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Palaniyappa Rice Mill and ors. Vs. P.A.A. Malayandi Chettiar (Decd.) and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany;Limitation
CourtChennai High Court
Decided On
Case NumberAppeal No. 460 of 1980
Judge
Reported in[2000]101CompCas203(Mad)
ActsLimitation Act, 1963 - Sections 20
AppellantPalaniyappa Rice Mill and ors.
RespondentP.A.A. Malayandi Chettiar (Decd.) and ors.
Appellant AdvocateS. Gopalaratnam, Adv. for;R.L. Ramani, Adv.
Respondent AdvocateP.A. Adhikesavalu, Adv. for;P.A. Daivasigamani, Adv.
DispositionAppeal dismissed
Cases ReferredMackenzie v. Tiruvengadathan
Excerpt:
.....be treated as acknowledgment of debt - plaintiff liable to file suit within three years from date of acknowledgment - suit admittedly filed after said period - date of encashment of cheque not relevant for computation of limitation period - date which cheque bears to be treated as date of acknowledgment - computation of limitation period from said date renders suit barred by limitation - suit dismissed. - - in the former case, can it be said that the payment was made by the debtor only on the date when the creditor received the cheque or on the date when he encashed the same ? it is by now well settled that if a debtor pays a cheque towards a debt which was not in dispute at that time and there is a delay in the encashment thereof, nevertheless the payment by cheque made by..........that the suit is barred by limitation, since the last draft was sent on october 16, 1975, the date of payment is only october 16, 1975, as contended by the defendant.4. mr. s. gopalaratnam, learned senior counsel, contended that even though the first defendant had sent the draft on october 16, 1975, the same was received by the plaintiff and given credit to on october 18, 1975. the date of credit of the amount alone is to be construed as the date of payment and not the date of purchase of the demand draft or the date of despatch of the demand draft.5. on the contrary, learned counsel for the respondents contended that when once the demand draft is purchased in the name of the plaintiff, it will amount to the payment of the amount towards the debt since the said demand draft will be.....
Judgment:

S. Jagadeesan, J.

1. The plaintiff, who lost before the trial court, is the appellant herein. The plaintiff filed the suit, O. S. No. 16 of 1979, on the file of the District Judge, Pudukkottai, for recovery of a sum of Rs. 11,125 due under two promissory notes, viz., exhibits A-1 and A-2, executed by the defendant for a sum of Rs. 30,000 and Rs. 10,000, respectively. The defendant had paid certain amounts and the last payment of Rs. 4,000 was sent on October 16, 1975, by demand draft and credited on October 18, 1975, and this will constitute a payment on account of the debt payable by the person liable to pay and hence under Section 19 of the new Limitation Act, the suit filed within three years from October 18, 1975, is within time. The date of the plaint is October 17, 1978, and the same was filed on October 18, 1978. The claim of the plaintiff is disputed by the first respondent herein, by filing a written statement. In the written statement, the first respondent herein has given the details with regard to several payments made and also admitted the last payment sent by demand draft on October 16, 1975, and as such the last payment is to be construed as if made on October 16, 1975, and hence, the suit is barred by limitation. The date of encashment is not the criteria and it will not furnish an extended period of limitation.

2. On the basis of the above pleadings, the trial court had framed three issues which are as follows :

'1. Whether the discharge pleaded is true ?

2. Whether the claim is barred by limitation ?

3. To what relief, are the parties entitled ?'

3. Ultimately, the trial court dismissed the suit finding that the suit is barred by limitation, since the last draft was sent on October 16, 1975, the date of payment is only October 16, 1975, as contended by the defendant.

4. Mr. S. Gopalaratnam, learned senior counsel, contended that even though the first defendant had sent the draft on October 16, 1975, the same was received by the plaintiff and given credit to on October 18, 1975. The date of credit of the amount alone is to be construed as the date of payment and not the date of purchase of the demand draft or the date of despatch of the demand draft.

