P. Sathasivam, J.@mdashSince the issues involved in all the appeals are inter-connected and parties are also same, all the appeals may be
disposed of by the following common order.
2. A.S. No. 308 of 1982 is filed by the defendant in O.S. No. 6335 of 1979 on the file of XIIth Assistant Judge, City Civil Court, Madras, against
the decree for Rs. 10,533 together with interest at 24 per cent. from the date of plaint till the date of decree and thereafter 6 per Lent. till the date
of realisation with proportionate costs.
3. A.S. No. 434 of 1982 is filed by the defendant in O.S. No. 6332 of 1979 on the file of XIIth Assistant Judge, City Civil Court, Madras, against
the decree for Rs. 10,032 together with interest at 24 per cent. from the date of plaint till the date of decree and thereafter 6 per cent. till the date
of realisation with proportionate costs.
4. A.S. No. 637 of 1981 is filed by the defendant in 0.5. No. 6334 of 1979 by the XIth Assistant Judge, City Civil Court, Madras, against the
decree for Rs. 13,720 together with interest on Rs. 10,000 at 18 per cent. from the date of plaint till the date of realisation with proportionate cost.
5. A.S. No. 639 of 1981 is filed by the defendants against the decree in O.S. No. 6338 of 1979 on the file of XIth Assistant Judge, City Civil
Court, Madras, for Rs. 13,760 together with interest on Rs. 10,000 at 24 per cent. from the date of the plaint till the date of realisation with
proportionate costs.
6. A.S. No. 640 of 1981 is filed by the defendant in O.S. No. 6339 of 1979 on the file of XIth Assistant Judge, City Civil Court, Madras, for -
Rs. 13,720 together with interest on Rs. 10,000 at 24 per cent. from the date of the plaint till the date of realisation with proportionate cost.
7. A.S. No. 821 of 1982 is filed by the plaintiff in O.S. No. 6332 of 1979 on the file of XIIth Assistant Judge, City Civil Court, Madras, with
regard to rate of interest only.
8. A.S. No. 822 of 1982 is filed by the plaintiff in O.S. No. 6335 of 1979 on the file of XIIth Assistant Judge, City Civil Court, Madras, with
regard to rate of interest only.
9. Transferred Appeal No. 888 of 1982 is filed by the defendant in O.S. No. 6337 of 1979 on the file of XIth Assistant Judge, City Civil Court,
Madras, against the decree for Rs. 4,113 with interest on Rs. 3,000 at 24 per cent. from the date of the plaint till the date of realisation with
proportionate costs. The said appeal has been filed initially before the Principal Judge, City Civil Court and, thereafter, as per the order of this
court the same has been transferred and numbered in this court as Transferred Appeal No. 888 of 1982 for joint disposal with the above
mentioned appeals.
10. Since A.S. Nos. 308 of 1982, 434 of 1982, 821 of 1982 and 822 of 1982, have been filed against O.S. Nos. 6335 of 1979 and 6332 of
1979 by the defendant and plaintiff, all the four appeals may be considered together.
11. The facts leading to the filing of A.S. No. 308 of 1982 are briefly stated hereunder :
12. In this appeal the respondent is the plaintiff and he filed the said suit for recovery of a sum of Rs. 14,546 together with interest at 24 per cent.
per annum over Rs. 10,500 from the date of plaint till the date of realisation, and also for costs of the suit. According to him, on July 5, 1977, the
defendant (appellant herein) borrowed a sum of Rs. 3,500 from the plaintiff by discounting his cheque bearing No. CA/A 003956 leaving the date
blank and to be post-dated as August 5, 1977, drawn on Nedungadi Bank Limited, T. Nagar, Madras-17. The defendant agreed to pay interest
at 24 per cent. per annum over the said borrowings and paid interest at the first instance till March 4, 1977. Again, on the same day, the defendant
borrowed a sum of Rs. 7,000 from the plaintiff by discounting his cheque bearing No. CA/A 003957 leaving the date blank and to be post-dated
as August 5, 1977, drawn on the aforesaid bank. Here also the defendant has agreed to pay interest at 24 per cent. per annum and in fact paid
interest till August 4, 1977. On August 4, 1977, the defendant requested the plaintiff to postpone the presentment of the cheques for encashment
for one month, i.e., till September 4, 1977, and paid interest over the total borrowing of Rs. 10,500 till September 4, 1977. Likewise, on every
fourth of the succeeding month, the defendant has been making representation to postpone the presentation of the cheques by one month and paid
interest over the said sum of Rs. 10,500 for every month till January 4, 1978. It so happened that those cheques and many other cheques were
seized by the Income Tax Department in January, 1978, and were returned to the plaintiff only on July 25, 1979. Therefore, the cheque could be
presented for collection on July 26, 1979, but the same was returned with bank memo out of date"". Immediately the plaintiff issued a telegraphic
notice to the defendant demanding payment. The defendant sent a reply with untenable allegations. The amount due by the defendant including
interest works out to Rs. 14,546 as on date of plaint. Therefore, the plaintiff is constrained to file the suit for recovery of the said sum of Rs.
