Skip to content


Harkubai Fakirchand Shet Vs. Shankerbhai Zaverbhai Gujarati - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtMumbai
Decided On
Case NumberFirst Appeal No. 45 of 1942
Judge
Reported inAIR1944Bom37; (1943)45BOMLR1014
AppellantHarkubai Fakirchand Shet
RespondentShankerbhai Zaverbhai Gujarati
DispositionAppeal dismissed
Excerpt:
.....filed and prosecuted in wrong court-exclusion of time-period of exclusion-payment by debtor to creditor-creditor applying it towards interest-whether creditor can subsequently treat it as part-payment of principal-approipriation of payment-dekkhan agriculturists relief act (xvii of 1879), section 13(f).;defendant passed a promissory note in favour of the plaintiff on january 2, 1933; and on october 13, 1935, made an endorsement on it under his signature saying : 'rs. 75 was paid on october 13, 1935, in the hand of motibhai (defendant).' the plaintiff sued on the note in the nasik court on october 13, 1938. he averred in his plaint that the payment of rs. 75 was credited towards interest. defendant in his written statement denied that it was paid towards interest and pointed out that..........down the law correctly, provided that the debtor making the payment was an agriculturist at the time the payment was made. if he was an agriculturist at the time the payment was made, then he may be presumed to have known at the time his rights as an agriculturist, to have intended to stand on his rights, to know the consequence of standing on his rights, namely that if the matter came to court, any appropriation other than an appropriation towards interest would not be upheld, and, lastly, to have intended to abide by the consequences of standing on his rights, unless of course there was an agreement to the contrary at the time of making the payment, namely that it should be appropriated towards principal rather than interest. it is true that the privy council in rama shah v. lal.....
Judgment:

Macklin, J.

1. This appeal by the plaintiff in a suit to enforce payment under a promissory note has led to an interesting discussion of the law of limitation. On the merits the plaintiff has succeeded in the Court below; but his suit has been dismissed as barred by limitation and not saved by the provisions of Section 20 of the Indian Limitation Act, 1908.

2. On January 2, 1933, the promissory note for Rs. 5,400 now sued upon was executed by defendant No. 2 on behalf of the suit shop. It contains three endorsements, of which the last is an endorsement of the payment of Rs. 75 on October 13, 1935, in the handwriting of defendant No. 2. On October 13, 1938, exactly three years after, the present suit was brought in the Nasik Court. On November 29, 1939, it was held by that Court that the Court had no jurisdiction, and the plaint was ordered to be returned. On Saturday December 9, 1939, the plaint was endorsed as returned to the plaintiff's pleader, and on Monday, December 11, 1939, it was re-filed in the Court at Nadiad. The point of limitation taken in the Court below arose out of Section 20 of the Indian Limitation Act. Section 20, so far as it is material, provides that 'Where interest on a debt is, before the expiration of the prescribed period, paid as suck by the person liable to pay the debt, or by his agent duly authorised, 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, a fresh period of limitation shall be computed from the time when the payment was made;' and then follows a proviso with which we are not now concerned. The plaint stated that the payment of Rs. 75 was credited towards interest but did not in terms say that interest had been 'paid as such' within the meaning of Section 20. The written statement of defendant No. 2 denied that it was paid towards interest and pointed out that the endorsement did not say that it was paid towards interest. The trial Court held that it could not be regarded as a payment towards interest as such, and it also held that there was no evidence from which the Court could come to the conclusion that the payment was made towards principal. On the contrary it pointed out that the plaintiff himself in his plaint having stated that it was credited towards interest it would be difficult for him to establish a case of its having been paid towards principal. On that ground alone the suit was dismissed, and the plaintiff now comes in appeal.

