Madras High Court
Sarala Vasu vs M/S.Belair Corporation Private ... on 1 July, 2015
Author: K.Ravichandrabaabu
Bench: K.Ravichandrabaabu
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 01-07-2015
(Orders reserved on 23-06-2015)
CORAM:
THE HONOURABLE MR.JUSTICE K.RAVICHANDRABAABU
Application Nos.2371 and 2372 of 2013
in C.S.No.224 of 2012
Sarala Vasu, W/o R.Vasu .. Applicant in A.No.2371 of 2013
R.Vasu .. Applicant in A.No.2372 of 2013
Vs.
1. M/s.Belair Corporation Private Limited,
(Formerly known as
M/s.Belair Enterprises Private Limited),
Represented by its Managing Director
Aravind Srinivasan,
Old No.140-A, New No.94,
Luz Church Road, Mylapore,
Chennai-600 004. .. First respondent in both the Applications
2. R.Vasu .. Second respondent in A.No.2371 of 2013
2. Sarala Vasu, W/o R.Vasu .. Second respondent in A.No.2372 of 2013
M/s.Belair Corporation Private Limited,
(Formerly known as
M/s.Belair Enterprises Private Limited),
Represented by its Managing Director
Aravind Srinivasan,
Old No.140-A, New No.94,
Luz Church Road, Mylapore, Chennai-600 004.
.. Plaintiff in C.S.No.224 of 2012
Vs.
1. R.Vasu
2. Sarala Vasu .. Defendants in C.S.No.244 of 2012
Application Nos.2371 and 2372 of 2013 are filed and the Judge's Summons issued under Order 14 Rule 8 of the Original Side Rules of this Court, read with Order 7 Rule 11 CPC, praying to reject the plaint filed by the first respondent and dismiss the suit for the reasons stated in the affidavit.
Civil Suit No.224 of 2012 is numbered and the plaint is filed under Order 7 Rule 1 of CPC read with Order 4 Rule 1 of the Original Side Rules of this Court, praying to pass a judgment and decree in favour of the plaintiff and against the defendants:
(a) to direct the defendants to pay the plaintiff the sum of Rs.2,74,60,403/- together with interest on Rs.1,98,23,969/- at the contract rate i.e. at 12% per annum or at a rate to be fixed by the Court from the date of plaint till the date of realisation, and
(b) to direct the defendants to pay the plaintiff the costs of the suit.
For applicants and second respondent
in both the applications : Mr.A.K.Mylsamy
For respondent-1 in both the applications:
Mr.V.Prakash, Senior Counsel for
M/s.Shubharanjani Ananth
ORDER
Both these applications for rejection of the plaint, are independently filed by the first and second defendants in the suit. The first defendant is the husband and the second defendant is the wife of the first defendant. The first respondent in both the applications, is the plaintiff, who filed the above suit for recovery of a sum of Rs.2,74,60,403/- together with interest on Rs.1,98,23,969/- at the contract rate i.e. at 12% per annum or at a rate to be fixed by the Court from the date of plaint till the date of realisation.
2. The case of the plaintiff, in short, is as follows:
The defendants are the husband and wife, forming part of one unit and are carrying on the business of buying shares, for which purpose, they executed loan agreements on 07.04.2004 and 01.12.2004 in favour of the plaintiff for funding the defendants to enable them to purchase the shares in their favour and for their benefits. The loan amount is repayable in full on demand at the plaintiff's absolute discretion. The transaction took place from 2004 to 2008, which is evident from the bank statement of the defendants. On 25.10.2008, the amount due by the defendants to the plaintiff was confirmed in writing. The amount due as on 31.08.2011 works out to Rs.2,48,39,019/- insofar as the second defendant is concerned. The amount due by the first defendant to the plaintiff as on 31.08.2011 works out to be Rs.26,21,384/-. Thus, the suit is filed for a total sum of Rs.2,74,60,403/- with interest as stated above.
3. The defendants have filed the above applications for rejection of the plaint on the grounds that the suit is barred by limitation, that there is mis-joinder of cause of action in filing the suit, and that the jurisdiction to file the present suit is vested exclusively before the Court at Mumbai.
