Madras High Court
Mr.S.Suresh Kumar vs /
Author: G.Jayachandran
Bench: G. Jayachandran
C.S.No.63 of 2021
and
A.No.621 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on :27.08.2021 Pronounced on:01.09.2021
Coram:
THE HONOURABLE DR. JUSTICE G. JAYACHANDRAN
Civil Suit No.63 of 2021
and
Application No.621 of 2021
Mr.S.Suresh Kumar,
Proprietor of Rolex Electro Cab,
No.128, Anna Pillai Street,
Chennai-600 079. .. Plaintiff
/versus/
Mr.Prakash Chand Jain,
Proprietor of Sir Mahaveer Suppliers,
Residing at No.1, Raji Street,
chinnaSekkadu, Manali,
Chennai 600 058. .. Defendant
Prayer:- Civil Suit has been filed under Order VII, Rule 1 of O.S. Rules Read
With Order XXXVII, Rule 1 of C.P.C., praying to pass a judgment and decree
against the defendant:(a)for a sum of Rs.2,71,19,379/- (Rupees Two Crores
Seventy One Lakhs and Nineteen Thousand Three Hundred Seventy Nine Only)
together with further interest @ 24% on the Principal amount of Rs.1,18,04,279/-
(Rupees One Crore Eighteen Lakhs Four Thousand Two Hundred Seventy Nine
1/19
https://www.mhc.tn.gov.in/judis/
C.S.No.63 of 2021
and
A.No.621 of 2021
only) per annum from the date of this plaint till the date of realisation; and (b) for
the cost of the suit.
For Plaintiff :Mr.R.Abdul Mubeen
For Defendant :No appearance
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JUDGMENT
(This case has been heard through Video Conferencing) The suit is filed for recovery of Rs.2,71,19,379/- with interest for the goods sold and delivered to the defendant under numerous invoices raised between 23/11/2013 and 30/05/2015.
2.The plaint averment in short is that, he is a wholesale dealer, carrying on business at Chennai, in electric materials and such other accessories and hardware goods. At request of the defendant, the plaintiff supplied various materials on credit basis, as per the defendant’s demand, through the invoices, on a running account. The defendant failed to pay the money as per the invoices, leaving an outstanding of Rs 1,18,04,279/- as on 30/05/2015/. The attempt to contact the defendant for collection of dues went futile. The defendant remained 2/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 unapproachable. On the other hand, the defendant through his advocate caused a notice dated 20/03/2015 admitting the liability. He in this notice requested 24 months time to repay the entire dues. After waiting for 24 months, the plaintiff realised that the defendant request for time was only to cheat the plaintiff his lawful dues. Therefore, the plaintiff caused the remainder notice dated 01/11/2019 to the defendant. The said notice returned to the sender.Thereafter, this suit filed for a sum of Rs 2,71,19,379/- being the outstanding of Rs 1,18,04,279/- as per invoices along with 24% interest from the last date of payment till 30/09/2020 and interest at the rate of 24% pa for the period pendent lite till the date of realisation. The suit laid before the Commercial Division of the High Court being a commercial transaction relating to sale of goods. The Court notice and private notice sent to the defendant 'returned un-served' and pursuant to this Court direction, the plaintiff effected substituted service of summon through paper publication.
3.Citing the completion of service to the defendant through paper publication, the learned counsel for the plaintiff sought for Attachment Before Judgment as prayed in the application No.621/2021. The learned counsel 3/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 submitted that, to evade the liability, the defendant remained ex-parte. He is making all attempts to alienate the suit schedule property, hence, to protect the interest of the plaintiff, attachment of the suit schedule property before judgment is imminent.
4.This Court, on verification, found no evidence to indicate the property mentioned in the schedule and sought to be attached belongs to the defendant. Hence, directed the plaintiff's counsel to produce document/s to show, the schedule mentioned property belongs to the respondent/defendant.
5.The plaintiff's counsel has not filed any document even to prima facie indicate, the suit schedule mentioned property is owned by the defendant. The learned counsel, instead, sought for summary judgment allowing the suit claim, since the defendant has failed to participate in the proceedings, despite notice. According to the plaintiff, there is no real prospect of successfully defending the suit claim and there is no compelling reasons, why the claim should not be disposed before recording the oral evidence.
4/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021
6.Thus, this Court has been asked to consider the pleadings and the documents relied upon by the plaintiff to decide, whether the suit claim to be allowed as prayed.
