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IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4416 OF 2010

SILLA JAYARAMA GUPTA & OTHERS

.....

APPELLANT(S)

VERSUS

STATE BANK OF INDIA

..... RESPONDENT(S)

O R D E R

The three appellants, Silla Jayarama Gupta, K. Janardhana Rao

and B. Chandra Sekhara Rao, have filed this appeal against the

judgment and decree dated 27^th January 2009 passed by the High Court

of Andhra Pradesh in AS No. 427 of 2001 which allowed the first appeal

filed by the State Bank of India (for short, ‘the respondent-bank’) and

thereby had decreed the suit for recovery of Rs.1,10,076/- with

subsequent interest at 12% per annum on the principal sum of

Rs.60,000/-.

2. The trial court, namely, the Court of Principal Senior Civil Judge,

Srikakulam by the judgment and decree dated 21^st January 2000 had

dismissed the suit filed by the respondent bank on the ground of

limitation.

Digitally signed by

GEETA AHUJA

Date: 2020.04.21

16:31:16 IST

Reason:

Signature Not Verified

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3. The High Court allowing the appeal and decreeing the suit accepts

that Article 113 of the Limitation Act, 1963 (‘Act’, for short) would be

applicable to the suit based on the indemnity, albeit grants benefit of

Section 17 of the Act observing that the limitation would commence from

the date of discovery of the fraud, that is, from the date of the letter

(Exhibit AA) dated 15^th September 1994 written by the Deputy General

Manager of the Vijayawada Branch of the State Bank of India, informing

that the first demand draft for Rs.60,000/- dated 21^st May 1985 drawn by

the respondent bank and payable by the Vijayawada branch of the State

Bank of India in favour of N. Surya Sivarao had been fraudulently

encashed on 17^th August 1985 by one P.V. Sivaprasad (who was not a

party to the civil suit, the appeal in the High Court and in the present

appeal) by impersonating and opening a new bank account with them in

the name of N. Surya Sivarao.

4.

It is an accepted and admitted position that the drawee bank, that

is, Vijayawada branch of the State Bank of India, had earlier, vide their

letter dated 28^th July 1989, informed the issuing bank, that is, the

Srikakulam Branch of the State Bank of India, that the first bank draft

had not been encashed. Thereupon, the appellants had issued an

indemnity letter on or about 8^th August 1989 in favour of the respondent

bank. Thereafter, the respondent bank had issued the second demand

draft on 8^th August 1989 for Rs.60,000/- in favour of N. Surya Sivarao,

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which was encashed through the drawee bank, that is, the Vijayawada

branch of the State Bank of India, on 16^th August 1989.

5. The respondent bank had received the letter dated 15^th September

1994 from the Vijayawada branch of the State Bank of India stating that

the Central Drafts Reconciliation Department of the State Bank of India,

Mumbai, on reconciliation, had noticed the double payment, that is, both

the demand drafts were encashed and, accordingly, the respondent

bank had, on 31^st July 1996, filed civil suit based upon the indemnity

letter/bond against the appellants.

6.

Section 17 of the Act reads as under:

“Effect of fraud or mistake.—

(1) Where, in the case of any suit or application for which a

period of limitation is prescribed by this Act,—

(a) the suit or application is based upon the fraud of the

defendant or respondent or his agent; or

(b) the knowledge of the right or title on which a suit or

application is founded is concealed by the fraud of any such

person as aforesaid; or

(c) the suit or application is for relief from the consequences

of a mistake; or

(d) where any document necessary to establish the right of

the plaintiff or applicant has been fraudulently concealed from

him, the period of limitation shall not begin to run until plaintiff

or applicant has discovered the fraud or the mistake or could,

with reasonable diligence, have discovered it; or in the case

of a conceal