1. ' The plaintiffs EFU General Insurance Ltd. Have filed this suit under Order XXXVII, Rule 2, C.P.C.
2. Against the defendants Messrs Security and Management Services (Pvt.) Ltd. For recovery of Rs,5,37,660.
3. ' Briefly the facts leading to this litigation are that the plaintiffs are an insurance company and the defendants had delivered them four cheques, each for Rs,1,30,500, duly signed by the defendants.
4. On presentation before the drawee bank these cheques were dishonoured on 5-9-1995, 5-10-1995, 5-11-1995 and 19-12-1995. Thereafter on 20-8-1996 the plaintiffs sent notice to the defendants requiring them for payment of amount of four dishonoured cheques but the defendants failed and thereby gave cause of action to the plaintiffs for filing of present suit. In the prayer clause, besides claiming Rs,5,22,000 towards the four dishonoured cheques the plaintiffs have also claimed Rs,15,660 towards interest at the rate of 6% per annum as provided under section 79 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the Act of 1881).
5. ' The defendants in their written statement did not deny the delivery of four cheques to the plaintiffs' company, however, they denied the fact that these cheques were dishonoured by bank.
6. The defendants also denied any consideration towards issuance of these cheques and stated that the defendants were doing business of cash-intransit (CIT) and for this purpose firstly they had obtained insurance policy from the plaintiffs for the period from 1-11-1993 to 31-10-1994. While this policy was still in force, at the request of plaintiffs, defendants opted for renewal of insurance policy for the period from 1-12-1994 to 30-11-1995. Such agreement of cash-in-transit insurance policy for the period 1-12-1994 to 30-11-1995 was received by the defendants from the plaintiffs, which also contained arbitration clause. Four cheques were issued by the defendants towards the premium of insurance policy for this period, but despite request of the defendants to provide certain proof in respect of reinsurance, plaintiffs failed to do so and therefore the defendants were neither debtors nor under any obligation to make payment of these cheques to the plaintiffs. The defendants also stated that there was no binding contract between the parties, suit was not maintainable and liable to be stayed under section 34 of the Arbitration Act.
7. ' On these pleadings of the parties following issues were framed by the Court on 15-5-2000: "(1) Whether the cheques issued by the defendant were dishonoured or not?
(2) Whether there was any binding contract between the parties?
(3) Whether there was any consideration for issuance of the cheques in favour of the plaintiff by the defendant?
(4) Whether the plaintiff renewed the insurance policy for the period from 1-12-1994 to 30-11-1995?
(5) Whether the defendant was fully covered by any insurance policy and as to whether the plaintiff was Justified in claiming for any reinsurance policy?
(6) What should the decree be?"
8. ' At the stage of evidence plaintiffs examined their only witness Abdul Hafeez as Exh.5, who produced documents Exhs.P-5/1 to P-5/16, while the defendants from their side examined witness Ikramul Majeed Sehgal as Exh.6, who produced documents-as Exh.D-6/1 and D-6/2.
9. ' I have heard the arguments of learned counsel and perused the whole case record.
10. ' Mr. M.A.M. Namazie, Advocate for plaintiffs in his arguments, after referring to the pleadings of the parties and the evidence led by them contended that not only the plaintiffs in their evidence have fully established their claim against the defendants but even the defendants have virtually conceded to this position in their pleadings and evidence of their witness. He referred to the deposition of Mr.Ikramul Majeed Sehgal to show the relevant admissions made by him in this regard. Learned counsel referred to sections 64, 76, 92 and 118 of the Act of 1881 to show that the cheques were duly dishonoured and therefore this summary suit for recovery based on such cheques has been competently filed and it should be decreed. On the point that in spite of note of the bank on the refusal memo. Exh.P-5/6, calling for second presentation after three days, it was not necessary for the plaintiffs to undertake such exercise and first refusal amounted to dishonour of cheque in law, learned counsel placed reliance upon C.M. Sivaram v. V.S. Jayaram Mudaliar AIR 1966 Mad.297.
11. ' On the other hand, Chowdhary Muhammad Jamil, Advocate for defendants in his arguments firstly referred to the contents of plaint and contended that same are so much vague that even background for issuance of four cheques and its alleged consideration has not been stated. He next contended that the disputed cheques were not dishonoured according to law and therefore the plaintiffs have no cause of action to file the present suit. In addition to this learned counsel contended that insurance cover for the period from 1-12-1994 to 30-11-1995 was not provided by the plaintiffs nor any re-insurance was arranged by them and therefore four cheques issued by the defendants were without consideration and the plaintiffs are not entitled to recover the suit amount from the defendants.
