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B. Udeypal Singh Vs. Lakshmi Chand - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtAllahabad
Decided On
Judge
Reported inAIR1935All946; 159Ind.Cas.387
AppellantB. Udeypal Singh
RespondentLakshmi Chand
Cases ReferredKripa Ram v. Balak Ram
Excerpt:
limitation act (ix of 1908 as amended by act i of 1927), section 20 - payment by debtor without specification--creditor appropriating it towards interest--whether constitutes payment of interest as such or part payment of principal--'paid as such,' meaning of--changes made by amending act, nature of--limitation--exemption--grounds shown in plaint--different grounds if can be proved--duty of court to apply law of limitation whether pleaded or not--interpretation of statutes--modification of language of statute to meet intention of legislature--redundant words cm be dropped if they lead to absurd results. - - 50 were paid and endorsed at the back of the bond and rs. 3. it is to be noticed that the plaintiff in his plaint distinctly said that the executants of the bond made the payment of.....bajpai, j.1. this case has been referred to a full bench, because there is some conflict of opinion as to the true meaning and scope of section 20, limitation act, more specifically after the amendment in the proviso by act 1 of 1927. the facts may be briefly stated. the plaintiff brought a suit for the recovery of a sum of rs. 250 on the allegation that defendant 1, ewaz and nanhe deceased borrowed rs. 100 from the plaintiff and executed a bond which provided for payment of interest at the rate of rs. 3-2-0 per cent per mensem, the interest to be compounded every six months. the bond was payable on demand. defendant 1 and nanhe deceased paid rs. 50 on 17th august 1930, towards interest and both of them put their thumb marks on an endorsement of payment at the back of the bond. the.....
Judgment:

Bajpai, J.

1. This case has been referred to a Full Bench, because there is some conflict of opinion as to the true meaning and scope of Section 20, Limitation Act, more specifically after the amendment in the proviso by Act 1 of 1927. The facts may be briefly stated. The plaintiff brought a suit for the recovery of a sum of Rs. 250 on the allegation that defendant 1, Ewaz and Nanhe deceased borrowed Rs. 100 from the plaintiff and executed a bond which provided for payment of interest at the rate of Rs. 3-2-0 per cent per mensem, the interest to be compounded every six months. The bond was payable on demand. Defendant 1 and Nanhe deceased paid Rs. 50 on 17th August 1930, towards interest and both of them put their thumb marks on an endorsement of payment at the back of the bond. The endorsement runs as follows: 'Deposited Rs. 50 to-day on 17th August 1930.' There is then an account at the foot of the plaint which, says:

Principal was Rs. 100 and interest from 7th October 1927 to 16th August 1933 at the rate of 2 per cent per mensem compoundable six monthly was Rs. 250 out of which Rs. 50 were paid and endorsed at the back of the bond and Rs. 40 were remitted. The interest therefore due was Rs. 150 and this with principal amounted to Rs. 250.

2. Ewaz, defendant 1, did not file any written statement, but the heirs of the deceased Nanhe pleaded that the bond was without consideration and that its execution was not admitted. Nanhe, the deceased, had no necessity to borrow nor did he as a matter of fact borrow anything on the bond in suit. All the allegations of the plaintiff were wrong and the interest was exorbitant. The learned Small Cause Court Judge referred to the evidence of the plaintiff and his witness Radha Ballabh and observed that they had said that Rs. 50 were paid towards the bond, but neither of them said as to whether this payment was made towards the principle amount or towards interest. Relying on the authority of Ram Prasad v. Binaek Shukul 1933 All 453, the Court below held that the suit was barred by time. It also held that the execution of the bond by defendant 1 and Nanhe deceased for consideration was proved. On the question of interest the learned Judge held that the interest claimed was not excessive in view of the fact that the plaintiff did not claim at the contractual rate, but at the lower rate of 2 per cent par mensem and had further remitted a sum of Rs. 40. In the event the suit was dismissed, and in revision before us it is contended that the view of the Court below that the plaintiff's suit was barred by time is not sound.

3. It is to be noticed that the plaintiff in his plaint distinctly said that the executants of the bond made the payment of Rs. 50 on the head of interest as such. One may say that the plaint might be read as meaning that the plaintiff also credited it as such, but it is not possible to argue that the plaintiff appropriated it as interest irrespective of the volition of the debtors. Para. 2 specifically says that defendant 1 and Nanhe deceased paid Rs. 50 as interest; it does not say that they paid Rs. 50 on account and the plaintiff in pursuance of the right conferred on him by law appropriated it towards interest. The admission made by the plaintiff can be construed only in one light and as a single admission, namely, that the sum of Rs. 50 was paid by the debtors towards interest as such and it was therefore appropriated as such hence the account in the plaint was calculated in the way in which it was done. It is possible to reject the entire admission and to say that the amount was not paid towards interest as such, but it is not permissible to hold that the plaintiff's case that the debtors paid the amount towards interest as such is wrong and to pin down the plaintiff to the implied admission in the plaint that he appropriated the amount towards interest. In Motabhoy Mulla Eassabhoy v. Mulji Haridas 1915 P.C. 2, at p. 409, their Lordships of the Privy Council say:

It is permissible for a tribunal to accept part and reject the rest of any witness's testimony. But an admission in pleading cannot be so dissected, and if it is made subject to a condition it must either be accepted subject to the condition or not accepted at all.

4. The learned Judge of the Small Cause Court while considering this aspect of the case says:

It means that Rs. 50 were paid by the debtors and they did not care to specify that the sum is to be appropriated towards the interest or principal.

5. And then following Ram Prasad's case held that the suit was barred by time. I can only interpret this observation of the learned Judge as meaning that he accepts the fact that Rs. 50 were paid, but he rejects the case put forward by the plaintiff, viz., that the amount was paid towards interest as such and that being so, the question arises as to the nature of this payment. I have said already that it cannot be payment of interest as such. A debt consists of two portions, namely, interest and principal, and this amount must therefore be taken as part payment of principal. It might be contended that such a finding would be opposed to the case put forward by the plaintiff, because the exemption from limitation was sought on the ground that a portion of interest was paid as such and the plaintiff should not be permitted to say that the suit is saved from limitation by reason of a part payment of principal. under Order 7, Rule 6 where a suit is instituted after the expiration of the period prescribed by the law of limitation the plaint shall show the ground upon which exemption from such law is claimed. Upon a liberal construction of the plaint it must be deemed that the exemption was sought generally under Section 20, Limitation Act. Courts are bound to apply the law of limitation in suits whether it is pleaded or not and to dismiss a suit which is apparently beyond time. Conversely they are bound not, to dismiss, as barred, a suit which, on the face of it, is not barred. In Hindu Miah v. Heramba Chandra (1911) 13 C.L.J. 139, at p. 147, Mukerji, J., went further and said:

If the plaint shows the ground of exemption, the requirement of the Code is satisfied, but this does not preclude the plaintiff from taking another and an inconsistent ground to get over the bar of limitation if he believes that the latter is the true ground. Consequently in the case before us the plaintiff-respondent is entitled to urge that the suit is not barred by limitation for a reason different from the one assigned in the plaint.

6. In Parmeshri Das v. Fakira 1922 Lah. 230, it was held that:

the plaintiff having mentioned one ground of exemption in the plaint was not debarred by the provisions of Order 7, Rule 6, Civil P.C., from taking another and an inconsistent ground to get over the bar of limitation and could consequently rely upon the acknowledgment made in the plea of the previous case.

7. In the present case the plaint does state the ground upon which (exemption from the law of limitation was sought and as such the requirements of Order 7, Rule 6 were satisfied, but if the case set up in the plaint is not proved, but certain other facts are established then the plaintiff is entitled to exemption on those other proved facts. In the cases of Abdul Ghani v. Mt. Babni (1903) 25 All 256 and Balmakund v. Dahu (1903) 25 All 498, the plaintiff was allowed to succeed on a case different from the one which he had set up, when the proved facts entitled him to a decree. The test to my mind is that justice should not be allowed to be defeated simply because a party has not been able to prove the case which he attempted to prove, but has proved certain other facts which nevertheless entitle him to a decree, provided the aggrieved party is not taken by surprise, and I cannot see any prejudice to the defendant in this case by allowing the plaintiff to allege that the payment of Rs. 50 should be considered as payment of a part of the principal.

