Delhi District Court
Mrs. Seema Sayal vs M/S Precision Castings on 16 January, 2014
IN THE COURT OF MS. NITI PHUTELA
CIVIL JUDGE02,SOUTH DISTRICT, NEW DELHI
Suit No. 39/10
Mrs. Seema Sayal
R/o A1, Parwana Vihar,
Sector9, Rohini,
New Delhi110085 (Delhi) .......Plaintiff
Versus
1. M/s Precision Castings
C1/66, Safdarjung Development Area
New Delhi110016 (Delhi)
Also At: 14/5, Milestone, Mathura Road,
Faridabad121003 (Haryana)
2. Mr. Subhash Aggarwal
Partner, M/s Precision Castings,
R/o C1/66, Safdarjung Development Area
New Delhi110016 (Delhi)
3. Mr. D K Aggarwal
Partner M/s Precision Castings,
N180, Panchsheel Park,
New Delhi110049 (Delhi) ....... Defendant
Date of Institution : 04.10.2010
Date of Reserving the Order : 18.12.2013
Date of Pronouncement : 16.01.2014
JUDGMENT
1. Vide this judgment I shall dispose of the suit of the plaintiff for recovery of Seema Sayal Vs. M/s Precision Castings & Ors. Page 1/14 sum of Rs. 1,50,000/ and pendente lite and future interest @ 18% p.a. along with costs of the suit.
2. It is the case of plaintiff on being approached by defendant she deposited a sum of Rs. 1,50,000/ (Rs. 50,000/ each on 25.01.2001, 11.11.2002 and 23.07.2003) with defendant out of her savings with a condition that quarterly interest would be paid to her and the entire amount will be refunded to her as and when it will be demanded by her, therefore they assured her that she will earn interest higher than Bank rate.
3. On the other hand defendant no.1 is partnership firm and defendant no.2 and 3 are its partner. That in April 2007, the plaintiff was in need of money therefore she claimed back the principal amount invested by her. But defendant only paid interest till September 2007 and failed to refund the principal amount and also failed to pay the interest thereafter w.e.f. 01.10.2007 despite various requests. A letter was also written by plaintiff on 22.07.2010 to all the defendants demanding the above said payments but no response was given by defendants. Hence the present suit is filed by her.
4. On the other hand on service of summons WS was filed by defendant no.1 and 2 in which they objected to the case of plaintiff on the ground that suit is barred by law of limitation. As per them the alleged last payment was made to plaintiff on 03.09.2007 and no payment has been made thereafter, hence the suit filed on 30.09.2010 is beyond the period of 3 years and is barred by law of Seema Sayal Vs. M/s Precision Castings & Ors. Page 2/14 limitation. As per them there is no cause of action in favour of plaintiff against the defendants. Also plaintiff has suppressed material fact from this court, therefore she is not entitled to any relief. They denied any privity of contract between plaintiff and them.
5. The defendant no.3 filed his separate WS and defended the suit of plaintiff on the ground that it is barred by law of limitation (on the same ground as that of D1 and D2) and also as per him the receipt dated 08.08.2007 shows that plaintiff received the payment of interest and as per her the same was for period 01.04.2007 to 30.06.2007 thus the suit is beyond the period of 3 years. It is also alleged by defendant no.3 that the suit of plaintiff is also not maintainable being barred by the provisions of Section 3 of Registration of Money Lender Act (Punjab) because she has not filed any money lending license for entitling her to earn any rate of interest.
6. Further an objection was also raised by him that he was working only for Marketing and Technical Development and had no concern with financial department. Therefore as per him there is no privity of contract between plaintiff and defendant no.3. As per him he is only a dormant partner and is not active partner. It was also alleged by him that the plaint is not verified properly and the supporting affidavit is also not valid because it is signed prior to the attestation of affidavit.
7. No replication to the WS of all the defendants was filed by plaintiff. Seema Sayal Vs. M/s Precision Castings & Ors. Page 3/14
8. Out of the pleadings of the parties following issues were carved out by Ld. Predecessor Judge:
Issue No.1: Whether the suit is barred by the law of limitation? OPD Issue No.2: Whether there is no privity of contract between the plaintiff and defendants? OPD Issue No.3: Whether the plaintiff is entitled to the recovery of Rs.2,30,463.70/ along with the interest? OPP Issue No.4: Relief.
9. The plaintiff in order to shed the onus on her shoulders got herself examined as PW1. She filed on record her affidavit which was Ex.PW1/A, original receipts were Ex.PW1/1(colly), letter dated 22.06.2010 was marked as Mark A , copy of letter dated 22.07.2010 was Ex.PW1/3 and later on during her cross examination she also filed on record copy of her bank statement which was Ex.PW1/4(OSR). She was crossexamined by ld. counsel for defendant no.1 and 2 and also by Counsel for defendant no.3. She was crossexamined and discharged vide separate statement of the plaintiff the plaintiff's evidence was closed on 02.05.2013.
