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Harikumar Radhakisan and ors. Vs. Uderam Ramkuwar and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial;Limitation
CourtMumbai High Court
Decided On
Case NumberA.F.A.D. Nos. 313 and 315 of 1962
Judge
Reported inAIR1970Bom262; ILR1971Bom283; 1969MhLJ681
ActsProvincial Insolvency Act, 1920 - Sections 28, 28-A and 37; Indian Limitation Act, 1963 - Sections 6, 9 and 15 - Schedule - Article 22; Debt Law; Central Provinces & Berar Money Lenders Act, 1934 - Sections 11(H); Indian Limitation Act, 1908 - Sections 15(1) - Schedule - Articles 59 and 60
AppellantHarikumar Radhakisan and ors.
RespondentUderam Ramkuwar and ors.
Appellant AdvocateM.W. Samudra, Adv.
Respondent AdvocateJ.N. Chandurkar and ;M.W. Palekar, Advs.
Excerpt:
.....that the second notice of the year 1957 cannot be taken into account at all because of the first notice of demand by the plaintiff in the year 1952. their contention, therefore, is that this suit, which is filed long after 3 years after 1952, is not tenable. therefore, if the plaintiff bad wished to prolong the limitation, he need not have made a demand by his notice in the year 1952. but he chose to serve a notice in the year 1952. in my view the period of limitation, therefore, had to run from the date of demand (in this case 1952) which he voluntarily chose; the plaintiff on his own has given a notice of demand to the defendants in the year 1952. when the insolvency proceedings were pending, he could 'as well have taken the leave of the court and ask the official receiver to file..........that because of the insolvency proceedings, the period of limitation does not start from the demand notice of the year 1952. a period of tendency of insolvency proceedings cannot also be excluded under section 15 of the indian limitation act except where there is an order refusing the leave to commence a suit. even if the pendency of the insolvency proceedings may have the effect of preventing any suit or application being filed against the insolvent, the bar of interdiction does not arise by any order of the court but under the law. hence, section 15(1) of the indian limitation act does not apply. under this section, in computing the period of limitation for any suit, the institution or execution of which has been stayed by injunction or order, the time of the continuance of the.....
Judgment:

1. I am disposing of both these appeals by a common Judgment because the common questions of law and also the similar facts have to be dealt with in these two appeals. The plaintiff in both these suits which are the subject-matters of these two appeals is the same although the defendants are different. Both these appeals are by the plaintiff against the judgment and decree passed by the District Judge. Amravati, dismissing the plaintiffs suits by confirming the decree of the Trial Court. These suits by the plaintiff are for the recovery of certain sums with interest on account of deposit with the defendants. In Appeal No. 313 of 1962, before me, the suit is for the recovery of a sum of Rupees 977-3-0 with interest. The suit is for the recovery of Rs. 2600/- with interest in the Appeal No. 315 of 1962. The plaintiff, in the suit which is the subject-matter of Appeal No. 313, had deposited with the defendant's firm Rs. 500/- on 23-2-1950 under a deposit chithi scribed by the defendant. It was agreed that the defendants would pay interest at 9% per annum. The plaintiffgave a notice to this defendant on 22-5-1957 demanding the deposit and the defendants refused the notice. The plaintiff, therefore, had to file this suit for the recovery of his dues, in the other appeal, the plaintiff had deposited a sum of Rs. 1,500/- with the defendants on 21-4-1950. The plaintiff gave a notice to them on 11-3-1957 demanding the deposit and the defendants received the notice but failed to comply with the demand. The plaintiff, therefore, had to file this suit for the recovery of total sum of Rs. 2600/- with interest.

2. In both these suits, which are the subject-matter of these two appeals here, the defendants resisted the claim of the plaintiff stating that the plaintiff had already served other notices to them in 1952. The plaintiff in one case had served a notice on 24-7-1952 and in die other case had served a notice of 3-10-1952. It is therefore the contention of the defendants that the plaintiff not having filed the suit within three years from the first notice, the suit is tune barred. It is further contended by the defendants that the transaction was one of loan under the C. P. & Berar Money Lenders Act, 1934. That the plaintiff having no money lending licence, under the Act, the suit was not maintainable,

3. There are other contentions also raised by the defendants but in view of the arguments by the learned advocates for the appellant, which are confined only to few contentions, it is not necessary for me to recite them.

