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Bathalur Naranappa Vs. Uppacharla Gurappa and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKarnataka High Court
Decided On
Case NumberSecond Appeal No. 427 of 1949-50
Judge
Reported inAIR1954Kant23; AIR1954Mys23; ILR1953KAR344; (1954)32MysLJ170
ActsLimitation Act, 1908 - Schedule - Article 64; Indian Contract Act - Sections 25
AppellantBathalur Naranappa
RespondentUppacharla Gurappa and ors.
Appellant AdvocateK.P. Muddappa, Adv.
Respondent AdvocateV. Krishnamurthy, Adv.
Excerpt:
.....1 and 2 have signed b-1 on 12-9-46 and b-2 on 12-2-47 clearly showing and acknowledging that as a result of examining the accounts between them and the plaintiff certain stated balances were due by them on those dates......acknowledging that as a result of examining the accounts between them and the plaintiff certain stated balances were due by them on those dates. they have signed and affixed their thumb impressions on one anna stamp. it is rather difficult to understand what the learned subordinate judge means by suggesting that because they were 'practically illiterate' different considerations should govern the application of the law of limitation. this is particularly so as they have not pleaded any fraud or to have signed by mistake in ignorance of the contents and in fact they have not even chosen to step into the box. 5. i do not think defendant 3 is liable as he has not signed any of the entries and it has not. been shown how he can be bound by them. the plaintiff's suit is therefore dismissed.....
Judgment:

1. The plaintiff brought a suit for the recovery of Rs. 272-8-0 principal, Rs. 11/- interest and Rs. 2-8-0 notice charges, in all Rs. 286/-due on accounts in respect of certain transactions carried on by defendants 1 and 2 with the plaintiff from 29-10-1938 to 16-8-1947. Defendant 3 is also sought to be made liable on the ground that he was a member of the joint family with the other defendants and it was expressly pleaded that defendants 1 and 2 were the managers of the family. Defendant 1 was ex parte. Defendants 2 and 3 totally denied that they had any transactions with the plaintiff and defendant 2 pleaded that he was an agriculturist which plea was upheld by the learned Munsiff. They also pleaded that the plaintiff's suit was barred by limitation. The learned Munsiff who heard the suit believed plaintiff 1 and his witness P. W. 2 and held that the transactions had been proved and that all the defendants were liable. He also found that the suit was in time. But on appeal by the defendants the learned Subordinate Judge reversed the judgment of the learned Munsiff and dismissed the plaintiff's suit. The plaintiff has come up in second appeal.

2. I think the learned Subordinate Judge's judgment is not correct and cannot be supported. The learned counsel for the respondents has strongly relied 011 a case in -- 'Satis Chandra v. Rampada Chattapadhya' : AIR1938Cal861 , which has also been relied upon by the learned Subordinate Judge. But it is found in that case that the defendant was working under the plaintiff as a tahsildar during the concerned period and that at the end of that period he signed a document admitting his liability for a certain sum. 'Siqueira v. Noronha' AIR 1934 PC 144 (B) and -- 'Bishun Chand v. Girdhari Lal' were expressly distinguished in that case and it was observed that in the latter of the Privy Council cases, the account was drawn up by the creditors in their own account book and below the entry there was a writing by the debtor containing a statement that the sum as found was due after adjustment of accounts. There were cross items of accounts between the parties and the parties had agreed to set off those items against each other and to have the balance paid. On the other hand in the case in -- ' : AIR1938Cal861 ', it was found that though the plaintiff had made some attempt to show that certain cross demands of the defendant were also considered in settling the figure due by the defendant he had failed to prove that allegation. ' : AIR1938Cal861 ', therefore, cannot help the respondent as the facts there are quite different.

3. In -- 'Ram Bahadur Singh v. Damodar Prasad Singh' AIR 1921 Pat 29 (D), the question which arose was whether the words of a certain acknowledgment amounted to a promise to pay within the meaning of Section 25, Contract Act. In that case also it was sought to be argued that there was 'an account stated' but on the facts their Lordships who decided it were of the view that there were no cross demands between the parties and that therefore there was nothing by way of settlement of account. 'Sasi Kanta v. Bonaulla' : AIR1929Cal444 which has been of a promise to pay will not bring an acknowledgment of debt under Section 25, Contract Act. In that case also the defendant was a gumshoe under the plaintiff and some time after the agency terminated he signed below an entry saying that he was liable to his employer in a certain sum. That case therefore was not one relating to a suit on 'account stated'. AIR 1934 PC 144 (B) and -- clearly apply to the facts and circumstances of this case. As pointed out in -- 'AIR 1934 PC 144 (B)', an account stated may only take the form of a mere acknowledgment of a debt, and in those circumstances, though it amounts to a promise & the existence of a debt may be inferred the same can be rebutted; and it may very well turn out that there is no real debt at all and in that case there would be no consideration and no binding promise. But in a case of transaction evidenced by entries on both sides in the plaintiff's account and in which the parties who have 'stated the account between them' have agreed that the items on one side should be set off against the items on the other and only the balance should be paid, their Lordships held that

'From such an account there arises a promise made for good consideration to pay the balance shown on the account.'

In -- '', their Lordships pointed out that there can be an account stated although the balance of indebtedness is throughout as it must be at the end in favour of one side; that the essence of an account stated is the fact that there are cross items of accounts and that the parties mutually agree to the several amounts of each and, by treating the items so agreed on the one side as discharging the items on the other side pro tanto, go on to agree that the balance only is payable. Such a transaction is in truth bilateral and creates a new debt and a new cause of action; it was not material whether the only payments made by one party were simply payments in reduction of an indebtedness or were payments made in respect of other dealings. In any event items must be ascertained and agreed on each side before the balance can be struck and settled. Such a transaction involves 'mutual promises, the one side agreeing to accept the amount of the debts as true and to pay it, the other side agreeing the entire debt as at a certain figure and then agreeing that it has been discharged to such and such an extent so that there will be complete satisfaction on payment of the agreed balance.' In -- 'AIR 1934 PC 144 at p. 145 (B)', their Lordships found fault with the Courts below observing that they had dealt with the matter before them upon the footing that the transaction between the parties which was alleged to be an account stated, amounted to an implied promise to pay without consideration, and, having got that in mind, they then began to consider fin that light) questions that arose under the Indian Contract Act and theIndian Limitation Act. I think that is just what the learned Subordinate Judge has done in this case.

4. If we examine the accounts in this case we find that there are items of debt as well as some items of credit i.e., cross items. Defendant 1 has signed Ex. A-1 on 12-7-1943. Defendants 1 and 2 have signed B-1 on 12-9-46 and B-2 on 12-2-47 clearly showing and acknowledging that as a result of examining the accounts between them and the plaintiff certain stated balances were due by them on those dates. They have signed and affixed their thumb impressions on one anna stamp. It is rather difficult to understand what the learned Subordinate Judge means by suggesting that because they were 'practically illiterate' different considerations should govern the application of the law of limitation. This is particularly so as they have not pleaded any fraud or to have signed by mistake in ignorance of the contents and in fact they have not even chosen to step into the box.

5. I do not think defendant 3 is liable as he has not signed any of the entries and it has not. been shown how he can be bound by them. The plaintiff's suit is therefore dismissed as against him but without costs.

6. The judgment of the learned Subordinate Judge is set aside; the appeal is allowed and the judgment and decree of the learned Munsiff are restored but there will be a decree only against defendants 1 and 2 with costs throughout.

7. Appeal allowed.


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