Allowed

Subash Vasudevan v. M/S. Vijayan Luxury Housing Project (Pvt.) Ltd.

Kerala HC5 Feb 2019RFA/119/2018

Case brief

AI extract

What is this about?

This appeal contested the dismissal of a money suit for limitation and premature filing. The High Court held that a fresh agreement executed after the limitation period barred by law conferred a new limitation period. It also found that allegations of fraudulent alienation by the defendants amounted to an anticipatory breach, rendering the suit maintainable despite being filed before the agreement

What did the court decide?

The appeal was allowed; the impugned judgment dismissing the original suit was set aside, and the suit was remitted to the trial court for fresh consideration and disposal on merits.

Subash Vasudevan Vs M/S. Vijayan Luxury… — Contract and Commercial Disputes | Kerala HC (2019)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE K.HARILAL

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THE HONOURABLE MRS. JUSTICE ANNIE JOHN

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TUESDAY, THE 05TH DAY OF FEBRUARY 2019 / 16TH MAGHA, 1940

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RFA.No. 119 of 2018

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AGAINST THE JUDGMENT IN OS 517/2013 of PRINCIPAL SUB COURT,ERNAKULAM DATED 21-12-2017

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APPELLANT:

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SUBASH VASUDEVAN

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AGED 46 YEARS, S/O. VASUDEVAN, RESIDING AT FLAT NO. 15C DUKES, SKYLINE IMPERIAL- GARDEN, KALOOR, KOCHI - 682 025.

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BY ADVS. SRI.T.KRISHNANUNNI (SR.) SMT.MEENA.A. SRI.ASHWIN SATHYANATH SRI.K.ANAND SRI.SAJU.S.A SRI.VINAY MATHEW JOSEPH SRI.VINOD RAVINDRANATH

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RESPONDENTS:

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1 M/S. VIJAYAN LUXURY HOUSING PROJECT (PVT.) LTD. 37/991, FIRST FLOOR, EMMY SQUARE, S.A ROAD, KADAVANTHRA P.O, KOCHI - 682 020. REPRESENTED BY ITS CHAIRMAN AND DIRECTORC.K VIJAYAN, AGED 54 YEARS, S/O. C.KRISHNANKUTTY.

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2 C.K VIJAYAN AGED 54 YEARS, S/O. C.KRISHNANKUTTY, RESIDING AT 37/595, DEVAKI SADAN, KADAVANTHARA (PO), KOCHI - 682 020.

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BY ADVS. SRI.S..EASWARAN (CAVEATOR) SMT.SOUMYA JAMES SRI.M.A.AUGUSTINE

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SRI.P.MURALEEDHARAN (IRIMPANAM) SRI.P.SREEKUMAR (THOTTAKKATTUKARA) SRI.S.EASWARAN SRI.S..EASWARAN CAVEATOR

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THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 05.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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JUDGMENT

K.Harilal, J.

1. The appellant is the plaintiff and the respondents are the defendants in OS 517/2013 on the files of the Principal Sub court, Ernakulam. The aforesaid original suit was one for realisation of money. The first defendant is a company registered under the provisions of the Companies Act and engaged in the business of real estate and construction. The 2^nd defendant is the Chairman and Director of the company.

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2. According to the averments in the

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plaint, on the request of the defendants', plaintiff advanced a sum of Rupees three crores twenty-seven lakhs as

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loan to the defendant company. He had invested other amounts in the company, whereby 1,30,000 shares, each having a face value of Rs.10 in the company, were issued to him. Subsequently, there were differences of opinion. The plaintiff requested the defendants to relieve him and return his investments. An apartment in the building complex Vijaya Glimpses was registered in the name of the plaintiff by the defendants. After much deliberations and persuasions, an agreement was executed on 14.8.2013, wherein it was agreed that the plaintiff will be given back Rs.3,27,000/- within a period of six months. Two postdated cheques dated 14.2.2014 were also handed over. But, to the surprise of the

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plaintiff, after execution of the agreement, defendants started to sell the properties belonging to them and appropriated the consideration received. The plaintiff was convinced of the fact that by 14.2.2014 no property will be left with the defendants and the plaintiff will not be able to realise the amounts due to him. In such circumstances, the plaintiff filed the above suit claiming realisation of Rs.3,27,00,000/- due to him from the defendants.

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3. The defendants resisted the claim for money from them contending that the suit is barred by limitation and even if the suit is not barred by limitation, the suit is not maintainable as it was filed

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prematurely. Since the original transaction, whereby the loan amount was allegedly granted to the defendants was in the year 2007-08, the claim for realisation of the said amount from the defendants is barred by limitation. Another contention raised by the defendants is that the civil court has no jurisdiction to try a suit and the remedy available to the plaintiff is under the provisions of the Companies Act. It is further contended that the sale deed executed on 26.12.2012 is not at all a valid acknowledgment with respect to a loan availed in 2007 and 2008, since it is not within the limitation period of three years.

