Time barred debt
Manoj
(Querist) 12 March 2013
This query is : Resolved
Hi to all,
My brother had taken an over draft from a regional Bank in 2004 against LIC Policies in which I stood as a guarantor. The account was neither renewed nor any transction was done from 2007. We stopped paying LIC premium from 2011. During 2011 the Money back of LIC was direcly paid to bank by LIC. Further the LIC Policy is going to mature in this month only. Now, the bank comes to us for the recovery of the overdraft amount along with interest.
My questions are whether Bank can recover the overdraft amount as this is a time barred debt ?
Can I recover the LIC policies which is pledged with bank ?
Raj Kumar Makkad
(Expert) 12 March 2013
Banker has no right to recover the time barred debt merely on the ground that the LIC maturity amount has been deposited with it. You can serve a legal notice followed with appropriate suit to refund the deposited amount.
Devajyoti Barman
(Expert) 13 March 2013
You were paying premiums till 2011, it is not time barred.
prabhakar singh
(Expert) 13 March 2013
As the LIC policies are assigned in favor of bank, any amount payable under them would be paid to bank only not withstanding any thing that loan advanced as overdraft has become time barred or not.
Raj Kumar Makkad
(Expert) 13 March 2013
BUT Mr. Singh question here is that whether the bank can retain that amount received through LIC policy with it against its time barred debt?
prabhakar singh
(Expert) 13 March 2013
To me Bank can.ONLY SUIT OF REALIZATION IS BARRED-THE RIGHT REMAINS ALIVE-then if debtor pays a time barred debt,there would be no illegality in it.Assignment of policy means all benefits would go to assignee and assignment can be even without consideration.
A debtor can not sue the creditor for refund
of payment of a time barred debt that it was time barred but he paid under mistake of law? Can he?
Raj Kumar Makkad
(Expert) 13 March 2013
Can an assignment in such cases be for unlimited time especially when the debt cannot legally be recovered?
In the given case, the debtor has not deposited the time barred debt rather assignee has deposited on his behalf though it can be done if instructions to assignee have not withdrawn by assignor but whether the act and conduct of the creditor is legal in the given case?
If not then the debtor has right to sue otherwise definitely he cannot recover back.
prabhakar singh
(Expert) 13 March 2013
There is yet another way to think over it.
you are my creditor and i am your debtor.
You have a right to remind me to pay you back.
Your this right is with you life long.You can make me remind even after this gets time barred.Law of limitation says that if you have a cause of action which can afford you a relief under law you need to make that claim in court within a particular time prescribed by law.
Law of limitation does not say a debtor do not pay a time barred debt.
law of limitation simply addresses a creditor that if you wish to file a suit for your debt you can come to the court latest by the date prescribed in the statute book.
prabhakar singh
(Expert) 13 March 2013
To your last post my understanding would be that unless relationship of debtor and creditor itself is in dispute by denial of debt,any payment made by LIC under the assignment to the bank would not be recoverable by the debtor from BANK or LIC.
prabhakar singh
(Expert) 13 March 2013
You may please take care that it was not a deposit by LIC but a benefit under money back policy that was passed on to Bank by LIC due to assignment which might have gone to holder of policy had there not been an assignment.
Raj Kumar Makkad
(Expert) 13 March 2013
Whether the relationship of debtor and creditor do not extinguished after the statutory period of recovery? If so, then its consequences?
Raj Kumar Makkad
(Expert) 13 March 2013
Can assignee revalidate the statutory law of limitation by his own act and conduct without asking from the assignor when the debt is time barred?
prabhakar singh
(Expert) 13 March 2013
"Whether the relationship of debtor and creditor do not extinguished after the statutory period of recovery?If so, then its consequences?"
No would be my answer to this question as you being creditor can always remind me to pay and i being honest debtor can always pay it even if gets time barred as RIGHT is alive but as matter of consequence it's enforcement by law suit is barred.
prabhakar singh
(Expert) 13 March 2013
"Can assignee revalidate the statutory law of limitation by his own act and conduct without asking from the assignor when the debt is time barred?"
We can not say any thing about it unless we see the assignment it self.
Raj Kumar Makkad
(Expert) 13 March 2013
Thanks Mr. Singh for sharing such vital discussion.
prabhakar singh
(Expert) 13 March 2013
Thanks to you too.I enjoyed your company here.
Manoj
(Querist) 14 March 2013
Thanks to all for giving your valueable
Suggestions.
I totally agree with Mr.Prabhakar Singh's view that "ONLY SUIT OF REALIZATION IS BARRED-THE RIGHT REMAINS ALIVE". This view was also given by Supreme Court in the case-Punjab National Bank and Others V/s. Surender Prasad Sinha.
But I have some doubts:
(i) Whether paymnet of money back by LIC to Bank created any enforceble right to bank;
(ii) Since we had paid LIC premium upto 2011 so whether the peiod of limitation is to be counted from the date of last premium paid as it was suggested by Mr. Devajyoti: and
(iii) Is there is any limitation on the period on assignmnet of LIC Policies.
R.K Nanda
(Expert) 17 March 2013
agree with Prabhakar Sir.
prabhakar singh
(Expert) 17 March 2013
Q.(i) Whether payment of money back by LIC to Bank created any enforceable right to bank?
A.Yes!against LIC but.
Q.(ii) Since we had paid LIC premium upto 2011 so whether the period of limitation is to be counted from the date of last premium paid ??
A.No!It has nothing to do with limitation,but so long the policy is running, benefits of policy would be passed on by the LIC to Bank due to assignment . LIC has nothing to look in to question of limitation of Bank's debt.It has just to treat assignee as if he (Bank in this case)was the holder of the policy;then whatever is payable to assignor(here debtor of Bank) under the policy by the LIC would be paid to the assignee(here creditor Bank).
Q.(iii) Is there is any limitation on the period on assignment of LIC Policies???
A.It is unnecessary doubt.Assignment here causing obligation on LIC to pay Bank whatever could be payable by LIC to original holder or buyer (assignor)of the policy.Limitation of original loan by the Bank to the debtor/assignor has nothing to do with LIC. LIC is discharging it's own obligation under the policy.Had there been
no assignment LIC would have been paying to
original buyer/holder/assigner of policy,and the same is being paid due to assignment to the Bank which LIC can not refuse to pay as it has nothing to do with Bank's loan or it's limitation.I have already pointed out that an assignment could be even without consideration.
Sudhir Kumar, Advocate
(Expert) 17 March 2013
limitation is against recovery suit. If assetts are already against the bank they can recover.
Anirudh
(Expert) 17 March 2013
Limitation for recovery is not at all barred in this case.
Please see Article 1 in Part-I to the Limitation Act which reads as under:
"For the balance due on a mutual, open and current account where there have been reciprocal demands between the parties. - PERIOD OF LIMITATION 3 YEARS - The period begins to run from - The close of the year in which the last item admitted or proved is entered in the account; such year to be computed as in the account.
Raj Kumar Makkad
(Expert) 17 March 2013
Thanks Anirudh for bringing the whole discussion within the ambit of relevant law.
prabhakar singh
(Expert) 17 March 2013
Some more probe required to disagree with my views.
Manoj
(Querist) 19 March 2013
Thank you all for your valuable suggesations and quick response.
Raj Kumar Makkad
(Expert) 19 March 2013
When author is agree with the advice, nothing remains more to probe by any one.
