The High Court of Kerala held that the payment agreement is a promissory note. A clause fixing interest on default does not alter the fixed repayment period. Consequently, the suit is within the three-year limitation period provided by Article 34 of the Limitation Act.
Appeal dismissed; execution petition deferred for four months for payment.
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE K.HARILAL
MONDAY, THE 19TH DAY OF DECEMBER 2016/28TH AGRAHAYANA, 1938
RSA.No. 777 of 2016 ()
AGAINST THE ORDER/JUDGMENT IN AS 105/2008 of SUB COURT, TIRUR DATED
06-02-2016
AGAINST THE ORDER/JUDGMENT IN OS 187/2006 of MUNSIFF COURT, PARAPPANANGADI DATED 30-09-2008
APPELLANT/APPELLANT/DEFENDANT :
KUMMILI VEETTIL PRADEEP
S/O. NARAYANAN, KARIMARAKKAD, ARIYALLOOR, TIRURANGADI.
BY ADV. SRI.E.NARAYANAN
RESPONDENT/RESPONDENT/PLAINTIFF :
K.P SWAMIKUTTY
S/O.APPUTTY, KATTUPARAMBATH, PANNIYANKARA, THIRUVANNUR NADA P.O., KOZHIKODE-673 004.
R1 BY ADV. SRI.P.SANJAY R1 BY ADV. SMT.A.PARVATHI MENON
THIS REGULAR SECOND APPEAL HAVING COME UP FOR ADMISSION ON 19-12-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
AL/-
“CR”
K. HARILAL, J.
-----------------------------------------------------R.S.A. No. 777 of 2016
Dated this the 19th day of December, 2016
JUDGMENT
The appellant is the defendant in O.S. No. 187/2006 on the files of the Munsiff Court, Parappanangadi as well as the appellant in A.S. 105/2008 on the files of the Sub Court, Tirur. According to the plaintiff, the defendant had borrowed a sum of Rs.1,00,000/- from the plaintiff on 30.10.2002 and agreed to repay the amount within a period of two years. The defendant also agreed that if he fails to pay the amount within a period of two years, he will pay interest @ 12% p.a for the amount. The defendant borrowed, the amount in the presence of two witnesses and on that date, the defendant executed Ext.B1 agreement in the presence of
R.S.A.No.777/2016 -: 2 :-
witnesses. But the defendant did not pay the amount as agreed and therefore, the plaintiff demanded for return of the amount with interest. Though, the plaintiff caused to
issue a lawyers notice to the defendant, the same was returned unserved. Thus, the defendant failed to repay the amount, despite the demand for the same and hence the suit was filed.
execution of Ext.A1 agreement and he contended that he never borrowed a sum of Rs.1,00,000/- from the plaintiff
and he does not know the persons named as witnesses in the agreement and the plaintiff himself. In October 2002 the defendant had borrowed Rs.25,000/- from one Valsarajan and while availing the said loan, the defendant had handover signed blank stamp papers to the said Valsarajan. Later he repaid the entire amount due to the said Valsarajan and when he demanded back the signed stamp papers Valsarajan told him that the stamp papers would be handed
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over to one Mr. Balakrishnan to hand over the same to him
but the defendant could not collect the same from him. The defendant further learnt that the present suit is filed at the instance of said Balarkrishnan, by using the signed
blank stamp papers given by the defendant to Valsarajan.
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to the learned counsel for the Appellant, Ext.A1 agreement
is neither a promissory note nor a bond. Therefore, Article 19 of the Limitation Act is applicable to the instant case, for instituting the suit. So, the period of limitation starts from 30.10.2002 itself and expires on 30.10.2005. But the suit was filed on 4.7.2006 only. Ext.A1 cannot be treated as a Bond, in the absence of a specified day for re-payment, as required in Article 28 of the Limitation Act. The learned counsel for the appellant drew my attention to Ext.A1 and submits that in case, the defendant could not pay the amount within two years, the principal amount would carry 12% interest, after the expiry of two years. Therefore, the defendant himself was not sure about the repayment within two years and the time granted for repayment cannot be deemed to be a limited one, as required in a promissory note, as per Section 2 (k) of the Limitation Act.
