S. 17(1)(b) of the Displaced Persons (Debts Adjustment) Act is universally applicable to civil suits, protecting displaced debtors from recovery claims.

1. This is an appeal by the plaintiff - bank which is a limited company. The bank had filed the suit for recovery of Rupees 6,612-12-9 against the defendants on the basis of a cheque for Rs. 5,200 issued by the defendants in favour of the bank on 11th November 1947 and a payment - order for Rs. 400 issued the next day. i.e., on the 12th November 1947. Both the cheque and the payment order were dishonoured on account of stoppage of the payment by the defendants Hence the suit for recovery of Rs. 6,612-12-9 including interest at Rs. 6 per cent per annum, with monthly rests, plus pendente lite and future interest at the rate of Rs. 6 per cent per annum.

2. The preliminary facts are not disputed between the parties. The defendants were carrying on business in Peshawar under the name and style of 'Harishingh Govind Singh', while the plaintiff - bank had one of its branches at peshawar. The defendants had a cash credit account in the name of their firm with the Peshawar Branch of the plaintiff - bank. The defendants used to borrow money from the plaintiff - bank against the pledge of goods by way of security. On 23rd November 1946 the defendants borrowed a sum of Rs. 30,000 from the bank and executed a promissory note in lieu thereof. Later on, in February 1947, the defendants further executed a deed of pledge in favour of the bank whereunder 425 bags of Mash (urd) were pledged with the bank to secure the payment of the aforesaid loan of Rs. 30,000 with interest. The defendants drew on then said cash credit account from time to time and repaid part of the dues of the bank, with the result that on 11th November 1947 a sum of about Rs. 5,600 was outstanding against the defendants in their cash credit account. It was in order to pay off this debt that the defendants had issued a cheque for Rs. 5,200 in favour of the plaintiff on 11-11-1947 and a payment order for Rs. 400 on 12-11-1947 in full and final adjustment of the plaintiff's dues.
From this stage there is difference between the versions of the parties. According to the plaintiff, the bank had handed over the key of the godown in which the pledged bags of Mash (urd) were lying stored, by way of symbolic delivery of possession of the goods to the defts. The plaintiff's case further is that the cheque and the payment order, which had been issued by the defendants in favour of the plaintiff only amounted to conditional payment of the plaintiff's dues outstanding against the defendants, and inasmuch as the same had been dishonoured, the debt remained due from the defendants to the plaintiff; as such the plaintiff - bank was entitled to recover Rs. 5,600 as the principal amount and Rs. 1,012-12-9 as interest, in all Rs. 6,612-12-9.

3. On the other hand, the case of the defendants was that they had issued the cheque and the payment order on the condition that the plaintiff - bank would return the pledged goods to them but the plaintiff - bank failed to do so, hence on 16-11-1947 the defendants stopped the payment of the cheque and the payment order in question. By amendment of their written statement on 20th February 1952 it was further pleaded by the defendants that in any case they were protected under the provisions of S.17(1)(b) of the Displaced Persons (Debts Adjustment) Act , 1951. This Act came into operation in Uttar Pradesh on the 10th of December 1951, while the instant suit had been instituted on the 4th of November 1950.

4. It has strenuously been argued by the learned counsel for the appellant - bank that the provisions of S. 17(1)(b) were applicable on