IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 15TH DAY OF JULY 2019 BEFORE THE HON’BLE Dr. JUSTICE H.B.PRABHAKARA SASTRY R.F.A.No.708 OF 2006 BETWEEN:
1. Ramanna, S/o. late Channapillaiah, Aged about 63 years, Residing at Shettigowdanadoddi Village, Hamlet of Muddapura Karenahalli, Bidadi Hobli, Ramanagaram Taluk, Bengaluru Rural District.
2. Hanumakka, W/o. Sri Ramanna, Aged about 58 years, Residing at the above address with The 1st appellant. …Appellants (By Sri.R. Narayana, Advocate and Sri H.R. Lakshman Reddy, Advocate) AND:
Chaluvaiah, S/o. Doddaiah, Aged about 63 years, Residing at Shettigowdanadoddi Village, Hamlet of Muddapura Karenahalli, Bidadi Hobli, Ramanagara Taluk, Bengaluru Rural District – 562 109. …Respondent (By Smt. M.B. Sindhu Shastry, Advocate for Sri N. Subba Shastry, Advocate) **** This Regular First Appeal is filed under Order 41 Rule 1 R/w Section 96 of the Code of Civil Procedure, 1908, against the judgment and decree dated:07.01.2006 passed in O.S.No.195/2002 on the file of the Principal Civil Judge (Sr.Dn), Ramanagaram, partly decreeing the suit for recovery of money.
This Regular First Appeal coming on for Hearing this day, the Court delivered the following:
JUDGMENT It is the defendants’ appeal. The present respondent as a plaintiff had instituted a suit against the present appellants arraigning them as defendants in O.S.No.195/2002, in the Court of the Principal Civil Judge (Senior Division) at Ramanagara, Bengaluru Rural District, (hereinafter for brevity referred to as `trial Court’), for recovery of a sum of `1,96,500/- (Rupees One Lakh Ninety Six Thousand Five Hundred Only), with future interest at the rate of 2% per month on a sum of `1,00,000/-. After contest, the said suit came to be decreed by the judgment of the trial Court dated 07.01.2006. It is against the said judgment and decree the defendants have preferred this appeal.
2. The summary of the case of the plaintiff in the Court below is that the defendant No.1 is the husband of defendant No.2. Defendant No.1 borrowed a sum of `1,00,000/- from the plaintiff on 06.11.1998 in the presence of the witnesses for their family necessity and also for education expenses of their daughters. They executed on that day an agreement agreeing to repay the said amount with interest at the rate of 2% per month. The period for repayment of money was for four years and in that regard, the defendants hypothecated the suit property as security. Inspite of several demands and issuance of legal notice, the defendants failed to repay the loan amount, as such, the plaintiff was constrained to institute the suit.
3. In response to the summons served upon them, the defendants appeared through their counsel and filed their written statement where they denied all the plaint averments. They denied that they had borrowed a sum of `1,00,000/- from the plaintiff on 06.11.1998 as loan. On the other hand, the defendants contended that their daughters are already married, as such, there was no necessity for them to borrow any amount towards their education expenses. The defendants also denied that they had executed any Hypothecation Agreement in favour of the plaintiff. On the other hand, they have stated that on 04.06.1998 the defendant No.1 had sold 24 guntas of land in Sy.No.67/2, situated in Muddapurakarenahalli Village, Bidadi Hobli, Ramanagaram Taluk, to the plaintiff. Taking undue advantage of the said transaction, the plaintiff had fabricated the agreement dated 06.11.1998. They further stated that they are in no way liable to pay any amount to the plaintiff as alleged.
4. Based on the pleadings of the parties, the trial Court framed the following issues:
1. Does the plaintiff prove that the defendants borrowed amount as alleged?
2. Whether the plaintiff is entitled for suit claim?
3. What Order or Decree?
The plaintiff got himself examined as PW-1 and got examined Sri Chaluvaiah, Sri K.V. Thimmaiah, Sri K.T. Thimmaiah and Sri B.S.Krishna Murthy in his support as
Sale Deed dated 04.06.1998 was marked as Ex.D-1 from the defendents’ side.
