Ram Gupta vs ICICI Bank Limited

V.K. Jain, J.—This is a suit for declaration. It is alleged in the plaint that in mid, 2006, the plaintiff, who had earlier obtained a Housing Loan from Punjab National Bank, required home loan for completing construction of his house and for taking over the home loan, which he had taken from Punjab National Bank. It is further alleged in para 4.5 of the plaint that on 29.06.2009, defendant agreed to grant home loan and agreed to sanction a total loan of Rs. 74,87,746/-. It is alleged that though the parties had agreed to grant of Home Loan but what was granted to the plaintiff was Home Equity Loan or Loan against Property (LAP) at floating interest of 11% per annum, instead of Home Loan which was to be granted at floating interest of 8.25% PA. An agreement to that effect was entered between the plaintiff and defendant bank, at Green Park Branch, New Delhi and the EMI to be paid under this loan agreement was Rs. 85,106/- per month for a period of 15 yeaRs. It is further alleged that on 3.7.2006, the defendant bank made disbursement from the loan account of the plaintiff mentioned in para 4.6 of the plaint. On 4.7.2006, the plaintiff received a copy of the agreement from the defendants and pointed out that Home Equity was not Home Loan, as agreed between the parties and requested the defendant through its agent to make necessary correction in the documents and adjust the rate of interest. It is further alleged that on 10.7.2006, the plaintiff paid Rs. 13,540/- as interest on advance as he was assured that the loan will be changed into Home Loan from Home Equity. It has been alleged in para 4.9 of the plaint that on 10.8.2006, EMI on the loan taken became due for period of 10.7.2006 to 9.8.2006 to be paid by the plaintiff. The plaintiff however, did not make the payments under protest for the EMI for month of July since his loan was not converted to Home Loan and correct EMI was not re-determined. The plaintiff has sought declaration that the loan taken by him from the defendants was a Home Loan and not a Home Equity Loan. He has also sought injunction directing the defendants to charge interest as applicable to Home Loan. IA 4363/2011 is an application filed by the defendant under Order 7 Rule 11 of the CPC for rejection of the plaint on the ground that the suit is barred by limitation.

The suits for declaration are governed by Article 56 and 58 of the Limitation Act. Articles 56 and 57 deals with specific declaration which are not applicable in this case. Article 58 deals with other declarations not covered by Article 56 & 57 and the period of limitation prescribed thereunder is three years from the date when the right to sue first accrues. This is plaintiff''s own case that copy of the agreement was received by him on 4.7.2006 wherefrom he discovered that the agreement was for Home Equity and not for Home Loan. This is also the case of the plaintiff that on 10.8.2006 the EMI for the period from 10.7.2006 to 9.8.2006 became payable but he did not make payment since the loan had not been converted into Home Loan and correct EMI had not been determined. Thus, the right to sue first accrued to the plaintiff on 4.7.2006. In case the agreement between the parties was not for grant of Home Loan, attracted floating interest @ 8.25% per annum and not 11% per annum, he could have come to the Court the moment he received the copy of the agreement and came to know that the interest rate mentioned in the agreement was not as per his first settlement with the defendant. The suit having been filed on 16.01.2010 is, therefore, clearly barred by limitation.

Article 58 of the Limitation Act, 1965 came up for consideration before the Supreme court in Khatri Hotels Private Limited and Another Vs. Union of India (UOI) and Another, . The Apex Court in that case, noted that while enacting Article 58 of 1963 Act, the legislature designedly had made a departure from the language of Article 120 of 1905 Act which provided the limitation of six years from the date when the right to sue accrues. The Apex Court held that if a suit is based on legal cause of action, the period of limitation will begin to run from the date when the right to sue first accrues and that successive violation of the right will not give rise to a fresh cause of action and the suit will be liable to be dismissed, if it is beyond the period of limitation, counted from the date when the right to sue first accrued.

The learned counsel for the plaintiff contended that on 12.9.09, the defendant had sent a fresh letter whereby they carried out corrections in the nomenclature of the loan, though the interest rate was not changed. In my view, a fresh sanction letter alleged to have been executed on 12.3.2009 does not save the limitation since Article 58 of the Limitation Act prescribes limitation period of three years from the date when the right to sue first accrues. If the right to sue accrues again, on account of some further developments, that does not extend the period of limitation in a suit for declaration of this nature. The period of limitation, once it begins to run in terms of Article 58 of the Limitation Act, does not get extended on account of such further developments. Therefore, the suit for declaration is barred by limitation being beyond the period prescribed in Article 58 of the Limitation Act. The plaintiff has also sought a mandatory injunction for directions to the defendant to charge interest rate as applicable under home loans. No such relief can be granted to the plaintiff without grant of declaration. In any case, even with respect to mandatory injunction, the right to sue accrued to the plaintiff when he got a copy of the agreement stipulating higher rate of interest.

For the reasons stated hereinabove, the plaint is rejected. The suit as well as all pending IAs stand disposed of.