4. On the pleadings of the parties, the Civil Judge, who tried the suits, framed a large number of issues and amongst other conclusions, he also came to the conclusion that the sums which are the subject-matters of the deposit belong to the plaintiff. As regards the nature of the transactions, he is of the view that the transaction was one of loan and not of deposit and that therefore the suit was time barred under Article 59 of the Indian Limitation Act (1908). According to him, even if this transaction was one of deposit, it is still time barred under Article 60 of the Indian Limitation Act (1908) because the first notice of demand in both the cases was in the year 1952. He also came to the conclusion that the transaction was one of loan under the C. P. & Berar Money Lenders Act, 1934 and that therefore the suit was not maintainable for want of a money lending licence by the plaintiff. There was an appeal by the plaintiff being aggrieved by this decree and the learned District Judge also framed several issues and found that the transaction is one of deposit; that the notice of demand issued in the suits in 1952 was valid, that therefore the suits are not within time. He also came to the conclusion that the suits are not maintainable in view of Section 11 (H) of the C. P. & Berar Money Lenders Act, 1934, Accordingly, therefore, he confirmed the decree of the Trial Court. It is against this decree that the original plaintiff has come up in appeal here. The original plaintiff is now dead and therefore his legal representatives are brought on record and they are therefore the appellants here.

5. The learned advocate for the appellant concedes that the transaction is one of deposit. He also concedes that the plaintiff was unable to produce any money lending licence of the year 1950. The deposit receipts in both the suits are dated 23-2-1950 and 21-4-1950. Therefore, if this transaction can be said to be a loan under the C. P. & Berar Money Lenders Act then he will have to produce a money lending licence of the year 1950. I have heard this appeal partly some time back and at that time the learned advocate for the appellant stated that if possible he would produce the money lending licence of the year 1950 afterwards. It however appears that the learned Advocate after attempts did not succeed in getting the said licence. It would also be difficult for him now to get it after a long time. The learned Advocate for the appellant therefore did not produce any licence even after a long time till this day.

6. The only points that are raised by the learned Advocate for the appellant are-

(1) Whether the suit is barred by limitation?

(2) Whether the suit is maintainable under the C. P. & Berar Money Lenders Act, 1934

7. I will have to recite briefly some facts before discussing these issues which are raised by the learned Advocate for the appellant. The plaintiff was declared insolvent on an application by the creditors on 8-2-1950. We nave seen that he had deposited a sum of Rs. 500/- with the defendants (respondents) in Appeal No. 313 of 1963 on 23-2-1950. He has also deposited a sum of Rs. 1,500/- with the defendants (respondents) in Appeal No. 315 of 1962 on 21-4-1950. Therefore, he has deposited these sums after he was declared insolvent on 8-2-1950. It appears that after he was adjudged an insolvent, his insolvency was also annulled unconditionally on 15-12-1956. It is admitted that his insolvency was annulled after all the creditors were paid in full. Therefore, we are concerned in both these matters with the deposits made by the plaintiff while he was an insolvent and with the notices of demand dated 24-7-1952 and 8-10-1952 which are also during the pendency of the insolvency proceedings. It appears he did not file any suit after his service of notices of demand on the defendants in the year 1952. After his insolvency was annulled on 15-12-1956, he again served another notice in one case on 25-2-1957 and in the other on 11-3-1957. The suits with which we are concerned in these two appeals, as per the pleadings of the plaintiff, are, on the basis of these notices of the year 1957. Therefore, the contention of the plaintiff is that the suit is tenable because it is well within three years after the service of notice in the year 1957. On the other hand, the contention of the defendant is that the second notice of the year 1957 cannot be taken into account at all because of the first notice of demand by the plaintiff in the year 1952. Their contention, therefore, is that this suit, which is filed long after 3 years after 1952, is not tenable. We have, therefore, to decide the issue of limitation on the basis of these facts and circumstances.

