IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17th DAY OF JULY 2019 BEFORE THE HON’BLE Dr. JUSTICE H.B.PRABHAKARA SASTRY R.F.A.No.2065 OF 2006 BETWEEN:
Gudal Rachappa, S/o Gudal Rachappa Aged about 52 years, Occupation : Business, Harihareshwara Nilaya Near Old Railway Bridge, Davanagere – 577 001. .. Appellant ( By Sri Ananda V., Advocate for Sri Jagadeesh Mundaragi, Advocate ) AND:
S.S.Mallikarjuna S/o M.Shivappa, Aged about 45 years, D.No.276/1, Vakkaligarapet, Davanagere-577 001. .. Respondent ( By Sri Gangadhara D.C., Advocate For Sri V.P.Kulkarni, Advocate ) This Regular First Appeal is filed under Section 96 of Code of Civil Procedure against the judgment and decree dated 23.12.2005, passed in O.S.No.337/2004, on the file of the I Addl.Civil Judge (Sr.Dn.,) Davanagere, dismissing the suit for recovery of money.
This Regular First Appeal coming on for Hearing, this day, the Court delivered the following:
JUDGMENT This is the plaintiff’s appeal. The suit of the present appellant filed against the present respondent/ defendant in O.S.No.337/2004, in the Court of learned I Addl. Civil Judge (Sr.Dn.), Davanagere, (hereinafter for brevity referred to as `trial Court’), for recovery of a sum of `1,02,000/-, came to be dismissed by the judgment and decree dated 23.12.2005. It is against the said judgment and decree, the plaintiff has preferred this appeal.
2. The summary of the case of the plaintiff in the trial Court is that the defendant was his friend and on 1.1.2002, at the request of the defendant, he had given him a hand loan of a sum of `60,000/- for the purpose of construction of a house by the defendant. The defendant had agreed to repay the said loan amount along with interest thereupon at the rate of 2% per month. No documentation was made with respect to the said loan transaction. As such, it was an oral transaction made out between the friends. However, despite the repeated demand made by the plaintiff, since the defendant failed to repay the loan amount, the plaintiff was constrained to institute the suit.
3. The defendant entered appearance and filed his written statement in the trial Court, where he admitted his friendship with the plaintiff and also admitted that he had availed a hand loan of a sum of `60,000/-, agreeing to repay the same with interest. He further admitted that he had instituted a suit in O.S.No.354/2003, against the plaintiff and others for the relief of permanent injunction. However, he stated that the said availment of hand loan from the plaintiff was not on 1.1.2002 as averred in the plaint. He further stated that he has repaid the said loan with interest at 3% much prior to the institution of the suit by the plaintiff.
4. Based on the pleadings of the parties, the trial Court framed the following issues :
1) Whether the plaintiff proves that 1.1.2002 the defendant has orally borrowed the hand loan of Rs.60,000/- from him for construction of Suit Schedule House and has agreed to pay the interest @ 2% per month?
2) Whether the defendant proves that, he has paid the interest @ 3% to the amount of Rs.60,000/- and paid the principal amount of Rs.30,000/-?
3) Whether this Court has no jurisdiction to try this suit as stated in Para-8 of the written statement?
4) Whether the plaintiff proves that, as on the date of suit the defendant is in due of Rs.1,02,000/-?
5) Whether the plaintiff is entitle for the suit claim?
6) What Order or Decree?
In order to prove his case, the plaintiff got himself examined as PW-1 and got marked documents at Exs.P-1 to P-7. The defendant got himself examined as DW-1, but, no documents were marked as exhibits from his side. After hearing both side, the trial Court while answering issue No.1 held that the defendant had borrowed a loan on 22.10.2001 from the plaintiff and answering issue No.2 in the negative, held issue No.3 would not survive for consideration since the said issue was already tried as a preliminary issue and has been answered in the negative. With respect issue No.4, it held that, as on the date of the suit, the defendant was in due of more than `1,02,000/-. However, with respect to issue No.5, it held that the plaintiff was not entitled for suit claim since the suit was barred by limitation. With the said finding on the issues, the trial Court vide its judgment and decree dated 23.12.2005, dismissed the suit of the plaintiff. It is against the said judgment and decree, the appellant/plaintiff has preferred this appeal.
5. Lower Court records were called for and the same are placed before this Court.
6. Heard the arguments of the learned counsel for both the parties.
7. For the sake of convenience, the parties would be referred to as per their ranks before the trial Court.
8. The learned counsel for the appellant submitted that the trial Court even after holding that the defendant was due to a sum of `1,02,000/- to the plaintiff, has committed an error by answering issue No.5 in the negative holding that the suit is barred by limitation. He submitted that since the respondent/defendant has not filed any cross-objection or an appeal challenging the finding of the trial Court on other issues, the scope of the appeal be confined to consider the finding of the trial Court given on issue No.5 regarding limitation.