14,546 with future interest and costs of suit against the defendant.
13. The defendant filed a written statement wherein it is contended that he had no occasion to meet the plaintiff. The defendant never borrowed
from the plaintiff a sum of Rs. 5,500 by discounting his cheque leaving the date blank and post-dated as August 5, 1977. The defendant never
discounted any cheque and obtained any consideration on the suit cheques. The plaintiff''s father, Muthiah Chettiar, with whom the defendant has
certain transactions earlier, was in possession of certain blank cheques issued by the defendant and the plaintiff has utilised the same for putting
forth a fictitious claim. The defendant never agreed to pay interest and the claim of interest at 24 per cent. per annum is against the provisions of
section 80 of the Negotiable Instruments Act. The defendant has also denied the statement that he approached the plaintiff and asked for
postponement of the presentation of the cheques. On the other hand, after the death of the plaintiff''s father, the defendant demanded one
Sivalingam, son of the said Muthiah Chettiar, to return the cheques and the said Sivalingam promised to return the same after having received from
the Income Tax Department. Believing his representation as true, the defendant did not issue any notice for the return of the documents. The
plaintiff issued a bald notice for which the defendant has sent a reply denying the liability. The said Sivalingam has made his brother ? the plaintiff to
present the cheques and file the suit as if there was a borrowing on the dates mentioned therein. The suit transaction never took place and there is
no liability hence prayed for dismissal of the suit with costs.
14. The facts leading to the filing of A.S. No. 434 of 1982 are briefly stated hereunder. The plaintiff as well as the defendant have raised identical
contentions as in the earlier appeal. Hence I am not repeating the same once again. No doubt, the date of transaction and cheque number alone
varies in this matter.
15. Both the suits, namely, O.S. Nos. 6332 of 1979 and 6335 of 1979 were taken up and disposed of jointly by the learned XIIth Assistant
Judge, City Civil Court, Madras. The plaintiff in O.S. No. 6335 of 1979, namely Thiyagarajan, was examined as P.W. 1 and K. Rajagopal,
defendant in both the suits was examined as D.W. 1. The plaintiff has marked exhibits A-i to A-b in support of his claim and the defendant has not
marked any document. The learned trial judge after framing necessary issues and in the light of the oral and documentary evidence granted a
decree for Rs. 10,032 with proportionate costs together with future interest at 6 per cent. per annum over Rs. 10,000 from the date of suit till the
date realisation in O.S. No. 6332 of 1979. Likewise, a decree for Rs. 10,533 with proportionate costs together with future interest at 6 per cent.
per annum over Rs. 10,500 from the date of suit till the date of realisation was granted in O.S. No. 6335 of 1979.
16. The very same plaintiff in both the suits aggrieved by the rate of interest filed A.S. Nos. 821 of 1982, 822 of 1982. There is no need to narrate
the facts once again in these appeals also.
17. The points for consideration in all the four appeals, namely, A.S. Nos. 308 of 1982, 434 of 1982, 821 and 822 of 1982, are (1) whether the
defendant has borrowed the suit claim from the plaintiff by discounting the suit cheques, (2) whether the decree granted by the trial court is
justified, (3) whether the defendant is entitled to interest at 24 per cent. till the date of realisation instead of 6 per cent. as awarded by the trial
court.
