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(Babu) Raj NaraIn Rao and anr. Vs. Lala Ram Sarup - Court Judgment

LegalCrystal Citation
SubjectCivil;Limitation
CourtAllahabad
Decided On
Reported inAIR1930All467
Appellant(Babu) Raj NaraIn Rao and anr.
RespondentLala Ram Sarup
Excerpt:
.....both these items were well over three years previous to the said acknowledgment. the lower appellate court has distinctly found that this acknowledgment was made after the expiration of the usual period of limitation and could therefore not be relied on by the plaintiffs. under that section an agreement which is a promise to pay a time-barred debt is good if it is in writing signed by the person to be charged therewith. in all probability it was just like the bahi produced by the plaintiff......before us that in a purely loan transaction, even though there may be payments by the debtor from time to time, inasmuch as there can be no adjustment of reciprocal claims or demands, the final balance struck even though with mutual consent can never amount to an account stated. on the other hand the learned advocate for the appellants has strenuously urged before us that it is not necessary that there should be mutual demands of claims, but if there are credit and debit entries in an account, though indicating only the advances made by one side and payments made by the other, the final settlement of accounts between the parties may amount to an account stated within the meaning of article 64.11. there is no doubt that even though no case may be directly in point and exactly similar to.....
Judgment:

Sulaiman, J.

1. This is a plaintiffs' appeal arising out of a suit for recovery of money based on a statement of account dated 17th June 1922, in the handwriting of the defendant. In the plaint the plaintiff alleged that the defendant approached the plaintiffs in 1927 and requested him to advance him money in order to run his business, on the understanding that interest at the rate of 1 per cent per mensem would be paid continually with yearly rests, and that if the defendant failed to pay the annual interest the same would be added to the principal and interest charged on the whole amount at the said rate; that the defendant used to borrow money from 1907 to 1921 and made entries in his account books, and having squared the account he used to credit year after year the amount of interest in the account of the plaintiffs, that a balance was struck on 17th June 1921, and finally on 17th June 1922, the defendant copied out the entire account from his account-books and entrusted the same to the plaintiffs and that the accounts were taken between the parties for the last time on this date, viz; 17th June 1922, when a sum of Rs. 2,000 and odd was struck by the defendant as the balance due by him to the plaintiffs. The defendant in his defence denied the existence of any loan transactions between the parties at all and pleaded that there was a memorandum book in which he kept an account of dealings with his own father which was stolen by the plaintiff and was produced as evidence in this case. He not only denied the existence of liability but also pleaded that the claim in any event was barred by time.

2. On 21st August 1924, the Court ordered that the first two issues viz:

(1) Whether the suit was barred by time? and

(2) Whether the entry as to the striking of a balance relied upon by the plaintiffs required a stamp and whether it was admissible in evidence? which involved legal points, should be decided first. On that date the plaintiffs' pleader Babu Sohan Lal made the following statement:

The plaintiffs' claim is solely based on Section 19, Limitation Act., In other words, the said section saves the plaintiffs' claim from limitation.

3. Evidence was accordingly confined to these two issues and the main questions of fact involved in issue 3, viz: whether the defendant borrowed money from the plaintiffs? If so, how much? were not gone into at all. Both the Courts below have dismissed the claim as being barred by limitation. In spite of the statement of Babu Sohan Lal, an argument based on Section 20, Limitation Act, was also advanced before the lower appellate Court and disposed of by it. The learned advocate for the appellants has, in addition to relying on Sections 19 and 20, Lim. Act, also relied on Article 64, Lim. Act and Section 25, Contract Act and has urged that his clients are not bound by the admission on a point of law made by their pleader in the trial Court. If the question raised in appeal were a pure question of law which would not require any fresh findings, we would have no hesitation in allowing the point of limitation to be raised before us, even though it were for the first time.

4. It is quite clear to us that Section 19, Lim. Act, cannot help the plaintiffs. The writing dated 17th June 1922, if treated as a clear acknowledgment of liability, would be an acknowledgment on that date. But according to the account filed, the last advance made by the creditor was on 17th October 1917, and the last payment made by the debtor was on 18th August 1918. Both these items were well over three years previous to the said acknowledgment. The lower appellate Court has distinctly found that this acknowledgment was made after the expiration of the usual period of limitation and could therefore not be relied on by the plaintiffs. We agree with that view.

