# Surendra Prasad Narain Singh v. Sri Gajadhar Prasad Sahu Trust Es/ate

- **Citation:** [1967] 1 S.C.R. 190
- **Court:** Supreme Court of India
- **Decided:** 1966-08-26
- **Case number:** Civil Appeal No. 606 of 1966
- **Bench:** K. N. Wanchoo, ]. C. Shah, R. S. Bachawat
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/surendra-prasad-narain-singh-v-sri-gajadhar-prasad-sahu-trust-es-ate-3811
- **Pages:** 11

## Headnote

Bilrar Money Lenders (Regulation of Transactions) Act, 1939 (Bihar
No. 7 of 1939), s. 4--Loan, if Includes promisSory note,
Indian Limitation Act (9 of 1908), s. 20-Handing over post-dated
Cheque-Date <,/ payment for purpose of /lm!tatlon.
. The respondent aclvanced a loan to the appellant before be was registered as money-lender in 1952 under the Bibar Money-Lenders Act, 1939.
On February 4, I 954 tho appellant executed a promissory note in renewal
of this loan and on the same day delivered to the respondent a post·
dated cheque dated February 25, 1954 towards part payment of the debl.
The cheque was cashed soon after February 25, 1954.
On February
22, 1957, the respondent filed a suit for recovery of the sum on the
basis of the promissory note.
The appellant contended that (i) the suit
was not maintainable under s. 4 of the Bihar Money-Lenders Act, because,
the suit promissory note was not a loan within the meaning of s. 4,
but was really renewal of a loan advanced when the respondent was not
legistered as a money-lender under the Act, and (ii) the suit was barred
by limitation as the part payment was made on February 4, 1954 when
the poet dated cheque was gh= to the respondent.
HELD : (i) (Per Full Court) Section 4 of the Bihar Money-Lender.
Act was not a bar to the maintainability of the suit. [ 195 FJ
The word 'loan' used in s. 4 has the same meaning as it has In s. 2(f)
and includes a transaction on a bond bearing interest executed in respect
of past liability. [195 EJ
Surendra Prasad Narain Singh v. Sri Gajadhar Prasad Sahu Trust Es/ate
ond Ors. [1940) F.C.R. 39 and B. S. Lyle v. C/rappe/i, [1932) I K.B. 591,
relied on.
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The promissory note of February 4, 1954
was a loan
within the
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meaning of s. 2(f) and it was made after the respondent had been
registered. [ 195 FJ
(ii) (Per Wanchoo and Shah, JJ.)
The suit was not barred by
timitation.
Where a post-dated cheque is accepted conditionally and it is honoured
the payment for purposes of s. 20 of the Limitation Act can only be
0
the dare which the cheque bears and cannot be on the date the cheque
i• handed over, for the cheque, being post-<lated, can never be paid till
the date on the cheque anives. [197 HJ
Commissioner of Income-tax v. Messrs. Ogale Glass Works Ltd. [195SJ
I S.C.R. 185, Marreco v. Rlc/rardson, L.R. (1908! 2 K.B. 584 and Felix
Hadley v. Hadley, L.R. [1898) 2 Ch. 680, distinguished.
Per Baebawat, J.-Tbe suit was barred by limitation.
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190
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JIWANLAL v. RAMESHWARLAL (Wanchoo, I.)
191
The doctrine· that the payment take:; effect from the date of the delivery
of the negotiable instrument is as inuch applicable to a post,dated
cheque and a. bill payable on a future date as to a cheque and a . bW
payable on demand.
During the currency of the post-dated cheque or
of the bill payable on a future date, the creditor cannot sue to rec:oVer
the original debt.
The post dated cheque or the running bill, if it. is
duly met operates as payment of the debt from the elate of its delivery.
For the purposes of s. 20 of the Limitation Act, also the date of the
pa:fment of the debt is the date when the· post-dated cheque was delivered
lo the creditor and not the date wnicb the cheque bore nor the date· when
it was cashed. [199 OJ'
Commissioner of Income-tax, Bombay South Bombay v. Messrs. Ogal•
Glass Works Ltd. Ogale Wadi, (1955) 1 S.C.R. 196, Marreco v. Ri~hart!
son, [1908] 2 K.B. 584 and Felix Hadley & Co. v. Hadley [1'898] 2 Ch.
