2010 (4) TMI 1227 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the suit is barred by limitation.
2. Whether the plaintiff/Bank is entitled to recover the loan amount with interest.
3. Whether the defendants had equitably mortgaged their lands for the security of the loan.

Summary:

Issue 1: Barred by Limitation
The trial court dismissed the suit as barred by limitation, holding that the suit was filed after three years from the date of taking the loan. The plaintiff argued that each payment made by defendant No. 1 extended the limitation period by three years as per Article 1 read with Sections 18 and 19 of the Limitation Act, 1963. The court noted that the last payment was made on 16-4-1996, and the suit was filed on 12-2-1997, thus within the extended limitation period. The court also considered Section 14 of the Act, which allows exclusion of time spent in bona fide prosecution of proceedings in another court. The High Court found that the trial court did not consider the effect of the payments made by the defendant, which extended the limitation period. Consequently, the High Court set aside the trial court's finding and held that the suit was within time.

Issue 2: Recovery of Loan Amount with Interest
The trial court had already decided that the plaintiff/Bank is entitled to recover the loan amount of Rs. 3,11,880/- with interest @ 14% per annum on six monthly rests from the date of institution of the suit. The defendants did not appeal against this finding, and thus, it attained finality. The High Court upheld this decision, stating that the plaintiff/Bank's suit is decreed with costs throughout, and the defendants are jointly and severally liable to pay the amount.

Issue 3: Equitable Mortgage of Lands
The trial court held that the plaintiff/Bank failed to prove that the defendants had equitably mortgaged their lands described in Schedules B, C, and D for the security of the loan. The High Court did not find it necessary to consider this issue further, as the primary issue of limitation was resolved in favor of the plaintiff, and the other findings of the trial court had attained finality.

Conclusion:
The appeal was allowed, and the suit was held to be within time. The plaintiff/Bank's suit was decreed with costs, and the defendants were held jointly and severally liable to pay Rs. 3,11,880/- with interest @ 14% per annum on six monthly rests. A decree was ordered to be drawn accordingly.