After hearing for both side, the trial Court by its impugned judgment and decree dated 07.01.2006 answered issue No.1 in the affirmative and issue No.2 partly in the affirmative and partly decreed the suit holding that the defendants shall pay the plaintiff a sum of `1,96,250/- (Rupees One Lakh Ninety Six Thousand Two Hundred Fifty Only) with interest at the rate of 6% per annum on a sum of `.1,00,000/- from the date of the suit till the date of realisation. It is against the said judgment and decree the defendants have 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 from both side and perused the materials placed before this Court.
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 appellants in his argument submitted that Ex.P-1 though is an unregistered document, still, a father cannot alienate or hypothecate minors’ property. As such, the Agreement of Hypothecation at Ex.P-1 would not hold good. He further submitted that the plaintiff not taking any action for the alleged non-payment of interest for a period of nearly four years would also go to show the conduct of the plaintiff and creates a doubt in his case. He also stated that the suit is barred by limitation which the trial Court has failed to consider in its proper perspective.
9. Learned counsel for the respondent/plaintiff in her argument submitted that the defendants though have denied the execution of the Agreement at Ex.P-1, but, the evidence of PW-1 to PW-4, among them, PWs.2 to 4 are the witnesses to the execution of the agreement by the defendants, clearly proves the execution of the Agreement at Ex.P-1 by the defendants. She further submits that the Agreement in Ex.P-1 is an agreement creating charge against the property mentioned therein, however, since it evidences the loan transaction, the said agreement, which is unregistered, can be relied upon for its collateral purpose for proving the loan transaction. In her support, she relied upon several judgments of Hon’ble Apex Court and Coordinate Benches of this Court which would be referred to at the appropriate stage herein afterwards.
Learned counsel for the respondent/plaintiff further submitted that the limitation attracts in this case is not under Article 19 of the Limitation Act, 1963, but, it is under Article 55 of the same Act. As such, the limitation commences once there is breach of repayment as agreed to under the agreement.
10. In the light of the above, the only point that arise for my consideration is :
“ Whether the judgment and decree under appeal requires an interference at the hands of this Court.”
As observed above, the appellants though have prayed for setting aside the impugned judgment and decree, in their arguments, confined only in questioning that the defendants could not have executed Ex.P-1. Further the said document was also a compulsorily registrable document since it creates charge, as such, the trial Court ought not to have considered the document. However, the learned counsel for the appellants had made it clear that, he would not dispute on the question of execution of Ex.P-1 by the defendants and would not challenge the finding of the trial Court in that regard.
When the evidence of the witnesses on the side of the plaintiff is perused, it go to show that the plaintiff, as PW-1, has reiterated the contentions of his plaint in his examination-in-chief filed in the form of affidavit evidence. He has stated clearly in his examination-in- chief that the schedule property belongs to the defendants and both the defendants jointly for their family necessities and for the education purpose of their children, had availed a loan of `1 lakh from him on 6.11.1998 and it is in that regard, they have executed the document at Ex.P-1, creating a charge against the property. He has got marked the said document at Ex.P-1.
11. In his cross-examination, interestingly, the defendants have not denied the execution of Ex.P-1 by them. It was only suggested to the witness that on 4.6.1998, the plaintiff had purchased 24 guntas of land in Survey No.67/2 and 27 guntas of land in Survey No.67/1, from defendant No.1, for a sum of `1,27,500/- and out of the said sale consideration, only a sum of `27,500/- was paid. The balance amount of `1 lakh was promised to be paid by the plaintiff to the defendants. Subsequently, the plaintiff took the signatures of the defendants on a blank paper. PW-1 admitted that on 4.6.1998, he purchased the lands, as suggested to him, in Survey No.67/2 and Survey No.67/1, from defendant No.1, for a valuable consideration. However, he denied that he has still remained with payment of a balance of sale consideration of `1 lakh to the defendants with regard to the said transaction and that he had obtained signatures of the defendants in blank paper. Thus, the defendants without denying that they have got executed Ex.P-1, have merely suggested that plaintiff had obtained their signatures on blank paper, which the plaintiff has denied.
By the said mere suggestion, it cannot be inferred that the defendants have not executed Ex.P-1. Otherwise, they would have specifically suggested to PW-1 that they have not executed Ex.P-1 and have not received the consideration mentioned in the said document.