8. The learned Advocate for the appellant contended here that the appellant-plaintiff was an insolvent at the time when he gave the notice to the defendants in the year 1952, and, therefore, according to him, he could not have filed a suit as an insolvent without the permission of the Insolvency Court. He, therefore, urges that because he could not have filed any suit after the notice of 1952, therefore, be was under a disability. Because of his disability, he says, he did not file this suit He had, therefore, under the circumstances, to send another notice in the year 1957 and file this suit on the basis or the second notice. He further says that in the circumstances of the case, the notice is a part of the suit and because he could not file this suit being an insolvent, therefore, this suit on the basis of the second notice is tenable. The learned counsel for the respondent in both the appeals contends here that the suit is not tenable on the basis of the second notice. According to him, he could have filed his suit on the basis of the first notice. Therefore, this suit is not maintainable. I have asked both the learned Advocates if they have in support of their contentions any case-law: both of them expressed their inability to find any appropriate case-law to justify their contentions. I will, therefore, have to examine these contentions.

9. Admittedly, this transaction is one of deposit, and, therefore, a suit on the basis of this deposit will be governed by Article 22 of the Limitation Act 1963 (Article 60 of the old Act). Article 22 provides a period of 3 years for money deposit under an agreement that it shall be payable on demand, The period of limitation starts from the date when the demand is made. Now, admittedly, the demand was made by the plaintiff first on 24-7-1952 in one case and on 3-10-1952 in the other. It was an unqualified demand for payment of the sum due to him. In my view, it was a legal demand by a person capable of giving valid discharge made directly on the party with whom a sum lies as a depositee. It was not necessary for the plaintiff to have made this demand in the year 1952 if he felt that he was under a disability or inability to file a suit. Since the limitation under Article 22 runs from the date of demand, which is entirely within his operative volition, the period or limitation could have been indefinitely prolonged by him; the institution of the suit may itself also be a demand. Therefore, if the plaintiff bad wished to prolong the limitation, he need not have made a demand by his notice in the year 1952. But he chose to serve a notice in the year 1952. In my view the period of limitation, therefore, had to run from the date of demand (in this case 1952) which he voluntarily chose; but the learned Advocates for the appellant contends here that he could not have filed a suit without the consent of the Insolvency Court; but is this contention valid

10. We have seen that the plaintiff became an insolvent and was adjudged as such on 8-2-1950. Under Section 28 of the Provincial Insolvency Act, 1920, the whole of the property of the insolvent vests in file Court or in a Receiver on the making of an order of adjudication. All that property becomes divisible amongst the creditors of the insolvent. No creditor, to whom the insolvent is indebted in respect of any debt, provable under the Insolvency Act, shall, during the pendency of the Insolvency proceedings, have any remedy against the property of the insolvent in respect of the debt or commence any suit or other legal proceedings except with the leave of the Court and on such terms as the Court may impose. Under Section 28-A of the Act, the property of the insolvent shall comprise and shall always be deemed to have comprised also the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the insolvent for his own benefit at the commencement of his insolvency or before his discharge. Therefore, the plaintiff knew that he was adjudged as an insolvent. Naturally, therefore the whole of his property was vested in the Court or in the Receiver. Yet he had kept some sum and deposited that sum with the defendants during the pendency of his insolvency. On the top of it, on having deposited the money which rightly ought to have been vested in the Court, he wanted to collect the same and, therefore, he had also served a notice of demand to the defendants in 1952. Therefore, the plaintiff cannot, in these circumstances, be allowed to say that he could not have filed a suit because he had to take leave of the Court for doing so. Whatever, in my view, may be the position regarding the position of the Official Receiver, the plaintiff-insolvent cannot be allowed to take an objection that because he had served a notice in 1952, without the leave of the Official Receiver and because he had to file a suit with the leave of the Receiver, he could not do it. It is true that if the Official Receiver was not a party to either the notice or to the suit filed thereafter by the insolvent, the proceedings would not be binding on him. It appears to me, therefore, mat in the circumstances which are brought about by the plaintiff himself, the plaintiff cannot be allowed to take these pleas. Although the suit by the plaintiff may be in a way defective by reason of his insolvency, the assignee alone could take advantage of this defect. The plaintiff himself could not take advantage or it. In fact we have seen that the plaintiffs insolvency was also annulled later on 15-12-1956, Because of this annulment he could not now turn round and say that he could not have filed a suit after his first notice in the year 1952. Under Section 37 of the Provincial Insolvency Act, 1920, 'where an adjudication is annulled, all sales and dispositions of property and payments duly made, and all acts therefore done by the Court or receiver, shall be valid; but subject as aforesaid, the property of the debtor who was adjudged insolvent shall vest in such person as the Court may appoint, or, in default of any such appointment, shall revert to the debtor to the extent of his right or interest therein on such condition as the Court may, by order in writing, declare.' The plaintiffs adjudication admittedly was annulled unconditionally. All the creditors were paid in full. Therefore, all the property except the property which might have been distributed to the creditors, reverted to the plaintiff. In other words, the property reverted back to the debtor as if the property never vested in the Court from the date of adjudication till the date of annulment of adjudication. Therefore, he could not under these circumstances, have said that his suit if he had filed after the first notice could not have been tenable.

