IN THE HIMACHAL PRADESH HIGH COURT 

Kuldip Singh and Bhupender Bhardwaj for the plaintiff. 

Neel Kamal Sood for defendant No. 1. 

JUDGMENT 

R. L. KHURANA J. - The plaintiff, a private limited company duly incorporated under the Companies Act, 1956, has filed the present suit for the recovery of Rs. 11,90,711.10 against the two defendants on the following averments : 

The plaintiff is engaged in the business of manufacture and sale of electric resistance pipes, welded M. S. blocks and galvanised steel tubes of various diameters. It is also engaged in the business of undertaking job works for slitting and galvanising of black steel tubes, etc. Defendant No. 2, who was having regular business dealings with the plaintiff, in the year 1987, introduced defendant No. 1 as a prospective customer. Defendant No. 1 was desirous in the purchase of steel tubes and also for getting the work of slitting, rolling and galvanising of black steel tubes, etc., done. Since the plaintiff did not have any dealings with defendant No. 1, it was reluctant in having dealings with defendant No. 1. However, defendant No. 2 assured the plaintiff about the financial standing of defendant No. 1 and also offered guarantee for defendant No. 1 for the amount which may be due from defendant No. 1 and not paid by it. Acting on the assurance and guarantee of defendant No. 2, the plaintiff started business dealings with defendant No. 1. Besides supplying goods to defendant No. 1 on credit as per the orders placed from time to time, the plaintiff also carried out the job work of slitting, rolling and galvanising of pipes for defendant No. 1. In this regard "an open collection and mutual running account" was started in the books of account of the plaintiff in the name of defendant No. 1. All payments received from defendant No. 1 from time to time were being duly accounted for and entered in such account. After some time, defendant No. 1 failed to make the payments in spite of repeated assurances and guarantee of defendant No. 2. Finally, defendant No. 1 through its managing director Shri Sushil Kumar and defendant No. 2 came to the office of the plaintiff and after having understood the accounts, defendant No. 1 issued two cheques for a sum of Rs. 6,92,273.90 in full and final settlement of its liability as under : 

(a) Cheque No. 955931, dated August 21, 1991, for Rs. 3,00,000 drawn on Punjab National Bank, Jaitu Mandi, District Faridkot (Punj.); and 

(b) Cheque No. 955933, dated August 31, 1991, for Rs. 3,92,273.90 drawn on Punjab National Bank, Jaitu Mandi, District Faridkot (Punj.). 

The two cheques on having been presented by the plaintiff for encashment and collection through its bankers were dishonoured on the ground that payment had been stopped by the drawer. The reason for dishonour of the cheques was wrong since the enquiries made by the plaintiff revealed that in fact defendant No. 1 did not have sufficient funds in its account for honouring the cheques. The defendants were, thereafter, repeatedly called upon to pay the amount. However, they failed to do so. As per the terms and conditions stipulated on the bills raised by the plaintiff, the defendants are liable to pay interest at the rate of 24 per cent. per annum on the outstanding amount, which is also the rate prevalent as per the custom and practice of the trade. The amount of interest calculated at the said rate comes to Rs. 4,98,437.20. Hence, the present suit for the recovery of Rs.11,90,711.10 (Rs. 6,92,273.90 as principal and Rs. 4,98,437.20 as interest). 

The suit is being resisted and contested by the two defendants, who have filed separate written statements. Defendant No. 1 while admitting its business dealings with the plaintiff has denied the outstanding amount. It has also denied having issued the two cheques in favour of the plaintiff. It was pleaded that the parties had very good relations and taking advantage of the relations, the officer of the plaintiff had manipulated the issuance of the cheques. A report regarding the same was duly lodged with the police on September 25, 1991, and the branch manager of the bank was duly informed to stop the payment of the said cheques. Defendant No. 1 also denied that defendant No. 2 stood as a guarantor for and on its behalf. Legal objections as to maintainability of the suit, limitation and the suit not having been filed by a duly authorised and competent person were also raised. 

Defendant No. 2 denied having introduced defendant No. 1 to the plaintiff or having stood as a guarantor for defendant No. 1. He also raised objections as to limitation, jurisdiction of the court and misjoinder of causes of action. 

On the pleadings of the parties, the following issues were framed on August 19, 1997 : 

(1) Whether the suit has been filed by the competent and duly authorised person ? OPP. 

(2) Whether defendant No. 2 stood guarantor for defendant No. 1 for payment of outstanding amount in respect of business dealings between the plaintiff and defendant No. 1 ? OPP. 

(3) Whether the suit is barred by time as alleged ? OPD. 

(4) Whether the suit is bad and not maintainable on account of misjoinder of causes of action ? OPD. 

(5) Whether this court has no jurisdiction to try the suit as alleged ? OPD. 

