Report No. 11

8. Hundis which conform to the Act.-

Section 1 of the Act now saves usages in respect of all instruments in an oriental language unless an intention is expressed in any such instrument that it would be governed by the provisions of the Act. The section clearly indicates that an instrument, even if it be within the definition of a promissory note, bill of exchange or cheque will, if written in an oriental language, be governed by usage, if any, applicable to it and not by the provisions of the Act.

Reference may be made to the case of Jambu Chetty v. Palaniappa Chettiar, where the Madras High Court, proceeding on the assumption that the hundi in question in that case was either a bill or a note, observed-

"If any local usage relating to bills and notes in an oriental language-the operation of which usage is saved by section 1, though such usage may be at variance with the Act-be relied upon, such usage should be alleged and established by the party relying upon it."

The Court thus took the view that if a contrary usage were established, an instrument in an oriental language, even though it conformed to the requirements of a negotiable instrument as laid down in the Act, would be governed not by the provisions of the Act, but by such usage; but that in the absence of proof of any such usage, such instrument (though in an oriental language) would be governed by the provisions of the Act. This view seems to have recently been followed by the Hyderabad High Court.1

1. Chandulal v. Ramchander, AIR 1955 NUC 2363 Hyd.

In Champaklal v. Keshrichand, (1925) 50 Bom 765 (781), Mirza J. of the Bombay High Court observed-

"Supposing that this hundi were not a Shah Jog hundi and were an ordinary hundi to which the Negotiable Instruments Act applied."

This observation also suggests the view that an 'ordinary' hundi which conforms to the requirements of a negotiable instrument under the Act would normally be governed by its provisions.

The two decisions in Pannalal v. Hargopal, ILR (1919) 1 Lah 80 and Surajmal v. Kashi Prasad, air 1933 Nag 389. also illustrate the above proposition. Both related to a hundi of the nature of a bill of exchange which required acceptance. In the former case1 the Lahore High Court held that a usage of oral acceptance in Delhi having been established by the evidence, such acceptance was valid in Delhi. In the Nagpur case,2 on the other hand, there was no allegation or proof of any usage in Bombay contrary to the provisions of section 7 and so it was held that acceptance must be in writing as required by section 7 of the Act.

1. ILR (1919) 1 Lah 80.

2. AIR 1933 Nag 389.