Achuveettil Abdul Nazar vs Sakkeer Abdul Kader

Sathish Ninan, J.

The suit for money was decreed by the trial court. The defendant is in appeal.

The plaintiff and the defendant, along with others were partners of a firm doing business in textiles. According to the plaintiff, during the period 2010-11, the defendant had borrowed a total amount of ₹ 55 lakhs from the plaintiff. Later, when repayment was demanded, the defendant issued Ext.A1 cheque dated 20.12.2014. The cheque when presented for payment was dishonoured. The suit is filed for recovery of money.

The defendant denied the alleged borrowal. While he did not dispute receipt of amounts from the plaintiff, it was contended that such amounts represented plaintiff's investment into the business, towards land purchases and the rent payable for the building occupied by the firm, of which the defendant was a co-owner. He denied the issuance of Ext.A1. It was contended that, the defendant had retired from the firm with effect from 30.06.2013 and that a cheque of the firm signed by defendant, who is one of the joint signatories has been fabricated into Ext.A1 cheque.

The trial court held that the payment of amounts by the plaintiff to the defendant is proved on the evidence, and that the defence set up regarding the nature of payments remained unproved. The contention that the defendant had retired from the firm in 2013, was held to be not proved. It was found that Ext.A1 cheque was issued in discharge of the liability. It was also held that, though the cheque is to be signed by two signatories, and though it is signed by the defendant alone, still, the signatory is liable under the cheque. Accordingly, the suit was decreed.

We have heard learned counsel Sri.Ajith Viswanathan on behalf of the appellant-defendant and the learned Senior Counsel Sri.T.Krishnanunni on behalf of the respondent-plaintiff.

The points that arise for determination in this appeal are :-

Even going by the plaintiff's case the, alleged loan transaction was during the period 2010-2011. As PW1 he deposed, “അനനന്യായതത്തിൽ പറഞ്ഞ സസംഖന 2010-2011 കന്യാലഘട്ടതത്തിലന്യാണണ് കകന്യാടടുതതണ് . ” The suit is filed on 28.03.2015. But for Ext.A1 the plaint claim is barred by limitation is beyond dispute and it is not attempted to be contended to the contrary. Therefore, the first question to be determined is whether Ext.A1 was issued by the defendant and if so, its nature, whether it amounts to a payment by cheque or an agreement under Section 25(3) of the Contract Act.

The plaintiff, defendant and three others were the partners of a firm. The defendant and another partner were its Managing Partners. The two Managing Partners were the joint signatories to the Bank Account of the firm. The above facts are undisputed.

It is the definite case of the defendant that, he retired from the firm on 30.06.2013 and that his signed cheque leaf relating to the account of the firm has been fabricated into Ext.A1. A perusal of Ext.A1 reveals that it is a cheque leaf of the firm and that it requires to be signed by the two signatories viz. the Managing Partners, as indicated therein. It also reveals that it is signed by the defendant alone and not by the other Managing Partner. It is also evident from Ext.A1 that the signature of the defendant on the one hand, when compared with the other writings on the cheque with regard to the date, name of the payee, and the amount, is with a different ink.

The plaintiff was examined as PW1. In his cross-examination he admitted that the defendant had retired from the firm in the year 2013 and that on the date of Ext.A1(20.12.2014) he was not a partner. The relevant deposition reads thus :-

Under the circumstances above, when the plaintiff claims to have accepted the cheque of the firm, signed by the defendant at a time when the defendant had already retired from the firm, it is for the plaintiff to explain the circumstances under which he accepted the same. There is absolutely no explanation forthcoming in the said regard.

When PW1 was questioned as to who had entered the writings in Ext.A1 he pleaded ignorance and then added that it might be the handwriting of the defendant and that it was taken out by the defendant from his pocket. As we had noted supra, the signature of the defendant on the one hand, and the other writings on the cheque are with a different ink. The writings on the cheque have not been proved to have been made by the defendant. All the above suggests that the defendant’s contention that a blank signed cheque of the firm (which was signed prior to his retirement) was fabricated and the suit has been laid, cannot be brushed aside.

In the circumstances as noticed above, we find that the plaintiff has failed to prove the due execution and issuance of Ext.A1 cheque.

A reading of the plaint reveals that the suit is not laid on the dishonoured cheque. Obviously this must have been for the reason that only one among the joint signatories has signed on Ext.A1, and that the Bank has dishonoured the instrument for the said reason also, along with insufficiency of funds. So also, the suit is not on the original cause of action, since such a suit is barred by limitation.

The cause of action pleaded in the plaint is 20.12.2014, the date of issuance of the cheque. Under Section 25(3) of the Contract Act, an agreement to pay a time barred debt is valid. It gives rise to a fresh cause of action. A suit can be upon such agreement. Law is settled that, the issuance of a cheque for a time barred debt falls within the scope of Section 25(3) of the Contract Act. However, having found that the defence contention that the cheque of the firm signed by him prior to his retirement has been misused is probable, and that the plaintiff has failed to prove the execution and issuance of the cheque by the defendant, including that it was filled up by the defendant, the questions as to, whether Ext.A1 would satisfy the requirement of a cheque it having not been signed by one among the mandatory signatories, and even if not, whether the writings in Ext.A1 would amount to a promise which would satisfy the ingredients of Section 25(3) of the Contract Act, do not crop up for consideration; so also is the question of proof of the original debt.

Having found that the plaintiff has failed to prove the execution and issuance of Ext.A1 by the defendant, the question of applicability of Section 25(3) of the Contract Act does not arise. As a necessary corollary, the suit is bound to fail.

The trial court failed to appreciate the fact that the suit is not on the dishonoured instrument and also that the proof of Ext.B1 retirement deed is insignificant in the light of the categoric admission of the plaintiff regarding the retirement of the defendant. On the above discussions, the decree and judgment of the trial court is liable to be interfered with.

Resultantly, the appeal is allowed. The decree and judgment of the trial court is set aside. The suit will stand dismissed.