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The Supreme Court has held that the limitation period under Article 113 of the Limitation Act begins when the right to sue accrues and not when the right to sue "first" accrues. (Shakti Bhog Food Industries vs Central Bank of India)
A three-judge Bench of Justices AM Khanwilkar, Indira Banerjee, and Dinesh Maheshwari was considering an appeal against the decision of the Delhi High Court which had affirmed the decision of the lower courts to reject a plaint on the grounds that the same was barred by limitation under Order VII Rule 11(d) of the Code of Civil Procedure (CPC).
In February 2005, the appellant had filed a suit against the respondent bank for the rendition of true and correct accounts as regards commission/interest charged and deducted by the bank for the period between 1997 and 2000.
The appellant also sought recovery of excess amount thus deducted by the bank and for 18 per cent interest on the same from the date the deductions were made till the realization of the amount.
Various communications were sent by the appellant to the bank from the year 2000, till ultimately, the Senior Manager of the bank communicated to him that all actions taken by the bank were taken as per the rules and, therefore, the appellant need not correspond in this regard any further. These correspondences were sent to the appellant in May and September of 2002.
The appellant then sent legal notices to the bank, and subsequently filed a suit in February 2005. However, the same stood rejected by the trial court as being barred by limitation under Article 113 of the Limitation Act. The Court invoked Order VII Rule 11(d) of the CPC as grounds to reject the plaint.
The trial court reasoned that the right to sue first accrued in the year 2000, when the cause of action arose, and given that the limitation period of three years prescribed under Article 113 had lapsed, the plaint filed in 2005 ought to be rejected. This decision was upheld by the district court and then affirmed by the Delhi High Court.
The Supreme Court, however, took a different view in the case and allowed the appeal. It held that the limitation period would not bar this suit, given that the right to sue accrued in 2002.
"Inasmuch as, having noticed from the averments in the plaint that the right to sue accrued to the appellant on receiving letter from the Senior Manager, dated 8.5.2002, and in particular letter dated 19.9.2002, and again on firm refusal by the respondents vide Advocate’s letter dated 23.12.2003 in response to the legal notice sent by the appellant on 28.11.2003; and once again on the follow up legal notice on 7.1.2005, the plaint filed in February, 2005 would be well within limitation."
The Court noted that the right to sue accrued for the plaintiff on various occasions, each time a letter in response to plaintiff's communication was received by him by the respondent Bank.
It was further held that the view taken by the lower courts entailed a reading of Article 113 - which deals with when the right to sue accrues - as "when the right to sue (first) accrues". This, the Court opined, would be "rewriting of that provision and doing violence to the legislative intent". The Court also highlighted,
The courts must assume that Parliament, while enacting the law, was conscious of the distinction between these provisions, the Apex Court said.
On these grounds, the Court held that the order of the trial court rejecting the plaint in question under Order VII Rule 11(d) of the CPC could not be sustained. The decisions of the High Court, the district court, and the trial court were thus set aside.