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4. On the rival pleadings, both parties

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adduced evidence and the evidence consists of Exts.A1 to A15 and the oral testimony of Pws.1 to 3 on the part of the plaintiff and Exts.X1 to X28 as witness exhibits. No document has been marked as defence exhibits. After evaluating the aforesaid evidence on record, the court below dismissed the original suit, on a finding that the suit is barred by limitation and even if the suit is not barred by limitation, the same is not maintainable as it was instituted prematurely. The legality and correctness of the aforesaid findings are assailed in this appeal.

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5. Heard the learned counsel for the appellant/plaintiff and the learned counsel for the respondents/defendants.

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6. Learned counsel for the appellant advanced arguments contending that the court below went wrong in finding that the suit was barred by limitation and it is not maintainable, as it was a premature one. According to the learned counsel for the appellant, the court below miserably failed to interpret Ext.A12 agreement in its correct perspective. Ext.A12 is a fresh agreement undertaking the liability of a time-barred debt falling under section 25(3) of the Contract Act. In order to substantiate the said contention, the learned counsel drew our attention to Ext.A12 and highlighted the terms of promise made afresh, acknowledging the time barred debt stated in Ext.A12. So,

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according to the learned counsel, the plaintiff will get a fresh period of limitation of three years from the date of Ext.A12, 14.8.2013. The suit was instituted on 15^th November, 2013 and it is not barred by limitation. Secondly, it is contended that the suit was not a premature one as it was filed on an anticipatory breach from the part of the defendants. Where the suit was filed on an anticipatory breach, the court below ought not to have dismissed the suit on that ground, according to the learned counsel for the appellant. In order to substantiate the said contention, the learned counsel for the appellant cited the decision of the Supreme Court in Vithalbhai Pvt.Ltd. v. Union of India

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[ AIR 2005 SC 1891].

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7. Per contra, the learned counsel for

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the respondents advanced arguments to justify the findings of the courts below. According to them, there is no pleadings in the plaint to the effect that Ext.A12 is a fresh agreement undertaking payment of time barred debt and it was the specific case of the plaintiff that Ext.A12 is an acknowledgement of an existing liability. According to the learned counsel, a plea which was not raised before the court below cannot be allowed to be raised in appeal to the surprise of the opposite party. As regards the other contention of premature institution of the suit, the learned counsel contends that there is no

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pleadings disclosing any kind of breach

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from the part of the defendants. According to the learned counsel, the suit was filed before the expiry of the term of the agreement and there was no pleadings or substance to prove the anticipatory breach alleged in the plaint. In order to fortify the said argument, the learned counsel for the plaintiff cited the decision reported in Madanuri Sri Rama Chandra Murthy [2017(13) SCC 174].

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8. In view of the arguments at the bar, the point to be considered in this appeal are; whether the court below is justified in dismissing the suit on a finding that the suit is barred by limitation and even

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if the suit is not barred by limitation,

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the suit is not maintainable as it is a premature one. Going by the written statement filed by the defendants, it could be seen that the execution of Ext.A12 agreement is not denied, though it was contended that it was executed under a different context and circumstances. Admittedly, the first defendant had obtained the plaint amount from the plaintiff, as a loan and the defendants have not paid back the said amount in cash. It is not disputed that they have entered into Ext.A12 agreement in discharge of the liability due to the plaintiff under Ext.D1 in the year 20072008. The court below dismissed the suit on a finding that Ext.A12 was executed beyond the period of three years, even if

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the period is calculated from the last date of the year 2008 and Ext.A12, even if it is an acknowledgment, will not extend the period of limitation, since it was executed beyond the period of limitation. The court below has taken Ext.A12 agreement as an acknowledgment, falling under section 18 of the Limitation Act. It is true that the acknowledgment must be in writing signed by the party against whom such property or right is claimed and it must be within the original period of limitation and if the acknowledgment is made after the original period of limitation, it will not extend the original period of limitation. We do not find fault with

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the aforesaid finding about the

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proposition of law.

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9. But the question is, what is the real effect and impact of Ext.A12 agreement? As rightly contended by the learned counsel for the plaintiff, if Ext.A12 is a fresh agreement undertaking the liability of payment of the original debt, which was barred by limitation, a fresh period of limitation will begin to run from the date of fresh agreement. Section 25 of the Contract Act is

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extracted below:

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“Section 25: Agreement without consideration, void, unless it is in writing and registered or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law.--

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An agreement made without consideration is void, unless-

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(1) it is expressed in writing and registered under the law for

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the time being in force for the registration of¹⁰ [documents], and is made on account of natural love and affection between parties standing in a near relation to each other; or unless

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(2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless.

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(3) It is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.

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In any of these cases, such an agreement is a contract.

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Explanation 1.-- Nothing in this section shall affect the

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validity, as between the donor and donee, of any gift actually made.

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Explanation 2.-- An Agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given.

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Illustrations

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(a) A promises, for no consideration, to give to B Rs. 1,000. This is a void agreement.

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(b) A, for natural love and affection, promises to give his son, B, Rs. 1,000. A puts his promise to B into writing and registers

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it. This is a contract.

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(c) A finds B's purse and gives it to him. B promises to give A Rs. 50. This is a contract.

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(d) A supports B's infant son. B promises to pay A's expenses in so doing. This is a contract.

