Post-dated cheque limitation and money-lender loan definition: Supreme Court treated renewal liability as a loan and time from cheque date.

A promissory note executed in renewal of an earlier interest-bearing liability was treated as a loan within the Bihar Money-Lenders (Regulation of Transactions) Act, because the statutory definition of "loan" extended beyond a fresh advance to such renewal transactions; on that basis, the section 4 bar did not apply and the suit was maintainable. For limitation under section 20 of the Indian Limitation Act, 1908, a post-dated cheque accepted as conditional payment was effective only from the date it bore, since it could not be honoured earlier; the written acknowledgement also satisfied the statutory requirement. Limitation therefore ran from the cheque date and the suit was within time.

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Issues: (i) whether the suit was barred by section 4 of the Bihar Money-Lenders (Regulation of Transactions) Act, No. 7 of 1939; (ii) whether limitation under section 20 of the Indian Limitation Act, 1908 ran from the date the post-dated cheque was delivered or from the date it bore.

Issue (i): whether the suit was barred by section 4 of the Bihar Money-Lenders (Regulation of Transactions) Act, No. 7 of 1939.

Analysis: The expression "loan" in the Act was held to include not only an actual advance but also a transaction on a bond bearing interest executed in respect of past liability. The definition in section 2(f) was applied in full to section 4. A promissory note executed in renewal of an earlier liability and bearing interest was treated as a loan within the statutory meaning, and since the transaction in question occurred after registration as a money-lender, the bar under section 4 did not apply.

Conclusion: The suit was not barred by section 4 and was maintainable.

Issue (ii): whether limitation under section 20 of the Indian Limitation Act, 1908 ran from the date the post-dated cheque was delivered or from the date it bore.

Analysis: The payment by cheque was treated as conditional payment. Where a cheque is post-dated and is not accepted as unconditional payment, it cannot operate as payment before the date it bears, because it is not capable of being honoured earlier. For section 20, the relevant date was therefore the earliest date on which the cheque could validly be presented and honoured, namely the date written on the cheque. The acknowledgement in writing also satisfied the statutory requirement.

Conclusion: Limitation began on the date borne by the post-dated cheque, so the suit was within time.

Final Conclusion: The appeal failed on both substantial questions and the decree in favour of the respondent was upheld.

Ratio Decidendi: For a post-dated cheque accepted as conditional payment, the date of payment for the purpose of section 20 of the Indian Limitation Act, 1908 is the date the cheque bears, not the date of delivery; and a promissory note executed in renewal of a past liability is a loan within section 2(f) of the Bihar Money-Lenders (Regulation of Transactions) Act, No. 7 of 1939.

Dissenting Opinion: Bachawat J. held that a conditional cheque operates as payment from the date of delivery, even if post-dated, and therefore limitation began on the date of delivery; on that view the suit was time-barred and the appeal should have been allowed.

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