The learned counsel for the appellant further submitted that the defendant who has admitted that he had instituted a suit for injunction against the present plaintiff and others in O.S.No.354/2003 and in his plaint, a copy of which is marked at Ex.P-1, has admitted his liability of `60,000/- payable to the present plaintiff (defendant No.3 therein), as such, the said acknowledgement of debt extends the period of limitation under Section 18 of the Limitation Act, 1963 (hereinafter for brevity referred to as `Limitation Act’).
In his support, he also relied upon a judgment of Punjab High Court in Mst.Biro w/o Anokha Mal Mahajan –vs- Dulla Singh s/o Phula Singh, reported in AIR 1961 PUNJAB 175, and drew the attention of this Court to a portion in Paragraph-13 of the said judgment which would be considered at the appropriate stage.
9. Learned counsel for the respondent in his very brief arguments only submitted that the acknowledgement of debt in Ex.P-1 was not with respect to the suit schedule transaction, however, that was with respect to a previous loan transaction.
10. In the light of the above, the only point that arise for my consideration is :
“ Whether the trial Court is justified in dismissing the suit holding that the suit was barred by limitation.
It is not in dispute that the plaintiff and the defendant were friends and that the defendant had availed a hand loan of a sum of `60,000/- from the plaintiff. The defendant has admitted the said loan transaction in his pleading itself. However, it is the contention of the defendant that the said loan was repaid along with interest thereupon at 3%. It is also the further contention of the defendant that the loan transaction between them had not taken place on 1.1.2002 as stated by the plaintiff. However, the defendant neither in his pleading nor in his evidence has anywhere stated as to what was the exact date of loan transaction. The trial Court in its impugned judgment while answering issue No.1, has held that the date of loan transaction was not on 1.1.2002, but, it was on 22.10.2001. However, it held that the loan transaction of `60,000/- has been proved by the plaintiff.
11. The contention of the appellant in this appeal is not challenging the finding of the trial Court about the date of the loan transaction as 22.10.2001 was erroneous, but, it is his contention that, even admitting that loan was on the date 22.10.2001, still the finding of the trial Court on issue No.5 that suit was barred by limitation was an erroneous finding. The argument of the learned counsel for the appellant was also confined only on the question of limitation and nothing else.
12. Admittedly, challenging the said judgment and decree of the trial Court, the defendant in the trial Court has neither filed any appeal nor filed any cross-objection to this appeal. As such, there is no opposition from the side of the defendant with respect to the finding of the trial Court on the other issues. Even the shortest argument of the learned counsel for the respondent herein was also on the point of limitation who only stated that the alleged admission of loan transaction in Ex.P-1 is not with respect to the loan transaction in the present suit, but, it pertains to a loan transaction of the year 2001. However, the learned counsel for the respondent could not able to convince the Court as to what was the date of loan transaction of the year 2001. Incidentally, it has to be noticed again that the trial Court has also held that the present loan transaction was on 22.10.2001, as such, it was of the year 2001 only.
The trial Court after holding that the proven date of the loan transaction was on 22.10.2001, has noticed that the date of filing of the suit was on 7.12.2004, as such, it was barred by Section 3(1) of the Limitation Act.
13. It is on the said point of question of limitation, learned counsel for the appellant while drawing the attention of this Court to a relevant portion in Ex.P-1, has stated that an admission of liability made by the borrower (defendant) in another judicial proceeding would also amounts to an acknowledgement of debt under Section 18 of the Limitation Act. As such, since that admission was made by the defendant in his suit which was instituted in the year 2003, the limitation afresh commences from the year 2003, as such, filing of the suit which was on 7.12.2004 in the instant case is within limitation. In his support, he has relied upon a judgment of Punjab High Court in Mst.Biro’s case (supra). In the said case, at Paragraph-13 of the judgment, towards which the attention of this Court was drawn, the Punjab High Court was pleased to observe as below :
“ It is true that the various acknowledgements, which were held to be effective in the rulings aforesaid had their own peculiar language, and obviously it is difficult to find two cases where the acknowledgement would be contained in the same words. The ratio decidendi, however, of all these cases is that where the debtor has admitted the existence of an account, it must be deemed to be an acknowledgement of liability for whatever is found due from him on the settlement of the said account. A debtor may, while admitting the existence of an account also say that on account of a set-off, which he claims, nothing will be found due to the creditor, or may say that on account of the payments which he has made the balance of the account will be found to be in his favour.
All the same he would be deemed to have admitted the existence of the account and would be deemed to have acknowledged his liability to pay whatever money is found due on the basis of the said account.”
