How rule of damdupat is applicable to suit for recovery of money?

 This Section is based on the rule of damdupat. The rule of damdupat is a branch of Hindu law of debts. According to this rule, the amount of interest recoverable, at any one time cannot exceed the principal. Where a suit has been instituted to recover a loan, the rule of damdupat ceases to operate. The result is that though the Court is bound to apply the rule of damdupat up to the date of the suit, it is free to award interest to the creditor at such rate, as it thinks proper from the date of the suit, up to the date of decree or payment upon the total amount that may be found due to the plaintiff after applying that rule. The rule of damdupat does not apply to interest recoverable in execution of a decree. The reason is that the rule ceases to operate after the suit. The principle of this section applies not only to a suit brought by a creditor, but also to a suit for redemption brought by a mortgager.

25. This rule of damdupat now finds a statutory recognition in the Karnataka Money Lenders Act, 1961. Section 26 of the said Act provides that notwithstanding anything contained in any agreement or any law for the time being in force, no Court shall in respect of any loan whether advanced before or after the date on which the Act comes into force decree, on account of interest, a sum greater than the principal of the loan due on the date of the decree. Thus, this rule of Hindu Law has been incorporated in the said Act in respect of the loans advanced by money-lenders.

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

Regular First Appeal No. 478 of 2012

Decided On: 01.12.2015

Bawa Enterprises and Ors.

Vs.

G.R. Shet and Ors.

Hon'ble Judges/Coram:

N. Kumar and B. Manohar, JJ.

Citation: AIR 2017(NOC) 55 KAR

Print Page

How to ascertain limitation in suit for recovery of money?

In the present case, de hors the correspondences that had been exchanged by and between the parties after the date of final payment i.e. 13th January, 1981, the aforesaid date of final payment would have been crucial for determination of the period of limitation for filing the instant suit. However, in the present case, from the correspondences that had been exchanged after the date of final payment it clearly appears that the Plaintiff after receipt of the payment on 13th January, 1981, reiterated its claim for additional payment on different counts including escalation and for extra works done. The Defendant instead of rejecting the said claim entertained the same and kept the matter pending. Finally on 6th November, 1981 (Exhibit P-2) the said claims were rejected. If the claims raised by the Plaintiff were entertained and rejected finally on 6th November, 1981, it would be reasonable to assume that the cause of action for the suit in respect of the said rejected claims arose on 6th November, 1981 and the suit could have been filed at any point of time prior to the expiry of three years from the said date i.e. 6th November, 1981 in view of Article 113 of the Limitation Act, 1963. The suit having been filed on 6th November, 1984, the same, therefore, will have to be considered to be within the period of limitation. The High Court, therefore, was not justified in holding the contrary.

IN THE SUPREME COURT OF INDIA

C.A. No. 1034/2008

Decided On: 21.03.2017

 Aries & Aries

Vs.

Tamil Nadu Electricity Board

Hon'ble Judges/Coram:

Ranjan Gogoi and Navin Sinha, JJ.

Citation: AIR 2017 SC 1897

Print Page

When suit for recovery of money is barred by limitation?

 At the out set, it may be noted that apart from the various contentions raised on behalf of the parties, it is clear from the record that the suit can be determined on the issue of law of limitation and we need not go into other aspect. It must be noted that even though the plaintiff has averred in his plaint that the amount was advanced as a friendly loan on 5/7/1989 payable back to plaintiff No. 1 "as and when demanded", the suit document itself does not show that either document can be construed as promissory note or there is any specification that the amount was to be repaid on demand in any manner whatsoever. If this is so, then the transaction between the parties is nothing less or more than a friendly loan advanced on 5/7/1989 between the parties. The learned Trial Judge has definitely fallen in error while holding that demand of repayment was made for the first time on 1 /11 / 1994 and therefore the suit filed on 4/1 /1996 was within 3 years and therefore within limitation. However, in absence of any other evidence to the contrary the trial Judge has definitely erred in relying on the statement in pleading between the parties that an amount was advanced and was to be repaid on demand. Therefore, the view which is taken by the trial Court that the suit transaction is covered by Article 22 of the Limitation Act is erroneous and has to be set aside. Record shows that suit transaction is entirely covered by the Article 19of the Limitation Act which provides the limitation period for recovery of the amount of 3 years which is the time from which period begins to run. In the present case before me loan is evidently given in the year 1989 and therefore, suit filed on 4/1/1996 is beyond period of 3 years and therefore barred by the law of limitation.

