Article 19: (Art. 57 of the Act of 1908):
The period of limitation for a suit for money payable for money lent is three years and the time of limitation starts when the loan is made.
Image Source: cache-blog.credit.com
ADVERTISEMENTS:
Article 19 is applicable to loans payable on demand; it applies to cases where no time is fixed for repayment of the loans.
Article 19 governs a suit in which the lender transfers to the borrower a cheque which had been drawn by another person and endorsed in his favour by the payee.
For recovery of loan against the principal debtor and the surety the suit filed by the creditor attracts Article 19.
In Uma Shankar v. Bank of Bihar, (AIR 1942 Pat. 201), it has been held that where a customer of a bank draws cheques on it knowing that the funds to his credit are not sufficient to meet them but expecting the bank nevertheless to honour them, a suit for recovery of the amount due by the customer is governed by the Article 19 and must be instituted within 3 years from the date on which the earliest of the various sums were paid to the customer or to his order in respect of cheques so drawn. The payment would not save limitation in respect of general balance of account. The fact that part of the floating balance is secured would not to make any difference.
ADVERTISEMENTS:
A suit on unregistered mortgage bond is governed by the Article 19. But the Article 19 has nothing to do with a suit for realisation of any amount due under a bond.
Where the money lent is secured by a pledge, a suit to recover the balance of the debt after deducting the proceeds of the sale of the articles pledged is governed by the Article 19 and limitation runs not from the date of the sale but from the date of the loan.
In Manmal v. Santok Chand, (ILR (1960) 10 Raj. 43), it is held that when the debts are distinct and separate debts are incurred on different dates each loan gives rise to separate cause of action governed by the Art. 19.
In Saraswati Devi v. Krishnaram Baldeo Bank Ltd., (AIR 1998 MP 73), it has been held that when the money was taken as loan on the basis of mortgage security and the debt amount was agreed to be paid in instalments, the limitation for recovery of loan runs from the date when the first instalment fell due on the borrower failing to pay the first instalment.