2020 (1) TMI 1291 - HC - Indian Laws

Dishonor of Cheque - time limitation - fraud and cheating - legally enforceable debt or not - rebuttal of resumption or not - HELD THAT - A promise to pay a time-barred debt is a condition precedent for application of Section 25(3) of the Indian Contract Act. The said promise must be express and unequivocal. Now, when we read the content of the letter - Ex. P-10 given by Krishnamurthy as general power of Attorney holder of the first defendant, leave alone the authority to give such letter, we find that the promise to pay is conspicuously absent in this letter. Assuming the letter acknowledging the debt is valid and given prior to the expiry of limitation, it is highly improbable to say the cheque - Ex. P-11 was issued on 30/10/2007. Undoubtedly, it should have been left the possession of the defendants and come to the possession of the plaintiff prior to 20/08/2007, the date on which the first defendant gave complaint to the Commissioner of Police, Chennai alleging fraud and cheating. However, the cheque being dishonoured, one of the issue framed in this case is 'whether a dishonoured cheque will save the limitation of time barred debt, in the absence of promise'. This issue is a significant question of law, though may not have serious bearing on the case in hand, even if held either way. Cheque is defined under section 4 of the Negotiable Instruments Act as a 'bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand'. Cheque is therefore a negotiable instrument carrying the promise implicitly, unlike a pro-note where the promise is explicit and mandatory. Therefore, limitation has to be reckoned from the date the cheque and not on the fact 'whether the cheque was honoured or dishonoured'. Under the Negotiable Instruments Act, the issuance of cheque is to be presumed to be issued for discharge of debt. The consequence event 'whether the said cheque on presentation honoured or not is immaterial - In the opinion of this Court, even if the said cheque is not presented in time and become stale, but it is proved that the cheque was issued with intention to discharge the debt or part of the debt then, the limitation has to be reckoned from the date of the cheque considering the cheque as acknowledgment of debt. As far as the facts of this case in hand, the cheque in the name of the plaintiff gives him the cause of action to sue and Suit being filed within 3 years from the date on which the cheque bear, this prima facie saves the limitation. The plaintiff cannot be disunited on the ground of limitation. However, the plaintiff fails to succeed, since, this Court has held that the plaintiff has not proved his case for recovery of money and the cheque is not issued for any enforceable debt. Therefore, the discussions on limitation based on the fact whether dishonor of cheque will save limitation is academics. Suit dismissed.

Summary

Issues Involved:
1. Entitlement of the plaintiff to recover ?1,21,66,000/- with interest.
2. Suit claim's sustainability based on speculation and plaintiff's role as a speculator.
3. Whether the suit is barred by limitation.
4. Mis-joinder of parties.
5. Validity of dishonoured cheque as a cause of action for a time-barred debt under Section 25(3) of the Indian Contract Act.
6. Suit claim's sustainability under Section 139 of the Negotiable Instruments Act.
7. Proof of the plaintiff's claim beyond reasonable doubt.
8. Other reliefs entitled to the parties.

Detailed Analysis:

1. Entitlement of the plaintiff to recover ?1,21,66,000/- with interest:
The plaintiff claimed that he facilitated the purchase of land for the first defendant and was owed ?79,00,000/-. However, the court found that the plaintiff failed to prove any interest or right in the properties in question and that there was no agreement with the defendants to sell the property at ?46 lakhs per acre. The acknowledgment letter (Ex. P-10) given by Krishnamurthy was beyond his authority and thus not binding on the defendants. The plaintiff's reliance on the sale agreement (Ex. P-3) and the acknowledgment letter was insufficient to establish his claim. Therefore, the plaintiff's entitlement to recover the claimed amount was not substantiated.

2. Suit claim's sustainability based on speculation and plaintiff's role as a speculator:
The court determined that the plaintiff's case was speculative, relying on documents that did not conclusively prove his claims. The plaintiff failed to provide evidence of his role in the transactions or any agreement with all landowners. The plaintiff's claim was viewed as speculative litigation based on documents held during the normal course of business transactions.

3. Whether the suit is barred by limitation:
The suit was filed within three years from the date on the cheque (30/10/2007), which prima facie saved the limitation. However, the court held that the plaintiff failed to prove that the cheque was issued for an enforceable debt. The discussions on limitation were deemed academic since the plaintiff's case for recovery of money was not proven.

4. Mis-joinder of parties:
The court found no legal error in the joinder of parties, as the first defendant signed the cheque on behalf of the second defendant partnership firm, and the other partners were rightly included as defendants.

5. Validity of dishonoured cheque as a cause of action for a time-barred debt under Section 25(3) of the Indian Contract Act:
The court noted that a promise to pay a time-barred debt must be express and unequivocal. The acknowledgment letter (Ex. P-10) lacked a distinct promise to pay and was given without proper authorization. Therefore, the dishonoured cheque did not constitute a valid cause of action for a time-barred debt.

6. Suit claim's sustainability under Section 139 of the Negotiable Instruments Act:
The court found that the presumption under Section 139 of the Negotiable Instruments Act was rebutted by the defendants. The plaintiff failed to prove that the cheque was issued for an existing debt or liability. The evidence did not support the plaintiff's claim that the cheque was given to discharge a debt.

7. Proof of the plaintiff's claim beyond reasonable doubt:
The plaintiff's claim was not proven beyond reasonable doubt. The court highlighted inconsistencies and the lack of corroborative evidence to support the plaintiff's assertions. The plaintiff's reliance on speculative documents and the absence of independent reliable evidence weakened his case.

8. Other reliefs entitled to the parties:
The court dismissed the suit with costs, concluding that the plaintiff failed to prove his entitlement to the claimed amount or any enforceable debt.

Conclusion:
The plaintiff's suit for recovery of ?1,21,66,000/- with interest was dismissed. The court found that the plaintiff failed to prove his claims and that the acknowledgment letter and cheque were not validly binding on the defendants. The suit was dismissed with costs, and the issues were resolved against the plaintiff.