JUDGMENT
Khanna, J.
1. This suit for the recovery of Rs. 1,05,000, has been brought by Smt. Sumitra Baluja with averments that her late husband, Shri K. L. Baluja, advanced a loan of Rs. 56,000 to defendants Nos. 1 to 3 on November 25, 1969. The same was refundable on demand with interest at the rate of 12% per annum. Defendants Nos. 2 and 3 then, for themselves and as partners of their firm, defendant No. 1, executed a pronote and a receipt on the same date to that effect. It was also mentioned that the amount would be paid not later than November 25, 1970. Thereafter, on the same day, these defendants deposited with Mr. Baluja the title deeds of their property bearing No. 369, Industrial Area-A, Ludhiana, and of a bungalow plot situated at College Road, Ludhiana. The former was stated to be of the value of rupees two lakhs and the other Rs. 50,000. However, in spite of the deposit of these title deeds, it is claimed that the transaction was a pure and simple loan and that their deposit was as a sort of collateral security for safeguarding the amount.
2. Shri K. L. Baluja, it is next stated, requested the defendants a number of times during his lifetime to return the amount of the loan along with the interest. Thus, the defendants confirmed and acknowledged the loan by their letters dated June 11, 1971, and August 12, 1972, and assured that they were trying to make an arrangement for payment as early as possible. These defendants also delivered 21 post-dated cheques of Rs. 2,500 each to Mr. Baluja. The first of them was payable on September 30, 1973. Similarly, one cheque each was payable on the 30th of each succeeding month, the last date of payment being May 30, 1975.
3. Shri Baluja, however, died on December 12, 1973, leaving behind the plaintiff as widow, and defendant No. 4 as his daughter. The latter, however, relinquished her rights with regard to the loan and the interest thereon, in favor of the plaintiff, and as such a succession certificate was granted on August 31, 1976, by a civil court in favor of the plaintiff with respect to the various amounts including the loan and interest in dispute.
4. It had so transpired that during the lifetime of Shri K. L. Baluja, the I.T. authorities raided his premises on June 23, 1973, and seized various documents including the aforesaid pronote, receipt, cheques, letters, title deeds, etc. It was only on July 9, 1976, that those authorities released these documents to the plaintiff. Thus, the cheques could not be presented to the defendants’ bankers for encashment.
5. The present suit was, therefore, brought by the plaintiff on October 29, 1976, for the principal amount of Rs. 56,000, and interest thereon of Rs. 47,480 at the rate of 12% per annum. Another amount of Rs. 1,520 has been claimed as expenses of correspondence, visiting charges, etc. The suit is pleaded to be within time because of the acknowledgments of the loan in letters dated June 11, 1971, and June 12, 1972. The period during which the pronote and the other documents remained seized with the I.T. authorities, i.e., from June 23, 1973, to July 8, 1976, is sought to be excluded as the documents were not within the access of the plaintiff. On this score the delay is sought to be condoned.
6. In any case, it is pleaded that the amount became payable on the basis of 21 cheques, and relief on their basis is also allowable.
7. This suit was brought under Order xxxvII of the Code of Civil Procedure. However, defendants Nos. 1 to 3 applied for leave to defend the same. The permission in this regard was allowed by Prithvi Raj J. by an order dated December 6, 1978, on the ground that the defense did raise a friable issue on the question of limitation.
8. Defendants Nos. 1 to 3 then in their written statement, admitted that they had received the loan of Rs. 56,000 from late Shri K. L. Baluja, and the amount thereof was payable with interest at the rate of 12% annum. They have also admitted the issue of 21 post-dated cheques, but have asserted that since they were not presented for encashment before the bank within the period of presentment, the defendants stood discharged from the liability on their basis. The suit has been pleaded to be barred by limitation. The acknowledgements by means of letters dated June 11, 1971, and June 12, 1972, it is contended, do not render the same as within time. The jurisdiction of the Delhi courts to try the suit has also been disputed.
9. The following issues were, therefore, framed by one of my learned predecessors :
“1. Whether this court has got territorial jurisdiction to try the suit ? O.P.D.
2. What is the effect of non-presenting the cheques in dispute ?
3. Whether the suit is not within the time ?
4. To what amount is the plaintiff entitled to, on account of interest and another amount as claimed ?
5. Relief.”
Issue No. 1 :
10. At the time when this suit came up for hearing, it was conceded from the side of the defendants that this court has jurisdiction to entertain the suit, Ex.P. 1, the pronote, itself shows that it was executed at Delhi.