8. It is not the defendants case that the sum of Rs. 50 represented the entire liability of the executants which was wiped off by the payment of Rs. 50; they in fact deny the taking of the debt. The debtors endorsed the payment on the back of the bond and allowed the bond to remain in the possession of the creditors thus showing that the liability was not completely wiped off. The debtors might be illiterate, but this amount of intelligence must be attributed to them that a document evidencing ability should not be allowed to remain in the possession of the creditor when the liability was extinguished, and there was no point in making any endorsement at the back of the bond. The payment must therefore be taken as the payment of a part of the principal.

9. As the acknowledgment of payment appears in a writing signed by the person making the payment the suit would be within time. Under Section 3(52), General Clauses Act, 'sign' with its grammatical variations and cognate expressions shall, with reference to a person who is unable to write his name, include 'mark' with its grammatical variations and cognate expressions. I might mention that before the Amendment Act of 1927 the proviso in Section 20, Limitation Act, ran as follows:

In the case of part payment of the principal of a debt the fact of the payment appears in the handwriting of the person making the same,

and it was held in some cases that where the endorsement of a part payment of principal was in the handwriting of a person other than the debtor, but it was signed by the debtor there was not a sufficient compliance with the proviso, but after the passing of the Amendment Act of 1927 where the language has been slightly altered and the words are 'in the hand-writing of, or in a writing signed by, the person making payment' it will be sufficient if the writing is merely signed by the debtor although it is written by another person.

10. I now propose to consider the importance of the words 'as such' in the first paragraph of Section 20 and of the proviso added by the Amendment Act of 1927. It is said that the words 'as such' must be given some meaning and the meaning that was given to them by almost all the High Courts in India was that where payment is not expressed to be made on account of interest or on account of principal and interest, but is simply made on account of the debt it cannot be said that there is a payment on account of interest as such and limitation will not be saved on that footing. The words 'as such' mean that there must be at the time of the payment some mention that the payment is wholly or partly for interest. It may be possible to infer that the payment was made by the debtor towards interest as such by the surrounding circumstances, for instance, where the amount that is paid represents the interest up to the date of payment or where there is an express provision in the bond that any money paid was to be applied first towards payment of interest and next towards payment of principal and money was paid by the debtor from time to time. The question is whether the words have, the same meaning as they had before the Amendment. My learned brother Thom, J., has discussed that in interpreting a statute the intention must not be defeated by too literal an adhesion to its precise language and where this will lead to a manifest contradiction of the apparent purpose of the enactment, a condition may be put on it which modifies the meaning of the words, and sometimes some words may be rejected altogether. But even if it be assumed, and indeed we must assume that the Legislature was aware of the view taken by the High Courts and the argument be that if it still allowed the words to remain in the amended section the same meaning should be given to them. I am of the opinion that those words have now lost much of their importance.

11. Before the amendment it was not necessary that the acknowledgment of the payment of interest should be in the handwriting of, or in a writing signed by the person making a payment. This led to a number of frivolous suits long after the period of limitation prescribed, for it was easy for the plaintiff to say that within the time fixed the defendant paid him a small amount as interest and then the plaintiff attempted to prove such payment by adducing oral evidence which wasted much valuable time but ultimately the suit was in most cases dismissed. There is also no reason why the payment of interest should stand on a different footing from the part of the principal. These seem to be the reasons why the Legislature made it essential that the acknowledgment of the payment of interest should also be in. the handwriting of or in a writing signed by, the debtor. It is however important to note that where the part of a principal of a debt is paid by the debtor the words 'as such' do not appear and therefore it is mot necessary that the creditor must prove that the debtor at the time of the payment made some mention that the payment was towards part of the principal as such nor is it essential that this fact should necessarily he inferred from the surrounding circumstances.

12. When construing Section 20, Limitation Act, it is the attitude or the volition of the debtor which has got to be considered and the action of the creditor is not important. The way in which the creditor appropriates the payment is of no significance except as an admission and I have already discussed in an earlier portion of my judgment that an admission must be accepted as a whole or rejected as a whole. The words in both the paragraphs are 'paid by the person liable to pay the debt or paid by the debtor' and not received or appropriated by the creditor. If therefore a plaintiff has failed to prove that the debtor expressly specified that he was making the payment towards interest as such or if such an intention on the part of the debtor cannot be inferred from the surrounding circumstances, it is obvious that the payment was made towards part of the principal (it is assumed that the payment cannot be inferred as a complete discharge of the liability and in this case from what I have said above it cannot be so inferred). Further it is not necessary that the payment should either by express words or by implication be towards part of the principal, because the words 'as such' do not appear in the second paragraph, and the finding that the payment was towards part of the principal becomes inevitable on the principle of elimination; a debt as I said before consists pf two portions, namely, interest and principal.

13. I agree with the learned Chief Justice for the reasons given by him, that the writing on the back of the bond does not operate as an acknowledgment under Section 19, Limitation Act. This is my answer in the case referred to us and I am not the opinion that the suit is not barred by limitation.

Thom, J.

14. This application in revision arises out of a suit for recovery of a sum of Rs. 250 on the basis of a bond dated 7th October 1927. The suit has been dismissed on the ground that it is barred by time. The applicant however contends that the claim is not barred by time as the date from which the period of limitation should be held to begin to run is 17th August 1930. On that date a sum of Rs. 50 was paid and the bond bears an endorsement within the meaning of Section 20, Limitation Act, by the debtor that this sum was paid. In the endorsement however there is no indication as to whether this sum is paid towards interest which was due or in part re-payment of principal.

15. The sum of Rs. 50 is less than the amount of interest that was due upon the bond on 17th August 1930 and it is less than the capital sum lent upon the bond. In these circumstances, in my judgment, the payment of Rs. 50 should be regarded as a payment towards interest. When a debtor makes a payment without specifying whether the payment is towards interest or towards capital then, in my view, is only reasonable to infer that he intends the payment to be made towards interest. It is difficult to imagine a case where a debtor will make a payment and intend it to be appropriated towards the redemption of the capital sum when interest is due. The Court in such circumstances, in my opinion, in the absence of any evidence to the contrary, is entitled to hold that the payment is a payment towards interest. This view however is not in accord with the interpretation of Section 20, Limitation Act, as that section was interpreted by the Courts in India prior to the amendment of the Limitation statute in 1927. Section 20 as amended is as follows:

Where interest on a debt or a legacy is, before the expiration of the prescribed period, paid as such by the person liable to pay the debt or legacy, or by his agent duly authorised in this behalf, or whore part of the principal of a debt is, before the expiration of the prescribed period, paid by the doctor or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made, provided that, save in the case of a payment of interest made before 1st January 1928, an acknowledgment of the payment appears in the handwriting of, or in a writing signed by the person making the same.

16. The amendment of the section took the form of the addition of the proviso which now appears at the end of the section quoted. The view taken by the Court in India prior to the amendment of the statute was that by the words 'as such' in the section the ligislature intended to place the burden upon the creditor claiming on the footing of a bond of proving that when a payment of interest was alleged the debtor specifically appropriated the payment towards interest at the date of payment. No doubt this was not an unreasonable interpretation to place upon the words 'as such', but it is permissible to doubt if such a construction was a correct one.

17. The opposite party contends that the words 'as such' in the amended section should be given the same meaning as they were given by the Courts in India prior to the amendment and he contends that, inasmuch as the claimant had failed to prove that the payment of Rs. 50 was a payment towards the redemption of capital or was specifically appropriated to interest by the debtor, it cannot have the effect, in view of the terms of Section 20, of starting a fresh period of limitation. In my view this argument is unsound.