7.According to the plaintiff, electrical and hardware goods were sold to the defendant, as per the invoices, which are plaint documents 1 to 48 between 23/11/2013 and 30/5/2015. It is contended that, the defendant, through his Advocate, had caused notice dated 20/03/2015, which is the plaint document No. 51, wherein he has admitted the liability and had acknowledged the dues of Rs.1,14,43,768/- payable towards goods delivered. Within the said two years period, the defendant failed to pay the admitted dues. Thereafter, the plaintiff had caused a remainder notice dated 01/11/2019 to the defendant through his Advocate calling upon the defendant to pay a sum of Rs.1,18,04,279/- within 15 days, from the date of receipt of the notice, failing which, civil and criminal proceedings will be initiated against him. This remainder notice is plaint document No.52. This notice returned with postal endorsement “LEFT”. The postal cover is plaint document No. 53.
5/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021
8.The plaint carrying the above facts was presented before the Assistant Registrar ( Original Side ) II on 15/10/2020 and the same is duly noted on the plaint. In the plaint, the concise statement, on cause of action, is narrated in paragraph 8 as below:-
“8.The cause of action to the above suit arose at Chennai within the jurisdiction of this Hon'ble Court Where the plaintiff and the defendant reside and work for gain; Where the defendant raised invoices at the office of the plaintiff; When the defendant requested the plaintiff to supply various materials to the defendant under the invoices raised; When the plaintiff supplied to the defendant on regular basis to the defendant on running account basis; When the plaintiff supplied materials in accordance to the invoices raised by the defendant from November 2013 to May 2015 vide various Invoices and several dates; When the defendant is liable to pay a sum of Rs.1,18,04,279/- (Rupees One Crore Eighteen Lakhs and Four Thousand Two Hundred Seventy Nine only) as per invoices on various dates; On 20.03.2015; When the defendant caused a legal notice requesting 24 months period to repay the entire dues of plaintiff; When the plaintiff accepted the request till 18.03.2017; when the defendant further sought time; on 01.11.2019, when the plaintiff to issue a reminder notice to the defendant; when the plaintiff come to know that the intention of 6/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 the defendant is to cheat the plaintiff of his lawful dues; When the defendant till date has not paid the outstanding balance for the reasons best known to the defendant......”
9.After perusing the statement made in the plaint and examining the documents relied, this Court requested the learned counsel for the plaintiff to first advance his submission on the point of limitation.
10.The learned counsel submitted that, the suit is well within the period of limitation. The transaction between the parties was on a running account. The last item entered into the account as per the ledger account is 30/05/2015. The notice of undertaking dated 20/03/2015 sent by the defendant through his lawyer seeking extension of time upto 18/03/2017 was accepted by the plaintiff. Advocate is an Agent of the Defendant. This notice of undertaking is an acknowledgment of debt under Section 18 of the Limitation Act and also to be construed as a promise of the agent to pay a time barred debt under Section 25(3) of the Contract Act.
11.The learned counsel for the plaintiff submitted that, the promise made 7/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 through the Advocate in the notice is valid and enforceable, even if the debt is time barred. A debtor can enter into an agreement in writing to pay the whole or part of the debt, which the creditor might have enforced, but for the law of limitation, a suit can lie on a written promise to pay the barred debt as it is a valid contract. Such a promise constitutes novation.
12.In support of his submissions the following judgments as precedent relied:
1.KAMTA RAI AND OTHERS v. RANI JADURAJ KUNWARI : A.I.R 1931 ALL 398.
2.SALIL DUTTA v. T.M. AND M.C. PRIVATE LTD: 1993 (2) SCC 185.
3.D.THIRUVENGADAM –VS- SIVARAJAN AND ANOTHER : 2012 (3) MWN(Civil) 70
13.In KAMTA RAI AND OTHERS v. RANI JADURAJ KUNWARI:
A.I.R. 1931 ALL 398, it is held by the Allahabad High Court that, the authority to be given to the agent need not in every case be an express authority. Admission by a pleader in a petition made in course of his business is binding acknowledgement 8/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 so as to give fresh starting point irrespective of whether the pleader represents majors, or guardian for minors.
14.In SALIL DUTTA v. T.M. AND M.C.PRIVATE LTD: (1993) 2 SCC 185, the Hon'ble Supreme Court held that the Advocate is the agent of the party. His acts and statements, made within the limits of authority given to him, are the acts and statements of the principal i.e. the party, who engaged him.