Further, it also cannot be ignored of the fact that Ex.P-1 is a document executed not on any white paper, but, it is on stamp paper, which stamp paper is shown to have purchased on 17.10.1998. Admittedly, even according to the defendants and if their version is believed, they have subscribed their signature on blank paper on 4.6.1998 when they said to have sold some portion of the immovable property to the plaintiff. If that were to be the case, the question of the plaintiff getting a stamp paper of a specific date which is more than four months thereafter would not arise. As such, on the very basis of it, the alleged defence of the defendants that the plaintiff has obtained their signature on a blank paper would not sustain.
12. In addition to the above, when the evidence of PWs.2, 3 and 4 is perused, it reveals that PW-2 K.V.Thimmaiah and PW-3-K.T.Thimmaiah, have deposed to the effect that the loan transaction between the plaintiff and defendants had taken place in their presence and execution of the document at Ex.P-1 was also in their presence. Both of them have identified their signatures as witnesses in Ex.P-1.
In their cross-examination, nothing was elicited from them which makes their evidence in examination- in-chief unbelievable. On the other hand, a mere denial suggestion made to them that no such loan transaction was taken place between the parties has been denied by both the witnesses.
13. PW-4 – B.S.Krishnamurthy, has stated that he had been the scribe of the document at Ex.P-1. He has stated that it was got written through him. Even in his cross-examination also, nothing could be elicited, except suggesting to him that he was not instructed to write the document and that the defendants were not present when the same was written. However, the witness has not admitted the said suggestion as true.
14. The defendant No.1 – Ramanna, who got himself examined as DW-1 has nowhere stated that he has executed the document at Ex.P.1 on 6.11.1998.
However, he has only stated that on the said day, the defendants did not avail the loan of `1 lakh from the plaintiff. On the contrary, the very same witness in his cross-examination has admitted that Ex.P-1 bears the thumb marks of himself and his wife.
15. Thus, by virtue of evidence of PWs.1, 2, 3 and 4, which could not be shaken in their cross-examination, the plaintiff’s evidence as PW-1 is further corroborated and established that, on the date 6.11.1998, both the defendants have jointly executed the document at Ex.P-1 in favour of the plaintiff and have availed a loan of `1 lakh from the plaintiff. The cross-examination of DW-1 also would enable the Court to come to a conclusion that the plaintiff has proved the availment of a loan of a sum of `1 lakh by the defendants on 6.11.1998.
16. The second question that would remain for consideration is, whether the Ex.P-1 was required to be considered as a basis for proving the alleged loan transaction between the parties. The said document which is on a stamp paper of a sum of `600/- go to show that the defendants jointly after availing a sum of `1 lakh as loan from the plaintiff, have agreed to create a charge on the immovable property shown in the said document. As such, the document is a document with respect to creation of a charge in response to a loan transaction which the executant of the document had availed from the plaintiff.
Merely because the defendants have produced a certified copy of the Sale Deed dated 4.6.1998, which is marked at Ex.D-1 and which shows that some portion of the property in Survey No.67/1 and Survey No.67/2 were sold by the defendants in favour of the plaintiff, by that itself, the very same defendants executing Ex.P-1 cannot suspected.
The said document at Ex.P-1 since creates charge in favour of the plaintiff with respect to an immovable property, is required to be registered under Section 17 of the Registration Act, 1908. Admittedly, the said document is an unregistered document. A perusal of the evidence of PW-1, wherein the said document was marked as an exhibit, goes to show that while marking the said document, an objection was raised, however, subject to the objection for making of the said document, the same was marked. Though the said document was initially referred to in the legal notice dated 18.10.2002, issued by the plaintiff as a Deed of Hypothecation and similarly referred even in the plaint of the plaintiff also, but, a perusal of the said document go to show that nowhere the said document identifies itself as a Deed of Hypothecation. On the other hand, the said document calls itself as an document creating charge and acknowledging the receipt of amount and for payment of interest. Therefore, safely the said document may be treated as not an Hypothecation Agreement. The said document since creates a charge, is a registrable document, but, admittedly it is not registered.
