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Citation: ALT(SC) 9 :2013

Bench: Aftab Alam, Ranjana Prakash Desai

Appellant/Petitioner: Britannia Industries Limited

Respondent/Defendant: Punjab National Bank & Ors- Respondent 1

Metropolitan Construction- Respondent 2

Raghunath Datta- Respondent 3

Amit Dutta- Respondent 4

Court: Supreme Court (India)


o The following case of Britannia Industries Ltd vs Punjab National Bank & Ors ALT(SC) 9 :2013 which is a civil appeal surfaced during 2013 and pertains to a Bill of Exchange and its execution .

o The main issue of the following case is surrounded by section 64 of The Negotiable Instrument Act, the dimensions which deal with presentation of a bill of exchange for payment to the acceptor and the consequences if it is not presented to the bill’s acceptor.

o The object of this case study is to analyze and gain factual knowledge as well as remember the legal facts regarding negotiable instruments and in particular that of a bill of exchange.


o The claim made by Britannia Industries Ltd, is for a bill of exchange for Rs. 1 crore only dated February 15, 1983.

o The bill was drawn by two partners in the firm Metropolitan Construction- Raghunath Dutta and Amit Dutta.

o M/s Lgee Enterprises accepted the bill of exchange.

o Metropolitan Construction endorsed the bill to Britannia Industries Ltd who then became the holder and the endorsee of the bill of exchange.

o Later, it was shown to be so that Punjab National Bank accepted the bill.

o The bill of exchange was accepted by A.B.Das (Branch Manager of P.N.B Calcutta).

o Punjab National Bank dishonored the bill by failing to make payment when the bill was presented.

o Britannia Industries filed a suit and sought to recover the full amount of the bill of exchange as well as statutory interest.

o Respondent no. 2, 3, and 4 were not served with the summons for the lawsuit, and they never contested it throughout.

o M/s Lgee Enterprise, was not named in the plaint because it is based in Mumbai and hence outside the purview of the Calcutta High Court. As a result, Punjab National Bank, who was named in the plaint as the bill's acceptor, was the target of the plaint.

o P.N.B refused the claim made by the Britannia Industries in the plaint.

o P.N.B filed a written statement claiming that the bill was never accepted by them and that A.B.Das (Branch Manager of P.N.B Calcutta) who accepted the bill of exchange was not authorized to do so and his ‘co-acceptance’ of the bill was not in discharge of his official duties and the bank was not bound by it. They also alleged that Metropolitan Construction and Lgee Enterprise were non-existent firms, and had no office at the given address in the bill of exchange and an allegation of fraud was made against Britannia Industries.

o The appellant-plaintiff attempted to amend the complaint when the respondent-Bank submitted its written statement, referring to it as the "co-acceptor" of the bill of exchange rather than the "acceptor" of the bill, as was stated prior in the plaint.

o The parties went to trial based on the pleadings, and the trial court decided the case by judgment and order dated December 12, 1990.

o The respondent-Bank filed an intra-court appeal against the rulings made by the trial court before the Division Bench of the High Court, and the Division Bench granted the appeal, overturned the rulings made by the single judge, and dismissed the plaintiff's case[1].

o Britannia Industries Ltd. appealed the division bench's decision, and this appeal was brought by special leave against the judgment and decree that was passed on April 3, 2001[2].


o Is the alleged bill of exchange properly executed?

o Is the “co-acceptance” by A.B.Das (Branch Manager of P.N.B Calcutta) authorized and binding on Punjab National Bank.

o Is the alleged bill of exchange presented to the acceptor for payment?

o Are the “other parties thereto” liable to the holder of the bill of exchange?


o To recover the full amount of the bill of exchange as well as statutory interest from Punjab National Bank.


o That the bill of exchange has not been accepted by Punjab National Bank and the alleged co-acceptance by A.B.Das is not binding on the bank and P.N.B is not liable to pay the full amount of the bill of exchange as well as any statutory interest.