5. Section 20, Lim. Act, was pressed before the lower appellate Court, but as appears from its judgment no authority was cited in support of the contention, The case of G.N. Lakshminarasimham Pantulu v. Bharata Mahanty [1910] 9 M.L. T 216 relied upon by the defendant was not directly in point. But a number of authorities have been produced before us to the effect that for purposes of Section 20 it is not necessary that there should be an actual payment in cash, but that even the addition of interest to the principal may amount to a payment within the meaning of that section. The Court below has assumed, although the fact was denied in the written statement, that there might have been an agreement to charge compound interest, that is to say, to add interest annually to the principal in case it was not paid. But even if there had been such an initial agreement between the parties, the mere fact that the debtor in pursuance of such an agreement went on adding in his books interest to the principal year after year would not amount to actual payments within the meaning of Section 20, unless the creditor each time agreed to it. The learned advocate for the appellants relied on the cases of Kasiyappa v. Rachappa [1900] 24 Bom. 493 In re, Tricumdas Mills Co, Ltd. : (1911)13BOMLR482 and Mohan Lal v. Lachman Das [1906] O.C. 221. In cases where both parties agreed to wipe out the previous balance and added the amount of interest to the principal so as to make it a new debt due, one may concede that such an act may amount to payment of interest within the meaning of Section 20. But in our opinion such addition of interest to principal must be the result of an agreement between the parties on the date of such payment. We are not prepared to hold that if either the creditor or the debtor by himself goes on adding interest to principal in his own books, even though the same may be in pursuance of the original agreement, there would be each time that this is done a fresh payment by the judgment-debtor to the creditor so as to extend the period of limitation under Section 20 of the Act.

6. In the present case the view taken by the learned Additional District Judge was that it was never the plaintiffs' case that any of the said balances (other than that of 17th June 1922) was struck in his presence and that there is no allegation that there was any settlement of accounts between the parties before that date. There is certainly no evidence on the record to show that the addition of interest to the principal in 1919, 1920 or 1921 was with mutual consent given at the time. We are therefore of opinion that Section 20 cannot help the plaintiffs.

7. The present claim cannot be considered to be one based on Section 25, Contract Act. Under that section an agreement which is a promise to pay a time-barred debt is good if it is in writing signed by the person to be charged therewith. But to bring the case within that section it is necessary to show an express promise to pay. A mere acknowledgment of liability, even if it implies a promise, would not be sufficient for purposes of this section. There is plenty of authority in support of this view. In the ease of Gobind Das v. Sarju Das [1908] 30 All. 268 the observations of their Lordships of the Privy Council in the case of Maniram Seth v. Seth Rupchand [1906] 33 Cal. 1047 were fully explained and it was pointed out that an express promise was necessary. The same view has been expressed in the recent case of Ram Bahadur Singh v. Damodhar Prasad Singh A.I.R. 1921 Pat. 29 We agree with that view and hold that Section 25 does not apply to this case as there is no express promise to pay contained in Ex. 1.

8. The last point urged on behalf of the appellants was that this Ex. 1 amounted to a statement of account which gave to the plaintiffs a fresh cause of action and a fresh period of three years. The circumstances under which the plaintiffs obtained this book have not been determined by the Court below and the case has proceeded on the assumption that it is a copy made of the entries in a memorandum of accounts kept by the defendant and handed over to the plaintiffs. But there is no evidence on the record, nor is there any finding that the plaintiffs and the defendant sat down together and went into the whole account, and on an adjustment of the account arrived at the conclusion or agreement that the amount due on 17th of June 1922, was Rs. 2,153-2-0 neither more nor less. The ordinary meaning of the expression 'account stated' is given in Wharton's Law Lexicon as:

the admission of a balance due from one party to another, and that balance being due there is a debt; the statement of the account and the admission of the balance implies a promise to pay it.

9. But there is undoubtedly, as observed by Blackburn J. in Leycock v. Pckles [1864] 33 L.J.Q.B. 43 a technical meaning attached to this expression, viz:

the real account stated is when several items of cross-claims are brought into account on either side, and being sat against one, another, a balance is struck, and the consideration for the payment of the balance is to discharge on either side; each party resigns his own rights on the sums he can claim in consideration of a similar abandonment on the other side, and of an agreement to pay and to receive in discharge the balance found due.