12. ' I have carefully considered the arguments advanced by the learned counsel and perused the pleadings of the parties as well as oral and documentary evidence produced by them.
13. ' My findings on the above issues are as under: ISSUE No,1 ' The burden of proof regarding this issue is on the plaintiffs. In the plaint, case of the plaintiffs is that four cheques issued by the defendants were presented before the drawee bank on 5-9-1995, 5-10-1995, 5-11-1995 and 19-12-1995 but same were dishonoured and returned with the bank memo.
14. For the reason assigned that 'effects not cleared may be presented again', which amounted to dishonour of cheques. In evidence the plaintiffs' witness Abdul Hafeez has stated that defendants- company had issued five post-dated cheques in the name of plaintiffs-company out of which one cheque bearing No,240760 dated 17-7-1995 for Rs,1,30,500 drawn on First Women Bank Limited was encashed whereas the remaining four cheques were dishonoured on presentation on due dates.
15. Such original cheques as Exhs.P/2 to P/5 and the refusal memos. As Exhs.P-5/6 to P-5/9 have been produced by this witness which confirm such assertion of the plaintiffs. In the cross-examination of this witness also these facts have not been disputed by the defendants. The trend of cross- examination of this witness only suggests that as the cheques were returned by bank for the reason at Serial No,10 of the memo. Therefore the same could not be termed as dishonouring of these cheques.
16. ' The fact remains that the cheques when presented before the bank on due dates were not encashed and even after notice to the defendants on 20-8-1996, which fact has not been disputed by the defendants, the payment of these cheques was not made by the defendants. Section 92 of the Act of 1881 deals with the question of dishonouring by non-payment and it provides that a cheque will be deemed to have been dishonoured by non-payment when the drawee of cheque makes default in payment. Further section 76 of the Act deals with the situations where presentation of an instrument will be unnecessary and instrument will be deemed to be dishonoured. The import of section 76 has been fairly discussed in the case of C.M. Sivaram v. V.S. Jayaram Mudaliar (supra) in the following words:-- "Finally, on the last point we are clearly of the opinion that both under section 76(c) as well as under general principles of law presentment is wholly unnecessary and would be futile in the instant case. It is settled law that when a maker refuses to pay the money or puts forward certain defences it is not necessary to present the bill for payment and the maker would be deemed to have waived his right to require that the note should be shown to him. It must be held that the defendant must be deemed to have waived his right to take advantage of any default in presentment for payment. Due presentment is insisted upon solely for the benefit of the maker who is prepared to honour his obligation. But this requirement can obviously have no application to a party who repudiates his obligation. Waiver may not only be express but may also be implied and any conduct of the maker leading to the inference that the note if presented would not be honoured would dispense with the necessity of presentment. The principle of the decision in International Contractors Limited v. Prasanta Kumar Sur, AIR 1962 SC 77 clearly applies to the instant case. In that case a party who was bound to recovery the property under an agreement of reconveyance denied the very truth of the agreement and repudiated his obligation. It was held that when the party sued him for specific performance, it was not necessary for that party to have made a formal tender of the amount payable to the other party who had definitely and unequivocally repudiated his obligation. We therefore, hold that presentment is dispensed with and unnecessary under section 76 of the Act."
17. In the present case, when after return of four cheques without encashment from the drawee bank the defendants .Despite service of notice failed to make payment of these cheques a situation had emerged where it can be safely deduced that the cheques were dishonoured and thus subsequent presentation was unnecessary. The arguments of the learned counsel for defendants that after return of cheques by the bank with the refusal memo. The plaintiffs should have again presented these cheques before the bank for encashment or should have immediately served notice on the defendants instead of serving such notice after more than eight months, have no force as the plaintiffs were under no legal obligation to present the dishonoured cheques to the drawee bank again or to have immediately served such notice to the defendants. More so, when the intention of defendants for non-payment of the sum mentioned in the four cheques was visible to the plaintiffs from their conduct. In view of the above discussion, I hold that the four cheques were dishonoured.
