- Bookmark
- Share
- CaseIQ
M/S. Shakti Bhog Food Industries Ltd. v. The Central Bank Of India
Factual and Procedural Background
This Regular Second Appeal (RSA 391/2016) was filed by the appellant challenging concurrent decisions of the Trial Court and the First Appellate Court, both of which dismissed Civil Suit No. 950/2014 on the ground that it was barred by limitation. The suit concerned allegations of excess interest/commission charged by the respondent bank on local cheques/drafts discounting facility extended to the appellant. The appellant contended that the suit was filed within the limitation period, reckoning from a communication dated 08.05.2002 by the respondent bank. The lower courts held that the cause of action arose earlier, in or before July 2000, rendering the suit time-barred.
Legal Issues Presented
- Whether the suit for rendition of account and repayment of excess money is barred by limitation under the Limitation Act, 1963.
- Whether Article 113 of the Limitation Act applies or whether the suit is governed by Section 22 and Articles 2 and 3 of the Limitation Act.
- Whether the cause of action arose on or before December 1999/July 2000 or from the communication dated 08.05.2002.
- Whether the question of limitation is a mixed question of law and fact requiring evidence before dismissal.
- Whether the decisions of the lower courts correctly applied the law on limitation, including the applicability of the decision in C.P. Kapur v. The Chairman & Ors.
Arguments of the Parties
Appellant's Arguments
- The lower courts erred in applying Article 113 of the Limitation Act to hold the suit barred by limitation.
- The suit was governed by Section 22 and Articles 2 and 3 of the Limitation Act, with limitation computed from 08.05.2002, the date the respondent bank communicated the prevailing rates for cheque purchase.
- Relied on precedents (Khaja Quthubullah v. Government of Andhra Pradesh and Mohan Lal Sukhadia University v. Miss Priya Soloman) to argue that limitation is a mixed question of law and fact that could not be decided without allowing evidence.
- Contended that the decision in C.P. Kapur v. The Chairman & Ors. was wrongly applied by the lower courts and was not applicable to the facts of the case.
Respondent's Arguments
The opinion does not contain a detailed account of the respondent's legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Khaja Quthubullah v. Government of Andhra Pradesh, AIR 1995 Andhra Pradesh 43 | Limitation is a mixed question of law and fact requiring evidence before dismissal. | Referenced by appellant to argue necessity of evidence on limitation; court considered but did not find merit to appellant's plea. |
| Mohan Lal Sukhadia University, Udaipur v. Miss Priya Soloman, AIR 1999 Rajasthan 102 | Similar principle on limitation as mixed question of law and fact. | Used by appellant to support argument for evidence; court upheld dismissal without evidence. |
| C.P. Kapur v. The Chairman & Ors., 2013 (198) DLT 56 | Application of limitation principles in similar factual context. | Lower courts applied precedent; appellant challenged applicability but court rejected that challenge. |
| Article 113 of the Limitation Act, 1963 | Where no specific limitation period is provided, a three-year limitation period applies from when the right to sue accrues. | Applied by both lower courts and upheld by this court to hold suit barred by limitation. |
| Section 22 and Articles 2 & 3 of Limitation Act, 1963 | Computation of limitation period in cases involving continuous causes of action. | Appellant argued suit governed by these provisions; court rejected this contention. |
| Sections 18 and 19 of Limitation Act, 1963 | Relate to acknowledgment and extension of limitation period. | Court noted no plea of acknowledgment was taken; communication dated 08.05.2002 did not extend limitation. |
Court's Reasoning and Analysis
The court analyzed the limitation issue primarily by applying Article 113 of the Limitation Act, 1963, which prescribes a three-year limitation period where no specific period is provided. The court observed that the cause of action arose by July 2000, when the appellant noticed arbitrary charges of interest/commission by the respondent bank, and that the alleged excess charges continued only up to December 1999. Consequently, the right to sue accrued at that time, and the suit filed in 2005 was beyond the three-year limitation period.
