1. This appeal by the defendant is directed against the decision of the 1st Addl. District Judge, Motihari, by which, reversing the judgment of the trial Court, he has decreed the suit filed by Bishwanath Kedia for recovery of a sum of Rs. 8,590.50 on account of price of motor car accessories supplied by the plaintiff to the defendant along with interest thereon.
2. The sole plaintiff Bishwanath Kedia died during the pendency of the appeal in the lower appellate Court and his heirs were substituted in his place and are respondents in this appeal except that one of his heirs the original respondent No. 2 died during the pendency of the appeal in this Court, and his heirs were substituted in his place.
3. The original plaintiff carried on business in motor accessories at Motihari in the name and style of Mohan Kedia and Company. According to the plaintiff's case the defendant owned trucks and cars and he entered into a contract with the plaintiff for supply of motor accessories as and when required on credit basis. In pursuance of the aforesaid contract supply to the defendants used to be made on the basis of Slips signed by the defendant and his employees and subsequently bills claiming the price for these goods supplied used to be sent to the defendant and the defendant used to make payment either in whole or in part of the sums claimed in the bills. It is alleged by the plaintiff that defendant had agreed to pay interest at the rate of 12 per cent per annum in the event of non-payment of the bills when submitted. The plaintiff's case further is that a bill bearing No. 94 dated 1-4-1962 for a sum of Rs. 5,274.71 was sent to the defendant and received by him on 4-4-1962 on account of the price due from him of motor accessories supplied on credit. On 12-5-1962 in satisfaction of the aforesaid bill the defendant granted to the plaintiff 3 post dated cheques, the first dated 15-6-1962 for a sum of Rs. 2000/- the second dated 15-7-1962 for a sum of Rs. 1500/- and a third dated 16-8-1962 for a sum of Rs. 1,774/- all drawn by the defendant on the Bank of Bihar, Motihari.
But all of a sudden the defendant sent a letter dated 15-6-1962 to the Manager of the aforesaid Bank with a copy to the plaintiff asking him to withhold payment on the baseless ground that accounting had to be done and therefore, the three cheques stood dishonoured. The plaintiff's case further was that on assurance of the defendant, in spite of the cheques being dishonoured prosecution continued as before and various bills, the last being Bill No. 193 dated 1-11-1962, for a sum of Rs. 6,617.39 which included the amount covered by dishonoured cheques. According to the plaintiff, in spite of the demands the defendant did not care to make any payment in respect of the bill. Hence, the suit for payment of the amount of Rs. 6,670.39 with interest.
4. The defence of the defendant was a complete denial. According to him he had no transport business at all and had never any business dealing with the plaintiff. The defendant maintained that the eldest brother of the defendant Ramautar Prasad had an independent and exclusive transport business and owned trucks and cars and the three post dated cheques to which reference was made in the plaint had been issued in a misconception, but when the mistake was realized the defendant took back his cheques. It was also pleaded that the suit was barred by limitation. Some other pleas were also raised, which is not necessary to state in view of the contentions raised in this appeal. The trial Court accepted the defendants' case and dismissed the suit. On appeal, however, the Additional District Judge who heard the appeal disbelieved the plea of the defendant that the three post dated cheques were issued to the plaintiff under misconception that certain amounts were due to the plaintiff from his elder brother and that as later on he was informed by his elder brother that he did not owe anything from the plaintiff he stopped payment on the cheques. The learned Additional Dist. Judge held that the post dated cheques were issued towards satisfaction of bill No. 94 dated 1-4-1962 and that the evidence clearly proves that the defendant had transaction with the plaintiff on credit and had purchased motor accessories from the plaintiff's shop and the price of the same, as claimed by the plaintiff was due and he accordingly decreed the suit with costs and interest pendente lite till the date of realization at the rate of 6 per cent per annum.
5. Sri K.D Chatterjee, appearing on behalf of the appellant has urged two points in support of the appeal:—
(1) That part of the amount claimed as the price of the motor accessories supplied namely, the sum of Rs. 5,274.71 demanded under bill No. 94 dated 1-4-1962 was barred by limitation and
(2) that any rate in the absence of a finding that there was a contract to pay interest at the rate of 12 per cent as alleged by the plaintiff the lower appellate Court erred in law in decreeing the claim for ante litem interest, I shall deal with the second contention first.
