Vidya Devi @ Vidya Vanti Chawla v. Bank of India — 1991 DIGILAW 400 (PAT)

JUDGMENT S. B. Sinha, J. This first appeal is directed against a judgment and decree dated 3.12.1986 passed by Shri Ram Anurag Singh, 3rd Additional Sub-ordinate Judge, Jamshedpur in Money suit no. 100/83/48/86 whereby and whereunder the said learned court decreed the plaintiff-respondent No.1’s suit for recovery of a sum of Rs. 85,797. 29p. 2. The fact of the matter lies in a very narrow compass. 3. The plaintiff filed the, aforementioned suit on 16.5.1983 alleging, inter alia, therein that one Ram Prakash Chawla (since deceased), the predecessor-in-interest of the - defendants No.2 to 9) had been carrying on a - proprietory business under the name and style of M/s Jamshedpur Cycle Stores. The plaintiff asserted that the said Ram Prakash Chawla as proprietor of M/s Jamshedpur Cycle Stores (Defendant No.1) had been granted the cash credit facility upto the limit of Rs. 40,00-/ which was sanctioned by the plaintiff Bank on 2.6.1973. Allegedly for obtaining the aforementioned cash credit facilities, the defendant No.I had hypothecated the stock in trade and further executed various of her documents. The plaintiff asserted that on 14.6.1973 a sum of Rs. 39,893. 34 P was disbursed to the aforementioned late Ram Prakash Chawla who executed a demand promissory note in terms whereof he promised to pay the said amount together with interest at the rate of 41/2% over Reserve Bank of India rate with a minimum rate of 41/2% per annum with quarterly rates, on demand. 4. Allegedly the said late Ram Prakash Clwwla executed a letter of continuing security on 14.6.1973. It was also alleged that he executed a letter of hypothecation of movable properties with regard to all stocks of cycle parts, cycle tyres and tubes etc. The said late Ram Prakash Chawla also allegedly executed a letter of lien and set, off in favour of the plaintiff on 14.6.1973. 5. It has further been asserted that the defendant No. 11 Sitaram Sachdev, the defendant No. 12, Roshanlalji Sachdev and Defendant No. 13, Monmohan Kumar Sachdev all partners of M/s Sachdev Cycle Mart at Main Road, Bistupur (the defendant No. 10) stood as guarantor of the defendant No. 1 M/s Jamsehdpur Cycle Stores and the aforementioned late R. P. Chawla. The said guarantors executed a letter of guarantee on 14-7-73. The said guarantee was a continuing one. The said guarantors executed a letter of guarantee on 14-7-73. The said guarantee was a continuing one. Allegedly the defendant No.1 had a current account with the plaintiff-bank and all the deposits made in favour of the defendant No.1 had been duly entered in the books of account. It has been accepted that the last deposit of Rs. 1001- in the said cash credit account was made on 3.1.1978 by clearance. 6. In paragraph 22 of the plaint, it has been accepted that on 24.1.1978 the aforementioned late R. P. Chawla acknowledged the liability of 34,563.84P which was the outstanding dues as on 31.3.1978 by executing a letter of ackowledgement. 7. The plaintiff further asserted that as the principal borrower late Sri Ram Prakash Chawla, expired, the defendant Nos. 2 to 9 being his heirs and legal representatives become liable and hound to pay the aforementioned amount claimed by the plaintiff-Bank. 8. A written statement was tiled by the 'defendant Nos. 2 to 7 and 9 before the learned court below alleging, inter alia, therein that the suit was barred by limitation. 9. The said defendants further alleged that late Sri Ram Prakash Chawla died on 20.2.1978. It was asserted after the death of aforementioned Ram Prakesh Chawla, the Bank account was never operated'. The said defendants alleged that they had no knowledge with regard to the transactions of late Sri Ram Prakash Chawla with the plaintiff-Bank or execution of any documents by him in its favour. 10. It was further asserted that the aforementioned late R. P. Chawla have not left any properties and thus the said defendants arc not bound to pay any amount to the plaintiff-Bank. 11. The guarantors also filed their written statement. 12. The learned trial court in view of the pleadings of the parties framed various issues, one of them being "whether the suit is barred under the law of limitation". 13. The learned trial court in his judgment held that the suit is not barred by law of limitation in view of the fact that a letter of continuing guarantee hade been executed by the guarantors. In support of the said conclusion, the learned trial court relied upon a decision of the Supreme Court in Margaret Lalita vs. Indo Commercial Rank reported in AIR 1979 S. C. page 102. 14. In support of the said conclusion, the learned trial court relied upon a decision of the Supreme Court in Margaret Lalita vs. Indo Commercial Rank reported in AIR 1979 S. C. page 102. 14. The learned trial court further held that as the account was never closed and as guarantors never disputed their liabilities to pay the lawful dues of the plaintiff-Bank, the suit was not barred under the law of limitation. 15. Mr. Gopal Chowdhury, learned counsel appearing on behalf of the appellant Submitted that the finding of the learned trial court to the effect that the suit was not barred by limitation is erroneous on the face of the judgment inasmuch as it has been accepted by the learned trial court that last deposit was made by the borrowers on 3.9.78 and he purported to have admitted and acknowledged his liability on 21.4.1978. 16. The learned counsel further drew my attention to the statement of P.W. 3. "P.W.3, Shri .K. Gopal, the Branch Manager of the plaintiff Bank in paragraph 10 of his deposition admitted that Ram Prakash Chawla died on 22.9.78. He further admitted that there is no document to show that heirs of Ram Prakash Chawla had acknowledged the liabilities. He further admitted after the death of Ram Prakash Chawla, his legal heirs did not operate the accounts. He further stated that the heirs of Ram Prakash Chawla' deposited certain amount after his death but there is no document in relation thereto. He further admitted that he had not insisted the heirs of Ram Prakash Chawla to fill up the forms as contained in Ext. 18 series." 17. The learned counsel, therefore, submitted that in view of the aforementioned admitted position, the learned court below must be held to have committed an illegality in deciding the issue No.2 i.e. the issue with regard to the limitation in favour of the plaintiff. 18. The learned counsel further submitted that the learned court below misdirected himself in relying upon the' decision of the Supreme Court in Margaret Lalita v. Indo Commercial Rank Ltd. case (Supra) .as therein in the facts and circumstances of the case, it was held that the bank account continued to be alive up to 29th September, 1952 and thus the suit which was filed on 8th November 1954 was not barred under the law of limitation. 19. 19. The learned counsel has further relied upon a decision of mine in M/s Keshari Engineering Works vs. Rank of India reported in AIR 1991 Patna page 194 and submitted that the limitation begins to run from the date of last payment or the date of acknowledgement. 20. In view of the submissions made by the learned counsel appearing on behalf of the appellant, the only question which arises for consideration in this appeal is as to whether the suit was barred by limitation. 21. In this ease the basic facts arc not disputed. 22. It is admitted that Ram Prakash Chawla, died on 20.2.1978. It is also admitted that the account was operated only upto 23.9.78 when a sum of Rs. 100/- was deposited in the aforementioned account of late R.P. Chawla by way of transfer. It is also evident from the statement made in paragraph 22 of the plaint that late R.P. Chawla admitted and acknowledged his liability on 21.4.1978. As noticed here-in-before, the suit was filed on 10.5.1983. 23. Sections 18 and 19 of the Limitation Acts reads as follows : "Section 18 (1) : Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, all acknowledgment of liability, in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through' whom he derives his title, or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1972) oral evidence of its contents shall not be received." Section 19 : Effect of payment on account of debt or of interest on legacy, - Where payment on account of debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the dent or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made: Provided that, save in the case of payment of interest made before the 1st day of January, 1128, an acknowledgment of the payment appear, in the handwriting of, or in a writing signed by, the person making the payment." 