S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR JUDGMENT
S.B.CIVIL REGULAR FIRs.APPEAL No.304/2003 Punjab National Bank versus M/S.Jain Wool House & Others Date of Judgment : 31st January, 2014 PRESENT HON’BLE Mr.JUSTICE MAHENDRA MAHESHWARI Mr.Jagdish Vyas, for the appellant.
Mr.Salil Trivedi } MRS.Shobha Kunwar, } for the respondents.
***** BY THE COURT Reportable This regular fiRs.appeal has been preferred by the appellant- Punjab National Bank, being aggrieved against the judgment and decree dated 16.8.2003 passed by the learned Additional District Judge, Sangaria, District Hanumangarh, (for short “the trial court”.) in Civil Original Suit No.8/1999 (16/2002) filed by the appellant-bank, whereby while decreeing the suit as against the respondent-defendants No.1 and 2 for sum of Rs.1,49,459.45.
paisa with interest and costs of the S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 2 litigation, the learned trial court has dismissed the suit as against the respondent-defendant no.3 on the basis of suit being barred by limitation.
The brief facts of the case, as depicted in the suit filed by appellant-bank before the learned trial court, are that the respondent-defendant No.2 Raj kumar Jain is the Proprietor of respondent-defendant No.1 Concern i.e.M/s Jain Wool House.
On 4.10.1994, the respondent- defendant No.2 on behalf of the respondent-defendant No.1, applied for providing loan facility before the appellant-bank and while acceding to the request made by the respondents-defendants No.1 and 2, the appellant-bank sanctioned cash credit facility up to Rs.50,000/- on hypothecation of goods with the Bank.
A loan agreement was executed between the respondents- defendants and the appellant- Bank.
As per the terms and conditions of the loan agreement executed, the respondents-defendants were to pay agreed interest and hypothecate with the bank the wool purchased out of the sanctioned loan amount also.
Accordingly, accepting the terms and condition as mentioned in the loan agreement, the respondents/ S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 3 defendants No.1 and 2 hypothecated the wool and duly executed hypothecation agreement and demand note in favour of the appellant-plaintiff bank.
The defendant No.3 Puranchand Jain who is the father of defendant no.2 stood as a guarantor and executed guarantee agreement on 4.10.1994 itself in favour of the bank and by depositing the title deed of his shop as a collateral security of the said loan, created equitable mortgage in favour of the bank.
On 4.10.1995, the respondents-defendants No.1 and 2 further requested to enhance the aforesaid cash credit facility from Rs.50,000/- to Rs.1,00,000/-.
This request was accepted by the appellant-bank and cash credit facility as desired by the respondents No.1 and 2 was enhanced from Rs.50,000/- to Rs.1,00,000/- on the previous terms and conditions.
The respondent- defendants No.1 and 2 accepting the terms and conditions, executed loan agreement, hypothecation agreement and demand note in favour of the bank and respondent-defendant No.3 again stood as guarantor and executed guarantee agreement in favour of the appellant-bank on 4.10.95, in relation to keeping his S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 4 shop for collateral security of the loan so as to create equitable mortgage by depositing the title deed.
The appellant-bank duly maintained the loan account of the respondents-defendants according to the norms and bylaws of the bank and as on 31.12.1998, a sum of Rs.1,49,459.45 paisa including interest was outstanding against the defendants.
Since the respondents-defendants failed to pay the loan amount and committed defaults in repayment in accordance with the terms and conditions in the agreement and despite demand being made by the bank, the respondents-defendants did not pay the outstanding dues and accordingly, the appellant-bank filed the suit before the trial court (Additional District Judge, Sangaria, District Hanumangarh) for recovery of its legitimate dues at once from the respondents-defendants jointly and severally.
The respondents-defendants No.1 and 2 jointly denied the facts by way of the written statement which are mentioned in the suit and stated that the defendant No.1 neither operated any trade in the name and style of M/s Jain Wool Sangaria nor he was the proprietor of S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 5 the said Concern, rather, it was future planning of the defendant No.2.
The respondents-defendants No.1 and 2 admitted to have applied for grant of loan facility before the appellant-bank but submitted that the appellant-bank neither provided any loan facility to them nor they ever took any loan from the bank.
It was also stated in the written statement that on presentation of the application by the defendants for providing loan, the Bank Officer got signed some printed forms and blank papers from the defendant No.2, and also got the signature of the defendant No.3 father of the defendant No.2 on some blank papers on the pretext of his identity.