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(e) A owes B Rs. 1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B Rs. 500 on account of the debt. This is a contract.

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(f) A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A's consent to the agreement was freely given. The agreement is a contract notwithstanding the inadequacy of the consideration.

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(g) A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A denies that his consent to the agreement was freely given.

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The inadequacy of the consideration is a fact which the Court should take into account in considering whether or not A's consent was freely given.”

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10. Bearing the aforesaid legal

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proposition in mind, we have examined Ext.A12 agreement. Going by Ext.A12 agreement, we find that Ext.A12 agreement

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is a fresh agreement with an undertaking

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to pay Rupees three crores twenty-seven lakhs, on or before 14.2.2014. The original period of limitation expired on 31.12.2011, if 31.12.2008 is taken as the date of granting the loan. Ext.A12 was executed on 14.8.2013, after the expiry of the period of more than 1½ years from the date of expiry of the original period of limitation. In the above view, we are of the view that Ext.A12 is a fresh agreement, promising to pay off the original debt, which stood barred by limitation, falling under section 25(3) of the Contract Act. It follows that the original suit was not barred by the period of limitation.

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11. Coming to the findings of

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maintainability, we find that in the

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plaint itself in paragraph 5 it is

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specifically stated as given below:

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“While it is true that the defendants have in the agreement dated 14.8.2013 promised to pay the amounts mentioned therein by 14.2.2014, the subsequent act of fraudulently alienating the properties of the 1^st defendant and siphoning off the same by the 2^nd defendant and the attempt to sell all the remaining properties, has convinced the plaintiff that the defendants do not intend to act on their said undertaking. On the contrary, the future date was fixed so as to enable the defendants to dispose off all their properties. Hence, the above suit for realisation is not premature.”

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12. We are of the view that on the

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aforesaid pleadings the plaintiff has specifically stated that the defendants have no intention to perform their part of the contract and they are taking steps to sell the property owned by the 1^st defendant company and the subsequent act of fraudulent alienation of the property

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of the 1^st defendant and siphoning off

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the amount by the 2^nd defendant has convinced the plaintiff that the defendants do not intend to act on the said undertaking in Ext.A12. An apprehension expressing anticipatory breach of contract is obviously manifested in the pleadings of the plaintiff.

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13. It is true that in paragraphs 10 and 11 of the written statement, it is stated that they intend to sell the property to pay off the debt due to Federal Bank. But, considering the question of anticipatory breach, what was the circumstances at the time of institution of the suit alone need be considered and

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the contention raised by the defendant is

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not decisive or relevant. What prompted the plaintiff to institute the suit before the accrual of cause of action as

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per the agreement alone need be considered. If it is proved that the cause of action has arisen prematurely from the subsequent conduct of the defendant, certainly, it shall be deemed to be an anticipatory breach. Thus, the

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question is, whether a suit is maintainable, if it was filed on an anticipatory breach of an agreement before the expiry of the term of the agreement. The question is seen answered

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by the Supreme Court in Vithalbhai's case ( supra), which reads as given below:

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“In Gurdit Singh and others v. Munsha Singh and others [(1977) 1 SCC 791] it was held that the court trying a premature suit does not suffer from

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inability or incapacity to entertain the suit on the grounds of lack of jurisdiction. Dealing with the 'narrower sense' and 'more comprehensive sense' in which the expression 'cause of action' is at times employed, the court has indicated that the cause of action may suggest all those essential facts without the proof of which the plaintiff must fail in his suit but right to sue may have a different connotation, the accrual of which need not necessarily be treated as an ingredient of cause of action but would be more relevant for the purpose of determining the commencement of the period of limitation.”

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14. Per contra, the learned counsel for the respondents cited the decision in [2017 (13) SCC 174] Madanuri Sri Rama Chandra Murthy's case (supra) and more particularly paragraph No.7.

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15. Going by the aforesaid paragraph, we find that the principle postulated in the aforesaid paragraph is the general

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law under Order 7 Rule 11 CPC and the proposition laid down in Vithalbhai's case ( supra ) is an exception to the said general rule, where cause of action has arisen prematurely from anticipatory breach. Therefore, the decision cited by the learned counsel for the defendant will not prevent us from applying the principles of the decision in Vithalbhai's case ( supra ). We are of the opinion that in the instant case, the apprehension exposing the breach of contract from the part of the respondent is manifested as an anticipatory breach. Therefore, the court below ought not to have dismissed the suit on a finding that the suit was not maintainable, as it was

premature one.

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16. In the above analysis, we are inclined to set aside the judgment under challenge and the original suit would stand remitted to the court below, for fresh consideration and disposal, on merits. We make it clear that the court below is at liberty to consider all the issues, on merits, except the question of limitation, which we have already found in favour of the plaintiff. The parties shall appear before the trial court on 3.6.2019.

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17. The RFA is disposed of accordingly.

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Sd/K.Harilal, Judge

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Sd/Annie John, Judge

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sl.

Subash Vasudevan v. M/S. Vijayan Luxury Housing Project (Pvt.) Ltd.

Case brief

What is this about?

What did the court decide?

Subash Vasudevan v. M/S. Vijayan Luxury Housing Project (Pvt.) Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

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