Holding

A cheque tendered within the time prescribed, and subsequently honoured, constitutes due payment unless the order expressly requires cash.

Summary

The appellant filed a suit for specific performance of a contract to sell a property and was ordered by the High Court to discharge a mortgage and deposit Rs.3.45 lakh with interest. She paid the mortgagee directly, which the High Court rejected, and later deposited Rs.2.42 lakh and subsequently tendered a cheque for Rs.6.02 lakh on the deadline of 29 May 1980. The High Court held that the cheque delivery did not constitute a deposit because the cheque was realised only on 16 June 1980 and required compliance with the Original Side Rules (Order XXXI Rules 1‑6) prescribing cash deposit. The Supreme Court examined whether payment by cheque, later encashed, satisfied the order and held that, absent a specific cash requirement, a cheque is a valid mode of payment and the date of payment is the date of delivery of the cheque. Consequently, the appellant substantially complied with the Supreme Court’s order, and the appeal was allowed, setting aside the High Court’s order and directing execution of the sale deed.

Issues considered

Whether payment by cheque, realised after the date of delivery, satisfies a court order directing deposit of a specified sum within a stipulated time.
Whether the Original Side Rules (Order XXXI Rules 1‑6) requiring cash deposit are applicable in the absence of an express cash requirement in the Supreme Court’s order.

Legislation cited

Madras High Court Ruless. Order XXXI Rules 1-6

Subjects

specific performancedeposit of moneypayment by chequecourt order complianceOriginal Side Rulescivil proceduremortgage discharge

Judgment

K. SARASWATHY ALIAS K. KALPANA (DEAD) BY LRS.
A
v.
.J.. P.S.S. SOMASUNDARAM CHETTIAR

MAY 1, 1989

[R.S. PATHAK CJ, SABYASACHI MUKHARJI B
AND RANGANATH MISRA, JJ.]

•
~
Practice and Procedure: Court order providing for deposit of
amount-Payment by cheque whether valid.

Original Side Rules-Madras High Court: Order XXXI Rules
1-6--Depositing Money into Court-Payment of money by cheque- c
Whether due compliance.
)'' The appellant filed a civil suit in the High Court for specific
performance of a contract to sell the snit property by the respondents to
her. The High Conrt held the appellant liable to discharge the mortgage D
and directed her to deposit in Court a sum of Rs.3.5 lakbs with interest
for the purpose. The appellant paid the amount direct to the mortgagee,
which the High Court refused to accept as due compliance with its
decree.
~ The appellant preferred appeals to this Court, which were dis- E
posed of on 29th November, 1979 with the direction that the appellant
was to deposit within six months from the date of the order, the entire
sum of Rs.3.15 lakhs together with interest .
•
Purporting to comply with the aforesaid order of this Court,
appellant deposited a sum of Rs.2,42,822.19 on 11 April, 1980 and tiled F
'?<, two Civil Misc. Petitions in the High Court for a declaration that
the payment was in compliance with the order of this Court and
claimed as set off of the amount of Rs.5,96,687 .19 paid by her earlier to
-~ the South Indian Bank, which she was entitled to recover from the
respondent.
G
The time limit fixed for fulfilling the two conditions set out in this
Court's order dated 29th November, 1979 having fallen on 29th May,
~ 1980 and the High Court not having passed orders on the appellant's
two CMP's the appellant paid into the High Court a sum of Rs.6.02
lakhs on 29th May, 1980 by cheque purporting to comply with the first
condition of this Court's order. H
819

ti'--·
820 SUPREME COURT REPORTS [1989] 2 S.C.R.

The High Court dismissed the appellant's CMP and refused to
A
grant the declaration that the appellant had complied with the order of
this Court dated 29th November, 1979, on the ground that the appellant
was bound to comply with the Original Side Roles of the High Court
which prescribed the procedure to he followed in depositing money into
Court particularly Order XXXI Rules 1 to 6 which aimed at securing
B the deposit of the money in the Reserve Bank of India to the credit of a
particular proceeding, on or before the specified date.

In the appeal to this Court, on the question; whether payment

c
made by the appellant on 29th May, 1980 by cheque of the amount of
Rs.6.02 lakhs together with the amount deposited earlier on 11th May,
1980 was in due compliance with this Court's order dated 29th
-
November, 1979.

