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2013 DIGILAW 3013 (ALL)

State Bank of India v. Pawan Malhotra

2013-12-11

R.K.GUPTA

body2013
JUDGMENT : R.K. GUPTA, J. (CHAIRPERSON) 1. They are heard. The present Appeal is preferred under Section 20 of the R.D.D.B.F.I. Act, 1993 challenging the order passed by the D.R.T. on 30th May, 2013. By this order the Tribunal has dismissed the Original Application preferred by the Appellant-Bank, holding it to be barred by time. The relevant facts for adjudication of the present case are that all the defendants were proceeded ex parte by the Tribunal as they did not appear. The Bank filed the Original Application for recovery of its dues for a sum of Rs. 18,29,565/- together with interest, cost and other reliefs. It was the housing term loan which was sanctioned by the Bank and the relevant documents relating to the loan transaction were executed on 19th March, 2002. Thereafter, the defendants before the Tribunal deposited the amount with the Bank on 16th May, 2002, 29th June, 2002, 11th July, 2002, 10th August, 2002 and the last deposit towards the E.M.I. was made on 14th February, 2004. Thereafter, no amount was ever deposited by the defendants. Since, there was default committed by the defendants in not paying the dues in form of the E.M.Is., therefore, the Bank declared the account as N.P.A. on 31st July, 2005. A legal notice was issued to the defendants on 6th September, 2011 by the Bank demanding the payment, and the Original Application was filed in the year 2012. 2. In the present case, there was no mortgage, therefore, the period of limitation would be of three years and not of twelve years. By virtue of Article 62 of the Limitation Act, 1953 which provides for recovery of debts through a mortgaged property, the period of limitation of twelve years is prescribed. 3. Admittedly, in the present case, the simple limitation of three years to recover the money will apply and now the question is, from which date the period of three years has to be counted? 4. Admittedly, the last payment was made by the defendants on 14th February, 2004 and thereafter, no payment was made. As stated earlier, because of non-deposit of the E.M.Is. the account was declared as N.P.A. on 31st July, 2005 and thereafter, the legal notice was given to the defendants by the Bank on 6th September, 2011. 4. Admittedly, the last payment was made by the defendants on 14th February, 2004 and thereafter, no payment was made. As stated earlier, because of non-deposit of the E.M.Is. the account was declared as N.P.A. on 31st July, 2005 and thereafter, the legal notice was given to the defendants by the Bank on 6th September, 2011. Since the last payment was made by the defendants on 14th February, 2004, therefore, that would be the crucial date for the purposes of ascertaining the limitation. 5. Learned Counsel for the appellant submitted that in the present case, the liability was acknowledged by the defendants by writing a letter to compromise the matter and accordingly, the Bank sanctioned the compromise vide its letter dated 10th May, 2010. On the basis of the same, it is contended that afresh period of limitation would commence from 10th May, 2010 and since, the Original Application was filed in the year 2012, therefore, the Original Application was within the period of three years and was not barred by limitation. 6. Learned Counsel for the Appellant further submitted that in the present case, by virtue of Section 25 of the Indian Contract Act, 1872, when a compromise is arrived at, then that will have the effect of commencement of afresh period of limitation. The compromise was not honoured by the defendants. 7. For the purposes of appreciating the submission so made on behalf of the Appellant, this is to be seen that right to sue for recovery of the amount that exist in the light of Section 18 of the Limitation Act, 1963, the remedy stands barred and not the right. 8. By virtue of Section 24 of the RDDBFI Act, 1993, the Limitation Act, 1963 applies which provides that the provision of the Limitation Act, 1963 shall, as far as may be, apply to an application made to a Tribunal, Thus, right to sue would only be within four corners of the permissibility as per the Limitation Act, 1963. If the remedy is barred under the Limitation Act, 1963, then the remedy as such being barred by time though may not have the effect of extinguishing the right to recover the amount, but if the remedy is barred by limitation, then right to sue does not survive as it becomes barred by limitation. 9. If the remedy is barred under the Limitation Act, 1963, then the remedy as such being barred by time though may not have the effect of extinguishing the right to recover the amount, but if the remedy is barred by limitation, then right to sue does not survive as it becomes barred by limitation. 9. Apart from the aforesaid, the compromise letter of the Bank dated 10th May, 2010, whether will have the effect of extending the period of limitation as per the mandate of Section 18 of the Indian Limitation Act, 1963? Section 18 of the Indian Limitation Act, 1963 provides for extending the period of limitation either from the date of last deposit or from the date of acknowledgement. But these two things must exist before expiry of the period of limitation, then only the benefit of Section 18 of the Limitation Act can be claimed. In the present case, if the period has to be commenced from the last deposit made i.e. 14th February, 2004 or from the date the account was declared as N.P.A. i.e. 31st July, 2005, there is no acknowledgement of the liability within the period of three years either from 14th February, 2004 or from 31st July, 2005, when the account was declared as N.P.A. 10. The so-called letter of compromise dated 10th May, 2010 in fact will be a letter after expiry of the period of limitation i.e. 3 years, therefore, the said letter of compromise issued by the Bank on the request of the defendants will not have the effect of extending the period of limitation, as the right to sue had already become barred by time, immediately after expiry of the three years either from 14th February, 2004 or from 31st July, 2005. 11. So far as the legal notice which was issued on 6th September, 2011 by the Bank, is concerned, defendants did not pay any amount in terms of the letter of compromise dated 10th May, 2010 issued by the Bank, therefore, in the present case, the legal notice dated 6th September, 2011 will also not come in a way to help the Appellant for extending the period of limitation, which was given to the defendants after the compromise letter of the Bank dated 10th May, 2010. 12. 12. So far as the Section 25 of the Indian Contract Act, 1872 is concerned, it will have no application as the letter of compromise will not have the effect of entering into afresh agreement, but at worst it could only be termed to be an acceptance of, the liability or acknowledgement of the liability, therefore, the compromise letter of the Bank dated 10th May, 2010 is the event after the expiry of limitation i.e. of three years from 14th February, 2004. The same is the eventuality after when the right to sue has already extinguished as the claim became barred by limitation and was obtained beyond the period of three years. Thus, even otherwise, Section 18 of the Indian Limitation Act, 1872 cannot be applied to help the Appellant. 13. The Apex Court in State of Kerala v. T.N. Chako, AIR 2000 SC 3597 , held that the acknowledgement must be made before the expiration of the period prescribed for a Suit or Application in respect of such property or right. On the same issue the earlier judgment passed by the Apex Court in Sant Lal v. Kamal Prasad, AIR 1951 SC 477 , and thereafter, in Sampuram Singh v. Niranjan Kaur, (1999) SLT 317 : 11 (1999) CLT 49 (SC) : AIR 1999 SC 1047 , are also referable, where the principle is laid down that for the purpose of reviving the limitation, the acknowledgement or revival of the liability by accepting the same should be before the expiry of the period of limitation and not thereafter. Under the circumstances, I am of the view that the Tribunal has rightly held that the Original Application preferred by the appellant Bank is barred by limitation and I do not find any case to interfere into the order passed by the Tribunal. Accordingly, the Appeal is without any merit, hence the same is dismissed.