4. An endorsement on a cheque says ‘pay C’, if he returns from Paris. If C does not return from Paris and Yet wants to claim the amount of the cheque. Can he succeed?

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.

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