Showing posts with label post dated cheque. Show all posts
Showing posts with label post dated cheque. Show all posts

Thursday, 2 April 2020

How to ascertain limitation for filing of suit if payment on account of debt is made by postdated cheque?

Shri Abhishek Manu Singhvi, learned senior Counsel has relied on two judgments of this Court, which need to be noticed: (i) Jiwanlal Achariya v. Rameshwarlal Agarwalla MANU/SC/0190/1966 : AIR 1967 SC 1118, and (ii) Kamla Devi and Ors. v. Pt. Mani Lal Tewari and Ors. MANU/SC/0375/1975 : (1976) 4 SCC 818. In Jiwanlal Achariya (supra), this Court had occasion to consider Section 20 of the Limitation Act, 1908, which was akin to present Section 19 of the Limitation Act, 1963. The Court was considering the question as to what shall be the date of a postdated cheque, whether it shall be the date on which cheque bears or the date the cheque is handed over to compute the start of fresh period of limitation. The Court held that the date which post-dated cheque bears subject to payment by the bank shall be treated as a date for start of the fresh period of limitation. In paragraph 8 of the judgment, it was observed that the proviso to Section 20 shall be treated to be complied with for the cheque itself is an acknowledgment of the payment in the handwriting of the person giving the cheque. Paragraph 8 of the judgment is as follows:

8. This brings us to the question of limitation. The facts are not in dispute now. The promissory note was executed on February 4, 1954. On the same date a postdated cheque bearing the date February 25, 1954 was given by the Defendant-Appellant to the Plaintiff-Respondent, the intention being that on being realised it would be credited towards part payment. It was realised sometime after February 25, 1954 and was credited towards part payment, the Appellant himself having made an endorsement admitting this part payment. But it is contended on behalf of the Appellant that as the post-dated cheque was given on February 4, 1954, that must be held to be the date on which part payment was made. It has been held by the High Court that the acceptance of the post-dated cheque on February 4, 1954 was not an unconditional acceptance. Where a bill or note, is given by way of payment, the payment may be absolute or conditional, the strong presumption being in favour of conditional payment. It followed from the finding of the High Court that the payment was conditional i.e. that the payment will be credited to the person giving the cheque in case the cheque is honoured. In the present case the cheque was realised and the question is what is the date of payment in the circumstances of this case for the purpose of Section 20 of the Limitation Act. Section 20 inter alia lays down that where payment on account of debt is made before the expiration of the prescribed period by the person liable to pay the debt, a fresh period of limitation shall be computed from the time when the payment was made. Where therefore the payment is by cheque and is conditional, the mere delivery of the cheque on a particular date does not mean that the payment was made on that date unless the cheque was accepted as unconditional payment. Where the cheque is not accepted as an unconditional payment, it can only be treated as a conditional payment. In such a case the payment for purposes of Section 20 would be the date on which the cheque would be actually payable at the earliest, assuming that it will be honoured. Thus if in the present case the cheque which was handed over on February 4, 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 not 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 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 the date where the conditional acceptance of a post-dated cheque becomes actual payment when honoured. We are therefore of opinion that as a post-dated cheque was given on February 4, 1954 and it was dated February 25, 1954 and as this was not a case of unconditional acceptance, the payment for the purpose of Section 20 of the Limitation Act could only be on February 25, 1954 when the cheque could have been presented at the earliest for payment. As in the present case the cheque was honoured it must be held that the payment was made on February 25, 1954. It is not in dispute that the proviso to Section 20 is complied with in this case, for the cheque itself is an acknowledgment of the payment in the handwriting of the person giving the cheque. We are therefore of opinion that a fresh period of limitation began on February 25, 1954 which was the date of the post-dated cheque which was eventually honoured.

16. The judgment of this Court in Jiwanlal Achariya (supra)does not lay down that even without pleading all facts for claiming start of fresh period of limitation, the Plaintiff is entitled for the benefit of Section 19.

  The function of Section 19 is to provide a later date to count the period of limitation afresh, and that fresh period of limitation will be computed from the time when the acknowledgement is signed. Nothing turns on whether the acknowledgement is itself registered or not. The office of Section 19 being to postpone the date of reckoning limitation and not to create a different substantive period of limitation, the latter depends upon the appropriate Article of the Limitation Act which applies to the suit. 


IN THE SUPREME COURT OF INDIA

Review Petition (C) Nos. 786-787 of 2019 in Civil Appeal Nos. 8442-8443 of 2016, 

Decided On: 18.12.2019

Shanti Conductors (P) Ltd. Vs.  Assam State Electricity Board 
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Thursday, 15 August 2019

Whether offence of dishonour of cheque is made out if post dated cheque was issued as security for loan?

Reference to the facts of the present case clearly shows that though the word "security" is used in Clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of installments. The repayment becomes due under the agreement, the moment the loan is advanced and the installment falls due. It is undisputed that the loan was duly disbursed on 28th February, 2002 which was prior to the date of the cheques. Once the loan was disbursed and installments have fallen due on the date of the cheque as per the agreement, dishonour of such cheques would fall Under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability.

