Part-payment of bills of exchange can block their execution

If the debtor pays in part the bills of exchange, the court may reject an application for them to be declared as an executive title. This was held in the acts of an executive judicial letter in the names of GasanMamo Motors Limited vs Khurram Saeed Qadir Khan and Khan Group Limited, before the First Hall of the Civil Courts presided over by Judge Doreen Clarke.

The Defendants filed an application asking the court to suspend the execution of 40 bills of exchange. GasanMamo objected to this.

The court went through the facts of the case. On 24 June 2024, GasanMamo presented the judicial letter asking for it to be paid by the Defendants the sum of €18,800, which represented the 40 bills of exchange. The company referred to Article 253(e) of the Code of Organisation and Civil Procedure, giving them 20 days to object to the execution of these bills of exchange. Copies of the bills of exchange were attached to the judicial letter. On 2 July 2024, the Defendants paid €4,374, but on 8 July the Defendants presented the application to suspend the execution of the bills of exchange.

Article 253(e) of the Code of Organisation and Civil Procedure (COCP) reads:

“The Following are executive titles:

(e) bills of exchange and promissory notes issued in terms of the Commercial Code;

Provided  that  the  court  which  is  competent according  to  the  value  of  the  bill  of  exchange  or promissory  note  may,  by  decree  which  shall  not  be subject to appeal, suspend the execution of such a bill of exchange or promissory note in whole or in part and with or without security, upon an application of the person opposing the execution of such bill of exchange or  promissory  note,  to  be  filed  within  twenty  days from  the  service  of  the  judicial  letter  sent  for  the purpose  of  rendering  the  same  bill  of  exchange  or promissory note executable, on the grounds that the signature on the said bill of exchange or promissory note is not that of the said person or of his mandatory or where such person brings forward grave and valid reasons to oppose the said execution and in such case any  person  demanding  the  payment  of  the  bill  of exchange  or  promissory note  shall  file  an  action according to the provisions of the Commercial Code.

The judicial letter referred to above in this proviso shall, under pain of nullity, notify the debtor of the right given to him by this proviso”

The Court referred to a judgment delivered on 27 May 2021, Mark Gaffarena vs Brian Lia. In this judgment the Court held that it should investigate the case on a prima facie basis. This is derived from what is said in the Commercial Code. The intention is that issues concerning bills of exchange are to be dealt and decided efficiently. If there are pleas which need in depth analysis, this should be done in a separate action. In another case Princess Holding Limited vs Wesley Kock, decided on 20 December 2021, the court held that it was not going to investigate the reasons why the bill of exchange was issued. The court was not to hold sittings to hear evidence and submissions in order to decide on the suspension of the execution of the bills of exchange.

In order for the execution to be suspended there must be grave reasons as mentioned in Article 253. The article of law does not specify what these grave reasons are. This was done in order to allow the court to exercise its discretion in the light of the particular circumstances it has before it. In another case Michael Attard Ltd vs Turista Limited, decided on 22 November 2012, the court pointed out that the term “grave and valid” reasons should not be wider than those mentioned in the commercial law.

The Defendants in this case argued that they had paid for part of the debt and the bills of exchange of the amount paid was not returned to them. However, it was pointed out that the payment was made after the application was filed. This therefore, did not effect the executive title of the bills of exchange. Article 1169(2) of the Civil Code states that part payments should first go towards the interest due. Therefore, it was hard to state at this stage that the whole amount was part of the capital due. As such in these circumstances there are grave and valid reasons for at least part of the bills of exchange not to be executed.

The court turned down the application.