Report No. 11
162. Section 117.-
Some improvements have been made in section 117, in the light of the corresponding English provision. As is evident from section 57(1) of the English Act, in case of dishonour, the holder, indorser and drawer are all entitled to recover not only the amount due on the instrument but also the interest due thereon; but interest is not mentioned, in the existing clause (a) of our section 117 which relates to the holder. The word 'indorsee' in the first paragraph of the section is a misprint for 'indorser' We have removed these defects and also made it clear from which parties the holder, drawer or indorser shall be entitled to recover. Corresponding changes have been made in clause (c). We have added a new clause1 to provide for the case of the drawer who has been compelled to pay the amount due on the instrument which is not mentioned in the section at all.
1. Section 101(1)(b) of App I.
Clause (e) has been split up into two sub-sections for the purpose of a better understanding of the provision.
163. There is a difference in the provisions of clauses (b) and (d) of section 117 of the Act. Under clause (b), the rate of exchange in the case of a holder who pays the amount is to be determined at the current rate of exchange between the place where the person charged resides and the place at which the instrument was payable. Under clause (d), if the person charged and the indorser are at different places, the rate of exchange between the two places determines the quantum of liability. The place where the instrument is payable has no relevance under clause (d). On principle there should be no difference between the rights of a holder and of an indorser in this respect.
In our opinion, the problem arises not because of the residence of the parties being at different places but because of the fact that the currency in which the amount payable is expressed is other than that of the country where the amount i§ payable. We can simplify the problem by confining ourselves to cases where the amount is payable in India.
Now, the amounts payable are of two kinds-(a) the amount due upon the instrument; and (b) the expenses incurred on presenting, noting, protesting and the like.
(a) As regards the sum due on the instrument, no difficulty arises where the instrument specifies it in Indian currency. Where it is expressed in a foreign currency, the payment in India must obviously be made in Indian currency and here the question of rate of exchange comes in. We have provide1 that in such'a case the sum is to be paid in Indian currency at the current rate of exchange obtaining between India and the foreign country concerned on the date on which such sum became payable
(b) The same principle should be followed as regards sums paid on account of protesting and the like in a foreign country except that the rate of exchange to be applied in this case should be that which was prevalent on the date on which such expenses were incurred by the holder or indorser, as the case may be. We have provided accordingly.2
1. Section 101(d)(i(ii), ibid.
2. Section 101(e, ibid.