4. Though these applications are filed raising the above said grounds, Mr.A.K.Mylsamy, learned counsel appearing for the applicants/defendants submitted that the applicants are confining the applications only on the ground of limitation and they are giving up and not pressing the other two grounds. By contending so, learned counsel appearing for the applicants/defendants made his submissions as follows:
(a) Admittedly, the first respondent/plaintiff claimed that the transactions were made between 2004 and 2008, whereas the suit came be filed only on 27.09.2011, mainly placing reliance on the so-called acknowledgement of liability given by the first defendant on 25.10.2008. Such acknowledgement was only conditional acknowledgement, as the first defendant has signed on 25.10.2008 by specifically stating, "subject to verification and confirmation". Such being the conditional acknowledgement, in the absence of further confirmation by the defendants, such acknowledgement cannot be construed as an acknowledgement of liability within the meaning of Section 18 of the Limitation Act.
(b) The last transaction between the parties took place on 25.7.2008, by which the plaintiff made the payment to the defendants, each, a sum of Rs.20 lakhs. Thereafter, no transaction had taken place. Therefore, the suit filed before this Court on 27.09.2011 is barred by limitation.
In support of the above submissions, he relied on the following decisions:
(i) 1906 (8) Bom.L.R. 501 = MANU/MH/0075/1906 (Bombay High Court) (Maniram Vs. Seth Rupchand);
(ii) 1919 (37) MLJ 353 = MANU/TN/0185/1918 (Madras High Court) (Narayanaswamy Mudali Vs. Gangadhara Mudali and another);
(iii) AIR 1921 Madras 464 = MANU/TN/0026/1921 = 1921 (14) LW 148 = 1921 (41) MLJ 217 = 1921 MWN 475 (Madras High Court) (Subbarama Aiyar Vs. A.P.T.Veerabadra Pillai), and
(iv) MANU/MH/0627/2006 = 2006 (70) SCL 52 (Bom) (Bombay High Court) (In Re: Reunion Electrical Mfrs. (P) Ltd).
5. Per contra, Mr.V.Prakash, learned Senior Counsel appearing for the first respondent/plaintiff contended as follows:
(a) The question of limitation is a mixed question of law and fact, and therefore, the plaint cannot be rejected merely based on the contention of the defendants that the suit is barred by limitation. What is to be seen is as to whether the plaint itself ex-facie shows that it is barred by limitation or not. If it does not show so, then the plaint cannot be rejected at the threshold.
(b) It was not a single transaction made between the parties, and on the other hand, it was a mutual open current account transactions. The shares were purchased and sold by the plaintiff on behalf of the defendants, by utilising the funds of the plaintiff. In the loan agreement(s), the "loan" had been defined to mean, the amount of loan facility drawn down from time to time and as reduced by repayment or prepayment and outstanding from time to time. Under Clause 10 of the loan agreement(s), the borrower agreed that the pay-out proceeds shall be adjusted by the plaintiff against the loan amount. In Clause 15 of the loan agreement(s), it is stated that the loan facility will be available for a period of 60 months. Clause 20 of the loan agreement(s) refers that the borrower agreed to accept the statement of account sent by the plaintiff as conclusive proof of the correctness of any sum claimed to be due from the borrower, unless the borrower reverts to the plaintiff within a period of three working days from the date of despatch of statement of account. Though it is contended by the defendants that the acknowledgement of liability made on 25.10.2008 is a conditional one, as they have not reverted back to the plaintiff within three working days as contemplated under Clause 20 of the said loan agreement(s), the acknowledgement of liability is to be construed as a total acknowledgement, and therefore, the defendants are not entitled to claim that the suit is barred by limitation.
In support of the above contentions, he relied on the following decisions:
(i) 2015 (1) CTC 385 = 2015 (1) LW 560 = 2015 (1) MLJ 821 = MANU/TN/2924/2014 (Madras High Court) (V.P.Narayanasamy Vs. Gurusamy), and
(ii) 2014 (2) CTC 199 (SC) (Surjit Kaur Gill Vs. Adarsh Kaur Gill).
6. Heard the learned counsels appearing on either side and perused the materials placed before this Court.
7. The point for consideration in these applications is as to whether the suit is barred by law on the face of the plaint, warranting rejection of the same on that ground.
8. The first respondent/plaintiff has filed the above suit for recovery of money based on the loan agreements, dated 07.04.2004 and 01.12.2004 and the consequential transactions that took place between the parties from 2004 to 2008. In paragraph 5 of the plaint, the plaintiff has specifically averred that on 25.10.2008, the defendants confirmed in writing regarding the transactions that took place between the parties and also the amount due to the plaintiff. In other words, according to the plaintiff, such confirmation said to have been made by the defendants on 25.10.2008, was an acknowledgement of liability. Thus, it is contended that the suit filed on 27.9.2011, is well within three years from the date of such alleged acknowledgement of liability.
