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Modern Engineering Co. Vs. Mohan Charan Mallick - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtKolkata High Court
Decided On
Case NumberSuit No. 1855 of 1960
Judge
Reported inAIR1963Cal12,67CWN54
ActsLimitation Act, 1908 - Schedule - Articles 68, 116 and 132
AppellantModern Engineering Co.
RespondentMohan Charan Mallick
Cases ReferredRaghunandan Prasad v. Kirtyanand Singh
Excerpt:
- .....no. 34-c nalin sarkar street and 23 fordyce lane are charged in favour of the plaintiff by two security bonds dated april 28, 1952 and april 6, 1955 executed by the defendant and for a decree for rs. 31,076 5 np. and also a decree under order 34 of the code in the appropriate form of appendix d. the plaintiff filed suit no. 538 of 1952 on february 11, 1952 for a declaration that the oil engine was tbe property of the joint venture between the plaintiff and t. n. chakravarty and sons andfor delivery of the said engine and for other reliefs. on february 15, 1952 the official receiver was appointed receiver of the said oil engine. on march 5, 1952 the order for appointment of the official receiver was discharged. on april 1, 1952 an order was made in appeal from the order of march 5,.....
Judgment:

A.N. Ray, J.

1. The plaintiff instituted this suit for a declaration that premises No. 34-C Nalin Sarkar Street and 23 Fordyce Lane are charged in favour of the plaintiff by two security bonds dated April 28, 1952 and April 6, 1955 executed by the defendant and for a decree for Rs. 31,076 5 np. and also a decree under Order 34 of the Code in the appropriate form of Appendix D. The plaintiff filed suit No. 538 of 1952 on February 11, 1952 for a declaration that the oil engine was tbe property of the joint venture between the plaintiff and T. N. Chakravarty and Sons andfor delivery of the said engine and for other reliefs. On February 15, 1952 the Official Receiver was appointed Receiver of the said oil engine. On March 5, 1952 the order for appointment of the Official Receiver was discharged. On April 1, 1952 an order was made in appeal from the order of March 5, 1952 in Appeal No. 32 of 1952 that upon furnishing security for Rs. 15,000/- by the defendant he was given liberty to take possession of the said oil engine. On April 28, 1952 the defendant in the present suit executed a security bond in favour of Registrar, Original Side in terms of the order of the Appeal Court dated April 1, 1952 and he thereby created a charge for Rs. 15,000/- on premises No. 34-C Nalin Sarkar Street, Calcutta and 23 Fordyce Lane, Calcutta. On January 6, 1954 the plaintiff obtained a decree in suit No. 538 of 1952. On November 22, 1954 the defendant preferred an appeal from the said decree. On March 14, 1955 on an application by the defendant in the said appeal an order was made that upon the defendant's furnishing security in the sum of Rs. 30,000/- to the satisfaction of the Registrar of this Court the execution of the decree dated January 5, 1954 except in so far as the reference had been directed should be stayed till the determination of the said appeal. On April 6, 1955 the defendant executed a security bond for Rs. 30,000/- in favour of the Registrar of this Court and the bond was registered. On September 13, 1955 the Assistant Referee of this Court made his report on the reference pursuant to the decree dated January 6, 1954. On June 3, 1957 the report of the Assistant Referee was confirmed and a decree was passed by this Court awarding the plaintiff a sum of Rs. 17,887-5-4 being the value of the engine and interest on the sum of Rs. 14,865/l0/-at the rate of 6 per cent per annum from the date of the decree until realisation and also a decree for Rs. 1819-14-0 as costs of the reference besides other costs in obtaining the report and other incidendtal costs. On February 19, 1957 the appeal preferred by the defendant was dismissed. On August 17, 1959 an order was made by this Court directing the Registrar, Original Side to assign the said security bond in favour of the plaintiff. On June 28, 1960 the Registrar Original Side duly assigned the said security bond in favour of the plaintiff. On July 13, 1960 the deed of assignment was registered with the Registrar of Assurance, Calcutta. On December 23, 1960 this suit was filed. The nature of the defence will appear from the issues raised at the trial. The following issues were framed at the trial :

1. is the plaintiff entitled to file a suit and claim a decree for Rs. 31076/5 nP.?

2. If not, is the suit maintainable as framed?

3. is the suit barred by limitation?