11. The cheques were also drawn on the Punjab National Bank, Bara Hindu Rao, Delhi. The issue is, therefore, decided in the affirmative.
Issues Nos. 2 and 3 :
12. As it is clear from the narration of facts above, the pronote which defendants Nos. 1 to 3 executed for Rs. 56,000, in favor of late Shri Baluja on receipt of that amount, was on November 25, 1969. It was payable on demand and in any case not later than November 25, 1970. By another letter, Ex.P. 2, of November 25, 1969. It was payable on demand and in any case not later than Novembers 25, 1970. By another letter, Ex.P. 2, of November 25, 1969, the defendants deposited with Mr. Baluja the title deeds of their factory building in the industrial area of Ludhiana, worth rupees two lakhs, and a bungalow plot at College Road, Ludhiana, worth Rs. 50,000, as further security. It was, of course, mentioned in this letter that the deposit of the title deeds would create equitable mortgage, but it is not the case of any of the parties that the same, in any manner, did so.
13. There are next two letters of June 11, 1971, and August 12, 1972, in which the contesting defendants confirmed and acknowledged the said loan of Rs. 56,000, and intimated that they were making arrangements for the adjustment of the loan at an early date. There is no dispute that these letters, in fact, amount to acknowledgements of the original loan and extend the period of limitation. As a result thereof, the suit could have been filed up to August 12, 1975, Instead, it was brought on October 29, 1976.
14. There is further no dispute that 21 post-dated cheques, vide Exs. P. 5 to P. 25, were issued by the contesting defendants in favor of late Shri K. L. Baluja. Each was for Rs. 2,500, the first of them being payable on September 30, 1973. The payment of one cheque each was to follow on the 30th of each succeeding months. Last payment of these cheques would have taken place on day 30, 1975. These cheques, admittedly, could not be presented to the defendants’ bank as the cheques, pronote, receipt and the aforesaid letters were all seized by the I.T. authorities in a raid conducted at the premise of late Shri K. L. Baluja on June 23, 1973, and were not returned to the plaintiff till July 9, 1976.
15. In the meanwhile, Shri K. L. Baluja died on December 12, 1973, and the plaintiff was able to obtain a succession certificate, in her favor, to enable her to recover the amount in dispute, on August 31, 1976.
16. With this background of the facts the crucial question to be considered in whether the issue of 21 post-dated cheques as aforesaid resulted in cheques being not presented to the bank for encashment and further no payments having been received on their basis, could not in any manner be treated to have resulted in a part payment of the debt so as to extend the period of limitation under s. 19 of the Limitation Act, 1963. It is not the issue of a post-dated cheque alone which results in payments but its encashment. Such cheque, if not encashed or dishonoured, does not extend the limitation for purposes of s. 19 of the Act. With such dishonour, no payment results. Hence, limitation cannot be counted from the date of the loan. The Punjab & Haryana and the Patna High Courts, have in the cases reported as Northern India Finance Corporation Pvt. Ltd. v. R. L. Soni [1973] 43 Comp Case 495 (P & H) and Arjunlal Dhanji Rathod v. Dayaram Premji Padhiar, , taken a similar view.
17. Section 72 of the Negotiable Instruments Act, 1881, provides that subject to the provisions of s. 84, a cheque must, in order to charge the drawer, be presented at the bank upon which it a drawn before the relation between the drawer and his banker have been altered to the prejudice of the drawer. Section 84, on its part envisages that where a cheque is not presented for payments within a reasonable time of its issue, and the drawer or person on whose account it is drawn had the right, at the time when presentment ought to have been made, as between himself and the banker, to have the cheque paid and suffers actual damage through the delay, he is discharged to the extent of such damage, that is to say, to the extent to which such drawer or person is a creditor of the banker to a larger amount than he would have been if such cheque had been paid. These provisions thus give protection to the drawer of a cheque to the extent he has suffered prejudice or damage by the non-presentment of a cheque within a reasonable time. It must, therefore, be shown by the drawer that prejudice and damage has actually resulted before he can altogether disown his liability under the cheque. He has also to show that when the cheque was to have been presented for encashment, he had sufficient amount in his account or had adequate arrangement with the bank for honour of the cheque. See (Abdul Majid v. Ganesh Das Kalooram Ltd.) In the present case, none of these has been established by the defendants. It has, however, been sought to be pleaded that these sections come into play only where the cheques are not presented within a reasonable time, and not where the cheques are not presented at all. In other words, it is urged that the presentment of cheques must take place though it may be beyond the reasonable time.