17. The learned counsel for the respondent in her argument while canvassing the point that merely because a document which is required to be registered is not registered would not be thrown away and the same can be relied for its collateral purpose, has relied upon some of the judgments of Hon’ble Apex Court High Court of Judicature at Madras and Coordinate Benches of this Court in her support. Those judgments are as below :
In Mattapalli Chelamayya and another –vs- Mattapalli Venkataratnam and another, reported in { (1972) 3 SCC 799}, at Paragraph-11, the Hon’ble Apex Court was pleased to observe as below :
“ The direction to pay a sum of money which has been held due and payable by the appellants to the respondents is a direction giving effect to a liability which already existed. It does not create the liability for the first time but merely works out the liability. But the same thing cannot be said about the charge. The charge is created for the first time. The case, therefore, involves two distinct matters – one is a personal liability to pay a certain amount, and the second is an additional relief to recover that amount from the immovable property of the appellants, should they fail to pay as ordered. It is, therefore, clear that the two do not form one transaction, but two severable transactions. As pointed out long ago by Muttusami Ayyar, J., in Sambayya v. Gangayya : “The test, therefore, is whether the transaction evidenced by the particular instrument is single and indivisible or whether it really evidences two transactions which can be severed from each other, the one as creating an independent personal obligation and the other as merely strengthening it by adding a right to proceed against immovable property. But it should be remembered that it is not enough that there is an obligation to pay a sum of money, but that it is also necessary that the obligation should have an independent existence, and be in no way contingent or conditional on the breach of some obligation relating to immovable property created by the same instrument, for the contingency or the condition and the obligation would then be parts of one indivisible transaction”. In the present case the document evidences two transactions which can be severed from each other. One transaction creates an independent personal obligation to pay a certain sum of money and the other transaction namely the charge merely strengthens the first transaction by adding a right to proceed against the charged property. In our opinion, the High Court was right in directing that the second transaction with regard to the charge being a severable transaction can be validly ignored and to the extent that it declares the personal obligation to pay the transaction, not being required to be compulsorily registered, the award was admissible in evidence.”
The very same Hon’ble Apex Court subsequently in Yellapu Uma Maheswari and another –vs- Buddha Jagadheeswararao and others, reported in { (2015) 16 SCC 787}, wherein the question of an unregistered and unstamped Partition Deed and Deed of Relinquishment was in question, was pleased to observe that the Deed of Relinquishment of right in respect of immovable property is not admissible in evidence for primary purpose of division of joint properties by metes and bounds, but, the same can be relied upon for collateral purposes of severance of title and nature of possession of various shares only if it is impounded by paying stamp duty together with penalty.
In Umde Bhojram –vs- Wadla Gangadhar, reported in CDJ 2004 APHC 097, a Single Bench of Andhra Pradesh High Court with respect to Section 58 of Transfer of Property Act, 1882, and an unregistered Mortgage Deed, was pleased to observe that, an unregistered simple Mortgage Deed disclosing any covenant undertaking to discharge the liability personally by the mortgagor without reference to the mortgaged property is admissible in evidence to prove the suit debt. It was further observed that, since the suit was for recovery of money covered by the claim, the document can be marked for collateral purposes for the recovery of money.
A similar view was also taken by the High Court of Judicature at Madras in T.K.Sathiyanarayanan & others –vs- S.Jaganathan, reported in CDJ 2013 MHC 2298, where the Court held that, unregistered Mortgage Deeds can be marked as exhibits for the limited extent of establishing the loan transactions and such marking cannot be found fault with.
A Coordinate Bench of this Court in Smt.Krishnakumari –vs- Sri K.Suresh Kumar, reported in ILR 2015 KAR 2335, though held that a possession of immovable property and an agreement is required to be compulsorily registered and the non-registration of such a document would not affect the immovable property comprised therein, however, had considered about relying on such document for collateral purposes. In that regard, it referred to a judgment of Andhra Pradesh High Court in K.Ramamoorthi –vs- C.Surendranatha Reddy, (C.R.P.No.1623/2012, dated 27.07.2012), wherein the Andhra Pradesh High Court has observed as below :
“i) A document, which is compulsorily registrable, but not registered, cannot be received as evidence of any transaction affecting such property or conferring such power. The phrase “affecting the immovable property” needs to be understood in the light of the provisions of Section 17(b) of the Registration Act, which would mean that any instrument which creates, declares, assigns, limits or extinguishes a right to immovable property, affects the immovable property.