18. The facts leading to the filing of A.S. No. 637 of 1981 are briefly stated hereunder :
19. According to the plaintiff, on July 4, 1977, the defendant borrowed a sum of Rs. 10,000 by discounting his cheque leaving the date blank to be
post-dated as August 4, 1977, drawn on Indian Bank, Madras-17, the cheque bearing No. 70-AB/930438. The said cheque was seized by the
Income Tax Department in January, 1978, and returned to the plaintiff on July 25, 1979. Then the suit cheque came to be collected, but was
returned with the bank memo ""out of date"". Immediately the plaintiff sent a telegraphic notice demanding immediate payment, but the defendant
sent a false reply. Hence, the plaintiff has filed the suit as stated above The defendant filed a written statement wherein it is contended that he had
no occasion to meet the plaintiff, nor to borrow any amount from the plaintiff. It is also contended that the defendant never discounted any cheque
and obtained any consideration on the cheque. The plaintiff''s father, Muthiah Chettiar, with whom he had certain transactions earlier, was in
possession of certain blank cheques issued by the defendant and the plaintiff has utilised the same for putting forth a fictitious claim. The defendant
never agreed to pay interest and the claim of interest at 24 per cent. per annum is against the provisions of section 80 of the Negotiable Instruments
Act. Therefore, the defendant prayed for dismissal of the suit with. costs. The trial court decreed the suit for Rs. 13,720 together with interest on
Rs. 10,000 at 18 per cent. from the date of plaint till the date of realisation with proportionate costs. Aggrieved by the said decree, the defendant
has filed the above appeal.
20. The facts leading to the filing of A.S. No. 639 of 1981 are briefly stated hereunder :
21. According to the plaintiff, the first defendant borrowed a sum of Rs. 10,000 on February 16, 1977, discounting the cheque for the sum drawn
by the second defendant in her favour. The defendants requested the plaintiff to fill up the date on the defendant''s advice. The defendants were
requesting the plaintiff to postpone the presentment of the cheque and paid interest ending January 11, 1978, at the rate of 24 per cent. In January,
1978, there was a raid by the Income Tax Department and this cheque along with other cheques was seized. The cheque was returned only on
July 25, 1979, and the same was presented for collection on July 26, 1979. The cheque was returned with the endorsement ""out of date"". To the
notice issued by the plaintiff intimating the fate of the cheque and demanding the immediate payment, the second defendant caused a notice through
lawyer on July 29, 1979, alleging false and untenable objections. Hence the plaintiff has filed the above suit. In the written statement the defendant
contended that the first defendant had not bar-rowed from the plaintiff any money on February 10, 1977, much less the sum of Rs. 10,000
discounting the suit cheque. The first defendant has also denied the statement that he had left blank cheques with the plaintiff. There is no
consideration fur the suit cheque nor the first defendant did borrow any amount from the plaintiff. It is a fictitious claim. The defendant never agreed
to pay any interest much less at the rate of 24 per cent. per annum. They prayed for dismissal of the suit. The trial judge on the basis of the oral and
documentary evidence, decreed the suit as prayed for with costs. Aggrieved by the said decree, the defendants filed the above appeal.
22. The facts leading to the filing of A.S. No. 640 of 1981 are briefly stated hereunder :
23. According to the plaintiff, the defendant on July 10, 1977, borrowed a sum of Rs. 10,000 from him by discounting his cheque bearing No.
74/BG-924055 leaving the date blank to be post-dated drawn on Indian Bank, Madras-i 7. According to him, this cheque along with other
cheques were seized by the Income Tax Department and returned only on July 25, 1979. When the same was presented for collection, it was
returned on July 26, 1979, with the bank''s memo ""out of date"". Thereafter, the plaintiff sent a telegraphic notice demanding the payment, to which
the defendant sent a reply denying the borrowing from the plaintiff and alleging transaction only with the plaintiff''s father, but pleading that the
transactions were closed as early as 1978. Hence, the plaintiff has filed the above suit. In the written statement, the defendant contended that he
had no occasion to meet the plaintiff nor to borrow any amount from him. The transactions referred to in the plaint are totally false and incorrect.
The defendant never discounted any cheque and obtained any consideration on the cheque. The plaintiff''s father, Muthiah Chettiar, with whom he
had certain transactions was in possession of certain blank cheques issued by the defendant and the plaintiff has utilised the same for putting forth a
false claim. He had never agreed to pay interest and the claim of interest at 24 per cent. is against the provisions of section 80 of the Negotiable
Instruments Act. The trial court on the basis of the or and documentary evidence decreed the suit as prayed for with costs. Aggrieved by the said
decree, the defendant has filed the above appeal.
