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Arjun Sahai Vs. Pitamber Das and ors. - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtAllahabad High Court
Decided On
Case NumberL.P.A. No. 35 of 1953
Judge
Reported inAIR1963All278
ActsLimitation Act, 1908 - Schedule - Articles 74 and 75
AppellantArjun Sahai
RespondentPitamber Das and ors.
Appellant AdvocateS.N. Verma and ;R. Krishna, Advs.
Respondent AdvocateGopi Nath Kunzru, Adv.
DispositionAppeal dismissed
Excerpt:
.....amount accrued to the creditor only upon the default of payment of all the instalments and as the present suit had been instituted within three years of the date of default of the last instalment payable under the bond, it was rightly held to be within..........which remained unpaid; and 3. if the creditor so desired he could realise the entire amount of the bond on default of payment of all the instalments. 2. it is the admitted case of the parties that the defendants did not pay any instalment. the present suit was brought by the creditor on and june 1943, that is, within three years of the default of the last instalment claiming the entire amount of the bond with interest. the plaintiffs' case was that the defendants having made default in payment of all the instalments the entire amount of the bond fell due on 19th june, 1940 and so they were entitled to a decree for the entire amount.3. the main defence taken in the case was that the suit was barred by limitation.4. the trial court upheld the defendants' plea and decreed the suit for the.....
Judgment:

V. Bhargava, J.

1. This is a defendant's special appeal arising out of a suit for the recovery of the entire amount due on a bond executed by the defendants on 20th September 1931. The bond was payable in 18 six monthly instalments which were to fall due in the months of Aghan and Jeth every year. The last instalment fell due on 19th June, 1940. The bond contained three stipulations as follows :

1. If any instalment was not paid then from the date of the default upto the date of payment of that instalment interest at annas eight per cent per mensem was payable on the amount of the instalment;

2. if there was any default in payment of two successive instalments the creditor was to have a right to realise the principal and the interest due on those two instalments which remained unpaid; and

3. if the creditor so desired he could realise the entire amount of the bond on default of payment of all the instalments.

2. It is the admitted case of the parties that the defendants did not pay any instalment. The present suit was brought by the creditor on and June 1943, that is, within three years of the default of the last instalment claiming the entire amount of the bond with interest. The plaintiffs' case was that the defendants having made default in payment of all the instalments the entire amount of the bond fell due on 19th June, 1940 and so they were entitled to a decree for the entire amount.

3. The main defence taken in the case was that the suit was barred by limitation.

4. The trial Court upheld the defendants' plea and decreed the suit for the last instalment only on the ground that the case was covered by the provisions of Article 74 of the Indian Limitation Act. On appeal, the learned Civil and Sessions Judge, Kanpur decreed the plaintiffs' suit for the entire amount holding that it was within time and that the suit was governed by Article 80 of the Indian Limitation Act. The matter came up ,in second appeal before this Court and the learned single Judge held, and in our opinion rightly, that the suit was governed by Article 75 of the Indian Limitation Act, because under the terms of the bond the plaintiffs could realise the entire amount of the bond only on default of payment of all the instalments and this right accrued to them when the default in payment of the 18th instalment was made on 19th June, 1940. The plaintiffs had no right to claim the entire amount earlier than the date of default of the last instalment and that in this case the provision 'default in payment of all instalments' was fully covered by the expression 'default of one or more instalments' used in Article 75 of the Indian Limitation Act.

5. Learned counsel for the appellant has contended before us that there are two default clauses in the document and under the first default clause the creditor was entitled to bring a suit for every two instalments which fell due, while under the second default clause the creditor was entitled to claim the entire amount meaning thereby all the unpaid instalments of the bond, and, consequently, the present suit by the creditor is in substance a suit to recover the unpaid instalments and that to such a case the proper article to apply was Article 74 of the Indian Limitation Act and not Article 75. For this purpose reliance has been placed upon a decision of the Madras High Court in the case of V. Narayanswami v. Sri Mohan Prasad Singh Deo : AIR1959Mad82 . He has submitted that the third clause of the bond in suit is similar in terms to the conditions contained in Clause (f) of the bond which came up for consideration before the Madras High Court. We are unable to accept this contention.

6. The applicability of Article 74 or 75 of the Limitation Act depends upon the terms of the bond and the nature of the claim or the character of the suit brought in terms of the bond. The mere fact that a bond contains a default clause will not in all cases attract the provisions of Article 75. Article 75 applies to only those cases where the provision relating to the default clause lays down that on default being made in payment of one or more instalments, the whole amount is to fall due. It would not apply in cases where a default clause may exist in a different form, e.g. where the right of bringing the suit is confined to recovering the amount of each instalment in respect of which default may have been committed. In fact, Article 74 applies to those cases where the suit is for the recovery of the instalments as such and not for the recovery of the whole amount on the basisthat it had fallen due because of some default. On the other hand where the whole amount falls due on one or more defaults being committed and the whole amount is claimed in the suit, the proper article, which will be applicable, will be Article 75.

