Sohrab Textile Mills Ltd. vs Eagle Tyres Private Limited and Others

Arun Palli, J.

Suit filed by the plaintiff was dismissed by the trial court vide judgment and decree dated 01.03.2006. Appeal preferred against the said decree failed and was dismissed on 23.01.2009. This is how, plaintiff is before this court, in this regular second appeal. Parties to the lis, hereinafter, would be referred to by their original positions in the suit. In short, plaintiff filed a suit for recovery of sum of Rs. 10,25,000/-. It was averred that the plaintiff is a limited company and engaged in business at Nabha Road, Malerkotla. Defendant No. 1 purchased certain goods on credit valuing Rs. 10,25,000/- and in discharge of its liability, defendant No. 2, as Director of defendant No. 1, issued six cheques of different dates and value, drawn on State Bank of Patiala, Branch Sector 7-C, Chandigarh, out of account No. 61316 of defendant No. 1. The details of which read as under:

The said six cheques were presented by the plaintiff to its banker i.e. Punjab National Bank, Branch Malerkotla. However, the same were returned unpaid and dishonoured, vide two different memos dated 14.10.1999, with the remarks "exceeds arrangements". Although, defendants were apprised of this development and were asked to make the payment, but to no avail. Thus, the suit.

In defence, it was pleaded, inter alia, that the cheques in question were issued to the plaintiff in advance as security to secure the payment of goods to be supplied by the plaintiff. It was maintained that defendants had in fact made the payment of all the goods that were supplied, but plaintiff never returned the cheques, mentioned in the plaint. No amount was due and payable by the defendants to the plaintiff. Further, defendants were never approached and asked by the plaintiff to make payment for the value of the cheques. The suit was alleged to be barred by time, as it was not filed within limitation.

Both the courts below, on an analysis of the matter in issue and evidence on record, found that defendants failed to lead any evidence to show that the cheques in question were in fact issued in advance as security to secure the payment of goods that were supplied by the plaintiff to the defendants. On the contrary, plaintiff had led cogent evidence to prove that the amount being claimed was indeed outstanding against the defendants. As regards issue No. 4, it was held that suit filed by the plaintiff was barred by time. It was observed that provisions of Section 18(1) of the Limitation Act postulates that where liability is admitted by a debtor in writing, the period of limitation is to be counted from the time when acknowledgment was so signed. Therefore, in case of dishonoured cheques, period of limitation has to be reckoned from the date of issuance of cheque. In reference to Hindustan Apparel Industries Vs. Fair Deal Corporation, , it was further observed that cheque is undoubtedly an acknowledgment of right or debt or liability and when the same is not issued as a post dated cheque, date of issuance of cheque would assume importance, whether subsequently it is honoured or not. Thus, it was concluded that period of limitation had to be computed from the date of issuance of cheques. And as the last cheque was issued by the defendant on 05.08.1999, therefore, suit at best could be filed on or before 05.08.2002. Whereas, present suit was filed on 11.10.2002, which was barred by limitation. Accordingly, suit as well as first appeal filed by the plaintiff was dismissed.

I have heard learned counsel for the appellant and perused the RSA paper book.

Learned counsel for the appellant simply seeks to reiterate the submissions that were advanced before the courts below and rejected after a due and comprehensive consideration. No other argument was advanced.

On a due and thoughtful consideration of the matter in issue, I am of the considered view that the instant appeal is devoid of merit and is thus, liable to be dismissed for the reasons that are being recorded hereinafter. It would be apposite to refer to the provision of Section 18(1) of Limitation Act, which reads as thus:

"Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall computed from the time when the acknowledgment was so signed."

Evidently, the afore-reproduced provision postulates that fresh period of limitation is to be computed from the time when the acknowledgment was so signed. The Gujarat High Court (F.B.) in Hindustan Apparel''s case (supra) in reference to the decision of Supreme Court in Jiwanlal Achariya Vs. Rameshwarlal Agarwalla, , observed that a cheque is undoubtedly an acknowledgment of right or debt or liability and when the same is not issued as a post dated cheque, date of issuance of cheque would assume importance, notwithstanding subsequently it is honoured or dishonoured. Thus, it is at the time and stage when the cheque is issued, acknowledgment of a debt comes into being. As rightly held by first appellate court that the last cheque was purportedly issued on 05.08.1999, so period of limitation would commence from the said date and plaintiff could file a suit after the cheques were dishonoured but within three years from the date of acknowledgement i.e. when these cheques were issued. Notwithstanding, if subsequently these cheques were dishonoured. That being so, the date, when these cheques were dishonored, pales into insignificance in law. Nothing was pointed out to show as to how the conclusions recorded by both the courts below were either contrary to the position on record or suffered from any material illegality. No decision to the contrary could be cited. In the wake of the position as set out above and the conclusions that have concurrently been arrived at by both the courts below, there hardly exists any ground, least plausible in law, to interfere with the decree being assailed in the present appeal. No question of law, much less any substantial question of law, arises for consideration. Appeal being devoid of merit is, accordingly, dismissed.