Respondent Side Moot On Juridiction

FRESHERS’ POOL PAGE 0
FRESHERS’ POOL 2017-18
IN THE HONOURABLE HIGH COURT OF MAHARASHTRA
Writ Petition filed under Article 226 of the Constitution of the State of Dhanbad
WP No. ____ of 2017
IN THE MATTER BETWEEN
Mr. Aashik Kumar and ors. …..Petitioner
versus
State of Dhanbad ….Respondent No. 1
State Bank of Indusland ….Respondent No.2
MEMORANDUM ON BEHALF OF THE RESPONDENT

[This Memorandum has been prepared for the Petitioner and is most respectfully submitted to
the High Court of Maharashtra]
WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

TABLE OF CONTENT
INDEX OF AUTHORITIES......................................................................................................2
TABLE OF ABBREVIATIONS..................................................................................................3
STATEMENT OF JURISDICTION............................................................................................4
STATEMENT OF FACTS.........................................................................................................5
QUESTIONS PRESENTED.....................................................................................................6
SUMMARY OF PLEADINGS..................................................................................................7
PLEADINGS ADVANCED......................................................................................................9
I WHETHER THE WRIT PETITION IS MAINTAINABLE BEFORE THE BOMBAY
HIGH COURT AND WHETHER THE JURISDICTION OF THE COURTS OF MUMBAI
IS OUSTED BY OPERATION OF CLAUSE A.7.8 AND A.7.9?.................................................9
1.1 That the Respondent is not State under Art. 12 of the Constitution of India.:........................9
1.2 That the action of the Respondent does not violates Art 14 and 19 of the Indian
Constitution:............................................................................................................................... 10
1.3 That The jurisdiction of the courts of Mumbai is ousted by operation of exclusive
jurisdiction clause of the agreement:......................................................................................... 12
II WHETHER THERE HAS BEEN ANY DEFICIENCY OF SERVICE ON PART OF SBI?...........................13
2.1 That The Petitioner is not a consumer under the Consumer Protection Act,1986................13
2.2 That Respondent retained discretion to determine eligibility:..............................................14
2.3 That The time taken by the Respondent was necessary to process the large number of
applications accurately................................................................................................................ 16
III. WHETHER THERE HAS BEEN A ‘DISHONOUR OF CHEQUE’ BY THE DEBTORS
UNDER SECTION 138 OF THE ‘NEGOTIABLE INSTRUMENTS ACT’? IF YES, THEN
WHETHER THE PROCEDURE HAS BEEN DULY COMPLIED BY STATE BANK OF
INDUSLAND?............................................................................................................................... 17
3.1 That the Post-dated cheques issued two days before the date on the cheque are valid......17
3.2 That there were insufficient funds and reasonable grounds for dishonour..........................18
3.3 That the Procedure has been duly complied by the Respondent.......................................... 20
IV. WHETHER THE INVOCATION OF PLEDGE IS IN CONTRAVENTION OF
DHANBAD CONTRACT ACT, 1872?........................................................................................ 22
4.1 That the pawnee can become the ultimate owner of the shares in certain exceptional cases
22
4.2 That the absence of a notice to the pawnor regarding the sale does not vitiate the sale.....23
4.3That the right to redeem the shares is not mandatory.......................................................... 24
PRAYER............................................................................................................................25

INDEX OF AUTHORITIES
Supreme Court Cases
Ajay Hasia v. Khalid Mujib, 1981 SCR (2) 79.......................................................................................11

Chander Mohan Khanna v. The National Council of Educational Research and Training,
(1991) 4 SCC 578.......................................................................................................................................12
Federation of Hotel & Restaurant Association of India, etc., vs. Union of India (UOI) and
Ors. AIR 1990 SC 1637...........................................................................................................................13
Indus Mobile Distribution Private Limited vs Datawind Innovations Private Limited.............15
Kamlesh Kumar vs. State of Bihar, MANU/SC/1275/2013................................................................23
Mukesh Jain Vs. V.K. Gupta & another 1991(1) CPR 364 (NC)......................................................17
National Council for Teacher Education and Ors. vs. Shri Shyam Shiksha Prashikshan
Sansthan and Ors.,AIR 2011 SC 932...................................................................................................13
R.D. Shetty v. The International Airport Authority of India and Ors 1979 AIR 1628, 1979
SCR (3)1014................................................................................................................................................11
R.V. Dnyansagar v. Maharashtra Industrial And Technical Consultancy Organization Ltd,
[2003] 46 SCL 153.....................................................................................................................................12
Ram Kripal Bhargava Vs. Union Bank of India & Ors 1991(1) CPR 448 (NC).........................17
Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited
AIR 2016 SC 4363.....................................................................................................................................22
Smt. Asha Sharma Vs. Union of India & Ors 1991 (1) CPR 575 (NC)..........................................17
State of West Bengal v. Anwar Ali Sarkar, AIR 1952 SC 75..............................................................13
Swastik Gases Pvt Ltd. v. Indian Oil Corporation ((2013) 9 SCC 32.).........................................14
High Court Cases
M/s Krishna Conductors Pvt. Ltd. Vs. Andhra Bank & Ors - 1992(1) CPR 434 (NC)..............20
The Official Assignee vs. Madholal Sindhu AIR 1947 Bom 217.....................................................27
Statues
Consumer Protection Act 1986...................................................................................................................16

Indian Contract Act, 1872.............................................................................................................................25
Negotiable Instruments Act, 1881..............................................................................................................19
Websites
https://consumerist.com/2015/06/03/does-postdating-a-check-prevent-anyone-from-
depositing-it-early/.....................................................................................................................................19
https://www.cdslindia.com/downloads/faq/Demat%20CDSL%20Way%20-%20VII%20-
%20Pledge.pdf............................................................................................................................................25

TABLE OF ABBREVIATIONS
NI Negotiable Instruments
AIR All India Reporter
Para Paragraph
AIR All India Reporter
Anr. Another
Art. Article
State Bank of Indusland SBI
Ed. Edition
CONST. Constitution
ICA Indian Contracts Act
CPC Civil Procedure Code
Hon’ble Honourable
Ltd. Limited
NSDL National Securities and Depository Limited
Ors. Others
Pg. Page
CPA Consumer Protection Act
SC Supreme Court
SCC Supreme Court Cases
SCJ Supreme Court Journal
Sec. Section
PM Prime Minister
v./vs. Versus

STATEMENT OF JURISDICTION
THE APPELLANT HAS APPROACHED THE COURT IN PURSUANCE OF A WRIT PETITION FILED UNDER
ARTICLE 226 OF THE CONSTITUTION OF INDIA.
The Respondent humbly submits to the jurisdiction of this Hon'ble Court.

