Decided on March 02,1983

ASHOKA Appellant


- (1.) This Rule arises out of the judgment passed by the leaned Judge, Small Causes Court on March 12, 1977 dismissing the suit filed by M/s. Ashoka, a registered partnership firm for a decree for a sum of Rs. 1,116/- and costs. The plaintiff's case as made out in the plaint is that on October 6, 1969, one Anil Kumar Banerjee and the defendant agreed to let out one piece of H. M. V. Califpso A/C Model (Record Player) (hereinafter referred to as the Record Player) to the said Shri Anil Kumar Banerjee on the hire purchase basis and it was agreed that the ownership of the article would pass on him on completion of the hire as agreed upon Initially hire was for a sum of Rs. 87/- and the subsequent hire was for Rs. 31/- per month and the total price was Rs. 31/- per month and the total price was Rs. 180/- The present defendant was a guarantor who also signed the agreement and Shri Anil Kumar Banerjee took delivery of the said article on October 6, 1969 on payment of Rs. 87/-. Thereafter he made only one payment of Rs. 31/- and did not pay any other instalment inspite of demands. The said Anil Kumar Banerjee died on July 12, 1975.
(2.) The learned Judge found the claim of the plaintiff barred by the laws of limitation. He observed that ?there was a clause in the hire purchase agreement that if the hirer fails to pay the hire charges regularly in advance the whole transaction will be treated as hire appears to me in the nature of penal clause and cannot be given effect to as the same appears to me to of oppressive character. The said clause cannot be taken to be as operative part of the agreement which was mainly for the purpose of securing timely payment of the amount due under the hire purchase agreement.? He further observed that ?the last installment was payable by the 7th of January, 1970 and the suit was filed in July 1976 i.e. long after the expiry of three years when the instalments fell due. As such the case was clearly barred by the laws of limitation.
(3.) Mr. Bhandari appearing for the plaintiff contended before me that the learned Judge was wrong in holding that the agreement was penal in nature and secondly that it was barred by laws of limitation. His argument is that as soon as the hirer failed to pay the instalment, he became bailee of the said article and as such he will be required to pay all the charges that were to be due at the rate of the instalment that was to be paid under the original agreement and a guarantor's liability was co-extensive with the principal debtor's liability he will be liable for the entire amount that became accrued due by way of hire for all these years to the owner and neither the question of limitation will apply in the case of the guarantor because as, Mr. Bhandari contends, limitation against him would run after the death of the hirer. Mr. Bhandari secondly contends that it was not penal as observed by the learned Judge inasmuch as the article was retained by him and he bound himself to be responsible for all the dues that may be due and payable to the plaintiff-company if the said article was not returned in time or the installment was not regularly paid. But to ascertain whether it was penal the clause of the agreement need be gone into.;

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