ii) The restriction imposed under Section 49 of the Registration Act is confined to the use of the document to affect the immovable property and to use the document as evidence of a transaction affecting the immovable property.
iii) If the object in putting the document in evidence does not fall within the two purposes mentioned in (ii) supra, the document cannot be excluded from evidence altogether.
iv) A collateral transaction must be independent of or divisible from a transaction to affect the property i.e., a transaction creating any right, title or interest in the immovable property of the value of rupees hundred and upwards..
v) The phrase “collateral purpose” is with reference to the transaction and not to the relief claimed in the suit.
Vii (b) An unregistered mortgage deed requiring registration may be received as evidence to prove the money debt, provided, the mortgage deed contains a personal covenant by the mortgagor to pay.”
From the above judgments, it is clear that even though a document pertaining to creation of charge was marked with respect to an immovable property is required to be a registered document, but, if the said document is unregistered, it cannot be totally ignored and can be considered for any collateral purposes.
18. In the instant case, the creation of charge with respect to the property mentioned in Ex.P-1 though requires the said document to be compulsorily registrable, but, a reading of the said document in its entirety, clearly go to show that the defendants, as borrowers of a sum of `1 lakh from the plaintiff, have acknowledged of they borrowing the said sum from the plaintiff and have ensured to repay the said loan amount together with agreed rate of interest thereupon within four years from the date of agreement. It is to ensure the due repayment of the loan amount, a charge was offered to be created with respect to the immovable property shown therein. As such, independent of the creation of the charge, the agreement between the parties as a lender and a borrower stands established and for the said purpose, which is a collateral to the purpose of creation of charge, Ex.P-1 can be relied upon. As such, even though the learned counsel for the appellants did not canvas the said point of alleged unregistered document at Ex.P-1, still, the above analysis would clearly go to show that Ex.P-1 can be relied and acted upon for its collateral purposes.
19. The first leg of the argument of the learned counsel for the appellants is that, admittedly the property in Ex.P-1 since has given to the share of the minors, the defendants as parents of the minors could not have created a charge against the said property.
No doubt, a reading of Ex.P-1 would go to show that the defendants have stated that the property was divided between the children, as such, the property shown in Ex.P-1 has been given up in favour of their minor daughters. It is for the educational expenses of those minor daughters, the defendants, as their natural parents, have executed the document at Ex.P-1. Here once again it can be repeated that, the aspect of whether the defendants executing the document on behalf of the minors would arise, provided the said document is taken for its primary purpose for creating charge against the said property. However, as observed above, since the scope of Ex.P-1 for the present suit is confined only for its collateral purpose for repayment of the money, the other question as to whether defendant Nos.1 and 2 could create charge against the property shown therein would not arise for consideration. As such, the said argument of the learned counsel for the appellants is not acceptable.
20. The agreement at Ex.P-1 is admittedly executed on 6.11.1998, which says that the defendants have agreed to repay the loan amount together with interest thereupon at the rate of 2% per month. The period of repayment of the loan amount was fixed at four years from the date of the agreement, which was on 6.11.1998. It is in this context, learned counsel for the appellants canvassed a point in his argument that, had really the defendants executed the said agreement at Ex.P-1, then, the plaintiff would not have kept quite for a long period for more than three years without claiming even the interest from the defendants. As such, the conduct of the plaintiff is questionable.
Admittedly, the plaintiff has not taken any action against the defendants for the defendants not paying the interest regularly though agreed to under Ex.P-1. But, merely because the plaintiff has not taken any action for recovery of the interest agreed to be paid by the defendants periodically, by that itself, the entire agreement at Ex.P-1 cannot be suspected. This is also for the reason that, as already observed above, apart from PW-1, even PWs.2, 3 and 4 have also supported the case of the plaintiff by stating that PWs.2 and 3 are the witnesses to the said loan transaction and PW-4 was the scribe of the document.