10. There are numerous cases of the Indian High Courts where this phraseology has been borrowed, and stress has been laid on the restricted meaning of the expression. We may only give references to a few of such cases, viz.: Nahanibai v. Nathu Bhau [1883] 7 Bom. 414, Jamun v. Nand Lal [1892] 15 All. 1 and Suraj Prasad v. W.W. Burke [1920] 5 Pat. L.J. 371. On the other hand there are undubtedly some observations to the contrary in Dukhi Sahu v. Mahomed Sikhu [1884] 10 Cal. 284 and a clear expression of opinion in Manjunatha Kamti v. Devamma [1903] 26 Mad. 186, and a reference to such contrary opinion in Sarifun Mandal in v. Feradoul Khatun A.I.R. 1923 Cal. 578 at p. 579. It may ba pointed out that the case of Gaya Prasad v. Ram Dayal [1901] 23 All. 502 was explained in Bhola Nath v. Net Ram [1906] 3 A.L.J. 800, where it was pointed out that the facts of the case make it one of a very restricted application. The learned advocate for the respondent has strongly urged before us that in a purely loan transaction, even though there may be payments by the debtor from time to time, inasmuch as there can be no adjustment of reciprocal claims or demands, the final balance struck even though with mutual consent can never amount to an account stated. On the other hand the learned advocate for the appellants has strenuously urged before us that it is not necessary that there should be mutual demands of claims, but if there are credit and debit entries in an account, though indicating only the advances made by one side and payments made by the other, the final settlement of accounts between the parties may amount to an account stated within the meaning of Article 64.

11. There is no doubt that even though no case may be directly in point and exactly similar to the case on facts, there is a preponderance of observations in favour of the contention advanced on behalf of the respondent though there are also express views to the contrary. It seems to us that the principal distinctions between Section 19, Article 64, and Section 25 are, that acknowledgments under Section 19 may be a purely one-sided and unilateral statement not even addressed to the creditor, whereas the statement of account under Article 64 must be the result of mutual agreement, and even though it may imply a promise to pay need not be an express promise to pay, but under Section 25, Contract Act, there must of necessity be an express promise to pay. In the present case, however, we do not think it necessary to express a final opinion of this vexed question, inasmuch as in view of the statement of the pleader for the plaintiffs no attempt was made on behalf of the plaintiffs to lead any evidence to show the circumstances under which the copy was made on 17th June 1922. In the absence of such evidence the learned Judge has remarked as follows:

There is nothing to show what the nature of the original bahi was. In all probability it was just like the bahi produced by the plaintiff. If so, it was a mere memo of account and not an account book regularly kept in the course of the business, as a perusal of it will at once show. There is nothing to show when it was written, It may be that it was all written in a single day. No presumption can be made that the balance referred to in the account book were struck on the particular dates given in the bahi. The plaintiff does not Say that any of the said balance (excepting that of 17th June 1922) was struck in his presence.

12. There is thus nothing to show, that the final striking of the balance was a result of a mutual settlement of account between the parties. For aught one knows it might be a mere copy made by the defendant. This is one difficulty in the way of applying Article 64. In the second place, the article requires that the account stated must have been signed by the defendant. Ex. 1 relied upon by the plaintiffs states at the beginning that this is an account of the defendant. It does not mention with, whom. The name of Ram Sarup only appears in this heading which describes the nature of the account. It does not appear at any other place in the book as one would expect a signature to be. Nor does the book contain anywhere the words such as 'baqalam khud' or 'likhtam khud.' But it is admitted that the whole of it is in the handwriting of the defendant.

13. The learned advocate for the appellants relies strongly on tha cases of Andarji Kalyanji v. Dulabh Jeevan [1880] 5 Bom. 88, Jekisan Bapuji v. Bhowsar Bhog Jetha [1880] 3 Bom. 89, Sadasook Agarwala v. Baikanta Nath [1904] 31 Cal. 1043-9 C.W.N. 83, Mathura Das v. Babu Lal [1876] 1 All, 683 and Uma Shankar v. Gobind Narain A.I.R. 1924 All, 855-49 All. 892 and urges that it is not necessary that a signature as understood in common parlance should appear on the document, but that it is merely necessary that there should be something which would show that the document was intended to have been duly authenticated by the executant. The cases relied upon by him are to some extent similar though not exactly on all fours with the case before us. But having regard to the fact that the book itself in no way suggests that It contained the plaintiffs' account or was an account stated between the parties, we would hold that Article 64 cannot be made applicable to this case. The result, therefore, is that this appeal is dismissed with costs.


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