Legal Principles and Key Case Laws in Recovery Suits: Limitation Period, SPA Holder as Witness, and Admissibility of Marked Documents

By HarshitaPublished on 21 Dec 2024 2:38 PM IST

Recovery suits ensure the enforceability of agreements, uphold creditor rights, and maintain trust in financial and contractual dealings.

Legal Principles and Key Case Laws in Recovery Suits: Limitation Period, SPA Holder as Witness, and Admissibility of Marked Documents

Not getting back your money or property is certainly not what someone expects while engaging with another party for money or property. Yet, disputes over recovery claims are common in civil litigation, necessitating the enforcement of legal rights and the principles to resolve such matters. In this context, especially in civil disputes, the law provides for initiating the recovery suit under Order IV of the Code of Civil Procedure 1908 (CPC).^[1] A recovery suit refers to a legal action initiated by a person (plaintiff) seeking the recovery of money or property from another person (defendant) who refuses or is unwilling to pay or return the same.

It is important to note that the same remedy comes with its limitation, governed by the Limitation Act of 1963; anyone can file the suit with the right to sue within three years from the date the cause of action has arisen.^[2] Beyond three years, the party loses the legal right to initiate proceedings, barring exceptional circumstances.^[3]

While initiating the recovery suit, a few things need to be kept in mind, which could influence the outcome of the case. To begin with, the limitation period is one of the deciding factors of a civil suit, as barring initiation of the suit after a certain time ensures the timely resolution of disputes.^[4] Secondly, the role of a Special Power of Attorney (SPA) holder as a witness in recovery suits. Lastly, the admissibility of marked documents in appeals is another issue in recovery suits. This paper will discuss these aspects in a structured manner, underlining the issue.

Limitation Period

Section 3 of the Limitation Act, 1963 (hereinafter “Act”) prescribes the time the limitation period starts. Whereas 'Residuary Articles' 19 to 26, 47, 53 and 62 of part II of the Schedule of Act outline the limitation period for various types of monetary claims, all governed by a three-year limitation period.^[5]

The grounds from which the limitation period applies include the
accrual of the right to sue, which is when the cause of action arises—commonly when a payment default occurs. Specific Articles of the Act prescribe the limitation periods for different recovery suits. For example, Article 113 provides three years from the date the right to sue accrues.^[6]

In contrast, Article 137 applies to applications under the Insolvency and Bankruptcy Code (IBC),^[7] highlighting that the Limitation Act governs such proceedings as well.

As per Section 18 of the Act, if the party against whom the liability has arisen, acknowledges such liability in writing, before the expiry of the prescribed period, a new period of limitation begins from the date of the acknowledgement Further, if a suit is not covered by any specific articles prescribing a limitation period, it must fall within the 'Residuary Article'.^[8]

Courts also possess discretionary powers under Section 5 of the Act to condone delays in filing suits if sufficient cause is demonstrated.^[9] Still, the same can also be rejected by the court.^[10]

“The said power to condone the delay or to admit the appeal preferred after the expiry of time is discretionary in nature and may not be exercised even if sufficient cause is shown based upon host of other factors such as negligence, failure to exercise due diligence etc.”

In certain cases, moratorium periods declared under section 14 of the IBC are excluded from the calculation of the limitation period,^[11] ensuring that protections given under the statute to the entities or the individuals do not prejudice recovery actions. In furtherance of this, the Supreme Court in the case of Gaurav Hargovindbhai Dave v. Asset Reconstruction Company (India) Ltd.,^[12] held that in insolvency proceedings, section 62 of the Act will only apply to the suit and not to the application filed under Section 7 of IBC. Similarly, the court held that, in matters of loan recovery, the suit starts from the date of default rather than the date of the loan agreement.^[13]

While not explicitly covered by the Act, the doctrine of laches also acts as a limitation principle by barring the parties from claiming their rights; it effectively says that the courts will not help people who sleep over their rights, and courts should only help people who are vigilant about their rights.

SPA Holder as Witness in Decree Holder

A special Power of Attorney (SPA) holder plays an important role in the recovery suits while representing the principal in ongoing suits. In addition to this, as its name shows, the SPA holder is authorised to act on behalf of the principal, including filing documents and representing them in court in the absence of the principal.

However, under the recovery suit, or any suit as such, the Special Power of Attorney (SPA) holder has certain limitations, such as testifying as a witness; having said so, while the SPA holder can handle the responsibilities entrusted to them, they cannot testify on behalf of the principal in court. The rule says that the witnesses must have personal knowledge of the facts they testify about. On similar lines and reasoning, an SPA holder can only testify about matters they know directly,^[14] and cannot provide testimony about facts that are known only to the principal and cannot act as a proxy for the principal.^[15]

The court also re-emphasized the same in the case of Shambhu Dutt Shastri v. State of Rajasthan; the court ruled that the power of attorney holder can appear, plead and act on behalf of the party, ^[16]but he cannot become a witness on behalf of the party, and can only give formal evidence about the validity of the power of attorney and the filing of the suit.^[17] Further, in A.C. Narayanan v. State of Maharashtra, the court observed that an SPA holder cannot appear as a witness on behalf of the principal.^[18] Additionally, in Kishan Lal v. Smt. Shanti Devi (Rajasthan High Court), it was held by the court that the term "acts" in Order 3 Rule 2 of the CPC does not include appearing as a witness for the party.^[19]

The Supreme Court, in Janki Vashdeo Bhojwani & Anr. v. Indusind Bank Ltd. & Ors.
clarified that a power of attorney holder could depose only facts within their personal knowledge and not those that are not within their knowledge; they cannot give statements in respect of facts that are exclusively in the knowledge of the principal. ^[20]

Marked and Exhibited Documents

In recovery suits, understanding the distinction between "marked" and "exhibited" documents is crucial, especially concerning their admissibility during appeals.

