Research › Search › Judgment

Allahabad High Court · body

2012 DIGILAW 2396 (ALL)

Gurmeet Singh v. LIC, Jabalpur

2012-10-10

R.K.GUPTA

body2012
JUDGMENT : R.K. GUPTA, J. (CHAIRPERSON) 1. They are heard. This is an appeal preferred by the appellants under Section 20 of the RDDBFI Act, 1993 challenging the judgment passed by the DRT on 29th November, 2010, by which the Tribunal has allowed the original application filed by the Bank and has directed to issue the recovery certificate against the appellants to the tune of Rs. 10,13,858/- along with cost and future interest @ 16% per annum from 19th December, 2004 till realization. During the pendency of the present appeal, the appellant No. 2-Mohindra Singh has expired, therefore, on the application, his legal heirs have been substituted. The appellant No. 1 was the borrower and the deceased-appellant No. 2 was the guarantor. The loan was sanctioned by the respondent-LIC for a sum of Rs. 2.50 lacs for construction of the shopping complex for commercial use and the same was sanctioned on the application so moved by the appellant No. 1. 2. The deceased-appellant No. 2 was the guarantor towards the said loan. Since the amount was not paid by the appellants, therefore, the respondent filed an original application for recovery of its dues under Section 19 of the REDDBFI Act, 1993 before the Tribunal. 3. It was the specific case of the appellant No. 1 that the loan was called by issuing the legal notice to the appellant No. 1 and the legal notice as such was issued on 18th May, 1991, which is Ext. No. A-12. 4. The Tribunal was of the opinion that Article 62 of the Limitation Act for the purpose of filing of the Original Application under Section 19 of the RDDBFI Act, 1993 would apply. 5. It was the case of the appellants that in the present case, since the loan has been recalled by the respondent, therefore, Article 62 shall have no application, but the limitation will be regulated for the purpose of filing the Suit for recovery of the money by Article 113 of the Limitation Act, 1963. 6. This is to be seen that the last payment was made by the appellants on 5th November, 1994 for a sum of Rs. 4400/-. Thereafter, no payment was made by the borrower and an application for recovery of money under Section 19 of the RDDBFI Act, 1993 was moved in the year 2004 by the respondent. 7. 6. This is to be seen that the last payment was made by the appellants on 5th November, 1994 for a sum of Rs. 4400/-. Thereafter, no payment was made by the borrower and an application for recovery of money under Section 19 of the RDDBFI Act, 1993 was moved in the year 2004 by the respondent. 7. The question in the present appeal is that whether Article 62 of the Limitation Act, 1963 would apply or Article 113 of the Limitation Act, 1963 would apply? For the purpose of convenience, the Article 62 and Article 113 of the Limitation Act, 1963 are reproduced as under: “62 To enforce payment of money secured by a mortgage or otherwise charged upon immovable property Twelve years When the money sued for becomes due. 113. Any Suit for which no period of limitation is provided elsewhere in this Schedule. Three years When the right to sue accrues.” 8. It is evident from the aforesaid that the Article 62 provides the period of limitation to enforce payment of money secured by a mortgage or otherwise charged upon the immovable property and the limitation of 12 years is provided which commences from when the money sued for becomes due. 9. So far as the Article 113 of the Limitation Act, 1963 is concerned, it provides a period of three years for filing the Suit for which no period of limitation is provided elsewhere in this Schedule and the commencement of the period of limitation will start when the right to sue accrues. 10. The Para Nos. 10 and 11 as well as 13 of the notice which was issued by the respondent-LIC on 18th May, 1991, which is Ext. No. A-12, are relevant and the same are reproduced as under: (10) That you noticee No. 1 cheated my client and thereby dishonestly induced the Corporation to deliver a sum of Rs. 1,24,000/- out of the sanctioned loan of Rs. 2,20,000/- committing an offence punishable under Section 420 of the Penal Code and other allied sections. (11) That as a result of deliberate suppression and concealment of facts by noticee No. 1 regarding ownership over Khasra No. 412/3 aforesaid, my client has been rendered without any security or immovable property. (12) That you noticee No. 2 brother of the borrower Shri Gurmeet Singh have stood guarantor for the borrower to repay the loan. (11) That as a result of deliberate suppression and concealment of facts by noticee No. 1 regarding ownership over Khasra No. 412/3 aforesaid, my client has been rendered without any security or immovable property. (12) That you noticee No. 2 brother of the borrower Shri Gurmeet Singh have stood guarantor for the borrower to repay the loan. You noticee No. 2 having knowledge of the fact that Gurmeet Singh was not the owner of the Khasra No. 412/3 joined with him in persuading my client to believe so. You also joined in criminal conspiracy with your brother to obtain loan by cheating and committing fraud and you, therefore, are equally liable not only to repay the amount of loan jointly and severally but to share criminal liability as well. (13) That loan granted is hereby recalled and both you are required by this notice to pay a sum of Rs. 1,24,000/- (Rupees One lac twenty thousand) together with interest and other charges which may have accrued due within 15 days from the date of receipt of this notice by you both failing which my client shall not only be constrained to file a suit against both of you for recovery of the amount found due but also institute criminal action and in that event both you shall be held responsible for all costs and consequence arising therefrom. 11. On the basis of the aforesaid, the respondent being Financial Institution has given notice to the appellants stating that they are not the owner of the mortgaged property, therefore, the loan granted is hereby recalled. Thus, the mortgage as well as sanction of the loan amount, both have been recalled. As consequence of the same, the mortgage also does not appear after cancellation of the same. Article 62 which provides for the enforcement of payment of money secured by a mortgage or otherwise charged upon the immovable property and the period of limitation of 12 years is provided. 12. The question is that once the respondent-LIC has given notice on 18th May, 1991, which is Ext. No. A-12, recalling the loan itself, then there is no transaction of loan by creating the mortgage. Under these circumstances, Article 62 of the Limitation Act, 1963 will have no application. 