24. The facts leading to the filing of Transferred Appeal No. 888 of 1982 are briefly stated hereunder
25. It is contended by the plaintiff that the defendant borrowed a sum of Rs. 5,000 from the plaintiff-company on August 10, 1977, discounting his
cheque bearing the date blank and to be post-dated on September 10, 1977, drawn on Indian Bank, T. Nagar, Madras-17, the cheque number
being 74/BG/924056. The present cheque along with other cheques were seized by the Income Tax Department and the same was returned to
him on July 25, 1979. The suit cheque was presented for collection on July 26, 1979, and the same was returned with the bank''s endorsement out
of date"". The plaintiff sent a telegraphic notice to the defendant demanding immediate payment to which the defendant sent a reply disputing the
claim made by the plaintiff. In such a circumstance, he has filed the present suit. In the written statement the defendant contended that he had no
occasion to meet the plaintiff nor to borrow any amount from him. The transaction referred to in the plaint is totally incorrect and false. The
defendant never discounted any cheque and obtained any consideration on the suit cheque. Here also it is contended that the plain-tiff''s father,
Muthiah Chettiar ? with whom the defendant had certain transactions was in possession of certain cheque leaves with blank dates and now the
plaintiff has utilised the same for putting forth a fictitious claim. The defendant never agreed to pay interest and in any event the claim at 24 per cent.
is against the provisions of section 80 of the Negotiable Instruments Act. With these averments, he prayed for dismissal of the suit. The trial court
on the basis of the oral and documentary evidence, decreed the suit as prayed for with costs. Aggrieved by the said decree, the defendant has filed
an appeal before the Principal Judge, City Civil Court, Madras. In view of the pendency of the other appeals before this court, on direction by this
court, the said appeal has been transferred to this court and numbered as Transferred Appeal No. 888 of 1982.
26. In the light of the above pleadings, I have heard R. Krishnaswamy, learned counsel for the appellants in A.S. Nos. 308 of 1982, 434 of 1982,
637 of 1901, 639 and 640 of 1901 and Transferred Appeal No. 888 of 1902, P. L. Muthiah, learned counsel for the respondents in the said
appeals and the appellants in A.S. Nos. 821 and 822 of 1982.
27. In all these cases the defendant has admitted the signature in the suit cheques. Even though the defendant has admitted his signature in the suit
cheques, it is his case that he had transaction with one Muthiah Chettiar, father of the plaintiff and with regard to the said earlier transaction he had
a number of signed blank cheques. The said cheques have been concocted and made up by the plaintiffs in all the above proceedings. The said
Muthiah Chettiar, died in the middle of January, 1978. It is admitted by the defendant that he did not fill up the date, the payee''s name and the
figure in words in the subject matter of the cheques. However, it is the specific evidence of the plaintiff as P.W. 1 that he was authorised by the
defendant to post-date the cheque and it is he who filled up the date, payee''s name and the figures in words in those cheques. As rightly observed
by the court below there is no specific denial in the written statement of the defendant about the drawing of cheques under exhibits A-l to A-3 in
O.S. Nos. 6332 and 6335 of 1979 Apart from this, all the above loan transactions were shown in Income Tax returns by the respective parties
submitted to the Income Tax Department. The defendant as D.W. 1 has stated that on each and every occasion he used to borrow money on
discounting cheques and he did not issue any notice for the return of the documents. He has not produced the counter-foil of the cheques before
the court. In other words, the defendant has not rebutted the presumption that the suit cheques are supported by consideration. As contended by
the defendant, if really the accounts were already settled even prior to January, 1978, nothing prevented the defendant to get return of the
documents even prior to the Income Tax raid conducted by the Income Tax Department in the house of the plaintiffs. Likewise, he has not sent any
notice calling upon the plaintiff or his father, Muthiah Chettiar, before his death to return the blank cheques. There are enough materials to hold that
suit cheques were not given to Muthiah Chettiar, and the defendants have borrowed amounts from the plaintiff by discounting the suit cheques.
Before going into the oral evidence, I shall consider the legal position advanced by both the counsel.
28. Relying on a decision in I. Armugam Vs. Channagiri N. Govindaraj Shetty, , R. Krishnaswamy, learned counsel for the appellants in some of
the appeals contended that mere payment by cheque is not a prima fade evidence of advancing loan. It is true that the Division Bench in the said
decision have concluded thus (page 349):
No doubt it is stated by learned authors Sriyuthus Bhashyam and Adiga thus :
`Prima facie all payments by cheque are to extinguish an existing debt, not to create a new one. Hence a cheque presented and paid is of itself no
evidence of money lent or advanced by the banker to the customer, on the other hand, it is prima facie evidence of the repayment of money
previously lodged by the customer in the banker''s hands, except perhaps, when the cheque was paid without funds or when the payment itself
creates an overdraft. Nor again a paid cheque is in itself an evidence of a loan by the drawer to the payee. Yet it may be shown by other evidence
that the cheque was in fact loaned to him.''