680, relied on,
Ked~r Nath Mitra v. Dinabandhu Saha, (1915) I.L.R. 42 Cal. 1043;
approved.

## Text

JIWANLAL ACHARIYA
RAMESHWARLAL AGARWALLA
August 26, 1966
(K. N. WANCHOO, ]. C. SHAH AND R. S. BACHAWAT, JJ.)
Bilrar Money Lenders (Regulation of Transactions) Act, 1939 (Bihar
No. 7 of 1939), s. 4--Loan, if Includes promisSory note,
Indian Limitation Act (9 of 1908), s. 20-Handing over post-dated
Cheque-Date <,/ payment for purpose of /lm!tatlon.
. The respondent aclvanced a loan to the appellant before be was registered as money-lender in 1952 under the Bibar Money-Lenders Act, 1939.
On February 4, I 954 tho appellant executed a promissory note in renewal
of this loan and on the same day delivered to the respondent a post·
dated cheque dated February 25, 1954 towards part payment of the debl.
The cheque was cashed soon after February 25, 1954.
On February
22, 1957, the respondent filed a suit for recovery of the sum on the
basis of the promissory note.
The appellant contended that (i) the suit
was not maintainable under s. 4 of the Bihar Money-Lenders Act, because,
the suit promissory note was not a loan within the meaning of s. 4,
but was really renewal of a loan advanced when the respondent was not
legistered as a money-lender under the Act, and (ii) the suit was barred
by limitation as the part payment was made on February 4, 1954 when
the poet dated cheque was gh= to the respondent.
HELD : (i) (Per Full Court) Section 4 of the Bihar Money-Lender.
Act was not a bar to the maintainability of the suit. [ 195 FJ
The word 'loan' used in s. 4 has the same meaning as it has In s. 2(f)
and includes a transaction on a bond bearing interest executed in respect
of past liability. [195 EJ
Surendra Prasad Narain Singh v. Sri Gajadhar Prasad Sahu Trust Es/ate
ond Ors. [1940) F.C.R. 39 and B. S. Lyle v. C/rappe/i, [1932) I K.B. 591,
relied on.
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The promissory note of February 4, 1954
was a loan
within the
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meaning of s. 2(f) and it was made after the respondent had been
registered. [ 195 FJ
(ii) (Per Wanchoo and Shah, JJ.)
The suit was not barred by
timitation.
Where a post-dated cheque is accepted conditionally and it is honoured
the payment for purposes of s. 20 of the Limitation Act can only be
0
the dare which the cheque bears and cannot be on the date the cheque
i• handed over, for the cheque, being post-<lated, can never be paid till
the date on the cheque anives. [197 HJ
Commissioner of Income-tax v. Messrs. Ogale Glass Works Ltd. [195SJ
I S.C.R. 185, Marreco v. Rlc/rardson, L.R. (1908! 2 K.B. 584 and Felix
Hadley v. Hadley, L.R. [1898) 2 Ch. 680, distinguished.
Per Baebawat, J.-Tbe suit was barred by limitation.
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JIWANLAL v. RAMESHWARLAL (Wanchoo, I.)
191
The doctrine· that the payment take:; effect from the date of the delivery
of the negotiable instrument is as inuch applicable to a post,dated
cheque and a. bill payable on a future date as to a cheque and a . bW
payable on demand.
During the currency of the post-dated cheque or
of the bill payable on a future date, the creditor cannot sue to rec:oVer
the original debt.
The post dated cheque or the running bill, if it. is
duly met operates as payment of the debt from the elate of its delivery.
For the purposes of s. 20 of the Limitation Act, also the date of the
pa:fment of the debt is the date when the· post-dated cheque was delivered
lo the creditor and not the date wnicb the cheque bore nor the date· when
it was cashed. [199 OJ'
Commissioner of Income-tax, Bombay South Bombay v. Messrs. Ogal•
Glass Works Ltd. Ogale Wadi, (1955) 1 S.C.R. 196, Marreco v. Ri~hart!
son, [1908] 2 K.B. 584 and Felix Hadley & Co. v. Hadley [1'898] 2 Ch.