7. Thus in a case where money became payable on a particular date in respect of an instalment, the suit for recovery of that money would have to be brought within a period of three years computed from the date of that default. That would be a suit for recovery of the amount due in respect of that instalment and would be governed by Article 74. Similarly, if the suit is brought for recovery of the amount due under each successive instalment, that suit would also have to be broughtwithin three years from the date of each respective default in respect of the instalment and the limitation would be governed by Article 74. Article 75 will apply to those cases where, instead of the suit being for individual instalments, it is instituted for the recovery of the whole amount of the bond which remained due when the default entitling the institution of the suit was committed.

In such a case it remains open to the creditor to waive his right to recover the entire amount on the commission of any particular default, in which case he can again bring a suit for the whole of the amount due on the bond on the commission of a fresh default. In all such cases the period of limitation would be the period of three years with effect from the particular default on the basis of which the creditor claims to recover the entire amount due under the bond. In the case before us the suit was brought not for particular instalments but for the whole of the amount due on the bond on the basis of default of an instalment on a date which was within three years of the date of institution of the suit. In such circumstances. Article 75 applied and the suit was within time.

8. The view expressed by the Madras High Court in the case of V. Narayanswami : AIR1959Mad82 does not appear to lay down any different principle of law. A careful examination of Clause (f) of the bond of that case will show that the stipulation contained in that clause was quite different from the stipulation contained in the third clause of the bond before us. In that case there was no provision for the entire amount falling due on default of one or more instalments. The only provision Which was contained in Clause (f) of the bond was that the creditor could sue only for the instalments which had fallen due, whether it was one instalment or more. It further appears that the right of suit to the creditor given under the bond was for the recovery of those instalments only in respect of which default had been committed. The creditor was also given the option to sue for those very instalments which had fallen due earlier at the time when all the instalments had also fallen into arrears,

In that case the creditor was not given the right to recover the entire amount of the bond as one single sum due under the bond on the basis that, even after the defaults were committed, the integrity of the bond had remained unaffected. The learned Judges took notice of the fact that under Clause (f) the only right conferred on the creditor was to recover the unpaid instalments as such and not the entire debt. The entire debt under that clause never fell due on the commission of any default. Each time, on the commission of a default, the amount due for each instalment fell due and the suit had to be brought for the amounts of the instalments and not the entire debt. It was in these circumstances that the learned Judges held that the further condition that a suit in respect of earlier instalments, which had fallen due on commission of earlier defaults, could be brought within a period of three years computed from a latter default in respect of a latter instalment amount to granting an extension for the period of limitation prescribed by the Limitation Act which was not permissible.

The case is different where the creditor has been given a right to recover the entire amount on the basis of any one or more of the defaults and he has the option of waiving all earlier defaults and relying on a later default, in which case the period of limitation has to be computed under Article 75 with effect from the date of the particular default on the basis of which recovery of the entire amount is claimed by the creditor. In such a case the creditor claims the entire amount treating the bond as a bond for the entire amount due with its integrity unaffected. . The facts 'of the case before us are clearly of this nature, so that the decision of the Madras High Court is not applicable at all to the present case. Learned counsel also referred to the case of Sukh Lal v. Bhoora : AIR1934All1039 and to the case of Munshi Lal v. Sagarmal, 1943 All LJ 238, but both these cases are based on different facts. We do not think it necessary to go into those cases in any detail.

9. On the other hand, the Full Bench authority of this Court in the case of Jawahar Lal v. Mathura Prasad : AIR1934All661 fully supports the view taken by us. That was a case in which an instalment bond was executed with a stipulation that in case the fixed-instalments with the interest thereon were not paid for any two successive months, then, in either case, the creditor would be authorised to realise the entire amount of principal and interest together with costs in a lump sum either within a stipulated period or after it. The learned Chief Justice, while discussing the proposition of law, observed at page 667 :

'........ the mere fact that a bond contains a default clause of that nature would not necessarily make Article 75 applicable if the nature of the claim or the character of the suit be different, for instance, where some other covenant in the document is being sought to be enforced. I can conceive of other cases also where, although there is a bond with a default clause, the appropriate article applicable would be Article 74. Such an instance would be where the suit is brought for the recovery of the instalment that has fallen due and before there is such a default as makes the whole amount become due. In such a case, although the bond is a bond payable by instalments and there is a default clause, Article 74 would nevertheless be applicable. But I am clearly of opinion that where Col. 1 of Article 75 is in terms applicable, then Article 74 cannot be relied upon.'

10. As stated earlier, it is a case which is clearly covered by the provisions of Article 75 of the Limitation Act because the right to recover the whole amount accrued to the creditor only upon the default of payment of all the instalments and as the present suit had been instituted within three years of the date of default of the last instalment payable under the bond, it was rightly held to be within time.

11. We, therefore, find no force in this appeal. It is accordingly dismissed with costs.


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