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  • 1961-03-16
  • GLR 155-157
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Cheque?-Unpresented on drawer's advice?-Whether drawee entitled to sue on it?-Bills of Exchange Ordinance, Cap. 195, (1951 Rev.), ss.45, 46 and 47.Moneylending?-Whether interest-free loan subsequently carrying interest is a moneylending transaction?-Moneylenders Ordinance, Cap. 176, (1951 Rev.)


The defendant gave a cheque to the plaintiff in payment of a loan. The cheque was not presented, the defendant having advised the plaintiff that he had no money in the bank to meet it. Whereupon the plaintiff sued the defendant on the cheque.The plaintiff contended that he had originally given the loan without interest, for one month. When the defendant failed to pay at the end of the month, he began to charge him interest. The transaction therefore, he contended, is not a moneylending transaction and does not fall within the Moneylenders Ordinance, Cap. 176, (1951 Rev.).


ACTION on a cheque. The facts sufficiently appear from the judgment.

This is a claim made against the defendant as the drawer of a cheque. The defence is that the said cheque was issued to the plaintiff in a moneylending transaction which contravenes the Moneylenders Ordinance,1 and therefore it is unenforceable. In his reply to the statement of defence, the plaintiff contended that the transaction in connection with which the cheque was issued, although a loan transaction is not a money lending transaction within the Moneylenders Ordinance,2 because he gave the loan without interest, and therefore the claim is one purely on a cheque. According to the plaintiff he has never presented the said cheque for payment because the defendant told him not to.

A claim upon a cheque is governed by the Bills of Exchange Ordinance3. In order to charge the drawee and the endorser of a bill, section 45 of the Ordinance makes it mandatory that it must first of all be presented for payment in accordance with rules laid down, unless such presentation is excused. The section reads:

"45. Subject to the provisions of this Ordinance, a bill must be duly presented for payment. If it is not so presented the drawer and the endorser shall be discharged."

Section 46 lays down the exceptions which will excuse such presentation: request by the drawer or endorser that a bill should not be presented is not one of the exceptions.

It is only when a bill is presented and is dishonoured that a right of recourse against the drawer and the endorser accrues to the holder. This is provided by section 47 of the Ordinance as follows:

"47. (1) a bill is dishonoured by non-payment (a) when it is duly presented for payment and payment is refused or cannot be obtained, or (b) when the presentment is excused and the bill is overdue and unpaid. (2) Subject to the provisions of this Ordinance, when a bill is dishonoured by non-payment, an immediate right of recourse against the drawer and endorser accrues to the holder."

And section 48 provides that notice of the dishonour must be given to the drawer or endorser, and any drawer or endorser to whom such notice is not given is discharged.

It follows therefore that for an action to be maintained on a bill, each of the following conditions precedent must be proved to have been fulfilled: (1) that the bill has been presented on the due date or as soon thereafter as possible unless presentation is excused by law; and (2) that it has been dishonoured; and (3) that notice of the dishonour has been given to the person sought to be charged.

This is further made clear by section 55(1) of the Ordinance which is as follows:

"55. (1) The drawer of a bill by drawing it:?-

(a) Engages that on due presentment it shall be accepted and paid according to its tenor, and that if it be dishonoured he will compensate the holder or any endorser who is compelled to pay it, provided that the requisite proceedings on dishonour be duly taken;

(b) Is precluded from denying to a holder in due course the existence of the payee and his then capacity to endorse."

Since none of the conditions precedent to the institution of an action upon a cheque has been fulfilled, the defendant must be discharged as provided by law.

Now in so far as the claim is for recovery of a loan the letters, exhibits 1, 2, and 3, and the telegram exhibit 4, written and sent by the plaintiff made it conclusive that the money G600 was lent at interest, and the transaction is therefore a moneylending transaction in terms of the definition of a moneylender as contained in sections 2 and 3 of the Money-lenders Ordinance4.

Until the letters and the telegrams were produced the plaintiff maintained that he lent the G600 without interest and he has never claimed or received interest on it. In an attempt to explain away the contents of those documents that interest had been charged and paid, the plaintiff in re-examination said that he originally lent the money free of interest for one month, and it was only after the one month, when the amount was not paid that he began to charge the interest. Upon that evidence his counsel submitted that the transaction is not a moneylending transaction because interest did not begin to run from the day the money was lent. I am not impressed by that submission.

To accept such a submission is to encourage money lenders to circumvent the Ordinance, to lend money at interest, the interest to begin to run a day or two after the lending of the money. I am of the opinion that even if the original loan was given without interest, the transaction would fall under the Ordinance from the moment a lender of money makes request that a loan already given without interest should begin to carry interest.

At the date of the institution of the action that loan of G600 was carrying interest and it had, upon the documentary evidence, been carrying interest at least, before July 1959. The transaction is therefore a moneylending transaction. But this moneylending contract, not made in compliance with section 12 of the Moneylenders Ordinance is unenforceable, as no memorandum of the contract was made in writing and signed by the parties to the contract or their representatives. But since moneylending is not proved to be the business of the plaintiff, non-compliance with section 19 of the Moneylenders Ordinance does not apply to this case.

Thus in so far as the suit is one brought simply upon a cheque, it must fail; and in so far as it is a claim for money lent, it must also fail.

Thus plaintiff's claim is therefore dismissed.


<P>Action dismissed.</P>

Plaintiff / Appellant

J. C. Armah

Defendant / Respondent

E. N. Moore


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