680, relied on,
Ked~r Nath Mitra v. Dinabandhu Saha, (1915) I.L.R. 42 Cal. 1043;
approved.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 606 of 1966.
Appeal by special leave from the judgment and decree dated
August 5, 1964 of the Patna High Court in Appeal from Original
Decree No. 362 of 1959.
P. K. Chatterjee, for the appellant.
The respondent did not appear.
The Judgment of W ANCHOO and SHAH, JJ. was delivered by
WANCHOO, J. BACHAWAT, J. delivered a dissenting Opinion.
Wanchoo, J. Two questions of law arise in this appeal by
special leave against the judgment of the Patna High Court. The
facts which have been found by the High Court and which are
necessary for our purposes may be briefly narrated.
The
appellant was the defendant in a suit filed by the plaintiff-respondent for recovery of money on the basis of a promissory note for
Rs. 10,000 executed on February 4, 1954 by the defendant-appellant in favour of the plaintiff-respondent.
12 per cent
per,
annum interest was to run on the promissory note which was
payable on demand or to the order of the plaintiff-respondent. The
suit was filed on February 22, 1957 and was thus obviously beyond
time from February 4, 1954. The plaintiff-respondent relied on
a payinent by cheque on February 25, 1954 to bring the suit within
time .
. The two questions raised by the defendant-appellant which
now survive for decision arose in this way. The appellant claimed
that no money was in fact advanced on February 4, 1954 and that
the promissory note executed on that date was to pay by rerrewal
a 'loan for Rs. 4,000 which had been taken as far back as October
19/16.
The sum of Rs. 10,000 included the principal amount
192
SUPREME COURT REPORTS
(1967] l S.C.R.
of Rs.
4,000 and the remainder was towards interest. The
defendant-appellant therefore claimed that the suit was
barred
by s. 4. of the Bihar Money-Lenders (Regulation of Transactions) Act, No. 7 of 1939 (hereinafter referred to as the 1939-Act)
which lays down that "no court shall entertain a suit by a moneylender for the recovery of a loan advanced by him after the commencement of this Act unless such money lender was registered
under the Bihar Money-Lenders Act 1938 at the time when such
loan was advanced." It appears that the. joint family consisting
of the respondent and his brother was registered as a money-lender
sometime about 1952, and the case of the defendant-appellant
was that as the loan was advanced really in 1946 when there was
no registration the suit was barred by s. 4 of the 1939-Act. The
other main defence was of limitation. The respondent's case
on that point was simple, namely, that on February 25, 1954 a
cheque for Rs. 1,000 was given in part payment and therefore
the three years period of limitation would start from that date.
The appellant's case on the other hand was that it was on February
4, 1954 that a postdated cheque for Rs. 1,000 was given and though
the cheque might have been cashed on or after February 25, 1954,
the payment must be deemed to have been made on February
.4, 1954 and therefore the three years period of limitation ran
from that date and the suit was out of time.
Thus two main questions arose for decision of the High Court,
namely, (i) whether the suit was not maintainable in view of s. 4
of the 1939-Act and (ii) whether the suit was barred by limitation.
On the first question the High Court held that s. 4 was not a bar
to the· maintainability of the suit. On the facts the High Court
held that there was no actual advance of money on February 4,
1954- and that the promissory note for Rs. I0,000/- executed on
that date was in lieu of an earlier promissory note for Rs. 8,000
executed on February 21, 1951. Even so the High court held that
the suit was maintainable as it was based on a loan alleged to have
been advanced in 1954 which was long after the respondent's familf
was registered as a money-lender. The High Court· was of the
view that the maintainability of the suit depended upon the pleadings on which the plaintiff came to court and on the pleadings
of the case, s. 4 had no application. On the question of limitation
the High Court held that the case of the plaintiff-respondent that
the cheque for Rs. 1,000 dated February 25, 1954 was given
on that date was not correct. The High Court was of the view
that the cheque for Rs. 1,000 was given in fact on February 4,
1954, though it was post-dated to February 25, 1954 and was actually realised sometime after February 25, 1954. Even so the High
Court held that the delivery of the post-dated cheque on February
4, 1954 could not be treated as an unconditional payment and
that for the purpose of s. 20 of the Indian Limitation Act,
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JIWANLAL v. RAMESHWARLAL (Wanchoo, l.)
