2022 (7) TMI 1584 - SC - Indian Laws

Time limitation of counter claims filed - whether the appellants counter-claim was governed by Article 22 or Article 113 of the Limitation Act 1963? - HELD THAT - In the factual position as apparent in the present matter the specific case of the defendants appellants was that the respondent Bank had extracted the amount from them by exerting undue influence. It could further be seen that the Board of Directors of the Appellant had contemplated and considered the possibility of approaching the Court against the respondent Bank. However it was thought fit not to drag the respondent Bank to the Court to avoid adverse publicity and mar their chances of receiving loans from other banks. It could thus be seen that the learned DRT has come to a finding of fact that it was the conscious decision of the appellants to pay off whatever amount was demanded by the respondent Bank without joining the issue and they had accordingly paid the amount may be much against their wishes. Admittedly the said amount which according to the appellants was paid under undue influence in the year 1994 - It appears that after waiting for a period of five years the appellants woke up from their deep slumber and issued a notice on 22nd September 1999. Conclusion - The DRT the DRAT as well as the High Court have concurrently held that the counter claim of the appellants was based upon the amount deposited in the year 1994 which according to the appellants was paid under undue influence. If that be so no error could be noticed in the finding of the fact as recorded by the DRT the DRAT and the High Court that the counter claim was squarely covered under Article 113 and not under Article 22 of the Limitation Act. There are no merit in the appeal. The appeal is dismissed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issue considered in this judgment was whether the appellants' counter-claim was governed by Article 22 or Article 113 of the Limitation Act, 1963. The determination of this issue was crucial to decide if the counter-claim was filed within the statutory limitation period. The appellants contended that Article 22 was applicable, while the respondent-Bank argued for Article 113.

ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents:

The Limitation Act, 1963, provides the statutory time limits within which claims must be filed. Article 22 pertains to money deposited under an agreement that it shall be payable on demand, with a limitation period starting from the date of the demand. Article 113 is a residuary provision applicable to cases not covered by other specific articles, with a limitation period of three years from when the right to sue accrues.

The appellants relied on the precedent set in the case of Jammu and Kashmir Bank Ltd. v. Attar-Ul-Nissa & Others, arguing that their claim was akin to a demand for repayment of a deposit, thus falling under Article 22.

Court's interpretation and reasoning:

The Court analyzed the nature of the transaction between the appellants and the respondent-Bank. It noted that the appellants claimed the amount was extracted by the Bank under undue influence, and not as a deposit payable on demand. The Court emphasized that the appellants had consciously decided to pay the amount demanded by the Bank to avoid adverse publicity and potential issues with securing loans from other banks.

Key evidence and findings:

The Court referred to paragraph 41 of the DRT's order, which highlighted that the appellants had not treated the amount as a deposit but rather as an amount paid under undue influence. The appellants' own admission that they delayed taking legal action to avoid negative publicity further supported the finding that the amount was not a deposit under Article 22.

Application of law to facts:

The Court applied Article 113 of the Limitation Act, concluding that the counter-claim was based on an amount paid in 1994 under undue influence. Since the appellants waited until 1999 to issue a notice, the claim was filed beyond the three-year limitation period prescribed by Article 113.

Treatment of competing arguments:

The appellants argued that the limitation period should start from the date of their notice in 1999, under Article 22. However, the Court found no merit in this argument, as the factual scenario did not support the characterization of the amount as a deposit payable on demand. The respondent-Bank's position that Article 113 applied was upheld by the Court.

SIGNIFICANT HOLDINGS

The Court held that the counter-claim was governed by Article 113, not Article 22, of the Limitation Act. The Court affirmed the concurrent findings of the DRT, DRAT, and the High Court, which had all concluded that the counter-claim was time-barred.

Preserve verbatim quotes of crucial legal reasoning:

The Court noted: "It is thus obvious that a conscious decision was taken by Defendant No. 1 Company to pay off whatever demanded by Applicant Bank without joining the issue and they had accordingly paid the amount maybe much against their wishes. Subsequently if the Defendants wanted to recover the said amount they ought to have taken out proper proceedings before proper forum within the statutory period of three years. This was admittedly not done."

Core principles established:

The judgment reinforces the principle that the characterization of a transaction is crucial in determining the applicable limitation period. The conscious decision to pay under undue influence does not transform the payment into a deposit payable on demand under Article 22.

Final determinations on each issue:

The Court dismissed the appeal, concluding that the appellants' counter-claim was filed beyond the limitation period prescribed by Article 113, and thus, was not maintainable. The appeal was dismissed for lack of merit.