TaxTMI 
TaxTMI 
1960 (9) TMI 107
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.... Act, and does not give a fresh term of limitation, unless the cheque is honoured and the money is realised. As in this case the cheque concerned was not honoured, limitation was not saved under Section 20 and the plaintiff's suit stood time- barred. The appellate Court did not consider whether the plaintiff could have been granted any relief on the fact of the cheque itself being dishonoured; the plaintiff himself had not made that prayer in so many words. ( 2. ) The facts of the case are the following: It is common ground that the plaintiff advanced a loan of ₹ 1000/- in cash on 11-6-1952. There was a receipt and interest was to be at one per cent. On 10-7-1953 the defendant passed a cheque for one thousand rupees written by hi....
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....or cheque or pro-note (or any such negotiable instrument) is given, one sense is that it is payment, because it represents money and the parties intend that as soon as it goes into the hands of the creditor, the debt should be washed out. The other sense is in regard to the ultimate effect. In the latter sense (but not in the former) payment by a negotiable instrument is at the first instance conditional; only when the cheque or bill is honoured does the creditor really benefit by it, i.e., is paid in the latter sense. If they are dishonoured, then original loan is revived. A good deal of confusion will be saved by remembering that it is possible to have payment in first sense without its turning out ultimately to be one in the second sense....
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....s not necessary that it must also be stated that the payment is towards a particular debt. Hence a cheque accepted by payee operates as payment as well as acknowledgment of payment in the handwriting of the person making the payment". Similarly the older view held in Mackenzie v. Tiruvengadathan, ILR 9 Mad 272 was overruled in Kandaswami Mudaliar v. Thevammal, AIR 1936 Mad 848 and the principle laid down was that: "Payment under Section 20, may be made in any form and a pro-note can be given by way of payment. The writing of the pro-note need not specify that the payment was made towards interest or principal". No fully reported case from the Nagpur High Court has been placed before me, but in a short-note case in Kisanlal v.....
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....o link Section 20 with the subsequent honouring of the negotiable instrument would indeed lead to absurd results. 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 it turns out that the debtor's negotiable instrument is dishonoured (or as for that matter the currency notes that he has given turn out to be counterfeit) this fresh term of limitation cannot be blocked. Again, 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 20 has already ....
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....Sang-ram Singh v. Election Tribunal, (S) AIR 1955 SC 425 are worth quoting: "A code of procedure must be regarded as such it is procedure something designed to facilitate justice and further its ends; not a penal enactment for punishment and penalties; not a thing designed to trip people up. Too technical a construction of sections that leaves no room for reasonable elasticity of interpretation should therefore be guarded against (provided always, that justice is done to both sides) lest the very means designed for the furtherance of justice be used to frustrate it". Thus if I had held that the dishonouring of the debtor's cheque disentitles the creditor to the fresh period of limitation given by Section 20, I would have gr....