STATEMENT OF FACTS
1. In the year 2015 in State of Dhanbad, Wassepur Party won Parliamentary elections for
Lower House and Raji Paji became the PM
2. Government launched a ‘Jan Dhan Trann Yojna’ scheme which provided personal/home
loans at drastically lower rates to lower income groups. the State Bank of Indusland,
which had 51% shares being held by State, shall be one of the nationalised banks to
provide these loans. The Bank has a single branch in Bhopal .
3. Bank retained full discretion to determine eligibility in three weeks. Bank made
applicants deposit two post-dated cheques for an amount equal to the principal amount.
4. The agreement(a form of a contract) had the following dispute resolution clauses:
A.7.8- Dispute Resolution- in the case of any dispute arbitration will be taken as a
method of resolution the seat and venue of which was fixed to be in Delhi which will
be governed by the Arbitrations and Conciliations Act,1996.
A.7.9- Jurisdiction- Any dispute arising out of this Agreement shall be brought
exclusively in the courts of Delhi.
5. There were some instances where the loan amount was denied by SBI to some applicants
‘arbitrarily’ and ‘without reason’. Mr.NLIU-Glory, one of the aggrieved applicants filed a
complaint in the Consumer Disputes Redressal Forum, Mumbai for deficiency of service.
6. Around 6 lakh pawnees pledged their shares of Company FloorMart in favour of SBI. The
owners registered as Beneficial Owners with NSDL. SBI moved the post-dated cheques
two days before the date on the cheque. SBI issued a statutory notice, 40 days from the
date of return of memorandum. Notice was not complied and after 15 days, SBI initiated
prosecution against the debtors.
7. On dishonour of cheques, NSDL registered SBI as the beneficial owner on invocation of
pledge. Subsequently, SBI withdrewing participation from NSDL, stood the ultimate
owner. ‘Mr. Anonymous Fresher’ complained before UGC, the SEBI of Dhanbad,
alleging it to be in violation of Dhanbad Contract Act, 1872.
8. Mr. Aashik Kumar filed a writ petition against SBI and State of Dhanbad before the High
Court of Maharashtra, Bombay Bench alleging violation of fundamental right to equality,
and freedom of profession under Article 19. The High Court clubbed the pending cases
before itself for effective determination.
-The matter is slated to be heard on 7th and 8th October, 2017-

QUESTIONS PRESENTED
WHETHER THE WRIT PETITION IS MAINTAINABLE BEFORE THE BOMBAY HIGH

COURT AND WHETHER THE JURISDICTION OF THE COURTS OF MUMBAI IS
OUSTED BY OPERATION OF CLAUSE A7.8 AND A7.9?
II
WHETHER THERE HAS BEEN ANY DEFICIENCY OF SERVICE ON PART OF SBI?
III
WHETHER THERE HAS BEEN A ‘DISHONOUR OF CHEQUE’ BY THE DEBTORS

UNDER SECTION 138 OF THE ‘NEGOTIABLE INSTRUMENTS ACT’? IF YES, THEN
WHETHER THE PROCEDURE HAS BEEN DULY COMPLIED WITH BY THE SBI?
IV
WHETHER THE INVOCATION OF PLEDGE IS IN CONTRAVENTION OF DHANBAD

CONTRACT ACT, 1872?

SUMMARY OF PLEADINGS
1. WHETHER THE WRIT PETITION IS MAINTAINABLE BEFORE THE BOMBAY

HIGH COURT AND WHETHER THE JURISDICTION OF THE COURTS OF
MUMBAI IS OUSTED BY OPERATION OF CLAUSE A7.8 AND A7.9?
The write petition is not maintainable under article 226 as Respondent is not State and
that the actions of the Respondent does not violates Art.14 and 19 as there is reasonable
classification and the action qualifies to be reasonable. Further, the jurisdiction of the
Bombay High Court is ousted by operation of Clause A.7.8 and A.7.9. as the exclusive
jurisdiction clause can oust the jurisdiction of the Courts as it is not absolute.
2. WHETHER THERE HAS BEEN ANY DEFICIENCY OF SERVICE ON PART OF
SBI?
The respondent humbly submits before this Hon’ble court that there has been no
deficiency of service by the State Bank of Indusland. This has been argued on three
grounds. Firstly, the applicant is not a consumer under the Consumer Protection Act
1986. Secondly, the bank retained full discretion to determine eligibility which was
exercised on bonafide term. Thirdly, the bank considers that the time taken by the bank
is a reasonable time to process the large number of applications accurately
3. WHETHER THERE HAS BEEN A ‘DISHONOUR OF CHEQUE’ BY THE

DEBTORS UNDER SECTION 138 OF THE ‘NEGOTIABLE INSTRUMENTS
ACT’? IF YES, THEN WHETHER THE PROCEDURE HAS BEEN DULY
COMPLIED BY STATE BANK OF INDUSLAND?
It is respectfully submitted before the court that, in the instant matter, there has been a
‘Dishonour of Cheque’ by the debtors under Section 138 of the ‘Negotiable Instruments
Act, 1881’. This is because the post dated cheques issued two days before the date of
withdrawal on the cheque are not invalid. In addition, there were insufficient funds in
the accounts of the Appellants and hence there was a reasonable ground for dishonour.
The process has been duly complied with by the Respondent.

