G BALAKRISHNAN Vs. OFFICIAL ASSIGNEE MADRAS

JUDGEMENT

(1.) THIS is an appeal against the order of Ramaprasada Rao, J., as he then was, dated 1st July, 1977. The facts are not in dispute. The insolvent drew a cheque on 8th December, 1970, but post-dated it as 15th December, 1970 and gave it to one Venkateswara Movies with whom he had transactions in film trade. Venkateswara Movies (mistakenly referred to in the order as "drawee") discounted the cheque with the appellant, on 29th December, 1970 and according to the appellant, Venkateswara Movies obtained consideration from him. However, the appellant was not permitted to present the cheque for payment from time to time at the instance of Venkateswara Movies and ultimately when the cheque was presented after a period of six months, it was dishonoured. It is thereafter the appellant preferred a claim before the Official Assignee. The Official Assignee rejected the claim holding that the appellant was not a holder in due course and the cheque was not supported by consideration. Against this order of the Official Assignee, an appeal was preferred before the learned Judge in Appln. No. 274 of 1977. The learned Judge, while disagreeing with the Official Assignee on the two points mentioned above, still upheld the rejection of appellant's claim on the ground that the appellant not having presented the cheque within a reasonable time, namely, six months, according to the usual custom in mercantile practice, having been hand-in-glove with the payee was not entitled to claim the amount in insolvency though he could have a cause of action against the payee. It is the correctness of this conclusion that is challenged before us.

(2.) THE learned Judge, for holding that the appellant cannot make a claim against the insolvent, relied on section 84 of the Negotiable Instruments Act, dealing with the consequence when a cheque was not duly presented within the reasonable time. However, what the learned counsel for the appellant contended before us is that under section 73 of the Act a drawer is not absolved of his liability because the casque is not presented within a reasonable time. Section 73 read as follows " "A cheque must in order to charge any person except the drawer be presented within a reasonable time after delivery thereof by such person. Section 83 reads as follows: "1. Where a cheque is not presented for payment within a reasonable time of its issue, and the drawer or person on whose account it is drawn had the right, at the time when presentment ought to have been made, as between himself and the banker, to have the cheque paid and suffers actual damage through the delay, he is discharged to the extent of such damage, that is to say, to the extent to which such drawer or person is a creditor of the banker to a larger amount than he would have been if such cheque had been paid. 2. In determining as to what is a reason able time, regard shall be had to the nature of the instrument, the usage of trade and of bankers, and the facts of the particular case.