JUDGMENT

Anoop V. Mohta, J.

1. This Appeal has been preferred by the original defendant No. 16/appellant herein against the original plaintiff/respondent No. 1 herein - Central Bank of India and other original defendants Nos. 2 to 15/rcspondent Nos. 2 to 15 herein, and thereby challenged the judgment and decree dated 11th July, 1988, passed in the Special Civil Suit No. 236 of 1975 between the parties, in respect of the finding, as well as, the decree against the said defendant-appellant herein.

2. The respondent No. 1-original plaintiff had filed the Suit basically against the respondent No. 2 and respondent Nos. 3 to 15 as Partners of the respondent No. 1 for the amount of Rs. 2,20,320.81 on the basic agreement/transaction called credit facilities including Clean Demand Endorsed Bills Limit and a Usance Bill Limit. From time to time, parties used to execute necessary documents like pronote. The said Bill Limit was for Rs. 2,00,000/- and Rs. 4,00,000/- which was increased from time to time. On 27-9-1972, a consolidated pronote was executed to the tune of Rs. 84,00,000/-. The respondent No. 1 alleged that it was a practice in the Bill Discounting Limits that the respondent No. 2 used to prepare the hundies in the name of a drawee and submit it to the respondent-plaintiff for discounting purposes. The respondent No. 1 used to purchase the hundies and make the payment to the respondent No. 2 immediately on its submission. Thereafter, within the time limit, the drawee of the hundi, on acceptance of the hundi, used to make payment of the bills connected with the hundi to the respondent No. 1. This practice was continued since 1959 till the Coal Mines (Taking Over Of Management) Act, 1973, came into force. The Custodian was appointed. The appointment date for the Coal Mines (Nationalization) Act, 1973, is 1st May, 1973. Based on that, the Custodian was inter-charged of the assets of the Mine owners from 31st January, 1973 to 30th April, 1973.

3. The respondent No. 2 was doing a business of coal mining and owned Ballarpur, Shasli and Ghugus Coal Mines. As per the practice, after despatch of the coal to the purchaser party, the respondent No. 2 used to prepare the bill of the goods sold and used to submit it for discount, along with hundies to the respondent No. IBank. The respondent No. 1-Bank immediately on submission used to credit the amounts of bill to the account of the respondent No. 1 and on acceptance of the drawee of the hundi, the amount was to be recovered from the drawee. The plaintiff had restricted the Suit for the claim of Bills Discounting Facility against the original defendant Nos. 1 to 16.

4. As alleged, the appellant-original defendant No. 16 was the acceptor of the hundies and the drawee and, therefore, primarily liable for payment of the amount claimed under the provisions of the Negotiable Instruments Act (for short "N.1 Act') and, therefore, the decree was claimed against all the defendants. The Suit was based on the hundies and the amount due on the said hundies. Along with the Suit, Schedule-C was filed that gave full particulars of the plaintiffs' claim in the suit, based on the respective hundies with over due interest and other details. This Schedule remained undisputed. The Schedule further provides date of purchase, number of hundies, amount of bill, due date, date of acceptance of payment, interest at 12% upto 15-9-1975 and amount of paid bill. Accordingly, total amount of the suit, as referred above, was claimed. The undisputed position on the record further shows the date and details of the number of accepted hundies and the interest claimed thereon. The same is reproduced as under:

"A) Madras Office :

Hundi No. Amount of Bill Date of Acceptance Interest of Hundi not acce pted

1 2 3 4 786 16,736,57 Not accepted 4,835.75 (Exh.144)

789 15,613.05 Not accepted 4,487.05 (Exh.l45)

Total of 2 + 4 = Rs. 41,672.42

B) Bangalore Office :

785 7,602.33 Not accepted 2,343.20 (Exh.138)

799 3,304.36 Not accepted 1,107.35 (Exh.140)

810 3,327.15 -do-- 1,023.20 (Exh.l42)

Total of 2 + 4 = Rs. 18,617.59

TOTAL OF (A) + (B) OF NON ACCEPTED HUNDIES ALONG WITH INTEREST IS RS. 60,290.01

C) Interest for delayed payment on accepted Hundies in Nagpur Office and Madras Office is Rs. 63,863.45."

TOTAL CLAIM IN APPEAL IS RS. 1,24,153.46 (Rs. 60,290.01 + Rs. 63,863.45)

This also includes the interest on the delayed payment on the accepted hundies in Nagpur, as well as, Madras Office.