5. On the contrary, learned counsel for the respondents contended that when once the demand draft is purchased in the name of the plaintiff, it will amount to the payment of the amount towards the debt since the said demand draft will be despatched to the plaintiff if not the same day, the next day. The demand draft is being a document which can be encashed by merely tendering the same and the purchaser of the draft has no occasion to stop the payment, the date of purchase of the draft is the criteria or at least the date of despatch of the draft is the criteria and not the date of credit of the amount.

6. I have carefully considered the contentions of both counsel. There is no dispute with regard to the execution of exhibits A-1 and A-2 and with regard to the amount claimed by the plaintiff in the suit. Towards the said debt, there is no further dispute that the defendant had purchased the draft on October 16, 1975, and forwarded the same to the plaintiff with a covering letter, exhibit A-6. The plaintiff also received the same and given credit to for the said draft on October 18, 1975. The suit has been filed on October 18, 1978. The short question for consideration is what is the date of acknowledgment of the debt by the defendant, i.e., the date of despatch of the draft or the date of giving credit to of the draft by the creditor and whether the suit is barred by limitation Learned senior counsel for the appellants drew my attention to the decision in CIT v. Ogale Glass Works Ltd. [1954] 24 Comp Cas 520 ; [1954] II MLJ 67 (SC) in support of his contention that the date of payment must be the date of delivery of the demand draft. Of course, this case is not on the question of limitation, but it arises under the Income-tax Act and the question for consideration arises before the Supreme Court is, whether the payment is to be construed to have been made in the place where the cheque has been received or where the cheque has been encashed, since both the places are distinct and different, I do not think this case can be of any help to decide the question of limitation, especially when the interpretation with regard to the receipt of money is in respect of a totally different statute.

7. Learned senior counsel for the appellants also relied upon another judgment of the Full Bench of this court in Employees' State Insurance Corporation v. Haji Md. Ismail Sahib : (1959)2MLJ521 . This case also, in my view, may not be of any help of decide the question of limitation when the question before the Full Bench is in respect of the jurisdiction of the court under the Employees' State Insurance Act.

8. Yet another judgment relied upon by learned senior counsel for the appellants is reported in E.C. Muthuswami Gounder v. V.K. Chennimalai Goundar : (1970)1MLJ341 . In that case, the debtor has sent the money to the creditor by way of money order. The question arose for consideration is whether the date of payment, i.e., the acknowledgment of the debt is the date of the payment made to the post office by the debtor or the date of receipt of the money by the creditor. The Full Bench of this court has held that the date of the money handed over at the post office will be the date of payment as follows (page 343) :

'It has two distinct and separable limbs. The first one is that the payment should be on account of a debt and that such a payment should constitute an acknowledgment. The second is that there should appear by reason of such payment, an acknowledgment in the handwriting of the debtor or the person making the payment under authority. In this case, the respondent sent the money order on July 16, 1962, for onward transmission to the creditor for payment. When a debtor seeks the instrumentality of the post office as media for transmission for payment of a part of a debt admittedly -due by him to the creditor then, it is certainly reasonable inference to draw, that such a payment was not made by him in the abstract but with the sole and only purpose and intention of payment of the same to the creditor towards any debt which was by then subsisting. Mr. Chinnappa, learned counsel for the respondent states that the payment to a post office ought not to be treated as such because, it cannot be deemed to be a payment to a creditor. He contrasted this state of affairs with a case where a debtor passed on a cheque to the creditor. Cheques also may be handed over in person or sent by post to a creditor. It is not always necessary that when a cheque is received by a creditor, it must be said that- it was handed over to him in person by the debtor. One can easily comprehend a case where a cheque is sent by post just as a money order is sent through post office. In the former case, can it be said that the payment was made by the debtor only on the date when the creditor received the cheque or on the date when he encashed the same It is by now well settled that if a debtor pays a cheque towards a debt which was not in dispute at that time and there is a delay in the encashment thereof, nevertheless the payment by cheque made by the debtor to the creditor, as evidenced by the cheque, is to be deemed to take effect from the date when the cheque was drawn and posted by the debtor to the creditor. The date when the creditor realises the cheque is of no significance. If this is therefore the principle which has to be applied when payments are made by cheques, I do not see any reason why the same principle should not be made applicable to a case where money is sent through the media of post office. Every one is aware of the form prescribed for sending the money by money orders wherein a debtor subscribes his signature and also signifies therein his assent for the payment of the money So sent by him to the creditor named in that form. This writing in the money order form by itself is an indication that the intention of the debtor, when he transmitted the money by money order, was to pay the same to the named creditor therein. It therefore, follows that the money sent under exhibit A-2 should be deemed to be a payment made by the respondent to the petitioner towards a debt and that having been made before the expiration of the prescribed period by the debtor, a fresh period of limitation shall be computed from the date of transmission which shall be deemed to be the date of payment. In this case, the date of transmission is July 16, 1962.'

