The court held that part-payments within the limitation period extend the limitation timeframe, and the suit was improperly dismissed as time-barred, affirming that legal heirs are liable only to the extent of the estate inherited.

JUDGMENT :

ANIL KSHETARPAL, J.

1. The present Appeal, filed by the Appellant, assails the correctness of the judgment and decree dated 13.02.2023 [hereinafter referred to as ‘Impugned Order’] passed by the learned Commercial Court in CS(COMM) No. 349/2021, whereby the suit filed by the Appellant for recovery of Rs.10,91,115/- along with interest came to be dismissed.

2. The Respondents, despite service, neither entered appearance before the learned Commercial Court nor filed their written statement and were accordingly proceeded ex-parte. Even before this Court, none has entered appearance on their behalf despite service. The Appeal is, therefore, being adjudicated after hearing learned counsel for the Appellant and upon careful perusal of the record.

3. The principal issue that arises for consideration in the present Appeal is whether the learned Commercial Court was justified in dismissing the Appellant’s suit as being barred by limitation and further holding that the Appellant had failed to duly prove its claim on account of alleged deficiencies in authorization of its representative and want of material particulars regarding the liability of the legal heirs of the original borrower.

FACTUAL MATRIX:

4. In order to appreciate the controversy involved in the present Appeal, the relevant facts, in brief, are required to be noticed.

5. The Appellant is a body corporate and a scheduled commercial bank. One late Mr. B.M. Bajaj (‘borrower’), proprietor of M/s Zen Electricals, had approached the Appellant in the year 2010 seeking grant of credit facilities for his business operations. Pursuant thereto, the Appellant sanctioned a cash credit facility to the tune of Rs.15,00,000/- in favour of the said borrower vide sanction letter dated 20.02.2010 under the Credit Guarantee Fund Trust for Micro and Small Enterprises [‘CGTMSE’] scheme.

6. In consideration of the aforesaid facility, late Mr. B.M. Bajaj executed various loan and security documents in favour of the Appellant Bank on 20.02.2010, including a composite hypothecation agreement in respect of stocks, receivables, plant and machinery and other movable assets of the proprietary concern, as well as a demand promissory note and allied documents. As per the terms of sanction, the borrower agreed to pay interest at the rate of 1% below the Benchmark Prime Lending Rate of the Appellant Bank, which at the relevant time worked out to 13.25% per annum with monthly rests, together with an additional penal interest of 2% per annum in case of default.

7. It is the case of the Appellant that although the borrower initially availed the aforesaid credit facility, he committed persistent defaults in servicing the account. As recorded by the Commercial Court, the loan account was ultimately classified as a Non-Performing Asset (NPA) on 08.02.2016. The record further indicates that despite issuance of intimations seeking clearance of outstanding dues, only part-payments were made by the borrower, the last of such payments having been received till September 2016. However, the entire outstanding amount remained unpaid.

8. Owing to continued default, the Appellant instituted O.A. No. 545/2018 before the Debts Recovery Tribunal-I, Delhi, seeking recovery of the outstanding dues from the borrower through his known legal heirs. The Commercial Court has noted that during the pendency of the said proceedings, the pecuniary