P. Saraswathy and P.K. Asokan v. Sakthi Finance Ltd.

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Shircy V.
Judgment Date: 2019-03-28
Court Decision / Holding: Appeal allowed; the judgment and decree of the Sub Court are set aside. The suit for balance amount is dismissed. The parties shall bear their own costs.
Final Disposition: Appeal allowed; suit dismissed; costs to be borne by the parties.

Parties to the Case

Appellants / Petitioners

P. Saraswathy, wife of Asokan Kallaramkettill (H), Chulliparamba, Feroke AMSOM, Desom, Feroke College (P.O), Calicut
P. K. Asokan, son of Ramootty Kallaramkettill (H), Chulliparamba, Feroke College (P.O), Feroke AMSOM and Desom, Calicut

Respondents

M/S Sakthi Finance Ltd.

Legal Representation & Advocates

Counsels for Petitioners

• T. R. Ravi

Counsels for Respondents

• P. Santhalingsam (Sr.)
• Jessy S. Salim
• S. Sharan

Case Synopsis & Summary

This Regular First Appeal before the High Court of Kerala, Kozhikode, arises out of a hire-purchase agreement dated 20 September 1996 under which the defendants/petitioners (appellants) availed a loan of Rs. 3,92,500 for a vehicle, with repayment in 36 installments. The defendants defaulted from 20 August 1997, having paid only Rs. 1,22,100 and a partial payment on 20 February 1998; the vehicle was repossessed on 5 November 1998 and sold for Rs. 1,65,000, which was adjusted against the outstanding installments. The plaintiff, Sakthi Finance Ltd., filed OS 104/2002 seeking the balance of Rs. 1,84,557 with interest. The trial court decreed in favour of the plaintiff on 20 March 2003 for Rs. 1,84,557 at 9% interest. The appellants contend that the suit is barred by limitation, insisting the breach occurred on 20 August 1997 and that limitation under Article 55 commenced there, making the March 2002 suit time-barred. The trial court treated the period from sale-adjustment date (27 September 1999) as the starting point, which the appellate court overturns. Citing Sundaram Finance Ltd. v. Noorjahan Beevi, the court emphasizes that accrual of a cause of action arises on breach. Ultimately, the High Court allows the appeal, sets aside the decree, and dismisses the suit, with parties bearing their own costs.

Provisions of Law Cited

Article 55 of the Indian Limitation Act

Legal Doctrines & Maxims

Right to sue accrues when breach of contract occurs (as per Sundaram Finance Limited v. Noorjahan Beevi and Another)
Contract termination ipso facto on breach (ipso facto termination)

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellants contend that the suit for realisation of the balance under the hire-purchase agreement is barred by limitation. Ext. A3 (the hire-purchase agreement) term 9 provides that upon default in payment (breach) the agreement is determined ipso facto. They argue that the right to sue accrues on breach (20.08.1997); hence the suit filed in March 2002 is time-barred under Article 55; they rely on the Sundaram Finance Ltd. decision to support accrual from breach and challenge the lower court’s note that limitation starts from 27.09.1999 after sale-adjustment. They submit that the lower judgment misapplied limitation principles by treating the post-sale adjustment as the starting point rather than the breach of the agreement.

Contentions of Respondents

Not expressly stated in the document; the plaintiff’s position on limitation is not elaborated in the judgment beyond reliance on the lower court’s conclusion and the appellant’s challenge thereto.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Sundaram Finance Limited v. Noorjahan Beevi and Another	2016 KHC 6417 (2016) 13 SCC 1	Positive	Cited to support the proposition that accrual of the right to sue arises on breach of the hire-purchase agreement, thereby anchoring the starting point for limitation.

Extracted Judgment Text

Exact text extracted from official judgment records.