9. At this juncture, it is useful to refer to the decision of the Apex Court, reported in 2006 (5) SCC 658 (Balasaria Construction (P) Ltd. Vs. Hanuman Seva Trust), wherein, in paragraph 8, it has been observed as follows:
"8. After hearing counsel for the parties, going through the plaint, application under Order 7 Rule 11(d) CPC and the judgments of the trial court and the High Court, we are of the opinion that the present suit could not be dismissed as barred by limitation without proper pleadings, framing of an issue of limitation and taking of evidence. Question of limitation is a mixed question of law and fact. Ex facie in the present case on the reading of the plaint it cannot be held that the suit is barred by time. The findings recorded by the High Court touching upon the merits of the dispute are set aside but the conclusion arrived at by the High Court is affirmed. We agree with the view taken by the trial court that a plaint cannot be rejected under Order 7 Rule 11(d) of the Code of Civil Procedure."
10. A perusal of the above decision of the Supreme Court shows that a reading of the plaint must ex-facie show that the suit is barred by time/limitation, otherwise, the plaint cannot be rejected under Order 7 Rule 11 CPC. In other words, if the conclusion regarding the plea of limitation is possible and could be arrived at only upon consideration of pleadings, supported by evidence by allowing the parties to go on for trial, such an issue raised, undoubtedly, a mixed question of fact and law, cannot be considered as a ground to reject the plaint. In fact, by following the above decision of the Apex Court reported in 2006 (5) SCC 658 (Balasaria Construction (P) Ltd. Vs. Hanuman Seva Trust), I myself, held, in the case of V.P.Narayanasamy Vs.Gurusamy, reported in 2015 (1) CTC 385 = 2015 (1) LW 560 = 2015 (1) MLJ 821 = MANU/TN/2924/2014, that the issue regarding limitation requires a trial, and therefore, the same cannot be made as a ground to reject the plaint.
11. Keeping the above principles in mind, if we peruse the plaint averments, the same do not ex-facie show that the suit is barred by limitation. On the other hand, the specific and categorical contention of the plaintiff regarding the confirmation of the liability on 25.10.2008, referred to in paragraphs 5 and 7 of the plaint, shows that on the face of the reading of the plaint itself, it cannot be construed that the suit is barred by limitation.
12. No doubt, the defendants contended that the acknowledgement made on 25.10.2008 is a conditional acknowledgement, and therefore the same cannot be construed as the acknowledgement within the meaning of Section 18 of the Limitation Act. In my considered view, such an issue cannot be decided while considering the application filed under Order 7 Rule 11 CPC for rejection of the plaint, as it requires not only appreciation of pleadings, but also the evidence to be let in by both parties in support of such pleadings.
13. I have already pointed out that whether the acknowledgement of liability as referred to by the plaintiff in the plaint, is a conditional acknowledgement or otherwise, and what was the intention of the parties, are all matters for trial. Further, the learned Senior Counsel appearing for the first respondent/plaintiff strongly relied on various Clauses of the loan agreement(s) to rebut the contentions of the defendants. A perusal of the loan agreement(s) entered into between the parties, more particularly, Clause 20 of the same, only suggests that the above contention of the defendants, is contrary to such agreed terms between the parties. For proper appreciation, Clause 20 of the loan agreement(s) is extracted hereunder:
"20. The Borrower agrees to accept the statement of account sent by Belair Enterprises Pvt. Ltd. or by any other authorised representative of Belair Enterprises Pvt. Ltd., as conclusive proof of the correctness of any sum claimed to be due from the Borrower unless the Borrower reverts to Belair Enterprises Pvt. Ltd., within a period of 3 (three) working days from the date of despatch of statement of account."
14. As per the above terms in Clause 20 of the loan agreement(s), if the defendants have made such acknowledgement conditionally, they should revert back to the plaintiff within a period of three working days. If not, such acknowledgement is to be treated as a conclusive proof of the correctness of the statement made in the accounts. That being the condition of the loan agreement(s), to which the defendants are admittedly parties, the issues as to whether was there is an acknowledgement of liability and whether the endorsement made by the first defendant has to be construed as a conclusive proof of the correctness of the claim made by the plaintiff as per Clause 20 of the loan agreement(s), have to be considered and decided only after trial, as consideration of such issues involves mixed question of fact and law.
15. Further, Clause 15 of the loan agreement(s) contemplates that the loan facility will be available for a period of 60 months. The loan agreement(s) were entered into between the parties on 07.04.2004 and 01.12.2004 respectively. Therefore, such loan facility between the parties being a continuous current account transaction for a period of 60 months, the same shows that such period would have come to an end only on 6.4.2009 and 30.11.2009 respectively. As the suit was filed on 27.09.2011, I am of the view that the issue of limitation as raised by the defendants, is to be relegated to be decided after conducting trial.