11. In Wood v. Surr (1854) 52 ER 465 Sir John Romilly M. R., while dealing with some circumstances similar to that of the insolvent before me, had made some observations which are very useful. In that case one Davis was adjudged an insolvent while his mortgage suit was pending. The assignees were not made parties to the suit and the matter proceeded. During these proceedings accounts were made and certain due sum was fixed for the payment Because of certain fault made in payment, the suit was ultimately dismissed. The effect of this was that the mortgagor became foreclosed. During these proceedings, Davis mortgaged the equity of redemption of the same property to one Mrs. Cuppage who sold the property to one Wood, Wood, it appears, later on filed a suit out of which an appeal arose before the Master to set aside the proceedings and the foreclosure made earlier in that suit of Davis. It was held that though the assignee in insolvency was not bound by the foreclosure, Wood and Cuppage who knew about it were bound by it and mat they were not entitled to raise the objection of the absence in the suit of the assignees in the Insolvency of Davis. Sir John Romilly M. R. observed:

'The proceedings having gone on exactly as if no insolvency had taken place, the subsequent proceedings would, in my opinion be wholly inoperative against the assignee in insolvency and if he thought fit to contest the validity of the decree or foreclosure against Davis, it could not be held to be binding on such assignee. But that does not conclude the question, which really is, whether the plaintiff who, but for this, would in truth have been bound, can take advantage of this objection I am of opinion that, although the suit was undoubtedly defective, by reason of this insolvency the assignee alone could take advantage of this defect. It is obvious that Davis himself could not take advantage of it or if from, any subsequent cause, or any subsequent circumstance, the insolvency or bankruptcy had been superseded or annulled he could not have 'said that the foreclosure was not absolute against him.'

Therefore, this statement of law, in my view, applies to the present case and the plea which the plaintiff is now making cannot be available to the quondum insolvent. The plea of disability, which is now being raised by the plaintiff is also not anywhere to be found in the provisions of the Indian Limitation Act.

12. Moreover, under Section 6 of the Limitation Act, 1963, where a person entitled to institute a suit or make an application for the execution of a decree, is at the time from which the prescribed period is to be reckoned, minor or insane, or an idiot, he may institute the suit or make the application within the same period after disability has ceased, as would otherwise have been allowed from the time specified therefor in the third column of the Schedule. Under Section 9 of the same Act, where once time has begun to run, no subsequent disability or inability to institute a suit or make an application stops it. There is a proviso but we are hot concerned with this proviso. Therefore, tie legal disabilities are mentioned in the Limitation Act. The pendency of the insolvency proceedings is not mentioned as a legal disability. We have seen that the plaintiff has served a notice on bis own. That was a legal notice of demand. The time, therefore, under Article 22 starts running and it cannot therefore stop for any disability or inability of the plaintiff.