There is no doubt that mere payment by cheque is not a prima facie evidence of advancing loan because the cheque is deemed to have been issued
on consideration. As such there cannot be any quarrel with the statement of law made by the aforesaid authors. However, it is necessary to
remember that it is not an irrebuttable presumption of law. It is permissible in law to show by other evidence that the cheque issued was not to
extinguish the existing debt but it was for the money lent. Learned authors have also recognised this aspect as is clear from the last underlined
portion. The plaintiff may adduce other direct evidence to rebut this presumption or rely upon the defence pleaded by the defendant and the
evidence adduced by the defendant.
29. In this case, the defendant has not disputed the signature in all the cheques which are the subject-matter of the suits. In such a situation, the
burden is on the defendant to show that no consideration was passed on for the above loans. In this case the plaintiff has produced account books
and ledgers in order to show that loan amount was advanced to the defendant on the particular date. A careful perusal of the account books and
ledgers show that at the relevant point of time the plaintiff had advanced money to the defendant.
30. Apart for the respondent/plaintiff contended that inasmuch as a cheque is a negotiable instrument as per section 13 of the Negotiable
Instruments Act, in view of section 118 unless and until the contrary is proved, it is presumed that the said negotiable instrument was made or
drawn for valid consideration. Section 13(1) of the Negotiable Instruments Act (hereinafter referred to as ""the Act"") reads thus
13. Negotiable instrument - (1) A ''negotiable instrument'' means a promissory note, bill of exchange or cheque payable either to order or to
bearer.
31. Likewise, section 118 of the Act reads as follows
118. Presumptions as to negotiable instruments-Until the contrary is proved, the following presumptions shall be made
(a) of consideration :- that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been
accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred, for consideration
(b) as to date. - that every negotiable instrument bearing a date was made or drawn on such date
(c) as to time of acceptance. - that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
(d) as to time of transfer - that every transfer of a negotiable instrument was made before its maturity
(e) as to order of endorsement 1. - that the indorsements appearing upon a negotiable instrument were made in the order in which they appear
thereon
(f) as to stomps. - that a lost promissory note, bill of exchange or cheque was duly stamped
(g) that holder is a holder in due course. - that the holder of a negotiable instrument is a holder in due course : provided that, where the instrument
has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from
the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in
due course lies upon him.
32. In the light of the specific provision namely sections 13 and 118 of the Act, I shall consider the following decisions referred to by learned
counsel for the respondents.
33. In Heerachand Vs. Jeevraj and Another, a Full Bench of the Rajasthan High Court has held thus (page 4) :
.... the presumption of consideration u/s 118(a) is that the court shall presume a negotiable instrument to be for consideration and shall regard the
consideration as proved unless and until it is disproved
34. In Kundan Lal Rallaram v. Custodian, Evacuee Property AIR 1961 SC 1316, it is observed thus (headnote) -
Section 118 lays down a special rule of evidence applicable to negotiable instruments. The presumption is one of law and thereunder a court shall
presume, inter alia, that the negotiable instrument or the endorsement was made or endorsed for consideration. In effect it throws the burden of
proof of failure of consideration on the maker of the note or the endorser, as the case may be"".
35. In Subba Narayana Vathiyar v. Ramaswami Aiyar [1907] 30 ILR 88 a Full Bench has held thus :
In a suit on a negotiable instrument by the payee named therein or the indorsee, it is not open to the defendant to plead that such payee or
indorsee is a mere benamidar"".
36. In S. Perumal Chettiar Vs. T. Santhanam, it is held thus :
Though the question whether a statutory presumption is rebutted by the rest of the evidence is a question of fact, the presumption is not left to the
discretion of the court, and in every suit on a Negotiate instrument, the court shall presume that such instruments were made, drawn, accepted or
negotiated for consideration, so much so, it has been held that where the lower court ignored the presumption and found that the instrument was
not supported by consideration, the decision regarding consideration was vitiated"".
37. In AIR 1938 123 (Privy Council) it is held in the following manner (headnote) :
Where a promissory note has been given consideration is to be presumed and the burden to prove that there was no consideration for the
promissory note is upon the executant.
38. In Lakhmi Das Vs. Lakho Ram and Another, , it is held as follows (page 411) :
As the document is a promissory note a presumption arises u/s 118(a) of the Negotiable Instruments Act that it was made for consideration. The
lower court has not taken this presumption into account because it did not hold the document to be a promissory note. The decision therefore on
the question whether there was consideration or not has been vitiated by the failure to consider this presumption of law.
