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Bai Havabu Vs. Isup Musa Patil - Court Judgment

LegalCrystal Citation
SubjectCommercial;Limitation
CourtMumbai
Decided On
Case NumberFirst Appeal No. 23 of 1935
Judge
Reported inAIR1938Bom467; (1938)40BOMLR968
AppellantBai Havabu
Respondentisup Musa Patil
DispositionAppeal dismissed
Excerpt:
.....by debtor as payment of interest as such-whether payment could be regarded as payment of part of principal or payment of interest as such.;where money is paid by a debtor without specifying whether the payment is towards interest or towards principal, leaving it to the option of the creditor to appropriate it as he likes, and the creditor appropriates it wholly towards interest due, there is neither a payment of interest as such nor a part payment of the principal within the meaning of section 20 of the indian limitation act, 1908.;udaypal singh v. lakhmi chand (1935) i.l.r. 58 all. 261, f.b. followed.;hem chandra biswas v. purna chandra mukherji (1916) i.l.r. 44 cal. 567 liquidator, bagha cooperative society v. debi mangal prasad sinha (1936) i.l.r. 16 pat. 27 and lakshmi naidu..........naidu v. gunnamma i.l.r. (1934) mad. 418 where the view was expressed (p. 426) that where the payment is evidenced by a writing which is signed by the person making the payment, it makes no difference whether the payment is held to be for interest or for principal or for both, and in support of this proposition hem chandra biswas v. purna chandra mukherji (1916) i.l.r. 44 cal. 567 was cited. the calcutta court, however, in that case did not hold that it makes no difference. what was held in that case was that where payments are made towards a debt, but there is nothing to show whether they had been made in respect of principal or interest, the court is entitled to find out on the evidence for what purpose the payments were made. it was a second appeal. the court of first appeal had.....
Judgment:

Broomfield, J.

1. This is an appeal from the decree of the First Class Subordinate Judge at Surat dismissing the plaintiffs' suit to recover Rs. 9,360-3-4 with costs and future interest. The plaintiffs are the heirs of one Gorabhai Daudbhai and they brought their suit to recover sums lent by him to the defendant. The suit was based on a khata signed by the defendant on September 17, 1927. It was filed on October 21, 1932, but it was sought to be brought in time by an alleged payment of Rs. 150 by the defendant on August 15, 1930, on which date according to the plaintiffs the defendant made an entry in his own hand in Gorabhai's account book reciting this payment. The trial Judge held that the payment of Rs. 150 was not proved and that it was not proved that the entry in the account books, exhibit 54, is in the handwriting of the defendant. The suit was accordingly dismissed as being barred by time.

2. In support of their case as to the alleged payment of Rs. 150 on August 15, 1930, and of the writing of the entry in the account books the plaintiffs examined plaintiff No. 2 and a witness Chunilal, exhibit 64. The plaintiffs' case is that this Chunilal was present when the defendant paid the money and wrote the entry in the accounts. Chunilal, however, does not support the case on this latter point. He deposes no doubt that defendant paid the sum of Rs. 150 but he says that no writing was made in his presence.

3. It has been argued on behalf of the appellants that the handwriting of exhibit 54 when compared with the various khatas admittedly written and signed by the defendant appears to be in his handwriting. No expert evidence was called on the question of handwriting. The learned trial Judge compared exhibit 54 with an application exhibit 73 made by the defendant in some proceedings in the High Court. The original of this application was apparently produced in the trial Court, but it is not now available and we have no opportunity therefore of making the comparison on which the trial Judge relied. Comparing exhibit 54 with entries in the plaintiffs' accounts admittedly made by the defendant we find that there is undoubtedly a similarity in the handwriting. In our opinion it. is quite possible that exhibit 54 is in the handwriting of the defendant so far as the examination of the handwriting goes. We are not prepared, however, to go further than that. Without any expert evidence to assist us we are not prepared to hold on the evidence of the handwriting alone or on that evidence supported merely by the somewhat unconvincing testimony of plaintiff No. 2 and Chunilal that exhibit 54 is written by the defendant. Nor are we prepared to differ from the finding of the trial Judge that the payment of the sum of Rs. 150 has not been proved by satisfactory evidence.