4. WHETHER THE INVOCATION OF PLEDGE IS IN CONTRAVENTION OF

DHANBAD CONTRACT ACT, 1872?
It is humbly submitted that the invocation of pledge can be reasonably interpreted to be

not in contravention of the Dhanbad Contract Act, 1872. This has been argued on the
following grounds. First, the Respondent can become the ultimate owner of the shares
of the Petitioner-Appellant in the cases where he has the Beneficial Ownership of the
shares. Secondly, the absence of notice regarding the sale does not vitiate the contract.
Lastly, the right of redemption granted to the Appellants is not mandatory.

PLEADINGS ADVANCED
I WHETHER THE WRIT PETITION IS MAINTAINABLE BEFORE THE

BOMBAY HIGH COURT AND WHETHER THE JURISDICTION OF THE
COURTS OF MUMBAI IS OUSTED BY OPERATION OF CLAUSE A.7.8 AND
A.7.9?
1.1 That the Respondent is not State under Art. 12 of the Constitution of India.:
1.1.1 Article 12 in the Constitution of India 1950 defines State to include the Government
and Parliament of India and the government and the legislature of each of the states and
all local or other authorities within the territory of India or under control of the
Government of India.
The term ‘other authorities’ is extended to include the agency and instrumentality of
government as State under the aforesaid definition. However, in the instant case, the
Respondent cannot be labelled as an agency or instrumentality of Government and
therefore cannot be called State under the term ‘other authorities’.
1.1.2 In the Ajay Hasia v. Khalid Mujib1the Supreme Court relied extensively on R.D. Shetty
v. The International Airport Authority of India and Ors. 2 and summarised that case
through six markers of the ambit of state:
(1) Holding of the corporation’s entire share capital by the Government
(2) Extensive financial assistance
(3) A State-conferred monopoly status
(4) Deep and pervasive State control
(5) Functions of public importance or closely related to government functions; and
(6) Transferring a government department to a corporation.
The emphasis however was given on Government control and the court here dilutes the
functional aspect of the test by relegating it to control by the Government.
1.1.3 Analysing the tests formulated in Ajay Hasia's case it was explained in Pradeep Kumar
Biswas that these are not rigid principles and mere fact that a body satisfies one of the
tests, it does not, as a ex- hypothesi, follow that said body is a 'State' within the
1 Ajay Hasia v. Khalid Mujib, 1981 SCR (2) 79

2
R.D. Shetty v. The International Airport Authority of India and Ors 1979 AIR 1628, 1979 SCR (3)1014

meaning of Art.12. For deciding the said status, cumulative effect of the facts have to be
examined so as to find out whether the said body is financially, functionally and
3
administratively dominated by or under the control of the Government. The control of
the Government should be particular to that body and must be deep and pervasive. A
control, which is merely regulatory whether under the statue or otherwise, would not
4
make the said body a 'State'.
1.1.4 It is humbly submitted before the Hon’ble Court that, in the instant case, Mere fact that
State has entered into partnership under schemes, or hold shares in the respondent, is
not sufficient. The fact that the State controlled Financial Institutions pursuant to
contracts or due to purchases from the share market cumulatively hold more than 50%
shares in the respondent, is also not sufficient to hold that the respondent is a 'State'.
The test is functional, administrative and financial control of the Government which
should be deep and pervasive and therefore the Respondent, in the instant case, is not
State under Art.12 of the Indian Constitution. This points that the writ petition is not
maintainable.
1.2 That the action of the Respondent does not violates Art 14 and 19 of the Indian
Constitution:
It is humbly submitted before the Hon’ble Court that, in the instant case, the rejection
of the applications by the Respondent does not violate Art.14 and 19 of the Indian
Constitution and therefore it does not involve any fundamental or legal right
infringement and hence the writ petition is not maintainable under Art 226 of the Indian
Constitution.
1.2.1 Art. 14 declares that ‘the State shall not deny to any person equality before the law or
equal protection of law within the territory of India.’
Article 14 forbids class legislation but permits reasonable classification provided that
1. it is founded on an intelligible differentia which distinguishes persons or things that are
grouped together from those that are left out of the group; and
3 R.V. Dnyansagar v. Maharashtra Industrial And Technical Consultancy Organization Ltd, [2003] 46
SCL 153
4 Chander Mohan Khanna v. The National Council of Educational Research and Training, (1991) 4 SCC
578

2. the differentia has a rational nexus to the object sought to be achieved by the legislation
in question.5;6
1.2.2 It is humbly submitted before the Hon’ble Court that, in the instant case, the differentia
used to create two groups, namely applicants for loan who have their applications
rejected and those who have been granted loan, is based on the object of Jan Dhan
7
Trann Yojna, which was to provide loans at lower rates to lower income groups. The
differentia is to ensure that only the lower income groups get the loan and therefore the
income documents, which were submitted while applying for the loan, was duly
processed and keeping in mind the same the applications were dealt with. The
differentia was very much inline to the object of the scheme and therefore there is
reasonable classification.
1.2.3 Art. 19(1)(g) of the Indian Constitution deals with the Freedom to practice any trade
and profession
However, the rejection of applications of loan by the Respondent on basis of applicant’s
profession does not prevent the individual from practicing that profession, it merely
lays down that the applicant’s profession does have an influence over the decision of
the Respondent in giving loans. This is important since the aim of the scheme to benefit
the lower income groups could only be achieved if such practice is put in place.
There is also a financial restraint in doing that since bank cannot provide loans at lower
interest rates to everyone, as the same would drastically affect its financial viability.
This is not per se, a restriction of the freedom under Art.19(1)(g). The policy of the
bank, in its effectuation, might, of course, bring in some hardship in some individual
cases. But that is inevitable, so long as the schemes represents a process of abstractions
from the generality of cases and reflects the highest common-factor. Every cause, as it
is said, has its martyrs.8
5 National Council for Teacher Education and Ors. vs. Shri Shyam Shiksha Prashikshan Sansthan and Ors .,AIR
2011 SC 932
6 State of West Bengal v. Anwar Ali Sarkar, AIR 1952 SC 75

7 Page1 para2 Moot Proposition.
8 Federation of Hotel & Restaurant Association of India, etc., vs. Union of India (UOI) and Ors. AIR
1990 SC 1637

