Dossabhai Hirchand v. Virchand Dalchharam

1. The plaintiff firm Dossabhai Hirchand brought this summary suit as endorsees to recover the amount of Rs. 4,000 due upon a cheque drawn by defendant 1 firm Virchand Dalchharam in favour of defendant 2 firm Hargovan Jeychand on the Bank of India, Ltd. Defendant 1 firm pleaded that the suit as framed would not lie as the cheque had the word “bearer” struck out and there was no substitution of the word “order” and that therefore the cheque was not negotiable within the meaning of the Negotiable Instruments Act. Defendant 2 firm did not obtain leave to defend, though one Parbhudas denied that he was a partner in defendant 2 firm. The plaintiff, thereupon, alleged a custom and usage of merchants, whereby a cheque with the word “bearer” struck out and without the word “order” was regarded as an “order” cheque and negotiable in Bombay. The first defendant firm replied that no such usage of merchants even if proved, could be recognized as it would override the express provisions of the Negotiable Instruments Act.

2. Now, the alleged custom has been spoken to by a number of witnesses, and no reason has been shown to reject their statements. They were the Chief Accountants of the Bank of India and of the Central Bank: the Assistant Accountants of the Chartered Bank of India, Australia and China, of the National Bank of India, of the Mercantile Bank of the Hongkong and Shanghai Banking; Corporation and of the International Bank; and do evidence has been forthcoming in rebuttal of their statements. It would appear dear therefore that the alleged usage does exist among merchants and bankers in Bombay. But it is equally clear that the custom and usage of regarding such a cheque as an “order” cheque, if recognized, would be an extension of the definition of “negotiable instruments” contained in Section 13 of the Negotiable Instruments Act, 1881. That definition would appear to have been framed upon the old law in England as laid down by Tindal, C.J in the case of Plimley v. Wesley (1). It did not include the rule that an instrument:

“which is expressed to be payable to a particular person and does not contain words prohibiting transfer or indicating an intention that it should not be transferable,”

3. Should be deemed an instrument payable to “order” as prescribed by clause (4), section 8 of the later bills of exchange act, 1882, 45 & 46, vic. c. 61. But it has been laid down by indisputable authority that usages contrary to positive law will not be recognized by the Courts. Cockburn, C. said:

“We must by no means be understood as saying that mercantile usage, however extensive, should be allowed to prevail if contrary to positive law ….. To give effect to a usage which involves a defiance or disregard of the law would be obviously contrary to a fundamental principle,”

4. In the leading case Goodwin v. Roberts (2). The question therefore four decision here is whether the mercantile usage extending the definition of “negotiable instrument” has involved a defiance or disregard of the provisions of the Indian Negotiable Instruments Act. It has, in the first place, to be observed that the Act, according to the preamble, was passed not merely to amend the law but to define it in respect of cheques, bills of exchange and promissory notes.

5. It was, therefore prima facie intended to lay down the whole law regarding those three classes of negotiable instruments. It has in the second place, to be observed that the saving clause in S. 1 saved only local usage relating to instruments in oriental languages such as Hundis, and did not save general usage like Section 1 of the Contract Act. It has thirdly, to be observed that S. 13 made use of the word “means” and not of the word “includes,” and was therefore prima facie intended to be an exhaustive definition of those particular classes of negotiable instruments.

6. And that is the view which was apparently taken by Farran, J., when he referred to the saving clause in S. 1 and the definition in S. 13, at pp. 699 and 697 of the case of Jetha Parkha v. Ramchandra Vithoba (3). It has been suggested that nevertheless it would be permissible to extend the definition though perhaps not to restrict it. But it seems to me that when the definition declared that certain forms of cheques, bills of exchange and promissory notes were meant by the term “negotiable instrument,” it impliedly indicated that no other forms should be included among “negotiable instruments,” upon the principle “expressio unius exclusio alterius.” applicable generally to the interpretation of statutes. It has been urged that extensions have been permitted, as in the case of railway receipts by this Court upon the strength of the provisions of Section 137 of the Transfer of Property Act. But the provisions of that section do not seem to me to be any authority for extending the definition of cheques, bills of exchange and promissory notes specifically within the scope of the Negotiable Instruments Act. It seems to me to be merely authority for extending the incidents of negotiability to such other instruments like railway receipts as have been excluded by S. 137 from the operation of Ch. 8 of the Transfer of Property Act, and as have not been made subject to the legislation of the Negotiable Instruments Act. It seems to me therefore that it is not open to me to give legal recognition to the usage proved in this particular case, as that would be in defiance and disregard of the express provisions of the Negotiable Instruments Act 1881. If it should be desired by merchants and bankers that particular usage should be legally recognized, then their proper course would be to apply for an amendment of the Indian Negotiable Instruments Act, 1881, so as to bring it into line with the later English Statute of 1882. Such an application, however would have to be made not to this Court but to the Indian legislature. (The rest of the judgment is not material to this report—Ed.)

G.P/R.K

7. Suit dismissed.