9. The learned judge, as he then was, while discussing the question with regard to the date of payment when the money is sent by money order also discussed with regard to the payment made by way of cheque and found that if a debtor pays a cheque towards a debt which was not in dispute at that time and there is a delay in the encashment thereof, nevertheless the payment by cheque made by the debtor to the creditor, as evidenced by the cheque, is to be deemed to take effect from the date when the cheque was drawn and posted by the debtor to the creditor, however, the learned judge has slightly emphasised that if there is a delay in encashment thereof. But if there is no delay in encashment, what would be the date Either the date of sending the cheque or the date of encashment is left open.

10. Learned counsel for the respondent drew my attention to the judgment in A. Ramavel v. Pandyan Automobiles Pvt. Ltd., : AIR1973Mad359 , and ' contended that when the payment is made by the debtor or his duly authorised agent, that payment would amount to acknowledgment. But in this case, the question for consideration is what would be the result of payment by the third person who is neither the debtor nor the authorised agent. Hence, the decision referred to above may not be of any use to consider the question that arises for consideration in the present appeal. Similarly, another judgment referred to by learned counsel for the respondents reported in Sant Lal Mahton v. Kamla Prasad, : [1952]1SCR116 , also cannot be of any use since the question arose for consideration before the apex court is whether the admission made in the written statement by the debtor would amount to an acknowledgment of the debt.

11. It may be worthwhile to refer some of the judgments to decide the question in issue. One view is that when the cheque is dishonoured, no payment arises thereunder and hence no acknowledgment. In such cases, the creditor has to fall back on the original cause of action. The judgments in Gorilal Baldeodas v. Ramjeelal Bhuralal, : AIR1961MP346 ; Arjunlal Dhanji Rathod v. Dayaram Premji Padhiar, : AIR1971Pat278 and Ahmad Hussain v. Tasadduq Husain, : AIR1966All136 , are on this line.

12. Now the question is when the payment is made, by cheque or draft, then what would be the date of acknowledgment of the debt In the decision in Marreco v. Richardson [1908] 2 KB 584 (CA) it is stated as follows (page 590) :

'I need not cite the whole case, but the following passage from the judgment of Lord Campbell C. J. Turney v. Dodwell (3 E and B 136) is very apposite (at page 142) : 'we think that, where a bill of exchange has once been so delivered in payment on account of the debt as to raise an implication of a promise to pay the balance the statute of limitations is answered, as from the time of such delivery, whatever afterwards takes place as to the bill'.'

13. As per the judgment referred to above, the payment is to be construed on the date when the cheque was handed over to the creditor or his agent. In this case, a debtor gave a cheque on May 10, 1900, by way of part payment of the bill and the parties agreed that the cheque should not be presented for payment before June 20. On June 29, the cheque was presented and the payment was duly paid. While considering the date of acknowledgment of the debt, the Court of Appeal held that the date of payment is only the date of the cheque, viz., May 10, 1900.