(6) To what amount is the plaintiff entitled to recover and if so, from whom ? OPP. 

(7) Whether the plaintiff is entitled to interest on the outstanding amount ? If so, at what rate ? OPP. 

(8) Relief. 

I have heard learned counsel for the parties and have also gone through the record of the case. My findings on the above issues are as under 

Issue No. 1 : 

The present suit has been filed by the plaintiff through its manager, Vipul Chanana. 

N. K. Chanana, the managing director of the plaintiff, while appearing as PW-2 has placed on the record the resolution exhibit PW-2/1 of the board of directors, authorising Shri Vipul Chanana to institute the present suit on behalf of the plaintiff. There is no rebuttal of this evidence. Even PW-2 was not cross-examined on this aspect. Therefore, it is held that the present suit has been filed by a competent and duly authorised person. The issue is decided in favour of the plaintiff. 

Issue No. 2 : 

No evidence is forthcoming to show that defendant No. 2 stood as guarantor for defendant No. 1 for the payment of outstanding amount in respect of the business dealings between the plaintiff and defendant No. 1. PW-2, N. K. Chanana, the managing director of the plaintiff has categorically admitted that no guarantee deed was executed by defendant No. 2. Even if it be assumed that defendant No. 1 was introduced to the plaintiff as a customer by defendant No. 2, such fact will not mean that defendant No. 2 stood as a guarantor. The issue is, therefore, decided against the plaintiff. 

Issue No. 3 : 

A perusal of the averments in paragraphs 6 and 7 of the plaint shows that the present suit for recovery of money is based on the two cheques dated August 21, 1991, and August 31, 1991, respectively, which are exhibits PW-1/A and PW-1/B. 

Both the cheques were drawn on Punjab National Bank, Jaitu Mandi Branch in District Faridkot (Punjab). Such cheques on having been presented for encashment/collection by the bankers of the plaintiff were dishonoured and returned with the endorsement "payment stopped by drawer" on September 15, 1991, vide memos exhibits PW-1/C and PW-1/D. Therefore, the period of limitation of three years will be reckoned from such date. 

The present suit was though initially filed on August 30, 1994, the court fee was made good only on September 9, 1994. No permission of the court under section 149 of the Code of Civil Procedure, for making up the deficiency in court fee was obtained by the plaintiff. Therefore, the suit would be deemed to have been instituted on September 9, 1994, the day on which deficiency in court fee was made good. Counting the period of limitation from September 19, 1991, the present suit having been filed within three years from such date, is within time. The issue is decided in favour of the plaintiff and against the defendants. 

Issue No. 4 : 

The case of the defendants is that the present suit is bad for misjoinder of causes of action and as such not maintainable. According to the defendants, two separate cheques furnish separate causes of action, therefore, two separate suits should have been filed. 

Rule 3 of Order 2, of the Code of Civil Procedure provides that the plaintiff may unite in one suit several causes of action against the same defendants). Therefore, in view of the said specific provisions, the present suit cannot be said to be bad for misjoinder of causes of action. The issue is decided against the defendants. 

Issue No. 5 : 

As stated above while discussing issue No. 3 that the two cheques exhibits PW. 1/A and PW.1/B were drawn on Jaitu Mandi Branch of the Punjab National Bank. Therefore, such cheques were to be presented and were payable only at Jaitu Mandi in District Faridkot (Punjab). Such cheques were deposited by the plaintiff into their account with the West Patel Branch (Delhi) of the Punjab National Bank, which branch had in turn sent the cheques for collection to Jaitu Mandi Branch. 

In Bodh Raj Mahesh Kumar v. Earl Chawla and Co. (P.) Ltd., AIR 1974 P & H 2, the facts were that cheque dated June 14, 1965, for Rs. 3,657 was drawn by the plaintiff therein on Chartered Bank of India, Amritsar. It was in favour of the defendant. The cheque was delivered to the defendant at Delhi, who in turn handed over the same to his bankers for collection. The cheque was encashed. Later on the plaintiff filed a suit to recover back the amount of cheque at Amritsar. A question arose whether the Amritsar court had the jurisdiction. The defendant's case was that the Delhi court had the jurisdiction since the amount of the cheque was received by him at Delhi. It was held that a banker, while collecting a cheque for a customer, cannot assert any right of a holder for value, as he is acting only as an agent. He has no better title than that of his customer. Therefore, if his customer has no title, the collecting banker can have no better title than that of his customer. Since the payment towards the cheque was made at Amritsar, only the Amritsar court had the jurisdiction. 

In Borakar Engineering and Foundry Works v. State of Bihar, AIR 1960 Cal 513, sales tax had to be paid at Dhanbad in the State of Bihar. The payment of such tax was made by the assessee by a cheque drawn in a bank at Calcutta. The cheque was encashed at Calcutta. The assessee later on claimed refund of sales tax by filing a suit at Calcutta. A question arose as to which court had the jurisdiction. It was held that the Calcutta court had the jurisdiction where payment towards the cheque was made. 

