Case: Seth Jagjivan Mavji Vithlani Vs. Messrs Ranchhoddas Meghji

it is payable on demand, as is the suit 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 v. Pralhaddas Subkaran, 20 Bom 133 at p. 141 (B), "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 sight 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 is maintainable by the payee against the drawees.7. 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 acknowledgement that 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 required by the law.8. On the question of the presentment of the hundi for acceptance, the position stands thus : The person who present 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 in the Act requiring that bills payable at sight should be present for acceptance by the holder or on his behalf, and there was, for bill 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 his 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.9. 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 observation of Baron Parke in --- "Bank of Ireland v. Archer, (1843) 11 M and W 383 at pp. 389, 390 (C). 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, (1808) 1 Camp 425 (D) ). But the law was altered in England by Section 17 (2) of the Bill 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 became an acceptor, when he has signed his assent upon bill. In view of these provisions, there cannot be, apart from any mercantile usage, an oral acceptance of the hundi, mush less an acceptance by conduct, where at least no question of estoppel arises.10. But then, it was argued that the possession of the hundi was not the only circumstances from which acceptance could be inferred; that there was the plea of the defendants that they had discharged the hundi; and that that clearly imported an acknowledgement 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 acknowledgement 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 acceptance by them of the instrument and not an acknowledgement of liability. As the law prescribes no particular form for acceptance, there should be no difficulty in construing an acknowledgement 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 acknowledgement 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

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]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 required by thea 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 v. Pralhaddas Subkaran, 20 Bom 133 at p. 141 (B), "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 sight 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 is maintainable by the payee against theperson who present 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 in the Act requiring that bills payable at sight should be present for acceptance by the holder or on his behalf, and there was, for bill 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 his 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 acceptance7 of the Negotiable Instruments Act following the English law, provides that the drawee became an acceptor, when he has signed his assent upon bill. In view of these provisions, there cannot be, apart from any mercantile usage, an oral acceptance of the hundi, mush less an acceptance by conduct, where at least no question of estoppelthat the plea of discharge of a hundi implies an acknowledgement 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 acceptance by them of the instrument and not an acknowledgement of liability. As the law prescribes no particular form for acceptance, there should be no difficulty in construing an acknowledgement 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 acknowledgement 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 SectionIn conclusion, we must hold that there was neither a valid presentment of the hundi for acceptance, nor a valid acceptance thereof