1964 (4) TMI 144 - HC - Indian Laws

Summary

Issues Involved:
1. Guarantee of payment for overdraft account.
2. Contravention of Foreign Exchange (Regulation) Act.
3. Essential terms of the guarantee.
4. Impossibility of performance.
5. Legality of the Letter of Lien.
6. Legality of the sale of shares.
7. Return of shares.
8. Barred by limitation.
9. Cause of action.
10. Entitlement to the claimed amount.
11. Relief entitled to the plaintiff.

Issue-wise Detailed Analysis:

1. Guarantee of Payment for Overdraft Account:
(a) The defendants guaranteed the payment of dues for advances made in the overdraft account of Central Jute Co., Ltd. at the plaintiff's Narayanganj Branch after the Deed of Guarantee dated 8 November 1954.
(b) The guarantee also included advances made prior to the Deed of Guarantee and up to the date of the suit.

2. Contravention of Foreign Exchange (Regulation) Act:
(a) The Deed of Guarantee was challenged as being in contravention of the Foreign Exchange (Regulation) Act of 1947, making it allegedly illegal, void, and of no effect.
(b) The court did not find the Deed of Guarantee to be illegal, void, or inoperative based on the Foreign Exchange (Regulation) Act.

3. Essential Terms of the Guarantee:
(a) It was argued whether it was an essential term that the defendant would make payment under the Deed of Guarantee in Calcutta for the overdraft debt of a foreign company in Pakistan.
(b) The court did not find any essential term that such payment was to be made for remittance to Pakistan for credit in the overdraft account.

4. Impossibility of Performance:
The defendants argued that the contract of guarantee became impossible to perform as no money could be transmitted to Narayanganj. The court did not find this argument sufficient to void the guarantee.

5. Legality of the Letter of Lien:
The Letter of Lien was also challenged as being in contravention of the Foreign Exchange (Regulation) Act of 1947, making it allegedly void. The court did not find the Letter of Lien to be illegal or void.

6. Legality of the Sale of Shares:
(a) The plaintiff was accused of acting illegally in selling the shares without the Reserve Bank's permission.
(b) The court found that the plaintiff did not require permission from the Reserve Bank for selling the shares.
(c) The sale of shares was contested as being without proper notice to the defendant No. 2 and not conducted legally. The court did not find the sale to be improper or illegal.

7. Return of Shares:
The court did not find the plaintiff bound to return the shares to the defendants.

8. Barred by Limitation:
The primary issue was whether the plaintiff's claim was barred by the Law of Limitation. The court found that the claim was indeed barred by limitation. The last debit entry was on 30 January 1956, and the demand was made on 14 February 1956. The suit was filed on 20 May 1960, beyond the three-year limitation period under Articles 59, 65, and 115 of the Limitation Act.

9. Cause of Action:
The court found that the plaintiff did not have a valid cause of action against the defendants due to the limitation bar.

10. Entitlement to the Claimed Amount:
The court ruled that the plaintiff was not entitled to the amount claimed in the plaint due to the limitation bar.

11. Relief Entitled to the Plaintiff:
The court concluded that the plaintiff was not entitled to any relief.

Conclusion:
The suit was dismissed with costs, certified for two counsel. The court focused on the issue of limitation and found that the plaintiff's claim was barred, thus disposing of the suit on this ground without considering the other issues raised.