193
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No. 9 of 1908, the payment must be held to have been made at
the earliest on February 25, 1954 for the cheque could not possibly
have been paid before that date: The High Court therefore held
that s. 20 applied as part payment had been made on February 25,
1954 and the cheque itself was an acknowledgment of the payment and was in the handwriting of the appellant. The High Court
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therefore over-ruled both the contentions of the defendant-appellant and after going into the accounts decreed the suit for an amount
which was slightly less than that claimed by the plaintiff-respondent.
In the present appeal the same two questions of law have
been raised before us, namely-(i) whether the suit was not maintainable in view of s. 4 of the 1939-Act, and (ii) whether the suit
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was barred by the three-year rule of limitation.
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Re.· (i).
We have already set out s. 4 of the 1939-Act and it does bar
a suit by a money-lender for recovery of a loan advanced by him
after the commencement of the 1939-Act unless the money-lender
is registered under the Bihar Money-Lenders Act, 3 of 1938. In
the present case it is not in dispute that the joint family of which
the plaintiff-respondent was a member was registered as a moneylender sometime about 1952. The promissory note on the basis
of which the suit was filed was executed in 1954 after the registra·
tion and therefore prima facie s. 4 would not bar the suit for the
loan was advanced after the plaintiff-respondent's family had been
registered as a money-lender. But the appellant's contention is
that the High Court found that real loan of Rs. 8,000 was advanced
in 1951 and that the promissory note for Rs. 10,000 executed
February 4, 1954 was only in renewal of that loan, and therefore
s. 4 applied.
We are of opinion that there is no force in this contention. lt is
necessary in this connection to refer to the definition of the word
"loan" in s. 2 (f) of the 1939-Act. " 'Loan' means an advance.
whether of money or in kind, on interest made by a money-lender.
and shall include a transaction on a bond bearing interest executed
in respect of past liability and any transaction which in substance
is a loan, but shall not include ............ (rest is immaterial) ... .
. . . . . . " It will be seen from this definition that the word ''loan"
for purposes of the I 939-Act includes not only an actual advance
whether of money or in kind but also a transaction on a bond bearing interest executed in respect of past liability, i.e. an instrument
which is in renewal of a past advance of money . It is, however.
urged on behalf of the appellant that a promissory note is not a
bond, even though the promissory note in dispute might have
been executed in respect of past liability and bore interest. Now
the word "bond" has not been defined in the 1939-Act. It is true
that a bond for the purpose of the Stamp Act is not the same thing
194
SUPREME COURT REPORTS
(1967) I S.C.R.
as a promissory note. But it appears to us that the word "bond'
is not used in s. 2 (f) in the special sense in which it has been defined
in· the Indian Stamp Act. It appears to have been used ia
its general sense, that is, a deed by which one person binds
himself to pay a sum to another person. This was the view taken
by the Federal Court in Surendra Prasad Narain Singh v. Sri
Gajadhar Prasad Sahu Trust Estate and others (1) and we respectfully agree with it.
Sulaiman J. after referring to the definition
of the word "bond" in the Indian Stamp Act and the Limitation
Act pointed out that "the essential common feature of these definitions is 'any instrument whereby a person obliges himself'."
He accordingly held that the meaning of the word "bond" for
the purpose of the 1939-Act was an instrument which itself obliges
the obligor to the obligee, that is to say, "the language of the instrument itself must expressly create the obligation." This view
of Sulaiman J. was apparently accepted by the other two learned
Judges. Therefore all that s. 2 (f) requires is that there should be
an instrument in writing by which the obligor obliges himself to
pay the past liability and the instrument should bear interest.
