The court held that the suit was filed by a competent and duly authorised person. It also held that defendant No. 2 did not stand as a guarantor for defendant No. 1. The court found that the suit was within the limitation period and not bad for misjoinder of causes of action. However, the court held that it did not have jurisdiction to try the suit. Assuming jurisdiction, the court held that the cheques were issued by defendant No. 1 for consideration and were dishonoured, entitling the plaintiff to recover the amounts. The court also held that the plaintiff was entitled to interest on the outstanding amount at the rate of 18% per annum from the date of dishonour of the cheques.

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 paise 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 sitting and galvanising of black steel tubes etc. The defendant No. 2, who was having regular business dealings with the plaintiff, in the year 1987, introduced defendant No. 1 as a prospective customer. The defendant No. 1 was desirous in the purchase of steel tubes and also for getting the work of sitting, rolling and galvanising of black steel tubes etc. done. Since the plaintiff did not have any dealings with the 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 of 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, 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 sitting, 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 assurance 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 paise in full and final settlement of its liability as under :

(a) Cheque No. 955931 dated 21-08-1991 for Rs. 3,00,000/- drawn on Punjab National Bank, Jaitu Mandi, District Faridkot (Pb); and

(b) Cheque No. 955933 dated 31-08-1991 for Rs. 3,92,273.90 paise drawn on Punjab National Bank, Jaitu Mandi, District Faridkot (Pb)."

2. 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 the 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 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 paise. Hence the present suit for the recovery of Rs. 11,90,711.10 paise (Rs. 6,92,273.90 paise as principal and Rs. 4,98,437.20 paise as interest).

3. The suit is being resisted and contested by two defendants, who have filed separate written statements. Defendant No. 1 while admitting its business dealing 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