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2014 DIGILAW 275 (CHH)

Bhartiya State Bank v. Bhanjan Singh

2014-07-22

GOUTAM BHADURI

body2014
ORDER 1. This is an appeal filed by the Bank against the judgment and decree dated 14.05.1999 passed in Civil Suit No.34-A/1999 by the Court of Additional District Judge, Bilaspur, whereby the suit filed by the Bank was dismissed as barred by limitation. 2. According to the plaint allegations, the deceased Ramu Singh Thakur had applied to the Bank to obtain the loan under the agricultural heads. It was also pleaded that different documents were executed and further the repayment of loan was further secured by the guarantor and a deed of guarantee was also executed by one Badri Prasad Agrawal. After examining the documents and application, the Bank sanctioned the loan to the borrower under different heads and loan Rs.40,000/-was for tube-well, Rs.12,000/-for fencing of the field and Rs.14,000/-for the crops. Thereby, in all, total loan of Rs.66,000/- was sanctioned. 3. As per the pleadings, the loan was sanctioned after execution of the necessary documents on 19.02.1990 and the interest was levied at the rate of 10% & 12½ % according to the variable rate declared by the Reserve Bank of India. In order to secure the loan, a deed of hypothecation was also executed whereby all the movable assets were hypothicated in favour of the Bank and mortgage in respect of the land at village Selar admeasuring 14.31 acres was also created. It was the case of the plaintiff/appellant Bank that after availing the loan, the defendants failed to repay the loan according to the terms of the agreement and thereafter the Bank initially served them with a legal notice and subsequently on 22.11.1995 filed a suit for recovery of an amount of Rs.1,36,765/-. 4. In reply to the pleadings made, the legal heirs of Ramu Singh Thakur namely Anju Singh Thakur and Megha Singh Thakur stated that only Rs.14,000/-loan was availed under the cash credit for crops and rest of the averments were denied. It was also stated in the reply that the Branch Manager did not have the power to file the suit and prayer was made for dismissal of the same. Whereas, the guarantor had also refuted the claim and it was stated that since the mortgage was created, therefore, the Bank should have first followed the property created under the mortgage and sale it thereafter the recovery from guarantor could have been made. 5. Whereas, the guarantor had also refuted the claim and it was stated that since the mortgage was created, therefore, the Bank should have first followed the property created under the mortgage and sale it thereafter the recovery from guarantor could have been made. 5. On the basis of the pleadings of the parties, the learned trial Court had framed the issues and in finding to such issues, the learned Court below came to a conclusion in order to avail the loan, the documents were executed by the borrower and the guarantor. Accordingly, the execution of documents were affirmed. The Court relied on the statement of PW-1 and it was held that the borrower deceased Ramu Singh Thakur had availed the loan on different heads from the Bank i.e. Rs.40,000/-for tube-well, Rs.12,000/-for fencing of the field and Rs.14,000/-for the crops. The learned Court below had also held that the defendants borrower and guarantor had failed to prove the fact that the signatures were obtained on the blank documents, which was not explained to them and accordingly, it was held that before signature, the documents were explained to the borrower and the guarantor. Therefore, with respect to such finding that the documents were executed and the loan was availed, the same is not under challenge. As a result, such finding arrived by the learned Court below are affirmed. The said finding is also not under challenge in the appeal and accordingly, it is also affirmed. 6. The learned Court below has dismissed the suit on the ground that the suit was barred under the law of limitation. In this aspect, to examine such finding, the documents which were executed were perused. Ex.P-1 pertains to the loan application, which was signed on 19.02.1990 subsequently on the basis of such application, the loan was sanctioned and the arrangement letter is marked as Ex.P-6 wherein the terms and condition of the loan were shown. The same was also executed on 19.02.1990. The deed of agreement of hypothecation is marked as Ex.P-7 and the mortgage deed was marked as Ex.P-8 whereas the deed of guarantee was marked as Ex.P-9. All these documents were executed on 19.02.1990. Similarly, the certified copy of the account book under the Bankers Book of Evidence Act was marked was Ex.P-13, Ex.P-14, Ex.P-15 & Ex.P-16. These are also not in much dispute. 7. All these documents were executed on 19.02.1990. Similarly, the certified copy of the account book under the Bankers Book of Evidence Act was marked was Ex.P-13, Ex.P-14, Ex.P-15 & Ex.P-16. These are also not in much dispute. 7. Now the question which falls for consideration as to whether the document Ex.P-19 the promise to pay time barred debt and balance confirmation letter executed on 03.11.1993 will take the claim within limitation and the promissory note to pay time barred debt is dated 03.11.1993 which is signed by Anju Singh Thakur as also the guarantor Badri Prasad Agrawal. The balance confirmation was also executed on 03.11.1993 whereby the wife of late deceased borrower Anju Singh Thakur acknowledged to have confirmed the balance outstanding in the account amounting to Rs.83,333/-. This Ex.P-18 & Ex.P-19 have been proved by PW-1 K.L.Dewangan. He has stated that after the death of the original borrower, the wife of the borrower Anju Singh Thakur on 03.11.1993 acknowledged the balance outstanding in the account and executed the document as Ex.P-18 and also promise to pay the outstanding dues and executed a document, which is marked as Ex.P-19. The witness also makes statement of fact that the LRs of the borrower namely Anju Singh Thakur & Megha Singh Thakur as also the guarantor Badri Prasad Agrawal had scribed their signature on the document. The said document Ex.P-18 & Ex.P-19 is further corroborated by PW-2 R.N.Das. He has stated that the said documents were filled up by him and the signatures were obtained in front of him and the documents were explained to the borrower and guarantor before obtaining signatures on them. So it is held that the documents Ex.P-18 & Ex.P-19 were duly executed and proved. 