18. It is true that the endorsement does not appropriate the payment of the Rs. 50 either towards principal or interest, but it is a fact that the sum of Rs. 50 is less than the amount of interest due or the amount of the principal sum. It clearly follows therefore that the payment just have been either towards interest or towards part payment of capital or towards both. I have already expressed my view that the payment should be regarded by the Court as a payment towards interest. Be that as it may, there can be no disputing the fact that the payment was either towards interest or was part payment of capital, or partly towards interest and partly towards capital, and which ever be the case, a fresh period of limitation will begin to run from the date of payment. The opposite party contends, however, that as the claimant has failed to prove that when making the payment the debtor specifically appropriated the same towards interest even though it has been appropriated towards interest by the creditor, it is not a payment of interest 'as such' within the meaning of Section 20, Limitation Act, and therefore a fresh period of limitation does not ruin from the date of payment.

19. The difficulty has arisen because of the 'expression 'interest paid as such' in the section. The words 'as such' appear to me to be redundant. A payment of interest is a payment of interest and it is no more a payment of interest if the words 'as such' are added. A payment of interest cannot be payment of anything else and it is no more clear that it is a payment of interest if the words 'as such' are added. Prior to the amendment of the statute as already observed however a certain meaning was given to the words 'as such' by the Courts in India. I can see no reason however for giving the same meaning to these words, which are clearly redundant, in the amended section. If the contention of the opposite party be accepted then the following will be the position : (1) If a payment were made and specifically appropriated towards repayment of capital a fresh period of limitation will run from the date of payment. (2) If a payment were made and specifically appropriated towards interest a fresh period of limitation will run from the date of payment. (3) If a payment were made and no specific appropriation appears in the endorsement then, though the payment must either be towards interest or towards capital, a fresh period of limitation will not begin to run from the date of payment.

20. In my view an interpretation which leads to so absurd a result should not be accepted by the Court. It should not be assumed that the legislature intended to pass an enactment which would lead to such an absurd result. In my view the intention of the Legislature was perfectly plain, viz., to put payment towards interest and part payment of capital on exactly the same footing. If the creditor could prove by an endorsement in the hand-writing of the debtor a payment either towards capital or interest then from the date of that payment, the intention of the Legislature was, a fresh period of limitation should run. It follows therefore if this view be sound, that where an endorsement appears on the back of a bond in the handwriting of a debtor or his agent of the payment of a certain sum which is less than the amount of interest due, and less than the, capital amount of the bond, a fresh period of limitation would run from the date of payment inasmuch as clearly the payment must be either towards interest or in part payment of principal, or partly towards interest and partly towards capital.

21. It is contended, on the other hand however that this interpretation would have the effect of reading out of the section the words 'as such.' This may be so, but it is permissible to read out words which are redundant or which lead to an absurd result and to refuse to give them an interpretation which would have the result of defeating the plain intention of the. statute. Clearly in the present case if the words 'as such' are given the meaning which was attributed to them by the Courts prior to the amendment of the Limitation Act then the plain intention of the section is defeated and, as already observed, an absurd position results. It may have been necessary, prior to the amendment of the section, to give the words 'as such' a certain meaning in order to make the section intelligible. That in my view however is no reason for giving the same meaning to the words in the amended section if thereby the intention of the Legislature is defeated or at palpable absurdity results.

22. The opposite party relies strongly upon the general principle with regard to the interpretation of the statute the full meaning must be given to every word of the statute. True it is that it 19 the duty of the Court to do full justice to each and every word appearing in a statutory enactment. The Court however should not shut its eyes to the facts. It is common knowledge that draftsmen are sometimes careless and slovenly and that their draftmanship results in an enactment which is unintelligible or, if intelligible, is absurd. Where this is so, there is no-reason why the Court should diligently endeavour to spell out a meaning where there is no meaning or to solemnly affirm that the Legislature deliberately placed imprimatur on an absurd enactment. No doubt, generally, full justice must be done to the words of a statutory enactment, but if the result of that is to do less than justice to the intelligence of the Legislature it is the duty of the Court to ignore the words which have the effect of making the enactment an absurd one. This view of the law is well founded on authority. Maxwell on Statutes, seventh edition, deals with the question of the modification of the language of a statute to meet the intention of the Legislature. The learned author states at p. 198:

Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. This may be done by departing from the rules of grammar, by giving an unusual meaning to particular words, by altering their collocation, by rejecting them altogether, or by interpolating other words under the influence, no doubt, of an irresistible conviction that the Legislature could not possibly have intended what its words signify, and that the modifications thus made are mere correction of careless language and really give the true meaning. Where the main object and intention of a statute are clear, it must not be reduced to a nullity by the draftman's unskilfulness or ignorance of the law, except in a case of necessity or the absolute intractability of the language used.

23. In King v. Vasey and Lally (1905) 2K.B. 748, the question of modification of the words of a statute was considered. In the course of his judgment Lord Alverstone, C.J., approves of the passage from Maxwell's Interpretation of Statutes quoted above and proceeds with regard to the special circumstances of that particular case:

This case is a good instance of the principle that the manifest intention of a statute must not be defeated by too literal an adhesion to its precise language. The object of the amendment is plain and I think it is a case in which we must apply the principle I have cited, and so construe the section as to make it carry out that undoubted object.

24. In that case the Court decided to ignore certain words which appeared in the section under consideration and Wills, J., in the course of his judgment states:

Nobody I think who considers the enactment in question as a whole, can doubt that such was the intention of the amending section, and, if so, something must be cast aside in order to make sense of the earlier section as amended. It matters little which words go, so long as the obvious meaning is preserved.

25. A similar question was considered in King v. Ettridge (1909) 2 K.B. 24. The judgment of the Court which consisted of Darling, Walton and Pickford, JJ., was delivered by Darling, J., and in the course of his judgment the principle that to give sense to an enactment it is the duty of the Court to ignore certain words of the enactment is specifically approved. At p. 28 of the report the learned Judge states:

We are of opinion that we may in reading this statute reject words, transpose them, or even imply words, if this be necessary to give effect to the intention and meaning of the Legislature; and this is to be ascertained from a careful consideration of the entire statute.

26. In Salmon v. Duncombe (1887) 11 A.C. 627, the principle was approved that where the main object and intention of a statute are clear it must not be reduced to a nullity by the draftman's unskilfulness or ignorance of law, except in a case of necessity, or the absolute intractability of the language used. Now, there can be no doubt whatever that Section 20, Limitation Act, as amended is a typical example of sloppy draftmanship, and applying the principle approved in the decisions referred to above it is in my judgment permissible to attach no meaning whatever to the words 'as such.' In my view, in any case, the words 'as such' are clearly redundant. Be that as it may, in the circumstances the Court ought to attach no significance to them. The Court ought to ignore them entirely in order not only to avoid an absurdity, but to give effect to the plain intention of then Legislature.

27. It may be observed that apart altogether from the absurdity of the position which would result from interpreting the words 'as such', as these words-were interpreted prior to the amendment of Section 20, such an interpretation would, for all practical purposes, render the section nugatory. In ninety-nine-cases out of, a hundred when a debtor makes a payment and endorses the game on the back of the bond he does, not appropriate the payment either to interest or to principal. But if he makes no appropriation then according to the contention of the opposite party, a fresh period of limitation will not run from the date of payment. Such a. result it is clear was not intended by the Legislature.

28. It was contended by the applicant that the endorsement of the payment on the bond by the debtor amounted to an acknowledgment of liability within the meaning of Section 19, Limitation Act. For the reasons given by the learned Chief Justice, I agree, that this contention is unsound. In the result I would hold that since the endorsement of the payment of Rs. 50 on the back of the bond in suit indicates a payment made on 17th August 1930 either towards interest or in part repayment of principal or partly towards-interest and partly towards capital a fresh period of limitation began to run, from that date and the suit is not. barred by limitation.

Niamatullah, J.

