Naranjee v Khan and Another (Civil Suit No. 540 of 1952) [1953] EACA 48 (1 January 1953)

ORIGINAL CIVIL

Before WINDHAM, J.

KANJEE NARANJEE, Plaintiff

$\mathbf{v}$

BABU KHAN, First Defendant LAHORI RAM BHALLA, Second Defendant

Civil Suit No. 540 of 1952

Bills of Exchange Ordinance (Cap. 291), section 87 (2)-Delay of 18 months in presentment of promissory notes—Whether reasonable—Section 50 (2) (d) (ii) read with section 90-Presentment to endorser admitted-Whether notice of dishonour necessary.

The plaintiff sued the second defendant, on five promissory notes, as endorser. The endorser pleaded, inter alia, unreasonable delay, ranging from 16 to 18 months, in presentment of the notes. The reason for delay, accepted by the Court was a request, by the endorser, for presentation at intervals, to allow time to pay. Presentment for payment to the endorser was admitted, but he pleaded that no valid notice of dishonour had been given.

Held (7-1-53).—(1) Section 87 (2) of the Bills of Exchange Ordinance provides that, in determining what is a reasonable time for the presentment of a promissory note, the nature of the instrument and the facts of the particular case shall be taken into account; a promissory note payable on demand is deemed to be a continuing security; and, a satisfactory explanation having been given, the delay was, in the circumstances, not unreasonable.

(2) Presentment for payment to the endorser being admitted, section 50 (2) (d) (ii) read with section 90 of the Bills of Exchange Ordinance dispensed with notice of dishonour and notice was superfluous.

Semble.—The Court not being satisfied that the bills were accommodation notes. notice of dishonour would have been unnecessary by virtue of section 50 (2) (d) (iii) Bills of Exchange Ordinance.

Case followed: Chartered Mercantile Bank v. Dickson, (1871) L. R. 3 P. C. 574.

Khanna for plaintiff.

Vaid for second defendant.

JUDGMENT.—The plaintiff sues the second defendant on five promissory notes for Sh. 400 each. He sues him as endorser. Judgment by default has already been given (though not yet executed) against the first defendant as maker of the notes. The notes were made out in favour of the second defendant, and were endorsed in favour of the plaintiff by P. L. Bhalla signing "for Lahori Ram Bhalla", the second defendant, who is his brother.

There are three lines of defence to this action. First that P. L. Bhalla had no authority to endorse the notes on his brother's behalf, and that he did so upon a false representation by the plaintiff that his brother had so authorized him. Secondly (in the alternative) that the notes were not presented for payment within a reasonable time. Thirdly (in the alternative) that no valid notice of dishonour of the notes was given.

In connexion with the first line of defence a great deal of evidence has been given, some not directly relevant. The second defendant and his brother,

P. L. Bhalla, who endorsed the notes on his behalf, have testified that the latter was not the former's agent, that the former never authorized the latter's endorsement, and that the plaintiff misrepresented to the latter that the former had authorized him to endorse on his behalf.

The plaintiff denies that he ever made any such representation to P. L. Bhalla. The plaintiff's manager and accountant, Pandya, says this: "Second defendant told me that his brother Peshori Ram would sign the pronotes and that he had authority from him (2nd defendant) to do so. I believed second defendant when he said this, as Peshori Ram was looking after the whole office". The first defendant himself, called as the plaintiff's witness, says this: "Second defendant said, 'I am going to Uganda'." I said, "Then who will execute the documents in your absence?" Second defendant replied giving me to understand that his brother Peshori Ram was authorized to sign documents in his (second defendant's) absence, and that he would do so in this case.

I unhesitatingly accept the evidence of the plaintiff and his manager, Pandya, and the first defendant, and reject that of the second defendant and his brother, as regards this question of authorization, and I find as a fact that P. L. Bhalla, the second defendant's brother, was held out by the second defendant as his agent and was in fact authorized by him to sign on his behalf (inter alia) the five promissory notes that are the subject matter of his action. I would add that I also accept the first defendant's explanation and reject that of the second defendant as to why the words "part of the purchase price of Field Tailors" were inserted on the notes. In connexion with this evidence it is to be observed that illegality of consideration has not been pleaded. The first line of defence therefore fails.

The second line of defence is that the promissory notes were not presented for payment within a reasonable time. They were all dated 21st September, 1950, and were payable on demand. Two of them were presented for payment on 1st February, 1952, and the remaining three on 11th March, 1952. They were presented at the place where they were expressed to be payable, namely the National Bank of India Ltd., Nairobi. Thus the delay in presentment was 16 to 18 months. In explanation of this delay the witness Pandya has given uncontradicted evidence that "I presented these five demand notes as late as I did, because first defendant asked me to present them at intervals so that he could pay them". Section 87 (2) of the Bills of Exchange Ordinance (Cap. 291) provides that in determining what is a reasonable time for presentment of a promissory note the nature of the instrument and the facts of the particular case shall be taken into account. So, while a cheque is normally intended for prompt presentment, a promissory note payable on demand is deemed to be a continuing security. In Chartered Mercantile Bank v. Dickson, (1871) L. R. 3 P. C. 574, a delay of ten months in presentment of a demand note (one of a series) was held not an unreasonable one, upon a satisfactory explanation being given. So in the present case I consider that the explanation of the delay is satisfactory and that this delay of up to 18 months was in the circumstances not unreasonable. The second line of defence accordingly fails.

The third line of defence is that no valid notice of dishonour of the notes was given. This defence, however, must fail on a point of law. For it is averred in the plaint that the notes were presented for payment to both the first defendant (maker) and the second defendant (endorser). This averment of presentation to the second defendant was not traversed in his statement of defence, which merely denied (in paragraph 6) that the presentment was made within a reasonable time. Presentment for payment to the second defendant is therefore admitted. That being so, this third and last line of defence is demolished by section 50 (2) $(d)$ (ii)

of the Bills of Exchange Ordinance (read together with section 90 which applies its provisions to promissory notes) which provides that notice of dishonour is dispensed with as regards the endorser, where the endorser is the person to whom the bill is presented for payment. In the present case notice of dishonour was given or purported to be given. But since by reason of section 50 (2) (d) (ii) it was dispensed with, it was superfluous, and therefore no defence relying on any defect in the notice can be entertained. This last ground of defence therefore fails. For the purpose of record only, I would add that the plaintiff, through his witnesses, has failed to satisfy me that these were accommodation notes, which would have made notice of dishonour unnecessary by virtue of section 50 (2) (d) (iii). Since, however, it was unnecessary by virtue of section 50 (2) (d) (ii) the point is academic.

For these reasons I give judgment in favour of the plaintiff against the second defendant in the amount prayed, namely Sh. 2,060: being the total of the five promissory notes for Sh. 400 each, plus Sh. 60, noting charges which are untraversed on the pleadings and were unchallenged in evidence or argument, together with interest thereon at court rates and the costs of this suit.