3. I do not propose to go as fully into the discussion that has taken place as I should otherwise have done, since the appeal in our view must fail on a question of fact. I shall however briefly indicate the lines which the discussion has taken, In support of the decree it has been argued on behalf of the defendants-respondents that, quite apart from Section 20 of the Indian Limitation Act, the suit is out of time because the period spent in prosecuting the suit in the Nasik Court, which had no jurisdiction to entertain it, is in this case incapable of saving limitation in spite of Section 14 of the Act. The argument takes two forms. In the first place it is pointed out that the order of the Court declining jurisdiction was passed on November 29, 1939, but the suit was not re-filed in the Nadiad Court until December 11, so that having been originally filed on the last day of limitation it was at least twelve days out of time. Alternatively it is argued that if the date endorsed on the plaint as the date of return, namely December 9, is taken to be the date up to which the plaintiff was prosecuting with due diligence his action in a Court which had no jurisdiction to entertain it, even so the suit is out of time because, it having originally been filed on the last day of limitation, it was not possible to file it two days after the plaint was returned and still save limitation. We do not think that in this case the date of declining jurisdiction should be taken to be the extreme limit of the period during which the plaintiff can be taken to have been prosecuting his suit with due diligence in the wrong Court. It is true that it is not in every case that the date of the actual return of the plaint should be taken to be the date on which the plaintiff could be taken to have been prosecuting his suit; see, for example, Neerendrabhoosham Lahiri v. Berhampur Oil Mills, Limited I.L.R. (1933) Cal. 1122 and Maneklal Mansukhbhai v. The Suryapur Mills Co. Ltd. I.L.R. (1927) 52 Bom. 477 . But the authorities make it clear that in a proper case it is open to the Court to treat the date of actual return as the limit of the period to be excluded under Section 14 of the Indian Limitation Act rather than the date on which the Court passes orders declining jurisdiction, though of course it would not do so if it thought that in the interval the plaintiff had been guilty of negligence. In this case we do not see any reason for supposing that the plaintiff was guilty of negligence; and that being so, we think that the date of the actual return of the plaint can be taken to be the appropriate date for the purposes of Section 14. If that is so, then by reason of explanation I to Section 14 the entire period from October 13, 1938, to December 9, 1939, (both days inclusive), must be excluded. The following day, which was Sunday, also must be excluded; and a plaint filed on Monday, December 11, 1939, can be deemed to have been filed exactly three years to a day after the date of the payment. The fallacy in the argument addressed to us on behalf of the defendants lies in its failure to notice the effect of explanation I to the section.

4. But the real question is whether limitation is saved by Section 20 of the Act. The plaint seeks to save limitation by the application of the section with reference to payment of interest. Although it is open to a creditor to treat a payment as payment towards interest or as payment towards principal provided he makes the appropriation within the period of limitation [see Rama Shah v. Lal Chand : (1940)42BOMLR640 ], he obviously cannot be allowed to appropriate ft towards principal during the course of the suit when he has in fact appropriated, and notified to the defendant that he has appropriated, to interest. Mr. Desai argues on the authority of the decision of the Privy Council in Rama Shah v. Lal Chand that an appropriation by the creditor to interest when the debtor has indicated no intention one way or the other is 'a payment towards interest,' and, if the appropriation is made within the period of limitation (as in the case here), it will save limitation. But that is not the effect of the decision, and their Lordships make it perfectly clear that there is a definite distinction for the purpose of saving limitation between an appropriation by a creditor to principal and an appropriation by a creditor to interest. An appropriation by a creditor to principal will save limitation if the appropriation is made within the prescribed period, even though the appropriation is not notified until after the prescribed period. But an appropriation to interest will not save limitation if made by the creditor alone, because the words of the section 'payment of interest as such' are a clear indication that the intention of the debtor making the payment is what counts; and if the debtor has not indicated any intention that his payment should go towards interest, it is not open to the creditor to make up his mind for him.

5. Alternatively it is contended on behalf of the plaintiff that the payment can be treated as an acknowledgment within the meaning of Section 19, and for this reliance was placed on Ganesh v. Dattatraya (1922) 25 Bom. L.R. 144 where payments endorsed in similar terms to the payment in this suit were held to save limitation under Section 19. The endorsement in question is simply an endorsement that 'Rs. 75 was paid on October 13, 1935, in the hand of Motibhai Sd. Shankarbhai Javerbhai, the handwriting of Motibhai Javerbhai' (Shankarbhai being defendant No. 1 and Motibhai being defendant No. 2). There is in terms no acknowledgment of any liability, nor any promise to pay the unpaid balance. But the authority of Ganesh v. Dattatraya has been doubted in a later decision of this Court, Kesharmal Indajishet v. Narayan Vidyadhar (1941) 44 Bom. L.R. 427 where it was pointed out that an acknowledgment of a part payment does imply a liability to pay something more and is therefore an acknowledgment of the right of the creditor to recover something more, and whether in any particular case the endorsement amounts to an acknowledgment must depend on the language of the endorsement. It is pointed out that a statement that something has been paid 'in respect of a promissory note' does not involve any admission that something more remains due on the promissory note. On the other hand, a payment made ' in part payment' or ' towards ' as distinct from 'in respect of' a promissory note does imply an admission that something more is due. In the present case it is not possible to infer any admission that anything more was due, though in fact it is probable that a good deal more was due. It follows that on this statement of the law neither Section 19 nor Section 20 of the Indian Limitation Act will help the plaintiff.

