Delhi District Court
M/S Ranbaxy Laboratories Ltd vs Dr. Suman Kapur on 15 January, 2007
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IN THE COURT OF SH. RAJ KUMAR CHAUHAN
ADDITIONAL DISTRICT JUDGE : DELHI
Suit No. 128/03
In the matter of :-
M/s Ranbaxy Laboratories Ltd. ............Plaintiff
VERSUS
Dr. Suman Kapur .....Defendant
O R D E R :-
By this order, I propose to dispose of an application u/o 7 rule 11 CPC of the defendant wherein it is stated that as per the averments in the plaint, the cause of action for filing the suit arose on 7-02-97 when the housing loan of Rs. 12 lakhs was granted to the defendant and various loan documents were signed and executed by the defendant in favour of the plaintiff company. It is further alleged that the last installment was made by the defendant towards Contd......
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the housing loan in June 1999; the cause of action for recovery of housing loan amount was expired on 6-02-00 as the loan was advanced to the defendant on 7-02-97; as per loan agreement, the plaintiff was entitled to recover the loan amount if the defendant was to commit default in payment of three consecutive installments; the salary of the defendant was paid till September 1999 as per the averments in the plaint, though, in fact, the defendant's salary was credited only till June 1999; even if it is assumed that the salary was credited till September, 1999, then the cause of action arose in December 1999 as the defendant is supposed to have defaulted in making the payment from October 1999; thus, the cause of action would have accrued to the plaintiff in December 1999 and the suit could have been filed latest by November 2002 which is clearly barred by limitation. It is, therefore, stated that the suit is liable to be dismissed being barred by limitation.
Contd......
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2 In reply, the plaintiff has opposed the application sating that the defendant was employee of the plaintiff company and was given a loan for the purpose of housing; the cause of action to recover such amounts will arise only when the relationship of employer and employee is seized; it is a case of recovery from an ex-employee of a company of certain benefits given as an employee; the loan as per loan agreement was for a period of 15 years at the interest rate of 4% per annum and the installments were to be paid by deduction from the salary; it is settled law that where a loan is given for a time bound period, the limitation will start only from the period specified in the loan agreement comes to an end; admittedly, the loan was given in 1997 for 15 years and it will be in February 2012 that the period of limitation will start; that the suit of the plaintiff is covered under the residuary entry 113 of the Limitation Act as the same is not a recovery of an amount paid but is a recovery of an amount paid Contd......
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under a loan agreement and the agreement is for 15 years. It is further stated that the defendant has mis understood the clause 4 of the agreement as it gives discretion to the plaintiff to terminate the loan agreement if there is default in payment of three consecutive installments. There is no compulsion on the plaintiff to terminate the agreement, as such, the agreement will survive; the service of the defendant was terminated on 31-08-00 and cause of action will arise from that date; the limitation will start from three years after the expiry of the terms of the agreement. It is, therefore, stated that the application was liable to be dismissed.
3 The Ld. counsel for plaintiff has filed the written arguments wherein the same averments has been taken as taken in the reply to the application. In addition, the plaintiff has cited the case of AIR 1976 AP 273 and referred para 35 and 36 of the said judgment Contd......
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supporting the case of the plaintiff which are as under:-
"35. The only other question that remains to be considered is whether the suit is barred by limitation. That contention is based on the ground that the right to sue for the recovery of the amount accrued to the plaintiffs on the date when the loan was advanced and the suit agreement was executed i.e. on 6-7-1965. According to the defendants the suit ought to have been filed within three years of the suit agreement i.e. before 6-07-1968 and the suit filed on 18-06-1970 is barred by limitation. It is Article 19 that is applicable. But a reading of the agreement would clearly show that the plaintiff had no right to demand payment of the amount at any time after the execution of the agreement Sri A.K. Babu Khan was given the right to pay at any time within two years without being label to pay interest. He was given a further period of one year to pay the amount with interest. The plaintiff was not therefore obliged to file a suit within the period of three years. He had the option to wait till the expiry of the three years and demand the payment of the principal with interest thereafter Art. 19 of the present Limitation Act which corresponds to Art. 57 of the old Act reads as follows :-
'For money payable Three When the loan for money lent years is made.'