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MRS. JUSTICE SHIRCY V.** **THURSDAY, THE 28TH DAY OF MARCH 2019 / 7TH CHAITHRA, 1941** ## **RFA.No. 266 of 2004** **AGAINST THE JUDGMENT IN OS 104/2002 of III ADDITIONAL SUB COURT, KOZHIKODE DATED 20-03-2003** ## **APPELLANTS/DEFENDANTS 1 AND 2:** **1 P.SARASWATHY,W/O.ASOKAN KALLARAMKETTIL (H), CHULLIPARAMBA, FEROKE AMSOM,, DESOM, FEROKE COLLEGE (P.O), CALICUT. 2 P.K.ASOKAN S/O. RAMOOTTY KALLARAMKETTIL (H), CHULLIPARAMBA,, FEROKE COLLEGE (P.O), FEROKE AMSOM AND DESOM,, CALICUT. BY ADV. SRI.T.R.RAVI** ## **RESPONDENTS/PLAINTIFF AND 3RD RESPONDENT** **1 M/S.SAKTHI FINANCE LTD. DR.NANAPPA ROAD, COIMBATORE, REPRESENTED BY ITS, GENERAL MANAGER (OPERATIONS), MR.S.ANAND, S/O. SREENIVASAN, M/S. SAKTHI FINANCE LTD., DR.NANAPPA ROAD, COIMBATORE-18. 2 M.CHANDUKUTTY S/O. COYICHAN --DELETED MUHAMPARAMBATH (H), FEROKE COLLEGE (P.O),, FEROKE AMSOM AND DESOM, CALICUT.** **R2 DELETED FROM THE PARTY ARRAY AT THE RISK OF THE APPELLANT VIDE ORDER DATED 1.7.2009 IN I.A. 2021/09.** **BY ADVS. SRI.P.SANTHALINGAM (SR.) ADV.JESSY.S.SALIM SRI.S.SHARAN** **THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 28.03.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **RFA.No. 266 of 2004** **2** ## **JUDGMENT** The defendants in O.S.No.104/2002 on the file of the Subordinate Judge, Kozhikode have come up with this appeal challenging the judgment and decree dated 20.3.2003 passed against them directing to pay a sum of Rs.1,84,557/- to the plaintiff. 2. The brief facts for disposal of this appeal are as follows: 3. The respondent/plaintiff is a finance company incorporated under the Companies Act engaged with the business of hire purchase. The defendants had availed an amount of Rs.3,92,500/- for purchase of vehicle bearing Reg.No.KL-11/E 7837 after executing an agreement dated 20.9.1996 agreeing to repay the amount in 36 monthly instalments. They have defaulted to pay the amount and the last payment effected was on 20.2.1998 for the instalment due on 20.8.1997. The plaintiff company repossessed the vehicle on 5.11.1998 and sold the vehicle for a sum of Rs.1,65,000/- after complying with the **RFA.No. 266 of 2004** **3** formalities and adjusted the sale proceeds towards the sale consideration and claimed the balance amount. 4. The defendants/appellants admitted the execution of the agreement as well the purchase of the vehicle as per the agreement dated 20.9.1996 for a sum of Rs.3,92,500/-. They have remitted an amount of Rs.1,22,100/- but could not pay the balance amount as agreed in the agreement. It is also admitted that the amount was defaulted as they could not repay the amount as agreed. It is also admitted by the defendants in the written statement that the vehicle was repossessed on 5.11.1998. But it is further contended that the amount claimed in the plaint could not be recovered from them as the suit is barred by limitation. 5. Before the court below on the side of the plaintiff, PW1 was examined and Exts.A1 to A30 were marked. The defendants were examined as DW1 and DW2 and Exts.B1 and B2 were marked. The court below after evaluating the entire evidence on record decreed the suit for a sum of Rs.1,84,557/- with interest at the rate of 9% per annum. Feeling aggrieved by the judgment **RFA.No. 266 of 2004** **4** and decree the defendants have come up in this appeal. 6. Heard Adv.Sri.T.R.Ravi, the learned Counsel for the appellants and Adv.Smt.Jessy.S.Salim the learned Counsel for the defendants/respondents. 