SUBRAHAMANYAM Vs. VENKATARATNAM

JUDGEMENT

(1.) The Judgment of the Court was delivered by the Hon'ble The Chief Justice. Umamaheswaram J. has referred this appeal to a Bench as, in the learned Judge's view, the question of law raised is one of importance and there was a conflict of authorities on the same. The relevant facts, that gave rise to the appeal, may be briefly stated. The plaintiff is a merchant of Kanuparthi dealing in salt and the defendant is a merchant of Bezwada dealing in the same commodity. The defendant was purchasing salt from the plaintiff and was paying amounts towards purchase price from time to time. On 27-8-1946, he issued a cheque on the Andhra Bank in favour of the plaintiff and the cheque was cashed and credited in the plaintiff's account on 27-8-1946. The suit was filed on 24-12-1948. The suit would be barred by limitation if the payment of Rs. 121-2-0 by the issue of a cheque did not operate as payment within the meaning of Sec. 20 of the Limitation Act. The short question, therefore, is whether a payment by cheque by a debtor in favour of a creditor is a payment which satisfies the terms of Section 20 of the Limitation Act. Section 20 reads:

(2.) In Mackenzie v. Tiruvengadathan, a Division Bench of the Madras High Court held that an endorsement on a cheque did not satisfy the conditions of Section 20 of the Limitation Act so as to give rise to a new period of Limitation from the date of such endorsement. The facts in that 'case were: The respondents executed a promissory note in favour of the appellants on 6th September 1881. The suit was filed in August 1885. There was a credit entry of Rs. 100/-in the books of the appellants and that amount represented the realisations of a cheque. The said cheque was drawn on the Agra Bank by one Haji Muhammad in favour of one of the respondents and endorsed over by him in favour of the appellants. The question that really arose before the learned Judges was whether the writing on the cheque satisfied the proviso as it then stood. The learned Judges observed at page 272:

(3.) This judgment could be sustained on the ground that the endorsement on the cheque did not satisfy the more stringent condition laid down by the proviso as it then stood, for, under that proviso, the fact of part payment should appear in the handwriting of the debtor or his agent. The observations of the learned Judges in regard to the cheque must be treated as obiter. Further, in the year 1886, the practice of issuing and receiving cheques in lieu of payment was not so common as it is now. Since that decision, except one decision in Ram Chandar v. Chandi Prasad ', which was also later dissented from by the same High Court, no other High Court, including the Madras High Court, followed that decision. The obiter dictum in that decision based upon the terms of the proviso since amended, cannot be taken as authority on the proviso as it now stands, which is far wider in scope than its predecessor. There is a long catena of decisions on the question now raised before us but it would be enough if we noticed a few of them throwing light on the subject. In Kedar Nath Mitra v. Dinabandhu Saha, Jenkins C. J. expressed his view at page 1049 as follows :