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TMI Blog2014 (1) TMI 1945X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Limitation Act on the basis of acknowledgment letter executed by the defendants No. 1 and 2 confirming the balance due to acknowledging the liability, is concerned, it is to be noticed here that the defendant No. 3 executed guarantee agreement (Ex. 23) which bears the signature of the Guarantor from A to B . A perusal of Section 18 of the Limitation Act, makes it clear that where before expiration of the limitation prescribed in Limitation Act for filing a suit, an acknowledgment of the liability is accepted by the borrower or Guarantor or any person authorized by the Guarantor, then such acknowledgment made, shall also be applicable on the person on whose behalf it is given and fresh period of limitation shall be calculated from the date and time when the acknowledgment was signed and such acknowledgment can be signed by the borrower or Guarantor either personally or by the agent duly authorized in this behalf - a conjoint reading of the provisions of Section 18 of the Limitation Act and the condition No. 9 of the Guarantee Agreement, makes the position clear that the acknowledgment of the liability made by the principal borrowers i.e. Respondents No. 1 and 2 should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt-defendant No. 3 on the basis of suit being barred by limitation. The brief facts of the case, as depicted in the suit filed by appellant-bank before the learned trial court, are that the respondent-defendant No. 2 Raj Kumar Jain is the Proprietor of respondent-defendant No. 1 Concern i.e. M/s. Jain Wool House. On 4.10.1994, the respondent-defendant No. 2 on behalf of the respondent-defendant No. 1, applied for providing loan facility before the appellant-bank and while acceding to the request made by the respondents-defendants No. 1 and 2, the appellant-bank sanctioned cash credit facility up to Rs. 50,000/- on hypothecation of goods with the Bank. A loan agreement was executed between the respondents-defendants and the appellant Bank. As per the terms and conditions of the loan agreement executed, the respondents-defendants were to pay agreed interest and hypothecate with the bank the wool purchased out of the sanctioned loan amount also. 2. Accordingly, accepting the terms and condition as mentioned in the loan agreement, the respondents/defendants No. 1 and 2 hypothecated the wool and duly executed hypothecation agreement and demand note in favour of the appellant-plaintif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever took any loan from the bank. It was also stated in the written statement that on presentation of the application by the defendants for providing loan, the Bank Officer got signed some printed forms and blank papers from the defendant No. 2, and also got the signature of the defendant No. 3 father of the defendant No. 2 on some blank papers on the pretext of his identity. The defendants also replied that neither any cause of action has accrued to the appellant-bank for filing the present suit nor the suit is within the jurisdiction of the Court. The respondent-defendant No. 3 by filing a separate written statement stated that he has not given any guarantee and has kept the shop on equitable mortgage only and the bank took the title deed of the shop No. 35 only for identification of defendant-respondent No. 2 and denied to have executed any hypothecation agreement. It was also stated that defendant No. 3 never executed any balance and security confirmation letter regarding any loan amount due and while taking the plea of accounts produced by the bank being not properly and regularly maintained with their specific dues and that the suit is barred by limitation, the defendant pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immovable property was required to be considered as within limitation while counting the period of limitation for filing suit to be 12 years as prescribed by Article 62 of Part-V of the Limitation Act, but the learned trial court has dismissed the suit as against the respondent-defendant No. 3 while treating the period of limitation for filing the suit as 3 years despite the fact that the immovable property was mortgaged for recovery of the loan amount and thus, the findings recorded by the learned trial court holding the suit filed by the bank as against the respondent-defendant No. 3 to be barred by the limitation and thereby exonerating him from the liability of paying the outstanding dues of the bank, are contrary to the law and facts. It has also been contended by the learned counsel that the respondent-defendant No. 3 executed guarantee agreement in favour of the bank appointing the borrower i.e. the respondent-defendant No. 2 as authorized agent to confirm the balance and acknowledge the liability on his behalf and also agreed that such confirmation shall be binding on him i.e. guarantor also for applying for fresh start of limitation. The respondents-defendants No. 1 and 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e years and the period of limitation for filing recovery of money suit cannot be considered as twelve years under Article 62 of the Limitation Act. According to the learned counsel, the present suit is covered only under Article 19, 21 23 Limitation Act mentioned in the schedule appended to the said Act and thus the suit is barred by the limitation. Lastly, learned counsel has prayed that the appeal may be dismissed. In support of his contention, learned counsel has relied upon the decision AIR 2006 Bombay 185 (State Bank of India vs. Ramkrishna J. Sakharkar Anr.). 12. I have considered the arguments and rival submissions made by both the parties and also carefully gone through the record, evidence of the case as also applicable legal position and decisions cited at the Bar by both the sides. 13. Admittedly, the appellant-bank preferred a suit before the learned trial court with the prayer for decreeing the suit for recovery of its legitimate dues against the respondents-defendants No. 1, 2 and 3 jointly and severally. The learned trial court reached to the conclusion that all the documents were executed by the defendants in favour of the Bank and accordingly decreed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as agent to confirm the balance due and acknowledge liability on his/their behalf as Guarantor(s) from time to time. The Guarantor(s) further agree(s) that any acknowledgment of liability made by Borrower(s) or any person duly authorized by him/them to operate account or any of the co-guarantors as agent on behalf of the Guarantor(s) shall-be binding on them for giving fresh start of limitation and also for admission of liability against him/them. 16. The tenor of the aforesaid condition No. 9 indicates that the Guarantor authorizes the borrowers or any other persons duly authorized by them to operate and confirm the balance due and acknowledgment liability on behalf of the Guarantor from time to time and such acknowledgment of the liability by the borrower or any person authorized by the Guarantor shall be binding to the Guarantor for giving fresh start of limitation and admission of liability against the defendant-respondent No. 3. 17. At this stage, it is also appropriate to consider and quote the provisions of Section 18 of the Limitation Act which deal with the object and effect of acknowledgment in writing and which reads as under:- 18. Effect of acknowledgment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the condition No. 9 of the Guarantee Agreement, makes the position clear that the acknowledgment of the liability made by the principal borrowers i.e. Respondents No. 1 and 2 should be considered as an acknowledgment of the liability on behalf of the Guarantor i.e. the respondent-defendant No. 3 also, which shall be binding on him and would provide fresh period of limitation for filing suit against the defendant No. 3 either from the time it was signed by the principal borrower. 19. Coming to the legal position regarding the applicability of Article 62 of the Limitation Act in which the period of twelve years limitation is mentioned in Part-V of the Limitation Act for filing the suit seeking decree for recovery of the amount secured through the immovable property, it is appropriate to quote Article 62 mentioned in Part-V of the Limitation Act for consideration of the limitation in present case which is as under:- 20. The above mentioned statutory provisions of Article 62 provides in an unequivocal terms that the limitation prescribed for filing a suit to enforce payment of money secured by mortgage of immovable property would be twelve years from the period when the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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