18. However, s. 73 elaborates that a cheque must, in order to charge any person except the drawer, be presented within a reasonable time after delivery thereof by such person. This section thus makes an exception in the case of the drawer where the presentment of the cheque does not take place within a reasonable time. Section 75A further clarifies that delay in presentment is excused if it is caused by circumstances beyond the control of the holder and not imputable to his default, misconduct or negligence. However, when the cause of delay ceases to operate, the presentment must be made within a reasonable time. The plaintiff has pleaded that this presentment could not have been effected in the year 1976 when the cheques were released by the I.T. Dept. as the same would have been of no consequence. Banks, it is pointed out, do not accept and pay cheques after the expiry of 6 months’ period of the dates which they bear. It is urged that so long as the cheques remained with the I.T. Dept., they were beyond her control and, therefore, the delay in the presentment was excusable. The defendants, however, have still urged that this section too deals with cases of delay in presentment and not those where a presentment did not take place.
19. A perusal, next, of s. 76 of the Negotiable Instruments Act, 1881, shows that in certain circumstances a presentment need not be made. Its relevant portion reads as under :
“No presentment for payment is necessary, and the instrument is dishonoured at the due date for presentment, in any of the following cases : …
(d) as against the drawer, if the drawer could not suffer damage from the want of such presentment.”
20. This section thus eliminates presentment for payment as against the drawer if he has not suffered damage from the want of such presentment. In the present case, as already noted above, there is no evidence of any such damage to the drawer. Although, per se, this section tends to show that the non-presentment and the dishonour of an instrument should conjunctively happen, this in fact was not envisaged, as non-presentment and dishonour are mutually exclusive. In case there is no presentment, the question of dishonour does not arise. If, however, a dishonour has taken place, it will not be a case of non-presentment, Clause (d) thereto also makes it clear that so for as the drawer is concerned, a presentment is (not ?) necessary where he could not suffer damage.
21. From the said of the plaintiff, PW 1, Vijay Mehta, who is her son-in-law, has been examined, and he has stated that after the death of K. L. Baluja, the defendants were informed that the 21 cheques along with the pronote had been taken away by the I.T. authorities and, therefore, fresh cheques be issued in favor of the plaintiff in lieu of the earlier cheques. This unrebutted evidence on record thus goes to show that the defendants were apprised of the non-presentment of the cheques and the circumstances thereof; It is correct that this witness also stated that a latter was addressed to the defendants by registered post in this respect and no copy thereof has been produced on record. However, the testimony on oath that the defendants by registered post in this respect and no copy thereof has been produced on record. However, the testimony on oath that the defendants were only apprised remains unrebutted. This circumstance could be treated as sufficient notice to the defendants of the non-presentment of the cheques.
22. Much reliance has been placed from the side of the defendants on s. 64 of the Negotiable Instrument Act, the relevant portion of which reads as under :
“Promissory notes, bills of exchange and cheques must be presented for payment to the maker, acceptor or drawee thereof respectively, by or on behalf of the holder as hereinafter provided. In default of such presentment, the other parties thereto are not liable to such holder.”
23. It has been pleaded that it is these provisions which are squarely applicable to the present case and bring out the consequences which result from non-presentment of cheque for encashment. In default of such presentment, the other parties thereto are rendered immune from liability thereon. Such “other parties”, it is pleaded, must in the case of a cheque, be other than the “drawee”. In other words, the drawer of a cheque, it is asserted, is totally absolved from liability on the non-presentment of cheque. Reliance in this regard has been placed upon Manik Ratan Guin v. Prakash Chandra, , Abdul Majid v. Ganesh Das Kalooram Ltd., , and Benaras Bank Ltd. v. Hormusji Pestaonji . The Calcutta High Court, in the first case, observed that the “other parties”, who were absolved in terms of s. 64 in the case of a promissory note, will be parties other than the maker; in the case of a bill of exchange, it will be all parties other than the acceptor while in the case of a cheque other parties must be parties other than the drawee. The Allahabad High Court in the case of Benaras Bank Ltd. v. Hormusji Pestonji , pointed out that the word “other” has been used to show that there is a difference between s. 64 and ss. 61 and 62 where the words used are “no party”.
24. The plaintiff, however, has referred to the decision reported as Kanhaya Lal v. Ramkumar, , in support of the contention that the rule of presentment for payment by the holder for fixing liability for non-payment on the drawer is subject to well recognised exceptions enumerated in s. 76 and on such exception is as respects the drawer where the drawer could not suffer damage from the want of such presentment.
