JUDGMENT

(This case was heard through Video Conferencing)

This Second Appeal has been filed challenging the impugned judgment of the Lower Appellate Court viz., II Additional District Court, Coimbatore dated 16.07.1999 passed in A.S.No.179 of 1998 wherein the Lower Appellate Court has reversed the findings of the Trial Court passed in its judgment and decree dated 24.08.1998 in O.S.No.648 of

1994 on the file of the Munsif Court, Coimbatore.

2.The Appellants are the plaintiffs in the suit O.S.No.648 of 1994 on the file of the Munsif Court, Coimbatore. They filed a suit against the respondents seeking for a declaration that no amount is due from them to the first respondent/first defendant in its Loan Reference No.C-53 and consequential mandatory injunction was also sought for to direct the first respondent/first defendant to return the original title deeds of the third Appellant/third plaintiff.

3.The case of the Appellant/plaintiff before the Trial Court was that though the first defendant sanctioned the loan of Rs.3,60,000/-, they lent only a sum of Rs.2,46,824/- and that too the said sum was paid directly to the seller of the machineries which was purchased by the Appellants/plaintiffs. Therefore, according to them, they had suffered huge loss on account of the breach of contract committed by the respondents/defendants by not granting sanctioned loan amount of Rs.3,60,000/-. In such circumstances, they filed a suit for declaration and for consequential mandatory injunction against the respondents/defendants as stated supra.

4.A written statement has been filed by the first respondent/first defendant denying the allegations of the Appellants/plaintiffs. In the written statement, they have pleaded that the loan was granted by them to the Appellants/plaintiffs only for the purpose of purchasing machineries and not for their working capital. According to them, the loan contract entered into between the Appellants and the first defendant also makes it clear that the loan was granted only for the purchase of purchasing machineries and not for their working capital. Since the first respondent/first defendant has paid the value of the machineries purchased by the Appellants/plaintiffs which amounts to Rs.2,46,824/-, they have not committed breach of contract as alleged by the Appellants/plaintiffs.

5.The Trial Court framed issues and after trial, decreed the suit in favour of the Appellants/plaintiffs by its judgment and decree dated

24.08.1998 passed in O.S.No.648 of 1994.

6.Aggrieved by the same, the respondents/defendants preferred an appeal before the II Additional District Court, Coimbatore in A.S.No.179 of 1998. By judgment and decree dated 16.07.1999 passed in A.S.No.179 of 1998, II Additional District Court, Coimbatore reversed the findings of the Trial Court and allowed the appeal filed by the respondents/defendants on the ground that the suit filed by the Appellants/plaintiffs is barred by law of limitation. According to the Lower Appellate Court, since loan agreement was terminated by the respondents/defendants as per Ex.B14 on 20.01.1990, the suit having been filed only in the year 1994, the suit is barred by law of limitation.

7.The Lower Appellate Court has held that the Appellants/plaintiffs did not take proper steps as against the auctions of the machineries conducted by the respondents/defendants even though two suits were filed by them challenging the suit auctions. The Lower Appellate Court has also held that injunction cannot be granted to loan related suits and hence Trial Court ought not to have granted a decree in favour of the Appellants/plaintiffs.

8.Aggrieved by the reversal findings of the Lower Appellate Court in its judgment and decree dated 16.07.1999 passed in A.S.No.179 of 1998, the Appellants/plaintiffs have preferred this Second Appeal. At the time of admission of the Second Appeal on 13.12.2002, this Court formulated the following substantial question of law:

“Whether the learned District Judge is correct in