TMI Blog1942 (3) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... him to draw ₹ 2,40,000 against them. Mr. Bhagwandas said he wanted a cheque the date of which should be the same as the date on which payment was to be made. Thereupon, Mitter went away taking the two cheques and returned a little while after on the same day with one cheque dated 20th June 1939 drawn on the Bank of Baroda by Ghose in favour of Mitter or order for ₹ 2,75,000. The cheque was crossed / / Co. and on the face of it were written crosswise these words: Marked good for payment on 20-6-39 for the Bank of Baroda, Limited, M.P. Amin, Manager. It is not denied that the signature was that of Amin, the Manager of the Bank of Baroda, Ltd., at Calcutta. There is no direct evidence as to how this cheque came to be so marked, because Ghose, Mitter and Amin were prosecuted by the Baroda Bank for fraud, etc, but not, we are told, in respect of this particular transaction. Ghose has since been discharged, but the prosecution of the two others--Amin and Mitter --is still going on. Mitter endorsed this cheque generally, handed it over to Mr. Bhagwandas and wrote two letters to the Punjab Bank. The first asked the Punjab Bank to credit the ₹ 2,75,000 to his account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reasons he has given. The Judge found that the marking amounted to an acceptance of a bill of exchange and that the Bank of Baroda were liable as acceptors. Further he said I would say however that even if there were no acceptance the evidence shows that bankers are by usage liable on cheques certified by them when presented by parties entitled to present them. On appeal, the contest was substantially on the two issues last mentioned. Apart from the words marked good for payment on 20th June 1939 for the Bank of Baroda, Ltd., M.P. Amin, Manager , it was not contended that the Bank of Baroda could be liable on the instrument. The facts as found are within a small compass. The relevant provisions of law also appear to be short. The Negotiable Instruments Act of 1881 defines bill of exchange in Section 5 thus: 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 promise or order to pay is not conditional , within the meaning of this section and Section 4, by reason of the time for payment of the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that this view is correct. 7. Hart on Banking, Edn. 4, Vol. 1 at p. 341 dealing with marked cheques states: At Common law there is no objection to the acceptance of a cheque, if the holder likes to take it in lieu of payment, but the Bank Charter Acts would in many cases render this illegal. However, a custom has grown up among bankers themselves of marking cheques as good for the purposes of clearance, by which they become bound to one another. As between the bankers themselves accordingly, this marking has an effect analogous to that of the acceptance of a bill, but it does not give the holder of the cheque a right against the banker who has marked it. 8. Halsbury's Laws of England, Edn. 2, Vol. 2 at page 610 states: Occasionally cheques are marked or certified by J the bankers on whom they are drawn. Doing so does not convert the bank into an acceptor of make him liable on the instrument, but it does constitute a representation by him, on which he may be held liable, that the cheque will be paid as drawn if presented within a reasonable time. 9. In Paget on Banking, Edn. 4 at page 164 the learned author devotes a short chapter to the subject of marking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No usage in favour of the holder of a marked cheque has ever been established in this country; and the marking, if intended to be a binding representation as to the drawer's credit will not impose any liability upon the banker, unless signed by him, in which case, of course, it will amount to an acceptance. 12. The practice of banks marking in this fashion cheques drawn on them has been observed at different times in different parts of the world where cheques are used. In Calcutta it is clear from the evidence that some banks do mark cheques so that the drawers can take them to merchants to obtain delivery of goods or to other banks to obtain securities and other documents of title. The exchange banks in Calcutta and in particular the Imperial Bank of India, however, do not so mark cheques, but some of them issue to the customer their own pay orders for the same purpose. We have not been referred to any Indian case on the effect of such marking. In England at one time the practice just referred was to some extent used, because on 7th December 1905, the Committee of London Clearing Bankers resolved: That this Committee strongly recommend the Clearing Bankers to disco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not paid; and the first question is, whether there is any laches as to the time of presentment : as to that, the case of Appleton v. Sweetapple B.R. M. 23 G 3 decides, that a cheque need not be presented on the day on which it is drawn; now this bill was in fact presented and accepted on the very day on which it was drawn : the reason of that haste probably was, in order to fix the banker, lest the drawer should be insolvent before the next day, bankers being usually persons of great substance; whereas the drawer may be of less credit. The mark on the cheque is an engagement to pay at a particular place : is not then the presenting it at that place equivalent to presenting at the banking house? It seems that it is, and that it therefore is no laches; consequently, the surplus of the money for the coals remains due, and judgment must be entered for the plaintiff. 14. This is the only English case bearing on the point I have been able to discover. Cockburn C.J. referred to the same practice in his judgment in Goodwin v. Roberts (1875) 10 Ex. 337 . In Gaden v. Newfoundland Sav-ings Bank 1899 A.C. 281 the Privy Council considered a Canadian case where a marked cheque was in questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uncil in the later Canadian case in Imperial Bank of Canada v. Bank of Hamilton 1903 A.C. 49. A decision of the Supreme Court of the United States of America--Merchants National Bank of Boston v. The State National Bank of Boston (1870) 10 Wallace 604 contains an interesting statement of the American law in this matter. The facts of the case are involved and need not be dealt with here. Swayne J. delivered the opinion of the Court and at p. 647 said: By the law merchant of this country, the certificate of the bank that a cheque is good is equivalent to acceptance. It implies that the cheque is drawn upon sufficient funds in the hands of the drawee, that they have been set apart for its satisfaction, and that they shall be so applied whenever the cheque is presented for payment. It is an undertaking that the cheque is good then and shall continue good and that this agreement is as binding upon the bank as its notes of circulation, a certificate of deposit payable to the order of the depositor, or any other obligation it can assume.... 16. This view of the marking of cheques by the drawee bank appears to have been embodied in the New York Negotiable Instruments Law above referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds, those words must be construed against the Bank of Baroda which used them. I am therefore of opinion that the words marked good for payment on 20th July 1939 for the Bank of Baroda, M.P. Amin, Manager meant that the Bank of Baroda would pay the amount stated in the instrument, i. e., ₹ 2,75,000 on 20th June 1939. I therefore hold that the Bank of Baroda as the drawee of the bill of exchange signed its assent upon the bill. I draw the inference from the known facts as to the drawing of the cheque and the certifying thereof and the handing of the same after certification to the drawer Ghose and/or Mitter that the Bank of Baroda delivered the bill of exchange to the holder or some person on his behalf within the meaning of Section 7, Negotiable Instruments Act, and became on 13th June 1939, the acceptor of the bill of exchange. 19. At the time of acceptance the instrument in question which was in form a post-dated cheque was in law a bill of exchange at seven days date, which on 20th June, became a bill of exchange payable on demand and so a cheque : see Forster v. Mackreth (1867) 2 Ex. 163 at pp. 166 and 167. Having regard to the view I have arrived at, viz., that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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