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Mar 31, 2009

Limitation Act Section 19, 20 Gori Lal v. Ramjee Lal, AIR 1961 MP 346, "If one bears in mind that the word "payment" has been used in two different senses, it would be clear that the moment the negotiable instrument is handed over and accepted by the creditor and is in the debtor's handwriting, there has been a payment for the purposes of Section 20, Limitation Act and a fresh period of limitation has already started. If the negotiable instrument is dishonoured subsequently the creditor, no doubt, can fall back on his original claim. But the new term of limitation (sic) of the subsequent happening. To link S. 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 S. 20 has already given him. Thus I would hold that the passing of the cheque is payment for the purpose of S. 20 and if the other conditions were fulfilled, a fresh term of limitation started from that date, whether or not it is subsequently honoured. That way the suit of the plaintiff was not time-barred."

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