M/S. SUNDARAM FINANCE LIMITED versus NOORJAHAN BEEVI AND ANOTHER

Citation: [2016] 3 S.C.R. 420 · Decided: 29-06-2016 · Supreme Court of India · Bench: ABHAY MANOHAR SAPRE · Disposal: Dismissed

Judgment (excerpt)

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[2016) 3 S.C.R. 420 
M/S. SUNDARAM FINANCE LIMITED 
v. 
NOORJAHAN BEEVI AND ANOTHER 
(Civil Appeal No. 7245 of2008) 
JUNE 29, 2016 
[ABHAY MANOHAR SAPRE AND ASHOK BHUSHAN, JJ.) 
Limitation Act, 1963 -Arts. 55 and 113 - Period of limitation 
for filing recovery suit against defaulting borrower - Hire purchase 
agreement between the financer and hirer for purchasing a vehicle 
- Default in payment of instalments by hirer within a year - One 
year thereajie1; company seizing the vehicle and selling it - However, 
the amount recovered not sufficient to clear the amount received -
Suit for recovery of the balance amount by the jinancer within three 
years from the date of selling of the vehicle - Borrowers case that 
the three years limitation period to be counted ji-0111 the first default 
- Company :s case that limitation period to be counted ji-om the sale 
of the vehicle - Trial court and High Court held that the suit was 
barred by limitation - 011 appeal, held: Limitation would start 
running from the date the hirer defaulted in making payment and 
suit was filed beyond three years from the said date, thus, was clearly 
barred by time and was rightly dismissed by the courts below . 
. 
Dismissing the appeal, the Court 
HELD: 1.1 There is no dispute between the parties that 
the hirer committed default in payment of instalments on 20th 
May, 1984. The High Court while noticing the contents of Clause 
4 of the agreement held that "if the hirer commits the breach of 
the agreement, the rights of the hirer under the agreement shall 
forthwith be determined ipso facto without any notice to the hirer 
and all the instalments previously paid by the hirer shall be 
absolutely forfeited to the owners who shall thereupon be entitled 
to enter any house or place where the said vehicle may then be 
seize, remove and retake possession of it and to sue for all the 
instalments due and for damages for breach of the agreement. 
420 
MIS. SUNDARAM FINANCE LIMITED v. NOORJAHAN BEEV! 42 I 
AND ANOTHER 
The High Court further held that there is no clause in agreement 
permitting the plaintiff to sell the vehicle. 'fhe submission that 
limitation to file the suit for recovery of balance amount shall 
begin with effect from the date of sale this is 30th May,1985, 
cannot be accepted. The contract was to be determined ipso facto 
on default being committed. The power of seizing the vehicle 
and to take possession as contemplated under Clause 4 of the 
agreement was consequent to default being !-'.Ommitted by the 
hirer. Thus, as per Clause 4 the right to sue accrues when the 
hirer commits breach of the agreement. Committing default in 
payment of installment is nothing but a breach of the agreement 
and thus courts below rightly took a view that period of limitation 
for filing a suit under Article 55 shall begin with effect from 20th 
May, 1984 when the default was committed by the hirer. [Paras 
12, 14, 15) [427-E-I<'; 428-B-D) 
1.2 The rights of the parties have to be determined as per 
terms and conditions of the agreement dated 20.9.1983. The terms 
of the agreement 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. [Para 20) 
[432-D-I<') 
1.3 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 dismisse

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