The High Court of Bombay dismissed a suit for recovery of an advance deposit and interest held to be time-barred. The court ruled the cause of action arose when the defendant failed to supply machines within 12 weeks of accepting the order in 1981, making the 1986 filing barred by limitation.
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SUIT NO. 1820 OF 1986.
1. M/s.National Textile Corporation Ltd., New Delhi, a Government company incorporated under the Companies Act I of 1956 having its registered office at Surya Kiran Building, Kasturba Gandhi Marg, New Delhi.
2. M/s.National Textile Corporation (S.M.) Ltd., a Government Company incorporated under the Companies Act I of 1956 having its registered office at N.T.C. House 13, N.M.Marg, Ballard Estate, Bombay 400 038. ... Plaintiffs
Versus.
M/s.S.B.M. Engineering Products Pvt.Ltd.
Company registered under Companies Act
I of 1956 carrying on business at 120,
Great Western Building, Nagindas Master
Road, Extension Fort, Bombay 400 023. ... Defendant.
Shri S.R.Mishra i/by Ms.Poonam Srivastava for the
Plaintiffs.
Shri R.A.Shaikh for the Defendant.
CORAM : ABHAY S.OKA, J.
DATED : 27th August, 2007.
ORAL JUDGMENT.:
1.By order dated 9th August 2007 this Court
directed that the issue of limitation (Issue No.1-A)
will be decided as a preliminary issue. Accordingly I
have taken up issue No.1-A for hearing as a preliminary
issue.
2. The learned Counsel appearing for the Plaintiff
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stated that except for the affidavit in lieu of evidence
of Shri Ramchandran Ravi, In-charge General Manager of
the 2nd Plaintiff, the Plaintiffs do not desire to lead
any evidence on the issue of limitation. The learned
Counsel appearing for the Defendant stated that the
Defendant also does not desire to cross-examine the said
witness of the Plaintiff on the issue of limitation and
the Defendant does not desire to lead any evidence on
the issue of limitation. The learned Counsel for the
Defendant stated that the Affidavit of Shri Ramchandra
Ravi may be treated as the evidence of the Plaintiffs.
3.For the purpose of appreciating the submissions
made by the learned Counsel appearing for the parties,
the facts of the case will have to be referred to in
brief. According to the case of the Plaintiffs by the
Textile Undertaking (Taking Over the Management)
Ordinance, 1983 the management of 13 textile
undertakings, more particularly mentioned in the first
schedule to the said Ordinance vested in the Union of
India. On the basis of the provisions of the Ordinance,
the Union of India appointed the National Textile
Corporation Ltd. New Delhi as a Custodian in respect of
the those textile mills. The said Custodian by order
dated 18th October 1983 appointed National Textile
Corporation (South Maharashtra) Ltd., the 2nd Plaintiff
herein as an additional Custodian. As per the
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provisions of the Textile Undertakings (Taking over of
Management) Act, 1983, the management of the textile
undertakings of the Elphinston Spinning and Weaving
Mills Ltd. vested in the Custodian.
4.The Elphinston Spinning and Weaving Mills Ltd.
had placed an order with the Defendant for supply of one
Singeing Unit and Burners which was accepted by the
Defendant by letter dated 1st April 1981. Under the
said acceptance of the order, the Defendant had agreed
to supply the said machine at the price of Rs.4,25,000/-
within 10 to 12 weeks. Accordingly, the said Elphinston
Spinning and Weaving Mills deposited with the Defendants
a sum of Rs.1,27,500/- being 30% of the price of the
machine.
5.It is the case of the Plaintiffs that the
machine was to be delivered within 8 to 10 weeks. It is
stated that in the year 1982-83 there was a strike in
the said undertaking and therefore, the same was closed.
On 26th July 1983 the Defendant forwarded proforma
invoice for the sum of Rs.5,25,918.29 ps. and informed
the Plaintiffs that 60% of the machine is ready and
balance will be getting ready shortly.
6.After taking over the management of the said
Elphinston Mills, the Plaintiffs realised from the
: 4 :
record that the Defendants have failed to manufacture
the said machine and deliver the same. According to the
case of the Plaintiffs by their letter dated 2nd January
1984 the Defendant informed the Plaintiffs that the said
sum of Rs.1,27,500/- has been paid over to its sister
concern M/s.Sherai Engineering Pvt.Ltd. as the said
sister concern of the Defendant was to receive the price
of the Jet Dyeing Machine supplied to the Elphinston
Mills. By letter dated 27th March 1984, the Plaintiffs
through their Advocate informed the Defendant that the
Defendant had no right whatsoever to pay the said
advance deposit to the sister concern. The Plaintiffs
by the said letter called upon the Defendant to pay
interest at the rate of 21% per annum from the date of
advance payment till the amount is refunded by the
Defendant to the Plaintiffs as the Defendant is justly
and truly indebted to the Plaintiffs. In the suit a
decree in the sum of Rs.2,55,139/- together with future
interest in the sum of Rs.1,27,500/- at the rate of 21%
per annum has been prayed for. In the written statement
filed by the Defendant apart from the challenge to the
claim of the Plaintiffs on merits, it is stated that the
claim of the Plaintiffs is barred by limitation.
