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Girdhari Lal and anr. Vs. Firm Bishnu Chand - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad
Decided On
Reported inAIR1932All461; 140Ind.Cas.783
AppellantGirdhari Lal and anr.
RespondentFirm Bishnu Chand
Excerpt:
- - but the point is whether the words 'account stated' can be applied to a money-lending transaction -like the present where one party, the plaintiff, lent money to the defendants and the defendants merely made repayments of money which had been lent. article 64, schedule 11, limitation act, applied only to such an account stated, and not to a case like the present, where there were no demands to be set off against each other, but only debts on one side of the account and payments made by the debtor on the other......the decree of the court of first instance on the ground that the acknowledgment would amount to an account stated under article 64, lim. act, and argued that in the alternative it would come under section 25, contract act. the acknowledgment in question is contained in the books of the plaintiff which show the loans which have-been taken by the defendants and the payments made by them. a correct translation is printed on p. 15 of the paper book and is as follows:balance due to be paid after adjusting theaccount up to kunwar sudi 9, rs. 10,043-8-9.signature of girdhari lal,in autograph. 3signature of ram charan lal,in autograph. 32. we may note that the account book shows that the vernacular words baqi lelina rahe miti kunwar sudi naumi sambat 1982 tain hisab karke rupaiya 16,043-8-9' are.....
Judgment:

Bennet, J.

1. This is a first appeal by the defendants against a decree of the learned Subordinate Judge of Shahjahanpur decreeing the plaintiff's claim for a sum of Rs. 18,467-9-0 together with costs and interest. The only question before us is one of limitation. The plaint set forth that the,' plaintiff's firm was a firm of money-lenders and that it was agreed that the defendants should borrow money from the plaintiff's firm, and interest would be payable on the loans at the rate of ten annas per cent per mensem, and that entries should be made of the loans in the account books of the plaintiffs. Para. 4 of the plaint set forth that on the date corresponding to 26th September 1925 the account as between the parties was adjusted and a sum of Rupees 16,043-8-9 was found due to the plaintiff by the defendants. The defendants admitted and acknowledged the said sum of money to be due by them. The plaints then set out an acknowledgment in the books of the plaintiffs, but we note that it is admitted by learned Counsel on both sides that the translation at p. 2 of the paper book is inaccurate as it contains the words 'by us' which are not in the vernacular in the original either of the plaint or of the account books. Para. 6 sets out that, according to this agreement, a sum of Rs. 17,347-1-0 was found due to the defendants on the date corresponding to 15th October 1926, and the defendants did not pay. The plaint therefore claimed a certain sum of money as due on the acknowledgment of 26th September 1925. The suit was brought on 17th August 1927, i.e., within three years of the acknowledgment. The written statement of the defendants pleaded that the defendants now and then took money from the plaintiff's firm and the defendants admitted that they signed the acknowledgement but denied that any account was made. The additional plea set forth that the defendants never advanced any sum of money to the plaintiff's firm as loan and that the defendants had neither taken any debt from the plaintiffs nor paid any sum of money to the plaintiffs within three years of the date of institution of the suit and that the suit was time barred. The Court of first instance held that the suit was within the period of limitation. On first appeal learned Counsel for the plaintiffs supported the decree of the Court of first instance on the ground that the acknowledgment would amount to an account stated under Article 64, Lim. Act, and argued that in the alternative it would come under Section 25, Contract Act. The acknowledgment in question is contained in the books of the plaintiff which show the loans which have-been taken by the defendants and the payments made by them. A correct translation is printed on p. 15 of the paper book and is as follows:

Balance due to be paid after adjusting theaccount up to Kunwar Sudi 9, Rs. 10,043-8-9.Signature of Girdhari Lal,in autograph. 3Signature of Ram Charan Lal,in autograph. 3

2. We may note that the account book shows that the vernacular words baqi lelina rahe Miti Kunwar Sudi Naumi Sambat 1982 tain hisab karke rupaiya 16,043-8-9' are in the account book of the plaintiff's firm in the writing of a person who kept the account book. Below this entry there occur the following words written by a defendant and signed by the defendants and written across a one anna stamp 'baqi dena rehe Miti Kunwar Sudi Naumi Sambat 1982 tain hisab karke rupaiya 16,043-8-9.' The signatures of the two defendants follow.

