2015 (12) TMI 1903 - HC - Indian Laws

Suit for recovery - dismissal on the sole ground of being barred by limitation - HELD THAT - The period of limitation would, though, commence from the date of the last defaulted EMI, which is made the subject matter of the notice and not from the date of the notice itself. Therefore, in such a situation, Article 113 of the 1963 Act would become applicable as against Article 55. The trial court while dismissing the suit has not alluded to any specific Article of the 1963 Act. Recourse has been taken by the trial court to Section 3 of the 1963 Act. Section 3, inter alia, only empowers a court to dismiss a suit which is barred by limitation even if limitation is not set up as a defence. The section by itself could not have helped the trial court in coming to the conclusion as to what should be the period of limitation in a case such as this. Furthermore, the reference to Article 37 in the written statement is also of no relevance as the appellant did not sue either on a promissory note or a bond. The impugned judgement is set aside - appeal allowed.

Summary

Issues Involved

1. Whether the suit is barred by limitation.
2. Whether the plaintiff is entitled to a decree for the suit amount.
3. Whether the plaintiff is entitled to pendente lite and future interest on the decree amount, and if so, at what rate.
4. Relief.

Detailed Analysis of the Judgment

Issue 1: Whether the Suit is Barred by Limitation

The trial court dismissed the appellant's suit for recovery on the ground that it was barred by limitation, as per the judgment and decree dated 16.09.2013. The learned ADJ concluded this based on the statement of accounts (Ex. PW1/9) dated 31.10.2009, indicating the last transaction occurred on 11.08.2008. The suit, filed on 20.07.2012, was deemed "hopelessly" barred by limitation under Section 3 of the Limitation Act, 1963.

The appellant argued that the limitation period should commence from the date of the last EMI, which was payable on 10.06.2012, invoking Article 55 of the Limitation Act, 1963. Article 55 provides a three-year limitation for compensation for breach of any contract, starting from when the breach occurs or ceases.

The court examined Articles 19 and 21 of Part II of the Schedule to the 1963 Act, which relate to money payable for money lent and money lent under an agreement payable on demand, respectively. These articles were found inapplicable as they pertain to loans repayable immediately or on demand, unlike the fixed-term loan agreement in question.

Citing precedent, the court noted that the term "compensation" in Article 55 includes claims for money due under a contract alleging breach. Therefore, the limitation period could be triggered by each defaulted EMI, with the last breach occurring in May-June 2012, making the suit filed on 20.07.2012 within the limitation period.

The court also considered the loan agreement's clause 48, which allows the appellant to issue a recall notice upon default. The recall-cum-demand notice dated 26.06.2012, dispatched on 29.06.2012, triggered the limitation period from the date of the last defaulted EMI.

Issue 2: Whether the Plaintiff is Entitled to a Decree for the Suit Amount

Since the trial court dismissed the suit on the ground of limitation, it did not adjudicate on the entitlement of the plaintiff to the suit amount. The appellate court set aside the trial court's judgment, directing the trial court to decide on this issue based on the evidence and relevant laws.

Issue 3: Whether the Plaintiff is Entitled to Pendente Lite and Future Interest on the Decree Amount, and if so, at What Rate

Similar to Issue 2, the trial court did not address this issue due to the dismissal based on limitation. The appellate court's decision to set aside the trial court's judgment necessitates a fresh examination of this issue by the trial court.

Issue 4: Relief

The appellate court allowed the appeal, setting aside the impugned judgment and directing the trial court to proceed with the remaining issues. The trial court is to issue fresh notice to the respondent and recommence proceedings to decide on the plaintiff's entitlement to the suit amount and interest.

Conclusion

The appellate court concluded that the suit was not barred by limitation, as the limitation period commenced from the date of the last defaulted EMI. The trial court's judgment was set aside, and the case was remanded for further proceedings on the remaining issues. The appeal was disposed of without any orders as to costs.