Facts of the Case
- A cheque is endorsed with the words: “Pay C, if he returns from Paris.”
- The payment is conditional upon C’s return from Paris.
- C does not return from Paris, but still seeks to claim the amount of the cheque.
Issues in the Case
- Is a conditional endorsement valid under the Negotiable Instruments Act?
- Can the endorsee (C) claim the amount if the specified condition is not fulfilled?
- Does the cheque remain negotiable with such a condition attached?
Principles Associated With It
- Under the Negotiable Instruments Act, endorsements must be unconditional to preserve the negotiable character of the instrument.
- An endorsement that imposes a condition, such as “if he returns from Paris,” is considered a conditional endorsement.
- Conditional endorsements are valid as endorsements, but the condition must be fulfilled before the endorsee can claim payment.
- The endorsee’s right is contingent on the happening of the stated condition.
Judgement
- Since C has not returned from Paris, the condition has not been fulfilled.
- Therefore, C cannot claim the amount of the cheque at this stage.
- The cheque remains conditionally enforceable, and payment can be claimed only upon fulfillment of the specified condition.
- C’s claim will not succeed unless and until he returns from Paris, satisfying the endorsement’s condition.