1985 (5) TMI 241 - HC - Indian Laws

Court affirms judgment, defendant personally liable for loan repayment.

Kuri Lal Rungta Versus Smt. Banarsi Devi And Ors.

Kuri Lal Rungta Versus Smt. Banarsi Devi And Ors. - AIR 1986 All 94 Issues Involved:1. Personal Liability of the Defendant2. Territorial Jurisdiction3. Limitation of the Suit4. Validity of Adjournments and Proceedings under Order XVII, Rule 3 of the Code of Civil ProcedureIssue-wise Detailed Analysis:1. Personal Liability of the Defendant:The court examined whether the defendant was personally liable to pay the debt in question besides the lien on the shares. The defendant contended that the shares were handed over as security and that the plaintiffs should have transferred them to recover the debt. However, the court found that the shares were merely pledged as security and did not absolve the defendant from personal liability. The agreement dated 27th July 1959 (Exhibit 3) explicitly stated that the defendant would repay the loan amount with interest and that the lender would have a lien on the shares until full repayment. Thus, the court held that the defendant was personally liable to pay the loan amount together with interest.2. Territorial Jurisdiction:The defendant argued that the loan transaction occurred in Basti, not in District Gonda, and thus, the court at Gonda had no jurisdiction. However, the court found that the loan was advanced at Seksaria Sugar Mills Private Limited, Babhanan Bhabhinpur, District Gonda, as evidenced by the testimonies of P.W. 1 and P.W. 2. Therefore, the court concluded that part of the cause of action arose within its territorial jurisdiction, making the suit maintainable in Civil Court at Gonda.3. Limitation of the Suit:The defendant claimed that the suit was barred by limitation. However, the court noted that a sum of Rs. 1,000 was paid by the defendant towards interest on 6-7-1972, evidenced by Exhibit 9. This payment extended the limitation period, making the suit filed within the permissible time frame. The court dismissed the contention regarding the limitation.4. Validity of Adjournments and Proceedings under Order XVII, Rule 3 of the Code of Civil Procedure:The defendant's counsel argued that the lower court acted illegally by deciding the case under Order XVII, Rule 3, as the defendant was not present in court when the case was taken up for hearing. The court examined whether the case could be decided under Order XVII, Rule 3, which applies when a party to whom time has been granted fails to produce evidence or perform necessary acts for the suit's progress. The court found that the defendant's counsel had appeared and moved an adjournment application, which was rejected. Despite multiple adjournments granted previously, the defendant failed to produce evidence. The court held that the defendant was deemed present through his counsel, as per Explanation to Rule 2 of Order XVII, and thus, the court rightly proceeded under Rule 3 to decide the case on merits. The court also rejected the argument that the judgment should be considered an ex parte decree under Order XVII, Rule 2.Conclusion:The appeal was dismissed with costs, affirming the lower court's judgment and decree. The court found no merit in the arguments regarding personal liability, territorial jurisdiction, limitation, and the validity of proceedings under Order XVII, Rule 3. The defendant was held personally liable to pay the loan amount with interest, and the suit was maintainable within the jurisdiction of Civil Court at Gonda and within the limitation period.