GORILAL BALDEODAS Vs. RAMJEELAL BHURALAL

JUDGEMENT

(1.) This is an appeal by the plaintiff from the judgment of the first appellate Court reversing the decision of the trial Court allowing the plaintiff's suit for the principal of a loan of Rs. 1000/-and interest at a rate lower than the one claimed. The appellate Court held that the suit of the plaintiff was time-barred; because the payment by a cheque in the handwriting of the borrower, is not an acknowledgement for the purposes of Section 20 of the Limitation Act, and does not give a fresh term of limitation, unless the cheque is honoured and the money is realised. As in this case the cheque concerned was not honoured, limitation was not saved under Section 20 and the plaintiff's suit stood time- barred. The appellate Court did not consider whether the plaintiff could have been granted any relief on the fact of the cheque itself being dishonoured; the plaintiff himself had not made that prayer in so many words.

(2.) The facts of the case are the following: It is common ground that the plaintiff advanced a loan of Rs. 1000/- in cash on 11-6-1952. There was a receipt and interest was to be at one per cent. On 10-7-1953 the defendant passed a cheque for one thousand rupees written by himself. The cheque when presented to the bank was dishonoured. That was on 18-7-1953. The plaintiff brought the present suit for Rs. 1000/- plus interest, on 11-5-1956. Starting from the date of the loan, the suit was obviously time-barred, but the plaintiffs case was that payment by cheque is "payment" with effect from the date on which it is given. Even if it was subsequently dishonoured, still it was "payment" tor the purposes of Section 20 of the Limitation Act and gave a fresh period of limitation. In this Court, the plaintiff further urged that it his contention on the ground of limitation is not accepted, he should at least get the relief of the payment of the amount of cheque that was dishonoured, plus interest for the subsequent period. No doubt, he has not pleaded it separately and expressly sought it as alternative relief. He relies upon order 7 Rule 7, C. P. C., which provides "it shall not be necessary to ask for general or other relief which may always be given as the Court may think just to the same extent as if it had been asked for".

(3.) The first question is whether limitation is saved in a case like this where a cheque in the handwriting of the borrower is handed over to the creditor, but is subsequently dishonoured. Both the parties have quoted case law. In these cases, the word "payment" is used in two slightly different senses. Where cash is handed over both the senses will have the effect. But where a bill or cheque or pro-note (or any such negotiable instrument) is given, one sense is that it is payment, because it represents money and the parties intend that as soon as it goes into the hands of the creditor, the debt should be washed out. The other sense is in regard to the ultimate effect. In the latter sense (but not in the former) payment by a negotiable instrument is at the first instance conditional; only when the cheque or bill is honoured does the creditor really benefit by it, i.e., is paid in the latter sense. If they are dishonoured, then original loan is revived. A good deal of confusion will be saved by remembering that it is possible to have payment in first sense without its turning out ultimately to be one in the second sense. The real question, therefore, is whether the word "payment" in Section 20, Limitation Act, is payment in the first sense i.e., ostensible payment that is intended by the parties, in other words, represented by the debtor and accepted by the creditor, or whether it is in the second sense of actual realisation.