Delhi High Court
Life Insurance Corporation Of India vs Raghunath Prasad Almal And Ors. on 16 April, 1991
Equivalent citations: 44(1991)DLT521
JUDGMENT Mohd. Shamim, J.
(1) PLAINTIFF-APPELLANT (hereinafter referred to as appellant) have preferred the present appeal against the judgment and decree dated 4.6.1970 passed by Shri V.B. Bansal, Sub Judge 1st Class (as he then was) whereby he dismissed the suit of the appellant for recovery of a sum of Rs. 14,474.52 P. (2) The matrix of the case of the appellant as set out in their plaint is as under : that one Shri Sagar Mall Almal deceased (hereinafter adverted to as deceased for the sake of convenience) of 7, Kannu Lall Lane, Calcutta-7, sent on 30.7.52 a proposal to M/s. Ruby General Insurance Company, 21, Darya Ganj, Delhi to be assured for life for a sum of Rs. 68,000.00 . The said proposal was accepted and on the basis thereof a policy bearing No. 75990 dated 8.9.1952 issued to the deceased by the said company. The said policy was converted into a paid up one at the request of the deceased with effect from 1.8.1955. A sum of Rs. 22,400.00 could have been paid to the deceased, on the date of maturity, under the said policy, i.e.,1.8.1962. The deceased borrowed a sum of Rs.12,400.00 from the above said company on the basis of a bond dated 1.2 1956 executed by him in favor of the aforesaid company (hereinafter referred to as company for the sake of brevity). The deceased deposited the above said policy with the said company by way of security for the repayment of the said loan.
(3) Meanwhile, Life Insurance Corporation Act of 1956 came into force. As a corollary whereof the business of the said company was transferred and vested in the appellant with effect from 1.9.1956. Consequently, the appellant became the insurers instead of the said company under the provisions of the said Act, as if it were they who,entered into the agreement of insurance with the deceased.
(4) The deceased took another, loan from the appellant vide bond dated 7.5.1959 to the tune of Rs. 1,860.00 on the security of the policy alluded to above which was already in deposit with them.
(5) The deceased neither cleared the said loans, nor paid any thing towards interest which fell due. As a causative consequence thereof a sum of Rs. 14,474.52 paisas including interest was due to the appellant on account of the 1st loan. Whereas a sum of Rs. 2,194.80 including interest was due from him as a result of the second loan vide bond dated 7.5.1959.
(6) Vide terms and conditions of the aforesaid bonds, on default of the payment of the above said two loans and interest thereon, by the deceased, the above said policy stood forfeited to the appellant. They as such became entitled to apply the value allowable under the impugned policy towards the payment of the aforesaid two loans together with interest due up to the date of maturity from the sum insured and only after such deductions, the balance, if any, could have been paid to the deceased.
(7) The deceased inadvertently was paid a sum of Rs. 18,205.20 paisas after deducting the IInd loan to the tune of Rs.2,194.80 paisas vide cheque No. 632300 dated 1.8.62 drawn on the State Bank of India which was duly encashed and honoured as maturity claim under the said policy. As ill luck would have it, on account of a mistake on the part of the staff of the appellant a sum of Rs. 14,474.5 2 which was due from the deceased under the first loan including interest for the period ending 1.8.62, i.e., date of maturity could not be deducted from the total amount of Rs. 20,400.00 due to the deceased under the policy in question. The appellant paid the said amount under a mistaken notion regarding the same as to be due from the appellant whereas in fact it was not. Hence the said amount was refundable and returnable to the appellant from the deceased, had he been alive. It is now to be realised from his property in the hands of his legal heirs.
(8) The impugned mistake with regard to the payment of the aforesaid amount was discovered on 20.5.1966. Hence, the present suit is within time.
(9) The deceased left for his heavenly abode sometime in October, 1963 leaving behind the defendants-respondents as his legal heirs (hereinafter referred to-as respondents). The respondents have inherited the estate-left by the deceased. Hence, they are liable to repay and refund the said amount to the appellant.
(10) The respondents put in contest, inter-alia, on the following grounds: that it was wrong and false that a sum of Rs. 14,474.52 P. was ever paid to the deceased. The respondents are under no obligation to refund or repay the alleged over-payment made to the deceased in asmuch the respondents have not inherited any property from the deceased. It is denied that the alleged payment was made by mistake. It is false and preposterous that the alleged mistake could be discovered for the first time on 205.1966. The suit is as such barred by time. The period of limitation is to be computed, from the date af alleged payment, i e., 1.8.62, if so computed the suit is out of time. Hence, the suit is liable to be dismissed.
(11) The learned lower Court framed the following issues : (1)Whether the plaintiff has locus-standi to file the preseat suit ? OPP. (2) Whether the suit is within time ? OPP. (3) Whether the amount of Rs. 12,400.00 was paid to the deceased Sagar Mal Almal, under mistake ? If so, to what effect ? OPP. (4) Whether the plaintiff is entitled to recover any interest ? If so, at what rate ? OPP. (5) If the foregoing issues are held in favor of the plaintiff, then whether the defendants are liable to refund the suit amount to the plaintiff, as legal representatives of the deceased ? OPP. (6) Whether the suit has been instituted and the plaint signed and verified by a duly authorised person ? OPP. (7) Relief.
