Limitation for loan recovery on defaulted EMIs runs from the relevant instalment default, with Article 113 applying over Article 55.

A loan recovery suit based on default in repayment under a fixed EMI schedule was held to fall under Article 113 of the Limitation Act, 1963, not Article 55. Article 55 applies to suits for compensation for breach of contract and may govern claims based on successive breaches, but where the agreement fixes instalment dates and permits the lender to treat a defaulted EMI as an event of default and issue recall, limitation runs from the relevant defaulted instalment made the subject of recall. Section 3 of the Limitation Act, by itself, cannot determine the applicable limitation period or justify dismissal on that footing. The limitation finding adopted by the trial court was set aside.

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Issues: Whether the suit for recovery arising from default in repayment under a loan agreement with a fixed EMI schedule was barred by limitation, and whether the applicable limitation provision was Article 55 or Article 113 of the Limitation Act, 1963.

Analysis: Article 55 applies to suits for compensation for breach of contract, and may cover claims founded on breach where the agreement contemplates successive breaches. However, in the present case, the loan agreement fixed specific instalment dates, and the lender retained the contractual power to treat a defaulted EMI as an event of default and issue a recall notice. The period of limitation was therefore linked to the last defaulted instalment made the subject of recall, not merely to the date of the notice. On that basis, Article 113, the residuary provision, governed the suit. Section 3 of the Limitation Act, 1963, by itself, could not determine the applicable limitation period or justify dismissal on the footing adopted by the trial court.

Conclusion: The suit was not barred by limitation on the basis adopted by the trial court, and the finding on limitation was set aside in favour of the appellant.

Ratio Decidendi: Where a loan agreement prescribes fixed instalments and the lender has a contractual right to treat a defaulted instalment as an event of default, limitation for recovery runs from the relevant defaulted instalment and is governed by Article 113 of the Limitation Act, 1963, rather than Article 55.

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