29. I adhere to the view-expressed by me in Ram Prasad v. Binaek Shukul 1933 All 453 and in Kirpa Ram v. Balak Ram 1935 All 47, and concur with the Hon'ble Chief Justice in the answer which he proposes to give to the question referred to the Full Bench.

Sulaiman, C.J.

30. This is an application in revision from a decree of the Court of Small Causes dismissing a suit on the basis of a simple mortgage bond. The bond was executed on. 7th October 1927, and was for Rs. 100 bearing interest at Rs. 3-2-0 per cent per mensem compounded every six months. On 17th August 1930 there was an endorsement made on the back of this bond stating that Rs. 50 were deposited on that date. Under this endorsement appeared the thumb-marks of the two executants. There was no specification in the endorsement as to whether the amount was paid towards interest or towards part of the principal or partly towards interest and partly towards principal. The plaintiff filed, his suit on 17th August 1933, on the allegation that the defendants had paid the amount of Rs. 50 towards interest and credited the same in his account towards interest and claimed the principal sum together with the balance of the interest giving up a small portion of interest. The Court below has dismissed the suit holding that it was barred by time. The matter came up before a learned Judge of this Court who referred the case to a larger Branch which has referred it to this Bench.

31. The reason for the constitution of a large Bench is that there has been some conflict of opinion in this Court on the proper interpretation of Section 20, Limitation Act. In the plaint there was no mention as required by Order 7, Rule 6, that exemption from limitation was claimed on account of any acknowledgment in writing of the liability to pay, but exemption was sought fin the ground that the amount had been' paid towards interest. Other subsidiary questions have also been argued before us, but we think that this Bench should dispose of only the main question of law on which there is a conflict of opinion, leaving other matters to be decided by the Bench concerned. Under Section 3, Limitation Act, it is the duty of the Court to dismiss a claim as time-barred if it is brought beyond the period prescribed in the schedule; but limitation may be saved if the plaintiff can bring himself within one of the exceptions. The burden therefore lies on the plaintiff to -show that his case falls strictly within the scope of any such exception.

32. Now, the substantive Section 20, as distinct from the proviso thereto has remained unaltered ever since 1877. Section 20 of Act 15 of 1877, consisted of five paragraphs, the first three of which were as follows:

When interest on a debt or legacy is, before the expiration of the prescribed period, paid as such by the person liable to pay the debt or legacy, or by his agent duly authorised in this behalf,

or when 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 in this behalf,

a new period of limitation, according to the nature of the original liability, shall be computed from the time when the payment was made.

33. The Legislature had considered it necessary to have two separate paragraphs dealing with the payment of interest and part payment of principal with separate marginal notes. The words used were different and the provisions in respect of them were distinct. While that Act was in force, Courts in India attached special importance to the words 'paid as such' in respect of payment of interest, and did not regard them as in any way superfluous. For instance, in Kariyappa v. Rachapa (1900) 24 Bom. 493 at p. 499, it was pointed out that:

The important words are at the commencement 'interest paid, as such by the person liable to pay' and further that while the forms of payment may differ, the section provides that it must be payment as interest by the debtor to the creditor. Mere crediting of interest by the creditor in his own account books is not enough to satisfy the statute. It must be interest paid as interest and distinctly stated to be so at the time of payment, or there must be evidence from which payment as interest may be distinctly inferred.

34. Similarly, in Muhammad Abdullah Khan v. Bank Instalment Co. Ltd. 31 All 495 , a Bench of this Court held that under Section 20 the payment of interest will save limitation when the payment is made as such, that is to say, that the debtor has paid the amount with the intention that it should be paid towards interest and there, must be something to indicate that intention the mere appropriation by the creditor of these payments to interest is not such an indication. That was a case where the debtor in making the payments had on no occasion specified how they were to be appropriated and there was no other indication whatsoever to show that he had made the payments towards interest as such. The Bench accordingly held that the claim of the plaintiff was not saved from the operation of limitation by the payments so made. And yet the Legislature when enacting Act 9 of 1908, did not think it at all necessary to alter the language of the substantive section, and the first three paragraphs were reproduced verbatim. The necessary inference to be drawn from their reproduction is that the Legislature accepted the importance attached to the use of the words 'paid as such' which had occurred in the earlier Act. Had those words been in any way superfluous or redundant, Courts would not have emphasized their significance, and the Legislature would certainly have deleted them. Accordingly in Bank of Mulatan Ltd. v. Kamta Prasad 1917 All. 465, it was held by another Bench that sums paid by the debtor on various dates and credited to the account and set off against the pre-existing debts in the absence of any specification cannot be treated as payments made on account of interest as such nor would they save limitation as part payment of principal when there was no hand-writing of the debtor. See also Narain Das v. Chandrawati Kuar 1929 Oudh 479 and U Ba Gyi v. U Than Kyank 1929 Rang 339.

35. In 1927 the Legislature amended the proviso to Section 20 which shall be considered hereafter, but again did not think it advisable to change the substantive section itself. It therefore follows that unless the old interpretation of this substantive section has become impossible, or there is anything else repugnant to maintaining its old interpretation, the words which are still retained must be given their full and natural meaning. All the. words used an this section ought to be given their proper meaning and no words should be considered to be superfluous unless there is no other possible option.

36. In M.B. Singh & Co. v. Sircar & Co. 1930 All 392, it was laid down that a part payment of principal, appearing in the hand-writing of the person making it, is not required by Section 20, Limitation Act, to be expressly stated as being such; it is sufficient if it evidences a payment. It is not quite clear from the judgment, but probably the substantial sums of money paid tender three cheques amounted to more than the interest due, in which case when the creditor had failed to show that at the time the amount was paid an interest, the Bench found it possible to treat the payment as having been made towards the principal. On the other hand, in Ram Prasad v. Binaek Shukul 1933 All 453, it was laid down by another Bench that where a debtor pays a certain amount in part satisfaction of what is due from him without caring to specify that the sum is to be appropriated towards interest or principal and the creditor appropriates such payments towards interest, the payment cannot he considered to be the payment of interest as such and will not save limitation on that footing, and further that the payment having been lawfully appropriated towards interest, it cannot be considered to be payment in part satisfaction of the principal and limitation cannot be saved on the supposition that a part of the principal was paid and the fact of payment appears in the hand-writing of the debtor. In the course of the judgment it was emphasized that where a debtor pays a certain sum of money to his creditor, there may be an implied acknowledgment of the liability to the extent of the amount paid; but it cannot be said that the remaining liability, by evidence aliunde, should be deemed to have also been acknowledged. This case was later followed by a member of the same Bench sitting singly in Kripa Ram v. Balak Ram 1935 All 47, but a Single Judge in Rambohar Misir v. Chaturghun Rai 1935 All. 58, may be considered to express a somewhat contrary view.

37. Now, the law of limitation imposes certain arbitrary time limits on suits. There may not be any clear principle of equity underlying such restrictions, which are entirely a matter of policy, aiming at expedition and intended to prevent stale claims from being litigated. The interpretation of sections in such an enactment has to be made strictly according to the language employed, and not on a consideration of what ought to be the law. Of course, where the language is ambiguous and capable of two interpretations, the section should preferably be interpreted so as to mitigate the rigour of the bar.

38. It seems to me that the main principle is that there is a fresh start for purposes of limitation with a fresh cause of action. Innovation of contract always gives rise to a new cause of action with a fresh starting point of limitation. In England, acknowledgment of a debt is considered to imply a promise to pay. And as a past debt can form a valid consideration for a contract, an acknowledgment of the liability to pay a debt, with the implied promise to pay it, may be treated as a new contract so as to give a fresh start for limitation. But in India Section 19 is rather restricted and the acknowledgment must be made before the expiry of the period of limitation, and appears to be distinct from a definite promise to pay. Where there is an acknowledgment of liability to pay within the meaning of Section 19, the time is computed afresh from such acknowledgment.

