Canara Bank v. Sreekumari K.

Citation: 2025 (4) KLR 107 : 2025 KER 29430
Court: High Court of Kerala
Judge: A. Badharudeen, J.
Case Number: R.F.A. No. 338 of 2015
Date of Judgment: 2 April 2025
Parties: Canara Bank v. Sreekumari K.

Limitation Act, 1963 – Section 18 – Acknowledgment of Debt: Written acknowledgment of liability signed before expiry of limitation period extends limitation from date of acknowledgment – Acknowledgments dated 24.09.2007 and 24.07.2010 for loan availed on 23.06.2005 held valid, rendering suit filed on 19.06.2012 within limitation.

Bankers Book Evidence Act, 1891 – Section 4 – Proof of Bank Documents: Certified copies of bank entries, produced by authorized officer, admissible as prima facie evidence – Testimony of bank manager (PW1) and supporting documents (Exts. A1-A8, X1) sufficient to prove loan agreement, guarantee, and acknowledgments – Trial court’s finding of non-proof erroneous.

Civil Procedure – Loan Recovery Suit: Plaintiff bank proved loan of Rs. 2 lakh, default, and balance of Rs. 2,27,084 with 15.25% interest – Defendants’ inconsistent defenses (denial of loan, signatures on blank forms, admission of signatures) unsustainable – Suit decreed with costs, defendants jointly and severally liable.

Appeal: Trial court’s dismissal of suit as time-barred set aside – High Court allowed appeal, decreeing suit for recovery with interest and costs from defendants’ assets and personally.

Against the Judgment dated 30.10.2014 in O.S. No. 236 of 2012 of Sub Court, Mavelikkara 

Appellant: By Adv. A. Shafeek (Kayamkulam)

Facts

Canara Bank, a nationalized bank, filed a suit (O.S. No. 236 of 2012) against Sreekumari K. (1st defendant) and a co-obligant (2nd defendant) to recover a loan of Rs. 2 lakh availed on 23.06.2005 for business purposes. The loan was secured by an agreement-cum-deed of hypothecation (1st defendant) and a covenant of co-obligation (2nd defendant). The repayment was to be in 35 instalments of Rs. 6,610 starting 23.07.2005, but the defendants defaulted. The 1st defendant acknowledged the debt on 24.09.2007 and 24.07.2010. Despite notices, the defendants failed to repay, leading to a claim of Rs. 2,14,572 with 15.25% interest. The trial court dismissed the suit, holding that the suit filed on 19.06.2012 was barred by limitation, as the acknowledgments of debt (Exts. A3 and A4) were not proved.

Issues

  1. Is the trial court’s finding that the suit is barred by limitation legally correct?
  2. Did the plaintiff prove the acknowledgments of debt (Exts. A3 and A4)?
  3. What is the mode of proof for bank documents under the Bankers Book Evidence Act, 1891?
  4. What constitutes an acknowledgment in writing under Section 18 of the Limitation Act?
  5. Does the trial court’s judgment require interference?

Arguments

Plaintiff/Appellant

  • The loan was availed on 23.06.2005, and acknowledgments of debt (Exts. A3 and A4) on 24.09.2007 and 24.07.2010 extended the limitation period under Section 18 of the Limitation Act.
  • The suit filed on 19.06.2012 was within the limitation period.
  • Exts. A3 and A4 were proved through PW1 (Bank Manager) and supported by Exts. A1-A8 and Ext. X1 (statement of accounts).
  • The Bankers Book Evidence Act allows certified copies of bank entries as prima facie evidence when produced by an authorized officer.

Defendants/Respondents

  • The suit was not maintainable and barred by limitation.
  • Signatures were obtained on blank forms by Vyapari Vyavasayi Ekopana Samithi, and no collateral security was executed.
  • No transaction existed with the plaintiff, and the documents were disputed.
  • The interest claimed was exorbitant, and non-joinder of Vyapari Vyavasayi Ekopana Samithi was raised.

Judgment

The High Court allowed the appeal, setting aside the trial court’s judgment. Key findings:

  1. Limitation: Under Section 18 of the Limitation Act, a written acknowledgment of liability signed before the limitation period expires extends the limitation period. Ext. A3 (24.09.2007) and Ext. A4 (24.07.2010) were valid acknowledgments, making the suit filed on 19.06.2012 within the limitation period.
  2. Proof of Documents: The plaintiff proved Exts. A3 and A4 through PW1’s testimony and supporting documents (Exts. A1-A8, X1). The Bankers Book Evidence Act permits certified copies of bank entries as admissible evidence when produced by an authorized officer, and PW1’s evidence was sufficient.
  3. Defendants’ Contentions: The defendants’ claims were inconsistent (denying the loan, alleging signatures on blank forms, and admitting signatures from 2005). Their denial of the legal notice (Ext. A5, returned unclaimed) was unsupported.
  4. Outcome: The suit was decreed for Rs. 2,27,084 with 15.25% interest from the date of the suit until realization. Defendants were jointly and severally liable, and the plaintiff was entitled to recover costs from the defendants’ assets and personally.