10. No defence evidence was led by defendant no.1 and 2 despite opportunity. Defendant no.3 led his evidence and got himself examined as DW1. He filed on record his affidavit which was Ex.DW1/A. No crossexamination was conducted by plaintiff despite opportunity. The defence evidence by defendant no.3 was closed on his statement on 25.11.2013.
Seema Sayal Vs. M/s Precision Castings & Ors. Page 4/14
11. Arguments addressed by all the defendants. Heard. No arguments addressed by plaintiff despite opportunity. Record perused.
12. My issue wise findings on the issues framed are as follows: Issue No.1: Whether the suit is barred by the law of limitation? OPD
13. The onus to prove the said issue was placed upon defendants. It is alleged by all the defendants that as per the case of plaintiff the last payment was deposited in her account on 03.09.2007 towards the interest part for the quarter (July, August and September 2007) whereas the suit is filed on 30.09.2010 which is therefore clearly beyond the period of 3 years and is thus barred by the provision of Limitation Act, 1963.
14. Though this objection was taken by all the defendants but no specific provision of law was quoted by all of them. However, during the course of arguments reliance was placed upon Article 113 of the Limitation Act which provides for the period of limitation where no specific mention is made regarding the same in the Act. However, after going through the record this court is of the view that in the plaint itself in paragraph no.1 of the same it is mentioned by the plaintiff that the sum of money deposited was repayable on demand as and when required by the plaintiff which therefore shows that the suit of the plaintiff for the principal part will be guided by the provision of Article 22 of Limitation Act and for the interest part the same would be guided by the provision of Article 25. The said provisions of law are as follows for ready Seema Sayal Vs. M/s Precision Castings & Ors. Page 5/14 reference: Article Description of suit Period of Time from which limitation period beings to run 22 For money deposited under an Three years When the demand is agreement that it shall be payable on made.
demand, including money of a customer in the hands of his banker so payable.
25 For money payable for interest upon Three years When the interest
money due from the defendant to the becomes due.
plaintiff.
15. Thus, going by the above said provision of law the plaint of the plaintiff is to be examined to see that when demand was made by the plaintiff and when the interest accrued in the present case.
16. It is averred by the plaintiff that the principal amount was demanded by plaintiff in April 2007 but instead of paying the said amount the defendant paid interest on the same till September 2007 on 03.09.2007. Thus, as per the case of plaintiff the period of limitation for claiming the principal amount started in April 2007 itself (though no specific date is mentioned). Hence, in view of the provision Article 22, Limitation Act, the suit should have been filed at the most till April 2010. As regards the limitation for claiming the interest is concerned the same started from 01.10.2007 because as per the case of plaintiff the interest till September 2007 was paid to her and the interest w.e.f. 01.10.2007 Seema Sayal Vs. M/s Precision Castings & Ors. Page 6/14 accrue and was due and payable but the same is not paid till date. Hence, as regards the interest part is concerned the suit should have been filed by the plaintiff till 30.09.2010 which is actually filed in the court on the said date and should have been within the limitation period in view of the provisions of Article 25, Limitation Act but in the considered view of this court the same is not the case. At this juncture it is relevant to mention the provision of Section 19 of Limitation Act which are as follows: Effect of payment on account of debt or of interest on legacy. Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made:
Provided that save in the case of payment of interest made before the 1 st day of January, 1928, an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment. Explanation For the purposes of this section ,
(a) where mortgaged land is in the possession of the mortgaged, the receipt of the rent or produce of such land shall be deemed to be a payment;
(b) "debt" does not include money payable under a decree or order of a court.
17. In the light of above said provision of law in case of any payment towards the 'debt' a fresh period of limitation is to be computed from the said date of payment, which means that the limitation which is already running gets extended by the period of three years from the date of payment. Another pre requisite for fulfilling the conditions of the above said provision of law is that the payment should be made before the expiry of the prescribed period. In the case in hand the limitation period started running from April 2007 when the Seema Sayal Vs. M/s Precision Castings & Ors. Page 7/14 demand was raised, therefore, the payment towards the interest part which was made in September 2007 was therefore within the prescribed period and would extend the period of Limitation for 3 years from the date of payment i.e. from 03.09.2007.