Bombay High Court

Mortulo Ramchandra Gad, (Since ... vs John Pinto (Since Deceased) ... on 11 August, 2006

Equivalent citations: I (2008) BC 63, 2006 (5) BomCR 522

Bench:  Kakade P.V., J.

Print Page

Whether suit for recovery of money is maintainable against sick industry without consent of BIFR ?

 Insofar as the recovery of money is concerned, the matter

is completely covered by Section 22(1) of the Act. The language

employed in Section 22(1) of the Act refers to the entirety of the

period beginning from the inquiry under Section 16 till the

implementation of sanctioned scheme for revival. Section 22(1)

bars any suit for recovery of money or for the enforcement of any

security against the industrial company without the express

consent of the Board. Reference in Section 22(1) is to “an

Industrial Company” and not to “the sick Industrial Company” as

found in later sub-sections of the same Section. This also throws

light that the bar is during the period contemplated in said

Section 22(1). Such bar is period specific and sub-section (5) of

Section 22 entitles exclusion of such period while computing

limitation. During the entirety of that period the Act grants

protection to the company and leaves it to the discretion of the

BIFR whether to permit filing and maintaining of suit or other

proceedings. In the present case the BIFR was considering Draft

Rehabilitation Scheme which is a stage under Section 18(3) and

is completely covered by the period under Section 22 of the Act.

The suit in the instant case as framed for recovery of money filed

without the consent of the BIFR was not competent and

maintainable. We may at this stage refer to the decisions

rendered by this Court with regard to Section 22(1) of the Act. In

Managing Director, Bhoruka Textiles Limited Vs. Kashmiri

Rice Industries1

, after quoting sub-section (1) of Section 22 of

the Act, it was observed:-

“A plain reading of the aforementioned provision

would clearly go to show that a suit is barred when

an enquiry under Section 16 is pending. It is also

not in dispute that prior to institution of the suit,

the respondent did not obtain consent of the Board.

9. the provision of the Act and, in particular,

Chapter III thereof, provides for a complete code.

The Board has a wide power in terms of the

provisions of the Act, although it is not a court.

Sub-section (4) of Section 20 as also Section 32 of

the Act provides for non obstante caluses. It

envisages speedy disposal of the enquiry and

preferably within the time framed provided for

thereafter. Section 17 empowers the court to make

suitable orders on the completion of enquiry.

Preparation and sanction of the scheme is also

contemplated under the Act.”

In para 12 of the said decision, it was further

stated:

“If the civil court’s jurisdiction was ousted in

terms of the provisions of Section 22 of the Act,

any judgment rendered by it would be coram non

judice. It is a well settled principle of law that a

judgment and decree passed by a court or tribunal

lacking inherent jurisdiction would be a nullity.”

Similarly, in Raheja Universal Limited Vs. NRC

Limited2

 it was observed as under:

“49. BIFR has been vested with wide powers and,

being an expert body, is required to perform duties

and functions of wide-ranged nature. If one looks

into the legislative intent in relation to a sick

industrial company, it is obvious that BIFR has to

first make an effort to provide an opportunity to

the sick industrial company to make its net worth

exceed the accumulated losses within a reasonable

time, failing which BIFR has to formulate a

scheme for revival of the company, even by

providing financial assistance in cases wherein

BIFR in its wisdom deems it necessary and finally

only when both these options fail and the public

interest so requires, BIFR may recommend

winding up of the sick industrial company. So long

as the scheme is under consideration before BIFR

or it is being implemented after being sanctioned

and is made operational from a given date, it is the

legislative intent that such scheme should not be

interjected by any other judicial process or

frustrated by the impediments created by third

parties and even by the management of the sick

industrial company, in relation to the assets of the

company.”