It can therefore be concluded that the rejection of the applications of loan by the bank
does not amount to violation of Art. 19(1)(g) of the Indian Constitution as it is not
restrictive of the Freedom of anyone to practice any trade or profession.
1.3 That The jurisdiction of the courts of Mumbai is ousted by operation of

exclusive jurisdiction clause of the agreement:
1.3.1 It is respectfully submitted before this Hon’ble Court that, in the instant matter, the
jurisdiction of this court has been ousted by the exclusive jurisdiction clause as
mentioned in clause A.7.8 and clause A.7.9.
1.3.2 It has been agreed that any dispute or claim arising out of or relating to this agreement
or claim of breach hereof shall be brought exclusively in the courts of Delhi. Such
courts shall have jurisdiction in exclusion to all other courts. By execution of the
agreement, the parties hereto, and their respective affiliates, consent to the exclusive
jurisdiction of such court, and waive any right to challenge jurisdiction or venue in such
court with regard to any suit, action, or proceeding under or in connection with the
agreement.9 The parties have also agreed that any dispute arising between them in
relation to the agreement will be resolved by way of arbitration and that the seat and
venue of the arbitration would be in Delhi.10

1.3.3 Parties to an Agreement may oust the jurisdiction of the Court. However, such ouster of
jurisdiction of the Court should not be absolute. Such clauses do not amount to
violation of public policy and does not contravene Section 28 of the Indian Contract
Act. Usage of words “alone”, “only”, “exclusive” are not mandatory to oust the
jurisdiction to one court. However, it is advised to use such wordings to avoid any
confusion/ litigation related to territorial jurisdiction of the courts resulting into delays
in adjudication of claims on merits. Where two or more courts have jurisdiction, if the
parties by agreement have chosen one court, only the Court chosen in the agreement
11
will have jurisdiction.
1.3.4 when there is an exclusive jurisdiction clause in an arbitration agreement stating that the
courts at a particular place alone would have jurisdiction in respect of disputes
9 A.7.9 clause concerning jurisdiction of the moot proposition.

10 A.7.8 clause concerning dispute resolution of the moot proposition.
11 Swastik Gases Pvt Ltd. v. Indian Oil Corporation ((2013) 9 SCC 32.)

arising under the agreement, it would oust all other courts’ jurisdiction in the matter,
even in a case where no part of cause of action arises at that place.12
1.3.5 Therefore, in the instant case, even if it were to be conceded that no part of the cause of
action arose at Delhi, yet the seat of the arbitration being at Delhi, courts in Delhi
would have exclusive jurisdiction in all proceedings over the same and ousted the
courts of Mumbai from taking any matters related to the said agreement.
It is humbly submitted before the Hon’ble court that the jurisdiction of the courts of
Mumbai is ousted by operation of Clause A.7.8 and A.7.9. of the agreement.
II WHETHER THERE HAS BEEN ANY DEFICIENCY OF SERVICE ON PART

OF SBI?
a. That there is no deficiency of service by the State Bank of Indusland
The respondent humbly submits before this Hon’ble court that there has been no
deficiency of service by the State Bank of Indusland. This has been argued on three
grounds. Firstly, the applicant is not a consumer under the Consumer Protection Act
1986. Secondly, the bank retained full discretion to determine eligibility which was
exercised on bonafide term. Thirdly, the bank considers that the time taken by the bank
is a reasonable time to process the large number of applications accurately.
2.1 That The Petitioner-Appellant is not a consumer under the Consumer

Protection Act,1986.
2.1.1 A consumer is a person belonging to the following category –
a) One who buys the goods for a consideration which has been paid or promised or
partly paid and partly promised under any system of deferred payment.
b) One who hires or avails of any service or services including any beneficiary
thereof or a consideration which has been paid or promised or partly paid and partly
promised or under any system of deferred payment.13
2.1.2 One of the most important essentials for being a consumer under the Consumer
Protection Act,1986(hereinafter ‘COPRA’) is consideration. Consideration is regarded
necessary for hiring or availing of services. Consideration may be defined as “when at
12 Indus Mobile Distribution Private Limited vs Datawind Innovations Private Limited
13 Section 2(1)(d) of the Consumer Protection Act 1986

the desire of the promisor, the promisee or any other person has done or abstained from
doing, or does or abstains from doing, or promises to do or abstain from doing
something, such act or abstinence or promise is called consideration for the
promise.”14.
2.1.3 It is humbly submitted before this court that, in the instant case, the applicant for loan
has not given any consideration whatsoever and therefore, because of the lack of
consideration the applicant for loan is not a consumer under the Consumer Protection
Act 1986.
2.1.4 At the outset it is clear that only a person who can be termed as a consumer under the
Consumer Protection Act can make a complaint. 15 Since, in the instant case, the
applicant for loan cannot be called as a consumer under the Consumer Protection Act
1986 because of the lack of any consideration therefore, it can be established that the
applicant for loan cannot bring a complaint of deficiency in service by the State Bank
of Indusland.
2.2 That Respondent retained discretion to determine eligibility:
2.2.1 The bank retained full discretion and that was exercised in bonafide terms. This was laid
down by the Reserve Bank of India guidelines, where it said that in matters concerning
the eligibility of parties to any credit assistance, viability of the project and continuation
of the credit facilities or the operation of the account by any party, are within the
discretion of the financial institution/bank depending upon various factors like financial
discipline and past history of borrower and his ability to pay the loan, if such discretion
is exercised bonafide.
2.2.2 It is humbly submitted before this court that, in the instant case, the bank exercised this
discretion in bonafide terms and the object was to benefit the lower income groups. The
bank also processed the income documents and other documents that were submitted by
the applicants so that the scheme works according to its objective which was to grant
loans at lower rates to lower income groups. Hence the discretion was exercised by the
bank on bonafide grounds and only to achieve the desired objective of the ‘Jan Dhan
14 Section 2(d) of the Indian Contracts Act 1872.
15 Section 2(b) and 12 of the Consumer Protection Act 1986.