Although there in an express averment in the plaint that there was an agreement to pay interest at the rate of 12 per cent per annum on the amount of the bills if they were not paid, the lower appellate Court has not recorded any finding whether it was established that there was a contract to pay interest in the event of the sums claimed remaining unpaid. Taking advantage of the absence of a finding on that point Sri Chatterjee initially contended that interest for the period prior to the date of the suit cannot be awarded as there was no finding that there was an agreement for payment of interest at a fixed rate and in support of this contention he relied upon the celebrated decision of the Privy Council in the case of B.N Ry. Co. Ltd. v. Ruttanji Ramji (AIR 1938 PC 67), which was approved by the Supreme Court in the case of Seth Thawardas Pherumal v. Union Of India (AIR 1955 SC 468). In the Privy Council case aforesaid it was laid down:
“Now, interest for the period prior to the date of the suit may be awarded, if there is an agreement for the payment of interest at a fixed rate, or it is payable by the usage of trade having the force of law, or under the provisions of any substantive law entitling the plaintiff to recover interest………”
Therefore, interest prior to the date of the suit may be awarded if it is payable under the provisions of any substantive law entitling the plaintiff to recover interest. Section 61(2) of the Sale of Goods Act, 1930 provides:
“(2) In the absence of a contract to the contrary the Court may award interest at such rate as it thinks fit on the amount of the price:—
(a) to the seller in a suit by him for the amount of the price from the date of the tender of the goods or from the date on which the price was payable.
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6. In view of the provisions of Section 61(2) aforesaid, it is manifest that even in the absence of a contract to pay interest, so long as no contract to the contrary was pleaded and proved, the Court has a discretion to award to the plaintiff interest at such rate as it thinks fit on the amount of the price of the goods sold by him from the date of which the price was payable. The defendant did not allege that there was a contract to the contrary within the meaning of the expression as used in Sec. 61(2). He was denying the existence of any contract whatsoever between him and the plaintiff. Therefore, even if the plaintiff had failed to prove the existence of a contract entitling him to recover interest on the amount due to him from the defendant on account of the price of goods supplied, the Court had the power to grant him interest on the amount of the price at such rate as it thought fit. Confronted with Sec. 61(2), Sri Chatterjee abandoned his original contention and contended that the award of interest was illegal as under Section 61(2) the Court has a discretion whether or not to award interest and at what rate and the Court has not applied its mind to the question whether it was a fit case, in which interest should be awarded and if so, at what rate. The lower appellate Court has granted the plaintiff interest on the amount of the price at the rate of 12% as claimed by the plaintiff. Interest at the rate of 12 per cent in my opinion, cannot be regarded as unreasonable. This was a case, in which there can be no doubt, the Court should have exercised its discretion of awarding interest on the amount of the price.
The fact that the defendant had issued cheques for the price claimed and has then stopped payment of the cheques on a plea which on the finding was incorrect shows that though the defendant had money in the bank and had no real excuse, he had refused to pay for the goods and at the same time had deceived the plaintiff by issuing cheques. At the trial, he raised a false defence and falsely repudiated the liability to pay even the price of the goods supplied. In these circumstances, there could be no question that interest on the amount of price should have been awarded and was rightly awarded and as I have said the rate at which the interest has been awarded 12 per cent cannot in these days when credit is hard to come by but beheld to be reasonable. I am therefore, unable to hold that the decree in so far it awards interest is illegal, because of the failure to record a specific finding either that interest had been agreed upon or that it was a case in which interest should be awarded at the rate of 12 per cent on the amount of the price.
The second contention of Sri Chatterjee must therefore, fail.
7. In my opinion, the first contention of Sri Chatterjee is also devoid of merit. The argument advanced by Mr. Chatterjee is that the suit being a suit for the price of goods sold and delivered and there being no averment in the plaint that a fixed period of credit had been agreed upon, the suit was governed by the three years' period of limitation commending from the date of delivery of the goods, as laid down in Article 14 of the Limitation Act 1963. And so far as the suit is in respect of the goods, the price for which had been demanded under bill No. 94 dated 1-4-1962, is concerned, as admittedly these goods were delivered prior to 1-4-1962. The suit the argument runs which had been filed on 6-4-1965 was filed more than three years from the date of the delivery of goods and was therefore, barred by limitation. The argument is attractive but unsound. It must be remembered that though a general plea as to limitation was raised in the written statement and the plea formed subject matter of issue No. 4, the plea was not pressed in the trial Court which answered it in the negative and did not find any case of limitation made out as such. In the appellate Court also, the plea of limitation was not raised and as pointed out by the lower appellate Court in paragraph 15 of its judgment, the finding of the trial Court that the suit was not barred by limitation was not challenged before it. It is, therefore, manifest that the defendant had abandoned the plea of limitation in the Courts below. The plea of limitation has not also been raised in the grounds in the memorandum of appeal filed before this Court. It is raised for the first time only in the course of argument of this Second Appeal.