The court rejected the appellant's argument that limitation should be computed from the communication dated 08.05.2002, holding that this communication merely confirmed the prevailing rates and did not amount to an acknowledgment or extension under Sections 18 and 19 of the Limitation Act.
Further, the court held that the question of limitation did not require evidence to be led, as the plaint itself contained sufficient averments to decide the issue. The court also dismissed the appellant's contention that the suit was governed by Section 22 and Articles 2 and 3 of the Limitation Act, clarifying that each illegal interest charge constituted a separate cause of action and thus Article 113 was applicable.
Finally, the court found no substantial question of law warranting interference under Section 100 of the Code of Civil Procedure and upheld the concurrent findings of the lower courts.
Holding and Implications
The Regular Second Appeal is dismissed.
The direct effect of this decision is the affirmation that the suit filed by the appellant is barred by limitation and cannot be entertained. The court's dismissal confirms the applicability of Article 113 of the Limitation Act in cases where no specific limitation period is prescribed and clarifies that communications confirming prevailing rates do not extend limitation absent acknowledgment under Sections 18 and 19. No new precedent was established, and the ruling reinforces established principles concerning computation of limitation and cause of action in suits for rendition of accounts and recovery of excess charges.
Pratibha Rani, J.
CM No. 48194/2016
1. Exemption allowed, subject to all just exceptions.
2. Application stands disposed of.
RSA 391/2016
3. This Regular Second Appeal has been preferred by the appellant assailing the concurrent decision of the two Courts below; order dated 06.01.2016 by the learned Trial Court and order dated 23.07.2016 by the First Appellate Court rejecting the plaint in Civil Suit No. 950/2014 being barred by limitation.
4. Mr. R.K Jain, Advocate for the appellant has submitted that both the courts below have wrongly applied Article 113 of the Limitation Act to hold that the suit filed by the appellant/plaintiff is barred by limitation. Mr. R.K Jain, Advocate has further submitted that in fact the suit of the plaintiff was governed by section 22 and articles 2 & 3 of Limitation Act, 1963 as the period of limitation has to be computed with effect from 08.05.2002 when the Senior Manager of the respondent bank communicated to the appellant/plaintiff that the cheques were being purchased at the prevalent rate. Hence, reckoned from that date, the suit filed by the plaintiff in the year 2005 was well within limitation.
5. Learned counsel for the appellant/plaintiff has relied upon Khaja Quthubullah v. Government of Andhra Pradesh AIR 1995 Andhra Pradesh 43 and Mohan Lal Sukhadia University, Udaipur v. Miss Priya Soloman AIR 1999 Rajasthan 102 contending that question of limitation is a mixed question of law and fact and could not have been disposed of without giving an opportunity to lead evidence.
6. I have considered the submission made by learned counsel for the appellant and carefully perused the record.
7. While dismissing the appeal, the First Appellate Court has made the following observations:
‘6. Having gone through the observations made by the learned trial Court, I find that learned trial Court has rightly observed that for the relief of rendition of account and repayment of excess money, there is no specific article provided in the Limitation Act, 1963 and therefore as per Article 113 of the Limitation Act in cases where the limitation period is not provided in the Act, their limitation period of three years would commence from the date when the right to sue accrued. Thus the suit to recover the excess amount could have been filed only within the stipulated period of three years from the date when the right to sue accrued.
7. In the instant case as per the plaintiff's own version, the local cheques/drafts discounting facility to the extent of Rs. 25 lacs was extended w.e.f the month of November 1997 to December 1999 and somewhere in the month of July 2000, the plaintiff/appellant noticed that the defendants/respondents herein were charged interest/commission @ Rs. 4/- per thousand rupees on local cheques/drafts in arbitrary manner in violation of the assurances given to the plaintiff/appellant.
