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Judgment
Ranjit Singh, J
The O.A. filed by the appellant Bank has been dismissed by the Tribunal below as being barred by limitation. Aggrieved against this order, the appellant Bank has filed the present appeal. The O.A. was filed for recovery of Rs. 23,94,458/- which was the balance due out of the loan granted by the Bank to the respondents to purchase 10 commercial vehicles under loan-cum-hypothecation scheme. The Bank had disbursed a sum of Rs. 1,08,00,000/- to the respondents for purchase of these vehicles. The amount was repayable in 35 equated monthly instalments with interest @ 7.01% in each case. The loan was disbursed and the respondents had executed various requisite documents, The respondents defaulted in the repayment of monthly instalments and as per the account maintained by the appellant Bank, the respondent became liable to pay a sum of Rs. 23,94,458/- which was outstanding towards instalment.
The respondents filed written statement pointing out that they had filed a suit for damages and rendition of account before the Civil Court, seeking declaration and decree for a sum of Rs. 18,71,836/-. This suit was said to be pending since 2008. The appellant Bank which was impleaded as defendant, in the suit, had filed written statement without seeking any counter-claim. Another plea raised was that the application so filed by the Bank was time-barred and thus was not maintainable. The respondents also pleaded that there was no recall notice dated 11.6.2010 and the application is just a misrepresentation and concealment of facts.
The Tribunal, after considering the pleas and evidence placed on record, has dismissed the O.A. as being barred by time. While reaching this conclusion, the Tribunal below has noticed that the loan was sanctioned on 30.11.2004 and this amount was repayable in 35 equated monthly instalments commencing from 7.1.2005 and ending on 1.11.2007. The plea by the respondent was that as per the provisions of the Limitation Act, limitation to initiate legal action against the respondent company was three years from the date of any instalment that is not paid and that there is independent and distinct period of limitation for every default in payment of instalment. In this regard, the Counsel for the respondents had also relied upon a judgment of the Hon'ble Himachal Pradesh High Court. The Tribunal, however, has held that since the Bank has claimed the entire amount due, it is not Article 36 but Article 37 of the Limitation Act that would apply. The last instalment was due on 1.11.2007 and the Bank could wait up to that date and the O.A. could be filed up to 31.10.2010. This is what was pleaded in the O.A. to show that the same was filed within the period of limitation. The O.A., however, was filed on 29.11.2010 and the Tribunal has accordingly held that the last instalment due was on 1.11.2007 and it could not be stretched to 30.11.2007 and thereafter to count three years to 30.11.2010.
To meet the objection of limitation, the Counsel for the appellant relied upon the entries made on credit side which showed one entry of dishonour of cheque. The Tribunal has held that the cheque which was presented and dishonoured could not be taken as amounting to part payment of the debt. This cheque bearing No. 840163 was posted to the account on 31.12.2007 but was claimed to have never been issued by the respondent. The Tribunal below has held that when the respondents had raised this contention, the Bank was expected to produce sufficient proof to show that the cheque was issued by the respondent and was dishonoured. Besides, the Tribunal below has opined that even if it was produced it would not improve the situation because the cheque having been dishonoured could not be taken as a part payment to derive benefit under Section 19 of the Limitation Act.
While taking this view, the Tribunal has relied upon a judgment in the case of Northern India Finance Corporation Pvt. Ltd. v. R.L. Soni, AIR 1973 P & H 35. The view expressed therein is noticed to the effect that payment by cheque will not save limitation under Section 19 if the cheque is dishonoured on presentation to the bankers on whom the cheque has been drawn. The Tribunal accordingly has held that the O.A. was barred by limitation.