8. Now it is well settled that even though Sec. 3 of the Limitation Act is peremptory and the Court is required to dismiss a suit instituted after the prescribed period of limitation even though limitation has not been pleaded where the question of limitation is not one purely of law but is a mixed question of facts and law, it cannot be permitted to be raised for the first time in argument in Second Appeal. See the decision of the Supreme Court in Banarsi Das v. Kanshi Ram (AIR 1963 SC 1165, at P. 1170 of the report). Sri Chatterjee did not contest this proposition and fairly conceded that unless the aforesaid claim is barred by limitation on the basis of admitted facts and the plea did not require any investigation into facts he would not be entitled to raise this plea for the first time in Second Appeal after it was abandoned and not pressed in the Courts below. He, however, contended that on the averments in the plaint itself, the claim for the amount of Rupees 5000/- and odd covered by bill No. 94 dated 1-4-1962 was barred by limitation. I will assume for the purpose of this case, though the position is contented by Sri Ghosh appearing on behalf of the respondent, that the instant suit is governed by Article 14 of the Limitation Act. But still in my opinion, it cannot be held that even if the statements in the plaint are taken at their face value and accepted in their entirety, the aforesaid claim is barred by limitation.
9. The plaint clearly mentions that post dated cheques for the total amount of Rs. 5,274/- were issued by the defendant after the receipt by him of the bill No. 94 dated 1-4-1962, vide paragraph 5 of the plaint, though it admits that the aforesaid cheques were dishonoured. Paragraph 10 of the plaint runs thus:
“That the cause of action for this suit admitting arose on the dates on which supplies were made and also on 12-5-1952 when the defendant granted the aforesaid 3 post dated cheques, admitting the dues then standing……”
The plaint, therefore, clearly mentions that on 12-5-62 which admittedly was a date within the period of limitation the defendant had granted three post dated cheques admitting the dues then outstanding namely, the dues in respect of which bill No. 94 dated 1-4-62 for a sum of Rs. 5,472-71 had been submitted. This averment in my opinion, clearly amounts to an averment that on 12-5-1962 the defendant acknowledged in writing signed by him his liability in respect of the right of the plaintiff to recover from him the sums covered by the three cheques issued by him. It is true that the plaint does not in express term say that the cheques were signed by the defendant. It uses the expression that the cheques were “granted by the defendant”, but that means that the cheques were issued by the defendants and were signed by him. The specific expression that limitation was saved or that a fresh period of limitation commenced as the defendant acknowledged his liability to pay the amount claimed under bill No. 94 dated 1-4-1962 is not there in the plaint. But it is well settled that a person is required to plead facts and not law and any legal plea can be raised provided the necessary averments of facts in respect of that plea are contained in the pleadings.
10. Sri Chatterjee, however strenuously contended that as the cheques were dishonoured, the Issue of these cheques cannot be regarded as an acknowledgment of the liability in respect of the right to receive the payment in respect of the bill No. 94 dated 1-4-1962. My attention has not been drawn to any decision of the Supreme Court or of this Court in which the question whether the issue of a cheque which is sub-sequently dishonoured in purported payment of a debt amounts to an acknowledgment in writing of the right of the payee of the cheque to receive the amount of the debt in ostensible payment of which the cheque was issued was decided. In Arjun Lal Dhanji Rathod's case (AIR 1971 Pat 278) a learned single Judge of this Court held that the issue of a post dated cheque which is dishonoured does not extend the period of limitation by virtue of Section 20 of the Limitation Act 1908 as the cheque having been dishonoured there is no payment. The question whether the issue of the dishonoured cheque amounted to acknowledgment of the liability to pay the debt in satisfaction of which the cheque was issued was neither raised nor decided in that case. The question so far as this Court is concerned is, therefore, res integra and must be decided on general principles.
11. Before proceeding to consider whether the issue of the cheque which were dishonoured can be regarded as an “acknowledgment of liability” within the meaning of the expression as used in Section 18 of the Limitation Act, 1963 (hereinafter called ‘the Act’) I would like to state that it has not been disputed and indeed it cannot be disputed, that if the issue of the aforesaid cheques amounted to acknowledgment of liability, it was an acknowledgment of liability in respect of the right to receive the price for the goods supplied the price which was demanded by bill No. 94, D/- 1-4-1962. It cannot also be doubted that if the issue of the cheques amounts to acknowledgment of liability, the acknowledgment is an acknowledgment made in writing signed by the party against whom the right is claimed for the cheques were signed by the defendant and were drawn in favour of the plaintiff who claimed the right to receive the payment. The only question for decision, therefore, is if the issue of those dishonoured cheques amounted to an acknowledgment of liability to pay the debts due to the plaintiff on account of the price of goods supplied and billed for within the meaning of the expression as used in Section 18 of the Act.