6. But he now relies mainly on the fact that this is a case of an agriculturist, and his learned advocate argues on the authority of Lacchia Limji v. Nagindas Chhotalal (1942) 45 Bom. L.R. 178 that when an agriculturist debtor makes a payment, the money by reason of Section 13(f) of the Dekkhan Agriculturists Relief Act has to be credited first in the account of interest notwithstanding any agreement between the parties as to the appropriation of the payment, so that the payment must be taken as having been made towards interest as such and therefore to be a good payment to save limitation under Section 20 of the Indian Limitation Act. This is a decision of my learned brother Divatia sitting alone and it is not binding on us. As at present advised however and having heard arguments on the point at considerable length, we think that it lays down the law correctly, provided that the debtor making the payment was an agriculturist at the time the payment was made. If he was an agriculturist at the time the payment was made, then he may be presumed to have known at the time his rights as an agriculturist, to have intended to stand on his rights, to know the consequence of standing on his rights, namely that if the matter came to Court, any appropriation other than an appropriation towards interest would not be upheld, and, lastly, to have intended to abide by the consequences of standing on his rights, unless of course there was an agreement to the contrary at the time of making the payment, namely that it should be appropriated towards principal rather than interest. It is true that the Privy Council in Rama Shah v. Lal Chand refused to presume an intention to pay interest as such from the English rule that, where interest is outstanding and a creditor receives an open payment without any appropriation as between principal and interest by either debtor or creditor, the presumption is that the payment is creditable in the first instance towards the outstanding interest. But that was because they refused to draw any inference as to the intention of the debtor from the rights of the creditor. Here we are drawing a presumption as to the intentions of the debtor from the rights not of the creditor but of the debtor himself, We do not however see how this presumption could arise in the case of a debtor who was not an agriculturist at the date of the payment. He may have ceased to be an agriculturist before the payment, or he may have become entitled to all the benefits provided by the Dekkhan Agriculturists' Relief Act after the payment. But if he was not an agriculturist at the time of making the payment, it is common sense that no presumption as to his state of mind could arise from rights which he did not then possess. In the present case it is argued on behalf of the defendants that there is nothing to show that either of the defendants in this case was an agriculturist at the time the payment was made; and with that contention we agree. In the Nasik Court it was held that defendant No. 1 was an agriculturist in 1939 and that defendant No. 2 was not an agriculturist at that time. But the Court made it clear that the reason for the finding was that since 1936 defendant No. 1 had no other source of income than agriculture. Prima facie therefore defendant No. 1 was not an agriculturist before 1936, and defendant No. 2 never was an agriculturist. For the plaintiff it is argued that in taking accounts a Court is not entitled to consider the position of the parties at any period except at the date of the suit. But that is beside the point. It is not a question of taking accounts; it is a question of drawing a presumption of fact, and we are unable to draw any presumption in this case as to the agricultural status of the defendants in 1935 at the time when the payment was made.

7. It is suggested that we might send the case back for a finding of fact on this point. But after all it is for the plaintiff to make out his case to save limitation, and merely because the decision in Lachhia v. Nagindas was not published until after this case had been decided by the lower Court, it does not alter the fact that the law must be presumed to have been the same at the time of the institution of this suit as it was when the decision in Lachhia v. Nagindas was published. It was for the plaintiff to take this particular point if it was open to him to take it. He did not take it in the lower Court when it was possible to take evidence. He cannot take it now as a new point, since it depends on evidence which is not available to us. The result is that on this ground the plaintiff must be held to have failed to show that limitation is saved. It is an unfortunate result, since on the law as now amended in 1942 appropriation by the creditor to interest-not merely payment by the debtor of interest as such-would save limitation; also even on the law as it stood in 1938 the creditor could have saved limitation by appropriating to principal instead of interest. But the law correcting this anomaly is not retrospective.

8. We uphold the decision of the lower Court and dismiss the appeal with costs. The attachment is set aside.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //