S. R. v. Mohamed Esmal VS A. S. Sevari Cruz — 1999 DIGILAW 194 (MAD)

Judgment 1. This second appeal is directed against the judgment of the learned District Judge, Madurai, In A.S.No.27 of 1986 reversing the judgment of the learned Subordinate Judge, Madurai, in O.S.No.387 of 1979. The defendant in the suit is the appellant in the present appeal. 2. The suit was filed by the plaintiff on two promissory notes praying for a decree for a sum of Rs.29,474.60 with subsequent interest at 9 percent per annum on Rs.17,000 from the date of plaint till date of decree and at 6% from the date of decree till realisation. 3. According to the plaintiff, the defendant borrowed a sum of Rs.10,000 from the plaintiff on 5.12.1970 promising to repay with interest at 12 per cent per annum. The defendant did not pay any money thereafter though he had promised to repay in six months time. Thereafter, the plaintiff was insisting on payment and at last on 4.12.1973 the defendant made a payment of Rs.50 towards the interest and principal and made endorsement on the back of the promissory note acknowledging his liability to pay the balance. A notice dated 21.10.1975 was sent demanding a payment of Rs.10,000 and other sums to an extent of Rs.7,000 payable by the defendant. Though the notice was received by the defendant he did not send any reply. The defendant met the plaintiff and told him that he would pay the entire amount in due course, and since the payment was delayed the defendant executed another promissory note for Rs.7,000 on 2.5.1976 promising to repay the said amount with interest at 15 per cent per annum. According to the plaintiff even after that the defendant did not pay the amount are when the plaintiff told that he would take legal action the defendant had stated that he is an agriculturist entitled to the benefits of the Debt Relief Act and that the plaintiff will not be in a position to go to court in view of the said Act. The plaintiff also believed the same in good faith and therefore he did not file any suit at that time. The plaintiff further submitted that by invoking the provisions of the Debt Relief Act, the claim was within the period of limitation. The plaintiff also believed the same in good faith and therefore he did not file any suit at that time. The plaintiff further submitted that by invoking the provisions of the Debt Relief Act, the claim was within the period of limitation. However, the plaintiff also pleaded that the defendant was not entitled to the benefits of the Tamil Nadu Act 40 of 1970 and that the defendant was assessed to house tax exceeding the limit provided under the Act. Hence, the suit. 4. In the written statement filed by the defendant, it was contended that though it was true that the defendant borrowed a sum of Rs.10,000 from the plaintiff on 5.12.1970 and had executed a promissory note, the allegation that he did not pay any amount was absolutely, false. According to the defendant, the promissory note dated 5.12.1970 was discharged, long ago, The allegation that he had paid Rs.50 on 4.12.1973 and had made endorsement on the back of the promissory note was absolutely false. The defendant also denied having made any payment on that date. The defendant doubted that the endorsement should have been forged. Even otherwise, according to the defendant the claim was barred by limitation as it was not filed within three years from the date of the alleged endorsement. The defendant further denied that he was liable to pay Rs.7,000 to the plaintiff since he had never borrowed the said amount. The plaintiff had not given any particulars about the alleged payment of Rs.7,000 and the defendant would contend that he never executed any promissory note on 2.5.1976. He would state that there was no need to execute any promissory note on 2.5.1976. The defendant suspects that the plaintiff would have created such a promissory note. The further allegation that when the plaintiff had met the defendant and demanded the amount the defendant had replied that he being an agriculturist the plaintiff cannot go to the court in view of the Debt Relief Act was denied. The said allegation was completely false and the further allegation that the plaintiff believed the same in good faith was also false. The plaintiff knew very well that the defendant owns extensive properties and was an assessment Income-tax, professional tax and property tax. It was only on the ground that the defendant was owning extensive properties, the plaintiff had advanced the loan of Rs.10,000. In the year 1970. The plaintiff knew very well that the defendant owns extensive properties and was an assessment Income-tax, professional tax and property tax. It was only on the ground that the defendant was owning extensive properties, the plaintiff had advanced the loan of Rs.10,000. In the year 1970. The plaintiff himself has stated in paragraph 6 of the plaint that the defendant was assessed to house tax exceeding the statutory limit and that therefore the plaintiff cannot claim to have filed the suit in good faith. As the defendant was not entitled to the benefits of the Act, the suit was badly barred by limitation. Hence, the suit was liable to be dismissed. 5. On a consideration of the said pleadings and the evidence both oral and documentary, the trial court held that the promissory note dated 5.12.1970 was truly executed and that the discharge as pleaded by the defendant was not true. As far as the promissory note dated 2.5.1976 is concerned, the trial court disbelieved the execution of the same. However, with reference to the first promissory note, the trial court held that the defendant had not established the fact of good faith in having filed the suit beyond the period of limitation and hence the suit was barred by limitation. With the result, with reference to both the promissory notes, the trial court rejected the plaintiffs suit and dismissed the same. However, on appeal, the appellate court while confirming the findings of the trial court as regards the second promissory note dated 2.5.1976, held that the promissory note dated 5.12.1970 was duly executed. As regards the question of limitation, the findings of the trial court was set aside and the appellate court observed that there was evidence to show that the plaintiff was under the bona fide belief that the defendant was entitled to the benefits of the Debt Relief Act. With the result the suit was decreed with reference to the first promissory note dated 5.12.1970 and as regards the second promissory note, the claim of the plaintiff was disbelieved and the suit was dismissed. Hence, the present second appeal by the defendant. 6. In this second appeal, sustainability of the first promissory note dated 5.12.1970 alone arises for consideration. With the result the suit was decreed with reference to the first promissory note dated 5.12.1970 and as regards the second promissory note, the claim of the plaintiff was disbelieved and the suit was dismissed. Hence, the present second appeal by the defendant. 