4. On a proper construction of the bonds what is the liability of the defendant?

5. To what relief, if any, is the plaintiff entitled? (2) The most important defence was the plea of limitation. Counsel on behalf of the defendant relied on the decision in General Accident Fire and Life Assurance Corporation Ltd. v. Janmahomed Abdul Rahim , in support of the contention that enforcement of a security bond is governed by Article 68 of the Limitation Act and the period of limitation is 3 years from the date of breach of the covenant. Reliance was also placed on this decision in support of another proposition that assignment by the Registrar does not constitute either the commencement of the period of limitation or any fresh starting point of limitation. Counsel for the plaintiff contended that the suit in essence was for enforcement of a charge and was in the nature of a mortgage suit and there-fore the period of limitation would be either 12 years orit would be six years. He relied on Article 132 as well as on Article 116 and Article 120 of the Limitation Act. He further . contended that if two periods of limitation were applicable the Court should take a view favourable to the plaintiff's case and apply the period of limitation which would give the plaintiff a longer period respecting limitation. In support of that contention reliance was placed on the decision in Kastur Chand v. Hari Gobind, AIR 1934 Bom 491, and the decisions of this Court reported in Behari Lall v. Sindhubala Dassi, 22 Cal WN 210 at p. 212 : (AIR 1918 Cal 615 at p. 617) and Madras Steam Navigation Co., Ltd. v. Shalimar Works, ILR 42 Cal 85 at p. 108 : (AIR 1915 Cal 681 at p. 685), were relied on for the proposition that a general article does not govern where there is a particular article which covers the case.

3. In the case of General Accident Fire and Life Assurance Corporation Ltd. , it was held that Article 68 of the Limitation Act would apply to the relevant bond which was an administration bond. Under section 291 of the Succession Act the bond was in the usual form in that case and it is the usual practice to apply section 292 and to have the bond assigned to the intending plaintiff which happened. in that case as well. No declaration of charge and no mortgage decree were asked for in that case.

4. Counsel for the plaintiff relied on the decisions inRama Rayanimgar v. Venkatalingam Nayanim, ILR 57 Mad218 : (AIR 1934 Mad 1), in support of his contention thata security bond which partook of the character of a security as well as charge of immovable properties would begoverned by Article 132 in respect of enforcement of thecharge.

5. Counsel for the plaintiff also relied on the decision reported in Krishna Chettiar v. Venkatachala Chettiar, ILR 42 Mad 302: (AIR 1919 Mad 432) in support of the contention that a bond given to Court by guardians and sureties would be governed by Article 132 in the matter or limitation. In Krishna Chettlar's case, ILR 42 Mad 302: (AIR 1919 Mad 432} it was so argued, but there was, in fact, no decision on the point. There is only the observation that Article 68 will apply unless the bond charges immovable property, when that Article (meaning thereby Article 68) may be Inapplicable. The only other decision on which Counsel for the plaintiff relied is the decision in Raghunandan Prasad v. Kirtyanand Singh . It was held in that case that the period of limitation for enforcement of a bond on an application Is three years and if enforcement was by way of Independent suit the period would be six years. No specific Article of the Limitation Act was referred to.

6. On this state of authorities I am of opinion that Counsel for the plaintiff is right in his contention that the present suit is for enforcement of charge. An important aspect in the present case is that it is a registered charge. Article 116 specifically provides the period of limitation in such cases to be six years and the time from which period begins to run is when the period of limitation would begin to run against a suit brought on a similar contract not registered. In other words, it would be when the cause 01 action arises. In the present case I am of opinion on the authority of the decision in the General Fire case that an assignment of the bond by the Registrar Is neither a part of the cause of action nor does it form any chain in the period of limitation. The cause of action is the breach of contract. Judged from that point of view the suit is within the prescribed period oflimitation. The suit is also competent under Article 132 of the Limitation Act for the basis of the suit is the enforcement of the charge. The surety bond in this particular case contains the specific covenant of creation of charge and the plaintiff's suit as constituted is for a declaration of that right and the ancillary relief of a mortgage decree.

7. Counsel for the defendant contended relying on the decision in that there was no present promise to pay and therefore the Registrar had no presently enforceable rights at the time of the assignment. In Raja Raghunandan's case the form of the security was as follows:--

' They shall pay a sum of Rs. 77,000/- or whatever may be payable under the said High Court order not exceeding Rs. 77,000/-.When the terms of the clause in that decision came up for consideration it was found that two things were to result, viz., that the decreeholders would be able to execute their decree with interest and the other that they would be able to realise Rs. 77,000/- from the giver of the bond. In other words, it was not a clause which put upon the giver of the bond an obligation to make an immediate payment in cash, but it was a clause which put the decree-holders in the position of having a realisable security of Rs. 77,000/-. The question was whether that was an absolute security which the decree-holders were to be tree to realise immediately or whether it was a security to the extent of Rs. 77,000/- for the balance of the sum, if any, remaining unpaid after the mortgage property had been realised. The Judicial Committee on the construction of the clause took the view that having regard to the circumstances in which the instrument was executed it was a bond for securing the balance unprovided for by the proceeds of the sale of the mortgage property. I am unable to accept the contention of Counsel for the defendant that the bond in the present case Is capable of any construction that there Is no promise to pay.

8. Counsel for the defendant finally contended that the plaintiff was not entitled to a decree for Rs. 31,000/-by reason of the fact that there was already a money decree. The basis of the suit is that the plaintiff asks for a charge and a mortgage decree for the sum charged. The plaintiff, therefore, is entitled to succeed. Counsel for the defendant did not dispute the amount but contended that the plaintiff's suit was barred by limitation. I have indicated that the suit is within the period of limitation, counsel for the defendant did not raise any issue of fact.

9. There will, therefore, be a decree in terms of prayers (a), (b) and (d). The plaintiff is entitled to costs. Certified for two counsel.


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