It was contended on behalf of the plaintiff that under the law a cheque is payment and since the cheques were handed over to the plaintiff by defendant No. 1 at Parwanoo within the jurisdiction of this court, a part of cause of action has arisen within the jurisdiction of this court, therefore, this court has the jurisdiction. 

There is no merit in the contention of learned counsel for the plaintiff. A cheque, unless dishonoured, is payment. The payment takes effect from the delivery of the cheque but is defeated by the happening of the condition, that is, when the same is dishonoured (see CIT v. Ogale Glass Works Ltd. [1954] 24 Comp Cas 520; AIR 1954 SC 429. 

Since the cheques were dishonoured on presentation at Jaitu Mandi, mere delivery of cheques at Parwanoo would not give jurisdiction to this court. Moreover, there are neither pleadings nor evidence to show that these cheques were delivered to the plaintiff at Parwanoo by defendantNo. 1. On the contrary PW-2 has categorically stated : 

"Both the defendants came to our office at Delhi and settled accounts and also issued cheques. These cheques are exhibits PW-1/A and PW-1/B..." 

Therefore, as per the plaintiff's own showing the cheques were delivered to it by the defendants at Delhi and not at Parwanoo. 

It was next contended by counsel for the plaintiff that the common law rule that a debtor must find his creditor is applicable to the present case and as such under the said rule this court would have jurisdiction. 

This contention of learned counsel is also without force. It has been held by a Division Bench of the Punjab High Court in Piyara Singh v. Bhagwan Das, AIR 1951 Punj. 33, that the technical rule of the debtor seeking the creditor is not applicable in India for the purpose of determining the local jurisdiction of the courts because that would be engrafting something on section 20 of the Code of Civil Procedure. It was further held that in the case of negotiable instruments, the Negotiable Instruments Act itself gives indication that the rule would not be applicable because of the provisions contained in section 68, section 69, section 70, section 78 and section 81 of the Act. To the similar effect it has been held in Jawala Dass Ram Narain v. Nand Lal, AIR 1951 Punj. 128; J. N. Sahni v. State of Madhya Bharat, AIR 1954 MB 184 and W. P. Horsburgh v. Chandroji Sambajirao, AIR 1957 MB 90. 

On the facts and in the circumstances of the case, and in view of the above proposition of law, this court has no jurisdiction to try the present suit. The issue is as such decided against the plaintiff and in favour of the defendants. 

Issues Nos. 6 and 7 : 

Though in view of the findings recorded under issue No. 5 above these issues have become redundant since any finding recorded under these issues would be without jurisdiction, however, I propose to deal with these issues, assuming that this court has the jurisdiction. 

Cheques, exhibit PW-1/A and exhibit PW-1/B, admittedly are signed by defendant No. 1 being a negotiable instrument, a presumption as to consideration is attached thereto under the law. The case of defendant No. 1 is that these cheques were not issued by it in favour of the plaintiff but blank signed cheques were found missing regarding which a report was made to the police. 

Be it stated that no evidence has been led by the defendants in this regard. So much so that even defendant No. 1 has not stepped into the witness box. The Supreme Court in Vidhyadhar v. Mankikrao [1999] 2 JT 183, has held that where a party to the suit does not appear into the witness box and state his own case on oath and does not offer to be cross-examined by the other side, a presumption would arise that the case set up by him is not correct. 

Therefore, in the present case as well, the case set up by the defendants will be presumed to be not correct and it has to be held that cheques exhibits PW-1/A and PW-1/B were issued by defendant No. 1 for consideration and since such cheques on presentation were dishonoured the plaintiffs are entitled to recover the amounts of such cheques from defendant No. 1. 

Section 80 of the Negotiable Instruments Act, 1881, provides : 

"80. Interest when no rate specified. - When no rate of interest is specified in the instrument, interest on the amount due thereon shall (not-withstanding any agreement relating to interest between any parties to the instruments), be calculated at the rate of (eighteen 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. 

Explanation. - When the party charged is the indorser of an instrument dishonoured by non-payment, he is liable to pay interest only from the time that he receives notice of the dishonour." 

In view of the said provision, the plaintiff is entitled to interest on the outstanding amount of two cheques at the rate of 18 per cent. per annum from September 19, 1991, the date of dishonour of the cheques till realisation of the amount. The two issues are accordingly decided. 

Relief : 

As a result of the above discussion and my findings recorded under issue No. 5 that this court has no jurisdiction, the plaint of the suit is ordered to be returned to the plaintiff under Order 7, rule 11 of the Code of Civil Procedure for presentation to the proper court. No orders as to costs.