Allowing the Appeal and setting aside the order of the High
Court, this Court

D HELD: 1. Payment by cheque is an ordinary incident of present-
day life, whether commercial or private, and unless it is specifically
mentioned that payment must be in cash there is no reason why pay-
ment by cheque should not be taken to be due payment if the cheque is
subsequently encashed in the ordinary course. [823D-E]

E In the instant case, there is nothing in the order of this Court
providing that the deposit by the appellant was to he in cash. The terms
of the order dated November 29, 1979 are conclusive in this respect and •
it is the intent of that order which will determine whether payment by
cheque within the period stipulated in that order was excluded as a
mode in satisfaction of the terms of that order. The time for payment of
F governed hy the order of this Court. [823E-F]

2. Payment on the cheque being honoured and encashed relates ~
hack to the date of the receipt of the cheque, and in law the date of
payment is the date of delivery of the cheque. [823F]

G Commissioner of Income Tax, Bombay South, Bombay v.
Messrs Ogale Glass Works Ltd. Ogale Wadi, A.LR. 1954 S.C. 429 \tr,-
referred to.

In the instant case, there is nothing to suggest that the cheque was
not honoured in due course and that the Bank had at any time declined
H to honour it for want offunds in the ordinary cause. [823G]
SARASWATHY v. SOMASUNDARAM CHETTIAR [PATHAK, CJ.] 821

.), 3. The conditions set forth in the order of this Court dated 29th
A
November, 1979 have been complied with by the appellant substantially
and she is entitled to the benefit of that order. [824C-D I

CIVIL APPELLATE JURISDICTION: Civil Appeal No.
11 l(N) of 1981.
.B
From the Judgment and Order dated 21.10.1980 of the Madras
..High Court in Application No. 2875 of 1980.

- Abdul Kareem, A.T.M. Sampath and P.N. Ramalingam for the
Appellant.

S. Govind Swaminathan, Rajendra Chowdhary, N.S. Sivam and c
)( K. Madhavan for the Respondents.

T.S. Krishnamoorthi Iyer, S. Balakrishnan and M.K.D.
N amboodiri for tho; Intervener.
D
The Judgment of the Court was delivered by

PATHAK, CJ: The appellant herein filed Civil Suit No. 18 of
1968 in the High Court for specific performance of a contract to sell
the suit property hy the respondent herein to her. A question which
arose for decision was whether the appellant should discharge the E
mortgage of the suit property created by the respondent in favour of
• the South Indian Ban·k. The High Court held that the apP'ellant was
liable to discharge the mortgage and directed her to deposit in Court a
sum of Rs.3,50,000 with interest for the purpose. The appellant paid
the amount direct to the mortgagee. The High Court refused to accept
the payment made directly to the mortgagee as due compliance with its F
decree and against that order of the High Court the appellant prefer-
red Civil Appeals Nos. 1993-1994 of 1977. This Court disposed of the
said appeals by the following order dated 29 November·, 1979:

"We direct that a decree be passed that the plaintiff-
Appellant do deposit within six months from today the G
entire sum of Rs.3,45,000 together with interest due upto
date at the rate of 11 per cent, together with an under-
taking that she would give up all her rights under the mort-
gage decree passed in her favour in C.S. No. 154 of 1968
except to the extent of the amount actually paid to the
South Indian Bank for taking the assignment. If these two H
822 SUPREME COURT REPORTS [1989] 2 S.C.R.

conditions are fulfilled, the appeals will stand allowed and ,~
A
a final decree for specific performance passed. In the event
of non-compliance with either of these conditions the
appeals will stand dismissed with costs."

Purporting to comply with the above order of this Court, the
B appellant deposited a sum of Rs.2,42,822.19 on 11 April, 1980 in the
High Court with the undcrta:,ing to give up all her rights decreed in
C.S. No. 154 of 1968 and filed C.M.P. Nos. 2424 and 2425 of 1980 i~'
the High Court for a declaration that the payment as mentioned above
was in compliance with the order of this Court and she claimed a set off
of the amount of Rs.5 ,96,687 .19 paid by her earlier to the South Indian
Bank which she was entitled to recover from the respondent in accor-
C dance with the second condition of the order of this Court dated 29
-
November, 1979. The time limit fixed for fulfilling the two conditions
set out in this Court's order dated 20 November, 1979 having fallen on
29 May, 1980 and the High Court not having passed orders on her
C.M.Ps. Nos. 2424-2425 of 1980 till then, she paid into the High Court
D a sum of Rs.6,02,000 on 29 May, 1980 by cheque purporting to comply
with the first conditition set out in this Court's order aforesaid.

