determined as per terms and conditions of the agreement dated
20.9.1983. The terms of the agreement as noted by the High
Court and referred to by us as above clearly indicate that on
committing a breach of terms and conditions of the agreement
the rights shall accrue to the plaintiff to sue for balance
instalments and the damages for breach of contract. Thus, the
right to sue shall not stand differed till either sale which took
place on 20th May, 1985 or till the last date of payment of the
instalment that is 20th September, 1986. Both the courts
below have rightly taken the view that limitation shall start
running from the date the hirer defaulted in making payment
that is on 20.5.1984 and suit has been filed beyond three years
from the above date was clearly barred by time. Article 55 of
the Limitation Act, 1963 has also come for consideration before
this Court in Syndicate Bank vs. Channaveerappa Beleri
and others,2006 (11) SCC 506. In paragraph 13 of the
judgment following was stated:
“13. What then is the meaning of the said words
used in the guarantee bonds in question? The guarantee
bond states that the guarantors agree to pay
and satisfy the Bank “on demand”. It specifically
provides that the liability to pay interest would arise
upon the guarantor only from the date of demand by
the Bank for payment. It also provides that the guarantee
shall be a continuing guarantee for payment of
the ultimate balance to become due to the Bank by
the borrower. The terms of guarantee, thus, make it
clear that the liability to pay would arise on the guarantors
only when a demand is made. Article 55 provides
that the time will begin to run when the contract
is “broken”. Even if Article 113 is to be applied,
the time begins to run only when the right to sue accrues.
In this case, the contract was broken and the
right to sue accrued only when a demand for payment
was made by the Bank and it was refused by
the guarantors. When a demand is made requiring
payment within a stipulated period, say 15 days, the
breach occurs or right to sue accrues, if payment is
not made or is refused within 15 days. If while making
the demand for payment, no period is stipulated
within which the payment should be made, the
breach occurs or right to sue accrues, when the demand
is served on the guarantor.”
21. In exercise of power under Clause 4 of the agreement
dated 20.9.1983 the plaintiff had taken possession of vehicle
on 9.2.1985 and had immediately vide letter dated 12.2.1985
called upon the defendant to pay them due within 10 days from
the receipt of the letter. The notice dated 12.2.1985 was
received by the first defendant which was also replied by the
first defendant as has been pleaded in the written statement.
Thus,in any event of the matter contract stood broken on the
default and right to sue accrued to the plaintiff on demanding
the amount to be paid within 10 days. Thus, in any view of the
matter suit filed by the plaintiff was beyond three years and
has rightly been dismissed by the trial court.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPEALLATE JURISDICTION
CIVIL APPEAL NO.7245 OF 2008
M/S. SUNDARAM FINANCE LIMITED
V
NOORJAHAN BEEVI AND ANOTHER.
Dated:JUNE 29, 2016.
Citation: (2016) 13 SCC1
