- (1.) The facts giving rise to this appeal are as under. Firm Messrs Singh Ram- Mata Din, defendants No. 4, drew a hundi in favour of Firm Messrs Khub Chand- Rub Chand, defendant No. 1 on the firm of Messrs Bansi Dhar-Ghansham Das of Calcutta for a sum of Rs. 12,500/-. The said hundi was duly endorsed by defendant No. 1 in favour of the plaintiff-Bank and was handed over to the Bank along with a railway receipt for 267 bags of barley on payment of Rs. 12,500/- by the Bank. The hundi was then sent to the Calcutta Office of the Bank and it is alleged that it reached there on 19-1-1948 because of the fact that postal arrangements were to some extent disorganised in those days. According to the allegations of the plaintiff Bank made in their plaint the hundi was presented to the drawee firm on the 20th January 1948 but the drawee firm kept on promising payment for a long time and on the 15th February, 1948 they finally refused to pay. On 25-2-1948, the Hailey Mandhi Branch of the Bank sent a registered notice to defendant No. 1 which is Exhibit P. G., on the present record. In this notice they informed Messrs Khub Ram-Rup Chand that the hundi for Rs. 12,500/- had been dishonored and that if the of the receipt of the notice the stock of barley covered by the railway receipt would be sold in the open market at the best buyer rate at the defendants risk and if there was any shortfall the firm would be liable to the Bank for the same. It is alleged by the plaintiff Bank that on 18-3-1948, and 23rd March, 1948, goods covered by the railway receipt were actually sold at Calcutta through Firm Messrs. Baldeo Ram-Behari Lal and the total amount received by the said sale was Rs. 5,006/9/9. On 29-4-1948, the Hailey Mandi Branch of the Bank served another notice on Messrs Khub Ram Rup Chand calling upon them to pay Rs. 7,493/3/6 as the balance due from them after allowing them Rs. 5,006/9/9 as the price of barley realised at Calcutta. Defendant No. 1 having failed to pay the said amount the plaintiff Bank brought the present suit against them as also against Messrs. Singh Ram-Mata Din for the recovery of Rs. 8,249/6/3 made up as under: Principal Rs. 7,493/6/3. Interest at 9 p. c. p. a. from Rs. 756/- /- 10th January 1948 to the date of institution of the suit. Total Rs. 8,249/6/3. Rup Chand and Khub Ram partners of defendant No. 1 who had been impleaded as defendants Nos. 2 and 3 respectively filed separate written-statements contesting the claim of the transaction really was been Singh Ram-Mata Din, the plaintiff's and the Calcutta firm and that their firm Messrs. Khub Ram-Rup Chand had nothing to do at all with the transaction and had merely lent their name for the purpose of making an endorsement on the hundi in favour of making an endorsement on the hundi in favour of the Central Bank. The endorsement and signatures of Raup Chand were alleged to have been obtained by the plaintiff's "merely for the sake of formalities of the Bank". The hundi was alleged to be without consideration so far as they were concerned. It was further pleaded that no notice of dishonour had at any time been given to them and that the plaintiff Bank was not entitled to bring the suit in question. The genuineness of the sale of goods and the price recovered were also challenged. The trail Court framed the following ten issues in the case- 1. Whether the hundi in suit was negotiated under the signatures of defendant No. 2 on behalf of the joint Hindu family firm Khub Ram Rup Chand? 2. Whether the ownership of the goods consigned by the railway receipt in dispute passed on the plaintiff by reason of the endorsement in their favour? 3. Whether notice of dishonour was given to the defendant? 4. At what price were the goods sold? 5. To what amount is the plaintiff entitled and against whom? 6. Whether the hundi was required to be presented to Bansi Dhar Ghansham Das at Calcutta in order to make the defendants liable? 7. If so, was the hundi duly presented? 8. Whether there was an agreement between the paties that signatures of defendant No. 2 were to be merely formal and the defendants were not to be liable? 9. Whether Rup Chand defendant No. 2 received Rs. 12,500/- from the plaintiff? 10. If so, is the defendant receiving the amount in suit not liable?