39. It seems to me that the principle underlying Section 20 is also similar, but the Legislature has laid down that in certain specified classes of cases, there should be a conclusive presumption of an acknowledgment of liability to pay, with a consequent fresh start for limitation. Section 20, no doubt, is not professedly based on any such principle, but when its provisions are examined, this, to my mind, appears to be a legitimate inference.

40. Now, it is noteworthy that two separate paragraphs have been allotted to payments of interest and part payment of principal respectively, and the words employed also are different. There is prima facie therefore no reason to suppose that the Legislature has intended that they should be exactly on the same footing. A mere payment of interest is useless to save limitation unless the interest has been paid : (a) before the expiration of the period; (b) paid as such, and (c) by the person liable to pay the debt or by his duly authorised agent. The words 'paid as such' necessarily imply that the interest must have been paid 'as interest', which in its turn implies that it must have been paid as interest at the time of its payment. It is equally necessary that it must have been paid by the person liable to pay or his authorised agent. Thus something which is much more than a mere payment of money is required. It should be payment of interest professedly as interest which means that at the time of making the payment, the debtor should distinctly appropriate it towards interest and inform the creditor that he is doing so, so that the creditor thereafter may not have the option of appropriating it towards the principal. It is significant that the Legislature is so particular. As a general rule all payments made by debtors go in the first instance towards the discharge of the interest, but the Legislature has thought it fit that this general practice should not be enough, but in order to save limitation, the creditor must prove that the interest was paid as interest.

41. Before 1927 it was not necessary that the payment of interest as interest should be evidenced by any writing. It was accordingly open to the creditor to prove aliunde that interest was paid as such although such payment did not appear in the hand-writing of the person making the same. It consequently frequently led to disputes between the creditor and the debtor, the former in order to save limitation alleging that interest had been paid as such and the latter in order to claim protection pleading that no such payment had in fact been made. But as regards the part payment of principal, the section was specific and the proviso as it then stood insisted upon the fact of the part payment of the principal appearing in the hand-writing of the person making the same. Now, if one examines the implications of these two provisions, it becomes at once obvious that they in a way implied an acknowledgment of a liability to pay a further amount that may be due. When interest is paid as-interest that is professedly as interest and not towards principal then, there is an indirect admission that there is some principal sum due on which the interest has accrued and that principal is not being paid, but only interest thereon is being paid. The Legislature has therefore provided that where interest is paid as interest there should be a fresh start for limitation.

42. Similarly, where a part payment of the principal sum is made, there is a, necessary admission that the other part is still outstanding, which implies an acknowledgment of a liability to pay the outstanding balance and so such, part payment also gives a fresh start. But in order to prevent disputes as to whether the payment of the principal was in part or whole, it was thought necessary that the fact of the payment should appear in the debtor's hand writing.

43. It is equally obvious that where a. payment is made without any specification and the debtor does not signify whether he is making the payment of interest as such or of part payment of the principal, there is really no admission on his part that any further sum is still due from him, and there is therefore no acknowledgment of liability on his part. He merely pays a lump sum of money and by no means admits that the debt is not fully discharged. There is an admission no doubt that there was a liability on Trim to the extent of the amount so paid, but there is no acknowledgment of any further-liability. Similarly where the debtor offers a sum of money distinctly on the condition that he is making the payment in full discharge of his liability, it would be impossible to hold that there is an implied acknowledgment on his part of a liability to pay the balance if it is found due. In the first two classes of cases the Legislature has allowed exemption from limitation, but has not considered it fit to make exemptions in the remaining classes of cases.

44. It seems to me that when a payment is made by a debtor, it may fall under any one of the following categories : (1) payment of interest as such by the debtor. In such an event the case would come under para. 1 of Section 20(2) Payment of interest by the debtor, but not payment as interest. For instance, a payment may be made by the debtor without specification, which entitles the creditor to appropriate the amount towards interest under Section 61, Contract Act. In such an event the amount if so appropriated would become a payment of interest, but it would not be interest paid as interest by the debtor. (3) Payment of interest as such, but not by the debtor. For instance, a co-judgment-debtor may make a payment on behalf of all the judgment-debtors, although he is not their agent and is not authorised to act on their behalf. In such a case so far as the other judgment-debtors are concerned, it would not be a payment by them, though the payment may well be of interest as interest : see Ahsan-ul-ullah v. Dakhkhni (1905) 27 All 575. (4) It may be a part payment of the principal, in which case it would fall under the second paragraph of Section 20. For instance, where the debtor professedly pays the amount in partial discharge of the principal sum. (5) It may professedly be the payment of the whole of the principal, when the offer is made by the debtor with the distinct condition that it is being paid in full discharge of the entire amount of the principal. In such a case, it would be difficult to hold that it was a part payment only, and there was an implied acknowledgment of the liability on the part of the debtor to pay the balance. (6) Or it may be paid without any specification whatsoever leaving the matter entirely at the option of the creditor to appropriate it either towards interest or towards principal.

45. Accordingly : (a) the creditor may appropriate the amount towards the principal when it becomes a payment of interest, though not paid by the debtor as such, or (b) the creditor may appropriate it towards the principal, in which case it would become a part payment, of the principal and not a payment of interest. The second paragraph does not use the words 'as such' and therefore it does not seem necessary for part payment of principal that the payment should have been made by the debtor at the time of payment professedly as part payment of principal. In my judgment Section 20 refers to the payments in categories Nos. (1), (4) and (6)(b) only, and not to the rest. These three categories, though mutually exclusive, are not between them absolutely exhaustive, for there are cases which may fall under the other four categories and not fall under either of these three. I am therefore unable to hold that where a payment is made without any specification, it must either be a payment of interest as such by the debtor or it must be a part payment of the principal by the debtor. In my opinion, there are additional possibilities as well.

46. As an illustration I may cite the instance of a tenant sending an amount by money order to his landlord without mentioning that the amount is being paid towards the principal part of the rent due from him or towards the interest on such rent, while in point of fact both the amount of the principal and the amount of interest as claimed by the landlord are separately in 'excess of the account sent by money order. Can it be seriously suggested that the tenant in sending this sum of money without any further admission was acknowledging his liability to pay a further balance which may be claimed by, the landlord. The tenant indeed might well dispute that anything more than the amount sent is due, in which case it can hardly be said that he had made an admission against himself. So far therefore as the substantive section stands, I see no difficulty whatsoever in interpreting it and I see no superfluity, inconsistency, anomaly or absurdity in its language. Payment of interest as such by the debtor and part payment of principal by the debtor are dealt with in the two separate paragraphs in a distinct manner and there is no ground for imagining that in spite of their being dealt with separately and in spite of the fact that different languages are employed in respect of them, they stand exactly on the same footing, and there is no distinction whatsoever between them.

47. I now come to a consideration of the effect of the amendment of 1927. The proviso in Section 20 of the Acts of 1877 and 1908, was in the following terms:

Provided that, in the case of part payment of the principal of a debt, the fact of the payment appears in the handwriting of the person making the same.

48. In place thereof the following proviso has been substituted:

Provided that, save in the case of payment of interest made before the 1st day of January 1928, an acknowledgment of the payment appears in the handwriting of, or in a writing? signed by, the person making the payment.

49. As I read the substituted proviso, the only difference which it has made is that the hand-writing of the person making the payment is now necessary for both the payments mentioned in Section 20, and not only for part payment of the principal as before. The Legislature has apparently thought it fit to put a stop to the controversy between creditors and debtors as to whether any amount has in fact been paid or not. Without an acknowledgment in the hand-writing of the debtor, the payment would not save limitation. Thus it is no longer open to a dishonest creditor falsely to admit payment of interest in order to save his claim from limitation. But this extension of the necessity to have a writing in case of both the payments does not, in any way, imply any radical change in the substantive section itself, which the Legislature has left untouched. That section had stood in its original form for 50 years and had been interpreted in a certain way by the Courts in India.

