Mary vs Central Bank of India

R.S. Ramanathan, J.—The first defendant in O.S. No. 94 of 1991 is the appellant. The plaintiff Bank filed the suit on the basis of the equitable mortgage created by one J.A. Martin the husband of the 1st defendant and father of the 2nd defendant and the suit is filed for the recovery of Rs. 3,09,435-45.

The case of the plaintiff is that Late J.A. Martin borrowed a sum of Rs. 68,000/- and executed a promissory note on 28.6.1979 for the purpose of purchasing a mechanised boat and defendants 2 and 3 stood as guarantors for the loan and the final payment by the plaintiff was made on 21.11.1979 and the late Martin executed an agreement of hypothecation on 28.6.1979 and deposited the sale deed in respect of the properties with the plaintiff Bank on 27.6.1979 with an intention to create equitable mortgage for the loan facilities to be granted by the plaintiff Bank and the loan is to be repaid in 60 equal monthly instalments over a maximum period of four years with due allowances of two months per year during non-fishing season which are to be decided by the Bank. The borrower did not make any payment and therefore the suit was filed by the Bank against the wife of the borrower the 1st defendant and the guarantors for the recovery of the amount.

The suit was resisted by the 1st defendant the wife of the borrower on the main ground that the suit is barred by time. She also denied the allegations that the final payment alleged to have been made on 21.11.1979 at the instance of J.A. Martin is not true and as per the documents the suit ought to have been filed within 12 years from the creation of mortgage and the suit having been filed on 11.9.1991 beyond the period of 12 years is barred by time.

During the trial, the plaintiff Bank examined one witness and marked 19 documents. No witness was examined on the side of the defendants and no document was marked.

The learned Sub Judge on the basis of the above pleadings framed the following issues:

(1) Whether the suit is barred by time ? (2) To what relief the plaintiff is entitled to?

The learned Sub Judge held that under Exs. A5 and A18 it is proved that the last payment by the plaintiff was made on 21.11.1979 and the first payment started only on 10.1.1980 and therefore the suit filed on 11.9.1991 is well within time and passed a preliminary decree as prayed for. Aggrieved by the same, this appeal is filed by the first defendant.

Point for consideration in this appeal is whether the suit is barred by time ?

To appreciate the above issue we have to see the documents filed on the side of the plaintiff/respondent. Ex.A1 is the agreement of hypothecation, Ex.A2 is an undertaking given by the borrower agreeing to repay the loan in 60 equal monthly instalments, Ex.A3 a demand promissory note, Ex.A4 agreement of guarantee, all these documents were executed on 28.6.1979. Ex.A6 is the original document of title and Ex.A9 is the memorandum of deposit of title deeds executed by borrower with an intention to create equitable mortgage. Under Ex.A9, the mortgage was created on 27.6.1979. Ex.A15 is the suit notice issued by the Bank and in that suit notice also it was clearly stated that on 28.6.1979 J.A. Martin borrowed Rs. 68,000/- and defendants 2 and 3 stood as guarantors and executed a guarantee document and an equitable mortgage was created by the said J.A. Martin. Ex.A17 is the statement of accounts and from that it is seen that on 28.6.1979 the Bank has credited Rs. 68,000/- in the account of J.A. Martin. Therefore, from these documents it is clearly found that the promissory note was executed on 28.6.1979, the mortgage was created on 27.6.1979 and these documents did not point out that the first payment is to be made only from 10.1.1980 and the plaintiff Bank made the final payment of Rs. 1500/- on 21.11.1979 at the instance of the deceased borrower. Therefore, having regard to the creation of equitable mortgage on 27.6.1979, the suit is to be filed on or before 27.6.1991. Admittedly, the suit was filed only on 11.9.1991. Therefore, prima facie the suit is barred by time.

The learned Sub Judge on the basis of Exs.A5 and A18 held that the last payment by the plaintiff was made on 21.11.1979 and that was at the instance of the borrower and therefore the suit having been filed on 11.9.1991 is well within time. Further according to the lower court the repayment commences only from 10.1.1980. Therefore, the suit is well within time.

In my opinion, the finding of the learned Sub Judge cannot be sustained. As stated supra, the promissory note, creation of equitable mortgage, execution of guarantee deed, hypothecation deed, undertaking, all were done on 28.6.1979. As per the demand promissory note the liability to repay the amount starts from that date. There is no execution of mortgage deed and equitable mortgage was created by deposit of title deeds and in none of the documents it was mentioned that the liability to repay starts only from 10.1.1980. In the plaint, it was stated that the final payment was on 21.11.1979 when the boat was taken delivery and the cause of action paragraph it was stated that the date of commencement of repayment was on 10.1.1980. On that basis, the trial Court held that the suit was filed within time. Though it is stated in the plaint that on 21.11.1979 final payment of Rs. 1500/- was made to the manufacturer of the boat at the instance of the borrower, having regard to the execution of promissory note and creation of mortgage on 28.6.1979 and 27.6.1979, the time starts to run from that date and payment of Rs. 1500/- on 21.11.1979 will not be the cause of action for the repayment. Further, in none of the documents filed by the plaintiff, it was stated that the repayment starts from 10.1.1980. As a mater of fact, in the suit notice Ex.A15 there is no mention about the final payment on 21.11.1979 and the date of commencement of repayment from 10.1.1980. At this juncture, it is relevant to see the evidence of P.W.1 an Office Accountant of the plaintiff Bank who clearly stated that in the hypothecation agreement time of repayment was not mentioned. Further, as the loan was given on 28.6.1979 the first payment has to be made on 28.7.1979 and the commencement of repayment on 10.1.1980 was not mentioned either in the mortgage deed or in the term of loan agreement. Further, in the cross, he would admit that on 28.6.1979 Rs. 68,000/- was paid to J.A. Martin and the borrower is liable to repay the loan from the date on which he borrowed the amount. Therefore, from the evidence of P.W.1, it is made clear that the repayment does not commence on 10.1.1980 and the borrower is liable to make repayment from the next month. The lower Court taking advantage of the recital in Ex.A2 wherein the borrower has stated that he would repay the loan in 60 equal monthly instalments over a maximum period of 4 years with a due allowance of two months per year for non-fishing season which are to be decided by the Bank. Relying on this undertaking, the lower Court has held that the liability to repay starts two months thereafter. Even assuming that two months allowance can be given, the repayment would have commenced from 28.8.1979 and even then the suit is barred by time. The finding of the lower Court that the liability to repay the amount arose only on 21.11.1979 the date on which the boat was handed over to the borrower is patently wrong as there is no evidence to that effect. No doubt, under Ex.A5 the manufacturer of the boat requested the Bank to disburse the final payment. In my opinion, having regard to the execution of promissory note, creation of mortgage and other documents, the delivery of mechanised boat to the borrower will not be a cause of action for repayment and it cannot be construed that the repayment started only from that date.

Therefore, having regard to Exs. A1, A2, A3, A9, and A17, I am of the considered view that the liability to repay the loan starts from 27.6.1979 and admittedly no payment has been made by the borrower and therefore, the suit ought to have been filed on or before on 27.6.1991 and the suit having been filed only on 11.9.1991 is clearly barred by time.

In the result, I set aside the Judgement and decree of the trial Court and held that the suit is barred by limitation and on that score the appeal has to be allowed and accordingly the appeal is allowed. In the circumstances, there will be no order as to costs.