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2004 DIGILAW 40 (JK)

J&K Bank Ltd. v. S. Surjit Singh

2004-02-26

S.K.GUPTA

body2004
1. Initiated by the unsuccessful plaintiff-bank, this Appeal seeks the correctness of the judgment and decree dated 27.11.99 drawn by the First Addl. District Judge (Bank Cases) Jammu, in an action instituted by the plaintiff-bank for the recovery of Rs.354558.18 paisa against the defendants-respondents on account of loan and advance for the purchase of TATA Truck. In culmination of the trial of the suit, the court below dismissed the claim of the plaintiff-bank for the recovery of the suit amount in declaring it as barred by period of limitation. 2. The appellant J&K Bank Ltd. (in short The Bank�) commenced a suit for recovery of Rs.354558.18 paisa, due under the pronote and guarantee deed, against defendants namely S. Surjit Singh, S. Prem Singh and Sh. Behari Lal Gupta, respectively. 3. According to the plaintiff-bank, an amount of Rs.2,20,000/- as loan was sanctioned in favour of defendant No. 1 for the purchase of new TATA truck who agree to repay the same in seventy equal monthly installments of Rs.4354/- each. A Hundi dated 12.08.1981 for the loan amount was executed by defendant No. 1, besides the deed of hypothecation whereby defendant No.1 hypothecated the purchased truck, trust receipt, irrevocable power of attorney, letter of undertaking and an affidavit in favour of bank by way of security of the loan amount advanced by the Bank. Whereas, the defendants 2 and 3 executed guarantee agreement dated 12.8.81 for the said amount and guaranteed repayment of the loan amount along with interest, at the rate of 3.50% p.a. OBR with minimum rate of 12%p.a. or any other rate of interest prescribed by the Reserve Bank of India from time to time. However, failure of defendants No. 1 (borrower) to discharge his obligation to pay the installments of the loan amount in terms agreed to by the parties rendered the loan account irregular and sticky. This led the bank to raise a demand notice dated 4.2.87 issued to the defendants requiring the repayment of the loan amount with interest accrued thereon. Further case of the bank is that the defendant No.1 (borrower) again approached the bank and sought some time to repay the loan amount. The borrower further stated to have executed a D.P. Note wherein he admitted and acknowledged the liability of past debt existing and outstanding against him of a sum of Rs.299865.52 NP and thus, thereby, extended the period of limitation. The borrower further stated to have executed a D.P. Note wherein he admitted and acknowledged the liability of past debt existing and outstanding against him of a sum of Rs.299865.52 NP and thus, thereby, extended the period of limitation. It is further, stated that the borrower defendant No. 1 promised to repay the amount at the rate of 2-1/2% OBR with minimum of 12-1/2% p.a. Failure of the defendant to repay the amount of loan along with the agreed interest despite various demands, the plaintiff-bank, preferred the suit for recovery of Rs.354,558.18 NP, both on account of principal and interest accrued thereon. 4. Resistance to the suit has been made on a blend of objections both preliminary and on merits. The preliminary objection taken was that the suit being time barred is liable to be dismissed. On merits, while admitting the amount of Rs. 220,000/- advanced as loan for the purchase of vehicle by the plaintiff-bank, defendant No. 1 asserted that the rate of interest on the loan was 11% p.a. It was further stated that the loan was advanced by the bank under 20 Point Economic Programme floated by the Central Government for working people. The defendants claim to have signed number of blank papers at the time of sanction of the loan. Thereafter the defendants have denied to sign any paper/document with the bank. It was also admitted that the defendants 2 and 3 signed certain documents with the assurance that it is only a formality. The defendant No.1 further expressed inability to pay the remaining amount by installments as the bank did not issue No. Objection Certificate when demanded by him. The vehicle is also stated to have remained off the road on account of riots of 1984. The defendants emphatically denied to have executed or signed any document of the nature of Hundi in favour of the plaintiff-bank after the sanction of the loan in August 1981. 5. Upon consideration of the pleadings, as may as five issues came to be framed for adjudication of the Court on 29.11.89. In support of its case, plaintiff-bank assembled testimony of various witnesses. However, neither the defendant No.1 examined himself nor produced any witness in the case. 6. 