These conditions are satisfied in the present case, for by the promissory note of February 4, 1954 the defendant-appellant obliged
himself to the respondent and it was in respect of past liability
and bore interest. Clearly therefore this transaction of February
4, 1954 was a loan within the meaning of s. 2(f) of the 1939-Act.
But it is urged that wncn s. 4 speaks of loan, it,dbes not include
the inclusive part of the definition given in s. 2(1') of the 1939-Act
and only refers to that part of the definition in s. 2(f) which says
·that a loan means an advance whether of money ·or in kind on
interest made by a money-lender.
It is true that definitions in
s. 2 begin with the words "in this Act, unless there is anything
repugnant in the subject or context" and therefore it may be possible to argue that in s. 4 the word "loan" should not be given
the meaning which has been given to it in s. 2(f). But what learned
counsel argues is that it should be given that meaning in s. 2(0
which says that it has to be an advance whether of money or in
kind, but it should not be given the extended meaning which it
has iri s. 2(f) by the inclusive part of the definition. We cannot
accept this contention. We have to use the definition of "loan"
given in s. 2(f) in its entirety for the purpose of s. 4 or we should
not use it al all.
But we cannot say that half the definition should
be used for the purpose of s. 4 and not the other half. ·Further
we see no reason to hold that the intention was that ins. 4 the word
"loan" should have any meaning other than that given to it in s.
2(f).
In this connection stress is laid on the words "advanced by
him" which qualify the word "loan", and it is said that when a
promissory note is made in renewal of a past liability arising out
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(1) (1940] F.C.R. 39.
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JIWANLAL v. RAMESHWARLAL (Wanchoo, l.)
190.
of an earlier advance, it cannot be said that any loan was advanced
when the renewal was made. There are two answers to this argument. When a Joan is renewed by the execution of a fresh doculllent there is no difficulty in holding that the forme_r loan was
repaid by borrowing a fresh loan on the document of~renewal ~
(see B. S. Lyle Limited v. Chappeli (1). So the transaction of February 4, 1954 itself can be treated as a fresh loan for the'purpose
of s. 4 of the 1939-Act. Secondly, we are of opinion that there is
no reason to lay such emphasis on the word "advanced" in s. 4
as is being done on behalf of the appellant. The word "advanced".
appears tq have been used there for convenience of language,
particularly to indicate that the loan must have been made after
the commencement of the 1939-Act. If we were to substitute the
first part of the definition of "loan" in s. 4, (for it is not disputed,
on behalf of the appellant that the first part certainly applies to
the word "loan" in s. 4), the relevant part of the section will read
like this : ·"for the recovery of an advance whether of money or in
kind advanced by him". That will show that the word "advanced".
was used in s. 4 merely for convenience of language and means. no
more than what would have been meant by using the word "made"·
or "given" in place of "advanced". It does not imply that there
should have been an actual advance whether of meney or in kind.
All that it means is that a loan as defined in s. 2(f) should have·
been made ,aqd If it was after the commencement of the 1939-Act
the money-lender would have to be registered before he could maintain a suit. We have therefore nq hesitation in holding that the·
word "loan" used in s. 4 has the same meaning as it has in s. 2(f)
and includes a transaction on a bond bearing interest executed in
respect of past liability. As the promissory note of February 4,
1954 is a loan within the meaning of s. 2(f) and as it was made
after the joint family firm of the respondent had been registered
·s. 4 is not a bar to the maintainability of the suit. We therefore·
hold accordingly.
Re. (ii).
This brings us to the question of limitation. The facts are
not in dispute now. The promissory note was executed on February 4, 1954. Oh tlie same date a post-dated 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 some--
time after February 25, 1954 and was credited towards part pay111ent, 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-·
: •(I) (1932) I K.B. 691.
196
SUPREME COURT REPORTS
(1967] I s.c.R.
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 follows 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 s. 20 of the Limitation
Act.
Section 20 i111er 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 s. 20 would be the date on which the cheque would he actually
payable at the earliest, a;suming 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 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 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 s. 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 mi.st be held that the payment was made on February 25, 1954. It is not in dispute that the proviso to s. 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
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JIWANLAL v. RAMBSHWARLAL (Wanchoo, J.)