Trann Yojna’.
2.2.3 No relief can be sought under the Consumer Protection Act against a Bank where the
Bank failed to advance further amount or discontinued the overdraft or cash credit
16
facility .
2.2.4 There is no deficiency in service where the bank did not provide loan to a customer
because it is for the bank to satisfy itself whether applicant for bank's financial
assistance was creditworthy & the project to be financed was technically feasible &
17
economically viable.
2.2.5 It will not be open to the Court to substitute its judgment for the decisions to be taken
by the Bank for giving bank credit. If there is any evidence of proved abuse or exercise
of their authority for giving credit by bank officials, redressal has to be sought from the
officers of the Bank in their higher echelons, the Reserve Bank of India and the
18
Government of India who have laid down the guidelines and norms for Bank credit.
The Court cannot over look the fact that the financial viability of the Banks would be
seriously affected and the whole credit system will collapse if it is not ensured that the
amounts advanced will be recovered in overwhelming majority of the cases and
defaults are kept to the minimum.
2.2.6 It is humbly submitted before the Hon’ble court that sanctioning of loans by the banks
are matters within their exclusive discretion depending upon the viability of the project,
the creditworthiness of the borrower, his sense of honesty in repaying the loan etc. and
19
it is not open to the courts to substitute its judgement for the decision of the Bank.
The Commission held that it is for the bank or financial institution to decide whether to
provide loan to any industry after taking into consideration its viability and its judgment
cannot constitute deficiency in service.20
2.2.7 In the instant case, If the court substitutes its judgement for the decision of the bank in
giving credit, which is taken after exercise of discretion given to it by the RBI, it will
16 Mukesh Jain Vs. V.K. Gupta & another 1991(1) CPR 364 (NC)
17 . Smt. Asha Sharma Vs. Union of India & Ors 1991 (1) CPR 575 (NC).
18 Ram Kripal Bhargava Vs. Union Bank of India & Ors 1991(1) CPR 448 (NC).
19
The Regional Manager, State Bank of India & Anr. Vs. A. Periasamy -1992(2) CPR 395 (SCRDC – Mad)
20 Ashok Prabhakar Vs. SBI & Ors. 1993(I) CPR – 103 (NC)

seriously affect the financial viability of Banks.21 The same was reaffirmed in the Ram
Kripal Bhargava Vs. Union Bank of India & Ors22.
2.2.8 Even if the bank decides not to grant advances after due consideration of relevant
23
factors it cannot be held liable for deficiency of service. Therefore, in the instant case
the rejection of loan application by the Respondent cannot be covered under deficiency
of service as the same was done by exercising discretionary powers on bonafide terms
given by the Reserve Bank of India.
2.3 That The time taken by the Respondent was necessary to process the large
number of applications accurately.
2.3.1 It is humbly submitted before this Hon’ble court that, in the instant case, the time that
the bank took to process the income statements and other documents that were
submitted by the applicants for loan was reasonable, as the processing of these
documents had to be accurately done to ensure that loans are sanctioned in accordance
with the object of the scheme, which was to give loans at drastically lower rates to
lower income groups. The time taken by the bank was justified considering the
importance of acting in accordance to the object of the scheme so that those who are
really applicable under the scheme gets its benefit and thus is very much important for
the effective implementation of the ‘Jan Dhan Trann Yojna’.
2.3.2 The bank also had earlier mentioned in the loan agreement that the loan benefits will be
provided within a processing period of three weeks24. It is in furtherance of this that the
bank has carried its function of processing of loan documents. Therefore, in the instant
case, it is not a valid ground for claiming that there is deficiency in service on part of
the State Bank of Indusland as the time for processing the loan applications and
providing the loan benefits has been mentioned in the procedure for applying under the
scheme. There is no reason which is precisely used to explain as to how the bank could
be held responsible for the loss incurred by the appellant due to delay in issuing loan,
25
therefore, complaint against the Respondent cannot lie.
21 Ram Kripal Bhargava Vs. Union Bank of India & Ors

22 the Ram Kripal Bhargava Vs. Union Bank of India & Ors ,1991(1) CPR 448 (NC).
23 Ambika Cold Storage ( P) Ltd. Vs. State Bank of India - 1992(2) CPR 719 (NC).
24 Moot proposition page1 paragraph 3
25 M/s Krishna Conductors Pvt. Ltd. Vs. Andhra Bank & Ors - 1992(1) CPR 434 (NC)

III. WHETHER THERE HAS BEEN A ‘DISHONOUR OF CHEQUE’ BY THE

DEBTORS UNDER SECTION 138 OF THE ‘NEGOTIABLE INSTRUMENTS
ACT’? IF YES, THEN WHETHER THE PROCEDURE HAS BEEN DULY
COMPLIED BY STATE BANK OF INDUSLAND?
It is respectfully submitted before this Honourable Court that, in the instant matter,
there has been a ‘Dishonour of Cheque’ by the Petitioner-Appellants under Section 138
of the ‘Negotiable Instruments Act, 1881’ This is argued on the following grounds.
Firstly, the post-dated cheques issued two days before the date on the cheque are valid.
Secondly, there were insufficient funds in the account of the Petitioner-Appellants and
reasonable grounds for dishonour.
3.1 That the Post-dated cheques issued two days before the date on the cheque are
valid
26
3.1.1 It is humbly submitted that the NI Act, 1881 defines a cheque as a ‘bill of exchange
drawn on a specified banker and not expressed to be payable otherwise than on demand
and it includes the electronic image of a truncated cheque and a cheque in the electronic
form’. It is a settled law that a cheque does not become invalid merely because of the
reason that it is ante-dated or post-dated.
3.1.2 According to the Halsbury’s Laws of England 27,
“A post-dated cheque if presented at or after its ostensible date, it should be paid
though the banker knows it to be post-dated, and even if it has been presented before
the date and payment was refused.”
3.1.3 It is reverently submitted that the banks and credit unions generally don’t have to wait
until the date you put on a check to cash it. It isn’t illegal for the dealership to deposit
the check or for the bank to take out the funds needed to cover that check, regardless of
the date. That’s because once a check is signed it becomes legal tender, and banks and
credit unions can generally use their own discretion when deciding when to process a
check – all without regard to the check’s printed date. If the consumer gives oral notice
to the bank, the institution must only wait 14 days before processing the note – even if
28
that happens to be before the date on the check.
26 Section 6 of the Negotiable Instruments Act, 1881