5. Upon consideration of the pleadings, as may as five issues came to be framed for adjudication of the Court on 29.11.89. In support of its case, plaintiff-bank assembled testimony of various witnesses. However, neither the defendant No.1 examined himself nor produced any witness in the case. 6. A graphic resume has been given by the trial court in its judgment, after analytical evaluation of the premier perceptive facts deposed by the witnesses examined by the plaintiff at the trial. Issues No.2, 3 & 4 stood determined in favour of the plaintiff and issue No. 1 held decided against the plaintiff on the basis of which the fate of the suit was decided and declared as time barred which became the subject matter of challenge by the plaintiff-bank before this court in appeal. 7. I have heard the learned counsel appearing for the respective parties at length and also perused the judgment rendered by the trial Court in context with the material on merits meticulously. 8. The main plank of the learned counsel appearing for the appellant is that the promisory note executed on 24.4.87 stood extended at the previous place of Hundi dated 12.8.81 by respondent No.7 and there was no fresh transaction at all and consequently no new contract between the parties. His further contention is that words "value received" incorporated in the Hundi clearly point out that the executant had received the consideration and thus, rule out the question that any money was given or not at the time of the executing the Hundi dated 24.4.87. According to Mr. Jamwal, learned Advocate appearing for the appellant, the guarantee executed by the guarantors was a continuous guarantee and the suit could not be dismissed against defendants-respondents 2 to 3, merely on the ground that no fresh guarantee deed was executed by the guarantors. Mr. Jamwal, further contended that trial court has not appreciated the evidence in its proper perspective and illegally held the suit as time barred. 9. Mr. Jamwal, further contended that trial court has not appreciated the evidence in its proper perspective and illegally held the suit as time barred. 9. Assailing the correctness of the judgment and decree, the learned counsel appearing for the appellant has stressed that the defendant No.1 by executing fresh Hundi dated24.4.87 for an amount of Rs.2,99,865.52 NP along with interest at the rate of 2-1/2% above RBI rate subject to minimum rate of 12-1/2% p.a. or such other rate of interest as may be prescribed by the bank from time to time with quarterly resets for value received, acknowledge and admitted the liability to pay the amount, by the execution of fresh Hundi dated 24.4.87 by defendant No. 1. The limitation period stands extended and would start running from the said date and suit having been instituted on 20.12.88 is well within the period of limitation. Adverting to the DP Note, EXPW-GG stated to have been executed by defendant No. 1 on 24.4.87, its contents clearly show that one S. Surjit Singh promises to pay an amount of Rs. 2,99,865.52 NP to the plaintiff-bank together with interest indicated therein on demand. The DP Note does not cite parentage of S. Surjit Singh. The scribe of the DP note has not been examined. However, one PW G.G. Sawhney in his evidence deposed that the Hundi was written by his officer, the contents of which had been read over and explained in his presence. He however, clarified in his cross examination that no amount was advanced to the defendant No. 1 at the time of execution of the Hundi. It is further stated in his cross examination that no document was obtained from the guarantors. Fresh DP note dated 24.4.87 also did not mention that the amount indicated therein pertains to the outstanding debt. The DP note when read in its plain language does not contain that the defendant No. 1 had made any acknowledgement of any liability of debt or outstanding amount. The fresh DP note on which the appellant-bank placed reliance for extension of period of limitation no where shows that the defendant No. 1 admitted and acknowledged his past existing liability. In order to raise a liability, claim or right against a debtor, such acknowledgement must be in writing and signed by party against whom it is claimed. The fresh DP note on which the appellant-bank placed reliance for extension of period of limitation no where shows that the defendant No. 1 admitted and acknowledged his past existing liability. In order to raise a liability, claim or right against a debtor, such acknowledgement must be in writing and signed by party against whom it is claimed. Fresh DP note therefore, cannot, in the facts and circumstances of the case, be determined and treated as acknowledgement of debt or existing liability for outstanding amount for extension of period of limitation within the purview of section 19 of the Limitation Act. 10. Apart from that, the DP note dated 24.4.87 stated to have been obtained from defendant No. 1 is for an amount of Rs. 2,99,865.52 NP. This amount does not tally with the entries recorded in the original statement of accounts duly certified by the