7. Certain facts are not in dispute. The defendants have availed hire purchase facility for purchase of a vehicle on 20.9.1996 and availed a loan for a sum of Rs.3,92,500 and they purchased the vehicle bearing Reg.No.KL.11/E 7837. As per Ext.A3 hire purchase agreement the amount has to be repaid in 36 monthly instalments. The instalment Nos. 1 to 26 was at rate of Rs.11,100/- and the remaining at the rate of Rs.10,300/-. Admittedly, the defendants could not repay the amount as agreed by them as per Ext.A3 agreement. In total they have paid an amount of Rs.1,22,100/- and the plaintiff has admitted the same. They have defaulted to pay the instalments from 20.8.1997. But even after that admittedly, they have remitted Rs.11,100/- on 20.2.1998. Thereafter, the defendants could not pay anything towards the instalments and thus the plaintiff had repossessed the vehicle on 5.11.1998. It is revealed from the records that the **RFA.No. 266 of 2004** **5** vehicle was sold by the company for an amount of Rs.1,65,000/and the same was adjusted towards the instalment that fell due on 20.8.1997 and they have claimed for the balance amount by filing the suit in the month of March 2002. The main argument advanced by the learned counsel for the defendants is that the suit is hopelessly barred by limitation as the suit was filed only in the month of March 2002, though the instalment fell due on 20.8.1997 and the vehicle was repossessed on 5.11.1998 and sold. 8. On a perusal of the judgment under challenge it could be seen that the court below in paragraph No.7 has stated that the vehicle was repossessed and sold after completing the formalities and the amount was adjusted on 27.9.1999 and as the suit was filed in the month of March 2002, it is not barred by limitation. But the learned counsel for the appellants/defendants invited my attention to the decision of the Apex Court i **n Sundaram Finance Limited v. Noorjahan Beevi and Another 2016 KHC 6417=(2016) 13 SCC 1)** wherein it has been held that if the terms and conditions in the agreement would show **RFA.No. 266 of 2004** **6** that the agreement would terminate when a breach was committed by the hirer, the period of limitation would start from that date onwards. 9. So in order to appreciate the facts clause No.9 of Ext.A3 has to be looked into which reads as follows: “9. In case the hirer shall during the continuance of this Agreement do or suffer any of the following act or things, viz, either; - a) fail to pay any of the hiring instalments within the - stipulated time, whether demanded or not; - (b) ***** - (c) ***** - (d) ***** - (e) ***** - (f) ***** - (g) ***** - (h) ***** - (I) ***** 10. The Apex Court in the above decision observed that the right to sue accrues when the hirer commits breach of agreement. Committing default in payment of instalments is nothing but a breach of agreement and but the court below has taken a view that as the vehicle was taken possession and sold **RFA.No. 266 of 2004** **7** after complying with all the formalities, the plaintiff could realise the balance, if any, after disposal of the vehicle from the defendants. 11. It is not in dispute that the instalment was defaulted by the defendants on 20.8.1997. Thereafter also a payment was effected on 20.2.1998, but as per clause 9 of the agreement it could be seen that the defendant who is the hirer under the agreement had defaulted to pay the instalment amount on 20.8.1997 and thus the agreement shall forthwith be determined ipso facto without any notice to the hirer as per the terms of the agreement executed between the parties. The breach was committed on 20.8.1997 and thus the contract was determined on 20.8.1997. Such being the case the relevant provision under the limitation act for filing a suit is under Article 55. Here, the default was committed on 20.8.1997. So the period of limitation would start from 20.8.1997. It is pertinent to note that the suit was filed by the plaintiff only in the month of March 2002. So no doubt the claim is barred by limitation. The finding entered by the court below that the limitation period starts from 27.9.1999, **RFA.No. 266 of 2004** **8** when the amount obtained after sale of the vehicle was adjusted is absolutely wrong and hence it could correctly be concluded that the suit for the balance amount of Rs.1,84,557/-, filed in the year 2002 is hopelessly barred by limitation. Hence, I find that the plaintiff/respondent is not entitled to get a decree for realisation of money thereby the judgment and decree under challenge are set aside. In the result, the appeal is allowed and the suit stands dismissed. The parties shall bear their respective costs. **Sd/-** **SHIRCY V.** smm **JUDGE**