MADHAVDAS JETHABHAI Vs. DEVIDAS VARDASA

JUDGEMENT

(1.) This is an appeal from a decision of Mr. Justice Kania, and it raises an interesting point as to the liability of the drawee upon a Shah Jog hundi. The facts, so far as this appeal is concerned, are not in dispute. On March 16, 1927, a firm called Premraj "Panalal drew upon defendants No. 1 certain hundis in favour of the plaintiffs, the direction in the hundis being to pay the amount of the hundis to a Shah. The hundis were sent by the plaintiffs to a firm called Ramkaran Ramnath up-country, and in the course of post they were stolen. Subsequently, an indorsement by Ramkaran Ramnath in favour of one Umarsaheb, who was presumably the thief, was forged on the hundis. They were then presented by Umarsaheb to defendants No. 2 in Bombay, and defendants No. 2, who are admittedly Shahs, obtained payments of the hundis from defendants No. 1 as the drawees. The plaintiffs as owners of the hundis sue in this suit both defendants No. 1, as drawees, and defendants No. 2, as the persons to whom payment was made, to recover the amount of the hundis, and the learned Judge gave judgment against both the defendants. Defendants No. 2 have, not appealed, and, therefore, the only matter with which we have to deal on this appeal relates to the liability of defendants No. 1 as drawees, and the question for determination is, whether in the case of a Shah Jog hundi the drawee paying to a Shah is absolved from liability notwithstanding that the Shah claims under a forged indorsement, that is to say, has no title in fact to the hundi.

(2.) It is admitted that, in the case of an ordinary hundi, if the drawee pays to somebody having no title, he is liable in conversion to the true owner; but Mr. Setalvad says that that principle does not apply to the case of a Shah Jog hundi. Now, there is no special custom pleaded in this caseshowing that the rule applicable to an ordinary hundi does not apply to a Shah Jog hundi, nor was any evidence given in support of any special custom. But Mr. Setalvad relies on decided cases as showing that the drawee paying to a Shah on a Shah Jog hundi is absolved from all liability. The first case on this subject is Daulatram Shriram v. Bulakidas Khemchand (1869) 6 B.H.C.R. (O.C.R.) 24. That was a case in which the drawees, who had made payments to a Shah under a forged indorsement, were suing the Shah for repayment of the money. The learned Judge discussed in some detail the peculiarities of a Shah Jog hundi, and he held that in the case of a Shah Jog hundi the direction must be to pay to a Shah, and if the Shah receiving payment has no title, he is liable to repay the amount to the drawee, unless the Shah produces the forger, or there has been some delay or laches on the part of the drawee in making his claim. So that the actual decision does not touch the point with which we have to deal here, because it does not involve any question as to the liability of the drawee. The next case on which Mr. Setalvad relies is Ganesdas Ramnarayan V/s. Lachminarayan (1894) I.L.R. 18 Bom. 570 and that is the only case in which the liability of a drawee was in issue. The facts there were that the drawees had paid to the holder of a hundi, who had in fact no title to it. But what the Court actually held was, that the person to whom payment had been made was not a Shah, and on that ground the drawees could not escape liability. There again the actual decision does not really assist us one way or the other. Mr. Setalvad asks us to infer that if the payment had been made to a Shah, the drawees would not have been liable ; but the decision does not go tliat length. None of the other cases to which we have been referred, in my opinion, really have any bearing on the question for our decision, and in my view the appellants have failed to prove that there is any custom relating to a Shah Jog hundi whichabsolves the drawee paying the amount of the hundi to a person having no title, although a. Shah, from liability in conversion to the true owner.

(3.) I think, therefore, that the appeal must be dismissed with costs. Rangnekar, J.