197
limitation began on February 25, 1954 which was the date of the
post-dated cheque which was eventually honoured.
The decision of this Court in Commissioner of Income-tax v.
Messrs. Ogale Glass
Works Ltd.<1l does not support the proposition that even where the acceptance of a post-dated cheque is
conditional the date on which payment is made is the date of acceptance of the post-dated cheque provided it is honoured. It
is true that there are observations in that case to the eft'ect that if
the cheque is not dishonoured the payment related back to the
date of the receipt of the cheque, and in law the date of payment
was the date of the delivery of the cheque. There is nothing- to
show however that this Court was dealing with a post-dated cheque
in that case. The cheques in question in that case were issued by
the Government of India and we have no reason to suppose that
they were post-dated. The observations therefore made in that
case must in our opinion be read in the light of the fact that the
cheques in that case were not shown to be post-dated. Where therefore the cheque bears the date on which it is delivered and it is
honoured, Ogale' s case lays down that the payment is on the date
on which the cheque was delivered.
But it is difficult to accept the
proposition that the same would be the position where the cheque
is post-dated, for it is clear that no payment of a post-dated cheque
is possible before the date which it bears. Section 20 of the Limi-
~on Act saves limitation from the date of payment, and if the
payment is made by a post-dated cheque, unless the cheque is accepted as unconditional payment, it cannot be regarded as payment
before the due date. We see no reason to hold that in such a case·
also the payment is on the date the cheque is delivered.
In the case of Marreco v. Richardson (2) the cheque bore the
date on which it was delivered, though there was an oral arrangement that it would not be presented for sometime, and it was in
those circumstances that the court held that the date of payment
must be the date of delivery, notwithstanding the oral arrangement..
That case in our opinion is no authority for the proposition that
if the cbeque is in fact post-dated the payment even though conditional would still have been on the date it was handed over.
The case of Felix Hadley v. Hadley <'> also does not help
the appellant as that case did not deal with a post-dated cheque.
We may however add that we are expressing no opinion as to what
would happen in case there was a bill payable on a future date,.
for the question does not directly arise in the present appeal. But
there ca:n in our opinion be no doubt that where a post-dated cheque
is accepted conditionally and it is honoured, the payment for pur-.
poses of s. 20 of the Limitation Act can only be the date which
(I) [1955] 1 S.C.R. 185.
(2) L.R. [1908] 2 K.B. 584.
(3) L.R. [1898] 2 Ch. 680.
U98
SUPREME COURT REPORTS
(1967) l S.C.R.
the cheque bears and cannot be on the date the cheque is handed
over, for the cheque, being post-dated, can never be paid till the
-date on the cheque arrives. In the present case the cheque was
·dated February 25, 1954 and was honoured soon after and therefore the date of payment for the purpose of s. 20 of the Limitation
Act would be the 25th February, 1954. The suit was therefore
within time and the second contention raised on behalf of the
appellant must also fail.
We therefore dismiss the appeal, but as the respondent has
·not appeared in this Court we make no order as to costs.
Bacbawat, J.
For the reasons given by Wanchoo, !. I agree
that the suit is not barred by s. 4 of the Bihar Money-Lenders
(Regulation of Transactions) Act No. 7of1939, but, in my opinion,
the suit is barred by limitation.
On February 4, I 954, the appellant executed a promissory
note for Rs. 10,000. On the same date, he delivered to the respondent a cheque dated February 25, 1954 and signed by him for
Rs.
1,000 towards part payment of the debt. The respondent received the cheque as conditional payment. The cheque
was cashed soon after February 25, 1954. The suit was instituted
on February 22, 1957.
Under s. 20 of the Indian Limitation Act,
1908, a fresh period of limitation has to be computed from the
time when the part payment of the debt was made, provided an
acknowledgment of the payment appears in the handwriting or in
a writing signed by the person making the payment. Now, the
question is when was the part payment of the debt made ? Was it
made on the date of the delivery of the cheque or on the date which
the cheque bore or on the date when the cheque was encashed ?
