( 1 ) THE National Small Scale Industries Corporation Limited (in short called nsic) which is a Government of India Undertaking, with a view to promote small scale industries, supplies machinery to small entrepreneurs. One of the beneficiaries of the said scheme was Shri Takdir Singh who is respondent before us. On 8. 5. 1991 the NSIC supplied to the respondent three lathe machines and on 31st May, 1991 the parties entered into a Hire Purchase Agreement. The payment towards the hire charges for the said machines was to be made by way of thirteen half- yearly instalments. The first instalment, as per the terms of the Agreement, was for Rs. 17,113/- and it was payable on or before Ist July, 1992. The remaining twelve instalments were for Rs. 10,550/- each and were payable after every six months. The respondent, however, committed default in making the payment towards instalments due. In fact, he made no payment on due dates against any of the instalments. He had issued three cheques dated 28. 2. 1995, 30. 6. 1996 and 30. 8. 1997 for a sum of rs. 3000/-,rs. 1000/- and Rs. 1000/- respectively. All these three cheques on presentation were dishonoured on account of insufficient funds. Thereafter he sent a letter dated 25. 11. 1998 to the appellant and along with it a cheque of Rs. 2000/- Not a single cheque issued by him was in terms of the Hire Purchase Agreement in as much as each instalment was of Rs. 10,550/- while the cheques issued were for a paltry sum of Rs. 1000/- to 3000/ -. Faced with this situation and the defaults so committed by the respondent, the NSIC which is appellant before us instituted a suit against the respondent for the recovery of Rs. 1,42,813/- towards the hire charges along with interest at the rate of 16% per annum and also for the recovery of machines or in the alternative a decree in the sum of Rs. 25,050/-

( 2 ) THE respondent though served did not put in appearance and as such he was proceeded ex- parte. The learned Trial Judge after having recorded ex parte evidence dismissed the suit solely on the ground that it was barred by limitation. The learned Trial Judge proceeded on the basis that the cause of action accrued in favour of the NSIC from the date of the Agreement of Hire Purchase and that the prescribed period of limitation for filing the suit was three years, which when computed from 31st May, 1991 expired on 31st May, 1994. The suit was instituted by the NSIC on 12th October, 2000 and as such it was held to be barred by limitation.

( 3 ) IT was argued before the learned Trial Judge that the cheques which were issued on 28th February 1995, 30th June, 1996 and 30th August, 1997 even though were dishonoured had the effect of extending limitation for a further period of three years in terms of Section 19 of the Limitation Act, 1963. It was further argued that the letter of the respondent dated 25. 11. 1998 and the cheque of rs. 2000/- sent along with it constituted acknowledgment in terms of Section 18 of the Limitation Act and, therefore, the said letter also had the effect of extending limitation by three years. The Trial Court after considering Sections 18 and 19 of the limitation Act felt that neither the cheques nor the letter dated 25. 11. 1998 promising to pay the future instalments regularly were of any help to the appellant as the cheques and the letter were issued after the period of limitation had already expired and that the benefit of these Sections could be availed of by the appellant only if the respondent had issued the cheques or the so-called letter of acknowledgment before the expiry of the period of limitation which the learned Judge felt was 31st May, 1994.

( 4 ) AGGRIEVED by the judgment and decree, the National Small Scale industries Corporation Limited has preferred this Regular First Appeal.

( 5 ) NOTICES of the appeal were issued to the respondent which were served upon him and he also entered appearance through his counsel but when the matter was taken u