« PreviousContinue »
In their report of the 4th October 1877 on the bill, the Select Committee say: "For instance, according to the original definition, a bill of exchange differs from a cheque only, in requiring that the money ordered by the instrument to be paid, should be held at the disposal of the drawer, a distinction which appears to us inaccurate, as a bill of exchange is in law, equally with a cheque, assumed to be drawn against funds in the hands of the drawee. Again, the definition of a cheque would include such an instrument as a tradesman's bill, on which the debtor writes an order to pay, for presentation to a cash-keeper, the ordinary mode of paying bills, at least in Calcutta, and one adopted by many private persons. According to the Draft Bill, such an instrument would apparently be negotiable, a very serious result indeed. Again, the definition of a cheque does not require that it should be drawn upon a banker, or a person acting as such, nor that it should be payable on demand. These are only a few of what seemed to us the more obvious omissions." The following is their definition: “A cheque is an instrument in writing, "containing an unconditional order signed by the maker, direct“ing a specified banker, to pay a certain sum of money only to, or to the order of, a person ascertainable when such order is "given, or to the bearer thereof.”
The next Select Committee, in the bill which they presented with their report of the 27th May 1878, introduced the section as it now stands, but made no remarks. Cheque is defined in the Stamp Act' to be a bill of exchange drawn on a banker, and payable on demand.
From the definition thus settled it will be seen that the difference between a cheque and a bill of exchange is, that it must be drawn on a particular banker,2 and not expressed to be payable otherwise than on demand, whereas we have seen a bill of exchange may be drawn on any one, and be payable at any specified time, or on the happening of an event which must occur. Not being payable at any fixed date or event, the drawee of a cheque is not entitled to-days of grace. It is never accepted in the sense that bills of exchange are, though in London there is a custom by which bankers mark cheques for payment, which as
1 Act I of 1879, s. 3 (6) (App). * See s. 3; Keene v. Beard, 8
C. B. (N. S.) 372; S. C. 29 L. J. (C. P.) 287.
3 Sec. 22.
between bankers may be considered as a promise to pay them.1 A very lucid description of a cheque is found in the Judgment of Lord Wensleydale2
"A banker's cheque is a peculiar sort of instrument, in many "respects resembling a bill of exchange, but in some entirely "different. A cheque does not require acceptance; in ordinary แ course, it never is accepted; it is not intended for circulation; "it is given for immediate payment; it is not entitled to-days "of grace; and though, strictly speaking, an order upon a debtor
by a creditor to pay to a third person the whole, or part of a "debt, yet, in the ordinary understanding of persons, it is not so "considered. It is more like an appropriation of what is treated
as ready money in the hands of the banker, and in giving the "order to appropriate to a creditor, the person giving the cheque "must be considered as the person primarily liable to pay, who "orders his debt to be paid at a particular place, and as being "much in the position of the maker of a promissory note, or the "acceptor of a bill of exchange payable at a particular place "and not elsewhere, who has no right to insist on immediate presentment at that place."
Nothing is said about a cheque being dated any more than a promissory note or bill of exchange in the Act, nor does the Indian Stamp Act provide any penalty for non-dated cheques. Post dating a cheque payable to order, has been held not to invalidate it.3 In another case, a post-dated cheque was held equivalent to a bill of exchange, for the period for which it had to run, and as a banker is under no obligation to accept bills of exchange
1 Warwick v. Rogers, 5 M. & G. 348; Boddington v. Schlencker, 4 B. & Ad. 752; S. C. 1 N. & M. 540; Pollard v. Bank of England, L. R. 6 Q. B. 623; Goodwin v. Robarts, L. R. 10 Ex. 351; Affd. I App. Cas. 476; S. C. 44 L. J. (Ex.) 57 & 157.
2 Ramchurn Mulick v. Luchmeechund Radakissen, 9 Moo. P. C. at p. 69.
3 Bull v. O'Sullivan, L. R. 6 Q. B. 209; S. C. 40 L. J. (Q. B.) 141; Gatty v. Fry, 2 Ex. D. 265, where it was held, that a postdated cheque is admissible in evi
dence, in an action brought after the date of the cheque by the holder, though he took it with knowledge of the post dating, and that the test of its admissibility is whether the instrument appears when tendered in evidence to be sufficiently stamped. Currie v. Misa, 1 App. Cas. 555, where a payment had to be made according to the custom of the trade on a particular day, the cheque though drawn before, was dated as on the day the payment had to be made.
for his customers, he was not liable for not paying it till presented on the due date.
In a case, where a cheque payable to bearer, had, on the 22nd June, been post-dated as of 22nd July, and on the latter date had been transferred to the plaintiff for value, he having no notice it had been post-dated, it was held, that the cheque appearing to be correctly stamped and taken by plaintiff without notice of its being post-dated, he was entitled to recover against the defendant (the drawer), on its being dishonored. Where a number of persons not being partners, have a banking account, they must each sign the cheque, for instance, Trustees, Committee of a Lunatic, Receivers appointed by a Court of Justice.
Though by Sec. 73, in order to charge any party to a cheque except the drawer, a cheque must be presented for payment within a reasonable time, as against the drawer, by Sec. 72, it need only be presented for payment, before the relation between the drawer and his banker has been altered to the former's prejudice.