The defendants also replied that neither any cause of action has accrued to the appellant-bank for filing the present suit nor the suit is within the jurisdiction of the Court.
The respondent-defendant No.3 by filing a separate written statement stated that he has not given any guarantee and has kept the shop on equitable mortgage only and the bank took the title deed of the shop No.35 only for identification of defendant- respondent No.2 and denied to have executed any hypothecation agreement.
It was also stated that S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 6 defendant No.3 never executed any balance and security confirmation letter regarding any loan amount due and while taking the plea of accounts produced by the bank being not properly and regularly maintained with their specific dues and that the suit is barred by limitation, the defendant prayed to dismiss the suit with cost in the light of defenses which have been taken by way of written statement by the defendant No.3.
On the basis of the averments and pleadings narrated by both the parties in the plaint and written statement, the learned trial court framed the following issues for deciding the controveRs.between both the parties.
“1.
क पत व द सख 2 न फर पत व द सख 1 क नर स पत व द सख 3 परचद क ग रट स व द बक स ददन क 4.10.94 क ऋर आवदन-पत पस $ कर 50,000/- र० क स'र क उसक ऋर व द पत क रद स0 4 र) वरर श , पर सव'क र कक ग और इसक ब र र) व द बक क पक र) पत व द स0 2 न पलख तनषप दद ककए?.
---व द 1.क – क पत व द स0 3 न व द पत क रद स0 6 क अन$स र व द बक क पक र) पत भत कर र तनषप दद कक ?.
---व द S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 7 1.
ख.
- क पत व द गर न व दपत क रद न0 8 क अनस $ र एक ल ख रपए क ऋर सव$ वध प प क और इसक व द पर क असर ह ---व द 1.
ग - क पत व द गर न ददन क 28.7.97 क ऋर क बक क सबध र) व द बक स शष एव पत भत प$व> पत द र ऋर क प$व> क और इसक व द पर क असर ह ---व द 2.
आ व द पत व द स0 3 स उसक दक $ न नबर 35 क कबA प प कर उसक स वAतनक न'ल र' द र ववक कर उपर क र शश वसल करन क अधधक र ह ---व द 3.
आ व द क व द शर द ब हर ह< ?.
---पत व द गर 4.अन$ ष?.”.
The learned trial court, after hearing both the parties, vide the judgment and decree dated 16.8.2003 decreed the suit filed by the appellant-bank against the respondents-defendants No.1 and 2 and dismissed the suit as against as respondent No.3 on the basis that the suit is barred by the limitation.
Aggrieved by the dismissal of the suit as against the defendant/respondent no.3, the appellant-bank has preferred this fiRs.regular appeal before this court.
S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 8 This court heard learned counsel for the parties and carefully gone through the judgment under challenge and the record of the trial court.
Learned counsel for the appellant-bank has vehemently contended that the learned trial court has seriously erred in law in dismissing the suit as against the respondent-defendant No.3 treating it to be filed beyond the period of limitation prescribed and thereby holding that the respondent-defendant No.3 is not liable to pay the outstanding dues of the bank.
According to the learned counsel for the appellant, the findings arrived at by the learned trial court regarding the issues No.2 and 3 in favour of the respondent-defendant No.3 are contrary to the statutory provision.
It is contended that the learned trial court has failed to take into consideration the entire material produced on record narrating the factual position and the implications as also the substance thereof while dismissing the suit as barred by limitation as against the respondent-defendant No.3 thereby holding that the bank has no right to recover its dues from the respondent No.3.
Drawing the attention of the court to the provisions of the Limitation Act, S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 9 learned counsel submitted that the present case is governed by the provisions of Article 62 of Part-V of the schedule appended to the Limitation Act, as immovable property of the respondent No.3 who is the father of the defendant No.2, has been mortgaged securing the recovery of the loan amount and therefore, the suit filed for recovery of the loan amount secured by immovable property was required to be considered as within limitation while counting the period of limitation for filing suit to be 12 years as prescribed by Article 62 of Part-V of the Limitation Act, but the learned trial court has dismissed the suit as against the respondent-defendant No.3 while treating the period of limitation for filing the suit as 3 years despite the fact that the immovable property was mortgaged for recovery of the loan amount and thus, the findings recorded by the learned trial court holding the suit filed by the bank as against the respondent-defendant No.3 to be barred by the limitation and thereby exonerating him from the liability of paying the outstanding dues of the bank, are contrary to the law and facts.
