Punjab National Bank v. Surendra Prasad Sinha, AIR 1992 SC 1815 – Limitation Act


  • Though the respondent was served on July 29, 1991, he neither appeared in person, nor through counsel. The facts set out in the complaint eloquently manifest on its face a clear abuse of the process of the court to harass the appellants. The respondent, an Advocate and Standing Counsel for the first appellant filed a private complaint in the court of Additional Chief Judicial Magistrate, Katni in C.C. No. 933 of 1991 for offences under Section 409 and Sections 109/114 IPC.


  • The first appellant’s branch at Katni gave a loan of Rs 15,000 to one Sriman Narain Dubey on May 5, 1984 and the respondent and his wife Annapoorna stood as guarantors, executed Annexure ‘P’ “security bond” and handed over Fixed Deposit Receipt for a sum of Rs 24,000, which would mature on November 1, 1988. At maturity its value would be at Rs. 41,292. The principal debtor committed default in payment of the debt. On maturity, the Branch Manager, appellant 5, Shri V. K. Dubey, adjusted 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 Savings Bank Account of the respondent. The respondent alleged that the debt became barred by limitation as on May 5, 1987. The liability of the respondent being coextensive with that of the principal debtor, his liability also stood extinguished as on May 5, 1987. Without taking any action to recover the amount from the principal debtor within the period of limitation, on January 14, 1989, Shri D. K. Dubey, the Branch Manager, intimated that only Rs 14,254.40 was credited to his Savings Bank Account No. 3763. The entire amount at maturity, namely Rs. 41,292 ought to have been credited to his account and despite repeated demands made by the respondent it was not credited. Thereby the appellants criminally embezzled the said amount. The first appellant with a dishonest interest to save himself from the financial obligation neglected to recover the amount from the principal debtor and allowed the claim to be bared by limitation and embezzled the amount entrusted by the respondent. Appellants 2 to 6 abetted the commission of the crime in converting the amount of Rs. 27,037.40 to their own use in violation of the specific direction of the respondent. Thus they committed the offences punishable under Section 409 and Sections 109 and 114 IPC.


  • The security bond, admittedly, executed by the respondent reads in material parts thus: “We confirm having handed over to you by way of security against your branch office Katni F.D. Account No. 77/83 dated November 1, 1983 for Rs 24,000 in the event of renewal of the said Fixed Deposit Receipt as security for the above loan.” “We confirm… the F.D.R. will continue to remain with the bank as security here.” “The amount due and other charges, if any, be adjusted and appropriated by you from the proceeds of the said F.D.R. at any time before, or on its maturity at your discretion, unless the loan is otherwise fully adjusted from the dues on demand in writing made by you….” “We give the bank right to credit the balance to our savings bank account or any other amount and adjust the amount due from the borrowers out of the same.” “We authorise you and confirm that the F.D.R. pledged as security for the said loan shall also be security including the surplus proceeds thereof for any other liability and obligation of person and further in favour of the bank and the bank shall be entitled to retain/realise/utilise/appropriate the same without reference to us.”


  • Admittedly, as the principal debtor did not repay the debt. The bank as creditor adjusted at maturity of the F.D.R., the outstanding debt due to the bank in terms of the contract and the balance sum was credited to the Savings Bank account of the respondent. The rules of limitation are not meant to destroy the rights of the parties. Section 3 of the Limitation Act 36 of 1963, for short “the Act” only bars the remedy, 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 that the right itself is destroyed. For example under Section 27 of the Act a suit for possession of any property becoming barred by limitation, the right to property itself is destroyed. Except in such cases which are specially provided under the right to which remedy relates in other case the right subsists. Though the right to enforce the debt by judicial process is barred under Section 3 read with the relevant article in the schedule, the right to debt remains. The time barred debt does not cease to exist by reason of Section 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. What Section 3 refers is only to the remedy but not to the right of the creditors. Such debt continues to subsist so long as it is not paid. It is not obligatory to file a suit to recover the debt. It is settled law that the creditor would be entitled to adjust, from the payment of a sum by a debtor, towards the time barred debt. It is also equally settled law that 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. Undoubtedly the respondent and his wife stood guarantors to the principal debtor, jointly executed the security bond and entrusted the F.D.R. as 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 savings bank account of the respondent. Thereby the appellant did not act in violation of any law, nor converted the amount entrusted to them dishonestly for any purpose. Action in terms of the contract expressly or implied is a negation of criminal breach of trust defined in Section 405 and punishable under Section 409 IPC. It is neither dishonest, nor misappropriation. The bank had in its possession the fixed deposit receipt as guarantee for due payment of the debt and the bank appropriated the amount towards the debt due and payable by the principal debtor. Further, the F.D.R. was not entrusted during the course of the business of the first appellant as a Banker of the respondent but in the capacity as guarantor. The complaint does not make out any case much less prima facie case, a condition precedent to set criminal law in motion. The Magistrate without adverting whether the allegation in the complaint prima facie makes out an offence charged for, obviously, in a mechanical manner, issued process against all the appellants. The High Court committed grave error in declining to quash the complaint on the finding that the Bank acted prima facie high-handedly.


  • It is also salutary to note that judicial process should not be an instrument of oppression or needless harassment. The complaint was laid impleading the Chairman, the Managing director of the Bank by name and a host of officers. Vindication of majesty of justice and maintenance of law and order in the society are the prime objects of criminal justice but it would not be the means to wreak personal vengeance. Considered from any angle we find that the respondent had abused the process and laid complaint against all the appellants without any prima facie case to harass them for vendetta.

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