25. The plaintiff has also sought to plead that irrespective of a cheque resulting in payment and extending the period of limitation under s. 19, such cheque as well amounts to an acknowledgment of debt under s. 18, and, therefore, in case of its dishonour, the acknowledgment must ensure to enlarge the limitation under s. 18.
26. Reliance was placed upon the following passage in Banning on the Limitation of Actions, Edn. 3, p. 51, which has been reproduced with approval in , Prafulla Chandra v. Jatindra Nath Kar (at p. 540) :
“When a debtor gave a bill on account of the debt and the bill proved ultimately worthless, the bill (being a conditional payment) operated as an acknowledgment of the debt; and if a bill be given in part payment of a debt, and the bill is duly paid when due, the bill operates as a part payment from the time of the delivery of the bill (and not merely from the time of the actual payment).”
27. Alternatively, the plaintiff has pleaded that even if for any reason it is found that the suit on the basis of the original promissory note is barred by limitation, she is entitled to base her claim on the 21 post-dated cheques for Rs. 2,500 each of which the defendants has issued in favor of Mr. Baluja. They, it is pointed out, independently provide causes of action and only one of them can be treated to be barred by time. The rest of them bore dates within three years of the institution of the suit and, therefore, could have been encashed on those dates. To that extent, a decree, in any case, is claimed. Even in the case of Chintaman Dhundiraj v. Sadguru Narayan Maharaj Datta Sansthan, , it is pointed out that the Bombay High Court had allowed relief on the basis of cheques issued in similar circumstances.
28. I have given my utmost consideration to the entire matter and am of the opinion that so far as defendants Nos 1 to 3 are concerned, their liability under the cheques must be held to subsist. In this respect a harmonious construction has to be placed on the different provisions of the Negotiable Instruments Act about which reference has been made above. The plaintiff in the present case was prevented by sufficient cause from presentment of cheques as they had been seized by the I.T. Dept. She was, therefore, absolved from their presentment. Defendants too have not suffered any damage or prejudice on that score. Sections 72, 73, 75A and 84 are specific provisions in this regard which protect the interest of the payee under the cheques and also retains the liability of the drawer. In my considered opinion, when these provisions absolve the presentment of cheques within a reasonable time, they do not necessarily enjoin that presentment must take place after the reasonable time. The effect of these provisions is that a presentment after the reasonable time and the non-presentment are both saved if the drawer has not suffered any damage or prejudice. Section 64, on which the defendants have placed much reliance, is more general in terms and does not specifically deal with cases of drawers of cheques as has been done by the aforesaid provisions. This section, therefore, cannot defeat the specific provisions contained in those sections. As observed by Rajasthan High Court in the case of Kanhayalal v. Ramkumar , the rule of presentment for payment by the holder for fixing liability for non-payment on the drawer is subject to well recognised exceptions enumerated in s. 76 and on such exception is as respects the drawer where the drawer could not suffer damage from the want of such presentment.
29. It is, therefore, held that defendants Nos. 1 to 3 are clearly liable on the basis of the 21 cheques which they had issued. They independently provide fresh cause of action to Mr. Baluja and on his death, to the plaintiff. They being post-dated cheques, payments on each of them could be obtained on the dates respectively mentioned in them. The limitations for bringing the suits on their basis, therefore, commenced on those respective dates. Only the first of them which was payable by September 30, 1973, could be held as barred by time in the present suit brought on October 29, 1976. Thus, the Supreme Court has, in the case of Jiwanlal Achariya v. Rameshwarlal Agarwalla, , held that a post-dated cheque can never be paid till the date on the cheque arrives and the payment must be construed to have been made on the date which the cheque bears. This was in the context of s. 20 of the Limitation Act.
30. The question still remains whether the issue of these cheques itself operated as acknowledgment of the original loan within the meaning of s. 18 of the Negotiable Instruments Act. This is irrespective of their non-presentment for encashment. There is no dispute in this regard that these cheques had been issued towards the loan of Rs. 56,000 which had been obtained on November 25, 1969. They thus had the clear implication of defendants Nos. 1 to 3 admitting the subsistence of the liability under the loan and their tacit acknowledgment of the debt. The cheques being in writing, also bore signatures on behalf of the defendant-firm of one of the partners. These cheques, therefore, operated as acknowledgment of the debt. The passage in Banning of Limitation of Actions, reproduced above and cited by the Calcutta High Court in the case of Prafulla Chandra Nag v. Jatindra Nath Kar , does lend support to the proposition that bills or cheques serve the dual purpose of operating as payment and in the case of their dishonour, as acknowledgment of the debt.