(12) The learned Sub Judge came to the conclusion that the suit was barred by time. As a causative consequence thereof the appellants were held not entitled to the relief claimed and this led to the dismissal of the suit. The other issues were decided in favor of the appellant.
(13) Aggrieved and dissatisfied with the impugned judgment and decree the appellants have approached this Court.
(14) Learned counsel for the appellant Mr. Ravinder Sethi has contended with great zeal and fervour that the learned lower Court fell into agrave error by coming to the conclusion that the suit was barred by time. According to him there was a world of difference in between the discovery of the mistake and the commission thereof. The period of limitation is to be reckoned from the date of the discovery of the impugned mistake which came to light only on 20.5.1966 and if the period so computed, the claim of the appellant was within time. The most question was, whether the mistake having once been made, could have been detected eaRIier than 20.5.1966 ?
(15) Ms. Kum Kum Sen urged to the contrary.
(16) We have heard the learned counsel for the parties at sufficient length and have very carefully examined their rival contentions and have given our anxious thoughts thereto.
(17) The most polemical and important issue which arises for adjudication in the preseat appeal, as is fully manifest from above, is as to whether the claim of the appellant was within time on the date of the institution of the suit i.e., 8th of July, 1967?
(18) There is no dispute between the parties that the provisions of Section 17 and Article 113 of the Limitation Act are the relevant provisions which will apply to the facts and circumstances of the present case. In fact, the very fate of the present case hinges on an interpretation of the said provisions of law. Since we are concerned with the construction of the said provisions it would be just and proper to examine them in extenso before proceeding any further in the matter.
(19) Section 17 of the Limitation Act is in the following words : "17.(1) Where, in the case of any suit or application for which a period of limitation is prescribed by this Act- (a) the suit or application is based upon the fraud of the defendant or respondent or his agent, or (b) the knowledge of the right or title on which a suit' or application is founded is concealed by the fraud of any such person as aforesaid; or (c) the suit or application is for relief from the consequences of a mistake; or (d) where any document necessary to establish the right of the plaintiff or applicant has been fraudulently concealed from him.' the period of limitation shall not begin to run until the plaintiff or applicant has discovered the fraud or the mistake or could, with reasonable diligence, have discovered it; or in the case of a concealed document, until the plaintiff or the applicant first had the means of producing the concealed document or compelling its production; Provided............... (i)........................ (ii)........................ (iii)........................ (2)........................"
Article 113 of the Limitation Act deals and prescribes period of limitation in those discerning few cases where there is no prescribed period. It reads as under: "113. Any suit for which no Three When the right period or limitation is years to sue accrues provided elsewhere in this Schedule.
(20) It is manifest from above that the above Section deals with the effect of fraud and mistake. The theory underlying under Section 17 is that every person is presumed to know his own legal right and title to the property. If he does not take care of his own rights and title to the property in that eventuality the time for filing the suit or application based on such a right or title is not prevented from running against him. The only exception to this rule is when such a person is prevented from knowing about such a right or title to the property on account of a mistake in that case the period of limitation would start running from the date of discovery of such a mistake or when he could with reasonable diligence have discovered it.
(21) The learned counsel for the appellant Mr. Ravinder Sethi has strenuously argued that the learned lower Court while interpreting the above provisions of law fell into a grave error by not distinguishing in between the two facts, i.e., discovery of a mistake and the commission of a mistake. According to the learned counsel the two things are altogether different. The next limb of the argument of the learned counsel for .the appellant is that in case of commission of a mistake the period of limitation is to be computed from the date when the mistake was discovered by a party and not from the date of the commission of the mistake. The learned lower Court to his dismay and horror computed the period of limitation in the present case from the date of the commission of the mistake. This sort of interpretation is obviously, according to the learned counsel for the appellant, not tenable in law.
(22) We are sorry, we are unable to agree with the learned counsel for the appellant. To our mind the learned counsel has considered amiss the provisions of Section 17 of the Limitation Act. While placing the said construction on the said Section the learned counsel has completely lost sight of the fact that Section 17 of the new Limitation Act, 1963 does not only deal with the discovery of mistake; it further provides and covers those cases in which the affected party could have discovered the mistake with a certain amount of reasonable diligence'.
(23) Legislators in their wisdom have used and incorporated the words "with reasonable diligence" in the newly framed Section 17 .of the Limitation Act. Thereby they have given abigger scope to the opposite party to contend that the date of the knowledge of the mistake or discovery pleaded is not the correct date of such discovery of a mistake or fraud, It further gives a handle in the hands of the opposite party to establish that it was possible for the plaintiff to have discovered the mistake had he been reasonably diligent. The plaintiff thus is not permitted to plead mechanically any date of the alleged discovery of the mistake-whichever he deems fit and proper in the circumstances of a particular case.
