purchase of commercial vehicles. The plaintiff and first defendant therein had entered into an agreement dated 29.09.1983 by which the plaintiff had financed an amount of ₹1,47,000/-. The hirer was to clear the entire amount due in 36 monthly instalments. The hirer committed default in payment of instalments with effect from 20/05/1984. The plaintiff seized the hired vehicle on 09/02/1985. Thereafter, vide letter dated 12/02/1985 the plaintiff called upon the defendant to settle the contract within 10 days from the date of receipt of the notice. The defendant did not pay. On 30/05/1985, the plaintiff sold the vehicle and adjusted the amount received from the sale of the vehicle toward the debt. There was still a balance of ₹40,138/- which was demanded. Consequently, the suit was filed for the aforesaid amount together with interest. Though the defendant admitted default in repayment of the debt, it was contended that as per Clause 4 of the hirer-purchase agreement, termination without notice is contrary to the statutory provisions. The plaintiff therein contended that the balance towards the liability of the defendant could be ascertained only after the sale of the vehicle on 30/05/1985 and that the suit was filed within three years from the said date and hence, within time. The Hon’ble Supreme Court held that as per Clause 4 of the hirer-purchase agreement, the right to sue accrues when the hirer commits a breach of agreement. Committing default in payment of instalment is nothing but a breach of the agreement and therefore, the limitation for filing the suit under Article 55 shall begin with effect from 20/05/1984 when the default was committed by the hirer.