A creditor may receive a bill or a cheque as a· conditional
payment of a pre-existing debt, i.e. as a payment conditional on
the instrument being duly honoured on presentation. If the cheque
is honoured, the date of the payment of the debt is the date when
the cheque was delivered and not the date· when it was honoured.
For purposes of s. 20 of the Indian Limitation Act, 1908 also, the
cheque is the payment and the date of the payment is the date of
the delivery of the cheque. The cheque also serves as an acknowledgment of this payment, see Kedar Nath Mitra v. Di11abandhu
Sahti-1>.
When the banker honours the cheque, the cheque is
paid and discharged but the debt is not paid over again ; the debt
was paid when the cheque was delivered. These principles are
well settled. In Marreco v. Richardson<2J, Farewell, L. J. said :
"In the more recent case of Felix Hadley & Co. v.
Hadley<» Byrne J. held that a cheque or a bill of exchange
given in respect of a pre-existing debt operated as a condi-
(I) [t915] I. L. R. 42 Cal. 1043, 1048.
(?) (1908] 2 K.11. 584, 593.
(3) [1898) 2 Ch. 6SO.
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JIWANLAL v. RAMESHWARLAL (Bachawat, J.)
199.
tional payment thereof, and on the condition being performed by actual payment, the payment related back to the
time when the' cheque or bill was given. That is only expressing the same principle in another form, and I should
prefer to say that the giving of a cheque for a debt is payment conditional on the cheque being met, that is, subject
to a condition subsequent, and if the cheque is met it is an
actual payment ab initio and not a conditional one. There
was only one act of payment here, that on May IO, and
that was out of time for the purpose of avoiding the operation of the statute."
In the last case, the cheque was delivered on May JO, 1900.
It was· post-dated May 20, 1900. It was agreed that the cheque
would not be presented for payment until June 20, 1900. on which
day it was presented for payment and was paid by th~ bankers.
It was held that the date of the part payment of the debt was May
JO and not May 20, nor June 20.
In The Commissioner of Income-tax, Bombay South Bombay
v. Messrs. Ogale Glass Works Ltd. Ogale Wadi(I> this C01lrt held :
" .. even if the cheques were taken conditionally, the
cheques not having been dishonoured but having b~en
cashed, the payment related back to the dates of the receipt
of the cheques and in law the dates of payment were the
dates of the delivery of the cheques."
It is to be observed that the Court made no distinction between
a cheque bearing the date on which it was delivered and a postdated cheque. It is immaterial whether the cheque is post-dated
or ante-dated or dated the day of the delivery. On the cheque
being met, the payment of the debt relates back to the date of the
receipt of the cheque and, in law, the date of the payment is the
date of the delivery of the cheque, and not the date which the cheque
bore nor the date when it was cashed.
The doctrine that the payment takes effect from the date of
the delivery of the negotiable instrument is as much applicable
to a post-dated cheque and a bill payable on a future date as to a
cheque and a bill payable on demand. During the currency of
the post-dated cheque or of the bill payable on a future date; the
creditor cannot sue to recover the original debt. The post-dated
cheque or the running bill, if it is duly met, operates as payment
of the debt from the date of its delivery. For the purposes of s.
20 of the Indian Limitation Act, 1908 also, the date of the payment of the debt is the date when the post-dated cheque was de- ·
· livered to the creditor and not th.e date which the cheque bore nor
(I) [1955] IS. C.R. 185, 196.
200
SUPREME COURT REPORTS
[1967) l S.C.R.
the date when it was cashed. I cannot subscribe to the novel
view that the date of the payment is the date written on the cheque.
In my opinion, the payment was made on February 4, 1954 and not
on February 25, 1954 nor on the date when the cheque was subsequently cashed. It follows that the suit is barred by limitation
and should be dismissed.
In the result, the appeal is allowed with costs, the decree of
the High Court is set aside and the decree of the trial Court is
restored.
ORDER
In accordance with the opinion of the majority, the appeal
is dismissed. There will be no order as to costs.
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