PUNJAB NATIONAL BANK AND ORS. versus SURENDRA PRASAD SINHA

Citation: [1992] 2 S.C.R. 528 · Decided: 20-04-1992 · Supreme Court of India · Bench: K. RAMASWAMY · Disposal: Dismissed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
PUNJAB NATIONAL BANK AND ORS. 
k 
v. 
SURENDRA PRASAD SINHA 
APRIL 20, 1992 
B 
[K. RAMASWAMY AND B.P. JEEVAN REDDY, JJ.] 
...--
Limitation Act, 1963-Section 3-Whether bars the right to which a 
remedy related--Right to enforce debt by judicial process-Scope of-Time 
barred debt-Realisation of-Filing of suit to recover debt-Creditor's obliga-
_,,, 
c ti oh. 
..... 
Penal Code, 1860-Section 40~Action in terms of a con-
tract-Whether amounts to criminal breach of trust or misappropria-
~ 
tion-creditor in possession of security-Adjustment of debt due from 
D 
security-Justification of. 
Penal Code, 1860-Sections 409, 109/114--Complaint petition-Main-
tainability-Duty of Magistrate, indicated-Accused to be legally responsible 
for the offences charged-Magistrate's satisfaction of prima facie 
case-criminal justice-Objects of. 
E 
On 5.5.1984, the Bank-appellant No.1, gave a loan of Rs.15,000 to one 
S.N. Dubey. The respondent and his wife executed a Security Bond, as 
guarantors and hande(l over a Fixed Deposit Receipt for a sum of Rs. 
24,000 which was valued at Rs.41,292 on its maturity on 1.11.1988. 
F 
The principal debtor defaulted making payment of the debt. When 
the respondent's F.D. matured, the Manager of the Bank (appellant No.5) 
~
adjusting a sum of Rs.27,037.60 due and payable by the principal debtor 
as on December 1988 and the balance sum of Rs.14,254.40 was credited to 
the S.B. Account of the respondent. 
G 
The respondent filed a private complaint against the appellants in 
the Court of Addi. Chief Judicial Magistrate u/ss.409,109/114, IPC, alleging 
that the debt became barred by limitation as on 5.5.1987; that the liability 
of the respondent being co-extensive with that of the principal debtor, his 
liability also stood extinguished as on 5.5.1987; that without taking any 
<' 
H action to recover the amount from the principal debtor within the period 
528 
I, 
P.N.B. v. S. P. SINHA 
529 
of limitation, on 14.1.1989, the Branch Manager credited to his S.B. A 
Account only RS.14,254.00 on the maturity of his F.D.R. and thereby the 
appellants criminally embezzled the amount. 
The appellants filed this Criminal Appeal by special leave challeng-
ing the High Court's order declining to quash the complaint filed by the 
respondent u/ss. 409, 109/114, IPC. 
· 
B 
Allowing the appeal of the Bank, this Court, 
HELD : 1.01. The rules of limitation are not meant to destroy the 
rights of the parties. Section 3 of the Limitation Act only bars the remedy, C 
but does not destroy the right which the remedy relates to. The right to the 
debt continues to exist notwithstanding the remedy is barred by the 
limitation. Only exception in which the remedy also becomes barred by 
limitation is the right is destroyed. [532E-F] 
L02. Though the right to enforce the debt by judicial process is D 
barred, the right to debt remains. The time 'i>arred debt does not cease to 
exist by reason of s.3. That right can be exercised in any other manner than 
by means of a suit. The debt is not extinguished, but the remedy to enforce 
the liability is destroyed. [532G] 
1.03. What s.3. refers is only to the remedy but not to the right of the E 
creditors. Such debt continues to subsists so long as it is not paid. It is 
not obligatory to file a suit to recover the debt. [532G-H] 
2.01. Action in. terms of the contract expressly or implied is a 
negation of criminal breach of trust defined in s.405 and punishable under 
s.409 I.P.C. It is neither dishonest, nor misappropriation. [533C] 
2.02. The creditor when he is in possession of an adequate security, 
the debt due could be adjusted from the security, in his possession and 
custody. [533A] 
2.03. The bank had in its possession the F.D.R. as guarantee for due 
payment of the debt and bank appropriated the amount towards the debt 
due and payable by the principal debtor. [5330) 
F 
G 
2.04. The respondent and his wife stood guarantors to the principal 
debtor, jointly executed the security bond and entrusted the F .D.R. as H 
B 
c 
530 
SUPREME.COURT REPORTS 
[1992) 2 S.C.R. 
security to adjust the outstanding debt from it at maturity. Therefore, 
though the remedy to recover the debt from the principal debtor is barred 
by limitation, the liability still subsists. In terms of the contract the bank 
is entitled to appropriate the debt due and credit the balance amount to 
the saving bank account of the resp?ndent. Thereby the appellant did not 
act in violation of any law, nor co

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