Punjab National Bank v Surendra Prasad Sinha (1992)

CPC & Limitation Act · Adverse Possession, Extinguishment of Right (s.27) & Distinction from Estoppel

Facts.

A loan had become time-barred; the bank adjusted the outstanding amount against the guarantors’ fixed deposit held with it, and the guarantors alleged this was dishonest.

Issue.

Does the expiry of limitation extinguish the debt itself, or only bar the remedy of suing on it?

Held.

Rules of limitation bar the remedy but do not extinguish the right. A time-barred debt still exists; the creditor holding security may lawfully adjust it, and doing so is not dishonest.

Why it matters.

The clearest modern statement of the cardinal rule of s.3 (Topic 1) and its practical consequence for time-barred debts.

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