2020 (9) TMI 1108 - HC - Indian Laws

Dishonor of Cheque - Time Limitation - decree for money in favour of the respondent was confirmed - HELD THAT - It is true that the cheques were presented to the Bank for encashment after passage of hardly seven years, since the date of delivery. As per Section 84(2) of the NI Act, the reasonableness of time to be taken for presentation from the date of issue of cheque, shall be determined with due regard to the nature of the instrument, the banking and trade usage and also the facts of each particular case. In this case, the cheques were postdated to 10.12.2017. They became payable only from the dates endorsed therein. Even though the dates of presentation and dishonour were not specifically pleaded, it is clear from the averments made in the plaint that the cheques were presented within the period of two months since they became payable - thus notwithstanding that the issue of cheques was as early as in 2001, the presentation made in 2007 in accordance with proviso (a) to Section 138 cannot be said to offend Section 84 (2) of NI Act. Review petition partly allowed.

Issues Involved:
1. Applicability of the relevant article in the Limitation Act to a suit on a dishonoured cheque.
2. Consideration of the time period for presenting a dishonoured cheque to the Bank.
3. Interpretation of Sections 84(1) and (2) of the Negotiable Instruments Act.
4. Relevance of the date of issue of a cheque in determining the period for presentation.
5. Review of a judgment based on factual grounds and legal provisions.

Issue 1: Applicability of the relevant article in the Limitation Act to a suit on a dishonoured cheque:
The High Court confirmed the decree for money in favor of the respondent, rejecting the appellants' plea that the suit was barred by limitation. It was held that the appropriate article that applies to a suit on a dishonoured cheque is Article 35 of the Limitation Act, 1963, not Article 19 as contended by the appellants. The Court followed a previous decision and noted that the judgment in that case had been recalled before the current judgment was passed. The error in following the recalled judgment was considered an error apparent on the face of the record but did not impact the conclusion on the applicability of Article 35.

Issue 2: Consideration of the time period for presenting a dishonoured cheque to the Bank:
The petitioners argued that the suit could not have been based on the dishonoured cheques as they were not presented to the Bank within a reasonable time as required by Section 84 of the Negotiable Instruments Act. However, the Court found that the cheques were postdated by the drawer himself and no material alterations were made by the respondent. The Court emphasized that the time for presentation should be determined with regard to the nature of the instrument and the particular case, and in this instance, the presentation was made within the stipulated period.

Issue 3: Interpretation of Sections 84(1) and (2) of the Negotiable Instruments Act:
The Court discussed the provisions of Sections 84(1) and (2) of the NI Act, emphasizing that the reasonable time for presenting a cheque should be understood in conjunction with the scheme and purpose of Section 138 of the NI Act. It highlighted the importance of the date of the cheque in determining the period for presentation and noted the specific period within which a cheque must be presented for encashment as per Section 138.

Issue 4: Relevance of the date of issue of a cheque in determining the period for presentation:
The Court clarified that the date of issue of a cheque is crucial in commencing the period for presentation, as indicated in the provisions of the NI Act. It distinguished between the date of issue and the date of delivery of the cheque, emphasizing that the date of the cheque itself determines when the presentation period begins. The Court underscored the harmonious reading of Sections 84 and 138 to ensure the effective operation of the NI Act.

Issue 5: Review of a judgment based on factual grounds and legal provisions:
The Court acknowledged the error in following a recalled judgment but concluded that it did not impact the overall findings based on facts, evidence, and applicable law. The review petition was partly allowed to correct the specific reference to the recalled judgment in the original judgment, while upholding the remaining aspects of the judgment. The Court emphasized that a review is not an appeal and that the findings were well-founded in law and evidence.

In conclusion, the High Court's judgment addressed various legal nuances related to the limitation period for suits on dishonoured cheques, the presentation requirements under the Negotiable Instruments Act, and the interplay between different statutory provisions. The Court's detailed analysis and application of relevant legal principles ensured a comprehensive consideration of the issues raised in the review petition.

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