Moreover, as further observed above, even DW-1 in his cross-examination also has admitted the execution of the document at Ex.P-1 by stating that himself, joined by his wife, have put their thumb marks to the said document. Thus, when the very execution of Ex.P-1 in favour of the plaintiff has stood established, the mere non-payment of the interest would not lead to such a suspicion so as to disregard or disbelieve Ex.P-1 or to exonerate the defendants from liability towards the plaintiff for repayment of the loan amount with interest thereupon. As such, the said point of argument canvassed by the learned counsel for the appellants is also not acceptable.
21. The last point of argument of learned counsel for the appellants is that the plaint is barred by limitation. According to the learned counsel for the appellants, the date of agreement as at Ex.P-1 is 6.11.1998 and the suit was filed in the trial Court on 11.11.2002, as such, the suit is barred by limitation under Article 19 of the Limitation Act, 1963. No doubt, Article 19 in Schedule-I of the Limitation Act mentions that the institution of a suit for recovery of money payable for the money lent is three years when the loan is made. However, learned counsel for the respondent in her arguments submitted that in the case on hand, admittedly the document at Ex.P-1 gives a period of four years for the repayment of the loan. Since the defendants have committed breach of the agreement by not repaying the loan even at the end of the fourth year from the date of the agreement, the cause of action has arisen to the plaintiff on the said date of breach, as such, the suit has been filed within the period.
She further submitted that, it is Article 55 of Schedule-I of the Limitation Act which is applicable in the case on hand. The said Article mentions that, in a suit for compensation for the breach of any contract, express or implied, not otherwise specifically provided in the Schedule-I, the limitation period would be three years from the date when the contract is broken or where there are successive breaches when the breach in respect of which the suit instituted occurs or where the breach is continuous from the date when the breach ceases.
22. In that regard, learned counsel for the respondent has relied upon the judgment of Allahabad High Court in Dhapai –vs- Dalla and others, reported in AIR 1970 Allahabad 206. In the said case, the plaintiff had obtained theka of fishery rights in certain tank for complete year. The defendants had agreed to pay half of theka money to the plaintiff in return of half of fishery rights in tank. The plaintiff had filed a suit for recovery of amount after defendants working out their theka in respect of their share. The Court held that the suit was for recovery of amount and not for specific performance of contract, as such, it was governed by Article 115 and not Article 113 of the Schedule-I of the Limitation Act.
23. The scope of Article 113 and Article 115 of the Limitation Act was described by the Allahabad High Court at Paras 13 and 14 of the said judgment, which are reproduced here below :
“ 13. We now proceed to consider why Art. 115 of the First Schedule to the Limitation Act should apply to the facts of the present case. Art.115 applies when there is a breach of contract and the suit is for compensation for the loss suffered by the innocent party. A breach of contract "occurs where a party repudiates or fails to perform one or more of the obligations imposed upon him by the contract": (vide Cheshire and Fifoot, p. 484). "If one of two parties to a contract breaks the obligation which the contract imposes, a new obligation will in every case arise -a right of action conferred upon the party injured by the breach": (vide Anson's Law of Contract, p. 412). Admittedly in the present case there was a contract and according to the plaintiff and the findings of the Court a breach of contract had occurred inasmuch as the defendants failed to pay the stipulated amount upon the date fixed under the contract.
14. Difficulty can, however, be caused by the word "compensation" used in Article 115. It can be argued that the words "compensation for breach of contract" point rather to a claim for unliquidated damages than to the payment of a certain sum, and, therefore, where the suit is for the recovery of a specified sum, and not for the determination of unliquidated damages, this Article should not apply. In our opinion this contention would be wholly untenable because it was not accepted by this Court in the Full Bench case of Husain Ali Khan v. Hafiz Ali Khan, (1881) ILR 3 All 600 (FB) and by the Privy Council in the case of Tricomdas Cooverji Bhoja Vs. Sri Gopinath Jiu, AIR 1916 PC 182.
