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2022 Supreme(AP) 1331
ANDHRA PRADESH HIGH COURT AT AMARAVATI
Subba Reddy Satti, J.
M. N. M. R. Cotton Industries & Ors. – Appellants
Versus
Jyothi Chit Fund Company, Guntur – Respondent
Appeal Suit No. 742 of 2006
Decided On : 04-05-2022
Y Ashok Raj, Advocate, V S K Rama Rao, Advocate, Atchutuni Rama Mohan Rao, Advocate, N Sriram Murthy, Advocate
A part payment made by a chit fund subscriber towards the outstanding dues after the expiry of the limitation period, in the absence of a separate agreement, cannot be considered an acknowledgement of debt under Section 25(3) of the Indian Contract Act and therefore, cannot revive the limitation period for filing a suit to recover the outstanding dues.
Headnote:
LIMITATION ACT, 1963 - SECTION 37 - CHIT FUND - PART PAYMENT - ACKNOWLEDGEMENT - VALIDITY - LIMITATION PERIOD: When a chit fund subscriber makes a part payment towards the outstanding dues after the expiry of the limitation period, such payment, in the absence of a separate agreement, cannot be considered an acknowledgement of debt under Section 25(3) of the Indian Contract Act, 1872, and therefore, cannot revive the limitation period for filing a suit to recover the outstanding dues.
Fact of the Case:
The plaintiff, a chit fund company, filed a suit to recover an amount of Rs.6,82,089/- from the defendants, who were members of the chit fund scheme. The defendants admitted that they had joined the scheme and had become successful bidders in the auction conducted for the chit amount, but they claimed that they had paid all the installments regularly and that the suit was barred by limitation. The plaintiff relied on a receipt dated 29.04.2002, which showed that the defendants had made a part payment of Rs.5,000/- towards the outstanding dues.
Finding of the Court:
The trial court decreed the suit in favor of the plaintiff, holding that the receipt dated 29.04.2002 was valid and genuine and that the part payment made by the defendants under the receipt was sufficient to revive the limitation period for filing the suit. The defendants appealed against the trial court's judgment.
Issues: 1. Whether the receipt dated 29.04.2002 is valid, genuine, and binding on the defendants? 2. Whether the part payment made under the receipt can be termed as an agreement under Section 25(3) of the Indian Contract Act? 3. Whether the suit is barred by limitation?
Ratio Decidendi: The High Court held that the receipt dated 29.04.2002 was valid and genuine, as the defendants had not produced any evidence to prove that it was forged. However, the Court held that the part payment made by the defendants under the receipt could not be considered an acknowledgement of debt under Section 25(3) of the Indian Contract Act, as there was no separate agreement between the parties to that effect. Therefore, the Court held that the suit was barred by limitation.
Final Decision: The High Court allowed the appeal and dismissed the suit.
JUDGMENT
Subba Reddy Satti, J. - Unsuccessful defendants filed the above appeal, assailing the judgment and decree dated 31.10.2006 passed in O.S.No.279 of 2005 on the file of II additional Senior Civil Judge (Fast Track Court), Guntur.
2. For the sake of convenience, parties to this appeal are referred to as they were arrayed in suit.
3. Plaintiff filed the Suit O.S.No.279 of 2005 for recovery of an amount of Rs.6,82,089/-.
4. The averments in the plaint, in brief, are that the plaintiff is a company registered under the Indian Partnership act and doing chit fund business; that defendant No.1 joined as member in chit scheme series JCC-a on 21.04.1997; that defendant No.1 was allotted ticket No.40; that each subscriber has to pay an amount of Rs.10,000/- per month for 50 months and the chit value is Rs.5,00,000/-; that in the auction conducted on 04.07.1997, defendant No.1 became successful bidder and agreed to forego Rs.2,00,000/-; that defendant No.1 paid Rs.50,000/- and his future liability is Rs.4,50,000/-; that the defendants executed agreement of guarantee on 15.09.1997 and defendants 2 to 6 stood as guarantors; that all the defendants executed promissory note on 15.09.1997; that defendant No.1 committed default in payment of installments from 04.04.1998; that the defendants failed to pay the amount in-spite of repeated demands of the plaintiff; that defendants paid Rs.5,000/- against receipt dated 29.04.2002 i.e. before expiry of limitation period and prayed the Court to decree the suit.
5. Defendants 1 to 4 and 6 jointly filed written statement and admitted that defendant No.1 was successful auction bidder for the chit amount; that defendant No.1 paid installments regularly; that the plaintiff did not mention dividend amount; that the receipt dated 29.04.2002 is forged for the purpose of saving limitation; that chit commenced in the year 1997 and it was terminated in 2001, however, the suit was filed in the year 2005, hence it is barred by limitation and eventually prayed Court to dismiss the suit.
6. Defendant No.5 filed separate written statement reiterating the stand taken by the other defendants.
7. Basing on the above pleadings, the trial Court framed the following issues for trial:
1. Whether the plaintiff is entitled to recover the suit amount as prayed for?
2. Whether receipt dated 29.04.2002 is valid, genuine and binding on defendants?
3. Whether 1st defendant paid entire amount as contended by 1st defendant is true, valid, binding on plaintiff?
4. To what relief?
8. During the trial, Managing Partner of plaintiff firm was examined as P.W.1 and Exs.a-1 to a-17 were marked. None were examined on behalf of defendants and no documents were marked.
9. The Trial Court decreed the suit by judgment dated 31.10.2006 for an amount of Rs.6,82,089/-. Defendants were directed to pay interest @12% p.a. on Rs.3,69,000/- from the date of suit till the date of decree and were also directed to pay interest @6% p.a. from the date of decree till the date of realization. Defendants were also directed to pay Rs.25,661/-towards costs of the suit. against the said judgment and decree, the above appeal is filed.
10. Heard Sri atchutuni Rama Mohan Rao, learned counsel for appellants/defendants and Sri N. Sriram Murthy, learned counsel for respondent/plaintiff.
11. Learned counsel for appellants would contend that suit debt is barred by limitation and hence suit is liable to be dismissed. He further contended that Ex.a-9 payment receipt dated 29.04.2002 is forged and the Lower Court ought not to have relied upon the receipt. He further contended that even if Ex.a-9 is a valid receipt, it being an acknowledgement of time barred debt, without separate agreement, it cannot be enforced and thus, the suit claim is barred by time. Hence, prayed the Court to allow the appeal by dismissing the suit.
12. Learned counsel for the respondent would contend that 1st defendant on emerging as the highest bidder in chit auction, received the amount, but failed to pay
