2022 (5) TMI 1582 - HC - Indian Laws

Recovery of suit amount - suit debt is barred by limitation or not - part payment made under Ex. A-9 receipt can be termed as agreement under Section 25(3) of Indian Contract Act or not. Whether the limitation to institute suit for recovery of amount, starts from the date of default or termination of chit is to be considered? - HELD THAT - The Division bench of composite High Court in Jillelamudi Dhanalakshmi Vs. the Union Bank of India 1992 (2) TMI 384 - ANDHRA PRADESH HIGH COURT while dealing with Article 37 of the Limitation Act held that the period of three years begins to run when the default is made unless the payee or obligee waives the benefit. It was further held that when the first installment fell due on 30-6-1976, the limitation began to run from 30-6-1976 and the suit filed beyond three years is held to be barred by limitation. The case on hand indicates that the chit transaction commenced on 21-4-1997; defendant No. 1 became successful bidder on 4-7-1997; amount was paid to successful bidder on 15-9-1997 on which date defendants executed promissory note and agreement of guarantee and defendant No. 1 committed default in payment of installments from 4-4-1998. In this case after the default, the prized subscriber did not pay a single instalment and hence the limitation to recover the amount reckons from 4-4-1998. However, an amount of Rs. 5,000/- was paid on 29.04.2002 under Ex. A-9 i.e. after expiry of three years from the date of default - Since the appellants committed default in payment of installments from 4-4-1998, the suit is to be filed within three years from the date of default. However, the plaintiff presented the suit on 29-4-2005 seeking recovery of amount beyond the period of three years prescribed under Article 37 of the Limitation Act. It is settled principle of law that when the pleadings of both parties are available and each party knows about the case of other and adduces evidence in support of the same, non-framing of an issue, is of no consequence. The very purpose of framing the issue is to know as to what is the lis involved in the suit. The parties went to trial knowing fully well what they were required to prove. Thus, the position of law is well settled that where parties adduce evidence in respect of a matter for which an issue has not been framed and both sides are well aware of the dispute which relates to the issue, the defect of non-framing of the issue is cured. There will be no inherent lack of jurisdiction in the Court to go into that question and decide that aspect of the matter. It is clear from perusal of Ex A-9 that it doesn't contain any specific promise as mandated under Section 25(3) of Contract Act. It is only a simple receipt evidencing making of payment of Rs. 5,000/-. There is no separate agreement between the parties in connection with payment of balance amount. Thus, even the part payment made under Ex A-9 without any specific agreement may not be useful to the plaintiff in saving limitation - this Court came to conclusion that the suit filed for recovery of amount is barred by limitation and hence is liable to be dismissed. The appeal filed by defendants in the suit deserves to be allowed by setting aside the judgment and decree passed by the Lower Court - Appeal allowed.

Summary

Issues Involved:
1. Validity and genuineness of the receipt dated 29.04.2002 (Ex. A-9).
2. Whether part payment under Ex. A-9 can be considered an agreement under Section 25(3) of the Indian Contract Act.
3. Whether the suit is barred by limitation.
4. Relief to be granted.

Detailed Analysis:

1. Validity and Genuineness of Receipt Dated 29.04.2002 (Ex. A-9):
The defendants argued that the receipt dated 29.04.2002 (Ex. A-9) was forged. However, despite pleading forgery, none of the defendants entered the witness box, nor did they take steps to send Ex. A-9 to a handwriting expert for verification. The court noted that the receipt indicated a payment of Rs. 5,000/- by defendant No. 4 on behalf of defendant No. 1, and the signature on the receipt was not disputed. Consequently, the court found no convincing evidence to support the defendants' claim of forgery and upheld the validity of Ex. A-9.

2. Whether Part Payment Under Ex. A-9 Can Be Considered an Agreement Under Section 25(3) of the Indian Contract Act:
The court examined whether the part payment receipt (Ex. A-9) could be considered a promise under Section 25(3) of the Indian Contract Act, which allows for a promise to pay a time-barred debt if it is in writing and signed. The court concluded that Ex. A-9 did not contain any specific promise to pay the balance amount and was merely a simple receipt evidencing the payment of Rs. 5,000/-. Therefore, Ex. A-9 did not satisfy the requirements of Section 25(3) and could not be used to save the limitation period.

3. Whether the Suit is Barred by Limitation:
The court referred to Article 37 of the Limitation Act, 1963, which states that the period of three years begins to run when the default is made. The court cited previous judgments, including Jillelamudi Dhanalakshmi Vs. the Union Bank of India and Vastava Chit Funds (Private) Limited Vs. Madala Benarjee, to support the view that the limitation period starts from the date of default. In this case, the default occurred on 04.04.1998, and the suit was filed on 29.04.2005, well beyond the three-year limitation period. The court found that the suit was barred by limitation.

4. Relief to be Granted:
Given that the suit was barred by limitation and Ex. A-9 did not save the limitation, the court allowed the appeal filed by the defendants. The judgment and decree dated 31.10.2006 passed by the II Additional Senior Civil Judge (Fast Track Court), Guntur, in O.S. No. 279 of 2005, were set aside. The appeal was allowed with costs, and any pending miscellaneous petitions were closed.

Conclusion:
The court concluded that the suit for recovery of the amount was barred by limitation and dismissed the suit, setting aside the previous judgment and decree.