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M.B. Singh and Co. Vs. Sircar and Co. - Court Judgment

LegalCrystal Citation
SubjectCivil;Limitation
CourtAllahabad
Decided On
Reported inAIR1930All392
AppellantM.B. Singh and Co.
RespondentSircar and Co.
Excerpt:
.....cheques were cashed by plaintiffs, it is clear that if the endorsement of the cheques amounted to payment, then limitation is saved by section 20, lim, act, 4. counsel for the appellants, who opened the case, told us that there was a mistake in this portion of the learned judge's judgment, in that the cheques were not endorsed by the defendants in favour of the plaintiffs, but were in fact endorsed in blank. the cheques were not drawn by the pioneer sugar mills at all in favour of the defendants, nor drawn by anybody in favour of the defendants, nor endorsed by the defendants in favour of anybody; ' a possible explanation clearly then is that the learned district judge took down in his notes a misdescription of the cheques from the plaintiffs' counsel in the lower court and defendants'..........the writing of a cheque and handing it over to the payee does not constitute the embodying of the fact of a payment in the handwriting of the person making the same. it is contended that a cheque only constitutes an order for payment and does not amount to payment. after hearing the arguments of the counsel for the parties and considering the cases to which we have been referred, we are of opinion that it would be laying down a proposition too broadly to say than the mere writing of a cheque and handing it over to and its receipt by the payee will and must always constitute a payment of the amount. it is matter of common knowledge that a creditor sometimes receives a cheque refusing wholly to regard it as a payment, while, on the other hand, sometimes it is accepted by him as payment......
Judgment:

Boys, J.

1. The plaintiff-appellants are M.B. Singh and Co., colliery proprietors, and it is admitted that they supplied coal to the defendants, Sircar and Co., owing to the fact that the plaintiffs were abolishing their agency in Cawnpore, an arrangement was come to by which the plaintiffs were to supply some of the coal to the Pioneer Sugar Mills Co., at Unao. The Pioneer Sugar Mills went into bankruptcy and a question of accounts and balance due arose between the plaintiffs and the defendants. No mention would have been necessary of the share of the Pioneer Sugar Mills in the transactions at all, but for 'the fact that the lower appellate Court seems to have misconceived some of the facts relating to three cheques, which were exhibits, a misconception to which we shall refer later.

2. A finding of fact is that the plaintiff company supplied coal at some date prior to 15th April 1922. The suit on a balance of account was filed on 6th April 1925. Prima facie, therefore, the claim was barred by limitation. The plaintiffs, however, relied on three payments alleged to have been made to them on 12th April 1922, 1st May 1922 and 22nd June 1922. It is on the basis of the transactions evidenced by three cheques that the plaintiffs claimed that their suit was saved from being barred by limitation. We have seen these three cheques, Exs, 9, 10 and 11, and there appear to be no other cheques in question, or, at any rate, no other are on the record. The trial Court describes these cheques as cheques for Rs. 115, Rs. 1050 and Rs. 300 respectively. The cheque, Ex. 9, is in fact not for Rs. 115, but for Rs. 200. No explanation of this is forthcoming, but the error, though curious, is immaterial. The trial Court's judgment proceeds on the view, and obviously correct view that these cheques were drawn by the defendant company in favour of the plaintiff company. It says while discussing the cheques:

In the present case the plaintiffs received payments for the three cheques and the cheques being in the handwriting of the defendant himself, the requirements of Section 20, Lim. Act are complied with.

3. The lower appellate Court refers to those three cheques as follows, at p. 16 of the paper-book:

But it is urged that the Pioneer Sugar Mills issued three cheques on the National Bank of India, Limited, in favour of defendant and defendant endorsed them in favour of plaintiffs and plaintiffs cashed them and this saves limitation, No doubt defendant admits these payments, The three cheques are on the record.... These cheques were cashed by plaintiffs, It is clear that if the endorsement of the cheques amounted to payment, then limitation is saved by Section 20, Lim, Act,

4. Counsel for the appellants, who opened the case, told us that there was a mistake in this portion of the learned Judge's judgment, in that the cheques were not endorsed by the defendants in favour of the plaintiffs, but were in fact endorsed in blank. Counsel for the defendant respondents accepted this correction and on it founded an argument. It is not necessary to be more precise. After a considerable amount of the time of the Court had bean taken up in considering arguments founded on these descriptions of the cheques, counsel for the appellant announced that neither description was correct. The cheques were not drawn by the Pioneer Sugar Mills at all in favour of the defendants, nor drawn by anybody in favour of the defendants, nor endorsed by the defendants in favour of anybody; but simple straight forward cheques had been drawn, in the first place, by the defendant company in favour of the plaintiff company. It would appear that, though these cheques were to form the basis of the whole of the argument in this appeal, neither counsel for the respondents, nor, more particularly, counsel for the appellants had taken the trouble to look at them before the hearing began. It is most unfortunate that so much of our time in a case already of some difficulty should have been taken up with argument that was wholly unfounded on the facts. On the spur of the moment then neither counsel was able to explain how this mistaken description of the cheques found its place in the lower appellate Court's judgment. But it is to be noted that the lower appellate Court's description of the cheques begins with the words, 'but it is urged.' A possible explanation clearly then is that the learned District Judge took down in his notes a misdescription of the cheques from the plaintiffs' counsel in the lower Court and defendants' counsel never corrected the error. The trial Court gave the plaintiffs a decree. The lower appellate Court allowed the defendants' appeal and dismissed the suit, holding it to be barred by limitation and relying upon the decisions in Mackenzie v. Tiruvengadathan [1886] 9 Mad. 271 and Ram Chander v. Chandi Prasad [1897] 19 All. 307, declined to decide the ease in accordance with the decision in Kedar Nath v. Dina Bandhu [1915] 42 Cal. 1043.

