Delhi High Court
Canara Bank vs Satish Vaid And Co. (P) Ltd. And Ors. on 10 October, 2006
Equivalent citations: [2007]139COMPCAS98(DELHI), (2007)145PLR7
Author: T.S. Thakur
Bench: T.S. Thakur, S.L. Bhayana
JUDGMENT T.S. Thakur, J.
1. This is a plaintiffs appeal arising out of a suit for recovery of money which the Court below has dismissed as barred by limitation.
2. Certain banking facilities were extended by the plaintiff-appellant to Satish Vaid and Company, a partnership concern against documents which the borrower and the guarantors executed in favor of the bank. These facilities appear to have been renewed and the credit limits increased in the year 1986 on execution of a fresh set of documents. In the year 1987, the partnership was converted into a private limited company and an intimation to that effect sent to the bank with a request that the existing liabilities be transferred to the company. On execution of the necessary documents by the Managing Director of the respondent company and upon hypothecation of the stock-in-trade and the shares standing in the name of defendant Nos.2 to 5 who stood as personal guarantors for the repayment of the outstanding amount, the liabilities were shifted from the partnership concern to the company. This included an open cash credit facility which was renewed upon execution of fresh loan documents by the company in favor of the bank. According to the plaintiff-appellant, the charge over the hypothecated stocks and the book debts of respondent company were also got registered with the Registrar of Companies in Delhi and Haryana.
3. By a letter dated 28.10.1992, defendant-respondent No. 2 herein appears to have offered the payment of the outstanding dues which offer was repeated vide letter dated 20.9.1993. The bank accepted the said offer and agreed to settle the claim for a sum of Rs. 4,41,249.35. Different amounts were thereafter paid from time to time in liquidation of the said amount. Since the balance was not arranged by the defendant-respondents, the plaintiff-bank withdrew from the settlement and started charging interest 16.5% per annum on the balance that remained due. The account was eventually declared as a non-performing asset as on 7.4.1994 with a debit balance against the respondent of a sum of Rs. 6,39,865.05. Adding interest to the said amount for the period 1.4.1994 to 19.01.1999 and after giving adjustment for all payments received by the bank, a sum of Rs. 9,88,015/- remained due against the defendants. This liability was,"according to the plaintiff, acknowledged by the defendants in terms of acknowledgement of debt and security confirmation letters furnished to the plaintiff-bank from time to time, the last out of which marked Ex.PWl/28 was executed on 20.1.1996. The failure of the defendants to pay the outstanding amount led the plaintiff-bank to file a suit for recovery of the said amount claiming interest pendente lite and till realisation at the stipulated rate of 16.5 % p.a. and costs, etc.
4. The defendants did not appear to contest the suit despite service of summons upon them. The suit was, therefore, tried exparte but dismissed by judgment and decree impugned in the present appeal on the ground that the same was barred by limitation. The trial Court held that in terms of a statement of account marked Ex.PWl/29, there was a debit balance of Rs. 4,38,615.70 as on 10.4.195 which amount was acknowledged by defendant No. 2 on behalf of defendant No. 1 company. Having said so, the Court examined the question of limitation and came to the conclusion that he acknowledgment of debt marked Ex.PWl/28 had actually been executed no 20.1.1996 and not on 28.1.1996 as alleged in the plaint and the affidavit filed on behalf of the plaintiff. The suit filed by the appellant on 21.1.1999 was, on that basis, held to be barred by limitation as the same had been presented after more than three years reckoned from 20.1.1996. The present appeal, as noticed earlier, assails the correctness of the said judgment and decree.
5. We have heard learned Counsel for the appellant and perused the record. The respondents have failed to appear even in the present appeal. In the light of the factual narrative given by us above in the absence of any challenge to the finding recorded by the trial Court that there was a debit balance of Rs. 4,38,615.70 in the account of the respondents as on 10.4.1995, we are not called upon to re-appraise the evidence relevant to the said finding nor was it argued before us that the finding recorded by the Court below suffers from any legal or factual error. We will, therefore, proceed on the assumption that a sum of Rs. 4,38,615.70 was due and payable by the respondents as on 10.4.1995.
6. The only question that falls for our determination is whether the suit was barred by limitation as held by the Court below. The trial Court has reckoned the period of limitation from 20.1.1996 and held that the three years available to the plaintiff bank to file the suit expired on 19.1.1999. There is,however, a patent fallacy in that finding. We say so because the Court below has completely overlooked the provisions of Section 12 of the Limitation Act which inter alia stipulates the provisions of Section 12 of the limitation for any suit, appeal or application, the date from which the said period is to be reckoned shall be excluded. It reads:
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7. The acknowledgement relied upon by the plaintiff-bank and marked Ex.PW1/28 was admittedly executed by the respondents on 20.1.1996. The plaintiff-bank was, therefore, entitled to a fresh period of three years under Section 18 of the Limitation Act from the date of the acknowledgement was executed. That period had to be reckoned by excluding the date on which the acknowledgement was executed. In other words the period of three years had to be reckoned from 21.1.1996 and would end on 20.1.1999 which was admittedly a holiday on account of Id-ul-fitr. In terms of Section 4 of the Limitation Act, the plaintiff appellant could file the suit on the next working day, i.e. on 21.1.1999. That provision reads:
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8. The suit field by the appellant-bank on 21.1.1999 was, therefore, within time and could not have been dismissed by the Court below.
9. In the result, this appeal succeeds and is hereby allowed. The impugned judgment and decree is set aside and the suit filed by the plaintiff decreed for a sum of Rs. 4,38,615.70 with interest @ 16.5% per annum from 10.4.1995 up to the date of filing of the suit. The plaintiff appellant shall be further entitled to interest pendente lite and till realisation @ 9% per annum together with costs of the suit and the present appeal.