12. The question is that once the respondent-LIC has given notice on 18th May, 1991, which is Ext. No. A-12, recalling the loan itself, then there is no transaction of loan by creating the mortgage. Under these circumstances, Article 62 of the Limitation Act, 1963 will have no application. If the mortgage, which was created, continues to exist for securing the loan and the same has already been cancelled by the respondent-LIC on 18th May, 1991 by issuing legal notice, which is Ext. No. A-12, then there is no mortgage and it will be a simple mortgage, which is unsecured one. Under these circumstances, the Article 113 of the Limitation Act, 1963 would have application and Article 113 provides the limitation of three years for the purpose of filing any suit for recovery of the amount. The commencement of the period of limitation of three years would start from 5th November, 1994, when the appellants deposited a sum of Rs. 4400/- and thereafter no amount was paid at any point of time. The original application was filed in the year 2004. Thus, the original application itself was barred by limitation. 13. Section 24 of the RDDBFI Act, 1993 provides that the provisions of the Limitation Act, 1963 shall, as far as may be, apply to an application made to a Tribunal. Admittedly, the Limitation Act has the application in the instant case and also shall be applicable for the purpose of filing an application before the Tribunal. The word "application" under the rule includes an application under Section 19 of the RDDBFI Act, 1993, which was filed by the respondent-LIC for recovery of its dues. The Tribunal in its order admitted that the period of limitation will begin to run only on 5th November, 1994 and not from the date of recall on 18th May, 1991. Thereafter, the Tribunal held that Article 62 of the Limitation Act, 1963 shall apply. This is difficult to concede that when the Tribunal has held that the limitation will commence from 5th November, 1994 i.e. the date when the appellants paid a sum of Rs. 4,400/-, then certainly the limitation will commence from this date. 14. The question is that whether Article 62, which provides to enforce the payment of money secured by a mortgage or otherwise charged upon immovable property, will apply. 4,400/-, then certainly the limitation will commence from this date. 14. The question is that whether Article 62, which provides to enforce the payment of money secured by a mortgage or otherwise charged upon immovable property, will apply. It has already been held that after when the notice of recall was given by the respondent on 18th May, 1991 which is Ext. No. A-12, the loan became unsecured without there being mortgage or otherwise charge upon immovable property, therefore, Article 62 would have no application in the present case. 15. On the basis of the aforesaid findings, it has to be held that the Tribunal was not right in applying the period of limitation which is enunciated under Article 62 of the Limitation Act, but in the present case, Article 113 of the Limitation Act would apply and admittedly, the suit was filed after expiry of three years from 5th November, 1994. The original application so filed before the Tribunal has to be held as barred by limitation. 16. Learned Counsel for the respondent further submitted that a civil suit was filed by the appellants before the First Civil Judge, Class-II, Chhindwara, which was numbered as 135-A/91, which was decreed in favour of the plaintiff, which was defendant before the Tribunal in the original application. Admittedly, a civil appeal under Section 96 of the CPC was preferred before the First Additional Judge, to the Second Additional Judge, Chhindwara, The said Civil Appeal was allowed by the First Appellate Court by passing the judgment on 22nd July, 2004. It is submitted on the basis of the same that the appellant No. 1 has been declared as owner of the said property, therefore, whatever notice was issued earlier on 18th May, 1991 after the order passed by the First Appellate Court allowing the appeal of the appellant, becomes redundant because notice was issued on the ground that the appellant No. 1 is not an owner of the property. Therefore, it was submitted that the loan as such becomes a secured loan by mortgage, therefore, Article 62 of the Limitation Act would apply. 17. To appreciate the submission, the order passed by the first Appellate Court i.e. the First Additional District Judge, Chindwara in Civil Appeal No. 87-A/02 on 22nd July, 2004 is perused. Therefore, it was submitted that the loan as such becomes a secured loan by mortgage, therefore, Article 62 of the Limitation Act would apply. 17. To appreciate the submission, the order passed by the first Appellate Court i.e. the First Additional District Judge, Chindwara in Civil Appeal No. 87-A/02 on 22nd July, 2004 is perused. In the said judgment, the Appellate Court has not declared the appellant to be an owner of the said property. The Appellate Court has only passed the decree that without there being legal authority, the possession of the appellant No. 1 shall not be disturbed. There is no decree passed by the First Appellate Court declaring the appellant No. 1 to be the owner of the said property. Thus, in the absence of declaration as such, the appellant is not the owner of the mortgaged property. The judgment passed by the First Appellate Court is of no help anywhere to the respondent either for the purpose of applying the Article 62 or even to make the notice dated 18th May, 1991 of the respondent to be redundant. 18. The next question arises in the present case with regard to the liability of the appellant No. 2. Since the appellant No. 2 has expired, therefore, legal heirs of the appellant No. 2 have been substituted. 19. The Tribunal held that the appellant No. 2 deceased was the guarantor, who mortgaged the property. The liability of the guarantor is co-extensive with the liability of the borrower. When the claim against the borrower itself is held to be barred by time and it is held that Article 62 of the Limitation Act, 1963 shall not apply, therefore, for the same reason, the claim against the guarantor also fails. Since the respondent has already recalled the loan by issuing notice on 18th May, 1991, therefore, he remains no more a guarantor to the transaction which was entered into by the respondent in favour of the appellants. In view of the aforesaid, the present appeal is allowed and the judgment impugned passed by the Tribunal stands set aside. The amount so deposited by the appellants to maintain the appeal under Section 21 of the RDDBFI Act, 1993 shall be refunded to the appellant No. 1.