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The (Indian) Negotiable Instruments Act (Act 26 of 1881): beiny

an Act to define and amend the Law relating to Promissorg Notes, Bills of Exchange and Cheques. Edited by M. D. CHAL

MERS, M.A., of the Inner Temple, Barrister-at-Law.* The Indian Government have recently passed an Act of considerable importance to all who are engaged in the Indian trade or wbo have dealings with Indian Bills.

The Negotiable Instruments Act, which was passed in December last and came into operation on the 1st of March, codifies the Indian law relating to bills of exchange, promissory notes and cheques.

In all its main features it reproduces and enacts the English law on the subject, and on the few points where it departs from English law it is not always evident whether the departure is intentional.

The present volume, which has been very carefully edited by Mr. Chalmers, points out where the Indian Act diverges or appears to diverge, from the English rule, and then states what the corresponding English rule is. Where the Indian and English rules coincide the abstract propositions of the Act are illustrated by reference to English decided cases. Occasional reference is also made to the Continental codes and American law when these seem relevant.

The provisions of the Indian Stamp Act, the Indian Limitation Act, the Indian Companies Act, and the Civil Procedure Code, which relate to negotiable instruments are given in the first appendix, The second appendix contains some forms which may be useful. The material provisions of the Indian Contract Act and the Indian Evidence Act are referred to in the body of the work, which is prefaced by an introduction dealing at length with the whole subject.

Calcutta : Thacker, Spink & Co., Government Place ; Bombay: Thacker & Co., Limited; Madras : Higginbotham & Co. ; London : W. Thacker & Co. 1882,



(Reported in full, see below.)

In this case the facts assumed to have been proved were that the defendant Groome had drawn a cheque, dated the 21st August, 1880, in favour of A. Moss or bearer, and had given it to one Colls on the understanding that it was to be held as security for a bill of exchange, of which the defendant was to procure discount for Colls, and that Colls should not part with the cheque until the defendant procured discount of the bill. Colls on the 29th August had in breach of the agreement paid the cheque to his bankers, the plaintiffs, who had given consideration for it.

The cheque was dishonored, and the bank sued Groome, the drawer for the amount. He contended that inasmuch as the bank had taken the cheque eight days after its date, it was taken subject to all equities between Colls and the defendant, attaching to it in the same way as if it had been an overdue bill.

The Court held that the rule applicable to bills of exchange and promissory notes does not apply to cheques, for the former instruments (unlike cheques) are usually current only during the period before they become payable, and their negotiation after that period is sufficient of itself to excite so much suspicion that, as a rule of law, the indorsee must take them on the credit of, and can stand in no better position than the indorser. With regard to cheques the question is whether they have been taken under such circumstances as ought to have excited suspicion. The lapse, as in this case, of eight days, is, although not conclusive a circumstance to be taken into consideration.


Cheque- Presentment-Laches of Bearer.

The rule of law as to bills of exchange and promissory notes—that an indorsee taking them after maturity takes them upon the credit of, and can stand in no better position than his indorser-does not apply to cheques.

A cheque for £98, dated the 21st August, 1880, directing the National Bank to pay that sum to A. M. or bearer, was handed by the defendant (the drawer) to one C. under circumstances which, if 0. had been suing upon it, would have been an answer to his claim. In fraud of the defendant, C. on the 29th paid it into his account with the London and County Banking Company, who, upon the presentment and dishonor of the cheque on the same or the following day, sued The drawer for the amount. There was no evidence of the absence of bona fides on the part of the plaintiffs, or that they had notice of the alleged fraud of C.:

Held, by Field, J., on further consideration, that the plaintiffs were entitled to recover.

Doron v. Halling (4 B. & C. 330), and Rothschild v. Corney (9 B. & C. 388), considered and distinguished. Action by the bearers against the drawer of a cheque.

St itement of claim. That the defendant on the 21st of August, 1880, by his cheque directed to the National Bank, Notting Hill branch, required the said bank to pay to one A. Moss or bearer the sum of £98; that the plaintiffs became the bearers of the said cheque, and the same was duly presented for payment, and was dishonored; and that the defendant had due notice of such dishonor, but had not paid the amount of the cheque, or any part thereof.

Statement of defence. Paragraphs 1, 2, and 3, admitted the drawing of the cheque, but denied notice of dishonor.

4. On or about the 20th of August, 1880, the defendant handed the cheque to one George Colls, who gave the defendant no consideration for the same, upon a distinct agreement and understanding that the cheque was to be held as security for a bill of exchange which Colls had requested the defendant to procure discount of for him, Colls. Colls further promised and undertook that he would not part with nor in any way deal with the cheque until the defendant procured discount of the said bill of exchange. The defendant was unable to procure discount of the said bill of exchange, and gave notice thereof to Culls before he paid the cheque to the plaintiffs.

5. In breach of the said agreement and in fraud of the defendant, Colls paid the cheque to the plaintiffs, who had notice of the premises.

6. The plaintiffs were the agents of Colls for the purpose only of collecting the proceeds of the cheque, and, if the same was paid, of placing the proceeds to his credit. The plaintiffs have given no consideration for the cheque, and hold the same subject to the agreement before referred to and to the equities existing between Colls and the defendant.

