(COURT OF APPEAL *(

BASIL ANTOUN BADRJ v. BAI-IAGWANJEE & JAYANTILAL

AC-APP-19-1965

Principles

·  Negotiable Instrument—Process of protest—Bills of Exchange Ordinance, s. 44— Protest imperative when a bill is presented for payment and dishonoured— Applicable to cheques           

If a cheque is presented for payment and dishonoured, it should be protested. If the process of protest is not carried out in accordance with the provisions of the Ordinance, then the drawer and subsequent indorsers prior to the holder shall, subject to certain well-defined exceptions under the Ordinance, be discharged from liability under Bi1l of Exchange Ordinance, s. .
 

Judgment

Advocates: Henry Riad

Hussein Wanni for respondent

Babiker Awadalla C.J. January 9, 1966 : —This is an appeal against the judgment and decree of His Honour the Province Judge, Blue Nile, ordering appellant and another—a certain Suleiman Abu Zeid a merchant of Wad Medani—who is not a party to this appeal—jointly and severally to pay to respondent a sum of £S.3,5oo—and costs. The facts are as follows:

On March 25, 1964, by virtue of a written contract, Suleiman Abu Zeid undertook to supply appellant with hides and skins by specified installments and at an agreed price. It was provided for in the contract that Suleiman should start delivery commencing April 1, 1964, so that by the end of June a total of 1,350 hides and 500 skins should be delivered. In consideration of that undertaking appellant delivered to Suleiman a post-dated cheque for £S.3.500—payable to the order of Suleiman on the Wad Medani Branch of Barclays Bank. The date of payment of the said cheque was June 30, 1964, .i.e., the date on which it was expected that the total

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deliveries of the goods would have been made. The cheque was liable to be countermanded should Suleiman fail to honour his agreement by supplying the total of the goods agreed to be delivered.

On April 8, i.e., about two weeks after the date of the contract, and only one week from the start of its performance, Suleiman indorsed the said cheque to respondent in consideration of goods and cash supplied.

The court below was satisfied that respondent—on the very day he received the cheque—did contact appellant inquiring about the circumstances in which the cheque was given and was informed by the latter of the true facts. It is not clear to us—nor does it appear to have been clear to the mind of the court below—whether that contract was made while the process of discounting the cheque was in progress or whether it was made immediately before or immediately after it.

No deliveries under the contract between appellant and Suleiman were made by the latter until April 28 when appellant wrote to the Bank countermanding payment. That same day respondent sent the cheque to the Bank for collection in due course and was informed by letter of the step taken by appellant.

It appears that the cheque was again presented by respondent to the Bank for payment and was marked “order not to pay.”

On July 15, 1964, respondent instituted proceedings in the court below against both appellant and Suleiman jointly and severally. Suleiman did not dispute the claim for he was bound on the consideration anyway.

Appellant on the other hand disputed the claim on two counts, viz.:

(a)that appellant did not negotiate any cheque but only a bill of exchange which was subject to all the provisions of the Bills of Exchange Ordinance 1917, including the requirement of acceptance, presentment for payment and protest for non-acceptance and non-payment;

 (b)that alternatively respondent was not a holder in due course because he received the cheque with notice of the fraud practiced by Suleiman on appellant.

The court below dealt with the first ground of defence as a preliminary issue and on December 10, 1964, made a preliminary finding against appellant. It then proceeded to hear evidence as to the allegation of fraud. Both parties were heard on oath as well as Suleiman and other. The court was satisfied on the facts that there was no fraud—or notice of fraud— on the part of respondent precluding him from suing on the cheque and accordingly passed a decree against appellant for claim and costs. Hence this appeal.

Before us, appellant was represented by Advocate Henry Riad and respondent by Advocate Wanni.

Advocate Henry Riad reiterated the same arguments made before the court below including the preliminary issue on which the preliminary finding was made. Advocate Wanni contended that as regards the alleged fraud his client, i.e., respondent had no knowledge of the facts alleged to constitute the fraud and that accordingly respondent was a holder in due course and that appellant had completely failed to rebut the presumption contained in Bill of Exchange Ordinance, s. 29.