18. Issue No,1 is answered accordingly.
19. ISSUES NOS.2 and 3 ' Since these two issues are interconnected I will take up these issues together. In the present suit, the claim of plaintiffs is based on four cheques issued by the defendants which were admittedly not encashed on due dates when presented before the drawee bank. The defendants in their written statement have taken the plea that these cheques were issued by them towards the payment of renewal of insurance policy of cash-in-transit for the period from 1-12-1994 to 30-11- 1995. In para.3(e) of the written statement the defendants have categorically stated that cash-in- transit Insurance Policy No,51548551/01/95 for the period from 1-12-1994 to 30-11-1995 was received by the defendants from the plaintiffs. This fact has been further affirmed in the evidence of defendants' witness Ikramul Majeed Sehgal, who deposed as under:-- "It is correct to suggest that reinsurance is a matter between the two insurance companies. It is correct to suggest that in case any damage is caused, the claim has to be lodged with the insurance company, i,e, the company who issues the policy. We did not lodge any claim against the second policy issued for the period 1-12-1994 to 30-11-1995. Voluntarily says that the Manager of the plaintiff-company told me that your insurance policy is invalid because the premium has not been paid. I do not know the name of the Manager, who has disclosed this fact to me and he further said that the policy is not valid till the cheques towards premium are encashed."
20. ' Obviously plea of invalidation of insurance ,policy due to non-payment of premium, which is to be regulated by the terms and conditions of the policy, presupposes existence of such binding contract between the parties.
21. ' Reverting to the case of plaintiffs it will be seen that the plaintiffs have produced the copy of cash- in-transit insurance policy issued by the plaintiffs-company in favour of the defendants as Exh.P-5/ 1, and their witness has further confirmed the fact that for the relevant period i,e, 1-12-1994 to 30-11- 1995 the plaintiffs insurance company had provided insurance cover to the defendants in the terms as contained in the said cash-in-transit insurance policy. In view of the above discussion, it is clear that there was a binding contract between the parties during the subsisting period of insurance and one Cheque No,240760 for Rs,1,30,500, which was encashed and the other four dishonoured cheques Exh.P-5/2 to Exh.P-5/5 were issued by the defendants-company for payment of premium of such insurance policy. Besides, section 118(a) of the Act creates a presumption that when an instrument is issued, it is issued for consideration. In the instant case, the defendants have failed to rebut such presumption in favour of plaintiffs. Issues Nos.2 and 3 are therefore, answered in affirmative.
22. ISSUES NOS.4 and 5 ' These issues being interconnected are also discussed and decided together. The case of the plaintiffs is that the defendants-company had obtained cashlin- transit insurance policy for the period from 1-12-1994 to 30-11-1995. Such insurance policy has also been produced by the plaintiffs witness as Exh.P-5/1. The statement on oath of the plaintiffs' witness in this regard has not been disputed in cross-examination thus it is to be deemed that such evidence of the witness has been admitted by the defendants' side. In addition to this, the defendants in their written statement have admitted this fact that the plaintiffs-company had provided them cash-in-transit Insurance Policy No,51548551/01/95 for the period from 1-12-1994 to 30-12-1995. The defendants have however taken the plea that since they have asked for details of reinsurance cover from a foreign company and this fact was not communicated by the plaintiffs-company therefore it shall be deemed that no proper insurance covet was provided by the plaintiffs-company to the defendants-company for the period from 1-12-1994 to 30-11-1995. The defendants' witness in his cross-examination has conceded to the position that the matter of re-insurance was a matter in between the two insurance companies. Thus from the evidence available on record it is proved that the plaintiffs- insurance company had renewed insurance policy of the defendants for the period from 1-12-1994 to 30-11-1995 vide Exh.P-5/1 and the defendants were covered with the insurance policy for this period according to the terms of the said insurance policy. Issues Nos.4 and 5 are accordingly answered in affirmative.
23. ISSUE NO.6 In the suit plaintiffs have prayed for a decree in the sum of Rs,5,22,000 towards the amount of four dishonoured cheques and also a sum of Rs,15,660 towards interest at the rate of 6% per annum under section 79 of the Act of 1881. On facts, neither the amount of four dishonoured cheques issued by the defendants is in dispute nor the fact that uptil the institution of the suit, in view of section 79 of the Act, the plaintiffs are entitled to claim 6% per annum interest. Accordingly, the suit of the plaintiffs is decreed in the sum of Rs,5 37,660 with costs and also 12% per annum mark-up from the date of institution of suit till realization of decretal amount from the defendants.