Case Note & Summary
The appeal arose from a judgment of a Single Judge of the High Court of Delhi in RFA No 5 of 2019, which upheld the trial court's dismissal of a suit on the ground of limitation. The appellant had instituted a suit under Order 37 of the Code of Civil Procedure, 1908, for recovery of Rs 1,11,63,633 with interest, alleging loan transactions with the respondent. The respondent denied the loans, claiming payments were for commission in real estate services, and filed an application under Order 7 Rule 11 CPC for rejection of the plaint as time-barred. The trial court framed a preliminary issue on limitation, heard oral arguments without evidence, and dismissed the suit, a decision affirmed by the High Court. The core legal issues were whether the suit was barred by limitation and if the issue could be decided as a preliminary issue under Order XIV Rule 2 CPC. The appellant argued that the plaint averments in paragraph 5 indicated repayment by 9 April 2014, making the suit filed on 31 March 2017 within limitation, and that the running account plea required evidence. The respondent contended there was no written agreement, the last payment was on 24 October 2013, and Article 1 of the Limitation Act did not apply. The Supreme Court analyzed Order XIV Rule 2 CPC, citing Nusli Neville Wadia v. Ivory Properties, which holds that limitation can be decided as a preliminary issue only if based on admitted facts; otherwise, evidence is necessary. The court found that the facts regarding the nature of transactions and repayment terms were disputed, requiring trial. It held the trial court's approach of deciding limitation based on oral arguments was irregular, as the issue could not be isolated from the evidence needed on the transactions. The court set aside the judgments of the lower courts and remanded the suit for trial on evidence.
Headnote
A) Civil Procedure - Limitation - Preliminary Issue Under Order XIV Rule 2 CPC - Code of Civil Procedure, 1908, Order XIV Rule 2 - The trial court framed a preliminary issue on limitation and decided it based on oral arguments without evidence, holding the suit barred. The Supreme Court held that when facts surrounding limitation are disputed, as in this case where the nature of transactions (loan vs. commission) and repayment terms were contested, the issue cannot be decided as a preliminary issue under Order XIV Rule 2(2)(b) and requires evidence. The court cited Nusli Neville Wadia v. Ivory Properties, (2020) 6 SCC 557, which states that limitation can be decided as a preliminary issue only if based on admitted facts. Held that the trial court's approach was irregular and remanded the suit for trial. (Paras 12-14) B) Civil Procedure - Plaint Rejection - Limitation Under Order 7 Rule 11 CPC - Code of Civil Procedure, 1908, Order 7 Rule 11 - The respondent filed an application under Order 7 Rule 11 CPC for rejection of the plaint on the ground of limitation. The trial court dismissed the suit on limitation, upheld by the High Court. The Supreme Court analyzed the plaint averments, particularly paragraph 5, which stated loans were repayable within one year from the last installment by 9 April 2014, and paragraph 10, which mentioned last payment dates. Since these facts were disputed and required evidence to prove, the court held that the issue of limitation could not be isolated from the nature of transactions and should be decided after trial. Held that the suit was not barred on the face of the plaint and set aside the dismissal. (Paras 7-12) C) Limitation Law - Running Account and Article 1 - Limitation Act, 1963, Article 1 - The appellant pleaded a running account between the parties, with the last payment on 24 October 2013, and argued that Article 1 of the Limitation Act applied. The respondent contended there was no mutual current account as only the appellant made payments. The Supreme Court noted that this issue depended on evidence regarding the nature of transactions (loan or commission) and could not be decided without trial. The court emphasized that the plea in the plaint required proof through evidence. Held that the matter must be tried on evidence. (Paras 5, 10-12)
Issue of Consideration
Whether the issue of limitation can be decided as a preliminary issue under Order XIV Rule 2 of the Code of Civil Procedure, 1908, when facts are disputed, and whether the suit was barred by limitation based on the plaint averments.
Final Decision
Supreme Court allowed the appeal, set aside the judgments of the trial Court and High Court, and remanded the suit for trial on evidence.
Law Points
- Limitation Act
- 1963
- Article 1
- Order 14 Rule 2 of Code of Civil Procedure
- 1908
- Order 7 Rule 11 of Code of Civil Procedure
- Order 37 of Code of Civil Procedure
- preliminary issue on limitation
- disputed facts
- evidence requirement
- running account