The suit in the instant case, insofar as it relates to the claim

for recovery of money, could lie or be proceeded with only after

express consent of the BIFR.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.10221 OF 2014 @

(SPECIAL LEAVE PETITION (C) NO.5249 OF 2014)

GHANSHYAM SARDA 

V

M/S SHIV SHANKAR

TRADING CO. & ORS. 

UDAY UMESH LALIT, J.

Citation: AIR 2015 SC 403

Dated:November 13, 2014

Print Page

Whether petition for recovery of money given at the time of engagement is maintainable before family court?

In my humble opinion, the bare reading of
Section 2 of the Dowry Prohibition Act, 1961 indicates
that if parties have agreed to enter into the marriage
on the future date, they shall be known as “parties to
a marriage” for the reason that any item or valuable
security given or agreed to be given either before the
marriage or at the time of marriage or after the
marriage shall be “dowry”.
It is nowhere denied by the defendant either in
this petition or in the application moved under Order
7 Rule 11 CPC that Rs. 2 lakhs were not given to him
by way of bank draft by the plaintiff/respondent,
herein to purchase the car so that car may be used by
them after the marriage. It is also not denied that
marriage was fixed between the parties to be
solemnized on 20.11.2003. Therefore, in my humble
opinion, parties to the plaint are parties to a marriage. 9
Since, as per the contents of the plaint, Rs. 2
lakhs were given by one of the parties to the marriage
i.e. the plaintiff in favour of another party to the
marriage i.e. defendant, therefore, for the recovery of
the amount, suit under Section 7, Explanation (c) of
the Family Courts Act is very well maintainable.
IN THE HIGH COURT OF UTTARAKHAND AT
NAINITAL
WRIT PETITION (M/S) No. 1277 of 2005

Uma Shanker Sharma  Vs  Principal Judge, Family Court, Rudrapur and another

Hon’ble Alok Singh, J. R
Citation; AIR 2015(NOC)855 UTR

Print Page

When suit for recovery of loan is not barred by provision of bombay money lender Act?

 The Bombay Money-Lenders Act was intended to do away with a very serious evil in our society. It was intended to keep control over money-lending transactions and to see that excessive rate of interest was not charged by money-lenders and the only way that such control could be maintained was by providing penalties for doing money-lending business without a proper license from the State. Therefore, in construing an Act of this nature which takes away vested rights and curtails freedom of contract in order to give relief to a particular class, the Court should guard against giving it an interpretation which would extend its scope. The provisions of the Act should be interpreted literally and strictly. Section 2(9)(f) expressly excludes an advance made on the basis of the negotiable instrument as defined under the Negotiable Instruments Act, from the definition of the term `loan'.

Section 10 provides that no Court shall pass a decree in favour of a money-lender to which the Act applies unless the moneylender held a licence at the relevant time. Section 2(17) states that the expression "suit to which this Act applies" means any suit or proceeding of the nature mentioned in clauses (a), (b) and (c) thereof. Clause (a) refers to a suit or proceeding "for the recovery of a loan made after the date on which the Act comes into force." Thus if a loan falls within the ambit of the expression "suit to which this Act applies" in section 2(17), a suit or proceeding to recover the same would have to be dismissed in view of section 10 unless the money-lender holds a licence at the relevant time.

 The question therefore, is whether the loan in the present case falls within the ambit of sections 2(17) and (10). The appellant's contention that the suit is barred by the provisions of the Bombay Money Lenders Act is not well founded. Section 2(9) defines a loan to mean an advance at interest whether of money or in kind, but does not include a loan or advance of the nature stipulated in clauses (a) to (f2) thereof. The above suit is not hit by the Bombay Money Lenders Act in view of clause (f) of section 2(9) of the Bombay Money Lenders Act. In view of clause (f), the loans do not fall within the purview of the Act as they were advances made on the basis of the negotiable instrument as defined in the Negotiable Instruments Act, 1881 viz. the cheques and the bills of exchange.