A careful reading of the above judgment of the Punjab High Court would go to show that there must be an admission of the existence of an account on the part of the defendant showing his outstanding liability towards the plaintiff. So, once he admits the existence of the loan account, it amounts to an acknowledgement of a liability. In the instant case, that particular portion of Ex.P-1, upon which the appellant/plaintiff, fully and strongly relies upon is in Kannada language, which reads as below :
“ 3 £Éà ¥ÀæwªÁ¢AiÀÄ ºÀwÛgÀ ªÁ¢AiÀÄÄ gÀÆ.60,000:00 UÀ¼À£ÀÄß ¥ÀqÉzÀÄPÉÆArzÀÄÝ CzÀPÉÌ gÀÆ.2 gÀAvÉ §rØ ªÀiÁvÁVzÀÄÝ ªÀÄgÀÄ¥ÁªÀw ªÀiÁqÀĪÀ ¸ÀªÀÄAiÀÄPÉÌ 3 ¥À¸ÉðAmïgÀAvÉ §rØ ¤ÃrgÀÄvÁÛgÉ. 3 £Éà ¥ÀæwªÁ¢UÉ AiÀiÁªÀÅzÉà zÁR¯ÉUÀ¼À£ÀÄß §gÉzÀÄPÉÆnÖgÀĪÀÅ¢®è.”
The English translation of the above passage would read as below :
“ The plaintiff had taken a sum of `60,000/- from the 3rd defendant on the words that it would carry interest at `2/-, however, at the time of its repayment, the interest at 3% has been paid.”
14. A careful reading of the above passage clearly go to show that nowhere the defendant has either admitted or acknowledged the existence of any liability towards any loan transaction between him and the present plaintiff (defendant No.3 therein). He has only stated that he had availed a loan of `60,000/-, in which regard, no documents were put in writing and it was agreed that the loan would carry interest at the rate of 2%, however, while repaying the loan, he has paid the interest at the rate of 3%. That means, what the defendant as a plaintiff in that suit has stated is that, he has repaid the loan amount with higher rate of interest. Thus, he has not acknowledged the existence of any debt or his liability. The same is the stand taken by him even in his written statement also, wherein also he has stated that while repaying the loan, he has paid 1% higher rate of interest than what was agreed.
15. In order to attract Section 18 of the Limitation Act, what is required is before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has to be made in writing and signed by the party against whom such property or right is claimed.
16. Though by virtue of the judgment in Mst.Biro’s case (supra), the pleading in the another suit between the same parties, which is at Ex.P-1, can be taken as a writing duly signed by the defendant (Ex.P-1 is signed by the plaintiff therein at all pages), still, as observed above, there is no acknowledgement of any liability on the part of the defendant. The statement made in the said plaint that he has repaid the loan amount with 1% excess interest than what was agreed, in my opinion, cannot be considered as an acknowledgement of liability. When Section 18 of the Limitation Act is required to be attracted, there must be an existing liability as on the date of its acknowledgement. In cases where a party acknowledges previous loan transaction or its previous liability, but further says that the said liability has been cleared off by him, the said statement would only be an acknowledgement of previous loan transaction but, it cannot be read as an acknowledgement of liability. The alleged cleared debt cannot be read as an existing liability on the part of the party who makes a statement regarding the previous debt.
17. In addition to the above, other incidental points which also cannot be ignored is that the said Ex.P-1 has not been confronted to DW-1 in his cross- examination. Further, the very same defendant as DW-1 in his examination-in-chief has clearly denied of his statement shown to have been made in O.S.No.354/2003. He has specifically stated that his statement made in the injunction suit to the effect of he availing loan of `60,000/- from the present plaintiff and paying the interest thereupon were all full of falsehood. Thus, when the defendant who alleged to have admitted a loan transaction in his other suit (Ex.P-1 herein), has specifically and categorically denied its correctness and truthfulness in his evidence, then, it was incumbent upon the plaintiff to confront the said document (Ex.P-1) which he has not done. Therefore, even on this point also, the mere statement about the previous loan transaction which the defendant herein claims to have already been cleared off by him, cannot be considered as an acknowledgement of debt. Therefore, that portion of Ex.P-1, upon which the appellant/plaintiff solely banks upon that there is an acknowledgement of debt on the part of the defendant and the same has extended limitation under Section 18 of the Limitation Act, is not acceptable.
18. As such, the sole argument of the learned counsel for the appellant on the said point is not acceptable. Though the trial Court has answered issue No.5 on the question of limitation in the negative by attributing different reasons, but, its conclusion that the suit is barred by limitation cannot be found fault with. As such, I do not find any reason to interfere in the judgment and decree impugned in this appeal.
19. Accordingly, I proceed to pass the following order:
ORDER The Appeal is dismissed. The judgment and decree dated 23.12.2005, passed by the learned I Addl.Civil Judge (Sr.Dn.), Davanagere, in O.S.No.337/2004, is confirmed.
The Registry is directed to transmit a copy of this judgment along with lower Court records to the lower Court without delay.
Sd/- JUDGE bk/