It has also been contended by the learned counsel that the respondent-defendant No.3 S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 10 executed guarantee agreement in favour of the bank appointing the borrower i.e.the respondent-defendant No.2 as authorized agent to confirm the balance and acknowledge the liability on his behalf and also agreed that such confirmation shall be binding on him i.e guarantor also for applying for fresh start of limitation.
The respondents-defendants No.1 and 2 executed balance and security confirmation letter in favour of the bank and acknowledged the liability for the purpose of Section 18 of the Limitation Act and therefore, according to the learned counsel, the learned trial court has erred in law in not applying the acknowledgment made by the respondent No.2 giving fresh start of limitation in respect of respondent-defendant No.3 also.
According to the learned counsel, the confirmation of the fact regarding dues of the bank and acknowledgment of liability by the principal borrowers shall also operate against the guarantor i.e.the respondent-defendant No.3 as per the terms and conditions of the guarantee agreement and once the suit is found within the limitation against the borroweRs.it should be treated within limitation against the guarantor also in the light of the provisions of S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 11 Section 18 of the Limitation Act, as the liability of the principal debtors and the guarantor is coextensive and not distinct.
Learned Counsel has thus, prayed that the appeal may be allowed.
In support of his contentions, learned counsel for the appellant-bank has relied upon the decisions reported in AIR1962Supreme Court 633 (L.
Janakirama Iyer and others versus P.M.Nilakanta Iyer and others).AIR1967Rajasthan 258 (Ali Mohammad versus Ramniwas and another).AIR1969Supreme Court 297 (The Bank of Bihar LTD.versus Dr.
Damodar Prasad and Another) and (2009) 9 Supreme Court Cases 478 ( Industrial Investment Bank of India LTD.versus Biswanath Jhunjhunwala).By way of opposing the arguments of the appellant, learned counsel for the respondents- defendants submitted that basically the suit was filed for recovery of the money only and therefore, the trial court was under a legal obligation to decide the point of limitation in favour of respondent-defendant No.3 while keeping in view the spirit of the original suit considering it to be a suit for recovery of the money only.
According S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 12 to the learned counsel, the object and purpose behind immovable property mortgaged as a security is only with the intention that if outstanding dues of the Bank are not recovered from the principal borrowers and the goods hypothecated, then in that situation such dues can be recovered from the immovable property of the respondent-defendant No.3 guarantor.
However, such suit for recovery of the outstanding dues must be filed within a stipulated period of three years and the period of limitation for filing recovery of money suit cannot be considered as twelve years under Article 62 of the Limitation Act.
According to the learned counsel, the present suit is covered only under Article 19, 21 & 23 Limitation Act mentioned in the schedule appended to the said Act and thus the suit is barred by the limitation.
Lastly, learned counsel has prayed that the appeal may be dismissed.
In support of his contention, learned counsel has relied upon the decision reported in AIR2006Bombay 185 (State Bank of India versus Ramkrishna J.
Sakharkar & Anr.).I have considered the arguments and rival submissions made by both the parties and also carefully S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 13 gone through the record, evidence of the case as also applicable legal position and decisions cited at the Bar by both the sides.
Admittedly, the appellant-bank preferred a suit before the learned trial court with the prayer for decreeing the suit for recovery of its legitimate dues against the respondents-defendants No.1, 2 and 3 jointly and severally.
The learned trial court reached to the conclusion that all the documents were executed by the defendants in favour of the Bank and accordingly decreed the suit against the respondents-defendants No.1 and 2, however, learned trial court dismissed the suit as against the respondent-defendant No.3 on the ground that it is instituted against him beyond the period of limitation.
According to the factual position of the case, originally, the loan facility upto Rs.50,000/- on mortgage of the goods was sanctioned on 4.10.1994 and the necessary documents in this regard were executed by the defendants in favour of the Bank on 4.10.1994 itself and the defendant No.3 executed guarantee agreement and deposited the title deeds of his shop for collateral security creating equitable mortgage in favour S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 14 of the Bank.
Thereafter, again on the request made by the defendants No.1 and 2, the loan facility was extended which was enhanced from Rs.50,000/- to Rs.1,00,00/- on the same terms and conditions, and necessary documents were executed between the parties.
