Dhanani v Amratlal Hirachand Limited (Civil Suit No. 22 of 1953) [1953] EACA 26 (1 January 1953)

### ORIGINAL CIVIL

#### Before WINDHAM, J.

# RAISHI MEGHJI DHANANI, Plaintiff υ

# AMRATLAL HIRACHAND LIMITED, Defendant Civil Suit No. 22 of 1953

Civil Procedure and Practice—Civil Procedure (Revised) Rules, 1948—Order 6, rule 4-Necessity of specifically pleading defence of lack of endorsement of

bill of exchange—Bills of Exchange Ordinance (Cap. 291), section 24 (1)— Evidence—Endorsement in blank on bill stroked out—Burden of proof— Presumption of regularity.

The defendant company drew and accepted a bill of exchange on Barclays Bank D. C. O., Mombasa, The bill came into possession of the plaintiff firm who claimed to be the holders in due course. The bill was presented, but dishonoured. The bill had an endorsement in blank by the bank but there was an unexplained wavy line in ink drawn through the writing. A partner in the plaintiff firm gave evidence and, producing the bill, claimed to be the holder. He was not crossexamined. The defendant called no evidence, but submitted that the plaintiff firm had failed to prove its case because of failure to show that the bill was endorsed by the bank, the drawees, so as to make the plaintiff firm the holder of it. This defence was not specifically raised in the written statement of defence.

Held (17-9-53).—Lack of, or cancellation of, endorsement must be specifically pleaded.

(2) The burden of proof lay on the defence to establish that the endorsement had<br>been cancelled before negotiation to the plaintiff firm. No evidence had been called to show when the wavy line was made or what is purported to be nor was the plaintiff witness cross-examined on this point. The defendant company had failed to establish any defence upon the evidence. There was a presumption of regularity which taken with the<br>uncontradicted evidence it was to be presumed that the bill was endorsed in such a manner as to enable the plaintiff firm to become legally the holders.

Case cited: Arab Bank Ltd. v. Ross, (1952) 2 Q. B. 216.

# C. A. Patel for plaintiff firm.

### U. K. Doshi for defendant company.

The plaintiff firm sues the defendants on a bill of exchange for Sh. 3,075. Paragraph 3 of the plaint alleges that the bill was drawn by the defendants on Barclays Bank D. C. O. Mombasa, that it was accepted by the defendants, that the plaintiffs are now the holders of it, and that the defendants have defaulted on it. The statement of defence deals with paragraph 3 of the plaint thus: "The defendant company denies the statements contained therein and deny their liability to pay to the plaintiffs the sum of Sh. 3,075 on the bill of exchange referred therein".

One of the partners in the plaintiff firm gave evidence in which he stated: "I produce the bill of exchange on which I sue. It was drawn on 1st October, 1952, by plaintiffs on Barclays Bank, Plaintiffs are the holders of it. Defendants have not paid anything on it. Defendants accepted the bill by endorsement on the<br>face of it. This is the only document on which I am suing." This evidence (which I accept), together with the bill of exchange itself, was the only evidence adduced in the case by either side. The defence called no evidence.

Counsel for the defence now seeks to argue that the plaintiffs have failed to prove their case because they have failed to show that the bill of exchange was endorsed by Barclays Bank D. C. O., Mombasa, the drawees, so as to make the plaintiffs the holders of it. This is a line of defence which was not specifically raised in the statement of defence. It is true, as has been seen, that the statement of defence in dealing with paragraph 3 of the plaint, "denies the statements contained therein" and that one of those statements was the allegation that the plaintiffs are the holders of the bill. But that is not specific enough. Even a specific denial that the plaintiffs are the holders of the bill would be too general a manner of pleading the defence of lack of endorsement. Such a defence to an action on a bill of exchange or a promissory note must be specifically pleaded, so that the plaintiffs may know exactly what they have to meet. In England, the Rules of the Supreme Court, by Order XXI, rule 2, lay this requirement down in unequivocal terms by providing that "In actions upon bills of exchange, promissory notes or cheques, a defence in denial must deny some matter of fact, e.g. the drawing, making, endorsing, accepting, presenting, notice of dishonour of the bill or note". And see Arab Bank, Ltd. v. Ross, (1952) 2 Q. B. 216, where the provisions of that rule regarding the necessity of specifically pleading a defence of lack or invalidity of endorsement were applied.

It is true that in Kenya the Civil Procedure (Revised) Rules, 1948, contain no rule reproducing the English Order XXI, rule 2. But I consider that the principles of pleading which the English rules lay down should be applied in Kenya if not inconsistent with the local rules. Moreover, the Kenya rules do contain relevant though more general provisions, namely those of Order VI, rule 4, which provides that: "Any condition precedent, the performance or occurrence of which is intended to be contested, shall be distinctly specified in his pleading by the plaintiff or defendant, as the case may be; and, subject thereto, an averment of the performance or occurrence of all conditions precedent necessary for the case of the plaintiff or defendant shall be implied in his pleading." The due endorsement of the bill of exchange in this case was a condition precedent to the liability of the defendants to the plaintiffs upon it. Therefore, the defence should have specifically pleaded the lack of endorsement or that the endorsement had been cancelled.

I would add that, in the present case, the bill of exchange bears on the back of it what purports to be an endorsement in blank by Barclays Bank, which under section 34 (1) of the Bills of Exchange Ordinance (Cap. 291) would make it payable to bearer, so that the plaintiffs by thereafter coming into possession of it would become holders. Through this endorsement there appears, however, a wavy line in ink which counsel for the defence argues to constitute a cancellation of that endorsement. The defence has called no evidence to show when this mark was made or what it purports to be, nor was the plaintiff partner crossexamined on the point. The burden lay on the defence to establish that the endorsement had been cancelled before negotiation to the plaintiffs.

Quite apart from the non-pleading of the defence of lack of endorsement, therefore, the defendants have failed to establish such a defence upon the evidence. For the only evidence on the record touching that question is the presence upon the back of the bill of a purported endorsement with a wavy line through it, which two things being unexplained bring the matter no further, coupled with the uncontradicted evidence of the plaintiff-partner that the plaintiffs are the holders of the bill, upon which uncontradicted evidence, together with the presumption of regularity, it is to be presumed, that the bill was endorsed in such manner as to enable them to become legally the holders.

For these reasons I hold that the plaintiffs must succeed in their claim upon the promissory note and I enter judgment in their favour with costs as prayed.