3. Now the questions which have been argued in regard to Article 64, Lim. Act, are two: firstly, was there an account stated within the meaning of that article and secondly, whether there can be an account stated after the period-of limitation has expired in regard to the transactions between the parties? The learned Counsel for the plaintiffs respondents did not show us any satisfactory authority in support of his argument that this acknowledgment would amount to an account stated. He referred to the statement of the plaintiff in evidence on pp. 7 and 8 of the paper-book which is to the effect that the plaintiff had sent a note of their accounts to the defendants and that the defendants had understood the account and had then written the acknowledgment. The defendants did not give evidence to contradict that, so we accept that statement as correct. But the point is whether the words 'account stated' can be applied to a money-lending transaction -like the present where one party, the plaintiff, lent money to the defendants and the defendants merely made repayments of money which had been lent. It has been shown by the evidence of the plaintiff that the defendants never sent to the firm of the plaintiff a sum which made the defendants creditors of the firm of the plaintiff. The defendants have all along been debtors of the firm of the plaintiff. The transactions therefore are entirely unilateral, and there is no statement of a mutual account. In Article 64, Schedule 1, Lim. Act the statement is accounts stated between them.' The article, therefore contemplates an account stated by one party and an account stated by the other party, that is, two accounts and not merely an account stated by a single party. The article therefore contemplates mutual accounts. We would refer for the meaning of this expression to the case of Laycock v. Pickles [1864] 4 B. & S. 497 at p, 506 where it is stated as follows:

There is a real account stated...when several items of claim are brought into account on either side, and being set against one another, a balance is struck and the consideration for the payment of the balance is the discharge of the items on each side.

4. In Jamun v. Nand Lal [1892] 15 All. 1 it was held that the striking of a balance in an account the items of which are all on one side, does not amount to an ' account stated.' This ruling followed Nahanibai v. Nathu Bhau [1883] 7 Bom. 414 and Tribhovan Gangaram v. Amina [1885] 9 Bom. 516 on this point. In Ganga Prasad v. Ram Dayal [1901] 23 All. 502 at p. 503 it was laid down:

An account stated' in the true sense is where several cross-claims are brought into account on either side, and are set off against each other and a balance is struck....

5. It was held in Jamun v. Nand Lal [1892] 15 All. 1 that:

Article 64, Schedule 11, Limitation Act, applied only to such an account stated, and not to a case like the present, where there were no demands to be set off against each other, but only debts on one side of the account and payments made by the debtor on the other.

6. In Ganesh v. Mallu Mal Girdhar Das : AIR1931All375 , a Bench of this Court held that the term ' accounts stated ' will not cover the going into accounts and the ascertaining of what is due to the plaintiff from the defendant, 'We may also refer to Deoraj Tewari v. Indrasan Tewari A.I.R. 1929 Pat. 258 at 709 (of 8 Pat. where it was held that certain chithas were not in any sense an account stated for want of mutuality. Against this array of authorities learned Counsel for the plaintiffs-respondents referred to Manjunatha Kamti v. Devamma [1902] 26 Mad. 186 where it was held that reciprocal demands were not necessary for Article 64. In that case which was very briefly reported there was an account between the partners in a shop for the profits of the shop, and it was not a case of a money-lending transaction between a creditor and a debtor. No authority was shown to us in which any Court had followed this ruling in 26 Mad. p. 186. Reference was made by learned Counsel for plaintiffs to Sarifun Mandalin v. Ferudoul Khatun A.I.R. 1923 Cal. 578, where the Court held that the case did not come under Article 64, but an observation was made that in two cases of the Calcutta High Court it had been held that for Article 64 it was not necessary to have reciprocal demands. The Court however stated that it was not going to express any opinion as to whether reciprocal demands were necessary or not for Article 64. As the Court did not state what were the cases in which the proposition advanced by the learned Counsel for the plaintiffs was held, this ruling does not help him in the least. Reference was also made to Kahan Chanddula Ram v. Daya Ram Amrit Lal A.I.R. 1929 Lah. 263 in which it was held that there was an account stated on the facts of that case where there was some loss from cotton seed. It was further stated:

Now, the three expressions, ' balance due,' ' account adjusted ' and ' balance struck ' mean that the plaintiffs and the defendants went through the account. The defendant accepted the statement of account contained in plaintiffs' books and made it his own by signing in the way he did. This in our opinion, fulfils all the necessary requirements of the words ' accounts stated between them.

7. If this paragraph in the judgment is intended to state that Article 64 will apply to a case where there is only an account on one side and not on both sides, we respectfully differ from that opinion. In our opinion the expression ' accounts stated ' implies that there must be mutual demands on each side and the account must not be a unilateral but a bilateral account. We consider that the definition given in Ganga Prasad v. Ram Dayal [1901] 23 All. 502 is correct and that the weight of authority supports that proposition. Accordingly we consider that the present case cannot come under Article 64, because there was no account stated between the parties.

8. It is perhaps unnecessary to go into the further question that the memorandum would be beyond the period of limitation and that for an account stated under Article 64 the account must be stated within the period of limitation. Sup-posing for instance a period of 50 years elapsed between the last transaction in question and the statement of the account we are of opinion that an interval of this nature or any interval beyond the period of limitation may render the account stated unless for the purposes of saving limitation.

