Ashok K. Khurana vs M/S. Steelman Industries & Anr.
2000 Latest Caselaw 274 Del

ORDER

S.K. Agarwal, J.

1. Admit.

2. This appeal is directed against Judgment and decree dated 18th January, 1999 passed by Shri Ved Prakash Vaish, Additional District Judge, Delhi dismissing the appellant/plaintiff's Suit for recovery of Rs 177048.58 p holding it to be barred by limitation. Learned counsel for the parties urged that as the trial court record has been and the point involved is short, the appeal be finally heard. Accordingly by this judgment the appeal is being disposed of.

3. Facts giving rise to this appeal briefly are : that the appellant (plaintiff) filed a suit against the respondents (defendants) for recovery of Rs. 1,77,048.58p with costs and interest @18% per annum from the date of filing of the suit till the date of realisation alleging therein that the defendant No. 2 is the sole proprietor of defendant No. 1, M/s. National Steels; that defendants had been purchasing iron steel goods from the plaintiff's firm and had been making part payments from time to time; as per the books of account kept by the plaintiff, a sum of Rs. 4,89,178.65p was due and outstanding against the defendants; vide their letter dated 7th January, 1994 defendants informed the plaintiff's firm that they had verified the statement of account sent by the plaintiff's firm to them for the period from 1st April, 1993 to 18th December, 1993 and it showed an excess debit balance of Rs. 23,842.73p . During the year 1994 the defendants also made purchases on credit and made part payments after giving adjustment of all the payments received from the defendants a sum of Rs. 1,14,252.33p was found due and outstanding against the defendants. It was pleaded that the cause of action had accrued to the plaintiff firstly on 18th March, 1995 when the defendants made the last payment of Rs. 1,00,000/- to the plaintiff vide cheque No. 062578 dated 11th March, 1995 drawn on Union Bank of India, Karol Bagh, New Delhi in favour of the plaintiff's firm and, thereafter on various dates when the plaintiff had demanded the dues from the defendants and the same were not paid. The cause of action lastly arose on 14th March, 1998 when the defendants refused to make payment to the plaintiff.

4. After service of summons respondent appeared and filed written statement, inter alia, raising a preliminary objection that the suit was barred by limitation and was liable to be dismissed on this short ground. It was pleaded that the defendant had delivered the cheque no. 062578 dated 11th March, 1995 to the plaintiff at his residence on 11th March, 1995 Material allegations in the plaint were also denied. However, averments made in the plaint that the courts were closed from 13th to 15th March, 1998 were not denied. In the replication to the written statement plaintiffs reiterated the submissions made in the plaint asserting that the cheque No. 062878 dated 11th March, 1995 was delivered to the plaintiff on 18th March, 1995 and thereafter the cheque was lodged in the Punjab National Bank for collection.

5. It may mentioned here that the plaintiff, out of abundant caution, also filled an application for condensation of delay under section 5 of the Limitation Act, 1963 along with the suit stating that he was confined to bed from 8th March, 1998 to 15th March, 1998 and that immediately on reopening of the courts the suit was filed on 16th March, 1998.

6. On the basis the pleadings trial court framed the following preliminary issue :-

1. Whether the suit is within the period of limitation? OPP

7. Trial court further felt that the issue was purely legal and did not require any evidence. Arguments were heard on the preliminary issue. By the impugned judgment it was held that the suit was barred by limitation and the same was dismissed.

8. We have heard learned counsel for the parties and been taken through record. Learned counsel for the appellant argued that the trial court completely misread and misconstrued the material on record. It was argued that the trial court has wrongly applied the law laid down by the Supreme Court in Jeewan Lal Acharya Vs. Rameshwar Lal Agarwala, . Learned counsel for the defendant argued to the contrary.