12. Now what is an acknowledgment of liability to pay a debt? In the context of the English Law of Limitation the question was thus answered by Fry LJ in (1884) 26 Ch. D. 474:—
“In my view an acknowledgment is an admission by the writer that there is a debt owing by him either to the receiver of the later or to some other person or whose behalf the letter is received. It is not enough that he refers to a debt as being due from somebody. In order to take the case out of the statute, there must upon the fair construction of the letter, read by the light of the surrounding circumstances, be an admission that the writer owes the debt………”
Quoting this statement in Shapoor Fredoon Mazda v. Durga Prasad Chamaria (AIR 1961 SC 1236) Gajendragadkar, J., as he then was, speaking for the Supreme Court in that case, observed:
“With respect, it may be added, that this statement succinctly and tersely gives the substance of the provision contained in Section 19 of the Limitation Act”, (now section 18 of the new Act).
Therefore, in order to amount to an acknowledgment in writing the statement must be in writing and it must contain an admission by the writer that there is a debt owing by him either to the receiver of the document or to some other person on whose behalf the document is received. Now when a cheque is drawn by a person in settlement of the price of goods demanded from him by the person who had supplied the goods and was making the demand for payment of the price, at least in a case in which the cheque is honoured there can be no doubt that it amounts to and is an admission by the writer of the cheque that there is a debt owed by him to the person in whose favour the cheque has been drawn. Issuing a cheque, as pointed out by Subba Rao, C.J, as he then was. In Subrahmanyam v. Venkataratnam (AIR 1956 Andhra 105) “has now become the usual mode of payment”. When a person pays a sum of money which is demanded as the price of goods supplied, he certainly admits that there is a debt owing by him to the person to whom he makes the payment or on whose behalf the payment is received. As pointed out by S.K Ghosh, J., delivering the judgment of the Bench of the Calcutta High Court in Prafulla Chandra v. Jatindra Nath (AIR 1938 Cal 538)’ “although the fact of payment may be different from the acknowledgment if the cheque itself is evidence of the fact of payment it is also evidence of acknowledgment” (at page 539 of the report).
13. Now, can it be said that merely because the cheque is subsequently dishonoured, there is no admission of the liability of the debt in satisfaction of which the cheque purports to have been issued? In my opinion, it is impossible to accept the proposition that in no circumstance, issuing of a cheque which is subsequently dishonoured in settlement of certain debt can amount to an admission or acknowledgment of that debt. Whether there is an admission of the debt has to be determined with reference to the point of time at which the purported admission was made, that is to say, when the cheque was issued. An admission does not cease to be an admission merely because it is subsequently retracted. It may well be presumed that by issuing the post dated cheque which was subsequently dishonoured towards the payment of a debt, the drawer intended to make that payment and on account of certain supervening circumstances, the cheque was dishonoured. It may be that the drawer had not the necessary balance in the account even though at the time of issuing the cheque he had expected that he would have the necessary balance at the time the cheque would be presented for encasement. Or it may be that though he initially admitted the liability and intended to discharge that liability by making the payment by means of the cheque in the drawer subsequently decided not to make the payment and as in this case stopped payment of the cheque.
At least, in those cases where he did not have at the time of issuing the cheque an intention to deceive the person in whose favour the cheque was issued the issue of a cheque towards the payment of a debt operates as admission of the liability to pay that debt even though the cheque is dishonoured subsequently. The case, in which even at the time of issuing the cheque, the drawer had no intention to make the payment presents more difficulty. In such a case it may be argued that by issuing the cheque he was not making an admission of liability to pay the debt but was resorting to a subterfuge to get rid of an inconvenient creditor. But even in such a case, by issuing the cheque which he had no intention should be honoured, the drawer represented to the person to whom the cheque was issued that the cheque would be honoured on presentation and thus, intimated to him his admission of his liability to pay the debt in satisfaction of which the cheque was issued. That a person who was issuing the cheque in satisfaction of a debt was admitting his liability to pay the cheque is a reasonable, indeed the necessary inference to be drawn from the issue of the cheque. An admission according to Section 17 Evidence Act is a “statement, oral or documentary, which suggests any inference as to any fact in issue a relevant fact.” Whether a statement constitutes an admission has, therefore, to be determined with reference to the inference to be drawn from the statement and not with reference to the mental processes underlying or accompanying that statement. And, therefore, it may well be said even in such a case that the drawer of the cheque acknowledged or admitted his liability to pay the debt in satisfaction or part satisfaction of which he had issued the cheque. Such a conclusion is in accord with justice and equity.