The defendants No.1 and 2 acknowledged their liability by executing balance and security confirmation letter on 28.7.97.
The learned trial court observed and reached to the conclusion that neither the said acknowledgment letter was executed by the defendant No.3 nor his signatures are there on the said confirmation letter dated 28.7.97, therefore, the trial court computed the period of limitation from 4.10.1995, the date on which the enhanced loan facility of Rs.1 lac was sanctioned and the documents in that regard were executed and, accordingly, dismissed the suit which was filed on 6.2.1999 as against the defendant No.3 due to barred by limitation of three years prescribed under Article 19, 21 and 23 of Limitation Act.
So far as the main contention raised by the counsel for appellant-bank regarding the suit being within S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 15 limitation in respect of defendant No.3 in the light of the provisions Section 18 of the Limitation Act on the basis of acknowledgment letter executed by the defendants No.1 and 2 confirming the balance due to acknowledging the liability, is concerned, it is to be noticed here that the defendant No.3 executed guarantee agreement (Ex.23) which bears the signature of the Guarantor from “A to B”.The condition No.9 of the said guarantee agreement is quoted herein as under:- “The Guarantor(s) authorize(s) and appoint(s) each of the Borrowers or any person duly authorized by them to operate account and also each of the co-guarantors as agent to confirm the balance due and acknowledge liability on his/their behalf as Guarantor(s) from time to time.
The Guarantor(s) further agree(s) that any acknowledgment of liability made by Borrower(s) or any person duly authorized by him/them to operate account or any of the co-guarantors as agent on behalf of the Guarantor(s) shall be binding on them for giving fresh start of limitation and also for admission of liability against him/them.”
.
The tenor of the aforesaid condition No.9 indicates that the Guarantor authorizes the borrowers or any other persons duly authorized by them to operate and confirm the balance due and acknowledgment liability on behalf S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 16 of the Guarantor from time to time and such acknowledgment of the liability by the borrower or any person authorized by the Guarantor shall be binding to the Guarantor for giving fresh start of limitation and admission of liability against the defendant-respondent No.3.
At this stage, it is also appropriate to consider and quote the provisions of Section 18 of the Limitation Act which deal with the object and effect of acknowledgment in writing and which reads as under:- “18.
Effect of acknowledgment in writing: (1) Where, before the expiration of the prescribed period for a suit or application respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against who much property or right is claimed, or by any person through whom he derives his title or liability a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.
(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872).oral evidence of its contents shall not be received.
Explanation-For the purposes of this section- S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 17 (a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or right; (b) the word “signed”.
means signed either personally or by an agent duly authorized in this behalf; and (c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right.”
.
A perusal of Section 18 of the Limitation Act, makes it clear that where before expiration of the limitation prescribed in Limitation Act for filing a suit, an acknowledgment of the liability is accepted by the borrower or Guarantor or any person authorized by the Guarantor, then such acknowledgment made, shall also be applicable on the person on whose behalf it is given and fresh period of limitation shall be calculated from the date and time when the acknowledgment was signed and such acknowledgment can be signed by the borrower or Guarantor either personally or by the agent duly authorized in this behalf.
According to the condition No.9 of the guarantee agreement, the original borrower S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 18 is authorized by the guarantor to sign the documents regarding acknowledgment of liability for the purpose of limitation also and the said acknowledgement shall be binding on the respondent-defendant No.3 also.
Thus, a conjoint reading of the provisions of Section 18 of the Limitation Act and the condition No.9 of the Guarantee Agreement, makes the position clear that the acknowledgment of the liability made by the principal borrowers i.e.Respondents No.1 and 2 should be considered as an acknowledgment of the liability on behalf of the Guarantor i.e.the respondent-defendant No.3 also, which shall be binding on him and would provide fresh period of limitation for filing suit against the defendant No.3 either from the time it was signed by the principal borrower.
Coming to the legal position regarding the applicability of Article 62 of the Limitation Act in which the period of twelve years limitation is mentioned in Part-V of the Limitation Act for filing the suit seeking decree for recovery of the amount secured through the immovable property, it is appropriate to quote Article 62 mentioned in Part-V of the Limitation Act for S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 19 consideration of the limitation in present case which is as under:- Description of suit Period of Time from which limitation period begins to run PART V – SUITS RELATING TO IMMOVABLE PROPERTY61 .........62 To enforce payment of When the money secured by a money Twelve years mortgage or otherwise sued for charged upon becomes immovable property due/ The above mentioned statutory provisions of Article 62 provides in an unequivocal terms that the limitation prescribed for filing a suit to enforce payment of money secured by mortgage of immovable property would be twelve years from the period when the money sued for becomes due.