12. Judgment in Indus Airways (supra) is clearly distinguishable. As already noted, it was held therein that liability arising out of claim for breach of contract Under Section 138, which arises on account of dishonour of cheque issued was not by itself at par with criminal liability towards discharge of acknowledged and admitted debt under a loan transaction. Dishonour of cheque issued for discharge of later liability is clearly covered by the statute in question. Admittedly, on the date of the cheque there was a debt/liability in praesenti in terms of the loan agreement, as against the case of Indus Airways (supra) where the purchase order had been cancelled and cheque issued towards advance payment for the purchase order was dishonoured. In that case, it was found that the cheque had not been issued for discharge of liability but as advance for the purchase order which was cancelled. Keeping in mind this fine but real distinction, the said judgment cannot be applied to a case of present nature where the cheque was for repayment of loan installment which had fallen due though such deposit of cheques towards repayment of installments was also described as "security" in the loan agreement. In applying the judgment in Indus Airways (supra), one cannot lose sight of the difference between a transaction of purchase order which is cancelled and that of a loan transaction where loan has actually been advanced and its repayment is due on the date of the cheque.

13. Crucial question to determine applicability of Section 138 of the Act is whether the cheque represents discharge of existing enforceable debt or liability or whether it represents advance payment without there being subsisting debt or liability.


IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 867 of 2016 

Decided On: 19.09.2016

Sampelly Satyanarayana Rao Vs.  Indian Renewable Energy Development Agency Limited

Hon'ble Judges/Coram:
Dipak Misra and A.K. Goel, JJ.

Citation: (2016) 10 SCC 458
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Thursday, 31 May 2018

Whether offence of dishonour of cheque is made out if post dated cheque is issued for repayment of loan?

(i) The question whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction. If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise. 

(ii) Though the word "security" is used in Clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of installments. The repayment becomes due under the agreement, the moment the loan is advanced and the installment falls due.Once the loan was disbursed and installments had fallen due on the date of the cheque as per the agreement, dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability. 

(iii) As per the case of the Complainant, the cheques which were subject matter of the said complaint were towards the partial repayment of the dues under the loan agreement. While dealing with a quashing petition, the Court has ordinarily to proceed on the basis of averments in the complaint. The defence of the Accused cannot be considered at this stage. The Court considering the prayer for quashing does not adjudicate upon a disputed question of fact. 

(iv) The question was answered in favour of the Respondent and against the Appellant. Dishonour of cheque in the present case being for discharge of existing liability was covered by Section 138 of the Act, as rightly held by the High Court.

IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 867 of 2016 (Arising out of S.L.P. (Crl.) No. 5410 of 2014)

Decided On: 19.09.2016

 Sampelly Satyanarayana Rao Vs. Indian Renewable Energy Development Agency Limited

Hon'ble Judges/Coram:
Dipak Misra and A.K. Goel, JJ.
Citation:(2016) 10 SCC458
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Monday, 19 September 2016

Whether dishonour of post-dated cheque given for repayment of loan installment is covered by S 138 of NI Act?


Question for consideration is whether in the facts of the present case,
the dishonour of a post-dated cheque given for repayment of loan
installment which is also described as “security” in the loan
agreement is covered by Section 138 of the Negotiable Instruments
Act, 1881 (“the Act”).
 Crucial question to determine applicability of Section 138 of the
Act is whether the cheque represents discharge of existing
enforceable debt or liability or whether it represents advance payment
without there being subsisting debt or liability. While approving the
views of different High Courts noted earlier, this is the underlying
principle as can be discerned from discussion of the said cases in the
judgment of this Court.
 As is clear from the above observations of this Court, it is well
settled that while dealing with a quashing petition, the Court has
ordinarily to proceed on the basis of averments in the complaint. The
defence of the accused cannot be considered at this stage. The court
considering the prayer for quashing does not adjudicate upon a
disputed question of fact.
18.In Rangappa versus Sri Mohan 9 (2010) 11 SCC 441Page 11, this Court held that once issuance
of a cheque and signature thereon are admitted, presumption of a
legally enforceable debt in favour of the holder of the cheque arises.

It is for the accused to rebut the said presumption, though accused
need not adduce his own evidence and can rely upon the material
submitted by the complainant. However, mere statement of the
accused may not be sufficient to rebut the said presumption. A post
dated cheque is a well recognized mode of payment
19. Thus, the question has to be answered in favour of the
respondent and against the appellant. Dishonour of cheque in the
present case being for discharge of existing liability is covered by
Section 138 of the Act, as rightly held by the High Court.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 867 OF 2016


SAMPELLY SATYANARAYANA RAO Vs  INDIAN RENEWABLE ENERGY DEVELOPMENT
AGENCY LIMITED

Dated:SEPTEMBER 19, 2016.

ADARSH KUMAR GOEL, J.
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Thursday, 12 November 2015

Whether Post dated cheque shall be deemed have been drawn on the date bears on it?

 Negotiable Instruments Act, 1881, Sections 138 – Dishonour of Cheque – Post dated cheque – Drawn date – Post dated cheque shall be deemed have been drawn on the date bears on it. 

 It is not the subject-matter of any controversy that the decision of this court referred to above in the case of Gulshan Rai v. Anil Kumar Sawhney [1992] ISJ (Banking) 208 ; [1993] 76 Comp Cas 685 (P & H) which was relied on by the learned Additional Sessions Judge has since been set aside by the Supreme Court of India in the case titled Anil Kumar Sawhney v. Gulshan Rai [1994] 79 Comp Cas 150 ; [1994] 1 RCR 150. The Supreme Court settled the controversy by holding that a post-dated cheque shall be deemed to have been drawn on the date it bears and the period of six months has to be reckoned from the date mentioned on the face of the cheque. 


Punjab-Haryana High Court
Anita vs Anil K. Mehra And Ors. on 17 November, 1995
Equivalent citations: 1998 94 CompCas 584 P H, (1996) 112 PLR 321

Bench: V Aggarwal
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