36. This provision is a general article applicable for suits for recovery of money lent. That would be applicable when the right to recover the amount is based on mere lending of the amount and the suit is based on the factum of lending and not governed by any agreement giving option to the debtor to pay after a certain period stipulated, under the agreement, obviously the creditor cannot enforce his claim within that period. Any suit filed within that Contd......
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period could be successfully resisted by the debtor under the terms of the agreement as premature. Having regard to the terms of the suit agreement, the plaintiffs could not enforce their claim for the recovery of the amount lent at any time within three years. The present suit in our view, is one for which no period of limitation is provided elsewhere in the new Act, and therefore, Article 113 would apply. That provides a period of three years and the period would begin to run from the date when the right to sue accrues. In the instant case, the suit is filed within three years after the period for repayment allowed to Sri A.K. Babu Khan. The first notice demanding the amount was issued on 1-4-70 in response to which alone the defendants respondents denied their liability to pay by publishing a notification in the Urdu daily 'Siya Sat' on 9-4-1970. The plaintiffs sold the shares by public auction on 10-04-1970 and after issuing a further notice, Ex. A-12 on 4-6-1970 have instituted the present suit. The right to sue in our view, accrued to the plaintiffs on the expiry of three years from the date of the suit agreement when in spite of demand for defendants did not pay the amount due under the agreement. The suit is therefore, held to be within limitation in Yellappa v. Desayappa (1906) ILR 30 Bom 218 on which reliance is placed by the learned counsel for the defendants- appellants, the suit was held to be barred by limitation. But that was a suit for the recovery of money secured by a pledge it was construed to be a suit for money lent and the period of limitation was held to be three years from the time the loan was made. So also in the case in Saiyid Ali Khan V. Debi Prasad (1902) ILR 24 All
251. Following the earlier decision in Madan Mohan Lal ILR 17 All 284, the court held that the suit of a pawnee to recover the balance of his debt after accounting for the proceeds of the sale of articles pledged is governed by Article 57 of the Second Schedule to the Indian Limitation Act, 1877 viz., three years from the date of the loan and the suit brought beyond that Contd......
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period was barred by limitation. But these cases were cases of pledges of movables and not cases of mortgages."
4 It is, therefore, argued on behalf of the plaintiff that it is article 113 of the Limitation Act which would apply in its case.
5 The Ld. counsel for defendant, on the other hand, argued that the application was maintainable and it is article 37 of the Limitation Act which applies in his case because the loan was advanced through a pro note and period of limitation is, therefore, three years from the date when the default was made in making the payment of the said loan by the defendant. The Ld. counsel has referred and relied the following cases :-
1. AIR 1928 CAL 292 : Cause of action accrued on the date of the first default as stated in the plaint-Stipulation that if there are one or more Contd......
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defaults, the whole amount shall be due.
2. AIR 1934 ALL 661 : Parties cannot by contract alter the statutory period of limitation. Nor can they alter the statutory starting point of limitation. Such a contract will be void.
3. AIR 1947 ALL 38 : Option to sue when last installment fell due could not arrest running of time under Art 75 of Limitation Act. Contract Act-Sec 23.
4. AIR 1947 OUDH 128 : When once the limitation has begun to run the period can only be extended in the manner laid down in the Limitation Act and not by mere agreement of the parties which does not come within any of the extending sections of the limitation Act.
5. AIR 1947 OUDH 235 : Limitation would begin to run from the date of first default notwithstanding the fact that the promisee had reserved to himself the right to sue at the end of the period during which the debt was to be paid by installments which remain unpaid.
Contd......
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6. AIR 1959 M.P. 413 : As soon as the exigibility clause comes into operation, the cause of action for the recovery of the whole amount due accrues and that is the starting point of limitation, unless there is waiver.
6 I have considered the rival submissions made at bar and gone through the documents placed on record by the parties. I have read the loan agreement as a whole. The clause 5, 6 and 7 of the loan agreement are relevant and reproduced as under :-
"5. The Borrower shall secure repayment of the principal amount of loan, interest and other charges by way of mortgage of the said House. The Lender shall have the sole right and discretion in the type of the mortgage and the Borrower shall execute and/or take such steps and do such acts, deeds and things as may be required to create the mortgage of the said House as security, as may be required by the Lender.