5. The said suit was opposed by respective original defendants by their Written Statements. However, they claimed that on acceptance of the hundies, the appellants had accepted liability to make the payment of the amount of hundies to the respondent-Bank. According to these defendants-respondents, on acceptance by the appellants, they were primarily discharged from the liability to pay to the respondent-Bank and appellants were primarily liable to make the payment. They resisted the claim of the interest also.

6. Appellants, in their Written Statement, however, resisted the total suit and raised the issue about jurisdiction. They resisted that there was no agreement between the plaintiff and defendant No. 16 in the matter of payment of interest.

7. The learned Judge, after considering the material, as well as, the evidence led by the parties, decreed the suit against all the original defendants including the appellants. Appellants-original defendant No. 16 has preferred this Appeal. The original defendant Nos. 1 to 14-respondent Nos. 2 to 15 herein, have not preferred any Appeal against the said judgment and decree. All respondents in the First Appeal are served. There is no cross-objection. Therefore, basically the judgment and decree dated 18th July, 1988, remained unchallenged so far as all other original defendants are concerned i.e. respondents Nos. 2 to 15 herein. They are bound by this judgment and decree in all respects. Therefore, controversy remained to be discussed only in respect of the appellants i.e. defendant No. 16. Rest of the finding, therefore, remained untouched.

8. The learned counsel appearing for the appellant submitted that the judgment and decree impugned is unsustainable so far as the hundies, which were accepted, are concerned. Those details of the hundies, as referred above, have remained undisputed. The interest claimed on such hundies, as well as, the interest for delayed payment on accepted hundies so far as appellant is concerned, therefore, was unlawful. There was no specific agreement between the parties, specially between the respondent No. 1 and the appellant. This part of the decree, therefore, is unsustainable. The learned counsel, therefore, has restricted his Appeal to the tune of Rs. 1,24,153.46. The statement, as recorded above, clarifies the position. He, therefore, contended that the Appeal be allowed to the extent of Rs. 1,24,153.46 (60,290.91 + 63,863.45). In support of his contention, he relied on , Jagjivan Mavji Vithlani v. M/s Ranchhoddas Meghji, , American Express Bank Limited v. Calcutta Steel Co. and Ors., 2001 (3) Mh.LJ. 389, Jetu Jacques Taru Lalvani v. Solestra Industries Pvt. Ltd., Bombay, 1969 MPJJ 491 = 1969 JLJ 711, Gabhabhai Velji v. Commissioner of Income Tax, M.P. and , Manick Chand Bagri v. Chartered Bank and Anr.

9. The learned counsel for the respondent No. 1-contesting plaintiff-Bank, however, supported the judgment even on the findings given by the learned Judge in respect of decree against the appellant. The undisputed position of law which is settled and remained undisturbed till this date is in respect of liability of payment of drawee or drawers on the principle of acceptance and/or non- acceptance of such hundies. The present Suit admittedly is based on such transactions of hundies. Sections 31, 32, 61, 64 and 78 of the N.I. Act gives the clear scheme and provisions for payment, as well as, liability of the drawee of a negotiable instrument. In the present case, the admitted position, as referred above, which reflects from the Plaint filed by the plaintiff-Bank itself, which remained undisputed, that the drawee-appellant could not be made liable to make the payment if those hundies, which were not accepted. The said acceptance must be in writing and must be clearly endorsed, preferably on the same document. There is no question of oral or further document which can be relied on. In the present case, as per the Bank's case itself, no such evidence has been placed on the record and this undisputed position further endorsed and/or decided the liability of such drawee. In Jagjivan Mavji Vithalani (supra), the Apex Court's decision has crystallized the issue as under :

"Under this section, the liability of the drawee arises only when he accepts the bill. There is no provision in the Act that the drawee, is as such liable on the instrument, the only exception being under Section 31 in the case of a drawee, of a cheque having sufficient funds of the customer in his hands; and even then, the liability is only towards the drawer and not the payee. This is elementary law, and was laid down by West, J. in - 'Khandas Narandas v. Dahiabhai', 3 Bom 182 at p. 183 (A) in the following terms;

"Where there is no acceptance, no cause of action can have arisen to the payee against the drawee. "

This judgment, in fact, covers the whole argument of the learned counsel appearing for the appellants. The Supreme Court, in American Express Bank (supra) further endorsed in paragraphs 7 and 14, after considering the detail procedure, as well as, the principle of law of such Bill of Exchange, which further concludes the issue. Those paragraphs are reproduced as under:

"7. It would thus be clear that the maker of a bill of exchange, is the drawer; the person thereby directed to pay is called the drawee; after the drawee had signed his assent upon the bill he is called the acceptor, in the absence of any contract to the contrary, the acceptor, before maturity of a bill of exchange, is bound to pay the amount thereof at maturity according to the acceptance to the holder on demand. No person except the drawee of the bill of exchange, in case of numerical drawees one or all drawees of the person named thereon as a drawee in case of need or for honour can bind himself by an acceptance.

