IMPORTANT POINTS
(1) Preliminary issue – When issues of both law and facts arise in same suit, Court may dispose suit by trying issue of law first.
(2) Money suit – Issue as to whether claim of appellant is barred by limitation cannot be isolated from nature of transactions between parties.

JUDGMENT

Dr. Dhananjaya Y. Chandrachud, J.

Leave granted.

2. This appeal arises from a judgment of a Single Judge of the High Court of Delhi in RFA No 5 of 2019. The trial Court dismissed the suit instituted by the appellant on the ground of limitation, by a judgment dated 16 August 2018. The High Court upheld the dismissal of the suit on that ground.

3. The appellant instituted a suit against the respondent on 31 March 2017 (Civil Suit No 76 of 2017 (new number 355 of 2017)) under Order 37 of the Code of Civil Procedure 1908 ["CPC"] for the recovery of an amount of Rs 1,11,63,633 together with interest at the rate of 18% per annum from the date of the institution of the suit till the realization of the full amount. The respondent filed a written statement on 24 May 2017. An application was filed under Order 7 Rule 11 of the CPC for the rejection of the plaint on the ground that the suit was barred by limitation. On 4 January 2018, the trial Court framed a preliminary issue on whether the suit was barred by limitation. On 15 March 2018, the appellant was granted an opportunity to file its replication and the suit was adjourned to 26 April 2018 for addressing arguments on the preliminary issue. The appellant filed its replication on 20 April 2018. On 26 April 2018 and 23 May 2018, an adjournment was granted by the trial Court. On 26 July 2018, the trial Court rejected a plea for an adjournment made by the appellant. Oral arguments were heard on behalf of the respondent and the appellant was granted fifteen days' time to file written arguments. The appellant failed to file the written arguments before 10 August 2018. On 16 August 2018, the trial Court declined to grant any further time and by its judgment decided the issue of limitation against the appellant. The appellant carried the matter in appeal in RFA No 5 of 2019. The Single Judge of the High Court dismissed the appeal by the impugned judgment dated 4 September 2019.

4. The case of the appellant is that the respondent had requested the appellant to grant a business loan from time to time, and the request was acceded to by the appellant. The loans were stated to be repayable with interest at the rate of 18% per annum. The appellant claims to have advanced an amount of Rs 10 lakhs on 13 June 2012, 18 lakhs on 11 July 2012 and Rs 15 lakhs on 21 December 2012 by cheques drawn on Axis Bank, and a further amount of Rs 39 lakhs. The case of the appellant is that the respondent partly discharged his liability and that he is entitled to a decree for the balance in the amount of Rs. 1,11,63,633 along with an interest at 18% per annum. Paragraph 5 of the plaint contains the following averments:

"The aforesaid loans have been given by the plaintiff to the defendant always with an understanding that aforesaid loans shall be returned along with interest @ 18% p.a. That the aforesaid loans were repayable within one year from the date of payment of the last instalment of the loan i.e. latest by 9th of April, 2014. However, the defendant was to pay interest on the aforesaid loan amounts on half yearly basis @ 18% p.a. to the plaintiff."

5. In paragraph 10 of the plaint, it has been pleaded that though two and a half years had elapsed since the date for repayment of the loan, the respondent had failed to pay the outstanding amount. The appellant has also set up the case that a running account has been maintained between the parties in pursuance of which, the last payment was made on 24 October 2013.

6. The defense in the written statement filed by the respondent is that the respondent provided real estate services to the appellant for which commission was being paid by the appellant. It was alleged that payments made for business transactions are in a malafide manner portrayed as loan transactions. On some occasions, it is alleged, payments were made for carrying out renovation work in the properties. The respondent has denied that there were any loan transactions, and on the contrary, set up