GANGA PRASAD Vs. HIRA LAL

JUDGEMENT

(1.) The plaintiff in this case sues to recover a sum of Rs. 609, due on a hundi dated the 7th of July, 1909, drawn by Lal Das Kedar Nath on Ram Gopal Bhagwan Das of Delhi, payable sixty-one days after date. The payee is a firm consisting of the defendants of the first party. The hundi was endorsed by the payee to the plaintiffs on the 11th of May, 1914. The plaintiffs endorsed it to Khub Chand Salig Ram, who endorsed it to Kanhaya Lal Brij Lal. The hundi was never presented to the drawers for acceptance, but some time on the 10th of July, 1914, it was presented by the holder for payment. In the meantime the firm of the drawers failed somewhere about the 8th to the 10th of July, 1914. The drawees refused to pay the amount. The last holder therefore demanded repayment from his endorser and obtained it. In the same way the plaintiffs, in their turn, had to pay to their endorsee, and in their turn they now claim payment from the defendants of the first set (their endorsers) as well as the drawers. The courts below have given a decree against the drawers, but have dismissed the suit against the payees. The decree against the drawers is perhaps of but little value as their business has failed. The plaintiffs therefore have appealed to this Court with the object of obtaining a decree against their endorsers. The hundi was never presented for acceptance by any one, and payment was refused when it was presented for payment on the 10th of July, 1914. The question in the case is whether the payees who endorsed over the hundi to the plaintiffs are responsible for the amount claimed.

(2.) Under Section 35 of the Negotiable Instruments Act (XXVI of 1881), in the absence of a contract to the contrary, whoever endorses and delivers a negotiable instrument before maturity, without in such endorsement excluding or making conditional his own liability, is bound thereby to every subsequent holder, in case of dishonour by the drawee, acceptor, or maker, to compensate such holder for any loss or damage caused to him by such dishonour, provided due notice of the dishonour has been given to or received by such endorser as hereinafter provided.

(3.) Again, under Section 37, "the drawer of a bill of exchange until acceptance, and the acceptor are, in the absence of a contract to the contrary, respectively liable as principal debtors, and the other parties thereto are liable thereon as sureties for the drawer or acceptor as the case may be." Section 38, however, lays down that "as between the parties so liable as sureties, each prior party is, in the absence of a contract to the contrary, also liable thereon as a principal debtor in respect of each subsequent party."