SURESH KUMAR JOON Vs. MOOL CHAND MOTORS

JUDGEMENT

(1.) THIS is a suit for recovery of Rs.74,88,340/-. The suit was filed under Order 37 of the Code of Civil Procedure and unconditional leave to defendants No. 1 and 3 was granted on 09.02.2011 whereas defendant No.2 who had admitted having received Rs.12 lakhs from the plaintiff was granted leave to defend subject to deposit of the aforesaid amount with Registrar General of this Court.

(2.) DEFENDANT No.1 is a partnership firm of defendants 2 and 3. It is alleged that the plaintiff advanced a loan of Rs.35 lakhs to defendants and an agreement dated 08.05.1999 was executed by them with the plaintiff. It is alleged that defendants had agreed to pay 50% of the gross profits of defendant No.1 firm to the plaintiff. The defendants are also alleged to have agreed to pay interest at the rate of 24% per annum on the principal amount borrowed from the plaintiff. The monthly instalment of gross profit according to the plaintiff was agreed to be deducted from the principal amount of Rs.35 lakhs. It is further alleged that defendants neither shared the gross profits nor returned the amount taken by them from the plaintiff. They rather offered the plaintiff to operate the petrol pump of defendant No.1 firm. The plaintiff accepted the offer and also agreed to extend, a further loan of Rs.12 lakhs to defendants. A fresh loan agreement was then executed between the plaintiff and defendants on 13.07.2000. It is also the case of the plaintiff that despite the agreement, he was not allowed to take charge of the petrol pump on one pretext or the other. It is alleged in the plaint that on re-consideration of the accounts, defendant No.2 issued a cheque dated 13.03.2007 for Rs.51,29,000/- to the plaintiff towards re-payment of the debt and requested him to present the same after two weeks so that they could arrange necessary funds in the meanwhile. However, on verification from the bank, the plaintiff came to know that the funds in the account of the defendants were not sufficient to honour the said cheque. The plaintiff has now claimed the aforesaid principal sum of Rs.51,29,000/- along with the interest amounting to Rs. 23,59,340/-.

(3.) THE contention of the learned counsel for the plaintiff is that the loan was acknowledged in writing by the defendant no.2 on 13.3.2007 and computed from that date, the suit is within the limitation. This contention, however, is not tenable in law. Section 18 of Limitation Act, to the extent it is relevant, provides that where, 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 been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. It would be seen that in order to extend limitation, the acknowledgment needs to be before the period prescribed for filing the suit has expired. In case the limitation has already expired before the acknowledgement is made, it would not save limitation. In the case before this Court, the first loan agreement between the parties was executed on 8.5.1999, whereas the second loan agreement was executed on 13.7.2000. Article 19 of the Limitation Act prescribes a limitation of three years from the date of loan, for the suit for recovery of the money payable or money lent. Computed from 13.7.2000, the period of limitation expired on 13.7.2003. The acknowledgment made on 13.3.2007, therefore, does not save the limitation.