24. From a bare perusal of the aforementioned provisions, it is evident that the limitation begins to run afresh and thus the period of limitation is to he computed from the time when the acknowledgment in writing is made or a part payment is made. 25. Article 55 of the Limitation Act, 1963 which is equivalent to Article 115 of the old Limitation Act provides for a period of limitation for three years for instituting a suit for damages for the breach of contract express or implied which has not specially provided therein and in such a case the time begins to run from the day when the contract is breached or where successive breach occurs and where the breach is continuing, when it ceases. 26. In Margaret Lalita v. Indo Commercial Rank Ltd. reported in AIR 1979 SC page 102 it was held that in a case where Article 115 of the Limitation Act, 1908, is attracted, the limitation will begin to run when the guarantor refuses to pay the amount of guarantee when called upon to do so and/or till the over draft account remains alive. In that case, it was found as of fact that the over draft account was alive upto 29.5. 1952 and thus the suit which was filed on 8.11.1954.was held to be not barred under the law of limitation. In that case the respondent Bank was enforcing the continuing guarantee. In that case, it was found as of fact that the over draft account was alive upto 29.5. 1952 and thus the suit which was filed on 8.11.1954.was held to be not barred under the law of limitation. In that case the respondent Bank was enforcing the continuing guarantee. However, a suit for realisation of the balance due on a mutual open and current account will be three years and the time therefore begins to run from the close of the year in which is last item admitted or proved is entered in the account. 27. Admittedly the demand promissory note, the letter of hypothecation etc., were executed by late Ram Prakash Chawla on 14.6.1973. From a copy of the accounts furnished by the plaintiff which is exhibit 31, it appears that the list amount entered in the account was of 23rd September, when a sum of Rs.100/- was credited to the account of the plaintiff, which was deposited by cheque. Thereafter no further amount has been credited in the aforementioned account. 28. In the instant case, the appellants have been sued by the plaintiff-Bank for realisation of a sum of Rs.85,795.25P on the ground that their predecessor-in-interest was the principal borrower. In this case, therefore, Article 55 of the Limitation Act, 1963 will not be attracted, but the suit will be admittedly governed by Article 1 thereof. 29. In view of the sections 18 and 19 of the Limitation Act, 1963 the suit should have been filed as against the principal borrower and/or his heirs within a period of three years from the date of acknowledgment made by the principal borrower i.e. by 21st April, 1981. Reference in this connection may be made to M/s Keshari Engineering Works v. Rank of India reported in AIR 1991 Patna page 194. 30. In this case, the appellants are not the guarantors. They arc heirs of the principal borrowers. P.W. 3 admitted that the contract entered into by and between the Bank and late R.P. Chawla was not operated nor any fresh arrangement, was entered into by the plaintiff Bank with the defendants No.2 to 9. The amount paid to the aforementioned late R.P. Chawla was by way of a loan and certain movable properties were hypothecated by him by way of security. Had it been a case of mortgage of immovable property, the matter would have been different. The amount paid to the aforementioned late R.P. Chawla was by way of a loan and certain movable properties were hypothecated by him by way of security. Had it been a case of mortgage of immovable property, the matter would have been different. The plaintiffs Bank has not also filed the suit for enforcing the letter of hypothecation allegedly executed by late Ram Prakash Chawla. 31. The facilities given to the laic R.P. Chawla to draw any amount upto the limit of Rs. 40,000/- was personal contract. The said contract came to an end upon the death of laic R.P.Chawla. 32. Although in a case of letter of continuing guarantee a suit may not be barred by limitation unless the guarantors refuse to pay the amount of guarantee its 'and when it is called upon to do so and so long the account remains alive hut a suit will be barred by limitation as against the principal borrowers, if the same is not filed, within a period of three years either from the date of acknowledgment or from the date of the last part payment. 33. In the result, this appeal is allowed and the impugned judgment so far as the appellant and respondent Nos. 3 to 9 arc concerned, the same is set aside. 34. However, in the facts and circumstances, the parties shall pay and bear their own costs.