(2.) After recording evidence of the parties the trial Court found that the hundi in suit had been negotiated under the signatures of defendant No. 2 on behalf of the joint Hindu family firm Khub Ram-Rup Chand, that the ownership of the goods consigned by the railway receipt in dispute had not vested in the plaintiff Bank by reason of the endorsement of the hundi in their favour, that no notice of dishonour was given to the defendants, that the goods were sold for Rs. 5,006/9/9, that the hundi was required to be presented to M/s. Bansi Dhar- Ghansham Das of Calcutta, that it was actually presented to them, that there was no agreement between the parties to the effect that the signatures of defendant No. 2 were to be merely formal and that defendants Nos. 1 to 3 were not to be liable on the hundi, that Rup Chand actually received Rs. 12,500/ from the plaintiff Bank and that the defendants were liable to pay to the Bank a sum of Rs. 8,249/6/3. In the result, the suit of the Bank was dismissed on the ground that the notice of dishonour had not been given to the defendants. Aggrieved against the said decree the plaintiff Bank has come up to this Court in first appeal.
(3.) The only points that arise for decision in this appeal are- (1) Whether a notice of dishonour of the hundi in question was necessary in the present case; and (2) whether such a notice had ever been given within reasonable time. The learned counsel for the plaintiff Bank urges that the hundi in dispute was a 'Shah Jog' hundi and did not therefore fall within, the ambit of the definition of a 'bill of exchange' as given in the Negotiable Instruments Act. The hundi is in the following terms: "Compliments from Singh Ram Mata Din, Hailey Mandi, Pataudi Road, to Bansi Dhar-Ghansham Das of Calcutta. We have drawn this hundi for Rs. 12,500/- (rupees twelve thousand and five hundred), doubt of Rs. 6,250/- (rupees six thousand two hundred and fifty) on you under date Poh Badi 15, given to Bhai Khub Ram-Rup Chand of Hailey Mandi. Please make payment immediately on its receipt to a respectable person after satisfying yourself according to the usage of market. Hundi drawn on Poh Badi 15, Sambat 2004 (corresponding to the 11th January, 1948). A railway receipt for 267 bags of barley accompanies this hundi. Signature of: Mata Deen. Address: Bansi Dhar-Ghansham Das, 15, Shiv Thakur Lane, Calcutta," The exact word used in the oriental language, in which the hundi is written is 'Shah' which means a respectable person. The hundi was made payable to a 'Shah'. There can be no doubt that a hundi of this type will fall within the definition of 'Shah Jog' hundi which term is well-known in the commercial world. Unlike a hundi payable to the bearer or a hundi payable to a specified person, a 'Shah Jog' hundi is payable only to a respectable person, and when a hundi of this type is issued it definitely casts a liability on the payee to see that the person to whom the payment is made is in fact a respectable person. Commercial people issue such hundis as a matter of abundant precaution because they do not wish that the payment of the same may be made to a person who may be penniless or a bankrupt. According to S. 13 of the Negotiable Instruments Act, a 'negotiable instrument' means a promissory note, bill of exchange or cheque payable either to order or to bearer. Evidently a hundi is neither a promissory note nor a cheque. The question then remains whether it is a bill of exchange as defined by the said Act. Section 5 of the Act reads as follows: "A 'bill of exchange' is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. A 'Shah Jog' hundi is neither payable to a certain person nor to order of a certain person. It is also not payable to the bearer. The command contained in the hundi is that it should be paid to a 'Shah' or a respectable person after ascertaining whether such a person is actually a respectable person or not. Technically therefore it does not fall within the definition of bill of exchange as given in the Negotiable Instruments Act. The Negotiable Instruments Act, however, is not a complete code on all types of negotiable instruments. Section 1 of the reads as under: "1. This Act may be called the Negotiable Instruments Act, 1881. It extends to the whole of India except the State of Jammu and Kashmir but nothing herein contained affects Indian Paper Currency Act, 1871, section 21, or affects any local usage relating to any instrument in an oriental language; Provided that such usage's may be excluded by any words in the body of the instrument which indicate an intention that the legal relations of the parties thereto shall be governed by this Act; and it shall come into force on the first day of March, 1882." This section,therefore,clearly provides that the strument in an oriental languag. A 'Shah Jog' hundi has always been held to be a document of this type and it has been held in various cases that such a hundi is a negotiable instrument although it is not a negotiable instrument as defined by the negotiable Instrument Act.;