1. This is a suit brought by the Liquidator of the Kayastha Trading and Banking Corporation in liquidation against the members of the family, the original mortgagors of certain property, under a hypothecation bond dated the 4th of February 1907, in respect of a sum of Rs. 10,000.
2. The only real question which was raised was whether the claim was barred. The Bank were the original mortgagees, but the suit was not brought by the Liquidator until October 1920, and the mortgage was entered into in 1907. The defence of limitation was raised by the defendants, and it, therefore, became necessary for the plaintiff to prove that there had been a payment or acknowledgment within the meaning of the Act so as to set the statute running afresh. The learned Judge found against the defence and decreed the suit and ordered the sale, holding both that interest had bean paid and that the debt had been acknowledged by means of a transaction carried out between September and December 1908.
3. The facts with regard to that transaction are extremely simple. The parties consisted at the date aforesaid, namely, 1908, of Babu Bans Bahadur Singh, his wife Mt. Rajwanta Kunwari, and the present appellant, his son Bandhu Singh. In 1908 the parties came together and agreed that a portion of the mortgaged property should be released from liability under the mortgage, and that the mortgagees should be paid the part of the debt due to them in respect thereof, and that the said property should be sold to certain transferees. That document was not executed by the appellant Bandhu Singh, although it was executed by his mother and his father. The document shows that the principal due was Rs. 10,000 borrowed under the mortgage of 1907. It shows that the interest was accumulating day by day, and that it was impossible to pay the loan except by transferring the property. It went on to state that the purchasers had agreed to purchase for its. 3,250, Rs. 150 of which was to be a cash payment. The rest namely, Rs. 3,100 was left with the purchasers with instructions to pay the amount to the mortgagees to redeem the property. Although Bandhu Singh did not execute that document, he signed the endorsement upon it on the 28th of November 1908 admitting its execution and acknowledging the receipt of the two sums of Rs. 150 and Rs. 3,100. That signature of his was the plainest possible acknowledgment of the liability in respect of the mortgage of 1907, which was recited in the deed and that the transaction upon which he placed his endorsement had been entered into is order to discharge the liability. It was also the plainest possible instruction in writing under his own hand to the purchasers to pay the mortgagees the sum of Rs. 3,100 to redeem the property.
4. On the 2nd of December 1908 that sum was paid to the mortgagees by a transfer in their books of two sums: one from the account of a customer of Rs. 400 and the other from the account of a customer of Rs. 2,700. The fact of payment is clearly established. As a matter of fact it is further clearly established from the circumstances and documents to which we have referred, that the sum of Rs. 3,100 included both interest and principal agreed to be due at the time in respect of this portion of the security. That is conclusively shown by the state of the accounts. In December 1908 not one rupee of the loan had been repaid and the amount due for principal and interest was Rs. 12,329. It is quite clear that Rs. 2,329 of that sum was interest. The fact that the money was to be paid to the mortgagees for the purpose of redemption, and that the property could not be sold unless the mortgagees consented to the transaction, is conclusive proof that the sum of Rs. 3,100 included the interest due in respect of the loan attributable to this part of the security. It could not be redeemed unless the interest due was paid up to the date of the sale.
5. It is, therefore, abundantly clear that the sum of Rs. 3,100 included interest and was paid as such. It is also clear that it consisted partly of principal because the total amount of interest on the whole mortgage deed in December 1908 was less than the sum of Rs. 3,100. It, therefore, stands in this way: that the agent of Bandhu Singh, the present appellant, acting in accordance with Bandhu Singh's instructions in writing under his own signature paid to the mortgagees on the 2nd of December 1908 a sum of money which could only contain the principal and interest due under this mortgage. Under Section 20 of the Limitation Act a part payment of principal must appear in the handwriting of the person making the same. The payment of this part of the principal did not. Therefore, so far as the principal is concerned, the payment does not help the plaintiff. But where interest is concerned, it is sufficient if interest-on the debt is paid before the expiration of the prescribed period as such.
6. We have been referred to a variety of cases in which the question has been raised whether a payment of interest can be said to be made 'as such.' It is a question of fact in each case. It has been questioned whether a mere appropriation by the creditor is sufficient. It is not necessary for us to decide that question though, if interest is due and the whole amount is paid, it goes with out saying; and if the amount paid is only part of the amount which is due, and the debtor does not take care to state that it is not paid as interest and the creditor appropriates it to interest as he has the right to do by law, the ordinary inference would be that it was paid as what it was, namely interest. If a debtor wants to avoid payment of interest, or to avoid the inference that ho is paying money as such although he owes interest, he ought to take care to make his payment unambiguous. There are dicta which seem to us to have gone somewhat further than is necessary and which have said that the words 'as such' in the section throw upon the creditor the onus of showing what the intention of the debtor was at the time he made the payment. However it is really not necessary for us to decide that question.
7. We agree with the decision in the case of Gopi Nath Singh v. Hardeo Singh (1909) 31 All 285, where it was held that the terms of the mortgage, and the appropriation of payment to interest by the creditor, and the conduct of the parties might be taken into account so as to raise the inference that payment was made as such, that is to say, as interest. There are many other authorities from which it can be shown that the same view has been taken, but in this case the evidence is overwhelming, because the amount paid was the whole amount which was due, both principal and interest, in respect of this particular property, and it really would be impossible to draw any other inference than that a part of that sum was paid as interest. We, therefore, agree with the learned Judge in holding that there was a payment of interest under Section 20. In order to make assurance doubly sure the mortgagees amended their plaint and alleged that the document of the 23rd of September 1908 was an acknowledgment within the meaning of Section 19. The learned Judge has also found that question against the defendants and we think that he was right, and on that ground alone the appeal fails.
8. The result is that the appeal must be dismissed with costs here and celow, including in this Court fees on the higher scale.