9911796707
TMI Blog1992 (2) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... , the defendants are the appellants. The plaintiff-respondent Bank filed suits for recovery of loan, which were decreed by the trial Court. On appeal by the defendants the learned District Judge, West Godavari District, at Eluru, confirmed the judgments of the trial Court and dismissed all but two appeals. The aggrieved defendants have filed these second appeals. It may be appropriate to mention here that the said two appeals, namely, A.S. No. 178 of 1981; and A.S.77 of 1984 were allowed by the learned District Judge. Against the judgments in those appeals, the Bank filed Second Appeal No. 241 of 1985 and Second Appeal No. 791 of 1987. The first mentioned second appeal was dismissed at the admission stage by a learned single judge on 2-4-1985. The other second appeal is now before us. 3. A brief narration of the facts giving rise to these appeals will be apposite. A scheme was evolved under which the members of the West Godavari District Co-operative Sugars Limited, Surappagudem, hereinafter referred to as the sugar factory , were advanced loans by the Bank for purchasing shares in the said sugar factory by the Bank. The members of the sugar factory were also promised crop loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e suit was filed after that date, therefore the suit is liable to be dismissed. 5. The trial Court held that Article 37 of the Limitation Act was not attracted and that Article 113 of the said Act was applicable and that the suit having been filed within three years from the date of the demand was within limitation. In that view of the matter, it decreed the suit on 30-6-1981. On appeal by the defendant-appellant, the learned District Judge, West Godavari District, Eluru, confirmed the judgment of the trial Court and dismissed the appeal (A.S.146 of 1981) on 24-4-1985. Aggrieved by the judgment and decree of the appellate Court, the defendant filed the second appeal. 6. Sri. M.V.R.N. Acharya, the learned counsel appearing for the appellants, who led the batch has contended that Article 37 of the Limitation Act applies and that all the suits are barred by limitation; the loan was advanced on the basis of promissory note, Ex.A-3, and the hypothecation bond, Ex.A-4, and therefore, under the terms of Ex.A-4 the whole amount became due in June, 1976 and the suits having been filed in 1980 are clearly barred by limitation under Article 37 of the Limitation Act. 7. Sri K. Mangach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 976 or from the date of first commissioning of the sugar factory (November, 1975). No communication was received by the defendants to their loan applications from the Bank. But from Ex.A-8 it is clear that the loan was sanctioned subject to certain conditions. Those conditions include execution of promissory note and hypothecation bond, by the applicants for loan. Subsequently the defendants-appellants executed Ex.A-3, promissory note and Ex.A-4, hypothecation bond. The relevant portion of Clause 13 of Ex.A-4 reads as follows:- 13. In the event of one or more of the following events occurring, namely, (i) if the borrower shall make default in payment whereof is hereby secured or any part thereof or in the performance or observance of any term or undertaking contained in this security and on the part of the borrower to be observed and performed, or x x x (viii) if any circumstances shall occur which in the sole opinion of the Bank is prejudicial to or imperils or is likely to be prejudice or imperil the security but so that this clause shall not be read sui generis with the said Clauses (i) to (vii) herein, of which the bank shall be the sole judge, then the entire balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also applicable to suits of the description contained therein where transaction of loan is contained in documents more than one. What is germane is the description of suit given in Column 1 of Article 37 which may be based on a single document-promissory note or bond-or on documents more than one. If that be so, the time for purposes of limitation, which is three years in such a case, begins to run when the default is made unless the payee or the obligee waives the benefit of the provision and then when fresh default is made in respect of which there is no such waiver. 12. In these cases the first instalment fell due on 30-6-1976. The second instalment fell due on 30-6-1977, and the third instalment became due on 30-6-1978. None of the said instalments was paid. A demand was, however, made by notice dated 5-5-1979 recalling the whole amount. As the very first instalment was not paid on 30-6-1976, the whole amount of loan had become due and, therefore, the limitation began to run from 30-6-1976, unless, of course, the benefit of Clause 13 was waived by the plaintiff on 30-6-1976 in which case the whole amount would become due on the second default on 30-6-1977. Again if the righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either enforce the whole debt or proceed to recover it in instalments mentioned inspite of the default made by the creditor. It was held that the conduct of the creditor in not enforcing the terms of the bond at once was an important element in considering the question of waiver. In Vishwanath v. Sadashiva AIR 1932 Nag, a Full Bench of the Nagpur High Court gave its opinion on reference that when a bond payable by instalments provides that if default is made in the payment of one or more instalments, the whole amount shall become due and default is made and the whole amount became due, but the creditor did nothing to show that he waived the benefit of the default clause during the period allowed by the Limitation Act for a suit for the whole amount, he could not subsequently sue for instalments counting limitation from the day on which these instalments would have fallen due, had there been no default clause. 14. In Jagat Jit Singh v. Manodat AIR 1936 Oudh 384. a learned single judge of the Oudh Chief Court took the view that where the obligee is given the right to sue for the whole amount on occurrence of default in payment of any instalments, it is open to him to waive the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 241 of 1985. We are in agreement with the view expressed by the learned Judges. However, we would like to add that waiver of the right to sue for the whole amount pursuant to the terms and conditions of the bond is not the same thing as giving up the claim for the instalments which became due. Where the amount of loan is agreed to be paid in instalments, there being no default clause in the bond or the promissory note, if the debtor makes default in payment of instalments, it is open to the creditor to give up his claim to the first or the subsequent instalment, as the case may be, which are barred by limitation to bring the suit filed for recovery of the remaining instalments within limitation. Suit of this nature is governed by Article 36 of the Limitation Act. But if there is a default clause in the bond providing that on default of payment of any of the instalments the whole amount would become due, the creditor has to sue for the whole amount on the occurrence of the default. He cannot in such a situation give up the claim for the instalments which are barred by limitation and sue for the balance of the loan representing the remaining instalments, because on the happening of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge or promissory note payable on demand was not accompanied by any writing restraining or postponing the right to sue and in that case as the promissory note was accompanied by a letter of Varthamanam Article 73 of the limitation Act was not attracted and that on those facts Article 80 of 1908 Act would apply. As observed above, in the instant case, having regard to the facts of the case, it cannot be said that the amount was advanced on the promissory note and that Ex. A-1 or Ex.A-4 has to be treated as a letter postponing the date of payment. All the parties proceeded on the premise that Exs.A-1, A-3, and A-4 have to be read together to ascertain the terms and conditions of the loan and we have already held that suits of the description contained in Column 1 of Article 37, even though based on documents more than one read together, would be covered by Article 37. Therefore, on the facts of this case, the residuary Article 113 of the Limitation Act does not apply. 20. For the above reason, we set aside the judgments and decrees of the Courts below in these second appeals except Second Appeal No. 791 of 1987 which is filed by the Bank, and accordingly allow the second appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
