Inter-se agreements with third parties do not absolve a borrower’s absolute liability under independent loan agreements.

The Appellant obtained a term loan of ₹5,27,000 from the Respondent Bank in 2015 to purchase a radio taxi

The Appellant entered into a bilateral agreement with M/s Magic Sewa Pvt. Ltd., according to which the Appellant was to pay the first 24 EMIs and the company was to pay the remaining 36 EMIs

Following a default, a settlement was reached in Lok Adalat in 2018 where the Appellant acknowledged a liability of ₹5,03,874, but subsequently failed to pay

The Trial Court decreed the suit for recovery in favor of the Bank on 18.04.2023, holding that the Bank was not a party to the agreement with Magic Sewa

The Appellant’s subsequent suit for declaration and his objections in execution proceedings were both dismissed

The Appellant now challenges the 2023 decree with a delay of 1035 days

1. Whether a bilateral agreement between a borrower and a third party regarding EMI payments can absolve the borrower of his liability toward the lending Bank

2. Whether the Appellant demonstrated "sufficient cause" under Section 5 of the Limitation Act to condone a delay of 1035 days in filing the appeal

The Court applied the principle of privity of contract, noting that a lender is not bound by a bilateral arrangement between a borrower and a third party unless it is a tripartite agreement

It relied on Section 47 of the CPC as interpreted in MMFC Limited v. Anglo American Metallurgical Coal Pvt. Limited and Electrosteel Steel Ltd. v. Ispat Carrier (P) Ltd., which establishes that an executing court cannot go behind the decree except in cases of jurisdictional infirmity or voidness

Furthermore, it applied Section 5 of the Limitation Act, emphasizing that the Commercial Courts Act, 2015 mandates a higher degree of diligence and expedition, narrowing the discretion to condone inordinate delays

The Court reasoned that the loan documents (Ex. PW1/1 to PW1/10) established a clear contractual relationship solely between the Appellant and the Bank

The Court found that while the Appellant may have a claim against M/s Magic Sewa Pvt. Ltd. under their 2015 agreement, the Bank was neither a signatory nor a party to that contract; thus, it remained a res inter alios acta (a matter between others) that could not extinguish the Appellant's absolute liability to the Bank

Regarding the procedural delay, the Court observed that the Appellant's attempt to litigate the same issue through a separate suit and execution objections—all of which were dismissed—did not constitute a valid legal excuse for a 1035-day delay

The Court held that the Appellant's acknowledgment of debt during the 2018 Lok Adalat further solidified his status as the primary debtor

The Court held that the Appellant's liability is absolute and unconditional regardless of his inter-se arrangement with a third party

The application for condonation of delay was rejected as no "sufficient cause" was shown

However, the Court clarified that under principles akin to Section 140 of the Indian Contract Act, the Appellant, upon satisfying the decree, remains at liberty to sue M/s Magic Sewa Pvt. Ltd. for recovery of the amounts paid