for the respondent contended that Ext.A1 is nothing other
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than a promissory note with limited time for repayment and default clause adds additional burden of interest only. It will not destroy or interferes with the limited time mentioned earlier in Ext.A1. Therefore, Article 34 of the Limitation Act 1963 alone is applicable to the instant case and neither Article 19 nor Article 28 will come into play. It is further contended that, where the terms of Ext.A1 is explicit and clear, disclosing the intention of the maker of the promissory note, there is no need to make a further probe into the mind of the maker of the promissory note, by interpreting other words or sentences in the document. According to the learned counsel, as far as possible, effect must be given to the express words used in the instrument itself. To substantiate the aforesaid contentions, learned counsel appearing for the respondent/plaintiff cited the decision of this Court in Indira Motor Service (M/s.) and Others v. Panakkat Nazaruddin and others [2015 (5) KHC 174].
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-: 6 :-
what is the nature and character of Ext.A1 agreement under
law ? The scope and extent of consideration of the aforesaid question centres around the operative portion of Ext.A1 agreement.
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promise that the amount borrowed would be returned within two years; it means before 30.10.2004. The operative portion of the aforesaid promissory note consists of 3 sentences. The first sentence means and indicates the receipt of Rs.1 lakh on an assurance that it will be returned within two years. The second sentence is a promise alone, that the aforesaid amount will be returned within two years. The third sentence is that, in case of failure to repay the amount within two years, the defendant agreed to pay 12% interest after two years.
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counsel, the time for repayment is not a fixed one as
prescribed in the definition. I am unable to agree with the said submission.
'promissory note' as given below:
“2(k): “Promissory note” means any instrument whereby the maker engages absolutely to pay a specified sum of money to another at a time therein limited, or on demand, or at sight.”
time therein limited' in the definition of 'promissory note' in
the Limitation Act means and includes a fixed period also and not a fixed day alone and the last day on which the period expires shall be deemed to be the last day for repayment. But, the cause of action to sue against the maker of the promissory note would arise after the last day only. Consequently, the expression 'a fixed time' in Article 34 of the Limitation Act includes a fixed period also. Besides, where there is a specific promise to pay back the
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money, within a limited time as envisaged under Section 2 (K), a further clause adding additional burden of interest on the defendant, in case of default, will not destroy or dilute or alter the nature and character of earlier promise made to repay the amount within a limited time. It is needless to say, it will not loosen the time limit stipulated under the promise.
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amount of Rs.1 lakh borrowed from the plaintiff will be
returned within 2 years. Thus, the fixed time expires on 30.10.2004 and the plaintiff will get 3 years time from 30.10.2004. It is not disputed that in the instant case, the suit was filed on 4.7.2006, when the period of limitation expires on 30.10.2007 only. Thus, the suit was filed within three years and it is not barred by limitation. Therefore, I do not find any illegality or impropriety in the entertainment of the suit before the trial court. Consequently, the appeal will stand dismissed.
The learned counsel for the defendant prayed for some time to pay the said amount to the plaintiff. The learned counsel for the plaintiff submits that a reasonable time can be given. Having regard to the entire facts and circumstance of the case, the defendant is given four months time to pay the decree amount. Consequently, all further proceedings in the execution petition will stand deferred for four months from today and in case of default, the plaintiff
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is at liberty to proceed with the execution petition. This
judgment will not stand in the way of mediation before the execution court. There is no illegality in the findings or perversity in the appreciation of facts or evidence. No other question of law arises for consideration. Hence, the Appeal is dismissed.
Sd/-
(K. HARILAL, JUDGE)
al/
True copy
P.S to Judge
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fair -signed
3 issues framed by the court
Whether the suit based on the instrument is barred by limitation.
Whether the agreement document falls within the definition of a promissory note under Section 2(k) of the Limitation Act.
Whether the clause for payment of interest in case of default alters the nature of the repayment period for limitation purposes.
Colour shows how this judgement treated each authority
Indira Motor Service (M/s.) and Others v. Panakkat Nazaruddin and othersReferred¶41
Indira Motor Service (M/s.) and Others v. Panakkat Nazaruddin and others [2015 (5) KHC 174]
2 provisions across 1 enactments
KUMMILI VEETTIL PRADEEP
K.P SWAMIKUTTY
K. HARILAL
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