18. At this juncture, it is relevant here to mention the judgment of Hon'ble Bombay High Court in case titled Angel Infin Pvt. Ltd. vs Echjay Industries Ltd. 2007 (3) ARBLR 110 Bom, 2007 (3) BomCR 997:
"In the submission of the learned Counsel for the Respondents, the fact that the cause of action for recovery of a loan and the interest accrued thereupon are independent, and the starting points for limitation to recover the two amounts are different, does not in any way affect this position. Article 21 of the Limitation Act provides that for money lent under an Agreement that it shall be payable on demand, the period of limitation shall be three years from when the loan is made. Article 25 provides in respect of an action for interest that the period of limitation shall be three years from when the interest becomes due. There is, however, nothing untoward in Section 19 subsuming both causes of action being subsumed in the expression "debt" and providing for a common fresh period of limitation being computed from the time when part payment is made. While Articles 21 and 25 provide for the starting points of limitation for the recovery of a loan payable on demand and interest respectively, part payment of either would be payment towards the debt (which has been construed to include both principal and interest) which would then furnish a fresh period of limitation (3 years in both cases) from the date of such payment. This would be evident from a plain reading of Section 19 which provides that "where payment on account of a debt... is made before the expiration of the prescribed period", then "a fresh period of limitation shall be computed from the time when the payment was made." Section 2(j) defines both "prescribed period" and "period of limitation". "Prescribed period" has been defined to mean "the period of limitation computed in accordance with the provisions of this Act" while "period of limitation" has been defined as "the period of limitation prescribed for any suit, appeal or application Seema Sayal Vs. M/s Precision Castings & Ors. Page 8/14 by the Schedule." The "period of limitation" is set out in Column 2 of the Schedule to the Limitation Act. Column 3 of the Schedule sets out the time from which the period begins to run. Section 19 provides that, in the case of a part payment, these periods of limitation will all be computed from a common starting point viz. from the time when the part payment was made. If a payment is made either towards principal or interest within the "prescribed period" for both, then such payment being a payment towards a "debt" would furnish a fresh period of limitation (3 years as evident from the second column titled "period of limitation" of Articles 21 and 25) in respect of both principal and interest. Such an interpretation does not "defeat" the provisions of Column 3 of the Schedule indeed it is in consonance with the legislative intent reposed in Section 19 that in the case of part payments, there will be a common starting point.
The requirement of Section 19 that the part payment be made "before the expiration of the prescribed period..." is only a recognition of the well settled principle that once time has expired, the case of action cannot be revived by a subsequent happening such as a part payment after the prescribed period of limitation has expired."
In my opinion, accepting the construction suggested by the Petitioner of the term "debt" found in Section 19 of the Limitation Act would nullify the purpose for which the legislature effected the amendment in the provisions of Subsection 1 of Section 20 which is the provision identical to the provisions of Section 19 of the Limitation Act. In any case, in my opinion, the construction placed by the learned arbitrator on the provisions of Section 19 cannot be said to lead to injustice, on the contrary it leads to justice and convenience, and therefore, in my opinion, so far as the award made by the learned arbitrator in this regard is concerned, it cannot be disturbed.
19. Thus, in view of the above said judgment of Hon'ble High Court it is apparent that after making part payment either towards the principal or towards the interest the same will be treated as payment towards the 'debt' which would furnish a common extended period both for the principal and interest from the date of payment and the difference between the prescribed period stands Seema Sayal Vs. M/s Precision Castings & Ors. Page 9/14 erased. Hence in the case in hand the suit should have been filed till 02.09.2010 i.e. within the extended period, however, the suit is filed by the plaintiff on 30.09.2010 which is clearly beyond the period of limitation. Therefore, the defendants have succeeded in shedding the onus on their shoulders. Hence, the present issue is decided in favour of the defendants and against the plaintiff. Issue No.2: Whether there is no privity of contract between the plaintiff and defendants? OPD
20. The onus to prove the said issue was upon defendants. In this regard PW1 on being cross examined by defendant nos.1 and 2 stated that the sum of Rs. 1,50,000/ was deposited by her with the defendants through her friend. She also admitted that she had not mentioned regarding the said friend in her plaint or in her affidavit Ex.PW1/A. She further admitted that she had inquired regarding the investment opportunity from her friend and it is not that the defendant approached her with their scheme. This shows that there is an apparent contradiction in her testimony and in her averment in the plaint because in the plaint she has averred that the defendant approached her with their scheme. She also admitted that she has never visited their office and all the transaction were completed telephonically. She failed to recall the fact that she had executed any agreement/document/form pertaining to the said deposit or not. She also stated that though she has disclosed regarding the said interest in her ITR but no such document was filed by her on record. This shows that Seema Sayal Vs. M/s Precision Castings & Ors. Page 10/14 no such document in writing was filed by the plaintiff to show that there was an agreement between the parties. Admittedly oral agreement in regard to the same is also valid but then it was upon plaintiff to show that there was such an agreement. In this regard she relied upon the bank statement Ex.PW1/4 and the original receipts Ex.PW1/1(colly). In this regard she was crossexamined and she admitted that the same was not bearing any stamp or seal of defendant no.1, it was only bearing the signature of the official of defendant no.1 She also admitted that she had never sought any clarification regarding the same from defendant no.1. As regards the bank statement Ex.PW1/4 is concerned the same is showing the payment of Rs.50,000/ on three occasion from the account of plaintiff but it is not reflected that in whose favour the same was released. Moreover, the interest part which is the plaintiff has shown to be received by her is not disclosing the source from where she was receiving this amount. She has not called any witness from the bank to show that the said transactions were taking place between plaintiff and the defendant on the other side , thus, the plaintiff has failed to show that the transactions as alleged by her had taken place between the parties hence, she has failed to show that there was privity of contract between plaintiff and defendants.
