Wakilii

Mehta v Fatuhnal (Civil Appeal No. 26 of 1951)

East African Court of Appeal · [1951] EACA 126 · 1951 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from decision of H.M. Supreme Court of Kenya
Decision
Appellant's appeal dismissed. Respondent entitled to recover the principal sum of Sh. 10,150 but not interest as damages.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Court held that a post-dated cheque given for a loan operates as conditional payment, not accord and satisfaction, and the debt revives if the cheque is dishonoured. A cheque returned by the bank after being held up for over a month due to alterations is dishonoured. Notice of dishonour is dispensed with where the drawer's act caused the dishonour, and in any event the drawer's subsequent promise to settle constituted waiver. Interest cannot be awarded as damages for wrongful detention of money at common law absent statutory provision.

Outcome

Appellant's appeal dismissed. Respondent entitled to recover the principal sum of Sh. 10,150 but not interest as damages.

Facts

In April 1948, the respondent lent the appellant Sh. 10,150 repayable in four months without interest. The appellant gave a cheque for the amount. In August 1948, unable to repay, the appellant replaced the first cheque with a post-dated cheque for 15 July 1949. The cheque was drawn on a Standard Bank form with the place of payment altered from Mbale to Jinja and back to Mbale. In November 1949, the respondent endorsed the cheque to Barclays Bank for collection. The Standard Bank held up payment, noting that alteration of domicile required the drawer's confirmation. The appellant was away from Mbale. On 30 November 1949, the appellant wrote promising to settle. On 14 December 1949, Barclays Bank returned the cheque unpaid. The appellant deposited Sh. 10,150 into court but contested the suit on grounds that the cheque was accord and satisfaction and that no notice of dishonour was given. The trial judge awarded the respondent Sh. 10,150 but refused interest as damages.

Issues

  1. Whether a post-dated cheque given for a loan operates as accord and satisfaction or conditional payment.
  2. Whether a cheque with alterations to the place of payment that is held up by the bank and returned unpaid constitutes dishonour.
  3. Whether notice of dishonour of a cheque is necessary when the payee and drawer are the only parties interested and the cause of dishonour is attributable to the drawer's act or omission.
  4. Whether a promise to settle after knowledge of the cheque being held up operates as waiver of notice of dishonour.
  5. Whether interest can be awarded as damages for wrongful detention of money lent under the common law or the Indian Contract Act in the absence of the Indian Interest Act 1839.

Orders

  • Appeal dismissed with costs.
  • Cross-appeal dismissed with each party to bear their own costs.

Rules and key headnotes

Bills of Exchange — Cheques — Dishonour — Alteration of Place of Payment
A cheque is dishonoured when the bank holds up payment for over a month due to alterations requiring the drawer's confirmation and the drawer is unavailable, and the bank subsequently returns the cheque to the payee as worthless.
Bills of Exchange — Cheques — Notice of Dishonour — Dispensation
Notice of dishonour of a cheque is dispensed with where the payee and drawer are the only parties interested and the cause of dishonour is attributable to the act or omission of the drawer.
Bills of Exchange — Notice of Dishonour — Waiver
A promise to pay made with full knowledge that a cheque has been presented and held up operates as waiver of notice of dishonour, and waiver may be raised for the first time on appeal.
Payment — Cheque as Conditional Payment
A cheque given for a debt operates as conditional payment, the condition being that the debt revives if the security is not realized, and the creditor may sue on the original consideration if the cheque is dishonoured.
Damages — Interest — Wrongful Detention of Money
At common law, interest cannot be awarded as damages for wrongful detention of money lent unless it appears on the face of the written instrument that interest was intended to be paid or is implied from usage of trade.
Indian Contract Act — Damages — Interest
Section 73 of the Indian Contract Act does not authorize the award of interest as damages for breach of a contract to repay money lent, and illustration (n) to that section assumes liability for interest only under the Indian Interest Act 1839 or otherwise.

Legislation cited (10)

  • Bills of Exchange Ordinance Cap. 291 s.4
  • Bills of Exchange Ordinance Cap. 291 s.47(1)
  • Bills of Exchange Ordinance Cap. 291 s.64(1)
  • Bills of Exchange Ordinance Cap. 291 s.64(2)
  • Bills of Exchange Ordinance Cap. 291 s.73
  • Bills of Exchange Ordinance Cap. 291 s.50(2)(h)
  • Bills of Exchange Ordinance Cap. 291 s.57
  • Indian Contract Act s.73
  • Indian Interest Act 1839
  • Lord Tenterden's Act 3 and 4 Will IV c.42 s.28

Cases cited (12)

  • London Joint Stock Bank v Macmillan (1918) AC 777
  • Peacock v Purssell (1863) 32 LJCP 266
  • Pratt v McDougall (1868) 12 LCJ 243
  • Cordery v Colville (1863) LJCP 211
  • Goodall v Dailey (1787) 1 TR 712
  • Woods v Dean (1862) 3 B & S 101
  • London, Chatham and Dover Railway Co v South Eastern Railway Co (1893) AC 429
  • Page v Newman (1829) 9 B & C 378
  • Fruhauf v Grosvenor (1892) 61 LJQB 717
  • May v Chidley (1894) 1 QB 451
  • Carew v Duckworth (1869) LR 4 Ex 313
  • Carlos v Fancourt (1794) 101 ER 272

Full judgment

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Mehta v Fatuhnal (Civil Appeal No. 26 of 1951) [1951] EACA 126 (1 January 1951)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.