2019 (1) TMI 725 - HC - Indian Laws

Dismissal of the summary suit seeking recovery - time limitation - Whether the suit for recovery is filed within limitation in the light of the fact that the four cheques acknowledging the defendant s liability were dishonoured? - Held that - The trial Court dismissed the suit as being barred by limitation. On appeal by the plaintiff it was urged that the amount borrowed on 12/07/1939 having been acknowledged and partly paid by virtue of cheques dated 25/09/1942 and 10/11/1944 the suit as filed on 08/11/1947 was within limitation. Said contention was not accepted by the Division Bench holding that the subsequent dishonour of cheques would not amount to acknowledgment of liability and same could not be regarded as part payment within the meaning of the provisions of Section 20 of the Limitation Act, 1908. It was thus held that the suit having been filed beyond the period of limitation which commenced after 12/07/1939 was thus barred by limitation. The Court then considered the alternate claim as made based on the four cheques issued by the defendant and held that the plaintiff was entitled for the amounts mentioned in the cheques that were dishonoured as that claim was within limitation. The Court thus did not grant any relief as regards the principal claim but granted relief as regards the amount as shown under the dishonoured cheques - the finding recorded by the trial Court that issuance of four cheques would not result in extending the period of limitation in the light of provisions of Section 18 of the said Act cannot be faulted. Demand of interest - Held that - As the plaintiff s claim based on the invoices has been found to be barred by limitation, the decreetal amount cannot carry interest at the rate of 24% per annum. The four cheques having been issued pursuant to the plaintiff s legal notice, interest at the rate of 10% per annum in the light of the proviso to Section 34 of the Code of Civil Procedure, 1908 would serve the ends of justice. Appeal allowed in part.

Summary

Issues Involved:
1. Whether the suit for recovery is filed within limitation in the light of the fact that the four cheques acknowledging the defendant's liability were dishonoured.
2. Whether the plaintiff is entitled to any relief.

Issue-wise Detailed Analysis:

1. Limitation Period for Filing the Suit:
The primary issue was whether the suit for recovery was filed within the limitation period, considering the dishonoured cheques. The plaintiff argued that the payment was to be made within thirty days of invoice delivery, failing which interest at 24% per annum would apply. The last invoice was dated 15/12/2006, implying payment was due by 14/01/2007. The suit was filed on 11/01/2010, which the plaintiff claimed was within the three-year limitation period.

The trial court dismissed the suit as barred by limitation, relying on the Division Bench judgment in *Chintaman Dhundiraj vs Sadguru Narayan Maharaj Datta Sansthan* (AIR 1956 Bom 553), which held that dishonoured cheques do not extend the limitation period under Section 18 of the Limitation Act, 1963. The plaintiff's counsel referenced the Full Bench of the Gujarat High Court in *Hindustan Apparel Industries v. Fair Deal Corporation* (AIR 2000 Guj 261), which did not endorse the Division Bench's view. However, the court noted that the Division Bench's judgment continues to operate as a binding precedent within the jurisdiction of the Bombay High Court, despite being overruled in Gujarat.

2. Entitlement to Relief:
The plaintiff issued legal notices and received four cheques from the defendant, each for ?1,00,000, which were dishonoured. The trial court did not grant any relief due to the absence of an alternate prayer in the plaint. However, the appellate court found that the plaintiff is entitled to relief for the dishonoured cheques, as they were part of the cause of action.

The court highlighted that, even if the entire relief cannot be granted, the plaintiff is entitled to lesser relief to which they are legally entitled. The cheques were issued in response to a legal notice and are presumed to be for consideration under Section 118 of the Negotiable Instruments Act, 1881. This presumption was not rebutted by the defendant.

Judgment:
1. The trial court's judgment in Summary Suit No. 4155/2010 dated 15/01/2015 was set aside.
2. The suit was partly decreed with costs, directing the defendant to pay the plaintiff ?4,00,000 with interest at 10% per annum from 11/01/2010 until realization.
3. The First Appeal was partly allowed with costs.

This comprehensive analysis retains the original legal terminology and significant phrases, ensuring a thorough understanding of the judgment while maintaining privacy.