39. In Marimuthu Kounder Vs. Radhakrishnan and Others, , the Kerala High Court made the following observation (page 660 of 68 Comp Cas) :
Section 118 of the Negotiable Instruments Act is mandatory in nature, though it deals with a presumption. A presumption has always a limitation
in the sense that only in very exceptional cases, there will be an irrebuttable presumption. It is difficult to say that the presumption in section 118 of
the Negotiable Instruments Act is a presumption against which no evidence can be adduced in order to take away the rigour of the presumption. In
other words, it is a rebuttable presumption, but imperative in its terms and so, the presumption under it continues with all its rigour until the contrary
is proved. The reason for the presumption is that a negotiable instrument passes from hand to hand on endorsement and it would make trading very
difficult and the negotiability of the instrument impossible, unless such a presumption was made. Passing of consideration must be presumed in a
negotiable instrument then alone the instrument can earn the hall-mark of negotiability. Such a presumption has therefore to be made. So the
principle is embedded as a rule of equity, justice and good conscience and it is said so by courts even where a presumption under the Act as such
was not available.
40. In Surjit Singh v. Ram Ratan Sharma AIR 1975 Gau 14, it is held thus (headnote) :
Although, u/s 118 payment of the consideration under a promissory note is presumed,. it is the burden of the defendant to disprove it.
Similarly, when the plea of repayment is taken by a defendant, the burden is upon him to prove the plea.
41. In the light of the above legal position inasmuch as in all the suit transactions the defendant has admitted the signatures in the suit cheques,
section 118 of the Act comes into operation. In such circumstances, it is for the defendant to substantiate and prove that those cheques were not
supported by any consideration. Except the oral and interested evidence of D.W. 1, no other material was placed before the court in support of his
defence. As a matter of fact, in an earlier suit filed by one Sivalingam, against K. Gopi and K. Rajagopal, after taking the identical defence there
also, the present defendant submitted to the decree and accordingly the decree was passed and he has also deposited the amount. The said
judgment has been marked as exhibit A-6, dated January 23, 1980, by the plaintiff. Having submitted to the decree in the earlier suit and having
taken a similar defence it is not possible to accept the case of the defendant in the later cases. The reliance on exhibit A-6 by the trial court is well-
founded.
42. No doubt the learned counsel for the appellant/defendant contended that mere issuance of cheques is not sufficient, the same has to be
presented within a reasonable time. In this regard section 84 of the Act is relevant which runs as follows
84. When cheque not only presented and drawer damaged thereby. -
(1) Where a cheque is not presented for payment within a reasonable time of its issue, and the drawer or person on whose account it is drawn had
the right, at the time when presentment ought to have been made, as between himself and the banker, to have the cheque paid and suffers actual
damage, through the delay, he is discharged to the extent of such damage, that is to say, to the extent to which such drawer or person is a creditor
of the banker to a larger amount than he would have been if such cheque had been paid.
(2) In determining what is a reasonable time, regard shall be had to the nature of the instrument, the usage of trade and of bankers, and the facts of
the particular case.
(3) The holder of the cheque as to which such drawer or person is so discharged shall be a creditor, in lieu of such drawer or person, of such
banker to the extent of such discharge and entitled to recover the amount from him.
43. As per section 84(2) of the Act, the reasonable time with regard to the nature of the instrument, the usage of trade and of bankers is six
months. The said fact has not been disputed by both sides. In this case it is the evidence of the plaintiff as P.W. 1 that on January 11, 1978, a raid
was conducted by the Income Tax Department and most of the documents including the suit cheques have been seized by the Income Tax
Department. It is the specific contention of the plaintiff that only on July 25, 1979, the Income Tax Department returned the documents including
the suit cheques. Immediately on July 26, 1979, the suit cheques were presented for collection.
44. Those cheques were returned with the bank''s memo ""out of date"". The plaintiff sent a telegraphic notice demanding the defendant to pay the
loan amount with interest. No doubt, the defendant sent a detailed reply disputing the payment of loan etc. It is also the case of the plaintiff that
apart from the raid by the Income Tax Department and seizure of most of the documents including the suit cheques, he has also lost his father
during the relevant point of time. By relying on section 75A of the Act, it is contended that the operation of section 73 is excused. Section 73 of the
Act runs as follows
73. Presentment of cheque to charge any other person. - A cheque must, in order to charge any person except the drawer, be presented within a
reasonable time after delivery thereof by such person.
