2021 (2) TMI 1243 - HC - Indian Laws

Dishonor of Cheque - suit is barred by limitation or not? - Applicability of Limitation of three years for recovery - rebuttal of statutory presumption - Whether the limitation for the suit based on a dishonoured cheque commence from the date of cheque or date of dishonour? - foundational requirement to adduce secondary evidence to sustain the suit on a lost negotiable instrument satisfied by the petitioner or not? - HELD THAT - Being an Association, the account books of the defendants if produced, the truth about the money transaction between the plaintiff and the defendants Association would have surfaced. P.W-1 has specifically deposed that the subject cheque was written by the second defendant. The defendants have not disputed it. When the burden to rebut the legal presumption is casted upon the defendants, the non-production of evidence to probablise the defence is fatal to the case of the defendants - In the instant case, presumption of existing debt has to be drawn since the defendants have failed to rebut the presumption against them. The explanation given by the defendants regarding the cheque is not a plausible explanation. No direct or circumstantial evidence adduced before the Court to rebut the statutory presumption. A cheque is bill of exchange. The period of limitation is three years. Only the date of commencement of limitation differs based on the further transaction on the said instruments. Under Article 35 of the Limitation Act, the three years period commences from the date of the bill, provided there is no restriction in writing postponing the right to sue. Under Article 40, the right of the payee to sue the drawer of a bill of exchange dis-honoured by non-acceptance commences from the date of refusal to accept. Under Article 113 three years time commences from the date when the right to sue accrues for a suit no period of limitation is provided elsewhere in the schedule - when the right to sue is restricted by law, Article 35 gets excluded and Article read with Article 113 alone is applicable. Therefore, taking into consideration the date of dishonour of cheque, the suit filed on 12.12.2005 is within the period of 3 years limitation. In view of the fact that 10th and 11th of December, 2005 fell on court holiday. The suit has been filed on the next working day i.e., 12.12.2005. Secondary evidence - HELD THAT - In the plaint the reason for filing the suit without the original document has been extensively mentioned in compliance of the provision Order VII Rule 16 of C.P.C. But this is not perse sufficient to rely upon the secondary evidence. The party who rely upon the secondary evidence has to mandatorily satisfy the foundational requirements laid in Section 65 and 66 as far as applicable. In this case, this Court finds a lapse on the part of the plaintiff in compliance of Section 65 of the Evidence Act before introducing the secondary evidence. The parties are not absolutely restrained from adducing secondary evidence. What is expected under laws is, before adducing secondary evidence plausible reason and factual foundation for laying secondary evidence has to be established. On going through the pleadings and evidence in this case, san filing formal application to receive secondary evidence and no separate application or notice caused to the defendants for production of document, the plaintiff had laid the necessary factual foundation for adducing secondary evidence and had accounted for not producing the original cheque - Defendants had not pleaded or proved that they were prejudiced by admitting secondary evidence. The limitation for the suit based on a dishonoured cheque commences from the date of dishonour. The facts pleaded and proved discloses that the plaintiff had satisfied the foundational requirement to adduce secondary evidence to sustain the suit on a lost negotiable instrument. As a result, the Appeal Suit stands dismissed.

Summary

Issues Involved:
1. Whether the plaintiff is entitled to the money claimed in the suit.
2. Whether the suit is barred by limitation.
3. Admissibility of secondary evidence.

Detailed Analysis:

1. Entitlement to Money Claimed:
The plaintiff, a businessman, claimed that the defendants, officials of the Rasipuram Lorry Owners Association, borrowed ?6,00,000 and issued a cheque which was dishonored. The plaintiff alleged that the defendants forcibly took the original cheque and bank intimation slip from him. The Trial Court found in favor of the plaintiff, stating that the defendants did not provide sufficient evidence to rebut the claim that the cheque was issued to discharge an existing debt. The presumption under Section 118(a) and Section 139 of the Negotiable Instrument Act was applied, which presumes the existence of a debt unless proven otherwise. The defendants failed to provide credible evidence to rebut this presumption.

2. Limitation:
The Trial Court held that the suit was not barred by limitation. The cheque dated 28.11.2002 was dishonored on 11.12.2002, and the suit was filed on 12.12.2005. The Court reasoned that the limitation period of three years should be counted from the date of dishonor, not the date on the cheque. This interpretation aligns with Article 113 of the Limitation Act, which states that the limitation period begins when the right to sue accrues. The Court referenced multiple judgments, including those from the Karnataka High Court and Delhi High Court, to support this view.

3. Admissibility of Secondary Evidence:
The plaintiff relied on a photocopy of the dishonored cheque, as the original was allegedly taken by the defendants and not returned. The Trial Court accepted this secondary evidence based on the High Court's prior permission in a related criminal case. However, the appeal raised concerns about the proper compliance with Section 65 of the Indian Evidence Act, which requires foundational evidence for admitting secondary evidence. The Court acknowledged that while the plaintiff did not formally apply for secondary evidence, the necessary factual foundation was laid during the proceedings. The Court referenced several Supreme Court judgments to emphasize the importance of establishing foundational evidence before admitting secondary evidence.

Conclusion:
The High Court dismissed the appeal, upholding the Trial Court's judgment. The Court concluded that the suit was filed within the limitation period, the plaintiff was entitled to the money claimed, and the secondary evidence was admissible as the foundational requirements were met. The appeal was dismissed with no costs, and the connected miscellaneous petition was closed.