Introduction

• This case deals with Section 3 of the Limitation Act, 1963 which says that if the suit, appeal and application is brought after the expiry of the prescribed time then the Court shall dismiss the suit as it is time barred.
• The law of limitation only bars the judicial remedy and does not extinguish the right.

Facts

• The case involves a loan transaction between the Punjab National Bank's branch at Katni and Sriman Narain Dubey (principal debtor), with the respondent and his wife serving as guarantors.
• The respondent alleges that the debt became time-barred by 5^th May 1987, and accuses the appellants of embezzlement.
• The security bond, executed by the respondent, authorizes the bank to adjust and appropriate the amount due from the fixed deposit receipt (FDR) at its discretion.
• The principal debtor defaulted, and on maturity, the bank adjusted the outstanding debt, crediting the remaining sum to the respondent's savings account.
• The respondent claims embezzlement, asserting that the entire FDR amount should have been credited.
• However, the bank, acting in accordance with the contract terms, adjusted the debt from FDR as authorized.
• The legal dispute centers on the interpretation of Section 3 of the Limitation Act, 1963 which bars the remedy but not the right to the debt.
• The bank argues that, despite the time-barred debt, the right to recover exists, and it lawfully adjusted the amount.
• Madhya Pradesh High Court declined to quash the complaint of respondents.

Issue Involved

• Whether it was barred under Section 3 of the Limitation Act, 1963?

Observation

• The Supreme Court emphasized that limitation rules aim to restrict remedies, not annihilate rights, under Section 3 of the Limitation Act, 1963.
• The right to a debt persists even if the remedy is time-barred, unless the right itself is obliterated.
• Time-barred debts do not vanish; Section 3 merely extinguishes the enforcement remedy.
• The Court clarified that the Limitation Act, 1963 pertains to remedies, not the creditors' rights, ensuring debts endure until settled.
• Additionally, when possessing ample security, creditors can offset debts. Even if the debt recovery remedy is time-barred, the liability persists.
• The Court affirmed that the appellant's actions, not constituting dishonesty or misappropriation, do not warrant criminal charges.
• It stressed that legal proceedings should avoid needless oppression or harassment.

Conclusion

• The Court finally held that the respondent had abused the process and laid complaint against all the appellants without any prima facie case to harass them.
• The appeal was allowed, and the complaint was quashed.