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Issues Involved:
1. Maintainability of the suit under Section 4 of the Bihar Money-Lenders (Regulation of Transactions) Act, 1939. 2. Whether the suit was barred by the three-year rule of limitation. Detailed Analysis: 1. Maintainability of the Suit under Section 4 of the Bihar Money-Lenders (Regulation of Transactions) Act, 1939 The primary issue was whether the suit was maintainable under Section 4 of the Bihar Money-Lenders (Regulation of Transactions) Act, 1939 (hereinafter referred to as the "1939-Act"). The appellant argued that the loan was actually advanced in 1951, and the promissory note for Rs. 10,000 executed on February 4, 1954, was merely a renewal of that loan. Since the loan was advanced before the registration of the respondent's joint family as a money-lender in 1952, the appellant contended that the suit was barred by Section 4 of the 1939-Act. The court examined the definition of "loan" in Section 2(f) of the 1939-Act, which includes not only an actual advance of money or kind but also a transaction on a bond bearing interest executed in respect of past liability. The court held that the word "bond" in this context should be interpreted broadly to include a promissory note, as it is an instrument by which one person binds himself to pay a sum to another person. The court concluded that the promissory note of February 4, 1954, constituted a "loan" within the meaning of Section 2(f) of the 1939-Act. Since the promissory note was executed after the respondent's family had been registered as a money-lender, Section 4 did not bar the suit. Therefore, the suit was maintainable. 2. Whether the Suit was Barred by the Three-Year Rule of Limitation The second issue was whether the suit was barred by the three-year rule of limitation. The promissory note was executed on February 4, 1954, and a post-dated cheque dated February 25, 1954, was given towards part payment. The cheque was honored sometime after February 25, 1954, and was credited towards part payment. The appellant argued that the limitation period should start from February 4, 1954, when the cheque was delivered, making the suit time-barred. However, the court held that the acceptance of the post-dated cheque on February 4, 1954, was not an unconditional acceptance. The payment was conditional upon the cheque being honored, and therefore, the date of payment for the purposes of Section 20 of the Indian Limitation Act, 1908, would be the date on which the cheque could be presented for payment at the earliest, i.e., February 25, 1954. The court noted that since the cheque was honored, the payment must be considered to have been made on February 25, 1954. Consequently, a fresh period of limitation began on February 25, 1954, making the suit filed on February 22, 1957, within the limitation period. Separate Judgment by Bachawat, J. Bachawat, J. agreed with the majority opinion that the suit was not barred by Section 4 of the 1939-Act. However, he dissented on the issue of limitation. He opined that the payment should be considered to have been made on February 4, 1954, the date on which the cheque was delivered, not the date it was honored. Therefore, he concluded that the suit was barred by limitation. Conclusion The majority judgment held that the suit was maintainable under Section 4 of the 1939-Act and was not barred by the three-year rule of limitation. Consequently, the appeal was dismissed with no order as to costs. However, Bachawat, J. dissented on the issue of limitation, opining that the suit was time-barred.
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