27 Fourth Edition; Volume: 3(1); p.143
28 https://consumerist.com/2015/06/03/does-postdating-a-check-prevent-anyone-from-depositing-it-early/

3.1.4 It is humbly submitted that it is not always possible to have a look at the date on the
cheque everyday by the banks. For instance in the case of an ATM deposit of a cheque,
and since most ATMs do not scan the check, it is subject to verification with regard to
the date, amount, payee name and proper endorsements. However, most banks, at their
option, may either reject or negotiate a post-dated check as if it has the current/past date
on it. So the discretion to accept/ reject the check lies with the bank. The officials of the
Respondent moved the post-dated cheques two days before the date on the cheque as a
preventive measure29, which is a reasonable ground to issue the check and hence is
maintainable.
3.2 That there were insufficient funds and reasonable grounds for dishonour
3.2.1 Section 138 of the Negotiable Instruments Act, 1881 states that where any cheque
drawn by a person on an account maintained by him with a banker for payment of any
amount of money to another person from out of that account for the discharge, in whole
or in part, of any debt or other liability, is returned by the bank unpaid, either because of
the amount standing to the credit of that account is insufficient to honour the cheque or
that it exceeds the amount arranged to be paid from that account by an agreement made
with that bank, such person shall be deemed to have committed an offence and shall,
without prejudice to any other provisions of this Act, be punished with imprisonment
for a term which may be extended to two years, or with fine which may extend to twice
the amount of the cheque, or with both.
Provided that nothing contained in this section shall apply unless-
3.2.1.1 The cheque has been presented to the bank within a period of six months from the date
on which it is drawn or within the period of its validity, whichever is earlier;
3.2.1.2 The payee or the holder in due course of the cheque, as the case may be, makes a
demand for the payment of the said amount of money by giving a notice in writing, to
the drawer of the cheque, within thirty days of the receipt of information by him from
the bank regarding the return of the cheque as unpaid; and
3.2.1.3 The drawer of such cheque fails to make the payment of the said amount of money to
the payee or, as the case may be, to the holder in due course of the cheque, within
fifteen days of the receipt of the said notice.
29 Para 4, Page 2 of the Moot Proposition.

3.2.2 It is a humble submission that the basic ingredients of the offence of cheque bounce, or
the conditions for the offence under this section being made out are:
3.2.2.1 First, the cheque should have been issued for the discharge of any debt or liability. It
should have been issued for payment of money for the discharge, in whole or in part, of
any debt or other liability. Thus, if the cheque is issued for purchasing some goods or
for payment for some services rendered or for some earlier debt or for payment of
salary for some work done, etc., the offence under this section may be attracted.
Moreover, the Explanation to Section 138 30clarifies that “debt or other liability” means
a legally enforceable debt or other liability. On the other hand, if the cheque is issued
for any other purpose, for example, for giving a gift or donation to another person,
offence under this section will not be attracted.
3.2.2.2 Second, the cheque should have been returned by the bank unpaid, either (1) because of
the amount of money standing to the credit of that account is insufficient to honour the
cheque, or (2) that it exceeds the amount arranged to be paid from that account by an
agreement made with that bank. However, if the cheque is returned unpaid for some
other reason(s), offence under Section 138 may not be attracted.
3.2.2.3 The third condition is that the cheque must have been presented to the bank within a
period of six months from the date on which it is drawn or within the period of its
validity, whichever is earlier.
3.2.3 If all the above-mentioned 3 conditions are satisfied, then the offence under Section 138
of the N.I. Act is made out. In the instant case the post-dated cheques were deposited by
the applicants for a total amount equal to the principal amount as per the loan taken
under the ‘Jan Dhan TrannYojna’. This was the standard market practice in the State of
31
Dhanbad. In the instant case, the SBI received information that funds in accounts of
the applicants were insufficient to repay the loan. The cheques were returned by the
respective branches with the information memorandum stating insufficiency of funds.32
3.2.4 It reverently submitted that offence under ‘Dishonour of cheque’ has been attracted by
the debtors in the State of Dhanbad.
30 Section 138 of the Negotiable Instruments Act, 1881.


3.2.5 In the case of Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development
33
Agency Limited , the Supreme Court held that a dishonoured post-dated cheque for
repayment of a loan instalment that was described as 'security' in the loan agreement
was covered by the criminal liability set out in Section 138 of the Negotiable
Instruments Act 1881. In accordance with Section 138, it is a criminal offence for a
person to issue a cheque which is subsequently dishonoured from an account
maintained by him or her in order to pay any amount of money to another person from
that account for the discharge, in whole or in part, of any debt or other liability.”
The Supreme Court further explained that the question of whether a post-dated
cheque is for "discharge of debt or liability" depends on the nature of the transaction.
Section 138 is attracted only if, on the date on which the cheque was issued, liability
or debt existed or the amount had become legally recoverable.
3.2.6 It is a humble submission that in the instant case, the cheques were returned by the
respective branches with an information memorandum stating insufficiency of funds.
On enquiry, it was found that the state of accounts of the Appellant-Petitioner had
been such during the past 2 years and had shown no improvement. This is covered
under the definition of ‘dishonour of cheque’ by the debtors under section 138 of the
Negotiable Instruments Act, 1881.34
3.3 That the Procedure has been duly complied by the Respondent
3.2.1 It is humbly submitted that as per the said section of the N.I. Act, 1881 the procedure to
be followed when a cheque is dishonoured by the Bank for insufficiency of funds is:
The payee or the holder in due course of the cheque, as the case may be, makes a
demand for the payment of the said amount of money by giving a notice in writing, to
the drawer of the cheque, within thirty days of the receipt of information by him from
the bank regarding the return of the cheque as unpaid; and the drawer of such cheque
fails to make the payment of the said amount of money to the payee or, as the case may
be, to the holder in due course of the cheque, within fifteen days of the receipt of the
said notice.
33 Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited AIR 2016 SC
4363.