9. In order to appreciate the rival contentions paragraphs 15 of the plaint and also the reply of the respondent in the written statement of this para are reproduced hereinbelow :-

PARA 15 of the Plaint

"That although the cheque was delivered by the defendant No. 2 at the business premises of the Plaintiff on 18.3.1995 the same had been encashed by the Bankers of the defendant on 19.3.95 at Karol Bagh, New Delhi, yet with a view to avoid any Technical Objection on the part of the defendants, an application for the condensation of Delay, if any, occasioned in filing the present suit may kindly be read as part of this plaint, which is filed with the suit forthwith. The delay, therefore, may kindly be condoned and the suit be treated to have been filed within the limitation period."

PARA 15 of the Written Statement

"In reply to the para 15 of the plaint it is denied; that the cheque was delivered by Defendant No. 2 at the business premises of the plaintiff on 18.03.1995. The said cheque was delivered on 11.03.1995 at the residence of the Plaintiff as he was in the need of the money. The alleged application is not maintainable under the law as the section 5 of the Limitation Act does not apply to the suits filed beyond the period of limitation. It applies only to filling of various miscellaneous applications. The delay in filing the present suit can not be condoned in view of the settled legal position and the suit as well as application merit dismissal.

10. Perusal of the averments made in the pleadings clearly reveal that the case of the appellant before the trial court was that cheque in question was delivered on 18th March, 1995 which was the starting point for the purposes of limitation, i.e. the date of delivery of the cheque, that on 19h March, 1995 the cheque was sent for collection by the plaintiff. However, the case of the defendant was that the cheque in fact was dated 11th March, 1995 and was delivered on that day itself but there was no specific denial to the fact that the cheque in question was sent for collection after 18th March, 1995.

11. In our considered view the trial court appears to have misread and misapplied the law laid down by the Supreme Court in Jeewan Lal's case (supra), which was a case of a post dated cheque. Supreme Court in that case held mere delivery of a cheque on a particular date does not mean that the payment was made on that date unless the cheque was accepted as unconditional payment. It was further observed that when the cheque is not accepted as an unconditional payment it can only be treated as a conditional payment. It was observed :-

"Thus if in the present case the cheque which was handed over on 4th February, 1954 bore the date February 4, 1954 and was honoured when presented to the bank the payment must be held to have been made on February 4, 1954, namely, the date which the cheque bore.

But if the cheque is post dated as in the present case it is obvious that it could be paid till February 25, 1954 which was the date it bore. As the payment was conditional it would only be good when the cheque is presented on the date it bears, namely, February 25, 1954 and is honoured. The earliest date, therefore, on which the respondent could have realised the cheque which he had received as conditional payment on February 4, 1954 was the 25th February, 1954 if he had presented it on that date and it had been honoured.

The fact that he presented it later and was then paid is immaterial for it is the earliest date on which the payment could be made that would be date where the conditional acceptance of a post dated cheque becomes actual payment when honoured."

12. The Supreme Court, while making the above observations made reference to its earlier decision, in Commissioner of Income Tax Vs. M/s. Ogale Glass Works Ltd., and observed that decision of this court does not support the proposition that even where the acceptance of a post dated cheque is conditional, the date on which the payment is made is the date of acceptance of the post dated cheque provided it is honoured."

13. In the present case the averments made in the plaint, clearly reveal that it is not a case of delivery of a post dated cheque. It is a case of delivery of an antedated cheque.

14. In Commissioner of Income Tax's case (supra), Supreme Court had observed that a sum of money may be received in more ways than one cannot be doubted. It may be received by transfer of coins or currency notes or a negotiable instrument which represents and produces cash and is treated as such in business. It was also observed that in the absence of any agreement, express or implied to the contrary, a payment by a negotiable instrument is always understood to be conditional, It was observed :-

"When it is said that a payment by negotiable instrument is a conditional payment what is meant is that such payment is subject to a condition subsequent that if the negotiable instrument is dishonoured on presentation the creditor may consider it as waste paper and resort to his original demand.

