Facts of the Case
- A cheque contains an endorsement stating “pay C, if he returns from Paris.”
- This endorsement creates a condition precedent for payment.
- C does not return from Paris, but still attempts to claim the amount of the cheque.
Issues in the Case
- Can a person claim payment under a cheque if the condition mentioned in the endorsement is not fulfilled?
- Does the law permit enforcement of conditional endorsements?
- What are the rights of C when the condition specified in the endorsement has not occurred?
Principles Associated with It
- Under Section 50 of the Negotiable Instruments Act, 1881, an endorsement may be made conditionally, limiting the liability or rights of the endorsee until the condition is fulfilled.
- If the endorsement contains a condition precedent, the right to receive payment does not arise unless the condition is satisfied.
- Conditional endorsements are valid in law, but enforceability depends on the fulfillment of the condition.
- The law recognizes that until the happening of the event, the endorsee has no enforceable claim to the instrument.
Judgement
- Since the cheque clearly states that it is payable to C only if he returns from Paris, and C has not returned, the condition is not fulfilled.
- Therefore, C cannot succeed in claiming the amount of the cheque.
- His right to payment is contingent and does not arise until he returns from Paris.
- The cheque, being conditionally endorsed, becomes unenforceable by C unless the specified condition is met.