1. The suit out of which this appeal has arisen was brought to recover a sum of Rs. 17,000 odd, the defendants in the case being Babu lal and Kishun Gopal, sons of Kedar Nath. These defendants apparently are the owners of the firm called 'Babu Lal and Kedar Nath,' carrying on business at Cawnpore. The firm has become insolvent and the estate of the defendants is now represented by the Official Receiver.
2. The plaintiffs in the suit are the descendants of one Bhawani Shanker who died on the 12th of February 1912. This man, Bhawani Shanker, owned a business at Farrukhabad which was carried on in the name of Mahanand Ram Bhawani Shanker.
3. On the 27th or 28th of December 1911 Bhawani Shanker sent certain hundis to the defendant firm at Cawnpore for realisation and credit to his account.
4. It is stated that the directions to the defendant firm were that the money should be treated as a fixed deposit payable six months after date.
5. On the 8th of February 1912 Bhawani Shanker wrote a letter to the defendant firm with respect to this deposit. He directed the defendants to open a fresh account in his name and to credit him with a sum of Rs. 12,000, and in his letter he stated that this sum was to be applied for the purpose of educating five boys of his community to enable them to pass the LL.B and Pleadership examination of the High Court.
6. This letter was received by the defendant firm and was answered by a letter dated the 9th February 1912 which is to be found at page 1 of the supplemental book A.
7. Four days after he wrote this letter, Bhawani Shanker died. After this, certain claims were presented to the defendant firm in respect of this money, and one of the claimants was Mohan Lal who apparently had succeeded to the business of Bhawani Shanker of Farrukhabad.
8. The defendant firm having these several claims made against it refused to pay until one or other of the claimants had established his title to the money.
9. The result of all this was that a suit was filed on the 29th June 1915 by Mohan Lal against the defendant firm claiming this money.
10. That suit was resisted on several grounds. One of the pleas in defence taken was that the money was trust money and that the plaintiff Mohan Lal could not recover it. Another plea was a plea of limitation.
11. In the course of the trial of that suit a certain statement was made on behalf of the defendant firm by the Pleader who was engaged to conduct the defence.
12. On the 23rd November 1915, while the suit was still pending, the Pleader for the defendants stated that if the plaintiff Mohan Lal presented Probate or letters of Administration or a Succession Certificate, the defendants would have no objection to pay him the amount in dispute with interest thereon for six months.
13. The suit was, however, dismissed by the Subordinate Judge on the 27th January 1915 on the ground that the plaintiff, Mohan Lal, had failed to obtain a Succession Certificate. This order dismissing the suit was confirmed in appeal by this Court.
14. At the time the suit brought by Mohan Lal was pending in the Court of the Subordinate Judge, proceedings were going on in the Court of the District Judge for the purpose of obtaining a Succession Certificate. For one reason or another this Certificate was not obtained till the month of December 1918 Mohan Lal has since died and now we have the present suit instituted on the 27th January 1920.
15. We have to deal here with two pleas which were raised in defence. One was that the money held by the defendant firm was trust money which Bhawani Shanker had made over for the purpose specified in his letter of the 8th February 1912. It was pleaded that the present plaintiffs had no right to have the money. The other plea taken was that the suit was barred by time.
16. The learned Subordinate Judge was of opinion that the suit was not barred by limitation. On the other hand, he was of opinion that the money had been dedicated in trust for the purpose specified in the letter of Bhawani Shanker which he wrote in the month of February 1912. The result of the proceedings in the Court below was that the suit was dismissed.
17. In appeal two points are raised before us. It is argued on behalf of the plaintiffs-appellants that the Court below was wrong in holding that a trust had beer, created and that the plaintiffs were not entitled to the sum in dispute. On the other hand, the learned Advocate who represents the Official Receiver supports the judgment of the Court below on the ground that the suit was barred by limitation.
18. We will deal with this latter point first.On the face of it, the suit as a suit for recovery of money which was deposited in December 1911, and which was payable in Jure 1912, is time-barred but the plaintiffs, claim to be suing on afresh cause of action arising out of what took place in the earlier suit on the 23rd of November 1915. The plaintiffs founded their cause of action upon the statement made by the Pleader for the defendant firm in that earlier case, the statement to which we have already referred. It was not pleaded that anything contained in. this statement amounted to an acknowledgment which would extend 0 the period of limitation. Obviously, no such plea could be taken for the statement, whatever it amounteo to, was made after the period of limitation had expired.