35
3.2.2 The N.I. Act provides that no court shall take cognizance of any offence punishable
under the section except upon a complaint, in writing, made by the payee or, as the
case may be by the holder in due course and such complaint is made within one month
of the date on which the cause of action arises under clause (c) of the proviso to Section
138.
3.2.3 The presentation of the cheque and dishonour thereof within the period of its validity or
a period of three months is one of the three requirements that constitutes “cause of
action” within the meaning of Sections 138 and 142 (b) of the N.I. Act, an expression
that is more commonly used in civil law than in penal statutes.
3.2.4 A similar case is that of Kamlesh Kumar v. State of Bihar36, the Supreme Court bench
of Justice Radha Krishnan and Justice Sikri has held that
“Though the holder or payee of the cheque has the right to present the same any
number of times for encashment during the period of its validity, non-issuance of notice
within the limitation prescribed would render the complaint as non-maintainable.”
In this case, the cheque was presented on 10.11.2008. The complainant however sent
the legal notice on 17.12.2008 i.e. much after the expiry of the 30 days. It was clear
from the complaint itself that the complainant had gone to the bank for encashment on
10.11.2008 but the cheque was not honoured due to the unavailability of the balance in
the account. Despite receipt of information about the dishonour of cheque on
10.11.2008 itself, the complainant did not send the legal notice within 30 days
therefrom. In this regard, the Supreme Court, in the above judgement, held that “The
complaint is not maintainable since it is barred by limitation.”
3.2.5 It is reverently submitted that in the instant case, since the Respondent was burdened
with processing the applications, it issued a statutory notice, 40 days from the date of
return of memorandum to the concerned debtors seeking the standard loan amount to
37
be cleared. But section 138 proviso (b) talks about the limitation period and states
that the notice given to the drawer should not exceed the 30 day period from the date of
receipt of the instruction from the bank. It took 40 days to issue the notice however the
maximum limit is 30 days. But due to the presence of a contract to the contrary, the
Respondent would not be held liable.
35 Section 142 of the Negotiable Act, 1881.

36 Kamlesh Kumar vs. State of Bihar, MANU/SC/1275/2013.
37 Page 2, Para 4 of the Moot Proposition.

IV. WHETHER THE INVOCATION OF PLEDGE IS IN CONTRAVENTION OF

DHANBAD CONTRACT ACT, 1872?
It is humbly submitted that the invocation of pledge can be reasonably interpreted to be
not in contravention of the Dhanbad Contract Act, 1872. This has been argued on the
following grounds. First, the pawnee can become the ultimate owner of the shares of
the pawnor in certain exceptional cases. Secondly, the absence of notice regarding the
sale does not vitiate the contract. Lastly, the right of redemption granted to the
Appellants is not mandatory.
4.1 That the pawnee can become the ultimate owner of the shares in certain
exceptional cases
4.1.1 It is reverently submitted that under Section 176 of the Indian Contract Act, a pawnee of
goods has the power to sell the goods pawned under certain conditions and he passes a
better title to than he himself has. In some cases a special power of sale is given to
officers of the court, liquidators of companies, official receivers of insolvent’s estate,
custom officers, etc. All these persons are not owners yet they sell the properties of
38
others and convey a better title to the buyers than they themselves possess .
4.1.2 It is humbly submitted that since NSDL gave the right of beneficial ownership to the
Respondent it can become the owner of the shares pledged. A beneficial owner is a
person who enjoys the benefits of ownership even though title to some form of property
is in another name. It also means any individual or group of individuals who, either
directly or indirectly, has the power to vote or influence the transaction decisions
regarding a specific security, such as shares in a company.
4.1.3 It is humbly submitted that in the case of Liquid Holdings Private Limited v. SEBI, on
which Securities Appellate Tribunal (SAT) passed its order on March 11, 2011.
Morepen Laboratories Limited, a group company of Liquid, obtained loans from two
banks, against which Liquid pledged its holding of shares in the Target. The shares were
held in dematerialized form, and the pledge was created using the procedures prescribed
under the depository system for demat shares. SAT recognized that a pledge may be
created in respect of demat shares through the procedure laid down in Reg. 58 of the
SEBI (Depositories and Participants) Regulations, 1996.
4.1.4 Hence, where a pledgee invokes the pledge and obtains a transfers of the securities
through change in beneficial ownership of the shares through the process prescribed
under the Depositories Regulations, that will determine the duties of the parties under
38 Legal Aspects of Business (Mercantile Law) by R S N Pillai

the Takeover Regulations even though the parties may have intended in the
documentation to allow a subsequent redemption of the transaction through repayment
of the loan by the borrower. To that extent, SAT’s judgment provides clarity in
structuring the creation and redemption of pledges over shares of listed companies that
are held in demat form.
4.2 That the absence of a notice to the pawnor regarding the sale does not vitiate
the sale
4.2.1 It is humbly submitted on the part of the Respondent that even if notice was required
39
under Section 176 of the Dhanbad Contract Act, 1872, the absence of it is a mere
irregularity and does not vitiate the sale or makes it void40.
4.2.2 It is reverently submitted that in Cooverjee v. Mawji Mr., Justice B. J. Wadia expressed
the opinion that
“the sale of the pledged goods without a proper notice did not render the sale void
but made the pawnee liable in damages for conversion to the pawnor.”
With respect to the learned Judge, this opinion was purely obiter. In this case the
grievance of the pledger was that the goods had been sold by the pledgee without
reasonable notice. The learned Judge accepted that contention and held that the pledger
was entitled to damages. The pledger was not seeking redemption and no question of
redemption arose.
4.2.3 It is humbly submitted that the pledgee may instruct the Depository Participant to invoke
the pledge by submitting Invocation Request Form (IRF). On execution of this instruction,
the securities are moved from Pledger’s account to the Pledgee’s account. Invocation does
41
not require any confirmation from the pledger . Pledger is informed of the movement of
securities by his Depository Participant. The applicability and sweep of this section is
eclipsed by the phrase “in the absence of a contract to the contrary.”
4.2.4 It is reverently submitted that the absence of notice from the Respondent cannot be
considered as an argument to vitiate the invocation of pledge by the Appellant-
Petitioner.
39 Section 176 of the Indian Contract Act, 1872