o Judges Aftab Alam and Ranjana Prakash Desai of the Supreme Court found their decision aligned with the judgment of the Division Bench of the High Court.

o The respondent-Bank, time and again stated in the written statement it filed that the alleged bill of exchange was created through the use of fraud and collusion and it was definitely not a valid instrument binding on the respondent and thus, it was decided that the appellant-plaintiff was required to prove the execution of the bill of exchange and its validity.

o The appellant failed to present any evidence regarding the bill of exchange's execution and thus there was insufficient evidence to support the conclusion that it was a properly executed document.

o The circumstances surrounding the drawing of the bill of exchange and its acceptance by M/s Lgee Enterprise and the “co-acceptance” by respondent-Bank looked to be exceedingly peculiar and odd, which supported the bank's claim that the bill of exchange was fraudulent in nature

o A.B. Das overstepped his bounds by providing the payment guarantee under the pretense of "co-acceptance" of the bill, and that the alleged co-acceptance signed by him could not bind the respondent-Bank.

o It was further held that under section 64 of The Negotiable Instruments Act,1881 presentation of the bill for payment to the acceptor is mandatory, and that failing to present will release any of the "other parties thereto" from liability. In this case, the bill was not presented to the acceptor of the bill i.e. M/s Lgee Enterprises, and as a result the other parties were released of any and all their liabilities.

o As the respondent-Bank was not listed as the acceptor on the bill of exchange, the appellant’s case was bound to fail.

o Citing the judgment- ‘Each of the findings noted above, have been arrived at by the High Court with great care in regard to the facts of the case and the relevant provisions of the law. Each of the findings is unimpeachable and each of the findings on its own is fatal to the case of the appellant-plaintiff. We find ourselves in complete agreement with the view taken by the Division Bench of the High Court. We find no merit in this appeal and is, accordingly, dismissed with costs[3].’


o A “bill of exchange” is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument[4].

o A “negotiable instrument” means a promissory note, bill of exchange or cheque payable either to order or to bearer[5].

o From the above facts of this case, it can be seen that the bill of exchange is a negotiable instrument as it satisfies all requirements laid down under section 5 of the act and since the document is payable ‘to order’ it satisfies the requirements of section 13 of The Negotiable Instrument Act,1881.

o However, with regards to the execution of the bill one of the things that can be observed is that there was no material to establish that the bill of exchange was a properly executed instrument based on the materials on record since Britannia Industries has failed to cite any evidence about its execution.

o In the case of the appellant-plaintiff, Punjab National Bank was described as the acceptor. As it was observed the respondent-Bank was not the acceptor of the bill of exchange and the appellants case is liable to fail as ‘promissory notes, bills of exchange and cheques must be presented for payment to the acceptor, by or on behalf of the holder and in this case, the bill of exchange was not presented to the acceptor i.e. M/s Lgee Enterprises and in default of the presentment, the other parties thereto were not liable.[6].’

Co-acceptance is not a known concept under The Negotiable Instruments Act. In any event, acceptance and co-acceptance cannot be equated and since A.B.Das has not been authorized to co-accept, the so-called co-acceptance by him and alleged by the appellant plaintiff is not valid. The power to accept bills cannot be converted into a power to co-accept bills. Also, A.B.Das had acted alone and not jointly with any other power of attorney holder. Therefore, the co-acceptance itself is already in excess of the authority conferred upon him and it is not binding on Punjab National Bank.

[1] Punjab National Bank vs. Britannia Industries Ltd. (2001) 2 CALLT 219 HC [2] Britannia Industries Ltd. Vs. Punjab National Bank ALT( SC)9:2013 [3] Britannia Industries Ltd. Vs. Punjab National Bank ALT( SC)9:2013 [4] The Negotiable Instruments Act,1881 sec.5 [5] The Negotiable Instruments Act,1881 sec.13 [6] The Negotiable Instruments Act,1881 sec.64

This article is written by Ashish Lobo of G.J. Advani Law College, Bandra(West), Mumbai.

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