7. The cheque was presented for payment by Colls, and dishonored by the defendant's bank, and the plaintiffs subsequently, at the expiration of eight days, took the same with notice thereof, and subject to the agreement between Colls and the defendant, and the equities existing between Colls and the defendant.

Reply-joiving issue and alleging facts excusing notice of dis. honor.

The cause was tried before Field, J., at the last Michaelmas sittings for Middlesex. The facts and the course which the trial took sufficiently appear in the judgment.

The case was argued, upon further consideration, on the 26th of November, 1881, by H. Matthews, Q.C. (Paget, with him), for the plaintiffs, and by Ross-Innes (Talfourd Salter, Q.C., with lum), for the defendant.

The following authorities were cited :-Brown v. Davies (1): Bophm v. Sterling (2); Robinson v. Hawksford (3); Rickford v. Ridge (4); Serle v. Norton (5); Down v. Halling (6); Rothschild v. Corney (7); Goodman v. Harvey (8); Bank of Bengal v. Fagan (9); Brooks v. Mitchell (10); Serrell v. Derbyshire Railway Company (11); Ingram v. Primrose (12); Story on Promissory Notes, $ 491–498 ; Byles on Bills, 13th ed. 171 ; Chitty on Bills, 11th ed. 161, 163, 188, 360.

Cur, ad. vult,

Dec. 19. FIELD, J. This is an action brought to recover £98, the amount of a cheque of which the plaintiffs were the bearers, It was dated the 21st of August, 1880, and it directed the National Bank to pay that sum to A. Moss or bearer; and the statement of claim alleged presentment for payment, non-payment, and due notice of dishonor.

The defendant by his statement of defence denied notice of dishonor, and alleged that the defendant on the 20th of August, 1880, handed the cheque to George Colls under such circumstances as, if proved and if the latter had been the plaintiff, might have presented a good answer to the claim: and the statement of defence then alleged (par 5) that Colls in fraud delivered the cheque to the plaintiffs, who had notice of the premises.

As a separate defence, the defendant further alleged (par 6) the same circumstances, and that the plaintiffs were the agents of Colls, and had given no consideration, and held the same subject to the equities existing between Colls and the defendant. As a further defence, the defendant said that the cheque was presented for payment by Colls and dishonored, and the plaintiffs at the expiration of eight days took the same with notice, and subject to the equities.

At the trial the plaintiffs proved that Colls was a customer having an account at one of their branches, and that he had on

(1) 3 T, R. 80.
2) 7 T. R. 423.
(3) 9 Q. B. 52.
(4) 2 Camp. 637.
(6) 2 M. & Rob. 401, 401, n.
(6) 4 B. & O. 330,

(7) 9 B. & C. 388. (8) 4 Ad, & E. 870. (9) 7 Moo. P. C. (N.S.) 61, 72, 76. (10) 9 M. & W. 15. (11) 9 O. B. 811. (12) 7 C, B. (N.S.) 82, 83,

the 29th of August (eight days after the date) paid in the cheque to the credit of his account, and that they had given him consideration for the same.

The defendant cross-examined the plaintiffs' witnesses, but did not elicit from them any circumstance tending to show any notice, or absence of bonâ fides on the plaintiffs' part, or that the payment of the cheque by Colls into his account was made under any circumstances which ought to have excited the suspicion of the plaintiffs as reasonable men of business, except the circumstance that the delivery to them was made eight days after the date of the cheque.

The plaintiffs' counsel having contented himself with proving a prima facie case, at the close of it Mr. Talfour Salter said that he had no affirmative evidence to prove any notice to the plaintiffs, and did not wish to address the jury upon the question as to tho consideration given by the plaintiffs or the presentment by Colls alleged in the fifth paragraph or the notice of dishonor; but he submitted that, as the statement of defence alleged that the plaintiffs took the cheque eight days after its date, I was bound to rule that this circumstance alone was sufficient to entitlo him to the benefit of the well-established rule of law, as applicable to overdue bills of exchange and promissory notes, that those who take them take them at their peril, and stand in no better position than thoso from whom they take them as to any equities between the latter and the acceptor or maker attaching to the instrument: and for authority upon this point he cited the case of Down v. Halling. (1) Mr. Matthews, for the plaintiffs, denied the existence of any such rule of law, and relied upon the subsequent case of Rothschild v. Corney. (2)

I, for the purpose of the day, ruled against Mr. Talfourd Salter's contention, and directed a verdict for the plaintiffs ; reserving, however, for further consideration the question whether the mere circumstance that the plaintiffs took the cheque eight days after its date was enough by itself, as a matter of law, to place the plaintiffs in the position of taking at their peril, so as to entitle the defendant to treat them as if they were in the position of Colls, and liable to have their title to sue defeated by any matter attaching to the cheque which would have amounted to an answer against Colls.

The case was afterwards argued before me on further consideration, when all the authorities on both sides were ably and fully brought before me; and, having considered them, I see no reason to alter the view which I took at the trial.

That the holder of an overdue bill or note payable at a fixed


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