The main legal point established in the judgment is the application of the Limitation Act, 1963 and the provisions of the Negotiable Instruments Act, 1881 in determining the accrual of the right to sue for lease rental payments.

PRADEEP NANDRAJOG, J.

1. Briefly stated, the facts leading to filing of the above captioned appeal are that on May 29, 1992 the respondent company filed a suit for possession and recovery of a sum of Rs.23,04,199/-against the appellant company on the original side of this Court.

2. It was pleaded that the respondent company is engaged in the business of leasing machines and providing other financial services. On May 23, 1984 Mohta Industries Ltd. wrote a letter to the respondent company stating therein that the respondent company should purchase 1 Hydraulic Bricketting Press (hereinafter referred to as the “Equipment”) costing about Rs.12,00,000/-from M/s.Punjab Machinery Manufacturing Corporation and thereafter let out said equipment to it i.e. Mohta Industries Ltd. On May 29, 1984 the respondent company purchased the equipment from M/s.Punjab Machinery Manufacturing Corporation for a sum of Rs.13,20,000/-. After several discussions, on May 31, 1984 the parties entered into a lease agreement whereby the respondent company agreed to let out the equipment to Mohta Industries Ltd. The term of the lease was 96 months. The rental payable was Rs.33,000/-per month for the period from May 31, 1984 to May 30, 1989 and Rs.660/-per month for the period from May 31, 1989 to May 30, 1992. Due to substantial cost involved in the transportation of the equipment, M/s.Punjab Machinery Manufacturing Corporation directly delivered the equipment at the premises of M/s.Mohta Industries Ltd. On October 18, 1986 Mohta Industries Ltd. sent a certificate to the respondent company, which certificate recorded that M/s.Punjab Machinery Manufacturing Corporation had installed the equipment in the premises of Mohta Industries Ltd. on May 29, 1984. Mohta Industries Ltd. regularly paid the rental till September 30, 1986 but thereafter stopped paying rent despite several demands raised by the respondent company in said regard. On April 01, 1988 Mohta Industries Ltd, which was declared as a sick company, was amalgamated with the appellant company. As per scheme of amalgamation, the appellant company took over all the liabilities of Mohta Industries Ltd. including its liability to pay rent of the equipment to the respondent company. In the meantime, the respondent company had sent 2 legal notices dated December 01, 1987 and February 23, 1988 to Mohta Industries demanding payment of rent of the equipment but Mohta Industries did not pay any heed to said notices. After amalgamation of Mohta Industries with the appellant company the respondent company sent several letters to the appellant company seeking payment of rent of the equipment but to no avail. On June 20, 1991 the respondent company issued a legal notice to the appellant company demanding payment of rent of the equipment, in response whereto the appellant company sent letter dated September 13, 1991 to the respondent company denying its liability to pay rent of the equipment.

3. Relief (s) claimed in the suit were as under:-

“(a) Grant a decree for recovery of sum of Rs.23,04,199/-in favor of the respondent company; (Rs.10,46,760/-towards rent for the period from 01.10.1986 to 30.04.1992 + Rs.12,57,439/-towards penal interest for the period from 01.10.1986 to 29.05.1992 calculated in terms of clause 2.2 of lease agreement)

(b) Grant a decree for possession of the equipment in favor of the respondent company;

(c) Grant a decree for recovery of mesne profits for use and occupation of the equipment @Rs.700/-per month;

(d) Award costs of suit and

(e) Award interest @1.5 % per month on the amount found due to the respondent company.”

4. In the written statement filed, it was contended by the appellant company that:-(i) the suit is barred by limitation; (ii) this Court does not have the territorial jurisdiction to deal with the suit; and (iii) the records of Mohta Industries Ltd. bring out that no lease agreement dated May 31, 1984 was entered into between Mohta Industries Ltd. and the respondent comp