19. But what the plaintiffs say is this. They contend that the statement made by the Pleader on the 23rd November 1915 gave rise to a new contract under section of the Indian Contract Act.
20. Under the section in question a promise made in writing and signed by the person to be charged therewith or by his agent generally or specially authorised in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law of limitation is a valid and binding contract.
21. And so it is argued that, when the Pleader stated that the defendant firm had no objection to pay the money claimed to the plaintiffs if the plaintiffs succeeded in getting Probate or Letters of Administration or a Succession Certificate, a fresh contract was entered into, and it is further argued that a suit on this contract is within time on the ground that the promise was conditional upon the plaintiffs obtaining a Succession Certificate. As that Certificate was not obtained till the month of December 1918, it was argued that this suit instituted in January 1920 was within limitation.
22. In our opinion, the judgment of the Subordinate Judge on this issue is erronious.
23. In order to establish a valid contract under Section 25 of the Contract Act it is necessary to show that a promise was made in writing and that this writing was signed by the person to be charged therewith or was signed by his agent generally or specially authorised in that behalf.
24. It is argued for the respondents, in the first place, that there is no proof on the record that the Pleader who made this statement was either generally or specially authorised to represent the defendants for the purpose of making a fresh contract under Section 25. We have here to notice what happened in the Court of the Subordinate Judge in the earlier suit. We have already mentioned that the defendants' Pleader made the statement, upon which the plaintiff now rely, on the 23rd of November 1915.
25. On the 17th January 1916 the defendants presented a petition in Court repudiating the statement which had been made on their behalf. It was stated in this petition that one Salik Ram, the general attorney, gave certain instructions to the Pleader who was conducting the defence, and that he had given these instructions without any authority. It was stated clearly in this petition that the dependant firm had not relinquished any of the pleas which they had raised in their written statement of defence. An affidavit was put in in support of this application.
26. The Subordinate Judge at that time dealt with this application in his order of 17th January 1916 which is printed at page 33 of the paper-book. He rejected the petition saying that the Vakil had not exceeded his authority inasmuch as he was 'competent to abandon any issue or plea.'
27. As the case stands, we have no proof at all that the Pleader who made the statement relied upon had any general or special authority from the defendant firm which would entitle him to enter into a contract on their behalf to pay a time-barred debt. The Pleader's authority was confined to the conduct of the case and the Subordinate Judge rightly observed that he was competent to abandon any issue or plea. All that his statement amounted to was that if, during the pendency of the suit, the plaintiff Mohan Lal obtained a Succession Certificate the defendants were ready to submit to a decree for the amount claimed together with interest for six months. We have already mentioned that the suit was dismissed, a couple of months later, on the ground that the plaintiff had failed to take out a Succession Certificate. We cannot, therefore, treat this statement as showing in any way that the Pleader who made it had authority to bind the defendant firm by a fresh contract under Section 25 of the Contract Act.
28. Another point which has to be noticed is this. In order that a valid contract may be constituted under Section 25 (3) of the Contract Act it is necessary that the statement should be in writing and should be singned by the person to be charged therewith or by his agent generally or specially authorised. There is nothing whatever before us to show that the record of the statement made by the Pleader on the 23rd November 1915 was signed by the Pleader or by any other agent. All we have got before us is a certified copy of an entry which we take to have been written on the Order-sheet recording the statement made by the Pleader. There is nothing whatever to show that this statement is signed by anybody except perhaps the Subordinate Judge who is responsible for initialling the entries on the Order-sheets This matter seems to have escaped the notice of the learned Subordinate Judge, and we think, therefore, that he was wrong in holding that the statement made by the Pleader on the 23rd November 1915 gave rise to a new contract and to a fresh cause of action.
29. This being so, the plaintiffs can only fall back upon the original cause of action, and, as we have already pointed out, a suit on that cause of action is long time-barred.
30. In this view of the case it is not necessary for us to discuss the other question, namely, whether there was good dedication of this fund to trust purposes, and we, therefore, abstain from saying anything beyond this, namely, that Dr. Katju who represents the Official Receiver, admits that this money was held in trust by the defendant firm.
31. The result, therefore, is that the appeal fails and is dismissed with costs.