(24) The provisions of the above Section came up for interpretation before their lordships of the High Court of Madras reported in Ramanathapuram Market Committee, Viradhunagar & Ors. Appellant v. East India Corporation Ltd. Madurai. The relevant portion reads, "If the plaintiff's allegation as to the date of knowledge of the mistake is adopted and accepted as a matter of course, then he would automatically be licensed to prejudice his adversary. A fortiori in a case where the defendant challenges the allegation, it is for the plaintiff to establisa that he could not have discovered the mistake "with reasonable diligence" on a date eaRIier than that on which the plaintiff bases his cause of action. Reason varies according to times and circumsances in which the individual thinks. Thus the word "reasonable" has always been understood in law as prima facie meaning, reasonable in regard to those circumstances of which the actor called on to act reasonably, knows or ought to know."
(25) With the above background let us now see as to whether the appellants in the instant case could have discovered the Impugned mistake eaRIier than that alleged to have been discovered. According to the plaintiff the cause of action arose in the present case on 20.5.1966 when the mistake with regard to the over payment of the amount was discovered by them. (Vide para 17). The question which stares in the faces and craves for an answer is as to whether the appellant could have discovered the alleged mistake earlier to that date with the application of reasonable diligence. Our answer to the above query is in the affirmative.
(26) There is ample material on record to show and prove that the appellants, could have discovered the impugned mistake on a date earlier than that on which they are alleging to have discovered it.
(27) It is in the statement of Mr. M.L. Aggarwal, PW7 and Shri R.S. Jain PW8 that the mistake with regard to over payment of Rs. 14,474.52 P. to the deceased was discovered on 20th May, 1966 and the said mistake never came to the notice of any one eaRIier to that. However, on being cross-examined Shri R.S. Jain, Public Witness 8 has admitted with commendable fairness on his part that apart from checking the account books they are audited every year. We further find in the statement of PW. 6 Shri A.N. Khanna during the course of his cross-examination wherein he goes to state, "Had there been ledger sheets with title papers which are Ex. P. 3 and P. 7 in this case there would have been no mistake." The appellants have also placed on record certain documents which prove in unequivocal terms that the impugned mistake could have been discovered had the appellants been reasonably diligent. Ex. P. 3 is the extract from the Ledger of the appellants where there is a mention that the loan of Rs. 1,860.00 is the second loan. The said factum should have been sufficient enough to put the appellants on their tip toe and guard, that there must have been first loan also. To our mind a mere mention of the said fact in Ex. P. 3 should have set them on inquiry with regard to the first loan. Ex. P. 15 is an extract from the Schedule which not only shows the second loan of Rs. l,860.00 but also refers to the first loan of Rs. 12.400.00 . Ex. P. 7 is again an extract from the loan Register. It refers to the first loan. Ex. P. 2 is a statement of account where there is reference to the second loan. All the above documents admittedly pertain to the department of the appellants. Appellants were admittedly in possession thereof. All of them are ante litem motam. Hence the said documents can be safely relied upon The appellants are very much bound by the citations in the said documents and they cannot wriggle out of them. Thus it does not lie in their mouth to allege that they could not have discovered the mistake earlier than 20.5.1966.
(28) Mr. Ravinder Sethi has then contended that the appellants are a statutory body. They deal day in and day out with thousands of cases. It is thus not possible for them to keep an eye on each and every case. According to him these things could not be lost sight of while interpreting the provisions of Section 17 of the Limitation Act. The contention of the learned counsel, we feel, does not hold any water. It is well known that the object of the Limitation Act is preventive and not creative. Its main object is to put an end to the litigation after the expiry of certain period of time. Hence, the Court while construing the provisions of the Limitation Act can not afford to be liberal. They have to be very strict and vigilant. We are fully fortified in our above view by the observations of the Hon'ble High Court of Madras, (supra) (Para 9) .which reads as under : "The object of the statute of Limitation is preventive and not creative. It interposes a statutory bar after a certain period and gives a quietus to suits to enforce an existing rignt. Such extinguishment of claims by statutory interference resulting in making certain demands stale should be construed strictly. No doubt, the provisions of the Limitation Act should be interpreted strictly in accordance with the language used, but it to always necessary that a litigant, who relies upon it, should bring his case within the four corners of the terms of the Statute."
(29) The alleged over payment was made to the deceased on 1st August, 1962 (vide para 13 of the plaint) vide cheque No. 632300, dated 1.8.62, i.e., vide Ex. P. 13. Thus we feel that the period of limitation is to be computed from the said date. The appellants brought forward their claim before the learned lower Court on 8.7.1967. Thus we feel that the claim of the appellants is obviously barred by time. We thus do not see any force In the present appeal. It is liable to be dismissed and the same is hereby dismissed with costs.