4. The defendant set up an alibi. He said that he was not in Surat on August 15, 1930, that he went to Bombay on August 14, stayed the night with one Alaudin in Bombay and the two following nights in a Musafarkhana. Entries from the register kept at the Musafarkhana have been produced and they appear to show that he arrived on August 15 and left on August 17. It is also proved that on August 16 the defendant presented an application in the High Court for a certified copy of a certain document. The application bore a stamp on which the date August 15, 1930, is written. That would not show, however, that the defendant was necessarily in Bombay on the 15th, the stamp might have been obtained for him by somebody else. All the evidence produced by him in fact would be consistent with his having been in Surat on the morning of the 15th and having left for Bombay in the middle of that day, except the evidence of witness Alaudin, exhibit 75, who deposes that the defendant came, on August 14 and spent the night of that day with him. It may be that the evidence of Alaudin made a favourable impression on the trial Judge. He says in fact that he believes his evidence. But it is not easy to see how he can be positive about the date. On the whole it can hardly be said that this alibi evidence could be regarded as sufficiently strong to rebut satisfactory evidence on the other side to show that the defendant was in Surat on the morning of the 15th. As I have said, however, the plaintiffs have not been able to produce satisfactory evidence of that fact and any weaknesses there may be in the defendant's evidence do not assist them.

5. As we feel we must accept the lower Court's finding on the question of fact, that is sufficient to dispose of the case. But I may say that even if we had held it proved that the payment was made as alleged on August 15, 1930, and that the entry about it is in the defendant's handwriting, it would not follow that the bar of limitation would be saved. The plaintiffs have to rely on Section 20(1) of the Indian Limitation Act. It provides that-

Where interest on a debt or legacy is, before the expiration of the prescribed period, paid as such by the person liable to pay the debt or legacy, or by his agent duly authorised in this behalf,

or where part of the principal of a debt is, before the expiration of the prescribed period, paid by the debtor or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made :

Provided that, save in the case of a payment of interest made before the 1st day of January, 1928, an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.

There is no evidence whatever in this case from which it would be possible to infer that this money, if paid by the defendant at all, was a payment of interest as such. There is no suggestion even that any intimation was given by the defendant that this payment or any payment by him was to be appropriated to interest. On the other hand in the notices sent before the suit, exhibit 55, and in the plaint itself the payment has been treated as a payment towards interest, and it has been so appropriated in the plaintiffs' accounts. That being so, it can hardly be regarded as a payment of part of the principal, for there is nothing whatever to contradict or explain away the admission made by the plaintiffs themselves.

6. In Udaypal Singh v. Lakhmi Chand I.L.R. (1935) All. 261. it has been held by a majority of the full bench that where money is paid by a debtor without specifying whether the payment is towards interest or towards principal, leaving it to the option of the creditor to appropriate it as he likes, and the creditor appropriates it wholly towards interest due, there is neither a payment of interest as such nor a part payment of the principal within the meaning of Section 20 of the Indian Limitation Act. The Court approved the view taken by the same High Court in Ram Prasad v. Binaek Shukul I.L.R. (1933) All. 632.

7. The learned advocate for the appellants drew our attention to Lakshmi Naidu v. Gunnamma I.L.R. (1934) Mad. 418 where the view was expressed (p. 426) that where the payment is evidenced by a writing which is signed by the person making the payment, it makes no difference whether the payment is held to be for interest or for principal or for both, and in support of this proposition Hem Chandra Biswas v. Purna Chandra Mukherji (1916) I.L.R. 44 Cal. 567 was cited. The Calcutta Court, however, in that case did not hold that it makes no difference. What was held in that case was that where payments are made towards a debt, but there is nothing to show whether they had been made in respect of principal or interest, the Court is entitled to find out on the evidence for what purpose the payments were made. It was a second appeal. The Court of first appeal had found as a fact that the payment was a payment towards the principal. The High Court accepted that finding in spite of the fact that the creditor had appropriated the money towards interest. There are some observations in the judgment of Mr. Justice Fletcher at p. 571 which rather suggest that the learned Judge considered that a payment of interest which is not shown to have been a payment of interest as such should always be taken to be a payment of principal. If that was really intended, I must say with respect that I am unable to agree. There are three categories of payments and not two. There may be a payment of interest as such, there may be a payment of interest which does not comply with the requirements of Section 20 and thirdly there may be a payment of part of the principal. In a case like the present, where there is evidently and admittedly no payment of interest as such, it is necessary for the creditor to prove that there was a payment of part of the principal, and if he has in fact appropriated the payment towards interest, it must, to say the least of it, be extremely difficult for him to establish that position.

8. Reference was also made in the argument to Liquidator, Bagha Co-operative Society v. Debi Mangal Prasad Sinha I.L.R. (1936) Pat. 27 where Mr. Justice Wort has indicated some disagreement with the view taken by the Allahabad full bench in Udaypal Singh v. Lakhmi Chand. But what was actually decided was that where a creditor appropriates a payment towards interest and the debtor consents to the appropriation, it may be treated as a payment of interest as such within the meaning of Section 20. That may be so, but it does not assist the appellants because there is no suggestion that the defendant in this case did consent to the appropriation or that he was aware of it.

9. The appeal must be dismissed with costs.


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