Section 75A reads thus :
75A. Excuse for delay in presentment for acceptance or payment. - Delay in presentment for acceptance or payment is excused if the delay is
caused by circumstances beyond the control of the holder, and not imputable to his default, misconduct or negligence. When the cause of delay
ceases to operate, presentment must be made within a reasonable time."" -
45. In the light of averments in the various plaints coupled with the oral evidence of P.W. 1 and in the light of section 75A of the Act, the action of
the plaintiff in not presenting the cheque in time is liable to be excused.
46. Now I shall consider the oral evidence of both parties with regard to their respective case. With regard to the earlier decree in O.S. No. 6900
of 1978 one M. Natarajan, who was examined as P.W. 1 deposed thus
* * *
47. With regard to signature of the defendant in the suit cheques, K. Rajagopal, was examined as D.W. 1. He has deposed in chief-examination
thus :
* * * *
48. The learned counsel for the plaintiff has also relied on exhibit A-20, dated November 27, 1980, which is a letter sent by the Indian Bank in
respect of the defendant''s accounts and his balance accounts and the same is extracted hereunder :
Exhibit A-20 - November 26, 1980 - Indian Bank letter in respect of the first defendant''s account and his balance account.
INDIAN BANK
Theagarayanagar Office
The City Civil Judge, 26th November, 1980
Madras.
Dear Sir,
We hereby certify that a cheque book containing leaves from 924051 to
924100 was issued to Mr. K. Rajagopal, No. 37, Anandan Street, T.
Nagar, Madras-17, on 10-8-1976 in respect of his current account and
that the said account now runs with nil balance.
Yours faithfully.
(Sd.) .........
Manager.
49. The cheque numbers mentioned in exhibits A-9, A-11, A-2 etc., in the light of exhibit A-2 referred to above clearly show that all of them were
issued by the Indian Bank to K. Rajagopal (defendant) on August 10, 1976, in respect of his current account. No doubt R. Krishnaswamy,
learned counsel for the appellants submitted that there is no proof how the above document has been called for from the bank and through whom
the same has been marked. However, the fact remains the said document has been marked as exhibit A-20, dated November 26, 1980, and there
is no proof from the record that no such objection was taken at the appropriate time before the trial court. Accordingly, I am unable to appreciate
the objection of the learned counsel for the appellants at this stage.
50. In the light of the above factual position and in view of the provisions of the Negotiable Instruments Act referred to above. I hold that the
defendant in each case had borrowed money from the plaintiff as claimed by the plaintiff, and accordingly, I confirm the finding of the trial court in
all the above suits with regard to the above aspects.
51. Regarding the payment of interest, admittedly there is no agreement or any written deed. No doubt, the case of the plaintiff is that since the
defendant could not pay the amount as requested on receipt of interest at the rate of 24 per cent., the presentation of the respective cheques were
postponed. In the meanwhile there was an Income Tax raid and according to the plaintiff, all the documents were seized including the suit cheques
by the Income Tax Department. On receipt of the documents from the Income Tax Department, on the next day the suit cheques have been
presented for realisation. Since they were returned as out of date, the plaintiffs sent a telegraphic notice demanding the defendant to repay the same
with interest at 24 per cent. Except the oral evidence of P.W. 1, there is no other acceptable evidence with regard to interest at 24 per cent. as
claimed by the plaintiff. No doubt it is the evidence of P.W. 1 that they are maintaining account books and ledgers which were also subjected to
seizure by Income Tax Department. It is true that in the account book there were entries to show that the defendants paid interest. A perusal of the
said documents clearly shows that nowhere any reference was made with regard to rate of interest or the particulars regarding for which the said
interest was paid. Another aspect which goes against the petitioner is even though it is contended by him that all the documents, records, etc., were
seized by the Income Tax Department, exhibit A-14 account book was not seized by the Income Tax Department. It is not explained how the said
account book was not seized by the Income Tax Department. Even according to the plaintiff, they have seized all the documents relating to their
accounts. Only in exhibit A-14, the alleged payment of interest by the defendant is mentioned in various places. In such circumstances it is highly
improbable to accept the case of the plaintiff relying on exhibit A.14. In this regard, it is relevant to point out that as per section 80 of the
Negotiable Instruments Act, when no rate of interest is specified in the instrument, the same has to be calculated at the rate of 6 per cent. from the
date at which the same ought to have been paid by the party charged, until tender of realisation of the amount due thereon. It is true that now the
rate of interest has been increased to 18 per cent. by way of an amendment to section 80 with effect from December 30, 1988. Absolutely there is
no dispute that the said amendment came into effect from December 30, 1988, only. In this regard, the following conclusion of the Division Bench
of the Karnataka High Court in I. Armugam Vs. Channagiri N. Govindaraj Shetty, , is very relevant and the same is extracted hereunder (page
354) :
It is next contended that the provisions of section 80 of the Act as they stood prior to December 30, 1988, governed the suit transactions as the
three cheques were issued prior to December 30, 1988, therefore, the interest ought to have been awarded at the rate of 6 per cent. per annum
from the date the amount became payable until tendered or realisation of the amount due thereof and not at the rate of 18 per cent. per annum
because the amendment effected by Central Act No. 66 of 1988 is not, and cannot be construed as, retrospective. On the contrary, it is
contended on behalf of the plaintiff that the plaintiff is entitled to interest at the rate of 18 per cent. at least from December 30, 1988, as the
amendment has come into force on that day.