50. There is absolutely no reason to alter the interpretation of that section merely because a written acknowledgment is now made necessary for, payment of interest also. The Legislature must be deemed to have been aware of the importance attached to the words 'paid as such' in the first paragraph and its deliberate act in not deleting those words should naturally be interpreted as implying that the interpretation put upon those words has been accepted by the Legislature and adhered to. I am altogether unable to see how this interpretation would make the section in any way absurd. As pointed out above, there are several categories of payment of money and only three of these come under Section 20. It was therefore necessary to retain both the paragraphs in this section so that the particular categories which are considered to give exemption should be identified and not confused with the other categories which are independent of them. Had the Legislature intended to make all payments of money, no matter of what kind and in what manner made, quite sufficient to save limitation, only if there was the handwriting, it would have been very easy to redraft the section and have one short paragraph to express such an intention. This course has not been adopted. The section has been retained as it stood before and only the proviso has been amended. I am, therefore, un able to hold that the entire effect of the use of the words 'paid as such' which pre-eminently occur in the opening paragraph is altogether null and void, that the words have become redundant and superfluous and that it is only due to a clumsy drafting that those words have been retained. I am bound to attribute to the Legislature a clear appreciation of the interpretation of the law, as it stood at the time of the amendment and its retention of those important words as a deliberate act in order to give effect to its real intention, which must be gathered from the language used and not by a mere speculation as to what the true intention ought to be.

51. Where there is no specification made by the debtor, the creditor is entitled under Section 61, Contract Act, to make the appropriation in any way he likes; and if the creditor chooses to appropriate the amount towards the payment of interest due, the payment cannot be considered to have been a payment of interest as such by the debtor. It would no doubt become a payment of interest after the appropriation, but not a payment of interest as interest by the debtor. It would certainly not be a part payment of the principal by the debtor as such; but if afterwards appropriated by the creditor towards the principal, it would become a part payment of the principal. As already pointed out the section does not require that part payment of the principal should be made by the debtor professedly as part payment of principal at the time. It follows that where the amount was paid without any specification and the creditor has, in fact appropriated it towards principal, it would become a part payment of the principal.

52. I have therefore come to the conclusion that where money is paid by a debtor without specifying whether the payment is towards interest or towards principal, leaving it to the option of the creditor to appropriate it as he likes, and the creditor appropriates it towards interest, there is neither a payment of interest as such nor a part payment of the principal within the meaning of Section 20, but there is a mere unspecified payment of money, which has subsequently by the act of the creditor become a payment of interest. This is my interpretation of Section 20, Limitation Act.

Rachhpal Singh, J.

53. The question for determination in these two cases is whether on the proved facts of the two cases the plaintiffs are entitled to the benefit of the provisions of Section 20, Limitation Act. In revision No. 219 of 1934 the facts were these: The plaintiff instituted a suit against the defendant to recover a sum of money on foot of a bond dated 7th October 1927. The suit was instituted on 17th August 1933. In the plaint it was stated that on 7th October 1930, the defendant had paid a sum of Rs. 50 towards interest, and therefore the plaintiff alleged that his suit was within limitation. It may here be stated that the payment was noted on the reverse of the bond and bore the thumb impression of the defendant. The trial Court held that it was proved that on 17th August 1930, the defendant had paid a sum of Rs. 50. No evidence was produced to show whether this payment had been made towards interest or principal. It appears that it was a general payment made by the defendant without specifying whether it was made towards interest or principal.

54. In revision No. 408 of 1934 the facts were very similar.

55. In both the cases the trial Court dismissed the claim as barred by limitation. In both the cases the plea of limitation was successful because the trial Courts felt compelled to decide the issue of limitation against the plaintiffs in view of the ruling of this Court in Ram Prasad v. Binaek Shukul 1933 All 453. It may here be stated that in revision No. 219 of 1934, on behalf of the defendant, the argument was that as the sum of Rs. 50 was a general payment and was not proved to have been paid as interest, the plaintiff was not entitled to a fresh period of limitation under the provisions of Section 20, Limitation Act. The plaintiff finding himself in this difficulty made an attempt to amend his plaint and to say that the payment of Rs. 50 had been made towards part payment of the principal sum secured under the bond. This amendment however was not allowed by the trial Court. Before Act No. 1 of 1927, was passed Section 20, Limitation Act, ran as follows:

Where interest on a debt or legacy is before the expiration of the prescribed period, paid as such by the person liable to pay the debt or legacy, or by his agent duly authorized in this behalf, 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 authorized in this behalf, a fresh period of limitation shall be computed from the time when the payment was made, provided that, in the case of part payment of the principal of a debt, the fact of the payment appears in the hand-writing of the person making the same....

56. The position was this : If a debtor paid interest as such then a fresh period of limitation was available to the creditor from the date on which-interest was paid. It was not necessary that there should be an acknowledgment in writing by the debtor. The debtor could make a payment without transaction being reduced to writing and it was open to the creditor to prove that as a sum of money had been paid towards interest a fresh period of limitation should be computed from the date of that payment. On the other hand if a payment was-made towards part payment of the principal then before it could be taken advantage of by the creditor it was necessary that there should be an acknowledgment in the hand-writing of the debtor.

57. Some curious results followed. It was always open to a dishonest creditor whose suit had become barred by limitation to set up a false payment of interest in order to bring his case within limitation. All that was necessary for him to do was to produce some-evidence to show that a small sum had' been paid by the debtor as interest. Then there were cases in which the debtor had made a general payment without specifying whether the payment was made towards interest or principal; In view of the provisions of Section 20, as it stood before the passing of Act 1 of 1927, the creditor in case of a general payment could not say, where the payment was not noted down in writing that it had been made towards principal. The proviso to Section 20 that:

In the case of part payment of principal of debt, the fact of the payment appears in the hand writing of the person making the same

stood in his way. So it was always to his interest in case of a general' payment to plead that it had been-made towards interest. The Courts insisted that whenever a payment was-pleaded by the creditor for the purpose of bringing his claim within limitation, he had to prove not only that a sum was paid to him, but he was further required to establish that the amount paid was paid towards interest as such. If he failed to prove that the payment was made towards interest as such then the Court held that the limitation was not saved. In cases of payment, made on general account constant disputes arose between the creditors and the debtors. The creditors always wished to prove that the payment which had been made was towards interest as such. By doing so they could get a fresh start of limitation. On the other and the debtors who wanted to defeat he claims of the creditors by pleading the bar of limitation always wished to prove that the payment had been made towards principal, but nevertheless the suit was not within limitation because no acknowledgment in writing had been made. It was in order to set at rest this fruitful source to litigation that the Legislature intervened and Act 1 of 1927, amending Section 20, Limitation Act, was enacted and came into force from 1st January 1928. The amended Section 20, Limitation Act, runs as follows:

Where interest on a debt or legacy is before the expiration of the prescribed period, paid as such by the person liable to pay the debt or legacy, or by his agent duly authorized in this behalf, 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 authorized in this behalf, a fresh period of limitation shall he computed from the time when the payment was made : Provided that, save in the case of a payment of interest made before 1st January 1928, an acknowledgment appears in the handwriting of or in the writing signed by the person snaking it....

58. The question which has to be considered, is what change has been made in the provisions of Section 20, Limitation Act, after the passing of the Amending Act 1 of 1927. In my opinion the only change that has been made is that after the amendment, payment of interest in order to save limitation must also be in the hand-writing of, or in the writing signed by the person making the payment. Before the amendment only part payment of the principal in order to give fresh start of limitation had to be in the hand-writing of the debtor. Now the same rule is made applicable in cases of payment of interest also. That is the only resuit of the amendment. In other respects the position is in no way altered.

59. The first part of Section 20 after the Amending Act 1 of 1927 stands exactly word for word, as it stood before the amendment. As already 'explained the only change made is that under the old section it was not necessary that payment of interest should be in the hand-writing of, or in a writing signed by the person making it, while now it is necessary.