40 The Official Assignee vs. Madholal Sindhu AIR 1947 Bom 217
41 Section 58 of SEBI (Depositories and Participants) Regulations, 1996
https://www.cdslindia.com/downloads/faq/Demat%20CDSL%20Way%20-%20VII%20-%20Pledge.pdf

4.3That the right to redeem the shares is not mandatory

4.3.1 Section 177 of the Indian Contract Act, 1872, If a time is stipulated for the
payment of the debt, or performance of the promise, for which the pledge is made, and
the pawnor makes default in payment of the debt or performance of the promise at the
stipulated time, he may redeem the goods pledged at any subsequent time before the
actual sale of them, but he must, in that case, pay, in addition, any expenses which have
arisen from his default.
4.3.2 The Section can be reasonably interpreted to include the term ‘may’ which states that
the right to redeem the shares is not a compulsory condition and in this case, even if the
right to redeem is not granted, still the case is maintainable..
4.3.3 It is reverently submitted that the right to redeem can be exercised right up to the time
when the ‘actual sale’ of goods takes place. This sale must be a sale in conformity with
42
section 176 which gives the pledgee the right of sale, and if the sale is not in
conformity with these provisions, the equity of redemption in the pawnor is not
extinguished. Since in the instant case, the sale is in conformity with Section 176,
Indian Contract Act the right to redeem is not a mandatory condition.
4.3.4 It is humbly submitted that the right to redeem the shares not been granted to the
Petitioner-Appellant and is not a condition which proves the case to be in contravention
of the Dhanbad Contract Act, 1872.
42 Section 176 of the Indian Contract Act, 1872

PRAYER
WHEREFORE, IN THE LIGHT OF THE ISSUES RAISED, ARGUMENTS

ADVANCED, REASONS GIVEN AND AUTHORITIES CITED, THIS HON’BLE
COURT MAY BE PLEASED TO
I. HOLD THAT WRIT PETITION IS NOT MAINTAINABLE BEFORE THE

BOMBAY HIGH COURT AND THE JURISDICTION OF THE COURTS OF
MUMBAI IS OUSTED BY EXCLUSIVE JURISDICTION CLAUSE
II. HOLD THAT THERE HAS BEEN NO DEFICIENCY OF SERVICE ON PART OF

RESPONDENT.
III. HOLD THAT THERE HAS BEEN A DISHONOUR OF CHEQUE AND THE
PROCEDURE WAS DULY COMPLIED WITH BY THE RESPONDENT.
IV. HOLD THAT THE INVOCATION OF PLEDGE HAS NOT BEEN IN

CONTRAVENTION OF THE DHANBAD CONTRACT ACT.
AND ANY OTHER RELIEF THAT THIS HON’BLE COURT MAY DEEM FIT TO
BE GRANTED IN THE INTEREST OF JUSTICE, EQUITY AND GOOD
CONSCIENCE, ALL OF WHICH IS RESPECTFULLY SUBMITTED.
Sd /-
COUNSELS FOR THE RESPONDENT

Respondent Side Moot On Juridiction

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Respondent Side Moot On Juridiction

Încărcat de

Drepturi de autor:

Formate disponibile

FRESHERS’ POOL PAGE 0

FRESHERS’ POOL 2017-18

IN THE HONOURABLE HIGH COURT OF MAHARASHTRA

IN THE MATTER BETWEEN

Mr. Aashik Kumar and ors. …..Petitioner

State of Dhanbad ….Respondent No. 1

State Bank of Indusland ….Respondent No.2

MEMORANDUM ON BEHALF OF THE RESPONDENT

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

Supreme Court Cases

Ajay Hasia v. Khalid Mujib, 1981 SCR (2) 79.......................................................................................11

Consumer Protection Act 1986...................................................................................................................16

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

The Respondent humbly submits to the jurisdiction of this Hon'ble Court.

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

WHETHER THE WRIT PETITION IS MAINTAINABLE BEFORE THE BOMBAY HIGH

WHETHER THERE HAS BEEN ANY DEFICIENCY OF SERVICE ON PART OF SBI?

WHETHER THERE HAS BEEN A ‘DISHONOUR OF CHEQUE’ BY THE DEBTORS

WHETHER THE INVOCATION OF PLEDGE IS IN CONTRAVENTION OF DHANBAD

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

1. WHETHER THE WRIT PETITION IS MAINTAINABLE BEFORE THE BOMBAY

3. WHETHER THERE HAS BEEN A ‘DISHONOUR OF CHEQUE’ BY THE

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

4. WHETHER THE INVOCATION OF PLEDGE IS IN CONTRAVENTION OF

It is humbly submitted that the invocation of pledge can be reasonably interpreted to be

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

I WHETHER THE WRIT PETITION IS MAINTAINABLE BEFORE THE

1 Ajay Hasia v. Khalid Mujib, 1981 SCR (2) 79

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

is said, has its martyrs.8

6 State of West Bengal v. Anwar Ali Sarkar, AIR 1952 SC 75

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

1.3 That The jurisdiction of the courts of Mumbai is ousted by operation of

venue of the arbitration would be in Delhi.10

9 A.7.9 clause concerning jurisdiction of the moot proposition.

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

II WHETHER THERE HAS BEEN ANY DEFICIENCY OF SERVICE ON PART

a. That there is no deficiency of service by the State Bank of Indusland

2.1 That The Petitioner-Appellant is not a consumer under the Consumer

12 Indus Mobile Distribution Private Limited vs Datawind Innovations Private Limited

13 Section 2(1)(d) of the Consumer Protection Act 1986

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

2.2 That Respondent retained discretion to determine eligibility:

14 Section 2(d) of the Indian Contracts Act 1872.

15 Section 2(b) and 12 of the Consumer Protection Act 1986.

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

21 Ram Kripal Bhargava Vs. Union Bank of India & Ors

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

III. WHETHER THERE HAS BEEN A ‘DISHONOUR OF CHEQUE’ BY THE

26 Section 6 of the Negotiable Instruments Act, 1881

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

29 Para 4, Page 2 of the Moot Proposition.

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

30 Section 138 of the Negotiable Instruments Act, 1881.

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

Negotiable Instruments Act, 1881.34

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

35 Section 142 of the Negotiable Act, 1881.