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Topline Shoes Limited and Another vs. Punjab National Bank

Civil Appeal · 2022 INSC 732Decided 20 Jul 2022
Civil Appeal No. 2125 of 2009
B.R. Gavai · Pamidighantam Sri Narasimha

Background

Punjab National Bank filed a recovery application against Topline Shoes Ltd. before the Debts Recovery Tribunal (DRT), Mumbai, and the company filed a counter-claim alleging that money it had deposited with the Bank in 1994 had been illegally withheld and extracted from it under undue influence. The DRT dismissed both the Bank's claim and the company's counter-claim, holding the counter-claim was time-barred; the Debts Recovery Appellate Tribunal and later the Bombay High Court upheld this. The company appealed to the Supreme Court, arguing that the more generous three-year limitation period under Article 22 of the Limitation Act (running from the date of its 1999 notice) should apply, rather than Article 113's residual period.

Decision Breakdown

The Supreme Court held that limitation is a mixed question of law and fact and cannot be decided while ignoring the underlying facts. It noted the DRT's finding that the company had, as a "conscious decision" by its own Board, chosen in 1994 to pay the disputed amount without contesting it (to protect its business relationships and future loans), and had only issued a demand notice five years later, in 1999. Since the claim arose from the 1994 payment and not from the 1999 notice, the Court agreed with the DRT, DRAT and High Court that the residual Article 113 (not Article 22) period applied, meaning the counter-claim was correctly held time-barred, and dismissed the appeal.

Lesson Learnt

The limitation clock for recovering money you claim was wrongly taken from you generally starts running from when the cause of action actually arose (here, the original payment), not from whenever you later choose to send a demand notice, delaying action does not restart the limitation period.

Official source (sci.gov.in)View Judgment (PDF)

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