Report No. 11
94. Sections 43-45.-
As has been already indicated, sections 43-45 have been included in the Chapter relating to Form and Interpretation1 except the two Exceptions to section 43 which have been included in the Chapter on Liability of Parties,2 with verbal changes.
1. Section 10-12, ibid.
2. Section 64(3), ibid.
Exception I to section 43 refers to an accommodation party but it requires to be supplemented as it does not contain all the relevant provisions relating to such a party. In the Chapter on Liability we have introduced two new provisions to indicate the liability of the accommodation party and the accommodated party, respectively. The first1 follows section 28(2) of the English Act. The second2 follows from the principle embodied in section 140 of the Contract Act, viz., that the relationship between an accommodation party and the accommodated party being one of surety and principal debtor, the former should be entitled to recover any amount paid by him, from the latter.
1. Section 64(1), ibid.
2. Section 64(2), ibid.
95. The words 'parties standing in immediate relation' are used in sections 44, 45 and 46, but there is an Explanation of the expression only in section 44 while there is none in section 46; nor is there anything in section 46 to indicate that the same Explanation is applicable to it.
Since the Explanation is based on the English decisions which are of a general application1, we have transformed the Explanation into a separate section laying down a rule of interpretation of the expression, wherever it is used in the Act.
1. Vide Chlamers Bills of Exchange, 12th Edn., p. 95.
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