C.M.Ps. Nos. 2424 and 2425 of 1980 filed hy the appellant in the
High Court were dismissed by a Single Judge by an order dated 6 June,
1980 against which the appellant prefened Petitions for Special Leave
+·
E to Appeal Nos. 947-48 of 1981. The appellant also filed another
C.M.P. N,o. 2875 of 1980 in the High Court for .i declaration that she
had complied with the aforesaid order of this Court dated 29 •
November, 1979 which was dismissed by the High Court. Civil Appeal
No. 111of1981 has been preferred against the judgment and order of
the High Court in C.M.P. No. 2875 of 1980.
F
The only question decided against the appellant by the High
Court in C.M.P. No. 2875 of 1980 was with regard to the deposit of the ~
amount stipulated in the first condition of the order '!f this Court dated
29 November, 1979. The crucial issue was whether the payment made
by the appellant on 29 May, 1980 by cheque of the amount of
G Rs.6,02,00Q together with the amount deposited earlier on 11 April,
1980 was in due compliance of the first condition of this Court's Order \,-
dated 29 November, 1979. The High Court found that the simple
delivery of the cheque on 29 May, 1980 could not be deemed to be
deposit of the specified sum of 29 May, 1980 in satisfaction of the order
of this Court when the amount of the cheque had been realised only on
H 16 June, 1980. The High Court held that the appellant was bound to
SARASWATHY v. SOMASUNDARAM CHETT!AR [PATHAK, CJ.] 823

~. comply with the Original Side rules of the High Court which pres-
A
cribed the procedure to be followed in depositing the money in Court,
and in particular, Order 31, rules 1 to 6 thereof which were aimed at
securing the deposit of the money in the Reserve Bank of India to the
credit of a particular proceeding on or before the specified date.
Accordingly, the High Court refused to grant the declaration that the
-{° appellant had complied with the order of this Court dated 29 B
'}November, 1979.

It is contended before us on behalf of the appellant that the

- cheque for Rs.6,02,000 was tendered in Court on 29 May, 1980 and
that it was duly honoured by the Bank and money was realised under
the cheque, and therefore it must be taken that payment had been
effected by the appellant on 29 May, 1980 within the time stipulated by
c
)( this Court in its order dated 29 November, 1979. In Commissioner of
Income Tax, Bombay South, Bombay v. Messrs Ogale Glass Works
Ltd .. Ogale Wadi, A.LR. 1954 S.C. 429 it was laid down by this Court
that payment by cheque realised subsequently on the cheque being
honoured and encashed relates back to the date of the receipt of the D
cheque, and in law the date of payment is the date of delivery of the
cheque. Payment by cheque is an ordinary incident of present-day life,
whether commercial or private, and unless it is specifically mentioned
~ that payment must be in cash there is no reason why payment by
cheque should not be taken to be due payment if the cheque is subse-
quently encashed in the ordinary course. There is nothing in the order E
of this Court providing that the deposit by the appellant was to be in
cash. The terms of the order dated 29 November, 1979 are conclusive
in this respect and it is the intent of that order which will determine
whether payment by cheque within the period stipulated in that order
>- was excluded as a mode in satisfaction of the terms of that order. The
time for payment is governed by the order of this Court. F
_..
It is alleged on behalf of the respondent that there was no money
on the date of delivery of the cheque to support payment of it and that
it was subsequently when arrangements were made that the cheque
was realised. Now, the High Court has not found that if the cheque
·~
was presented for encashment on the date it was delivered the cheque G.
would not have been encashed. There is nothing to suggest also that
the cheque was not honoured in due course and that the Bank had at
any time declined to honour it for want of funds in the ordinary course.
In any event, there is nothing to suggest that, under the arrangements
made for payment of the cheque, even if it had been encashed on the
date it was delivered the cheque would not have been encashed. There H
824 SUPREME COURT REPORTS [1989] 2 S.C.R.
:~.
A is no finding by the High Court that on 29 May, 1980 the cheque would
not have been realised. That befog so, the question whether the appel-
!ant had wrongly stated that her counsel had offered to pay cash to the
High Court office on 29 May, 1980 ceases to be relevant. We also see
no substance in the objection taken before the High Court that in the
letter dated 29 May, 1980 addressed by counsel for the appellant for-
B warding the cheque for Rs.6,02,000 there was a request for the return
'r-
of the cheque in case it was found that the appellant was entitled to the'
set-off claimed by her. The application of the appellant claiming

c
adjustment was pending in Court, and no conclusion can be drawn
against her on the ground that she had requested a return of the
cheque in the event of the adjustment being allowed by the Court. -
We are of the view that the conditions set forth in the order of .,.,
this Court dated 29 November, 1979 in the facts and the circumstances
of the case have been complied with by the appellant substantially and
she is entitled to the benefit of that order.

D The appeal is allowed, the order dated 21 October, 1980 of the
High Court is set aside and the application by the appellant for a
direction to the respondent to execute the sale deed in her favour is
allowed. In the circumstances of the case, there is no order as to costs.
+ '

N.V.K. Appeal allowed.