Equivalent Citation: 2015(2)ALLMR679
IN THE HIGH COURT OF BOMBAY
Appeal (Lodging) No. 252 of 2014 in Summons for Judgment No. 21 of 2013 in Summary Suit No. 203 of 2013
Decided On: 20.11.2014
Appellants: Parekh Aluminex Limited
Vs.
Respondent: Ashok Commercial Enterprises
Hon'ble Judges/Coram:S.J. Vazifdar and Revati Mohite Dere, JJ.

Print Page

Whether suit for recovery of money is maintainable, for want of privity of contract?

   Privity of  Contract-Supply made by appellant Plaintiff
to respondent defendant of 268 Bengali Maunds of Tobacco and
accepted by  the latter-Four  cheques issued  by the  latter
covering  the  value  bumped-No  document  was executed  to
evidence the  contract-Whether suit for recovery of money is
maintainable, for  want of  privity of contract?-  Onus  of
proof is  on the  defendant in such cases by producing best
evidence like Books of Accounts.



HEADNOTE:
     In the  money suit  filed by the appellant-plaintiff to
recover the  value of  tobacco sold  to respondent-defendant
after the  four cheques  covering the  value of  tobacco and
issued by  latter bumped,  the defendant  took  a  plea  of
nonexistence of privity of contract and while admitting both
the receipt  of the  tobacco from and issuance of cheques to
plaintiff,  explained  the  tobacco  had  been supplied  to
defendant by  the plaintiff  at the instance of another Firm
R. K. Patel with whom the defendant had placed the order for
the supply  of the  tobacco and  that the  four cheques were
issued in favour of plaintiff at the instance of Firm "R. K.
Patel", in  respect of another transaction for the supply by
that Firm  of 900  bags of  tobacco, which transaction later
failed.
     The Trial Court decreed  the suit  after rejecting the
evidence and  pleadings of the defendant. In appeal the High
Court reversed the judgment  and set  aside decree  of  the
trial Court.
     Allowing the appeal by certificate, the Court
^
     HELD :  Supply of the goods  by the  plaintiff to  the
defendant and  the issuance  of cheques  by  the  latter  in
favour of  the former shifted the onus of proof on the point
of privity  of contract  to the defendant. The fact that the
goods had  been sent  to the  defendant by the plaintiff and
had been  received by  the former  was admitted on all hands
and was sufficient to raise a presumption, till the contrary
was proved,  that an order had been placed for the supply of
the goods  with the  plaintiff by  the defendant  firm.  The
plaintiff could  thus bank  on the said fact for the purpose
of discharging the initial  onus which  lay on him to prove
the privity  of contract  between the parties and it was for
the defendant  to  rebut  the  presumption  which  the fact
raised. [27 G-H, 28 A]
     (ii) The  books of  account maintained by the defendant
being the  best evidence  available in proof of the stand of
the defendant  firm that no order had been placed by it with
the plaintiff  the failure  of the  defendant  to  place  on
record those  books is a clincher.  Non production of these
books by  the defendant raises a presumption against it that
if such evidence had been produced, the same would have gone
against the case propounded by it, more
23
so when  the defendant fails  to  bring  witnesses  to  the
transactions set up by it into witness-box and examine them.

Supreme Court of India

Kushalbhai Mahojibhai Patel vs A Firm Of Mohmadhussain Rahimbux on 11 March, 1980

Equivalent citations: 1981 AIR 977, 1980 SCR (3)  22



Bench: Koshal, A.D.

Print Page

Whether Bank has right to recover money paid under mistake?

 The Bank, of course, has a right to recover the money paid under a mistake as per Section 72 of the Indian Contract Act, which reads as under:

72. Liability of person to whom money is paid or thing delivered by mistake or under coercion.- A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.

