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Judgment
S. Ravi Kumar, J
These two Appeals are filed challenging judgment dated 07.06.2006 in Original Application (O.A.) No. 1038 of 2000 on the file Debts Recovery Tribunal No. II, Mumbai (D.R.T.) Central Bank of India filed Civil Suit No. 1235 of 1996 before Hon'ble High Court at Mumbai and the same was transferred to D.R.T. in pursuance of the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the RDDB&FI Act) which was registered as O.A. No. 1038 of 2000. The Bank filed above Suit for recovery of Rs. 14,14,850/- being the amount due under Bills Purchase Facility sanctioned to Defendant No. 1 company (Seema Synthetics Fabrics Pvt. Ltd.) and the Guarantors i.e. Defendants 2 and 3 who were the Directors of the said company. Defendants filed common Written Statement (W.S.) disputing the claim and the main plea of the Defendants is that claim is barred by limitation. Tribunal below on consideration of contentions and rival contentions of both parties dismissed the claim against Defendant No. 1, but allowed the claim against Defendants 2 and 3. Aggrieved by the said order of disallowing the claim against Defendant No. 1, Bank filed Appeal No. 346 of 2007. Defendants 2 and 3 aggrieved by the order of allowing the claim against them filed Appeal No. 416 of 2006.
Advocate for Bank submitted that there was part payment through letter dated 11.03.1993 which amount was realized on 20.03.1993 and within 3 years from that date Suit is filed, but the Tribunal below has not accepted that payment on the ground that it was after the expiry of period of limitation ignoring the acknowledgment dated 30.09.1990. He submitted that a combined examination of acknowledgment dated 30.09.1990 and the amount realized on 20.03.1993 would make it clear that the claim is made within the period of limitation, therefore, the Tribunal below is not right in dismissing the claim against Defendant No. 1. Advocate for Defendant No. 1 submitted that the claim is clearly barred because the Pay Order enclosed through letter dated 11.03.1993 is dated 12.03.1993, but as the Suit is filed on 19.03.1996 which is barred by limitation. Advocate for Defendants 2 and 3 submitted that the liability of the Guarantors is co-extensive with that of principal debtor and once the principal debtor is discharged, fastening liability on the Guarantors i.e. Defendants 2 and 3 is incorrect and, therefore, the order of the Tribunal below is liable to set aside. He submitted that the limitation aspect was rightly examined by the Tribunal below and Tribunal below was right in dismissing the claim against Defendant No. 1 and it ought not have extended the same to Defendants 2 and 3 also. He submitted that if the Appeal filed by the Bank is allowed and the liability is fastened on Defendant No. 1, then Defendants 2 and 3 have no case.
I have perused the material papers and the impugned order dated 07.06.2006. It is not in dispute that Defendant No. 1 availed Bills Purchase Facility with a limit of Rs. 5 Lakhs in February 1988 and executed documents in favour of the Bank. It is not in dispute that Defendants 2 and 3 stood as sureties for the said facility and executed Guarantee Agreement. According to the Bank, the said facility was availed from time to time and a sum of Rs. 3,52,656/- covering 16 Bills remained as outstanding for which the Defendants executed Letter of Acknowledgement on 30.09.1990. According to Bank, a sum of Rs. 26,150/- was paid on 20.03.1993 and these two transactions make the claim within time.