concerned branch Manager. The statement of account placed on file by the appellant-bank shows that the amount of Rs. 309865.52 NP on 24.4.87 was outstanding. It further shows that an amount of Rs. 10,000/- plus 22,0007- stood deposited in cash on that date and after crediting the aforesaid amount the outstanding amount would be Rs.277865.52, whereas, the DP note allegedly executed by defendant No.1 and obtained by the plaintiff-bank shows an amount of Rs.2,77865.52 as outstanding. This further strengthens the stand of the defendants respondents that this DP note could not be treated as acknowledgement of the outstanding liability by defendant No. 1 in his loan account, so as to extend the period of limitation under section 19 of the J&K Limitation Act, as asserted by the plaintiff-bank. 11. It is not in dispute, that the period of limitation provided for filing suit for recovery of loan under the Limitation Act is six years. The suit filed is based on DP note executed on 12.8.81 and is clearly thus, time barred as the alleged DP note dated 24.4.87 does not extend the period of limitation. It was next submitted by Mr. Jamwal, learned Advocate appearing for appellants, that execution of promissory note raises statutory presumption of supported by consideration. It is significant to point out that the plea put across by Mr. Jamwal, Appellants Advocate stands controverted by evidence of the witnesses examined before the trial court. Mr. It was next submitted by Mr. Jamwal, learned Advocate appearing for appellants, that execution of promissory note raises statutory presumption of supported by consideration. It is significant to point out that the plea put across by Mr. Jamwal, Appellants Advocate stands controverted by evidence of the witnesses examined before the trial court. Mr. G.G. Sawhney has unambiguously stated in his cross examination that no amount was advanced to defendant No. 1 on the date of the execution of fresh DP note EXP W GG. Even the DP Note EXP W GG did not make mention that the amount indicated therein pertains to past liability or existing outstanding amount. Another limb of argument addressed by the appellants counsel is that since the amount advanced was repayable in seventy equal monthly installments, the period of limitation would start from the last payment made by the defendant-borrower. His further submission is that last payment amounting to Rs.32000/- stands paid by the principal debater on 24.4.87, shown in the statement of accounts, the suit filed on 20.12.88 is within time, and referred to Article 182(7) of the J&K Limitation Act in support of his submission. In this context, it may be pointed out that Article 182(7) is not applicable to the Appellant-bank as it only pertains to the execution of the decree. Further submission made by Mr. Jamwal is that his case is also squarely covered under Article 104 and 105 of the Limitation Act. I am afraid that this contention is not legally tenable as the provisions of the aforesaid Articles of the Limitation Act attract only when the amount is payable by installments. The DP note however, does not specify any term for the payment of amount in installments. Whereas, in the deed of hypothecation it is recited that the amount shall be deposited in monthly installments of Rs. 43547- each. Further, deed of hypothecation provides that in case of default by the borrower for the period exceeding one month in the payment of installments of the said principal sum, the bank shall have right to require the borrower forthwith to discharge the full liability of the bank. This clearly shows that the document contains a provision for default. The statement of account clearly indicates that the defendant did not pay any amount of installment in full and in time. This clearly shows that the document contains a provision for default. The statement of account clearly indicates that the defendant did not pay any amount of installment in full and in time. Thus evident, the default committed was in the payment of first installment when whole amount became due. The suit has been filed after the period of six years from such date when the whole amount had become due on default in payment of first installment in full and in time and is thus, barred by limitation. 12. I see no reason to differ from the aforesaid finding of the trial court, which is quite in accord with the factual matrix of the case and the legal position. Therefore, the decision of the trial court in dismissing the suit as time barred is sound and unimpeachable and is hereby affirmed on this count. 13. AIR 2002 SC 985 cited by Mr. R.P. Jamwal, Ld. Advocate for appellants is of no avail being distinguishable on facts. No further point is urged or argued by the appellant™s counsel. 14. For the foregoing reasons, the appeal possessing no merit, is hereby dismissed under the peculiar circumstances. There shall be no order as to costs.