15.In THIRUVENGADAM –VS- SIVARAJAN AND ANOTHER : 2012 (3) MWN(Civil) 70 relying upon the above two judgments, Madras High Court held that, Advocate is an Agent for his client and in so far as the acknowledgement in Ex.A2 (reply notice by the first defendant acknowledging the time barred debt) is concerned, it is a valid acknowledgement of promise to repay the time barred debt and the said promise is legally qualified. It is further added that P.W.2 (lawyer, who caused the reply notice on behalf of the first defendant) has not acted beyond the authority given to him by the first defendant and the acknowledgement is very well valid in the eye of law.
16.In Thiruvengadam case cited supra, the reply notice by the lawyer 9/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 admitting a time barred debt was construed as promise by the principal. Interestingly, in this case, the lawyer, who caused the reply notice admitting time barred debt and sought 2 to 3 years time to clear, the debt was the counsel for the defendant in the suit and conducted the case before the trial Court. He was examined as PW-2 and he on oath deposed that he caused the notice admitting the liability on instruction from his client to gain time to pay the debt. Therefore, there was no difficulty for the Court to conclude that, it is acknowledgement of time barred debt under Section 25(3) of the Indian Contracts Act. Though there is no enforceable consideration, the contract is valid applying the principle of novation.
17.Duty of the Court:
The defendant in this suit has neither received notice nor entered appearance to defend. The suit is heard ex-parte. However, it is the duty of the Court to ascertain, whether the suit is maintainable under law. Particularly, whether the suit is barred by limitation.
18.Section 3 of the Limitation Act, mandates that subject to the provisions 10/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 contained in Sections 4 to 24 (both inclusive) every suit instituted after the prescribed period shall be dismissed, although limitation has not been set up as a defence.
19.It is, therefore, the duty of the Court to ensure, whether the suit is filed within the prescribed period of limitation, even if it is a defenseless suit.
20. Section 18 of the Limitation Act and Section 25(3) of the Contracts Act.
The learned counsel for the plaintiff rely upon Section 18 of the Limitation Act and plead that, the undertaking notice issued by the defendant through his counsel is acknowledgement of debt. He also in alternate pleads that the undertaking notice is a promise to pay the time barred debt, therefore, the right to sue the defendant is protected by Section 25(3) of the Contract Act.
21.Section 18 of the Limitation Act and Section 25(3) of the Contract Act cannot be applied to one and the same fact. Basically, these two Sections play on different field. Section 18 of the Limitation Act deals with acknowledgement of 11/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 debt made within the prescribed period of limitation. Whereas Section 25(3) of the Contract Act deals with promise to pay a time barred debt.
22.The ingredients required to rely on Section 18 of the Limitation Act are:
(i) the acknowledgement of debt must be prior to the expiry of the prescribed period of limitation; (ii)It must be in writing, signed by the party against whom the right is claimed. Explanation (b) to this Section says, the word ‘signed’ means either personally or by an agent duly authorized in this behalf. If these conditions are satisfied then, such acknowledgement will give a fresh period of limitation from the time, when the acknowledgement so signed.
23.As far as Section 25 of the Contract Act, it deals with exception to the general Rule, “agreement without consideration is void”. Sub Section (3) deals with one such exception i.e ‘a promise to pay a time barred debt’. To fall on this provision, (i) the said document must refer to a debt. which the creditor, but for the period of limitation, might have enforced. (ii)there must be a distinct promise to pay wholly or in part such debt and (iii) the promise must be in writing signed by the person concern or by his duly appointed Agent. In such case, by applying the 12/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 principle of novation, the limitation is reckoned from the date of such promise to pay the time barred debt.
24.In the instant case, the plaintiff claims, the notice of the defendant’s lawyer is an acknowledgement. The said notice is dated 20/03/2015. The said submission is legally acceptable. The said notice is prior to the alleged last transaction. Therefore, obviously the said notice is within the period of 3 years limitation prescribed under the law. Section 18 of the Limitation Act alone gets attracted and not Section 25(3) of the Contract Act.
25.An acknowledgement of debt given in writing signed by the debtor or his Agent, need not necessarily be with a promise to repay. Mere acknowledgement of debt will give a fresh period of limitation under Section 18 of the Limitation Act, if the acknowledgement is made within the period of limitation. If the acknowledgement of debt is with a promise to pay, such acknowledgement will be a fresh contract even if the acknowledgement is made beyond the period of limitation.
13/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021
26.It is to pertinent to emphatically clarify that, in case of acknowledgement of a debt with a promise to pay the debt on a future date, fresh period of limitation shall run from the date of acknowledgement and not from the future date the debtor promise to pay the debt, unless such extension is mutually agreed and form part of a written document, which will impede the plaintiff from filing suit prior to the expiry of the said period.