5. Two questions have finally emerged for decision. The first question is: Did each or all of the transactions evidenced by these cheques amount to payments within Section 20, Lim. Act, so as to save limitation? It is not suggested that the amounts of the cheques were to go towards interest and were paid as such. It is contended for the plaintiff appellants that the admitted facts amount, in the first place, to a payment of part of the principal due. Those facts are that the cheques were drawn by the defendants in favour of the plaintiffs. The plaintiffs presented the cheques immediately for payment and they were honoured and the plaintiff's account was credited with the amounts of the cheques. It is contended for the defendants that the writing of a cheque and handing it over to the payee does not constitute the embodying of the fact of a payment in the handwriting of the person making the same. It is contended that a cheque only constitutes an order for payment and does not amount to payment. After hearing the arguments of the counsel for the parties and considering the cases to which we have been referred, we are of opinion that it would be laying down a proposition too broadly to say than the mere writing of a cheque and handing it over to and its receipt by the payee will and must always constitute a payment of the amount. It is matter of common knowledge that a creditor sometimes receives a cheque refusing wholly to regard it as a payment, while, on the other hand, sometimes it is accepted by him as payment. This may be illustrated by what is within the common knowledge of all. A creditor will sometimes give a receipt for the cheque stating that his account has been paid by cheque.

6. On the other hand, he will sometimes acknowledge receipt of the cheque and say that a receipt for the amount will follow when the cheque has been duly honoured and the amount paid to the account of the creditor. In the present case, there is no doubt whatever on the facts that the cheque was received by the creditor plaintiffs in payment of their account so far as the cheques are concerned. We are, therefore of opinion that there was here a payment such as prima facie would save limitation. It is next urged on behalf of the defendant respondents that the writing, i.e., the cheques, did not comply with the requirements of the proviso to Section 20. It is contended that while the fact of the payment, in view of the answer to the first question, must be admitted to appear in the handwriting of the defendants, the document must further show that the payment was towards part of the principal of the debt due. In support of this contention for the defendants we are referred to the case of Muthiah Chettiar v. Kuttian Chetty [1918] 6 M.L.W. 790. That case certainly supports the argument of the defendants. It does not, however, discuss the question, but merely follows the decision in Mackenzie v. Tiruvengadathan [1886] 9 Mad. 271. We were further referred to the case of Ranchor Das v. Pestonji : (1907)9BOMLR1329 . That case has, in our view, no bearing on the question, for in that case, so far as the payment of principal is concerned, there appears to have been no memorandum at all. Other cases referred to for the defendants do not call for mention. On the other hand, there is a decision of two Judges of this Court to which we are referred for the plaintiffs reported in Curlinder v. Abdul Hamid A.I.R. 1921 All. 335. The view of the learned Judges in that case was that it was not necessary that in the document in the handwriting of the defendants there should be any statement that the payment was made towards the principal of the debt in question. It was sufficient, if it evidenced a payment.

7. Agreeing with the decision in that case, we would state our reasons as follows. Section 20 provides for eases in which a payment towards interest or a payment towards principal may be proved to save limitation. If there has been nothing in the handwriting of the defendant, as required by the proviso, the only way in which the plaintiff can show, that it is open to him to use the payment to save limitation, is by proving that at the time it was made it was avowedly made and accepted as a payment towards interest. If it was so made, it does not come within the proviso and no writing is necessary. But if there is no question of the payment being proved to have been made towards interest at the time it was made, then it must be treated as a payment towards principal. This, we think, is the meaning of the words' paid as such' in para. 1, Section 20(1). The effect then of the first two paras is that unless the creditor can show that, at the time, the amount was paid as interest, it will be treated as having been paid towards the principal. If it is to be treated as having been paid towards the principal, the fact of the payment must be recorded in the handwriting of the debtor. But to hold that there must further be recorded in the handwriting of the debtor the fact that the payment is towards the principal, is to require that something should be inserted in the handwriting of the debtor which ex hypothesi is already presumed. To accept the contention that it is necessary for the fact that the payment is towards part of the principal to be include i in the document in the handwriting of the debtor, would further be to read into the section after the words 'the fact of the payment' the words 'as such.' If the legislature had desired to insert these words, it could very easily have done so. We are, therefore, in accord with the decision of this Court already referred to. Allowing the appeal, we set aside the decree of the lower appellate Court and restore that of the trial Court. The appellants will have their costs of the appeal and in the Court below.


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