9. The next point which was advanced by learned Counsel for the plaintiff-respondent was that his case would come under Section 25, Contract Act. Section 25 lays down in Sub-section (3):

An agreement made without consideration is void, unless it is a promise, made in writing and signed by the person charged therewith or by his agent generally or specially authorized in that behalf to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.

10. That is, a promise to pay a time-barred debt is valid Tf it is made in writing and signed by the person to be charged therewith. We may observe that the plaint set forth that there were transactions between the parties, and it is established by evidence that the last transaction by way of loan to the defendants from the plaintiffs took place more than three years before the acknowledgment of 25th September 1928, i.e., on 9th August 1921 the defendant borrowed Rs. 1,000 from the plaintiff. That is the last transaction which is proved to have taken place between the parties. It is proved in fact that the amount of the debt on 10th October 1921 was Rs. 17,057-11-3 and was reduced on 26th September 1925 to Rs. 16,043-8-9, and this implies that certain payments must have been made by the debtor in this interval of four years, but there is no evidence to show whether those payments were made within a period of three years from 26th September 1925 or not. It is also possible that some portion of the claim might have been remitted by the plaintiff. The learned Counsel for plaintiff argued that as neither side had given evidence on this point, the burden of proof to show that the acknowledgment was beyond the period of limitation lay on the defendants. But we consider that the onus of proof lay on the plaintiff to show that his case came within the period of limitation on account of this acknowledgment and therefore that it was necessary for the plaintiff to establish that this acknowledgment came within the period of limitation. Another reason why we consider that the burden of proof lay on the plaintiff is that under Order 7, Rule 6, Civil P.C. where a suit is instituted after the expiration of the period prescribed by the I law of limitation, the plaintiff shall show the ground upon which exemption from such law is claimed.

11. We now turn to the question of Section 25, Contract Act. The argument centred round the question of firstly whether an express promise is necessary for that section or an implied promise is sufficient. The learned Counsel for the defendants-appellants relied on Ganga Prasad v. Ram Dayal [1901] 23 All. 502, Gobind Das v. Sarju Das [1908] 30 All. 268, Raj Narain v. Ram Sarup : AIR1930All467 , Allah Bakhsh v. Hamid Khan : AIR1931All160 and Ganesh v. Mallu Mal Girdhar Das : AIR1931All375 for the proposition that it was necessary to show an express promise to pay for Section 25, Contract Act, and a mere acknowledgment of liability, will not be sufficient. This doctrine of the Allahabad High Court has been followed in Deoraj Tewari v. Indrasan Tewari A.I.R. 1929 Pat. 258, Magan Lal Harjibhai v. Amirahand Gulabjz A.I.R. 1928 Bom. 319 Ramaswami Pillai v. Kuppusivami Pillai [1910] 7 I.C. 901 and Sasi Kanta v. Sonaulla Munshi : AIR1929Cal444 . On the other hand, learned Counsel for the plaintiff could only advance the ruling of Kahan Ghanddula Ram v. Daya Ram Amrit A.I.R. 1929 Lah. 263 where it was held that an unconditional acknowledgment implied a promise to pay. We consider that the weight of authority is undoubtedly in favour of the doctrine advanced by the defendants, and we hold that it is necessary to show an express promise to pay in order that Section 25, Contract Act, should be applied. If the argument of the learned Counsel for the plaintiff were correct and an implied promise were sufficient for Section 25, Contract Act, then any acknowledgment could be used under Section 19, Limitation Act, if the acknowledgment were made within the period of limitation and, if the acknowledgment were made beyond the period of limitation, then it could be used under Section 25, Contract Act. If this were so, then the criterion in Section 19, Limitation Act, that the acknowledgment must be made within the period of limitation would be useless.

12. We may note that it was admitted that Section 9, Limitation Act, would not apply to the present case, because the period of limitation had expired before the acknowledgment in question was made. Some further argument was made on the basis of a statement in a judgment of their Lordships of the Privy Council in Maniram Seth v. Seth Rupchand [1906] 33 Calo. 1047 which was as follows:

An unconditional acknowledgment has always been held to imply a promise to pay because that is the natural inference, if nothing is said to the contrary. It is what every honest man would mean to do.

13. We follow Gobind Das v. Sarju Das [1908] 30 All. 268 in holding that as the acknowledgment before their Lordships of the Privy Council was held to come under Section 19, Limitation Act, these words apply to an acknowledgment under that Act and are not intended to apply to Section 25, Contract Act. Further argument was made by learned Counsel for the plaintiff to the effect that there was in the present case an express promise to pay. We consider that there is nothing whatever in the words of the memorandum to support such an argument, and we consider that the words 'express promise' mean that there should be some such words as 'I promise to pay.' There is no such expression at all and we consider that the argument is unsound. For the reasons stated, we consider that the case for the plaintiffs is brought beyond the period of limitation. Accordingly we allow this appeal and set aside the decree of the lower Court, and we dismiss the suit of the plaintiff with costs throughout.


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