Case Note & Summary
The appellant, M/s Mongia Realty and Buildwell Private Limited, instituted a suit against the respondent, Manik Sethi, on 31 March 2017 under Order 37 of the Code of Civil Procedure, 1908 (CPC) for recovery of Rs 1,11,63,633 with interest at 18% per annum. The appellant claimed that it had advanced loans to the respondent on various dates in 2012 and 2013, and that the loans were repayable within one year from the date of the last installment, i.e., by 9 April 2014. The respondent filed a written statement denying the loan transactions and alleging that the payments were for commission and renovation work. The respondent also filed an application under Order 7 Rule 11 CPC for rejection of the plaint on the ground of limitation. The trial court framed a preliminary issue on limitation and, after hearing oral arguments, dismissed the suit as barred by limitation, holding that the last payment was made on 20 June 2013 and the suit was filed beyond three years. The High Court of Delhi upheld the dismissal, noting that the last payment was on 24 October 2013 and that there was no written agreement to support the appellant's claim of repayment within one year. The Supreme Court allowed the appeal, holding that the issue of limitation could not be decided as a preliminary issue under Order XIV Rule 2 CPC because the facts were disputed. The court observed that the appellant had specifically pleaded in paragraph 5 of the plaint that the loan was repayable within one year from the last installment, and the respondent had denied the existence of any loan. The court relied on the precedent in Nusli Neville Wadia v. Ivory Properties, which held that if the issue of limitation is based on admitted facts, it can be decided as a preliminary issue, but if facts are disputed, it cannot. The court set aside the judgments of the trial court and the High Court and remanded the suit to the trial court for trial on merits, directing that the suit be decided afresh in accordance with law.
Headnote
A) Civil Procedure - Preliminary Issue - Order XIV Rule 2 CPC - Bar to Suit - Limitation - The court held that when facts surrounding the issue of limitation are disputed, it cannot be decided as a preliminary issue under Order XIV Rule 2(2)(b) CPC. The issue requires evidence to be adduced at trial. (Paras 11-14) B) Limitation Act - Bar of Limitation - Disputed Facts - The court held that the question of limitation cannot be isolated from the nature of transactions between parties. Where the plaint contains a specific plea that the loan was repayable within one year from the last installment, and the defendant denies the existence of a loan, the issue must be decided after trial. (Paras 11-12) C) Precedent - Nusli Neville Wadia v. Ivory Properties - (2020) 6 SCC 557 - The court relied on this precedent to hold that if the issue of limitation is based on admitted facts, it can be decided as a preliminary issue; but if facts are disputed, it cannot. (Para 14)
Issue of Consideration
Whether the suit filed by the appellant is barred by limitation and whether the issue of limitation can be decided as a preliminary issue under Order XIV Rule 2 CPC when the facts are disputed.
Final Decision
The Supreme Court allowed the appeal, set aside the judgments of the trial court and the High Court, and remanded the suit to the trial court for trial on merits. The trial court is directed to decide the suit afresh in accordance with law, without being influenced by the earlier findings on limitation.
Law Points
- Limitation Act
- 1963
- Order XIV Rule 2 CPC
- Preliminary issue
- Disputed facts
- Evidence required
- Bar to suit
- Nusli Neville Wadia v. Ivory Properties