27.In the instant case, the notice dated 20/03/2015 issued by an Advocate on behalf of the defendant assuming to be given on the instruction of the defendant, it can be considered as an acknowledgement of debt. The request for time to repay and an unilateral offer to repay the debt within 24 months as found in the undertaking notice will not extend the period of limitation beyond 3 years from 20/03/2015, the date on which the debt is acknowledged. More so, when there is no evidence placed by the plaintiff that, he accepted the offer and granted the 24 months time to pay the debt. Further, in the instant case, the plaintiff has not soon after the expiry of the said 24 months i.e 18/03/2017, demanded the dues. He has caused notice of remainder only on 01/11/2019, i.e after 31 months. The suit is laid on 15/10/2020 after lapse of 11 months 15 days from the date of notice. To be 14/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 more precise, the suit is laid 5 years 8 months, after the expiry of the date of acknowledgement of debt and the last date of transaction in the mutual and open running account.
28. Reckoning Limitation in this case:
The suit is for recovery of money. The plaint disclosed the cause of action at paragraph No.8 and the same has been extracted in the earlier portion of this judgment. The plaintiff claims that, the goods were sold on credit basis and the transaction with the defendant was a running account. In such case, the limitation has to be reckoned under Article 1 of the Schedule. In alternate, if the price of goods sold and delivered, where no fixed period of credit is agreed upon then, the period of limitation shall be reckoned under Article 14. If the contention of the plaintiff is that the undertaking notice of the defendant's counsel to be taken as acknowledgement of debt under Section 18 of the Limitation Act and the 24 months period sought for repayment is taken, as the period fixed for payment, then Article 15 has to apply. For convenient reference, the relevant Articles are extracted below:-
15/19
https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 Description of suit Period of Limitation Time from which period begins to run Article 1: For the balance due Three years. The close of the year in which on a mutual,open and current the last item admitted or account, where there have been proved is entered in the reciprocal demands between account; such year to be the parties. computed as in the account.
Article 14: For the price of Three years. The date of delivery of goods. goods sold and delivered where no fixed period of credit is agreed upon.
Article 15: For the price of Three years. When the period of credit
goods sold and delivered to be expires.
paid for after the expiry of a
fixed period of credit.
29.In the instant case, the goods allegedly to have been sold under the invoices from 23/11/2013 to 30/11/2015. According to the plaintiff, it is a running account. If so, the limitation has to start from the close of the year, in which the last item admitted or proved. The invoices filed along with the plaint does not indicate the date of delivery. The invoices may be proof for sale, but not for delivery. Therefore, the first limb of this Article i.e last item admitted has to be the starting point for limitation. In this case, the admission is the liability of Rs.1,14,43,768/- as on 20/03/2015. If the limitation is computed, as per Article 1 16/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 of the Schedule, the limitation of three years expired on 31/03/2018.
30.If the undertaking in the notice is taken as acknowledgement of debt then the limitation period expires on 19/03/2018. As clarified earlier, the two years period sought to repay cannot be taken as credit period fixed under Article 15 since, the expression used in Article 15 clear enough to hold that the credit period is to be fixed at the inception, when the goods sold and delivered. The 24 months period sought by the defendant through his lawyer is not the credit period fixed under contract, but grace period requested subsequently. Even for the sake of argument, the 24 months is taken as credit period fixed, even then the limitation had come to end on 19/03/2020. (20/03/2015 + 2 years + 3 years). Whereas the suit is filed on 15/10/2020.
31.The learned counsel for the plaintiff pleaded that, the demand notice was issued within the period of limitation, therefore, the suit is well within the limitation. It is to be noted that the remainder notice of the plaintiff dated 01/11/2019 demanding the due is not a point for reckoning limitation. Such submission is preposterous and untenable. Also, it is against the spirit of the law of 17/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 limitation.
32.Viewing from any angle, the plaint presented on 15/10/2020 for the debt arose on 30/05/2015 is hopelessly barred by limitation, hence, the suit is liable to be dismissed.
33.Accordingly, this Civil Suit is dismissed. No order as to costs.
Consequently, connected Application is closed.
1.09.2021 Index:yes ari 18/19 https://www.mhc.tn.gov.in/judis/ C.S.No.63 of 2021 and A.No.621 of 2021 DR.G.JAYACHANDRAN,J.
ari Pre-delivery judgment made in C.S.No.63 of 2021 and A.No.621 of 2021 1.09.2021 19/19 https://www.mhc.tn.gov.in/judis/