In this regard, the case as set out by the learned counsel appearing for the respondents-defendants, while relying upon a decision rendered in the case of State Bank of India versus Ramkrishna J.
Sakharkar and Anr.
(supra).is that where the suit has been filed for recovery of the money simplicitor and no additional relief S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 20 has been claimed to recover the money out of any immovable property, then in that situation the provisions of Section 62 of the Limitation Act would not be applied.
From the perusal of the pleadings of the bank in the suit, which has been filed by the appellant-bank, the bank claimed the following reliefs:- “(क) कक 149459=45 रप क डGक व द बक क पक र) व पत व द गर क ववरद फरर ई A व थ डGक श$द र शश क Aर कर न क तनदK श फरर A व। ददन क 1.1.99 स वसल क व द बक क सर -सर पर पचशल दर स ब A ददल Aव 15.50 पत श अन$बधध ब A ददल A व। (ख) कक डGक श$द र शश क च$क न ह न क ससथत र) पत व द स.3 क अचल समपवO दक $ न सAसक वववरर व द-पत र) अकक ह< क पत व द स.3 अन क ई क बबA ह बदखल कक A कर व उक अचल समपवO क न ल अपन ध रर र) लकर तपशच उस स वAतनक तनल र द र ववक कर इसस प प शद $ र शश पत फल क डGक शद $ S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 21 र शश र) सर सA कक Aन व वद बक क अद कक Aन ह तनदK श फरर व) । (ग) कक खच व द ददल A व। (घ) अन कई अन$ ष A न ल अपन वववक स ददल न उधच सरझ पद न कक A व।" As per the clause (ख) of the relief clause of the suit, the appellant-bank has prayed that the immovable property i.e.shop of the defendant No.3 mentioned in the suit, may be taken into possession by the Court by evicting the defendant No.3 or any other person found in possession thereof and the same may be put to public auction and after adjusting the sale proceeds of the shop in the decretal amount, the same may be paid to the bank.
From the aforesaid relief clause in the plaint, it is abundantly clear that the facts of the present case are different than the aforesaid case law cited on behalf of the respondents-defendants.
The present case is also relating the recovery of the loan amount by the sale of immovable property of defendant No.3 which was mortgaged with the Bank to secure the loan amount.
In the light of the legal position as emerged from the case laws cited by the learned counsel for the appellant-bank, S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 22 it is settled law that the liability of the principal borrower and the guarantor in respect of recovery of the loan amount is coextensive and not distinct and therefore, in the opinion of this Court, the acknowledgment for the purpose of the liability vide Ex.
21 made by the principal debtors/borrowers is also binding on the respondent- defendant No.3 Guarantor and since the suit was filed claiming relief for recovery of the loan amount, out of the sale proceeds of the immovable property of the defendant No.3, the suit is clearly covered under the provisions of Article 62 of the Limitation Act prescribing limitation of twelve years and accordingly, it was filed, which can be treated within the limitation.
In view of the discussion made herein above, the judgment and decree impugned passed by the trial court dated 16.8.2003 dismissing the suit as against the defendant-respondent No.3 as barred by limitation by deciding the issue No.2 and 3 against the appellant- bank and in favour of the respondent-defendant No.3 is therefore, liable to be set aside and the appeal filed by the appellant-bank deserves to be allowed against the defendant No.3.
S.B.Civil Regular FiRs.Appeal No.304/2003 (Punjab National Bank versus M/S.Jain Wool House & Ors.) 23 Hence, in the result, the fiRs.appeal filed by the appellant-bank succeeds and is hereby allowed.
The impugned judgment and decree dated 16.8.2003 passed by the Additional District Judge, Sangaria, District Hanumangarh in Civil Original Suit NO.8/99 (16/2002) dismissing the suit as against the respondent-defendant No.3, is set aside and it is ordered that the respondent- defendant No.3 is also liable to pay the decretal amount of Rs.1,49,459.45 and the interest thereon as also the costs awarded by the trial court in the letter and spirit of the judgment and decree impugned dated 16.8.2003.
Record of the trial court be returned forthwith.
(Mahendra Maheshwari)J.
Taruna