It is the contention of the Defendants that a sum of Rs. 26,150/- is paid as full and final settlement of the dues against the Bill dated 02.02.1998 with a request to release related Bill and related documents. In the Claim Affidavit of the Bank Officer it is stated that Defendant No. 1 made payment on 20.03.1993, for which Defendant No. 2 filed Answer Affidavit supporting the plea of Defendants. Nowhere in the Answer Affidavit the factum of last payment of Rs. 26,150/- on 20.03.1993 is disputed. It is only stated in the Answer Affidavit that letter dated 11.03.1993 was delivered to the Bank on the evening of 16.03.1993 along with Pay Order dated 12.03.1993 for Rs. 26,150/- towards Bill dated 02.02.1988. It is stated that the Bank put the date of receipt as 17.03.1993 as it was presented after banking hours. It is further stated that the Pay Order was conditional pay order and the Bank having encashed the Pay Order, it deemed to have accepted the condition incorporated in the letter dated 11.03.1993. The Tribunal below not accepted this payment to 20.03.1993 by referring to judgment of Hon'ble Supreme Court in Jiwanlal Achariya Vs. Rameshwarlal Agarwalla (AIR 1967 SC 1118). In that case Promissory Note was executed on 04.02.1954 and on the same date a post dated cheque bearing the date of 25.02.1954 was given by the Defendants therein to Plaintiff therein. The money was realized after 25.02.1954 and credited towards part payment. The point before the Hon'ble Supreme Court was as to the date of payment was 4th February or 25th February. In the circumstances of the said case, the Hon'ble Supreme Court held that as it is a post dated cheque, it could not be realised before 25.02.1954 though it was delivered on 04.02.1954 and the date for the purpose of Section 19 of the Limitation Act, 1963 could be only 25.02.1954 irrespective of the fact when the amount was realized. But here in our case, in the Claim Affidavit it is clearly stated that the part payment was made on 20.03.1993 and such fact was not denied in the Answer Affidavit. When the evidence of the Bank Officer remained unchallenged as to the date of part payment, the same cannot be discarded. Therefore, the decision of Hon'ble Supreme Court referred and relied on by the Tribunal below has no application to the case on hand.
The Tribunal below discarded this payment for one more reason. The Tribunal below held that as per Section 19 of the Limitation Act, fresh period of limitation shall be computed from the date when the payment was made, but such payment should be made before the expiration of prescribed period. The Tribunal below held that payment dated 20.03.1993 was after the expiry of limitation period. The Tribunal below discarded Letter of Acknowledgement dated 30.09.1990 on the ground that there is no pleading about that document. But the said finding is incorrect. In para 5 of the Plaint it is clearly stated that the Defendants have confirmed their liability from time to time and executed Letter of Acknowledgement dated 30.09.1990, a copy of which is annexed and marked as Exh. A-5. In the Claim Affidavit also the Bank Officer reiterated the same and referred to this Letter of Acknowledgement dated 30.09.1990.
I have perused this Letter of Acknowledgement dated 30.09.1990 and as the Bank addressed letter requesting the Defendants to confirm the Accounting showing the particulars of the claim, Defendants acknowledged it for Rs. 14,14,850/-, so this payment of 20.03.1993 is within 3 years from 30.09.1990. The finding of the Tribunal below that the payment is not within the period of limitation u/s. 19 the Act is contrary to the material on record.
The other point held against the Bank is that this amount of Rs. 26,150/- made on 20.03.1993 is not in respect of a particular Bill and, therefore, it cannot be extended to other Bills. But this finding of the Tribunal below cannot be accepted because it a continuing Account and the Suit is not filed for a particular Bill and it is filed for all Bills. So as rightly pointed by Advocate for Bank, the Tribunal below erred in dismissing the claim against Defendant No. 1 on the point of limitation.
It is not in dispute that as per Section 128 of the Indian Contract Act, 1872, the liability of Surety is co-extensive with that of principal debtor, unless it is otherwise provided by the contract. In this case, from the pleadings and documents it is clear that Defendants 2 and 3 being Directors of Defendant No. 1 company stood as Guarantors for the credit facilities granted to Defendant No. 1 company. So once the principal borrower is liable, the Guarantors are also liable. Here the Tribunal below held that provisions of law governing Defendants 2 and 3 is under Article 55 of the Limitation Act and whereas Defendant No. 1 is under Article 31 of the Limitation Act. This finding is also incorrect because Article 55 is in respect of Suit for compensation for breach of contract, which is no way applicable to the case in hand, since the Suit is filed for enforcing Bills of Exchange through which money is payable at fixed time. When the liability of Guarantors is coextensive with that of principal borrower, the provisions of law to both principal borrower and the Guarantors should be one and the same, which is Article 31 of the Limitation Act.
On a scrutiny of the material and for the reasons stated above, I am of considered view that Tribunal below erred in dismissing the claim against Defendant No. 1 and, therefore, findings recorded by the Tribunal below in that connection are liable to set aside. Accordingly, Appeal No. 346 of 2007 filed by the Bank is allowed and the Appeal No. 416 of 2006 filed by the Guarantors is dismissed. Both parties shall bear their own costs. Tribunal below shall issue modified Recovery Certificate accordingly.
All Miscellaneous Applications, if any, are dismissed as infructuous.