31. However, an important circumstance in the present case is that these cheques were issued in favor of Mr. K. L.Baluja before June 23, 1973. This is apparent from their seizure by the I.T. authorities on that date. IF the issue of these cheques is treated to operated as acknowledgment of the original loan, then this acknowledgment would not operate to save limitation for the suit brought in October, 1976. If, however, the acknowledgments are held operative from the dates which the post-dated cheques bore, then it can be said that the suit is within limitation. In this regard, the Madhya Pradesh High Court decision in the case of Balchand Champalal Chandari v. India Pictures, , lends some support to the case of the plaintiff that in exceptional cases where there is post-dating, the acknowledgment is effective from the date on the instrument irrespective of whether it is post-dated and handed over earlier or it is dated on the occasion it is made over to the creditor. It was held that, the date on the cheque is the starting point for limitation.
32. A persual, in this regard, of the provisions contained in s. 18 of the Limitation Act, shows that where the writing containing acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872, oral evidence of its contents shall not be received. The present is not a case where the acknowledgments were resultant from these cheques which were undated. In fact, the cheques bore dates and as such it remains to be seen whether oral evidence is permissible for determining when the cheques were actually drawn and whether the acknowledgment could be related back to the date when they were so drawn.
33. The significant circumstance in this respect is that both the sides admit that these were post-dated cheques. This by itself shows that the dates which they bore were not the dates when they were drawn. It is further clear that these cheques had been seized by the I.T. Dept. in the raid effected at the premises of Mr. K. L. Baluja during his lifetime on June 23, 1973. The cheques thus obviously were issued before that date. As to how long earlier they had been issued, the pleadings of the parties as also the evidence on record are silent.
34. So far as s. 19 of the Limitation Act is concerned, the position of law is well settled by the decision of the Supreme Court in the case of Jiwanlal Achariya, , that since a post-dated cheque cannot be paid till the date on the cheque arrives, the payment must be construed to be made on that date. The acknowledgment in writing and under the signatures of the person making the payment, which must corroborate such payment in terms of the proviso to s. 19, has also, accordingly, to be construed as if executed on the date which the cheque bears. This acknowledgment evidences the factum of payment and is incidental or appurtenant to the payment. It is the payment which is the significant factor under s. 19 of the Limitation Act.
35. However, the acknowledgment under s. 18 of the Limitation Act is not dependent upon any such payment. It is its own character which saves limitation. One must, therefore, look to when it was made, and not be guided by the post or ante-dating which it may bear. It must be treated to have been made when it was actually made and not the date which it purports to bear. It is the factum of acknowledgment which extends limitation, and once it is established to have been executed at a particular time, the limitation starts running from then. In this respect this acknowledgment differs from the part payment under s. 19. Such payment on the basis of a post-dated cheque cannot be construed to have taken place before the date it bears. However, the acknowledgment under s. 18 is not deferrable to any future date not is it dependent upon any extraneous factor. It is the singular act of the debtor acknowledging the debt, which of its own, completes the act resulting in an extension of limitation. It is thus from the date when acknowledgment is actually made that a fresh limitation starts. To hold it otherwise would permit a creditor to obtain an acknowledgment even after the expiry of the period prescribed for a suit and get that ante-dated. Such an acknowledgment will not save limitation under s. 18 of the Act. Similarly, another creditor who may be in a position to dominate, may obtain post-dated acknowledgments at the time of grant of the loan itself. Such acknowledgments cannot ensure for these future dates and have to be construed as having been made on the date when they were executed.
36. In this view of the matter, the acknowledgment resulting from the drawing of the cheques, in the present case, must be held to have been made prior to at least June 23, 1973, when these cheques were seized by the I.T. Dept. Those acknowledgments, therefore, do not save the limitation for the suit brought on October 29, 1976.
37. The plaintiff is, therefore, entitled to relief only on the basis of 20 cheques, the payments of which fell due within three years of the institution of the suit. Their total amount comes to Rs. 53,500. The defendants shall pay interest at the rate of 6% per annum from the date from which each of these cheques was en cashable till realisation. This rate of interest is allowed under s. 80 of the Negotiable Instruments Act. The plaintiff will also be entitled to proportionate costs.