29. Learned Counsel appearing for the Appellant brought to our notice a judgment of this Court in Jammu and Kashmir Bank Ltd. v. Attar-Ul-Nissa and Ors. MANU/SC/0007/1966: AIR 1967 SC 540. In that case, this Court had held that if a third party, by mistake deposits the money in account of some other person, as soon as the money is deposited in the account of such third person, who is a customer of the bank, the money becomes the money of customer, and it is not open to the bank in such circumstances, without obtaining the consent of the customer, to reverse the entry of credit made in his account and in effect pay back the money to the person who had deposited it, even though it might have been deposited by mistake. In this connection, we may refer to a judgment in United Overseas Bank v. Jiwani (1977) 1 All ER 733, wherein the Defendant had an account in Switzerland in which there was a credit of US$ 11000. The Defendant intended to purchase a hotel as an investment. The Bankers in Switzerland sent by telex US$ 11000 to London bankers at the instance of the Defendant and also an advice confirming the telex. The London bank by a mistake credited two sums of US$ 11000 to the Defendant. Later, when the Defendant enquired about its balance, it was shown to be about US$ 32000. The Defendant purchased a hotel out of the amount with the London Bankers. Facts would reveal, but for this balance shown, he would not have been able to purchase the hotel. The bankers rectified its error. Consequently, there was a debit balance of US$ 9000 as against the Defendant. Plaintiff bank demanded the money of the overdraft. It was held by the Court that the extra money credited to the Defendant's account was under mistake of fact and the bank was entitled to recover it.

Banking - Wrong credit - Re-payment thereof - Appellant's challenge to action of Bank was dismissed by High Court on ground that it was dispute which arose out of contractual relationship between parties and therefore, appropriate remedy for Appellant was by way of civil suit and not writ petition - Hence, present appeal - Whether Bank was right in debiting foreign currency in Appellant's account, after long lapse of time, on ground that it was wrongly deposited in Appellant's account and driving Appellant to recover amount by way of civil proceeding - Held, Appellant used to export goods directly and submitted documents to Bank and it was for Bank to claim payment and report transaction to Reserve Bank of India to claim export benefits - Bank committed mistake when Appellant had submitted copies of export bills to it on account of amount related to Importer - Bank after seeing credit amount in name of Appellant Smart Screen Reconciliation, evidently in good faith credited said amount to account of Appellant which was meant for another Bank - Bank might have committed mistake, but now it would be impossible for Appellant to recover amount from importer since, so far as importer was concerned, it had paid amount - If Bank had not given credit of amount, then, Appellant could have proceeded against importer at earliest opportunity - Therefore, Appellant would not suffer for mistake committed by Bank - Impugned order set aside - Appeal allowed. 

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 4807 of 2014 (Arising out Special Leave Petition (Civil) No. 28366 of 2010)

Decided On: 23.04.2014

Appellants: Metro Exporters Pvt. Ltd. and Anr.
Vs.
Respondent: State Bank of India and Ors.

Coram:K.S. Panicker Radhakrishnan and Vikramajit Sen, JJ.

Citation;AIR2014SC3206.

Print Page

Dishonour of cheque-amount not disclosed in income tax can be recovered

“......The learned J.M.F.C. has also held
against the complainant the fact that the
complainant had not shown the amount advanced
by him in his income tax returns. I do not think
that every person who gives friendly loans does in
all cases show such loans in their income tax
returns more so if they are payable on demand
after short time. The learned acquitting J.M.F.C.
entirely lost sight of the several presumptions
which the law has enacted in favour of the

complainant. 

IN THE HIGH COURT OF BOMBAY AT GOA
CRIMINAL APPEAL NO.6 OF 2012
Mr. Krishna P. Morajkar V/s Mr. Joe Ferrao,

CORAM : R.C. CHAVAN, J.

Pronounced Date : 19th JULY, 2013
Citation;2013 CR l J(NOC)572 Bombay

Print Page