I think that concerning this allegation of fraud, the point should obviously be disposed of in favour of respondent, for it is a question of fact which was thoroughly investigated by the court below and the learned advocate for appellant did not advance any convincing ground why this court should interfere with that court’s decision.

As regards the points covered by the first leg of appellant’s defence and dealt with by the court below in its preliminary finding, I think that His Honour failed to discern with the necessary accuracy the effect of the various aspects of that defence on the merits of the claim. I think that in carefully examining that defence it will be evident that at least one of the points raised merits careful scrutiny and that is whether the absence of protest in this case is sufficient to discharge appellant from his liability on the cheque. His Honour the Province Judge has ruled in his preliminary finding that protest is not necessary in the circumstances because of the special attributes of a cheque which are lacking in the case of other bills of exchange. This opinion in my view finds no support either in our Ordinance or in the few precedents decided by this court.

The Bills of Exchange Ordinance 1917 s. 76, which is simply a re-enactment- with very slight variations—of the English Act of 1882 reads as follows:

“A cheque is a bill of exchange drawn on a banker payable on demand. Except as otherwise hereinafter provided, the provisions of this Ordinance applicable to a bill of exchange payable on demand apply to a cheque.”

Bills of Exchange Ordinance, s.44 , makes the process of protest imperative when any bill is presented for payment and dishonoured and discharges both drawer and indorser if that process is not carried out in accordance with the provisions of the Ordinance.

That this is so in the case of cheques is obvious and the point was dealt with by this court in Abdel Halim Mohamed v. Yousif Tabet, AC-REV-5- 1940, where the court was unanimous on the point. His Honour Evans J. clearly put the matter as follows:

“The difficulties which have arisen and been under consideration in this case are largely due to the fact that the Bills of Exchange Ordinance 1917 has made it necessary in general—I believe quite contrary to intention—to apply what I describe shortly as the ‘procedure of protest’ in the case of dishonoured cheques in order to preserve the holder’s right of recourse against the drawer and prior indorsers of the cheque.”

The learned advocate for respondent strove hard to establish the rule that, as in English law protest is dispensed with altogether by any circumstance which would dispense with notice Of dishonour, there is no need for protest in this case in which notice of protest (or—in England of dishonour) is unnecessary by reason of the fact that the drawer has countermanded payment. I. do not suppose I need mention that examination of our Ordinance will reveal that it has specifically deviated from the English Act on the point in question. In the case cited above Bennett J. referring to this deviation, states as follows:

“The Ordinance follows the English Act very closely and here it - differs therefrom in the omission of an express provision of the English Act, it appears to me that the inference is that the difference flows from design unless such an infer would lead to a result which is plainly contradictory of some other provision or provisions of the Ordinance or to patent injustice.”

Respondent can therefore only recover on the cheque if he can show that the case falls within section 48 of the Ordinance. Both in Abel Hahlim Mohamed v. Yousif Tabet,AC-REV-5-1940, and in the latter case of Hussein El Hag Osman v Shekib Basil Battikha, AC-APP-28-1950 It was decided that protest was unnecessary where presentment for payment Is dispensed with.

The learned advocate for respondent__apparently in order to bring the present case within the rule in Abdel Halim Mohamed v. Yousif Tabet— contended that as appellant had countermanded payment on April 28, then presentment for payment on June 30 was unnecessary because on the later date the drawee (i.e., the bank) was not bound to pay the bill (cf. Bill of Exchange Ordinance, S. 48 (2) (C)). In my view such an interpretation is not correct. In the first place this provision refers to presentment for payment by the drawer and not to presentment by a holder in due Course or by an indorser. Secondly, paragraph (a) of the same subsection states that “the fact that the holder has reason to believe that the bill will, on presentment, be dishonoured, does not d with the necessity for presentment.”

For the above reasons, I think that there is nothing in this ease to excuse or dispense with the process of protest and as that was not done appellant is discharged from liability on the cheque by the prov1sIo of section 44

This appeal is therefore allowed with costs and the decree of the court below is hereby varied in so far as it concerns appellant.

Osman El Tayeb J. January , 1966 : —I agree. I have nothing useful to add.

Hassan Abdel Rahim J. January 9, 1966 :—I concur.

• Court Babiker Awadalla C.J.. Osman El Thyeb J. and Hassan Abdel Rahim J.