60. The first point for consideration is whether how a general payment without any specification by the debtor would save limitation if the creditor makes an appropriation of payment towards the payment of interest. Before the amending Act 1 of 1927 was passed the view taken in a large number of ruling cases was that a payment towards general account made by a debtor without specifying whether such payment was to be appropriated in satisfaction of interest due from him was no payment of interest as such. It is not necessary to cite all the rulings in which this view was expressed, but I may be permitted to mention a few of them. In Muhammad Abdullah Khan v. Bank Instalment Co. Ltd. (1909) 31 All 495, a Bench of two learned Judges of this Court held that under Section 20, Limitation Act, the payment of interest will save limitation when the payment is made as such, that is to say, that the debtor has paid the amount with the intention that it should be paid towards interest and there must be something to indicate that intention and the mere appropriation by the creditor of these payments to interest is not such an indication. I am aware of no case of this Court in which a contrary view may have been expressed.

61. Hanmant Motichand v. Ramba Bai (1878) 3 Bom. 198 was a case in which a debtor had at different times made payments to the plaintiff in reduction of the general balance of account against him, but without intimating that any of such payments was to be appropriated in satisfaction of the interest due on his debt. The Bombay High Court held that there had been no payment of interest 'as such' by the defendant so as to bring the case within Clause 1, Section 21, Limitation Act (9 of 1871), and that the claim was barred. Suhraya Kamati v. Pakaya (1902) 4 Bom. L.R. 231 was a case in which at the time of making the. payment the debtor had made an endorsement saying that he was paying Rs. 4 out of the entire amount payable on account of principal and interest in respect of this bond. The Court therefore held that there was a payment of interest as such which saved limitation. That case is not applicable to the case before us, for the simple reason that here there is no indication that the debtor expressed an intention that he was paying money in payment of interest. The next Bombay case is Damodar Ramchander v. Jankibai (1903) 5 Bom. L.R. 350. The learned Judge who decided this case held that where payments were made towards the satisfaction of a debt and there was nothing to show whether they were made in respect of principal, or interest, or both, or indefinitely on general account, they could not serve to extend the time, under Section 20, Limitation Act, unless it was established clearly in some way that payments were made on account of interest as such. The ruling reported in Suhraya Kamati v. Pakaya (1902) 4 Bom. L.R. 231, referred to above was distinguished on the ground that in that case the Court below had found as a matter of fact that the payment was for principal and interest. The next Bombay case on the point is Ranchordas Trib Howandas v. Pestonji Jehangir (1907) 9 Bom. L.R. 1329. It was remarked that:

Principal must always be paid as principal, but the fact of the payment must appear in the hand-writing of the person making the same, i.e., of the debtor or his duly authorized agent; consequently, if a lump some be paid by a debtor to his creditor, and no intimation be given as to how it is to be appropriated, and no memorandum be made by the payer of its payment, it cannot be treated as part payment of principal, because of the want both of appropriation and of a memorandum, and it cannot be treated as part payment of interest because it was not paid as such.

62. The Calcutta High Court in Bitari Ram v. Kunjf Singh (1913) 20 I.C. 857 held a creditor cannot claim the benefit of Section 20, Limitation Act, unless he can show that the payment was made on account of interest as such there must be either some express declaration by the debtor, or there must be circumstances from which such an intention on the part of the debtor may be inferred. Another Calcutta case on the point is Charu Chandra v. Karam Buax 1918 Cal. 477. It was held that the expression 'as such' in Section 20, Limitation Act, implies that something more than mere payment of interest must be established to entitle the creditor to the benefit of that section. At p. 814 the following observations were approved:

This section requires something more than the English law does, namely, that interest must be paid as interest, that is, it must be distinctly stated at the time of payment that it is paid on account of interest, or else there must be evidence from which the payment as interest may be distinctly inferred, and if so, the mere proof of payment is sufficient.

63. In Muinuddin v. Muhammad Ahmad 1915 Lah. 275, Shadi Lal and Leslie Jones, JJ., held in a Punjab case that:

Payments made by the debtor in reduction of the general balance of account against him, but without intimating that any of such payments was to be appropriated in satisfaction of the interest due on his debt, do not amount to a payment of interest as such to save the bar of limitation.

64. The same view was taken in a Nagpur case Jago v. Mahadeo. 1921 Nag 94; in an Oudh case Lalji v. Ghasi Ram 1930 Oudh 287; and in Burma case Nga Twe v. Nga Ba 1915 U.B. 11. A contrary, view appears to have been 'expressed in Narayana Iyengar v. Alagiriswamy Iyengar (1912) 14 I.C. 580, by a Bench of Madras High Court.

65. It appears to me that the preponderance of authority is in favour of the view which has prevailed in this Court and which is expressed in Muhammad Abdullah Khan v. Bank Instalment Co. Ltd. (1909) 31 All 495. It will thus be seen that there is ample authority in favour of the proposition that before the amending Act 1 of 1927, a general payment without specifying that it was made on account of interest as such did not save limitation. The amending Act 1 of 1927, has made no change in the first part of Section 20. When a creditor wants to bring his case within the provisions of Section 20 he has to show not only that a payment was made, but has further to establish that the payment was made of interest as such; Before the amending Act he could Drove the payment of interest as such without showing any writing signed by his debtor whereas now he is required to show that the payment was signed by his debtor. In the cases before us all that the creditors have been able to establish is that payments which are endorsed by the debtors on their bonds have been made. In other words the creditors have proved general payments. In my opinion they cannot be deemed to be payments of interest as such which would save limitation.

66. It was argued before us that as the debtors had not made appropriation and as the creditors appropriated the payments towards interest it should be deemed that they were made towards payment of interest. I do not think that a general payment without specification by the debtor that it was being made towards interest as such would attract consequences of Section 20, Limitation Act. The ruling of this Court in Muhammad Abdullah Khan v. Bank Instalment Co. Ltd. (1909) 31 All 495, is against the contention of the applicant. In that case it was held that the mere appropriation by the creditor of payments to interest is not an indication that the payment was made towards interest as such. The same view was expressed in Mahommad Kamen v. Ahmed Ali 1925 Cal. 1030, by the two learned Judges of the Calcutta High Court. It was held that under Section 20, Limitation Act, payment towards interest must be deemed as such, that is, it must expressly be towards interest, and that it has nothing to do with the general right of the creditor of appropriation of money either towards, interest or towards principal. The question of appropriation has nothing to do with the question of the rule of limitation enacted by Section 20, Limitation Act. Where a debtor makes the general payment without specifying whether he is making it towards interest or principal, it is the absolute right of the creditor to make an appropriation. All that this means is that it, is open to him to accept the payment either towards part payment of interest or towards part payment of principal. But that has nothing to do with the question of limitation. By crediting the payment towards the part payment of interest the creditor would not be entitled to claim a fresh period of limitation because the payment has not been made towards interest a such and therefore would not come within the terms of Section 20, Limitation Act.

67. The next question which has to be considered is whether in the case of a general payment without any specification by the debtor a creditor can say that the payment should be treated as having been made towards part payment of the principal which would entitle him to claim a fresh period of limitation from the date of payment in view of Clause 2, Section 20, Limitation Act, as it stands now. In my opinion the applicants cannot be permitted to do so. In Venkatadri Appa Rao v. Parthasarathi Appa Rao 1922 P.C. 233, their Lordships of the Privy Council made the following observations which are to be found at p. 573 of the report:

The question then remains as to how, apart from any specific appropriation, these sums ought to be dealt with. There is a debt due that carries interest. There are moneys that are received without a definite appropriation on the one side or on the other, and the rule which is well established in ordinary cases is that in those circumstances the money is first applied in payment of interest and then when that is satisfied in payment of the capital. That rule is referred to by Rigby. L. J., in Parr's Banking Co. v. Yates (1898) 2 Q.B. 460 at p. 466 in these words : 'The defendant's counsel relied on the old rule that does no doubt apply to many cases, namely that where both principal and interest are due, the sums paid on account must be applied first to interest. That rule, where it is applicable, is only common justice. To apply the sums paid to principal where interest has accrued upon the debt, and is not paid would be depriving the creditor of the benefit to which he is entitled under his contract.

