Nagoor Pitchai v. Kanapalhy PiUai
1963Present: L. B. de Silva, J., and Abeyesundere, J.
NAGOOR PITCHAI, Appellant, and M. KANAPATHY PILL At
and another, Respondents
S. C. 43411961—D. C. Colombo, 23621JS
Cheque—Crossing with words “ not negotiable ”—Consideration not paid by payee—
Right of payee’s indorsee to sue drawer—Rills of Exchange Ordinance, s. 81.
Section 81 of the Bills of Exchange Ordinance reads as follows :—
“ Where a person takes a crossed cheque which bears on it the words* not negotiable ’ , he shall not have and shall not be capable of giving abetter title to the cheque than that which the person from whom he tookit had.”
A cheque which was crossed and marked “ not negotiable ” was drawn byA in favour of B, who paid no consideration for it. B indorsed the chequeto C.
Held, that, by virtue of the provisions of section 81 of the Bills of ExchangeOrdinance, C was not entitled to any better rights upon the cheque than B whoindorsed it to him. Accordingly, inasmuch as an action by B upon the chequewould have failed for failure of consideration, C was not entitled to sue A onthe cheque.
L. B. DE SILVA, J.—Nagoor Pitqhai v. Kanapathy Pillai
A^eal from a judgment of the District Court, Colombo.
Austin Jayasuriya, with G. E. de Silva, for defendant-appellant.
S. Sharvananda, for plaintiff-respondent.
October 9, 1963. L. B. de Selva, J.—
The 1st defendant-appellant was a dealer in produce. The 2nddefendant had been supplying him with produce from time to time. On30. 4. 1980 the 2nd defendant promised to supply certain produce as persamples tendered and obtained from the 1st defendant a cheque forRs. 500 as an advance payment for the produce to be so supplied. The2nd defendant failed to supply the goods on that day, or at any timethereafter, and the 1st defendant stopped payment on that cheque.This cheque was crossed and marked ‘ not negotiable The 2nddefendant had endorsed this cheque to the plaintiff who presented it forpayment and the cheque was dishonoured as payment had been stopped.Thereafter, the plaintiff sued the 1st and 2nd defendants in this action.The defence of the 1st defendant was that he was not liable to pay onthis cheque as the 2nd defendant had failed to supply the goods whichhe had agreed to do. Under Section 81 of the Bills of Exchange Act,a person who takes a crossed cheque bearing the words * not negotiable ’shall not have and shall not be capable of giving a better title to thecheque than that which the person from whom he took it had. Inview of this provision the plaintiff was not entitled to any better title tothe cheque than the 2nd defendant. 'The question that has arisen inthis case is : “ What is meant by a better title to the cheque?”. In ouropinion, it means that the plaintiff is not entitled to any better rightsupon this cheque than the 2nd defendant who endorsed it to him. Byleson Bills of Exchange, Twenty-first Edition, at page 37, dealing with thisSection states :
“ A cheque marked * not negotiable 5 is freely transferable, but theholder of such an instrument is in an exceptional position, since, thoughhe is otherwise a holder in due course, he gets no new and independenttitle and no presumption as to the liablity of antecedent parties isdrawn in his favour. ”
He has cited a number of authorities in support of this proposition.The plaintiff in this case will not be in any better position than the 2nddefendant if he was suing on this cheque, and as the 2nd defendant hadnot supplied the goods on account of which he had obtained this cheque,an action by him on this cheque would have definitely failed for failureof consideration. That defence is open to the 1st defendant as againstthe plaintiff. The plaintiff’s action must, therefore, fail.
We set aside the judgment entered in favour of the plaintiff in this- case, and dismiss his action against the 1st defendant with costs in both
AbeyesukderE, J.—I agree.
NAGOOR PITCHAI, Appellant, and M. KANAPATHY PILLAI and another, Respondents