Even If Plea Of Limitation Is Not Set Up As Defence, Court Has To Dismiss Suit If It Is Barred By Limitation: SC

The Supreme Court reiterated that even if the plea of limitation is not set up as a defence, the court has to dismiss the suit if it is barred by limitation.

The Court reiterated thus in a batch of appeals preferred against the judgment of the Andhra Pradesh High Court by which the Division Bench allowed the plea of the plaintiff.

The two-Judge Bench comprising Justice B.R. Gavai and Justice Sandeep Mehta said, “In the facts and circumstances of the case, we find that the reasoning given by the learned Division Bench while dismissing LPA No. 47 of 2002, that the learned Single Judge ought not to have considered the question of limitation as the defendants did not choose to raise the plea of limitation in the trial Court is ex-facie erroneous. Law in this regard has been settled by this Court through a catena of decisions. … Thus, it is a settled law that even if the plea of limitation is not set up as a defence, the Court has to dismiss the suit if it is barred by limitation.”

Senior Advocate Sridhar Potaraju represented the appellants while AOR T.V. Ratnam represented the respondents.

In this case, the respondent/plaintiff along with defendants had constituted a partnership firm with its primary business being the construction of buildings on a contract basis with respect to the works of the Government and Municipalities. The plaintiff instituted a suit seeking relief of dissolution of the firm and rendition of accounts. The Additional Chief Judge, City Civil Court (Trial Court) allowed the original suit and passed a decree, declaring the firm to be dissolved and directed the defendants to tender accounts of the firm from the year 1979 onwards till October 1998. It further granted liberty to the plaintiff to file a separate application seeking appointment of an Advocate Commissioner for taking accounts of the firm and for other appropriate reliefs.

Being aggrieved, the firm preferred an appeal before the High Court and the Single Judge allowed the same on the ground that the original suit was barred by limitation as one of the partners in subsisting partnership firm expired in 1984 and therefore, the firm stood dissolved immediately on his death. Since the original suit was filed in 1996, it was barred by limitation. Aggrieved by the decision of the Single Judge, the plaintiff approached the Division Bench, which allowed the appeal and set aside the judgment of the Single Judge. It observed that the plea of limitation was never raised during the pleadings in the Trial Court and the Single Judge ought not to have dealt with that issue at all. Hence, the appellants preferred an appeal before the Apex Court.

The Supreme Court in view of the above facts observed, “The fact that the firm-defendant No.1 namely “M/s Shivraj Reddy & Brothers”, was a partnership at will, is not in dispute. It is also not disputed that one of the partners of the firm, namely, Shri M. Balraj Reddy expired in the year 1984. This event leaves no room for doubt that the partnership would stand dissolved automatically on the death of the partner as per Section 42(c) of the Act.”

The Court noted that the question of limitation in the case is pure question of law and not mixed question of fact and law, because the fact regarding the death of one of the partners is not disputed.

“… there cannot be any doubt that the firm stood dissolved automatically in the year 1984 as mandated under Section 42(c) of the Act unless and until there was a contract between the remaining partners of the firm to the contrary. There is of course, no such averment by the respondents. The business activities even if carried on by the remaining partners of the firm after the death of Shri M. Balraj Reddy, would be deemed to be carried in their individual capacity in the circumstances noted above”, it further said.

The Court also observed that the period of limitation for filing a suit for rendition of account is three years from the date of dissolution and in the case, the firm dissolved in year 1984 by virtue of death of one of the partners, and thus, the suit could only have been instituted within a period of three years from that event.

“Indisputably, the suit came to be filed in the year 1996 and was clearly time-barred, therefore, learned Single Judge was justified in accepting the C.C.C. Appeal No. 35 of 1999 and rejecting the suit as being hopelessly barred by limitation. … the impugned judgment dated 27th March, 2014 passed by the Division Bench in LPA No. 47 of 2002 does not stand to scrutiny and is hereby reversed and set aside”, it added.

Accordingly, the Apex Court allowed the appeal.

Cause Title- S. Shivraj Reddy (Died) Thr His LRs. and Another v. S. Raghuraj Reddy and Others

Appearance:

Appellants: Senior Advocate Sridhar Potaraju, Advocates Srinivas Kotni, Rohan Garg, AOR Gaichangpou Gangmei, Advocates Chahat Raghav, Nisha Pandey, Aayush, Rajat Srivastava, Rajat Shrivastava, Maitreya Mahalay, Maitreya Mahaley, and Yimyanger Longkumer.

Respondents: AORs T. V. Ratnam and Bela Maheshwari.

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