14. "Acceptance" in regard to a bill of exchange is a technical term. It does not mean "taking " or "receiving ". Acceptance of a bill of exchange is the signification by the drawee of his assent to the order of the drawer. If is the act by which the drawee evinces his consent to comply with, and be bound by, the request contained in a bill of exchange directed to him, and is the drawee's agreement to pay the bill when it falls due. In commercial parlance acceptance of a bill of exchange is the drawee's signed engagement to honour the draft as presented. The contract of the acceptor is a new and independent one. It comes within the rules as to consideration for a contract, on a negotiable instrument and, like every contract on a negotiable instrument, is incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto. Acceptance, generally speaking, is therefore, necessary to render a drawee liable, upon a bill of exchange and until he accepts it the drawee is not liable on the bill. As between a drawer and a drawee, the latter is to be under an obligation to accept a bill of exchange drawn by the former. Thus it is a well-settled rule of commercial law that no one but the person upon whom it is drawn, or is duly authorised agent, can accept a bill except for need of honour. We have, therefore, no hesitation to hold that no person except a drawee of a bill of exchange can bind himself by acceptance. The drawee of the bill of exchange, in the absence of any contract to the contrary, on acceptance is the acceptor before maturity by the bill of exchange and is bound to pay the amount thereof at maturity to the holder on demand. When the drawee does accept he undertakes that he will pay the bill according to the tenor of the acceptance and he remains primarily liable on the bill of exchange as acceptor."

In view of the above declared decisions of the Supreme Court, the decisions of the other High Courts, including our High Court, as cited, need no further discussion. The above principle as crystallized, in my view, takes care of the contentions raised by the learned counsel for the appellants, specially when those facts, as well as, the statements placed in the record, remained unchallenged.

10. The appellants, therefore, cannot be fastened with the liability of the bills, which were not accepted. In view of this, as per the statement filed on the record, the appellants are not liable for the same amount. If this is so, the interest on such hundies was also not liable to be recovered from the appellants. Therefore, along with the principal amount of those hundies, which were not accepted, the amount of interest also goes. The appellant, therefore, as prayed, succeeds in this aspect.

11. What remains thereafter is the interest for the delayed payment on the accepted hundies as awarded by the impugned judgment. Paragraph 18 of the judgment deals with the same. The agreed rate between the respondent No. 1 and other respondents, for want of challenge, remained undisturbed. Those respondents are liable for the same. However, appellant herein, as contended even in the Written Statement that there was no agreement between the Bank and the appellant so far as interest for delayed payment on accepted hundies. In absence of any agreement, the appellant was not liable for the said interest also. The evidence led by the parties and basically by the Bank admitted in the evidence of one (PW1) Sushant Kumar as follows:

"There was no direct agreement between the plaintiff and defendant No. 16 in respect of the payment of interest. "

There was no contrary evidence placed on record to show the existing agreement between the Bank and the appellant. The further evidence of (PW2) Asholumar Wani also endorses the same view. The relevant portion is as under :

"I have not brought the record to show that the plaintiff Bank had recovered the interest for the delayed payment from defendant No.

16. It is not true top say that the defendant No. 16 never at any point of time had made the payment towards the interest for the delayed payments."

Appellant in his Written Statement, as well as, in his evidence also resisted the same and to that there was no rejoinder and/or any opposition as such. The Written Statement, at page 180 also supports the contention as raised by the appellant.

12. Therefore, considering the above material, as well as, undisputed position on record, according to me also, appellants not liable for this payment on non-accepted hundies, interest thereon and the interest for the delayed payment. Therefore, the total amount as prayed in the First Appeal by the appellants which remained to be modified is Rs. 1,24,153.46. The judgment and decree is modified accordingly by dismissing the plaintiff's claim for Rs. 1,24,153.46 against defendant No. 16.

13. The appeal, therefore, is partly allowed. Decree is maintained so far as other defendants are concerned. However, the liability of the appellant is restricted to the tune of Rs. 1,24,153.46. No order as to costs.