Shell India Markets Pvt Ltd vs Raja Ram Paras Prabhu
2012 Latest Caselaw 5179 Del

         *       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                         Judgment delivered on: 31.08.2012

+        CS(OS) 143/2012 and IA No.1093/2012/2012(Exemption) and IA
         No.11998/2012(u/O 6 R.17 CPC)

         SHELL INDIA MARKETS PVT LTD             ..... Plaintiff
                       Through:Mr.D.Hasija with Ms.Sandhani B.Saikie,
                       Advocates.

                        versus
                                                                  ..... Defendant
         RAJA RAM PARAS PRABHU                            ..... Defendant
                      Through:None


CORAM:
HON'BLE MR. JUSTICE V.K.JAIN


V.K.JAIN, J. (ORAL)

This is a suit for recovery of Rs 28,12,178/-. The case of the plaintiff is that

M/s Penzoil had been supplying goods to the defendant and raising invoice from

time-to-time. The defendant, in discharge of its liability is alleged to have issued a

cheque dated 1.2.2008 for a sum of Rs 11,51,332.32. The aforesaid cheque, while

presented to the bank, was dishonored for want of sufficient funds. The plaintiff

sent a legal notice to the defendant which was replied by the defendant through his

Advocate. The plaintiff has claimed the amount of the cheque along with interest

on that amount @ 36% p.a., thereby making a total sum of Rs 28,12,178/-

comprising principal sum of Rs 11,51,332.32 and interest amount to Rs 16,74,661/-

.

2. When this matter was listed before Joint Registrar, she took the view that the

suit is barred by limitation and accordingly placed the matter before the Court.

3. I have heard the learned counsel for the plaintiff. The contention of the

learned counsel is that during the course of admission/denial of documents before

the Court in the proceedings instituted against him under Section 138 of Negotiable

Instruments Act, the defendant had admitted his signature on the cheque in

question, as would be evident from the order sheet dated 10th July, 2009 in CC

No.1009/1, a copy of which the plaintiff has placed on record. The submission is

that the aforesaid admission of signature on the cheque amounts to

acknowledgment within the meaning of Section 18 of the Limitation Act.

4. Section 18 of the Limitation Act, to the extent it is relevant provides that

where before the expiration of the prescribed period for a suit or application in

respect or 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 derived his title or

liability, a fresh period of limitation shall be computed from the time when the

acknowledgment was so signed.

5. In my view, the Joint Registrar was right in saying that admission of

signatures on the cheque before the learned Magistrate on 10.7.2009, in

proceedings under Section 138 of the Negotiable Instruments Act does not amount

to any acknowledgment of liability in respect of the amount claimed in the present

suit. The defendant while admitting signatures on the cheque, wrote nothing

acknowledging his liability to the plaintiff. The only effect of admission is that the

defendant admitted that he had signed the cheque, which was subject-matter of the

criminal complaint before the learned Magistrate. It does not, in any manner,

constitute admission of the liability particularly when in the reply to the legal

notice received from the plaintiff, the defendant had denied liability to pay any

amount to the plaintiff.

6. The case of the plaintiff is that M/s Pen Zoil had supplied the goods to the

defendant from time to time and it was in discharge of its liability to pay the price

of those goods that the defendant issued cheque dated 1.2.2008. Article 14 of the

Limitation Act, which applies to a suit for price of goods sold and delivered,

prescribes a limitation of three years from the date where no fixed period of credit

is agreed upon. It is not the case of the plaintiff that any period of credit was agreed

with the defendant for payment of the price of the goods. Computed from the date

of delivery of the goods, the suit when instituted on 11.01.2012, was clearly barred

by limitation.

Article 40 of the Limitation Act prescribes a period of three years in a suit by

the payee against the drawer against a Bill of Exchange, which has been

dishonoured by non-acceptance and the limitation is counted from the date of

refusal to accept to Bill of Exchange. The cheque is a bill of exchange as defined

under Section 6 of the Negotiable Instruments Act. Therefore, if Article 40 of the

Limitation Act is applied, the period of limitation would be three years from the

date the cheque was dishonoured. Computed from the date of dishonor of the

cheque, which came to be dishonoured between 9.6.2008 to 12.6.2008, also the suit

is barred by limitation.

7. Para 14 of the plaint, which refers to the cause of action, reads as under:

"That the cause of action firstly arose in favour of the plaintiff company and against the defendants, when the defendant purchased the material from the plaintiff company. The cause of action again arose when the plaintiff company supplied products to the defendant. The cause of action again arose on 12th June, 2008, when the plaintiff company received the limitation from its bankers about the dishonourment of the above said cheque. The cause of action also arose on 11 th July, 2008, when the legal demand notice was issued by the plaintiff company to the defendant. The cause of action also arose on 12th July, 2008, when the legal demand notice issued by the plaintiff company was received by the defendant. The cause of action again arose on 27th July, 2008 when the stipulated period of 15 days from the date of receipt of legal demand notice sent to the defendant had expired. The cause of action again arose on 6th August, 2008, when the defendant replied to the aforesaid

legal notice through his advocate and tried to raise unnecessary and illegal disputes. The cause of action again arose when the criminal complaint case was filed by the plaintiff company against the defendant. The cause of action again arose when, after filing of the criminal complaint case, the defendant contracted the plaintiff company for settlement of his dues. The cause of action is still continuing as the defendants have still not cleared their debts and other liabilities towards the plaintiff company."

Dishonour of a cheque paid for price of goods does not constitute a

continuing cause of action. Computed from even to the last date mentioned in para

11 of the plaint, though sending legal notice or the reply by itself does not extend

limitation, the suit is barred by limitation.

8. Order 7 Rule 11(d) of Civil Procedure Code provides rejection of the plaint

where the suit appears, from the statement in the plaint to be barred by any law.

Therefore, a suit which from the averments made in the plaint, appears to be barred

by limitation, can be rejected in terms of the said provisions. The plaint is

accordingly rejected. The suit as well as all pending IAs also stand disposed of.

                                                                          V.K. JAIN, J
AUGUST         31, 2012/ks