A cheque unless dishonoured, is payment. The payment takes effect from the delivery of the cheque but is defeated by the happening of the condition i.e., nonpayment at maturity.(Emphasis Supplied)

15. It is not difficult to imagine that sometimes a debtor may approach the creditor offering him payment of the debts due by presenting an ante dated cheque and informing the creditor that the same was lying ready and that he could not deliver the same earlier. In such a case date on which the cheque is delivered to the creditor would be the date from which the limitation would start under section 19 of the Limitation Act, 1963 for the simple reason that before the cheque is actually delivered by the debtor to the creditor, the debtor cannot be said to have made the payment, nor the creditor can be said to have accepted such payment. However, in case of the postdated cheque the date of delivery is totally irrelevant because the cheque cannot be presented for encashment till date mentioned on the cheque is reached.

16. On the same logic, if a cheque bears a date prior to the date of the delivery of cheque the creditor can present the same for collection only after it is delivered to him. In such a case it is the date of delivery of the cheque rather than the date which the cheque bore, would be the date for computing the period of limitation.

17. In Jeewan Lal's case (supra) the Supreme Court has observed :

"But there can in our opinion no doubt that where a post dated cheque is accepted conditionally and it is honoured, the payment for purposes of Section 20 (now section 19) can only be the date which the cheque bears and cannot be on the date the cheque is handed over, for cheque being post dated, can never be paid till the date on the cheque."

18. We are of the considered view that the question whether the cheque was delivered on 18th March, 1995, as claimed by the plaintiff, or was delivered on 11th March, 1995, as claimed by the defendant, is a question of fact, and the plaintiff could not be nonsuited without trial.

19. Regarding the other point as to whether an application for condensation of delay in filing the suit was maintainable, we would like to observe that there is no provision in the Limitation Act, 1963 (for short the Act) for condensation of delay in filing the suits. Section 3 of the Act provides :-

3. Bar of limitation - (1) Subject to the provisions contained in Sections 4 to 24 (inclusive), every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed although limitation has not been set up as a defense.

(2) For the purposes of this Act.

(a) a suit is instituted -

(i)......

(ii)......

(iii)......

(b) any claim by way of a set off, or a counter claim, shall be treated as a separate suit and shall be deemed to have been instituted -

(i)..........

(ii).........

(c) an application by notice of motion in a High Court is made when the application is presented to the proper officer of that court.

20. Mere reading of Section 3 of the Act shows that it is mandatory and absolute in nature. It enjoins upon the courts to dismiss any suit instituted, appeal preferred application made, after the prescribed period of limitation, although limitation has not been set up as a defense. Courts have no discretion or inherent powers to condone the delay if the suit is filed beyond the prescribed period of limitation. Rather a duty is cast on the court to dismiss the suit appeal or application, if the same is barred by limitation, unless the matter is covered by sections 4 to 24 of the Act.

21. At this stage it would also be relevant to refer to section 5 of the Act which reads as under :-

"5. Extension of prescribed period in certain cases - Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908 may be admitted after the prescribed period of the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period."

22. Reading of Section 5 of the Act itself reveals that it does not apply to the suits. It applies only to the appeals or applications except an application under Order XXI of the Code of Civil Procedure, 1908. The court cannot grant exemption from limitation even on equitable considerations or hardships. Section 5 of the Act though worded in very wide terms is not applicable to the suits, even if it is assumed that the plaintiff was really incapacitated for any reason, benefit of Section 5 of the Act cannot be availed.

23. For the foregoing reasons appeal is allowed, findings of the trial court on the preliminary issue are set aside. Consequently, the judgment and decree dated 18.1.99 passed by the trial court is also set aside. Suit is remanded back with the directions to proceed with the trial of the suit in accordance with law. Trial court will also decide the issue of limitation afresh, after allowing the parties to lead evidence as the suit has been remanded for trial. The appellant will be entitled for the refund of the court fee on memorandum of appeal for which requisite certificate will be issued in favour of the appellant by the Registry.

24. Parties to appear before the trial court on 21st March, 2000.