7.The learned Counsel for the Plaintiffs submitted
that the cause of action arose when the Plaintiffs came
to know from letter dated 2nd January 1984 that the
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amount paid by the Plaintiffs to the Defendant has been
transferred by the Defendant to M/s.Sherai Engineering
Pvt.Ltd. He submitted that the period of limitation
will not start running from 27th March 1981 when the sum
of Rs.1,27,500/- was paid. He submitted that in fact
the cause of action for filing suit has arisen when the
letter dated 2nd January 1984 was received from the
Defendant informing the Plaintiffs that the Defendant
had transferred the said sum of Rs.1,27,500/- to its
sister concern. He submitted that the suit will be
governed either by clause (b) of Article 91 of the First
Schedule to the Limitation Act, 1963 or the period of
limitation will be three years under Article 113 of the
said Act. He submitted that at highest the cause of
action first arose on 26th July 1983 when the Defendant
forwarded to the Plaintiff a proforma invoice in the sum
of Rs.5,25,918.39 ps. He pointed out that in the letter
dated 26th March 1983 itself the Defendant had stated
that 60% of the machine was ready and the balance would
be getting ready shortly.
8.The learned Counsel appearing for the Defendant
submitted that the Plaintiffs have not produced on
record the alleged letter dated 2nd January 1984. He
submitted that in any event the cause of action arose
when the Defendant failed to supply machine within the
time agreed. He submitted that the suit filed in the
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year 1986 was clearly barred by law of limitation.
9.I have considered the submissions. It is an
admitted position that a sum of Rs.1,27,500/- was paid
by the Plaintiffs to the Defendant on 27th march 1981.
As per the terms of the agreement, the Defendant had
agreed to supply the machine within 10 to 12 weeks.
According to the case of the Plaintiffs on 26th July,
1983, the Defendant forwarded proforma invoice for
Rs.5,25,918.39 and informed the Plaintiffs that 60% of
the said machine is ready. Reliance is placed on letter
dated 2nd January 1984 allegedly written by the
Defendant to the Plaintiffs stating that it has
transferred the said amount of Rs.1,27,500/- to its
sister concern which was entitled to receive the said
amount from the Plaintiffs under a different
transaction.
10.It must be stated here that even according to
the case of the Plaintiffs, the Defendant was to supply
the machine within 10 to 12 weeks. Thus after expiry of
12 weeks from 1st April 1981 (i.e. the date of
acceptance of the order by the Defendant) the Elphinston
Mills had a notice that the Defendant has failed to
perform its part of the contract. Therefore, the cause
of action for filing the suit arose when the Defendant
failed to supply the machine within 12 weeks from 1st
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April 1981. Merely because an invoice was forwarded by
the Defendant on 26th July 1983, it will not change the
starting point of limitation. By the said letter dated
26th July 1983 the Plaintiffs were called upon to pay
the balance amount and the Defendant had shown readiness
and willingness to give credit for the sum of
Rs.1,27,500/-. Thus the Defendant had agreed to give
credit provided the sum of Rs.3,98,418.39 ps. was paid
by the Plaintiffs to the Defendant.
11.Reliance placed by the Plaintiffs on letter
dated 2nd January 1984 will not help the Plaintiffs.
Firstly the said letter is not placed on record. The
Plaintiffs made no effort to lead secondary evidence of
the said letter. Therefore, letter dated 2nd January
1984 cannot be considered for deciding the issue of
limitation. According to the Plaintiffs the cause of
action is based on the contents of the said letter.
12.I have also perused the affidavit in lieu of
examination-in-chief of Shri Ramachandran Ravi of the
2nd Plaintiff. In the said affidavit it is not stated
that after receiving the proforma invoice dated 26th
July 1982, the Plaintiffs showed readiness and
willingness to pay the balance amount and to take the
machine. The learned Counsel for the Plaintiffs has
relied upon clause (b) of Article 91 of the Limitation
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Act, 1963. Assuming that the said clause (b) of Article
91 of the said Act is applicable, it is obvious that the
possession of the said amount of Rs.1,27,500/- by the
Defendant became unlawful when the Defendant failed to
supply the machine within the period of 12 weeks from
1st April 1981. Therefore, the cause of action for
filing the said suit arose in the year 1981 itself. The
learned Counsel for the Plaintiffs tried to rely upon
Article 113 of the said Act. Even applying Article 113,
the suit will not be within limitation as the cause of
action arose in the year 1981 itself. The communication
dated 1st April 1981 records that the said machine will
be supplied by the Defendant within 10 to 12 weeks.
Thus the cause of action for filing the suit first arose
on expiry of 12 weeks from 1st April 1981. The action
of issuing the proforma invoice on the part of the
Defendant on 26th July 1983 will not extend the period
of limitation or will not stop the period of limitation
which started running on expiry of period of 12 weeks
from 1st April 1981. As stated earlier, the letter
dated 2nd January 1984 is not produced by the
Plaintiffs. The suit is filed in April 1986.
13.The sum and substance of the aforesaid
discussion is that the suit is barred by law of
limitation. Accordingly the issue of limitation will
have to be answered against the Plaintiffs by holding
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that the suit claim is barred by law of limitation. The
suit is accordingly dismissed on the ground that the
same is barred by limitation. There will be no order as
to costs.
Judge.
3 issues framed by the court
Whether the suit filed in 1986 is barred by the law of limitation.
Whether the cause of action arose on the date of advance payment or on the subsequent demand for balance.
Whether the issuance of a proforma invoice or an unproven letter revived the cause of action.
2 provisions across 1 enactments
M/s. National Textile Corporation Ltd., New Delhi
M/s. National Textile Corporation (S.M.) Ltd.
M/s. S.B.M. Engineering Products Pvt. Ltd.
Abhay S. Oka
As recorded by the court registry
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