21. As regard the objection of defendant no.3 that money lending licence is not filed by plaintiff to show that she was entitled to deposit the said amount and claimed interest on the same is tenable. At this juncture it is relevant to go Seema Sayal Vs. M/s Precision Castings & Ors. Page 11/14 through the provisions of Punjab Money Lenders Act, 1938 as applicable to Delhi that Money Lending License was required by the plaintiff or not, which is as follows:
Section 2 (8): "Loan" means an advance whether secured or unsecured of money or in kind at interest and shall include any transaction which the court finds to be in substance a loan, but it shall not include
(i) an advance in kind made by a landlord to his tenant for the purposes of husbandry; provided the market value of the return does not exceed the market value of the advance as estimated at the time of advance;
(ii) a deposit of money or other property in a Government Post Office Bank, or any other Bank, or with a company, or with a cooperative society or with any employer as security from his employees;
(iii) a loan to, or by, or a deposit with any society or association registered under the Societies Registration Act, 1860, or under any other enactment;
(iv) a loan advanced by or to the Central or any [State] Government or by or to any local body under the authority of the Central or any [State] Government;
(v) a loan advanced by a bank, a cooperative society or a company whose accounts are subject to audit by a certified auditor under the Indian Companies Act, 1913;
(vi) a loan advanced by a trader to a trader, in the regular course of business, in accordance with trade usage;
(vii) an advance made on the basis of a negotiable instrument as defined in the Negotiable Instruments Act, 1881, other than a promissory note.
22. Thus from the abovesaid definition it is apparent that any money deposited with any society or association the same should be registered society or association. But plaintiff has not brought anything on record that defendant no. 1 is registered partnership concern and therefore the benefit of section 2(8) (iii) cannot be given to her and this would amount to a loan for which compulsorily Seema Sayal Vs. M/s Precision Castings & Ors. Page 12/14 money lending license is required and the suit is not maintainable even on this ground as per Section 3 of Punjab Registration of Money Lenders' Act, 1938.
23. As regard the objections of defendant no.3 that he is merely a sleeping/dormant partner is also not tenable because he has not filed any documents to show that he was acting a merely as a sleeping partner. Moreover, the concept of sleeping partner is not applicable to civil proceedings and defendant no.3 can not shirk away from the his civil liability on the ground that he was not actively participating in the business.
24. Also in regard to his objections regarding the validity of the affidavit of plaintiff is concerned the same is also not tenable because the affidavit is attested on 30.09.2010 and the suit was also filed on the same date. Therefore there the affidavit of plaintiff is valid.
25. Thus from abovesaid discussion it is clear that plaintiff has not been able to prove privity of contract between the parties. Hence, present issue is decided in favour of defendants and against the plaintiff.
Issue No.3: Whether the plaintiff is entitled to the recovery of Rs. 2,30,463.70/ along with the interest? OPP
26. The onus to prove the above said issue was upon plaintiff. In view of the discussion of this court on above said issues it is apparent that plaintiff has failed to prove any privity of contract between the parties and the suit is also time barred. Hence she is not entitled to any relief sought by her. Therefore the Seema Sayal Vs. M/s Precision Castings & Ors. Page 13/14 present issue is decided in favour defendants and against the plaintiff. Issue No. 3: Relief.
27. In view of the discussion on above said issues the suit of the plaintiff stands dismissed. Parties to bear their own costs.
28. Decree sheet be prepared accordingly.
29. File be consigned to record room.
Announced in the open Court (NITI PHUTELA)
dated 16/01/2014. Civil Judge02 (South)
Saket Courts, New Delhi.
Seema Sayal Vs. M/s Precision Castings & Ors. Page 14/14