Research › Browse › Judgment

Calcutta High Court · body

1983 DIGILAW 47 (CAL)

ASHOKA v. MANIK BANERJEE

1983-03-02

ASHA MUKUL PAL

body1983
ASHA MUKUL PAL, J. ( 1 ) THIS Rule arises out of the judgment passed by the leaned Judge, Small Causes Court on March 12, 1977 dismissing the suit filed by M/s. Ashoka, a registered partnership firm for a decree for a sum of Rs. 1,116/- and costs. The plaintiff's case as made out in the plaint is that on October 6, 1969, one Anil Kumar Banerjee and the defendant agreed to let out one piece of H. M. V. Califpso A/c Model (Record Player) (hereinafter referred to as the Record Player) to the said Shri Anil Kumar Banerjee on the hire purchase basis and it was agreed that the ownership of the article would pass on him on completion of the hire as agreed upon Initially hire was for a sum of Rs. 87/- and the subsequent hire was for Rs. 31/- per month and the total price was Rs. 31/- per month and the total price was Rs. 180/- The present defendant was a guarantor who also signed the agreement and Shri Anil Kumar Banerjee took delivery of the said article on October 6, 1969 on payment of Rs. 87/ -. Thereafter he made only one payment of Rs. 31/- and did not pay any other instalment inspite of demands. The said Anil Kumar Banerjee died on July 12, 1975. ( 2 ) THE learned Judge found the claim of the plaintiff barred by the laws of limitation. He observed that ?there was a clause in the hire purchase agreement that if the hirer fails to pay the hire charges regularly in advance the whole transaction will be treated as hire appears to me in the nature of penal clause and cannot be given effect to as the same appears to me to of oppressive character. The said clause cannot be taken to be as operative part of the agreement which was mainly for the purpose of securing timely payment of the amount due under the hire purchase agreement. ? He further observed that ?the last installment was payable by the 7th of January, 1970 and the suit was filed in July 1976 i. e. long after the expiry of three years when the instalments fell due. As such the case was clearly barred by the laws of limitation. ( 3 ) MR. ? He further observed that ?the last installment was payable by the 7th of January, 1970 and the suit was filed in July 1976 i. e. long after the expiry of three years when the instalments fell due. As such the case was clearly barred by the laws of limitation. ( 3 ) MR. Bhandari appearing for the plaintiff contended before me that the learned Judge was wrong in holding that the agreement was penal in nature and secondly that it was barred by laws of limitation. His argument is that as soon as the hirer failed to pay the instalment, he became bailee of the said article and as such he will be required to pay all the charges that were to be due at the rate of the instalment that was to be paid under the original agreement and a guarantor's liability was co-extensive with the principal debtor's liability he will be liable for the entire amount that became accrued due by way of hire for all these years to the owner and neither the question of limitation will apply in the case of the guarantor because as, Mr. Bhandari contends, limitation against him would run after the death of the hirer. Mr. Bhandari secondly contends that it was not penal as observed by the learned Judge inasmuch as the article was retained by him and he bound himself to be responsible for all the dues that may be due and payable to the plaintiff-company if the said article was not returned in time or the installment was not regularly paid. But to ascertain whether it was penal the clause of the agreement need be gone into. ( 4 ) MR. Bhandari referred to me some clauses of the hire purchase agreement (Ext. 1 ). They were clauses (h) in the first page of the agreement and clauses (e) of the second page of the agreement. Under clause (h) the hirer will have to pay hire upto date of keeping the goods in his possession. Under clause (d), on the failure of the hirer, to pay hire of any month in advance the owner may not only terminate the agreement but retake possession of the said article and for that purpose the owners have the leave and licence to enter any premises occupied by the hirer to retake that article. In this case Mr. Under clause (d), on the failure of the hirer, to pay hire of any month in advance the owner may not only terminate the agreement but retake possession of the said article and for that purpose the owners have the leave and licence to enter any premises occupied by the hirer to retake that article. In this case Mr. Bhandari states that it was a mere liberty to the owner not meant to be used as such; but when once the liberty is given in the arrangement to retake even on failure to pay the installment in advance for one month, wherever the article might be traced in the possession of the hirer, it renders the bargain unconscionable and oppressive for the party who being in need may be subjected to such a clause. ( 5 ) SO far as the guarantor is concerned, I find that the relevant clause which is the clause (e) of agreement is, besides being repugnant and oppressive is uncertain. The clause (e) also militates against the general law of contract. Under clause (e) the guarantor remains liable even if any time is granted or any indulgence is shown in respect to the terms and conditions and the indulgence shown and/or time allowed shall not prejudice the owner and that it shall not be necessary even when the hirer is granted any such concession or indulgence, for the owner to give any notice to the guarantor thereof. The word 'indulgence' has been defined nowhere and as such, it attracts the provisions of Section 29 of the Indian Contract Act being vague and uncertain making such an agreement void. Any indulgence which purports to modify, vary or alter the contract discharges the guarantor under the general law of Contract and time given to the hirer also frees the guarantor from any obligation and any term which tends to render the Guarantor to such a continuing liability under any such circumstances make the bargain wholly unconscionable and oppressive and Court should not give effect to such an agreement. Moreover, the attempt to fasten liability upon the guarantor even if the hirer compounds or makes different arrangement with the owner without notice to the guarantor renders the contract of guarantee infructuous and ineffective. Moreover, the attempt to fasten liability upon the guarantor even if the hirer compounds or makes different arrangement with the owner without notice to the guarantor renders the contract of guarantee infructuous and ineffective. ( 6 ) BESIDES the claim as found by the learned Munsif is manifestly barred by the laws of limitation, the instalment became due in the year 1970. No effective step was taken to retake the goods or filing any suit. No effective step was taken for getting back the money. The hirer died in 1975 and after the death of the hirer, the guarantor is sought to be made liable from July 1973 to June 1976 in a Suit filed in July 1976. If vigilance has got anything to do to enforce a claim, it is absolutely nil in this case, Years passed. The claim is allowed to swell and in every sense became stale and barred by laws of limitation and suddenly it was sought to be brought back to life by seeking to attach liability on the guarantor by giving up some portion of claim and that also on a clause which is itself is not free form uncertainty. The relevant clause of the said agreement of which the guarantor is sought to be made liable violates the accepted rule and norm of fair business standard and also violates against the general provisions of the law of contract. ( 7 ) AFTER considering all the aspects, I do not find any ground to disturb or set aside the judgment of the learned Judge of the Small Causes Court. Hence it is ordered : that the Rule is discharged; stay order, if any, is vacated. Let the records be sent down as early as possible. There will be no order as to costs. Rule discharged.