Case Note & Summary
The respondent, Shrimat S/o Ramrao Kage, was a guarantor for a loan taken by one Laxman from the Osmanabad District Central Cooperative Bank Ltd. The loan was taken in 1982, and the principal debtor defaulted. The bank obtained a recovery certificate under Section 54 of the Co-operative Societies Act, 1912 against the principal debtor. Subsequently, the bank filed a civil suit in 1992 against the guarantor for recovery of the amount. The trial court decreed the suit in favor of the bank. The bank appealed against the decree, but the High Court framed the issue of limitation. The High Court held that the suit against the guarantor was barred by limitation as it was filed beyond three years from the date of default. The acknowledgment of liability by the principal debtor did not extend limitation against the guarantor. The court also held that the civil suit was maintainable despite the recovery certificate. The appeal was allowed, and the suit was dismissed as barred by limitation.
Headnote
A) Limitation Act, 1963 - Section 18 - Acknowledgment of Liability - Guarantor - An acknowledgment of liability by the principal debtor does not extend the period of limitation against the guarantor unless the guarantor also acknowledges the liability. The suit against the guarantor was filed beyond three years from the date of default, and no acknowledgment was made by the guarantor. Held that the suit is barred by limitation. (Paras 5-6) B) Co-operative Societies Act, 1912 - Section 54 - Recovery Certificate - Bar of Civil Suit - The issuance of a recovery certificate under Section 54 of the Co-operative Societies Act does not bar a civil suit for recovery of the same debt. The bank had obtained a recovery certificate against the principal debtor but filed a civil suit against the guarantor. Held that the civil suit is maintainable. (Para 4) C) Limitation Act, 1963 - Article 55 - Suit for Money Lent - Limitation Period - The period of limitation for a suit for recovery of money lent is three years from the date of default. The loan was taken in 1982, and the suit was filed in 1992, beyond the limitation period. Held that the suit is barred by limitation. (Paras 5-6)
Issue of Consideration
Whether the suit filed by the bank against the guarantor is barred by limitation, and whether the acknowledgment of liability by the principal debtor extends limitation against the guarantor.
Final Decision
The appeal is allowed. The judgment and decree of the trial court are set aside. The suit is dismissed as barred by limitation. No order as to costs.
Law Points
- Limitation Act
- 1963
- Section 18
- Acknowledgment of liability
- Guarantor's liability
- Co-operative Societies Act
- 1912
- Section 54
- Recovery certificate
- Civil suit
- Bar of jurisdiction