In the case of Husain Ali Khan, (1881) ILR 3 All 600 (FB), Art. 116 of Schedule II of the Limitation Act (Act 15 of 1877) was the subject of interpretation. Articles 115 and 116 of Schedule II of Act 15 of 1877 have been reproduced verbatim in the Indian Limitation Act, 1908. Article 115 deals with the breach of contracts not in writing and registered while Article 116 provided for breach of contracts in writing and registered. It is, therefore, obvious that the meaning which has to be given to the words "compensation for breach of contract" occurring in both the Articles will have to be the same.
In Syndicate Bank –vs- Channaveerappa Beleri and others, reported in { (2006) 11 SCC 506}, at Para- 18, the Hon’ble Apex Court was pleased to observe as below :
“ 18. Some arguments were addressed about the article of limitation that would apply in respect of a suit against the guarantors. Samuel held that in the case of refusal of a guarantor to pay the amount, the matter would be governed by Article 115 of the Schedule to the Limitation Act, 1908, which corresponds to Article 55 of the Limitation Act, 1963. One of the submission made before us was that the term “compensation for breach of contract” in Article 55 indicates a claim for unliqudated damages and not a claim for payment of a sum certain as to what is the difference between a claim for unliquidated damages and a claim for a sum certain or a sum presently due, reference can advantageously be made to the classic statement of law by Chagla, C.J., in Iron and Hardware (India) Co. v. Firm Shamlal & Bros. If Article 55 does not apply, then a claim against a guarantor in such a situation may fall under the residuary Article 113 of the Limitation Act, 1963 corresponding to Article 120 of the old Act. The controversy about the appropriate article applicable, when the claim is found to be not exactly for “compensation” but ascertained sum due has been referred to as long back as in 1916 in Tricomdas Cooverji Bhoja v. Gopinath Jiu Thakur. Under the old Limitation Act (Act of 1908), the periods prescribed were different under Articles 115 and 116. The period prescribed were also different under Articles 115 and 120. But under the 1963 Act, the period of limitation is the same (three years) both under Articles 55 and 113. Having regard to the fact that the period of limitation is 3 years both under Article 55 and Article 113, and having regard to the binding decision in Samuel, we do not propose to examine the controversy as to whether the appropriate article is 55 or 113. Suffice it to note that even if the article applicable is Article 113, the Bank’s suit is in time.
In the light of the above judgment, when Ex.P-1 is perused, it clearly go to show that the defendants had agreed for the four years time for the repayment of the loan amount. Though the loan amount was specified, but, the period for repayment was fixed at four years. As such, the defendants had a time up to four years from the date of the alleged execution of the agreement for repaying the said loan amount and the interest thereupon. Once they commit any breach for payment of the said amount at the end of four years, the plaintiff gets a cause of action to sue for recovery of the loan amount from the defendants. As such, the arisal of cause of action for the plaintiff in the case on hand is not necessarily the date of alleged agreement, but also the date when the breach of performance on the part of the defendants has occurred. Since the legal notice at Ex.P-2 go to show that plaintiff after waiting for a considerable period as per the agreement to enable the defendants to repay the loan amount, has finally issued a legal notice to them on 18.10.2002, calling upon the defendants to repay the loan amount and since the defendants have not responded to the said notice and not even repaid the loan amount, the plaintiff gets a cause of action as per Ex.P-1 to treat that the defendants have committed breach of agreement towards the repayment of the loan amount with interest thereupon and has thus instituted a suit without wasting any further time. As such, the contention of the appellants that the suit was barred by limitation is also not acceptable.
24. Barring the above, the appellants have not raised any other contention in their memorandum of appeal and in the argument which are worth to be considered. As observed above, since the plaintiff by leading cogent evidence, both oral and documentary, has proved that the defendants have borrowed a sum of `1 lakh from him on 6.11.1998, agreeing to repay the same with agreed rate of interest thereupon and have committed default and have failed to repay the loan amount with interest, the plaintiff is entitled for recovery of the said sum.
25. The trial Court since has passed a considered and reasoned order decreeing the suit in-part after appreciating the materials placed before it in its proper perspective, I do not find any reason to interfere in the said judgment and decree.
26. Accordingly, I proceed to pass the following order:
ORDER The Appeal is dismissed. The judgment and decree dated 7.1.2006, passed by the learned Prl.Civil Judge (Sr.Dn.), Ramanagaram, in O.S.No.195/2002, 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/