Counsel for the appellant has made laborious efforts to contest this finding returned by the Tribunal below. As per the Counsel, cheque issued even if dishonoured could be taken as a part payment for the purpose of limitation. In support, the Counsel has relied upon the judgment of the Hon'ble Delhi High Court in Bhushan Steel & Strips Ltd. v. Bhartiya Loha Udyog (P.) Ltd., 167 (2010) DLT 237, CS (OS) No. 1734/1999, decided on 10.2.2010. One of the issues which arose for consideration before the Court related to a suit being barred by time. In this case also, a cheque given by the defendant to the plaintiff on 17.4.1997 which on presentation had been dishonoured. The Trial Court had decided this issue on this basis in favour of the plaintiff and against the defendant. A sum of Rs. 54,65,445.60 was due and outstanding against the defendant as per the statement of account which was for a period from 1.4.1994 to 31.3.1995, 1.4.1995 to 31.3.1996 and thereafter from 1.4.1996 to 31.3.1997. The closing balance as on 22.4.1997 showed an amount of Rs. 54,65,445.60. The contention by the defendant in this case before the Court was that cheque dated 17.4.1997 was never issued by him. The case set up by the defendant in this case was that cheque in question was given in lieu of a cheque given in March 1996, which was misplaced. This plea was not found plausible on the basis of material on record. The Court ultimately has held that the cheque which was issued on 17.4.1997 as last payment and even if dishonoured was a valid document for the purposes of extension of period of limitation. In this regard, the Court has placed reliance on the case of Rajesh Kumari v. Prem Chand Jain, 67 (1997) DLT 502 : 1997 DRJ 42 : AIR 1998 Delhi 80.
Counsel for the appellant has also placed this judgment in the case of Rajesh Kumari (supra) before me. The single Judge of the Delhi High Court has agreed with the view taken by the High Courts of Madhya Pradesh and Calcutta. The Court has observed that the payment of cheque satisfies the requirement of Section 19 inasmuch as the acknowledgment of payment appears in the handwriting of or in a writing signed by the person making the payment in the form of a cheque. A direct authority available on the point as noticed by the Court is in the case of Gorilal Baldeodas v. Ramjeelal Bhuralal, AIR 1961 M.P. 346. The Court in this case has observed as under:-
"If one bears in mind that the word "payment" has been used in two different senses, it would be clear that the moment the negotiable instrument is handed over and accepted by the creditor and is in the debtor's handwriting, there has been a payment for the purposes of Section 20, Limitation Act and a fresh period of limitation has already started.
If the negotiable instrument is dishonoured subsequently the creditor, no doubt, can fall back on his original claim. But the new term of limitation of the subsequent happening. To Sink Section 20 with the subsequent honouring of the negotiable instrument would indeed lead to absurd results. The debtor has intended and at all events represented to the creditor that the negotiable instrument is good, and thereby the creditor has for his part, been given a feeling of security with a fresh term of limitation.
If it turns out that the debtor's negotiable instrument is dishonoured (or as for that matter the currency notes that he has given turn out to be counterfeit) this fresh term of limitation cannot be blocked. Again, if one looks to the equity side of it, a payment which the debtor means as a sheer pretence, but the creditor accepts as genuine, cannot certainly deprive the latter of what Section 20 has already given him.
This would hold that the passing of the cheque is payment for the purpose of Section 20 and if the other conditions were fulfilled, a fresh term of limitation started from that date, whether or not it is subsequently honoured. That way the suit of the plaintiff was not time-barred."
To bring home the point, the Court in the case of Rajesh Kumari (supra) has given the following illustration:
"I may illustrate. The loan is dated 1.3.1981, the limitation for suit for recovery' expires on 1.3.1984. On 28.2.1984 the debtor delivers a cheque in part payment of principal or in payment of interest duly signed by him. The plaintiff files a suit on 7.3.1984. Seeking extension to limitation relying on payment dated 28.2.1984. The suit will be within limitation though the cheque may bounce during the pendency of the suit. The bouncing of the cheque will not undo the advantage of extension in the period of limitation earned by the plaintiff and his validly instituting the suit on 7.3.1984. Thus, dishonouring of the cheque results in not extinguishing the liability of the debtor to the extent of the amount of the cheque; nevertheless the cheque remains an effective payment for the purpose of Section 19 of the Limitation Act 1963."
Thus, the Court has held that bouncing of a cheque will not undo the advantage of extension in the period of limitation earned by the plaintiff and his validly instituting the suit. It is held that dishonouring of the cheque results in not extinguishing the liability of the debtor to the extent of the amount of the cheque, nevertheless the cheque remains an effective payment for the purpose of Section 19 of the Limitation Act.