A "marked" document is a document that has been presented and identified in court but is yet to be formally admitted as evidence in a court of law; contrary to this, an exhibited document is a document that has been accepted by the court as evidence and has an assigned exhibit number.^[21]

It's important to note that merely marking a document as an exhibit doesn't imply its acceptance as evidence;^[22] it must be verified and meet evidentiary standards to be deemed admissible.^[23]

The Bombay High Court has held, that according to the provisions of the Code of Civil Procedure (CPC), specifically Order 13, Rule 1, original documents must be produced at or before the settlement of issues. The court shall receive the produced documents if an accurate list accompanies them. ^[24]

In addition to this, it has been held that it is the discretion of the courts to reject documents as irrelevant or inadmissible.^[25]

It is important to note that it is important for the court to decide on the admissibility of the documents marked subject to the objection before they are to be considered as a part of the record; while doing so, it becomes necessary for the opposing party to raise objections to the admissibility of documents at the stage of marking. Once a document is marked and accepted, it becomes part of the record, allowing the opposing party to cross-examine witnesses based on that evidence. The failure to mark documents means that cross-examination on those documents is not possible. ^[26]

The Supreme Court in the case of Venkatachala Gounder v. Arulmigu Viswesaraswami & V.P. Temple and Another, held that the objection should be taken when the evidence is tendered, but the objection about the document as evidence or mode adopted for proving the document is irregular cannot be accepted as a valid objection.^[27]

Conclusion

Recovery suits, at times, along with the limitation period and the admissibility of marked documents, involve the role of SPA holders. As written earlier, limitation laws ensure that parties are not filing the cases at their whims and fancies. The role of the Special Power of Attorney (SPA) holder is a representation of the principal, it is also subject to limitations when it comes to providing testimony in matters where he doesn’t have substantial knowledge or first-hand knowledge, thereby maintaining the sanctity of the trail.

The admissibility of marked documents ensures that only documents that meet the required evidentiary standards are accepted in court. These principles uphold the legal framework for recovery suits, ensuring procedural fairness and clarity in the litigation process.

References

[1] Code of Civil Procedure 1908, Order IV

[2] State v. Jathavedan Nambooripad and Another, A.S. No. 34 of 1956

[3] Naubahar Singh & Ors. v. State Of U.P.& Ors., WRIT - C No. - 18841 of 2002

[4] Ram Lal Puri v. Gokalnagar Sugar Mills Co. Ltd, Letters Patent Appeal Nos. (26-D and 27-D of 1964)

[5] Limitation Act, 1963

[6] Limitation Act, 1963, Resid. Art. 113

[7] Limitation Act, 1963, Resid. Art. 137

[8] State of Punjab and Others v. Gurdev Singh. 1991 AIR SC 2219

[9] Section 5, Limitation Act

[10] Pathapati Subba Reddy (Died) By Lrs and Ors v. Special Deputy Collector (La), SLP(C) No.031248 of 2018

[11] Section 14, Insolvency and Bankruptcy Code

[12] Gaurav Hargovindbhai Dave v. Asset Reconstruction Company (India) Ltd., 2019 (10) SCC 572

[13] IFCI Venture Capital Funds Limited v. Santosh Khosla & Ors., RFA No.80/2004

[14] Vimla Bai v. Smt. Shanti Bai, WP 00088/2016

[15] Ramprasad v. Hari Narain, AIR 1998 RAJ 185

[16] Shambhu Dutt Shastri v. State of Rajasthan, (1986) 2 WLN 713

[17] Man Kaur (Dead) By Lrs. v. Hartar Singh Sangha, (2010) 10 SCC 512

[18] A.C. Narayanan v. State of Maharashtra, AIR 2014 SC 630

[19] Kishan Lal v. Smt. Shanti Devi, 2002 (1) WLC 635

[20] Janki Vashdeo Bhojwani & Anr. v. Indusind Bank Ltd. & Ors., (2005) 2 SC 217

[21] Sonam Singh, Understanding Exhibition and Marking of Documents During Evidence, Available Here

[22] Sait Tarajee Khimchand And Others v. Yelamarti Satyam Alias Satteyya And Others, (1972) 4 SCC 562

[23] Narbada Devi Gupta v. Birendra Kumar Jaiswal and Anr., 2003 (8) SCC 745

[24] M/S. J.M. Constructions v. M/S. Shamrock Impex Pvt. Ltd. And Ors., WP No. 5016 of 2018

[25] Narendra Prasad & Others v. Indian Express Newspapers, C.S.No.410 of 1982

[26] Duggireddy VenktReddy v. A. Rajender, Civil Revision Petition Nos. 2260 and 2273 of 2022

[27] Venkatachala Gounder v. Arulmigu Viswesaraswami & V.P. Temple and Another, Appeal (civil) 10585 of 1996

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Updated On 21 Dec 2024 3:27 PM IST