Part-payment by honoured cheque saves limitation where the payment is proved and the debt is partly extinguished.

A cheque delivered and honoured in part-payment of principal operates as payment when honoured and to that extent extinguishes the debt, with revival only if dishonoured on presentation. On the facts, the debtor's cheque was paid before expiry of the prescribed period, so part of the principal had been paid within section 20 of the Indian Limitation Act and limitation was saved. The proviso requiring the fact of payment to appear in the payer's handwriting was treated as satisfied because the payment was made by cheque. The argument based on appropriation of payment and separate causes of action in a running account was rejected as inconsistent with the true character of such accounts.

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Issues: Whether a cheque given and honoured in part-payment of principal amounted to payment sufficient to save limitation under section 20 of the Indian Limitation Act.

Analysis: A cheque delivered and received as payment operates as payment when honoured, and to that extent extinguishes the debt, subject only to revival if dishonoured on presentation. On the facts, the cheque was paid, so part of the principal had been paid by the debtor to the creditor before expiry of the prescribed period. The proviso requiring the fact of payment to appear in the handwriting of the person making it was satisfied because the payment itself was made by the cheque. The further contention based on appropriation of payment and separate causes of action in a continuous account was rejected as inconsistent with the true character of such accounts.

Conclusion: The cheque constituted part-payment within section 20, limitation was saved, and the appeal failed.

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