presentment
of the hundi for acceptance ; and secondly, that there
was no acceptance of the same as required by law.
On the question of the presentment of the hundi
for acceptance, the position
stands thus : The person
who presented it to the defendants was Vrajlal ; and if
he had no authority to act in the matter, it is difficult
to see how he could be held to have acted on behalf of
the plaintiff in presenting the hundi. There was only
one single act, and that was the presentment of the
hundi by Vrajlal and the receipt of the amount due
thereunder. If he had no authority to
receive
the
payment, he had no authority to present the bill for
acceptance. It was argued that there was no provision
(I) I.L.R. 20 Bom. i33 at p. 14r.
14-878. C. India/59
1954
Seth ]agjivtlJI
Mavji V ilhfani
v.
Mm« Ranchhotidas Meghji.
Venkataroma
A»ar J.
•
1954
Seth Jagjivan
MavJi Vithlani
v.
Messrs. Ranchhoddas Meghji.
Vtnkatarama
AyyarJ.
•
508
SUPREME COURT REPORTS
[1955]
in the Act requiring that bills payable at sight should
be presented for acceptance by the holder or on his
behalf, as there was, for bills payable after sight, in
section 61. But, as already pointed out, in the case of
a bill payable at sight, both the stages for presentment
for acceptance and for payment are rolled up into one,
and, therefore, the person who is entitled to receive
the payment under section 78 of the Act is the person,
who is entitled to present it for acceptance. Under
section 78, the payment must be to the holder of the
instrument; and if Vrajlal had no authority to receive
the amount on behalf of the plaintiff, there was no
valid presentment of the hundi by him for acceptance
either.
It has next to be considered whether, assuming that
there was a proper presentment of the hundi for
acceptance, there was a valid acceptance thereof. The
argument of the appellant was that as the hundi had
got into the hands of the defendants and was produced
by them, the very fact of its possession would be
sufficient to constitute acceptance. Under the common
law of England, even a verbal acceptance was valid.
Vide the observations of
Baron Parke in Bank of
England v. Archer ('). It was accordingly held that such
acceptance could be implied when there was undue
retention of the bill by the drawee. ( Vide Note to
Harvey v. Martin (•).
But the law was altered in
England by section 17(2) of the Bills of Exchange Act,
1882,
which enacted that an acceptance was
invalid,
unless it was written on the bill and signed by the
drawee. Section 7 of the Negotiable Instruments Act,
following the English law, provides that the drawee
becomes an acceptor, when he has signed his assent
upon the bill. In view of these provisions, there cannot
be, apart from any mercantile usage, an oral acceptance of the hundi, much less an ac.ceptance by conduct,
where at least no question of estoppel arises.
But then, it was argued that the possession of the
hundi was not the only circumstance
from which
acceptance could be inferred ; that there was the plea
(1) (1843) II M. & W. 383 at PP• 389, 390; 150 E.R. 850, 855.
(2) (1808) I Camp. 425; 170 E.R. 1009.
, ..
•
•
'
....
1" ....
-
-
'
S.C.R.
SUPREME COURT REPORTS
509
of the defendants that they had discharged the hundi ;
and that that clearly imported an acknowledgment
of liability on the bill, and was sufficient to clothe the
plaintiff with a right of action thereon.
Assume that
the plea of discharge of a hundi implies an acknowledgment of liability thereunder-an assumption which
we find it difficult to accept. The question still remains
whether that is sufficient in law to fasten a liability on
the defendants on the hundi. What is requisite for
fixing the drawees with liability under section 32 is the
acceptance by them of the instrument and not an
acknowledgment of liability. As the law prescribes no
particular form for acceptance, there
sltould be no
difficulty in
construing
an acknowledgment as
an
acceptance ; but then, it must satisfy the requirements
of section 7, and must appear on the bill and be signed
by the drawees. In the present case, the acknowledgment is neither in writing; nor is
it signed by the
defendants. It is a matter of implication arising from
the discharge of the instrument. That is not sufficient
to fix a liability on the defendants under section 32.
In conclusion, we must hold that there was neither a
valid presentment of the hundi for acceptance, nor a
valid acceptance thereof.
In the result, the appeal fails, and is dismissed with
costs.
Appeal dismissed.
V ASHIT NARAIN SHARMA
v.
DEV CHANDRA AND OTHERS.
[S. R. DAs, GHULAM HASAN and JAGANNADHADAS JJ.]
Representation of the People Act, 1951 (Act XL/II of 1951),
s. 100(1) (c)-Words "the result of the election has been materially
affected"-lnterpretation of-Improper acceptance or rejection of a
nomination paper-Election-Validity of-Onus of proving that the
result
has
been materially affected-Finding of Election Tribunal
based on speculation and conjecture-Mis direction in law.
The words "the result of the election has been materially
affected" in section 100(1) (c) of the Representation of the People
1954
Seth Jagjivan
Mardi Vithlani
v.
Messrs. Ra11ehhod·
das Meghji.
Venkatarama
Ayyar].
1954
May20