8. By these averments of the plaintiff/appellant, it transpires that the alleged excess amount charged by the defendant from the plaintiff was till December 1999 and therefore the learned trial Court rightly observed that at best it can be said that right to sue accrued in favour of the plaintiff/appellant herein in December 1999 and as such, the plaintiff was legally entitled to file the present suit for rendition of account and repayment of excess amount till December 2002 and not till May 2005 as claimed by the plaintiff/appellant herein. Thus I find no merit in the plea taken by the appellant, hence, this plea is rejected.’
8. Learned First Appellate Court also rejected the contention raised on behalf of the appellant that the decision in C.P Kapur Plaintiff v. The Chairman & Ors…. 2013 (198) DLT 56 has no applicability to the facts of the present case or the same has been wrongly applied by the learned Trial Court in the instant case.
9. Copy of the plaint annexed with this appeal incorporates the following averments which were considered by the Courts below to decide the question of limitation:
‘8. That the facility as referred to in the foregoing paras was extended with effect from 01.04.1997 and somewhere in the month of July, 2000 it was noticed by the plaintiff that the defendants were charging interest/commission @ Rs. 4/- per thousand rupees on local cheques and drafts in an arbitrary manner in violation of the assurance given to the plaintiff.
9. That after the detection of the above over-charging of interest/commission the plaintiff sent a letter to the defendants on 21.07.2000 complaining about the overcharging and thereafter the interest/commission was charged as per assurance given.’
10. In the subsequent paragraphs, the appellant has pleaded about the various communications addressed to the bank in respect of the alleged overcharging and various dates when cause of action arose.
11. Suffice it to note that both the courts below have held the case to be barred by limitation on the basis of the averments made in the plaint and on the admitted case of the appellant/plaintiff. That being so, there was no necessity to allow the appellant/plaintiff to lead evidence on this aspect.
12. The averments that the suit has been filed within limitation, is on the strength of letter dated 08.05.2002 received from the Senior Manager of the respondent bank informing appellant/plaintiff that the cheques were being purchased at the prevalent rate. The thrust of the arguments before this Court is that prior to the above communication dated 08.05.2002, there was no occasion for the plaintiff to file the suit and it was only on refusal by the respondent bank to rectify the error that the cause of action to file the suit arose. The suit has been filed within three years from the date of said communication.
13. I do not find any force in the above contentions.
14. The case of the appellant/plaintiff is that the appellant company was having a current account with the respondent bank. It being a manufacturer of wheat flour and other products used to sell the same to various purchasers and receive the payment through cheques and drafts which were deposited with the respondent bank. The appellant was availing local cheques/drafts discounting facility to the extent CC Limit of Rs. 25 lacs in its account No. CCM202251, which was being maintained with defendant No. 2. As per the practice, the interest on the account of local cheques/drafts to be lodged by the plaintiff was to be charged for the actual number of days for which the bank remained out of fund. This facility was extended w.e.f 01.04.1997 till July 2000.
15. When interest/commission is allegedly charged illegally on each discounted cheque/draft the same is not a case of continuous cause of action falling under Section 22 of Limitation Act. Each entry towards alleged illegal interest is a cause of action for seeking refund of the same. In cases, such as the present case, case is covered under Article 113 of Limitation Act, 1963 as the cause of action has arisen on alleged illegal debiting of interest/commission charged each time.
16. Both the courts below have rightly held that the cause of action arose in the year 2000 for the said facility availed by the appellant/plaintiff and the amount was allegedly charged in excess by the respondent bank upto that period. It has also been rightly held by both the Courts below that the communications by appellant/plaintiff or the service of legal notice did not extend the period of limitation for institution of the suit. It was not a case where plea of acknowledgment under Section 18 and 19 of Limitation Act, 1963 was taken. Rather the communication dated 08.05.2002 from the Senior Manager was reiterating the fact that the cheques were being purchased at the prevailing rates.
17. In my opinion, arguments as raised by learned counsel for the appellant/plaintiff do not raise any substantial question of law.
18. Since no question of law much less any substantial question of law arises in this appeal so as to require interference by the High Court in exercise of jurisdiction under Section 100 of CPC, the instant Regular Second Appeal is dismissed.
19. No costs.
Alert