By issuing a cheque which is dishonoured subsequently to the words of Krishnan, J., in Gori Lal v. Ramjeelal (AIR 1961 Madh Pra 346) the debtor has intended, and at all events represented to the creditor that the negotiable instrument is good, and thereby the creditor has for his part, been given a feeling of security with a fresh term of limitation. If one looks to the equity side of it a payment which the debtor means as a sheer pretence, but the creditor accepts as genuine, cannot, certainly deprive the latter of what Section 18 has already given him (Section 18 of the Act has been substituted for Section 20). At any rate, it cannot be held that in no event a cheque which has been subsequently dishonoured may amount to an acknowledgment of a liability within the meaning of the expression as used in S. 18 of the Act.
14. The conclusion that even a cheque which has been dishonoured may operate as acknowledgment of the debt to satisfy which it was issued finds support from the following passage in Banning on the Limitation of Actions, Edn. 3 P. 51:
“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.” (quoted with approval by S.K Ghose in Prafulla Chandra v. Jatindra Nath (AIR 1938 Cal 538) (supra) at Pp. 539-540 of the report).
15. Sri Chatterjee placed great reliance on the decision in Chintaman v. Sadguru (AIR 1956 Bom 553). In which their Lordships of the Bombay High Court observed “there is in our view no acknowledgment of liability merely by giving a cheque which is dishonoured and a cheque which is dishonoured cannot be regarded as part payment within the meaning of the Sec. 20 Limitation Act” (at p. 554 of the report). The view that a cheque which is dishonoured cannot be regarded as part payment may be correct though it was dissented from by a learned single Judge of the Madhya Pradesh High Court in Gorilal v. Ramjeelal (AIR 1961 Madh Pra 346) (supra) relying upon it. But for the reasons given already, I cannot assent to the proposition that in no circumstance there can be an acknowledgment of liability by giving a cheque which is dishonoured. Their Lordships of the Bombay High Court gave no reasons for their conclusion that there is no acknowledgment of liability in such a case if they meant to lay down any such proposition I must respectfully, dissent from it.
16. It follows, therefore, that the plaintiff had pleaded in the plaint that limitation, if any, was saved by the acknowledgment of liability of the debt in respect of which the demand was made by bill No. 94 dated 4-1-1962. If even a cheque which has been dishonoured can, even in certain circumstances amount to an acknowledgment of liability of the debt to satisfy which it is issued, the question whether the claim for the amount of Rs. 5,274.71 was not barred by limitation as the acknowledgment on 12-3-1962 provided a fresh period of limitation cannot be determined against the plaintiff merely on the basis of the averments in the plaint. It can be determined only if it is held that in the circumstances of this case, the payment did not amount to an acknowledgment of the liability of the debt aforesaid. I may mention that the lower appellate Court has held that the defendant had issued three post dated cheques which clearly proves that he had acknowledged the liability to pay the amount as mentioned in the cheques. The question of limitation raised by Sri Chatterjee, therefore, is not a pure question of law, but is a mixed question of law and facts, which cannot be determined at least in favour of the defendant without fresh investigation into facts. That being so, the plea of limitation raised by Sri Chatterjee, cannot be permitted to be raised for the first time in second Appeal and must be rejected.
17. Both the contentions raised by Sri Chatterjee having been found to be devoid of merit, the appeal must be dismissed. In view of the conclusion at which I have arrived it is not necessary to consider the other contention of Sri Ghosh namely, that the period of limitation governing this case was not that laid down in Article 14 or that even if Article 14 applied, on the finding of facts arrived at by the lower appellate Court limitation was saved by the provisions of Sections 18 and 19 of the Limitation Act or that at any rate, the petitioner was entitled to recovery of the amounts of the three cheques which were dishonoured the cause of action being the failure of the consideration under the three cheques on the lines on which the alternative relief was granted by the Bombay High Court in the Bombay case referred to above.
18. In the result, the appeal is without merit and it is, accordingly dismissed with costs.
Appeal dismissed.
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