16. Learned counsel appearing for the applicants/defendants relied on a decision of the Bombay High Court reported in MANU/MH/0075/1906 = 1906 (8) BOM.L.R. 501 (Maniram Vs. Seth Rupchand) and a decision of this Court reported in 1919 (37) MLJ 353 = MANU/TN/0185/1918 (Narayanaswamy Mudali Vs. Gangadhara Mudali and another), in support of his contention that if the condition attached with the acknowledgement of liability is not performed or fulfilled, such acknowledgement cannot be the acknowledgement of liability.
17. I have already pointed out that as per Clause 20 of the loan agreement(s), the defendants have to revert back within three working days, if there is any disagreement. Therefore, it was for the defendants to revert back. A perusal of such acknowledgement, dated 25.10.2008 only shows that the first defendant has signed the same stating, "subject to verification and confirmation". If that be the condition attached with the acknowledgement, obviously, it is for the defendants to verify and confirm. If they have not reverted back within three working days as contemplated under Clause 20 of the loan agreement(s), then it becomes unconditional acknowledgement of liability. Therefore, when these are all matters for trial, I do not think that the above decisions of this Court and Bombay High Court, relied on by the learned counsel for the applicants/defendants help him in any way, as the facts and circumstances of each case differ.
18. The decision of this Court reported in AIR 1921 Madras 464 = MANU/TN/0026/1921 = 1921 (14) LW 148 = 1921 (41) MLJ 217 = 1921 MWN 475 (Subbarama Aiyar Vs. A.P.T.Veerabadra Pillai), is relied on by the learned counsel appearing for the applicants/defendants to contend that the statement made by the defendants does not amount to the acknowledgement of liability. Hereagain, the facts and circumstances of each case have to be gone into for deciding such issue. There cannot be any general proposition of law on this aspect. Moreover, a reading of the said decision of this Court shows that such question was raised during the conduct of the trial in that case, which ultimately came up before this Court by way of Second Appeal. Therefore, while deciding the application for rejection of plaint, the said decision cannot be pressed into service, especially when the facts and circumstances of the present case are totally different and distinguishable.
19. The decision of the Bombay High Court reported in MANU/MH/0627/2006 = 2006 (70) SCL 52 (Bom) (In Re: Reunion Electrical Mfrs. (P) Ltd.) is relied on by the learned counsel appearing for the applicants/defendants, again in support of the contention that the endorsement (acknowledgement) made by the applicants/defendants cannot be construed as the acknowledgement of liability. In that case, the question before the Bombay High Court was as to whether the issuance of Form-C under the Companies Act, 1956, was an acknowledgement of liability. Further, a perusal of the said decision shows that the said issue was raised in a petition filed under Sections 433 and 434 of the Companies Act, 1956 for winding up of the respondent-Company therein. It has been held therein that an inference cannot be drawn that execution and issuance of Form-C by the purchaser impliedly reflects on the question of payment of purchaser to the seller in respect of the transactions referred to therein, even though the said Form-C is issued.
20. In my considered view, the facts and circumstances of the above said case are totally different and distinguishable to the case on hand, more particularly, on the fact that the acknowledgement under dispute was made admittedly by the first defendant herein on the accounts furnished by the plaintiff-Company, and therefore, this Court, at this stage, cannot conclude that such endorsement/acknowledgement is not an acknowledgement of liability.
21. Learned Senior Counsel appearing for the first respondent/plaintiff relied on the decision of the Supreme Court reported in 2014 (2) CTC 199 (SC) (Surjit Kaur Gill Vs. Adarsh Kaur Gill), wherein, the Apex Court observed that the issue of limitation is always a mixed question of fact and law, and therefore, it could not be a ground for rejection of the plaint.
22. Considering the above stated facts and circumstances, I am of the view that the plaint cannot be rejected on the ground raised by the applicants/defendants, in view of the fact that such issue of limitation being a mixed question of law and fact, has to be gone into and decided only after conducting the trial.
23. For the reasons stated above, I find no merits in these applications, which are accordingly dismissed. No costs.
01-07-2015 Index: Yes Internet: Yes cs Copy to The Sub-Assistant Registrar (Original Side), High Court, Madras.
K.RAVICHANDRABAABU,J cs Order in A.Nos.2371 and 2372 of 2013 in C.S.No.224 of 2012 01-07-2015