8. Admittedly, the loan was obtained on 19.02.1990 and according to law of limitation the right to recover the same would last up to 18.02.1993 in absence of acknowledgment of it within the period of limitation. So whether the documents obtained after the prescribed period of limitation will extend the limitation ? The learned Court below has held that according to the law of limitation, the said documents were executed beyond the period of limitation and therefore, it will not fall within the ambit of acknowledgment and eventually the suit was dismissed. 9. In order to appreciate the fact, Section 25(3) of the Indian Contract Act would be relevant, which is quoted hereinbelow. 9. In order to appreciate the fact, Section 25(3) of the Indian Contract Act would be relevant, which is quoted hereinbelow. 25. Agreement without consideration void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt, barred by limitation law. -An agreement made without consideration is void, unless - (1) …....xxx....... (2) …...xxx........ (3) It is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorised in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits. 10. In order to invoke the provisions of Section 25(3), the following conditions must be satisfied : (i) it must refer to a debt which the creditor but for the period of limitation, might have enforced; (ii) there must be a distinct promise to pay wholly or in part such debt; (iii) the promise must be in writing signed by the person or by his duly appointed agent. The rule is founded on the principle that a pre-existing liability is a good consideration for a new promise. A moral obligation may be sufficient to sustain a promise, where the moral obligation is one which has once been a valuable consideration, but has ceased to be binding from some supervent act of the law. A promise may be supported by a moral obligation, where the obligation grows out of an original legal obligation, that has been barred by the law of limitation without being performed. Where the consideration was originally beneficial to the party promising, but some provision of law confers upon him an advantage and protects him from liability, he may renounce the benefit of the law; and if he promises to pay such debt – what every honest man ought to do – he is bound by the law to perform it. The rule, however, has no application where the original right of action is extinguished not by the act of the law but by the act of the parties. 11. In the instant case, Ex.P-18 certainly is a balance confirmation letter which was executed on 03.11.1993 after the period of limitation. The rule, however, has no application where the original right of action is extinguished not by the act of the law but by the act of the parties. 11. In the instant case, Ex.P-18 certainly is a balance confirmation letter which was executed on 03.11.1993 after the period of limitation. The said document was within the ambit of Section 18 of Limitation Act, 1963 and was not made before the expiration of prescribed period for suit, but if we look to Ex.P-19 it would reveal that it is not merely an acknowledgment but there is also a further expression attached with promise to pay. Reading this document therefore will bring the case within the Section 25(3) of the Contract Act. The interpretation of Section 25(3) provides that a debtor can enter into an agreement in writing to pay the whole or part of a debt, which the creditor might have enforced but for the law of limitation, and a suit can lie on a written promise to pay the barred debt as it is a valid contract; such a promise constitutes novation, and hence, can form a basis of a suit independently of the original debt. The reason for this provision is that the debt is not extinguished; only the remedy gets barred by passage of time, and this provision does not revive a dead right but merely resuscitates the remedy to enforce the right, which already exists. This proposition was interpreted by the Supreme Court in Bombay Dyeing & Manufacturing Co. Ltd. v The State of Bombay & Others ( AIR 1958 SC 328 ). The said provision does not revive a dead right but merely resuscitates the remedy to enforce the right, which already exists. 12. It is also settled that promise to pay the time barred debt is good consideration, which is reported in 2001 (4) MPHT 64 , which is further reiterated the proposition in case of Vimla Pradhan v. United Commercial Bank ( 1990 MPLJ 819 ). Therefore, the promise to pay a time barred debt is enforceable and is a good consideration, thereby written promise to pay time barred debt furnished by itself a fresh cause of action as held in case of Ghanshyamdas v. Ghasilal (1969 MPLJ 501). 13. Therefore, the promise to pay a time barred debt is enforceable and is a good consideration, thereby written promise to pay time barred debt furnished by itself a fresh cause of action as held in case of Ghanshyamdas v. Ghasilal (1969 MPLJ 501). 13. As has been held earlier, here in the instant case, fresh promissory note to pay time barred debt was executed on 03.11.1993 and the suit was filed for recovery on 22.11.1995. Therefore, according to the considered opinion of this Court, the suit was within limitation and accordingly could not have been dismissed for the reasons as barred by time. 14. As a result, the appeal is allowed. The case is decreed for an amount of Rs.1,36,765/-along with the interest at the rate of 6% per annum from the date of filing of the suit till the date of recovery. The respondents shall also bear the cost of the suit. The decree be drawn accordingly.