68. In the case before us large sums of money were due at the time of the payments on account of interest so it cannot be said that the debtors could possibly have intended that the payments should go towards the part payment of principal. There can be no doubt that the payments were made towards the reduction of interest and not towards payment of principal. The question whether such payments of interest would attract the benefit of Section 20, Limitation Act, however, stands on a different footing. Mere payment towards interest does not attract the provisions of Section 20. If a man goes and makes a payment to his creditor and says that he is making it towards interest the creditor would not on account of such payment be entitled to claim the benefit of Section 20. The reason is that before any advantage can be claimed under Section 20 certain formalities have to be observed. One is that the payment of interest should bear the signature of the debtor oar his agent and the other is there must be something to indicate that payment was made on account of interest as such. If these formalities are not observed then the first part of Section 20 cannot come to the aid of the creditor. Nor can the creditor ask the Court that on failure of his proving that the payment was made towards interest as such, it should be treated as having been made towards part payment of the principal. The case might have stood on a different footing altogether if at the time of payment the entire sum paid could not possibly have gone towards the payment of interest only. Take the following case as an instance: On the date of payment Rs. 50 are due on a bond on account of principal and Rs. 2 on account of interest. The debtor makes the payment of Rs. 20. In that case the creditor would be right in saying that only Rs. 2 had been paid towards interest and the balance must be deemed to have be.en paid towards part payment of the principal. To such a case the provisions of the second part of Section 20 would be clearly applicable. The payment of interest might not enlarge the period of limitation because it was not paid as such, but the payment of the balance would certainly be one towards part payment of the principal and if the endorsement about it is signed by the debtor or his agent then it will certainly enlarge the period of limitation. But where the sum due on account of interest is much larger than the amount paid then in my opinion it will be wrong to say that as the payment cannot be treated as, having been paid in payment of interest as such, it might be treated as having been made towards part payment of the principal.

69. A. Curlendar v. Abdul Hamid 1921 All. 335 was cited on behalf of the applicants. What was laid down in that ruling was that it was not necessary that writing referred to in Section 20, Limitation Act, 1908, must itself show that the payment made was made as part payment of the principal sum due as it may be obvious from the fact that no interest was due at the time of making the payment that it could only have been made in part payment of the principal. This ruling would be applicable to those, cases where it appears that on the date of payment the whole sum which was paid could not possibly have been intended to be paid only towards interest. I have given an instance of a case of that description above. But the rule laid down in that case would have no application to cases where it appears that on the date of the payment a larger sum than the amount paid was due on account of the interest. Another ruling relied upon by the applicant was M.B. Singh & Co. v. Sircar & Co. 1930 All. 392. In that case the learned Judges held that if the payment could not be proved to have been made towards interest as such then it must be treated as a payment towards principal. With great respect to the. learned Judges who decided this case I find myself unable to agree with this view. It does not appear that the ruling of their Lordships of the Privy Council reported in Venkatadri Appa Rao v. Parthasarathi Appa Rao 1922 P.C. 233, referred to above was brought to the notice of the learned Judges. Nor does the case show whether at the time of the payment the interest due was more or less than the amount paid. If at the time of each payment the entire interest due then was wiped off and there remained a balance, then certainly it can be said that the balance went in part payment of the principal and thus limitation was saved. On the other hand if interest due on the date of each payment was more than the amount actually paid then it cannot possibly be argued that any portion of the payment made went towards the part payment of the principal. In Hem Chandra Biswas v. Purna Chandra Mukerji 1918 Cal. 891, there are certainly observations which support the contention of the applicants before us. At p. 571 the learned Judges made the following observations:

The learned Judge said. 'If I am wrong in the conclusion that I have arrived at as to the payment being a payment of interest as such, then the payment being proved and there being admittedly a document in the handwriting of the defendant from which the fact of the payment appears, the payment must be taken to be a payment on account of principal.' That view I think is right. In none of the cases where a different view has been taken, was there a document in writing to satisfy part 2, Section 20, Lim. Act. In this case there is a distinct finding by both the Courts below as regards the payment. 11 the Judge was right that the evidence did not establish that the payment was made on account of interest as such, still there was evidence establishing the payment plus the document in writing proving the fact of payment. On that evidence the learned Judge was entitled to come to the conclusion that the payment was a part payment on account of principal.

70. With utmost respect I find myself unable to agree with the view expressed in these observations. A perusal of the case shows that the learned Judges held that there was a finding of fact by both the Courts below that tine payment has been made towards the part payment of principal and was in the hand-writing of the debtor and therefore they held that Section 20 was applicable. As I have already remarked, I fail to see how it can be possibly argued that a part payment towards principal was made when a much larger amount than the sum paid was due on account of interest.

71. For the reasons given above I am clearly of opinion that where a general payment without any specification is made by a debtor and at the time of payment a larger sum with the amount paid is due on account of interest then the creditor cannot be heard to say that it was a payment towards the part payment of the principal, which would give him a fresh period of limitation under Section 20, Limitation Act. On the other hand if in a case it is found that at the time of general payment without specification the entire interest was wiped off and there remained a balance then in that case a creditor would be entitled to a fresh period of limitation under Section 20, because a part of the payment undoubtedly went towards the part of the principal.

72. In Ram Prasad v. Binaek Shukul 1933 All 453, which was a case decided by my learned brother Niamatullah, J., and myself, the view taken was that where a debtor pays a certain amount in part satisfaction of what is due from him without caring to specify that the sum is to be appropriated towards interest or principal, and the creditor appropriates such payment towards interest, the payment cannot be considered to be the payment of interest as such and will not save limitation. It was also held that the payment having been lawfully appropriated towards interest it cannot be considered to be payment in part satisfaction of the principal, and limitation cannot be saved on the supposition that a part of principal was paid and the fact of payment appears in the hand-writing of the debtor. I adhere to the view taken in this case. I may be permitted to point out that the same view was taken by Niamatullah, J., in Kripa Ram v. Balak Ram 1935 All 47.

73. It has been suggested that after the passing of Act 1 of 1927, the words 'as such' have lost their importance. I find myself unable to agree with this contention. These words are there, and there appears to be no justification for holding that they have ceased to be of any importance. I find myself unable to share the view that there is any absurdity in this section as it stands now. The law of limitation is always arbitrary and the question as to whether or not the rule of limitation laid down in a particular section is inequitable is a point with which the Courts have no concern whatsoever. The duty of the Court is to interpret the section as it stands. If there is any inequity then the remedy lies in the hands of the Legislature. If the Legislature had intended to enact a rule that a general payment without specification would save limitation then it could have easily expressed it is intention by enacting a rule to this effect. All that the Legislature had to say was that payment made by a debtor would give a fresh period of limitation to the creditor from the date of the payment. Before Act 1 of 1927, was passed the Legislature were aware that Courts had held, in a large number of ruling cases, that so far as payment towards interest was concerned limitation, could only be saved if it was proved that the debtor made payment of interest as such. But we find that the Legislature did not consider it fit to change the wording of this section. We would therefore be justified in holding that the intention of the Legislature was that the distinction between general payments and payments of interest as such should, continue. As I have already mentioned, the only change made was that when a payment was made towards interest then like part payment of principal it had to be in writing bearing the signature of the debtor or his agent.

74. For the reasons given above I hold that in the two cases before us there was no payment of interest as such. Nor was there any payment of a part of the principal. A creditor who has appropriated a payment towards interest cannot get a fresh period of limitation by saying that the general payment without specification may be treated as part payment of principal, when on the date on which the payment was made a larger sum than the amount paid was due to him on account of interest. I would therefore hold that the plaintiff-applicants are not entitled to claim a fresh period of limitation from the dates on which general payments without specification were made to them.

75. Where money is paid by a debtor without specifying whether the payment is towards interest or towards principal, leaving it to' the option of the creditor to appropriate it as he likes, and the creditor appropriates it towards interest, there is neither a payment of interest as such, nor a part payment of the principal within the meaning of Section 20. The case should go back to the referring Bench for disposal.


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