A cheque, whether payable to bearer or order is, when paid, considered payment of the sum for which it was drawn, and is a discharge of the debt,3 but unless expressly taken as payment, the mere drawing and delivery of a cheque until payment is not.
If a cheque is delivered in payment of a debt to the payee, or his authorized Agent, it operates as payment and discharges the debt, subject only to the condition, that if upon due presentment, the cheque is not paid, the original debt revives. But if the cheque is stolen, or lost by the payee, and on its presentment by a party into whose hands it has fallen, is paid before the payee has had time to give notice of the loss to the banker, or while he delays giving such notice, the loss must fall on him. He has taken the cheque in payment, and cannot call upon his debtor for a second payment, so long as the latter is in no default as regards payment of the cheque on presentation."
1 Forster v. Mackreth, L. R. 2 Ex. 163.
2 Austin v. Bunyard, 3 B. & S. 687; S. C. 34, L. J. (Q. B.) 217; See Gatty v. Fry, 2 Ex. D. 287; Williams v. Jarrett, 5 B. & Ad. 32; Whistler v. Forster, 9 M. & W. 309; S. C. 34 C. B. (N. S.), 248; 32 L. J. (C. P.) 161.
3 Charles v. Blackwell, 2 C. P. D. at p. 159:
Bolye Chund Sing v. Moreland, I. L. R., 4 Cal. 572.
5 Somarimull v. Bhairo Doss Foury, 7 Beng. L. R. 431.
6 Charles v. Blackwell, L. R. 2 C. P. D. at p. 158. ·
Hansard v. Robinson, 7 B. & C. 90; S. C. 9 D. & Ry. 860.
Where a person takes a cheque in payment of a debt, he is estopped from proceeding to enforce the debt, until payment of the cheque is refused, and if it is paid, the debt is extinguished. And where payment of a cheque, given in payment of a debt, is stopped by the drawer, the suspension of the remedy ceases, and the debt remains just as if the cheque had never been given.'
A banker must refuse to honor a cheque if he knows of the death, lunacy or insolvency of his customer, and it is conceived he would also be bound to dishonor a cheque, drawn by a customer, against whom a sentence of forfeiture of property had been pronounced under the Indian Penal Code.
Skeleton cheques may be impressed with a coloured stamp denoting the duty payable, by the Superintendent of Stamps at Calcutta, Bombay, Madras or Rangoon.3
Section 7 of the Stamp Act provides, that any person drawing, paying, or receiving payment, of or in any manner negotiating a cheque, without its being duly stamped, shall be punished with fine, which may extend to five hundred rupees. Section 69 of the same Act however provides, that no prosecution for offences under the Act or any Stamp Act, shall be instituted without the sanction of the Collector, or some other person generally authorized by the Local Government, or specially by the Collector.
The proper stamp duty payable on a cheque for more than twenty rupees is one anna, and it may be stamped with an adhesive stamp whether drawn in, or out of British India, but if made out of British India, the stamp must bear the words "Foreign Bill."" As to the provisions relating to stamping unstamped negotiable instruments after issue, penalties for not stamping them, and the provisions relating generally to negotiable instruments under the Stamp Act (see Appendix).
7. The maker of a bill of exchange or cheque is called the "drawer;" the person thereby directed to pay is called the "drawee."
Drawer and Drawee.-The distinction in English law that the
1 Cohen v. Hale, 3 Q. B. D. 371.
2 Hewett v. Kay, L. R. 6 Eq.
3 Rules of Governor-General, 3rd March 1882.
4 Act I of 1879, Sch. I, Art. XIX. (App).
5 Ib., s. 10. (App).
6 Rules of Governor-General, 3rd March 1882.
maker of a promissory note is not called a drawer is maintained here, the drawer may, in non-legal parlance, be said to be the person who gives the order or direction, while the drawee is the person to whom the order is directed. The same terms are used in the act, as describing the primary parties liable on bills of exchange and cheques, and we shall see further on,' that there is a material difference in the liabilities of the parties to the two different instruments, as affecting the presentment and notice of dishonor necessary.
case of need."
When in the bill or in any indorsement thereon "Drawee in the name of any person is given in addition to the drawee to be resorted to in case of need, such person is called a "drawee in case of need."
Drawee in case of need. This term is what is known to mercantile men in England simply, as a case of need, and is in effect an addition of the name of a person to whom the bill should be presented in case of dishonor, by the party chargeable. A drawee in case of need may accept and pay the bill without previous protest, and when a drawee in case of need is named, it is provided that a bill is not dishonored till it has been dishonored by such drawee. It does not apply to promissory notes or cheques, for, no reference is made to these instruments in the clause.
After the drawee of a bill has signed his assent "Acceptor." upon the bill, or, if there are more parts thereof than one, upon one of such parts, and delivered the same, or given notice of such signing to the holder or to some person on his behalf, he is called the acceptor."
Acceptor. The words in this clause "has signed his assent upon the bill," are somewhat different from those of the English Act which defines what amounts to acceptance. The English Act now in force is 41 Vict. c. 13, s. 1, which was passed in consequence of a decision of the Common Pleas Division in 1878,+
1 Sec. 37.
2 Sec. 116.
9 Sec. 115.
4 Hindhaugh v. Blakey, 3 C.
P. D. 136; see the remarks on this