13. Now, let us also see what exactly is the position if an insolvent files a suit pending the insolvency proceedings, in Subbaiah Goundan v. Ramasami, : AIR1954Mad604 (FB), which is a Full Bench case, the Madras High Court was dealing with the Provincial Insolvency Act, the Official Receiver was not made a party to a mortgage suit. The effect on the title of the property on annulment was being considered. It is mentioned that if a decree is passed without making an official assignee a party to the suit and the decree-holder purchases in execution of the decree, the decree and the proceedings are not null and void in the sense that they have no legal effect at all. The proceedings are only ineffective to bind the equity of redemption which is vested in the receiver. It is also observed that the effect of annulment is to vest the property retrospectively in the insolvent. In other words, consequences of annulling the order of adjudication is to wipe out altogether the insolvency and its effect except to the limited extent reserved under the section. In view of this, the alienations made of the property moveable or immoveable by the insolvent after adjudication or the decree or execution proceedings suffered by him during such insolvency notwithstanding the property is taken away and transferred from him are all restored and validated with effect from the date on which the insolvency petition was filed. Their Lordships in that case have referred to a large number of cases. They also observed that during the insolvency proceedings the insolvent's property vests in the Official Receiver for the purpose of administering the estate and for meeting the claim of the creditors. The Act does not affect the capacity of the insolvent to enter into the contract and otherwise deal with the property. He is in the position of a person who has alienated all his property or otherwise lost it. But his position cannot be equated to that of a minor or a lunatic. He can be sued with or without the leave of the Court, as the case may be and in that suit be can properly represent himself. But any decree that might be obtained against him would not bind the Official Receiver in whom his entire property vests. With respect I agree with this statement of law, Therefore, the plaintiff could have property represented himself, if he had filed a suit We have seen that his insolvency was also annulled later on. At any rate, having chosen once to give the notice in the year 1952, which he was not bound to, he could not now take up a plea and say that he could not have filed a suit because be had to ask for leave of the Court for it.

14. It can also be looked in another way. The plaintiff on his own has given a notice of demand to the defendants in the year 1952. When the insolvency proceedings were pending, he could 'as well have taken the leave of the Court and ask the Official Receiver to file this suit against the defendants. The Official Receiver could as well have filed the suits against the defendants. In this view of the matter also, the plaintiff cannot now take a plea saying that it was not possible for him to file any suit at all after the first notice. Moreover, as mentioned earlier, neither Section 6 nor Section 9 of the Indian Limitation Act also provides any assistance to the plaintiff when he pleads that because of the insolvency proceedings, the period of limitation does not start from the demand notice of the year 1952. A period of tendency of insolvency proceedings cannot also be excluded under Section 15 of the Indian Limitation Act except where there is an order refusing the leave to commence a suit. Even if the pendency of the insolvency proceedings may have the effect of preventing any suit or application being filed against the insolvent, the bar of interdiction does not arise by any order of the Court but under the law. Hence, Section 15(1) of the Indian Limitation Act does not apply. Under this section, in computing the period of limitation for any suit, the institution or execution of which has been stayed by injunction or order, the time of the continuance of the injunction or order, the day on which it was issued or made, and the day on which it was withdrawn, shall be excluded. Therefore, this section of the Indian Limitation Act also does not assist the plaintiff.

15. For the aforesaid reasons, therefore, the period of limitation would start under Article 22 of the Indian Limitation Act when the demand is made. The demand made by the plaintiff in one suit is on 24-7-1952 and in the other on 8-10-1952. The period fa of three years. Therefore, the suits in both these matters are not tenable. The notice given afterwards by the plaintiff in the year 1957 will not be of any use to him. In this view of the matter, therefore, the suits in each of the appeals are barred by limitation.

16. The other point as regards the maintainability of the suit under the C. P. & Berar Money Lenders Act, 1934, depends upon the production of a money lending licence by the plaintiff. Both the Trial Court as well as the learned District Judge found that this was a loan transaction under the provisions of the C, P. & Berar Money Lenders Act, 1934. The suit filed by a money lender for die recovery of such a loan has to be dismissed if the plaintiff does not hold a valid registration certificate issued under the Money Lenders Act on the date of the transaction to which the suit relates. However^ if a money lender holds a valid licence even at the time of the hearing, the suit need not be dismissed. In Hajarimal V. Harinarayan, 1965 Mab LJ 797, this Court, while dealing with Section 11 (H) of the C. P. & Berar Money Lenders Act, 1934, was of the view that it contemplates that if die Court finds that the plaintiff does not hold a valid licence, it shall stay the suit for a reasonable time until a valid registration certificate was produced. If no certificate is produced thereafter, the Court will not pass a decree in the plaintiffs favour. As mentioned earlier, no licence was filed at any time at any stage of the proceedings from the Trial Court till now. It, therefore, appears that no valid licence is with die plaintiff. The plaintiff, therefore, would also fail on die ground. His suit, therefore, will not be tenable because he has no money-lending licence for this loan transaction under the C. P. & Berar Money Lenders Act, 1934.

17. For the aforesaid reasons, therefore,both these appeals should fail. I, therefore,confirm the decrees of the Appellate Courtand dismiss both the appeals with costs.Permission for L. P. A. granted as perrequest.

18. Appeals dismissed.


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