14. Yet another judgment is reported in Maurice Mayahas v. W. Morley : AIR1925Cal937 , wherein the Calcutta High Court has held as follows (page 939) :

'It has been contended that though the cheque bears the date 5th January, and though it was paid to the manager of the plaintiff on that date nevertheless the actual payment from which the fresh period of limitation should be computed is the date of payment when the cheque was presented at the bank. There is not before me any evidence as to the actual date when the cheque was presented and paid at the bank, but inasmuch as it was handed over to the plaintiffs representative after banking hours on 5th January, I will assume that it was paid on 6th January, 1921, and this would suffice for the plaintiff's purpose, if his contention is otherwise correct. In support of this contention, I have been referred to Garden v. Bruce 3 CP 300 ; 37 LJCP 112 ; 17 LT 544 ; 16 WR 366That was a suit for money lent. The plaintiff in lending the money handed the defendant a cheque for the amount. The defendant paid it into his bank and received credit. The plaintiff's bankers paid the cheque some days later. The question there arose whether limitation ran from the date when the cheque was handed by the plaintiff to the defendant or from the date when it was met by the plaintiff's bankers and it was decided that the action being one to recover money lent limitation only ran from the date when payment was made by the plaintiffs bankers. A number of authorities were there cited in support of the proposition that a cheque, unless dishonoured, is payment, and the learned Chief Justice said in his judgment :

'I quite agree with all the cases that have been cited, but in all of them the cheque has been treated as an acknowledgment of a pre-existing debt. Here the debt did not accrue till the payment of the cheque'.'

15. The other case is reported in Prafulla Chandra Nag v. Jatindra Nath Kar : AIR1938Cal538 . In the said case, a Division Bench of the Calcutta High Court has held as follows (page 540) :

'These passages not only confirm the view taken by Sir Lawrence Jenkins C. J. but they go further and show that a cheque may not only be payment but also acknowledgment. The Indian statute only required that the acknowledgment must be of the payment; it is not necessary that it must also be stated that the payment is towards a particular debt. Mr. Bagchi has referred to the case in Beti Maharani v. Collector of Etawah [1895] 22 IA 31 (PC). But that was a case under Section 19 of the Limitation Act, which relates to an acknowledgment of liability towards a particular debt which is a different matter from acknowledgment of payment, as required by the proviso to Section 20. Mr. Bagchi has also referred to the case in Muthiah Chettiar v. Kuttayan Chetty [1919] 43 IC 20 a Madras case which followed the decision in Mackenzie v. Tiruvengadathan [1886] 9 Mad 271. This view was dissented from in the case in Mandardar Aitch v. Secretary of State [1902] 6 CWN 218 where it was held, distinguishing Section 19 from Section 20 of the Limitation Act, that it is not necessary that the writing of payment (or acknowledgment, as the case may be) must, on the face of it, show expressly that the payment was made as such. To the same effect is the decision in the case in M.B. Singh and Co. v. Sircar and Co : AIR1930All392 mentioned above. Our attention has also been drawn to a decision of a single judge in Jagtumal Sada Sukh Rai v. Charanji Lal Fakir Chand [1933] 14 Lah 580 ; AIR 1933 Lah 341as also the case in Municipal Committee, Amritsar v. Ralia Ram [1936] 17 Lah 737 ; AIR 1936 Lah 629 which support the view taken by Henderson J. Mr. Bagchi has laid great stress on the decision of their Lordships of the Judicial Committee in the case of Babu Manmohan Das v. Baldeo Narain Tandon, , and he has contended that the effect of this decision is to negative the view taken by Sir Lawrence Jenkins. But this decision refers to articles 57 and 58 of the Limitation Act, where the question turns on the payment of a cheque which is a different matter from the cheque being taken as payment of the debt. As mentioned already, Jenkins C. J. pointed out that the parties accepted the cheque as payment and that is the case here. It was never the case that the parties did not accept the cheque as payment nor was it brought out that the cheque was actually paid into the bank a considerable time later. That being so, on the facts of the present case it cannot be said that the view taken by Sir Lawrence Jenkins C. J. should not be accepted as correct and relevant. As I have pointed out, the acknowledgment was simultaneous with the payment; the appellant himself wrote out the cheque by which he paid, and it follows necessarily that by such writing he acknowledged the debt. Therefore, there was compliance with the proviso to Section 20 of the Limitation Act and the view taken by Henderson J. was correct.'