6. In this second appeal, sustainability of the first promissory note dated 5.12.1970 alone arises for consideration. As regards the execution of the promissory note and the alleged discharge of the debt under the promissory note as pleaded by the defendant have been disbelieved by the courts below concurrently. The said issue being a pure question of fact that concurrent findings of the courts below have to be sustained. However, on the question of limitation, I am inclined to hold that the appellate court is not justified in ignoring the plea of limitation raised by the defendant. It is not disputed that but for the postponing of the right to institute a suit as envisaged under the Debt Relief Act the suit would have been barred by limitation. Therefore, the only question which arises for consideration is as to whether the suit was filed by the plaintiff belatedly under any bona fide belief and in good faith of the plaintiff regarding the applicability of the Act in favour of the defendant. In this context as stated earlier, in paragraph 5 of the plaint, the plaintiff has pleaded that he did not file the suit because he was informed by the defendant himself that he was entitled to the benefits of the Debt Relief Act and that he believed the statement of the defendant in good faith and did not file the suit at that time. But in the very next paragraph, he would plead that the defendant was not entitled to the benefits of Tamil Nadu Act 40 of 1970 as he was assessed to house tax exceeding the statutory limit. 7. Such contradictory pleadings cannot be sustained but for the liberty envisaged under the Act itself in favour of the plaintiff in not filing the suit in time, and the plaintiff could substantiate that such non-filing of the suit within the period of limitation was due to his bona fide belief that the defendant was entitled to the benefits of the Act even though subsequently the plaintiff came to realise that the defendant was not entitled to the benefits of the Act. In this context, Sec.6 of the Tamil Nadu Indebted Persons (Temporary Relief) Act, 1976 is relevant and extracted below: “6. Exclusion of time for limitation: In computing the period of limitation or limit of time prescribed for a suit for the recovery of a debt or an application for the execution of a decree passed in such suit, the time during which the institution of the suit of the making of the application was barred by Sec.4, or during which the plaintiff or his predecessor-in-title, believing in good faith that Sec.4 applied to such suit or such application, refrained from instituting the suit or making the application, shall be entitled. Explanation:”Good faith “ shall have the meaning assigned to it in clause (22) of Sec.3 of the General Clauses Act X of 1897“. The above quoted provision gives liberty to a plaintiff to come forward with a belated suit even in respect of a debtor who is not entitled to the protection of the Act, but that at the same time, the plaintiff was under the bona fide belief in good faith that the defendant was entitled to the protection of the Act. It is needless to point out that the rights arising under the provisions of the Limitation Act, 1963 in favour of a party is a vested right founded on the law of limitation and such a vested right cannot be deprived without a strong reason. Sec.6 quoted above is in the nature of an exception to the Rule of Limitation and hence ought to be strictly construed. It is not sufficient for a party to merely plead good faith and thereby deprive the defendant of his valid and vested right to resist the suit on the ground of limitation. The alleged good faith must be properly substantiated in evidence. The explanation appended to the Section clearly states that the phrase” good faith “ shall have the same meaning assigned in Sec.3(22) of the General Clauses Act, 1897. Sec.3(22) of the General Clauses Act holds that thing shall be deemed to be done in good faith where it is in fact done honestly whether it is done negligently or not. Therefore, it is not sufficient to merely allege in the plaint that the plaintiff had assumed in good faith the defendant was entitled to the benefits of the Act. Therefore, it is not sufficient to merely allege in the plaint that the plaintiff had assumed in good faith the defendant was entitled to the benefits of the Act. He has to prove further the circumstances under which he had believed so, and also to prove that he had honestly believed that the defendant was entitled to the protection of the Act. 8. In the present case, as discussed in detail by the trial court, the pleadings as well as the evidence on the side of the plaintiff would show that the plaintiff had no reason to believe honestly that the defendant was entitled to the benefits of the Act. Firstly, there is no proof of the claim by the plaintiff that he was informed by the defendant himself that he (defendant) was entitled to the benefits of the Act. Apart from the fact that no suit notice had been issued against the defendant even prior to the lapse of original period of limitation, there is no evidence to show that the plaintiff ever contacted the defendant much less, that the defendant himself told the plaintiff that he is entitled to the benefits of the Act. The defendants having denied the said allegation in the written statement, has also suggested in the cross-examination of the plaintiff, that the defendant had never informed the plaintiff anything to the said effect. In fact, in the cross-examination of the plaintiff, the plaintiff has also admitted that he cannot say exactly as to when the defendant had informed him that he was entitled to the benefits of the Act. Therefore, the reason given by the plaintiff is not at all acceptable. 9. It is also to be seen further that the plaintiff himself had admitted in the evidence that the shop which was owned by the defendant was a very popular business in the City and that the defendant was also paying house tax and sales tax. Therefore, it is very clear that the plaintiff was aware of the status of the defendant even when the suit promissory note was executed and therefore, the contention that the plaintiff was under the bona fidebelief that the defendant was entitled to the benefits of the Act cannot at all be sustainable. Therefore, it is very clear that the plaintiff was aware of the status of the defendant even when the suit promissory note was executed and therefore, the contention that the plaintiff was under the bona fidebelief that the defendant was entitled to the benefits of the Act cannot at all be sustainable. This aspect of the dispute between both parties has been analysed in a very detailed manner by the trial court and the trial court had recorded a clear finding against the plaintiff. In contrast the appellate court has not given due consideration to the very admissions by the plaintiff in this context and the glaring contradictory pleas raised by the plaintiff merely with a view to countenance the objection of limitation. Therefore, I am unable to sustain the decree as granted by the appellate court and with the result, the above second appeal is allowed. No costs.