Kerala HC: The Substantive Right Remains; Only Judicial Remedy Barred Under Limitation Law

Background

• The original applicant in this was the wife of a deceased southern railway employee who received a family pension since his death in the year 2007. The pension was disbursed through the petitioner bank.
• The family pension was to be paid till the deceased would have attained the age of 67 years or till 7 years from the date of his death.
• However, the bank mistakably continued to pay the pension till January 2019 even though the deceased would have been 67 in 2013. The bank erroneously paid a sum of 1.5 lakh to the applicant till January 2019.
• The petitioner realized the mistakes and took measures to adjust the excess amount paid from the original applicant’s account in installments at the rate of Rs. 3,200 per month from February 2019 till December 2022.
• Respondent 1 challenged this process before the Tribunal on the ground that the amount sought to be recovered is barred by limitation.
• The Tribunal held that the bank is only entitled to recover the amount due for the period immediately before February 2019 when the mistake was realized.
• The order of the Tribunal was challenged by the petitioner.

Arguments – Petitioner

• The counsel for the Petitioner, Adv. Bindumol Joseph argued that the petitioners are entitled to the benefits under section 17 of the Limitation Act. It was contended that for any application for relief from the consequences of a mistake, the limitation period won’t begin till the Applicant person has realized the mistake.
• It was submitted that in this case, the limitation period starts only from January 2019, and hence the petitioner bank is entitled to recover the amount from the Respondent-Applicant.
• It was also argued that the rule of limitation merely bars the remedy and not the substantive right. In that scenario, it was submitted that even if a portion of the claim is barred by limitation, it will not hamper the substantive right of the petitioner to recover the excess amount paid because of a mistake.

Arguments – Respondent

• The Counsel for Respondent, Adv. C. S. Gopalakrishnan Nair argued that the Respondent was entitled to the benefit of the guidelines issued in the White Washer’s case.
• In the White Washer’s case, the Top Court had issued guidelines for the situations where recoveries by the employers would be impermissible in law.
• However, it was rebutted by the petitioner that the bank wasn’t the employer of the deceased and these prinsciples wouldn’t apply to them.

Court’s Observations

• The Tribunals findings that the bank is only entitled to recover the amount before three years to the issuance of notice was held unsustainable since section 3 of the Act only bars judicial remedy and not the right the remedy relates to.
• The Court also held that the bank is however not entitled to benefits under section 17 of the Limitation Act as section 17 is only applicable when it is established the discovery of the mistake could not be sooner with reasonable diligence. It was observed that a considerable amount of time had passed between the mistake and the discovery and the mistake could have been discovered earlier with reasonable diligence.
• It was further held that the Principal-Agent relationship binds the petitioner. Even though there was no employer-employee relationship between the bank and the deceased, there was a principal-agent relationship between the southern railways and the bank and this made the guidelines issued by the Apex Court in the White Washer case applicable to the bank as well.
• The Court also observed that recovery of total excess amount would be harsh and iniquitous and hence it was held that it was impermissible as per law to permit the bank to recover the excess payment made to the respondent before 2016.
• However, it was held that the petitioners were entitled to recover the amount paid from the period of 8th February 2016 to 8th February 2019.

Judgment

• The Division Bench of Hon’ble Justices Alexander Thomas and K. Babu held that law of limitation only bars judicial remedy and that substantive right remains and continues to be available in other ways.
• The Court clarified that the rules of limitation are not meant to destroy the rights of the parties.
• The bottom line being that the Hon’ble High Court held that the bank is entitled to recover the amount from the respondent-applicant’s account.

What do you think of this case?