2003 (1) TMI 756 - HC - Indian Laws

Summary

Issues Involved:
1. Limitation period for filing the suit.
2. Validity of acknowledgment of debt.
3. Applicability of interest under Section 80 of the Negotiable Instruments Act.

Issue-wise Detailed Analysis:

1. Limitation Period for Filing the Suit:
The appellant contended that the suit was barred by limitation, arguing that the original cause of action arose between 1-8-1990 and 5-3-1991, and the suit filed on 13-12-1994 was beyond the prescribed period. The appellant relied on precedents from the Bombay High Court and Punjab and Haryana High Court, which held that a dishonoured cheque does not constitute part-payment to save the limitation under Sections 19 or 20 of the Limitation Act. However, the respondent countered with a ruling from the Karnataka High Court, which stated that the right to sue accrues from the date of cheque dishonour. The court accepted the respondent's argument, holding that the suit was filed within the limitation period from the date of cheque dishonour.

2. Validity of Acknowledgment of Debt:
The appellant denied the acknowledgment of debt marked as Ex. P. 1, arguing that it could not constitute a valid acknowledgment under Section 19 of the Limitation Act. The court found that Ex. P. 1, an account extract in the defendant's handwriting, served as a valid acknowledgment, saving the limitation period. The Trial Court's comparison of signatures and the documentary evidence supported this finding.

3. Applicability of Interest under Section 80 of the Negotiable Instruments Act:
The appellant argued that there was no contract to pay interest, and thus, the provisions of Section 80 of the Negotiable Instruments Act were inapplicable. The court noted that while the original agreement did not include interest, Section 80 mandates interest at 18% per annum after the dishonour of the cheque, overriding any prior agreement. The court referenced the Division Bench's interpretation in I. Armugam v. Channagiri N. Govindaraj Shetty, which confirmed that post-dishonour, the statutory interest rate applies notwithstanding any prior agreement.

Conclusion:
The court dismissed the appeal, upholding the Trial Court's judgment and decree. The suit was deemed within the limitation period due to the acknowledgment of debt and the date of cheque dishonour. The court also affirmed the applicability of statutory interest under Section 80 of the Negotiable Instruments Act, rejecting the appellant's contention of no interest liability. The appeal was dismissed with costs.