6. The Borrower agrees and undertakes to execute an irrevocable power of attorney nominating, constituting and appointing the Lender to be her true and lawful attorney to execute and perform the acts, deeds and things in connection with the said House and the construction raised thereon, including executing mortgage of the said House and the Contd......
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construction raised thereon, and in the event of default in the repayment of the loan either in part or full alongwith interest including any installments(s), to sell, agree to sell, to receive the sale consideration, to enter upon the premises, to give on rent, lease/leave and license basis and to receive rent, licence fees/compensation and to execute and present for registration before any Registrar any deed of mortgage, sale/conveyance and lease as may be required under the law of the land to be registered.
7. The Borrower shall indemnify and keep indemnified the Lender, from and against all losses, damages and expenses caused to the Lender arising on account of or consequent to any failure or default of the Borrower to observe any of the terms and conditions or covenants under this Agreement."
7 Thus, in pursuance of the above terms of the loan agreement, the defendant has executed irrevocable general power of attorney dated 17-02-97 in favour of the plaintiff wherein he has given sole discretion to the plaintiff to deal with the house in question for securing the repayment of the loan and interest against it. Clause 2 of the said attorney provides that "the lender may, in its absolute discretion consider appropriate and to do all such other acts, Contd......
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deeds and things as may be required for the purpose of ensuring complete and absolute sale and transfer of the said House." The defendant has also executed an undertaking dated 7-02-97 which provides as under :-
"The Obliger (defendant) undertakes to deposit the original deed of conveyance with RANBAXY with the intention of creating an equitable mortgage over the said House unto and in favour of the RANBAXY as and by way of collateral security securing the repayment by the Obliger of the loan alongwith interest taken by the Obliger from RANBAXY."
8 In para No. 7 of the plaint relating to the cause of action, it is stated that "the cause of action finally arose to the plaintiff on 31-08-00 on the termination of the services of the defendant on account of willful absence from the duties."
9 In reply to para No. 7 on merit, it is simply Contd......
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stated that the cause of action did not arose finally on 31-08-00. The plaintiff in reply to the application as well as in the written arguments submitted that the cause of action in such like cases of employer and employee wherein the question of recovery of amount given to the employee as service benefits arises, the cause of action for such recovery starts from the date when the relationship of employer and employee came to an end. Admittedly, this is not a case of grant of house loan to a stranger but the house loan facility was granted under the housing loan policy of the plaintiff to its employees.
10 Moreover, as already discussed, the defendant has also executed irrevocable power of attorney dated 17-02-97 and has given an undertaking in writing dated 7-02-97 showing her intention to create an equitable mortgage over the immovable property meaning thereby securing the repayment of the loan Contd......
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by equitable mortgage in favour of the plaintiff. In these facts and circumstances, article 62 of the Limitation Act 1963 is relevant and reproduced as under :-
Description of suit Period of limitation Time from which period begins to run When the money sued
62. To enforce payment Twelve years for becomes due.
of money secured by a mortgage or otherwise charged upon immovable property 11 The averments made in the plaint and the documents relied by the plaintiff shows that the loan granted to the defendant was a charge upon the immovable property of the defendant for which the defendant has agreed to create an equitable mortgage in favour of the plaintiff securing the repayment of the loan granted to the defendant by the plaintiff. Therefore, article 62 of the Limitation Act is Contd......
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applicable to the case of the plaintiff and the period of limitation shall be 12 years from the date when the money sued for becomes due. The defendant has placed on record a letter dated 24-05-01 of the plaintiff informing the defendant about the resigning from the employment of the plaintiff company on 31-12-99. During the arguments, the Ld. counsel for defendant has highly relied upon this letter stating that as per their own admission, the plaintiff has accepted the date of resignation of the defendant as 31-12-99, therefore, the cause of action arose on that date for recovery of the loan amount and the suit, therefore, was not filed within the period of limitation. In the light of the above discussion, even if the date of cause of action is considered 31-12-99, the plaintiff has a right to file the present suit within a period of 12 years from that date as the loan was secured by creating a charge upon the immovable property of the defendant i.e. property No. B-5/291, Yamuna Vihar, New Delhi securing Contd......
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repayment of the loan granted by the plaintiff. For this reason, the application of the defendant is devoid of merits and accordingly stands dismissed. Announced in the open Court on 15-01-07 (Raj Kumar Chauhan) Additional District Judge, Delhi.
Contd......