16. In the decision in Thawa Subrahmanyam v. Chenna Venkataratnam, : AIR1956AP105 , the learned Chief Justice of the Andhra Pradesh High Court has held as follows (page 107) :

'A payment may be made not only in cash but in any other medium that the creditor may choose to accept. It may be by delivery of goods or by the adjustment of accounts. Whatever might be the position at the time when Mackenzie v. Tiruvengadathan [1886] 9 Mad 271 was decided, it cannot be said that payment by cheque is not now in consonance with the practice obtaining in the commercial world. It has now become the usual mode of payment.

Further, the requirement of the proviso that there should be an acknowledgment of payment is also satisfied by the writing contained on the cheque. The word 'acknowledgment' means only recognition or admission. The admission of payment need not be necessarily subsequent to the payment. It may be simultaneous or even antecedent. The cheque is not only evidence of payment but it 'ex facie' contains recitals admitting the payment.

We, therefore, hold that it satisfies the requirements of the section. We would go further and hold that a cheque together with the subsequent receipt of the money by the payee would be an acknowledgment of payment within the meaning' of the proviso. It is not necessary that there should be actual payment of money simultaneous with the endorsement. Money sent to a creditor along with a letter containing an acknowledgment would satisfy the requirements of law, though in fact the money will be paid subsequent to the writing of the letter.

The whole transaction, i.e., the writing of the letter and the payment of money to the creditor may reasonably be considered as one process. So too, in the case of the issue of a cheque, the issue of the cheque and the subsequent realisation of it may be considered as one process--the cheque containing the acknowledgment and the realisation of the cash being the payment.

We, therefore, hold that, under the new proviso, a cheque issued by a debtor would be an acknowledgment of payment within the meaning of the proviso to Section 20(1) of the Limitation Act. It is not disputed that the payment in the present case is within three years from the date of the suit, and, therefore, the suit is within time.'

17. From the abovesaid principles, it is clear that where a debtor writes the cheque by himself, that itself would amount to the acknowledgment of the debt as per Section 20 of the Limitation Act. Where a cheque has been received by the creditor and encashed, then the payment relates back to the date which the cheque bears, because that is the day on which the acknowledgment is made by the debtor. That acknowledgment is considered to be the payment and not the actual payment by the banker, which takes some time. When it has been held that the handing over of the cheque would amount to the payment of the money, there cannot be any dispute to hold that the date of purchase of the demand draft will be the date of the payment towards the debt. Hence, on an analysis of the above principles, I find that the date of the instrument will be the date of payment where the instrument has been duly honoured and the moneys are credited by the creditors towards the debt. In the present case, admittedly the date of draft is on October 16, 1975. Hence, the period of limitation would expire by October 15, 1978. The suit having been filed on October 18, 1978, is obviously barred by limitation.

18. Apart from this, even if the argument of learned senior counsel is accepted, I am of the view that then also the suit is barred by limitation. The draft had been despatched on October 16, 1975, which had been credited by the plaintiff on October 18, 1975. If the date of the credit is to be taken as the criteria for acknowledgment, the expiry of three years would fall on October 17, 1978, and the suit ought to have been filed on or before October 17, 1978. In this case, admittedly, the plaint has been presented only on October 18, 1978, i.e., one day after the expiry of the limitation and as such on this ground also, the suit is barred by limitation.

19. For all the reasons stated above, the appeal is dismissed. However, there will be no order as to costs.


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