The issue in the case of Gorilal Baldeodas (supra) was also concerning limitation. In this case where cheque issued in the handwriting of the borrower was handed over to the creditor, but was subsequently dishonoured. After referring to a number of judgments, the Court has held that it would be clear that the moment the negotiable instrument is handed over and accepted by the creditor and was in the debtor's handwriting, there had been a payment for the purposes of Section 20, Limitation Act and a fresh period of limitation had already started. The Court further held that if the negotiable instrument is dishonoured subsequently, the creditor no doubt could fall back on his original claim but the new term of limitation that had already started, could not get blocked because of the subsequent happening. The Court has accordingly held that the passing of the cheque for the purpose of Section 20 and if the other conditions were fulfilled, a fresh term of limitation started from that date, whether or not it was subsequently honoured. The suit of the plaintiff was held not time-barred. In view of this legal position, the finding returned by the Tribunal below that the payment of cheque will not save limitation under Section 19 if the cheque is dishonoured may not reflect the correct position of law. This finding, therefore, cannot be sustained.
The Counsel for the respondents, however, would say that limitation being a mixed question of fact and law required of the appellant to prove to the satisfaction of the Tribunal whether the respondents had issued this cheque which was dishonoured. In this regard, Counsel would refer to the reply filed in response to the notice in appeal where it is averred that the appellant is relying upon the alleged cheque which was posted by it in their books of accounts on 1.4.2008. This, as per the respondents, was just to have advantage of extension of period of limitation from the original date 31.10.2010 to the date of cheque in terms of Section 19 of the Limitation Act. This cheque was neither produced on record nor proved as per law. Even the entry of the alleged cheque in the account did not refer to the date of the cheque. It is stated that even the date of alleged cheque may be different from the date when the alleged cheque was presented. It is further stated that there is no evidence that the alleged cheque was presented to the answering respondents and was returned unpaid. The respondents have otherwise categorically denied having issued the alleged cheque and its presentation to the Bank account.
That being the stand of the respondents, it was incumbent upon the appellant Bank to produce the cheque to show that it was signed by the respondent. This was also essential to show when the cheque was issued. The Bank was also required to show that this cheque when presented was dishonoured, by leading relevant evidence. Nothing of this sort appears to have been done. The Counsel for the appellant has only relied upon an entry in the statement of account to show that one cheque was dishonoured. There is no evidence on record as to who was signatory on the cheque or whether it was issued by the respondents. Since the respondents were denying having issued any such cheque, the burden resting on the appellant Bank increased manifold to show that the cheque issued by the respondents had been dishonoured in order to take advantage of Section 19 of the Limitation Act. In any case, burden to prove this fact was on the appellant Bank. This cheque even if had been dishonoured could have extended the period of limitation for the Bank to make this claim, but in the absence of any evidence of the cheque having been so issued by the respondent and its dishonour, the plea of limitation claimed on this count by the Bank obviously fell short of proof. The Bank was required to prove that the cheque was issued in the handwriting of the borrower and was handed over to the creditor but was dishonoured. The evidence to this effect was essential to claim benefit for extending period of limitation even in terms of the judgment relied upon by the Counsel of the appellant.
The Counsel for the respondents would also refer to the O.A. filed by the appellant Bank where this ground is not pleaded to claim that the O.A. to be within limitation. What all is stated in the relevant paragraph to show that the O.A. filed was within limitation is that the amount was repayable in 35 equated monthly instalments up to November 2010. Since the loan instalment was payable by 1.11.2007, the period limitation of three years on this basis expired on 31.10.2010. The submission by the Counsel for the appellant is that the Tribunal below had considered the plea raised by the appellant about dishonour of the cheque though not pleaded in the OA. The Counsel sought to contend that this plea indeed was raised. May be so, but this is no substitute for proof of the fact that the cheque was issued by the respondents and was dishonoured.
Faced with this difficult situation, the Counsel prayed for time to take some remedial measures in this regard. The Counsel states that he would file an application for leading additional evidence. This prayer cannot be accepted at this late stage. Such a prayer ought to have been made at the time of filing of the appeal or on any subsequent date before the case was finally heard. At this stage it would only mean that this Tribunal is giving chance to the appellant to fill in the lacuna in its case. Accordingly, 1 find that it would not be fair to allow time to the Bank to move application for leading additional evidence. This oral prayer made by the Counsel for the appellant is accordingly rejected. I am of the view that the factual basis for claiming that the O.A. was filed within limitation was not properly laid or proved before the Tribunal below and, accordingly, the finding returned by the Tribunal below that the O.A. was not filed within limitation is required to be sustained not for the reasoning given by the Tribunal, but due to the fact that factual matrix in support of this legal plea has not been proved at all. Consequently, the appeal filed by the appellant fails and is, therefore, dismissed.