We are of the view that the contention of the learned counsel for the plaintiff cannot at all be accepted All the three cheques were issued prior to
December 30, 1988. Section 80 of the Act as it stood prior to December 30, 1988 was as follows :
`80. Interest when no rate specified. - when no rate of interest is specified in the instrument, interest on the amount due thereon shall
notwithstanding any agreement relating to interest between any parties to the instrument be calculated at the rate of six per centum per annum from
the date at which the same ought to have been paid by the party charged, until tender or realisation of the amount due thereon or until such date
after the institution of a suit to recover such amount as the court directs.''
By Act No. 66 of 1988, section 80 of the Act was amended. The words `eighteen per centum'' were substituted for the words `six per centum''
with effect from December 30, 1988.
Unlike section 79, section 80 of the Act provides for the case where no rate of interest is mentioned in the instrument This section governs a case
where, in a negotiable instrument, payment of interest is mentioned but no rate is stipulated and also a case where there is no interest mentioned at
all in the instrument. Any agreement between the parties contemporaneous with or subsequent to the date of the negotiable instrument, as to
interest will not have any effect and such a agreement will not be enforceable because the section specifically states that `notwithstanding any
agreement relating to interest between any parties to the instrument'', interest shall be calculated at the rate of six per cent. per annum (of course
from December 30, 1988, onwards eighteen per cent. per annum). The non-obstante clause contained in the section supersedes or sets aside such
agreement if any between the parties to the instrument. The section further provides `interest on the amount due thereon shall . . . be calculated
a{the rate of six per cent. per annum from the date at which the same ought to have been paid by the party charged until tender or realisation of the
amount due thereon or until such date after the institution of a suit to recover such amount as the court directs''. Thus the rate of interest on the
amount due under the instrument attracting section 80 of the Act as it stood prior to December 30, 1988, will have to be calculated at the rate of 6
per cent. per annum from the date the amount ought to have been paid and until it is tendered or realised. The amendment effected by Act No. 66
of 1988 which came into force on December 30, 1988, does not apply to the transactions effected prior to December 30, 1988. The amendment
applies to the transactions effected on and from December 30, 1988.
52. The above conclusion makes the position clear that the amendment effected by Act No. 66 of 1988 which came into force on December 30,
1988, does not apply to the transaction effected prior to December 30, 1988. There is no dispute in all cases before me that the transactions were
effected long prior to December 30, 1988. As stated earlier, in the absence of any written agreement with regard to rate of interest or acceptable
evidence and when the instrument is silent as to the rate of interest, the plaintiff is entitled to interest only at the rate of 6 per cent. as per section 80
of the Act. The same view has been expressed by Swamikkannu J. in a decision in Syndicate Bank v. N. C. Kalyani AIR 1985 Mad 254.
53. In the light of the above position with regard to rate of interest, in the absence of anything specified in the instrument with regard to rate of
interest and in the absence of any specific agreement, the interest has to be calculated only at the rate of 6 per cent. per annum from the date at
which the amount ought to have been paid by the defendant. Accordingly, I confirm the finding of the trial court with regard to the amount payable
by the defendant in favour of the plaintiff. However, the interest rate mentioned in all the decrees is modified as 6 per cent. for the said amount
from the date when the suit cheques were returned by the banker till the date of realisation.
54. As a result, Appeal Suits Nos. 308 of 1982, 434 of 1982, 637 of 1981, 639 of 1981, 640 of 1981 and Transferred Appeal No. 888 of 1982
are allowed in part, the decree with regard to interest alone is modified as stated above with costs. Appeal Suits Nos. 821 and 822 of 1982 filed
for higher rate of interest are dismissed with costs.