Ratio Decidendi

  • An acknowledgment of debt under Section 18 of the Limitation Act, if made in writing and signed before the limitation period expires, extends the limitation period from the date of acknowledgment.
  • Bank documents, under the Bankers Book Evidence Act, can be proved through certified copies and testimony of an authorized officer, which constitutes prima facie evidence unless rebutted.

Obiter Dicta

  • An acknowledgment of debt need not be express and may be implied, providing new proof of the debt’s existence.
  • Inconsistent defenses weaken the credibility of the defendants’ case.

Conclusion

The High Court reversed the trial court’s dismissal, finding the suit maintainable and within the limitation period due to valid acknowledgments of debt. The plaintiff successfully proved the loan transaction and default, entitling them to recover the claimed amount with interest and costs.

Multiple Choice Questions (MCQs)

  1. What was the primary issue in Canara Bank v. Sreekumari K. (2025 (4) KLR 107)?
    a) Validity of the loan agreement
    b) Whether the suit was barred by limitation
    c) Interest rate charged by the bank
    d) Non-joinder of a necessary party
    Answer: b) Whether the suit was barred by limitation
  2. Under which provision was the acknowledgment of debt considered in this case?
    a) Section 25 of the Indian Contract Act
    b) Section 18 of the Limitation Act, 1963
    c) Section 4 of the Bankers Book Evidence Act
    d) Order XLI Rule 1 of CPC
    Answer: b) Section 18 of the Limitation Act, 1963
  3. What evidence was deemed sufficient to prove the bank’s documents under the Bankers Book Evidence Act?
    a) Original loan documents
    b) Certified copies of entries with testimony of an authorized officer
    c) Defendants’ admission of signatures
    d) Independent witness testimony
    Answer: b) Certified copies of entries with testimony of an authorized officer
  4. What was the outcome of the High Court’s judgment in this case?
    a) Upheld the trial court’s dismissal of the suit
    b) Remanded the case for retrial
    c) Allowed the appeal and decreed the suit for Rs. 2,27,084 with interest
    d) Reduced the interest rate claimed by the bank
    Answer: c) Allowed the appeal and decreed the suit for Rs. 2,27,084 with interest
  5. Why did the High Court find the defendants’ defenses unsustainable?
    a) They failed to appear in court
    b) Their contentions were inconsistent and contradictory
    c) They admitted full liability
    d) They did not dispute the statement of accounts
    Answer: b) Their contentions were inconsistent and contradictory

Frequently Asked Questions (FAQs)

  1. What was the basis for the High Court’s finding that the suit was not barred by limitation?
    The High Court relied on Section 18 of the Limitation Act, 1963, which provides that a written acknowledgment of liability signed before the expiry of the limitation period extends the limitation period. The acknowledgments of debt dated 24.09.2007 (Ext. A3) and 24.07.2010 (Ext. A4) for the loan availed on 23.06.2005 were valid, making the suit filed on 19.06.2012 within the limitation period.
  2. How did the plaintiff prove the acknowledgments of debt in this case?
    The plaintiff proved the acknowledgments (Exts. A3 and A4) through the testimony of the bank manager (PW1), supported by certified copies of bank entries and other documents (Exts. A1-A8, X1). Under Section 4 of the Bankers Book Evidence Act, 1891, such certified copies produced by an authorized officer are admissible as prima facie evidence.
  3. Why did the trial court dismiss the suit, and why was this overturned?
    The trial court dismissed the suit, holding that the plaintiff failed to prove the acknowledgments of debt (Exts. A3 and A4), rendering the suit barred by limitation. The High Court overturned this, finding that PW1’s testimony and supporting documents sufficiently proved the acknowledgments, and the trial court’s finding was erroneous.
  4. What role did the Bankers Book Evidence Act play in this case?
    The Bankers Book Evidence Act, 1891, particularly Section 4, allowed the plaintiff to prove the loan transaction and acknowledgments using certified copies of bank entries, supported by the testimony of an authorized officer (PW1). This evidence was deemed sufficient unless rebutted, which the defendants failed to do.
  5. What was the final relief granted by the High Court?
    The High Court decreed the suit, ordering the defendants to jointly and severally pay Rs. 2,27,084 with 15.25% interest from the date of the suit until realization, along with costs. The plaintiff was allowed to recover this amount from the defendants’ assets and personally.
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