Limitation and dishonoured cheques: principal recovery claim barred, but limited relief sustained on the cheque amount.

The principal recovery claim was barred by limitation because the suit was filed more than three years after the invoices fell due, and dishonoured cheques did not extend limitation under the binding Bombay High Court precedent. However, the claim on the four dishonoured cheques remained within limitation, the statutory presumption of consideration applied and was not rebutted, and the plaintiff was entitled to lesser relief even though the full claim failed. Relief was therefore confined to the cheque amount with reasonable interest, while the bar against the principal claim was maintained.

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Issues: (i) Whether the suit for recovery was within limitation on the basis that the defendant had issued cheques acknowledging liability, though those cheques were dishonoured; (ii) Whether the plaintiff was entitled to any relief in respect of the dishonoured cheques notwithstanding that the principal claim was barred by limitation.

Issue (i): Whether the suit for recovery was within limitation on the basis that the defendant had issued cheques acknowledging liability, though those cheques were dishonoured.

Analysis: The invoices showed that the cause of action on the principal claim arose from the dates on which payment became due, and the suit was filed beyond three years from the latest due date. The Court held that the earlier Bombay decision remained binding within its territorial jurisdiction and that dishonour of cheques did not extend limitation under the governing limitation provision. The contrary view taken by other High Courts did not displace that binding precedent for the Court.

Conclusion: The principal claim was barred by limitation and the finding of the trial Court on that aspect was upheld.

Issue (ii): Whether the plaintiff was entitled to any relief in respect of the dishonoured cheques notwithstanding that the principal claim was barred by limitation.

Analysis: The four cheques were issued in response to the demand notice and stood dishonoured within a period that kept the claim on those cheques within limitation. The cheque amount attracted the statutory presumption of consideration, which was not rebutted. The Court further held that a plaintiff may be granted lesser relief even if the full claim cannot be decreed, and interest on that limited sum should be awarded at a reasonable rate.

Conclusion: Relief was granted for the cheque amount of Rs. 4,00,000 with interest at 10% per annum, against the defendant.

Final Conclusion: The appeal succeeded only in part, the dismissal of the principal claim was maintained, and the decree was confined to the amount represented by the dishonoured cheques with costs.

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