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R. Subbaraya Gounder (Died) and ors. Vs. K.R. Eswaramoorthy Gounder - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtChennai High Court
Decided On
Case NumberApp. No. 7 of 1960
Judge
Reported inAIR1963Mad202
ActsCode of Civil Procedure (CPC) , 1908 - Sections 34; Madras Indebted Agriculturists (Temporary Relief) Act, 1954 - Sections 5; Madras Indented Agriculturists (Repayment of Debts) Act, 1955 - Sections 8; Madras Indebted Agriculturists (Temporary Relief) Ordinance, 1953 - Sections 5; Limitation Act, 1908 - Sections 14 and 19
AppellantR. Subbaraya Gounder (Died) and ors.
RespondentK.R. Eswaramoorthy Gounder
Appellant AdvocateR. Gopalaswami Iyengar and ;S. Sethuratnam, Advs.
Respondent AdvocateR. Desikan, Adv.
DispositionAppeal dismissed
Cases ReferredChidambaram Chettiar v. Venkatasubba Naik
Excerpt:
limitation - bar of limitation - sections 14 and 19 of limitation act, 1908 and section 34 of code of civil procedure, 1908 - suit for recovery of money - suit challenged on ground of limitation - acknowledgment relied on was effective to save limitation period - suit not barred by limitation. - - 15750 towards the suit promissory note as on 29-3-1954 and other sums one of which was endorsed on the suit note as paid for principal, the balance was claimed in the plaint as due. 50 was endorsed on the suit promissory note as paid towards the principal. we are, therefore, satisfied that the two enactments did not purport to effect any change in the period of limitation prescribed under the indian limitation act byprescribing a special or different period of limitation......as deposits and lending monies to them. after giving credit to the sum of rs. 15750 towards the suit promissory note as on 29-3-1954 and other sums one of which was endorsed on the suit note as paid for principal, the balance was claimed in the plaint as due. various defences were raised to the action but it is enough for the present appeal to mention three defences pressed before me. the first is that despite the terms of the promissory note in suit there was no agreement to pay interest on the loan.the second is that there was an agreement between the parties that as and when collection was made of the outstandings due to k.s.r. and co. by the respondent, such amounts should be given credit to towards the suit promissory note. it is said that if this agreement had been acted upon by.....
Judgment:

Ganapatia Pillai, J.

1. This appeal is preferred by the first defendant in O. S. No. 54 of 1958 on the file of the Court of the Subordinate Judge, Coimbatore. That suit was brought by the respondent for recovery of Rs. 21794-8-0 due on a promissory note executed by the appellant. The admitted facts are these.

2. The appellant and the father of the respondent were carrying on business in partnership at Tirupur under the name and style of K. S. R. and Co. This firm became indebted to the Central Bank, Tirupur, in a large sum. In order to pay off this debt the two partners of K.S.R. and Co. borrowed Rs. 50000 by executing two promissory notes; the notes sued upon in this litigation was one ana the other was the note executed by the father of the respondent in favour of one Saraswathi Amnial, a niece of the respondent. Both notes were executed on 14-3-1351.

Sometime before the execution of the promissory notes K. S. R. and Co. stopped doing business. Even while they were doing business the respondent was acting as a Banker for them receiving their monies as deposits and lending monies to them. After giving credit to the sum of Rs. 15750 towards the suit promissory note as on 29-3-1954 and other sums one of which was endorsed on the suit note as paid for principal, the balance was claimed in the plaint as due. Various defences were raised to the action but it is enough for the present appeal to mention three defences pressed before me. The first is that despite the terms of the promissory note in suit there was no agreement to pay interest on the loan.

The second is that there was an agreement between the parties that as and when collection was made of the outstandings due to K.S.R. and Co. by the respondent, such amounts should be given credit to towards the suit promissory note. It is said that if this agreement had been acted upon by the respondent a sum of Rs. 15/50 actually given credit to on 29-3-1954 should have been credited even in September 1951 when it is said a sum of more than Rs. 30000 was available as deposits with the respondent representing the collections of outstandings due to the K.S.R. and Co. The third defence which was pressed before us related to the question of limitation. We will take up the points in that order.

3. Points 1 and 2 are inter-related because it is said that in the account books of the respondent no counter interest has been allowed for the collections deposited by the K.S.R. and Co. That circumstance is relied on as an indication in proof of the agreement not to collect interest on the suit promissory note. Not onlyp the suit promissory note but also the voucher executed for the amount covered by the note Ex. A-3, mentions the term as to payment of interest.

It is true that Ex. A-3 was executed a few days after the execution of the promissory note Ex. A-1. It is also true that it is signed by defendant 3. These circumstances, in our opinion, do not make a difference. The third defendant was the partner of the K.S.R. and Co. on the date of the suit borrowing. His father, the executant of the promissory note Ex. A-1, had ceased to be a partner of this firm sometime earlier than 1951 as a result of a partition in his family. By the arrangement come to between the members of the family of the appellant, in the place of the father the third defendant was taken as a partner. In the face of the recitals in Exs. A-1, and A-3 we would require clinching evidence to show that there was an agreement between the lender and borrower not to charge interest for the suit promissory note. The respondent who was examined as a witness in the case admitted his liability to pay interest on the deposits made from out of the collections of the outstandings due to the K.S.R. and Co.

It is true the account book maintained by the respondent does not show that interest has been calculated on the deposits till now. But in the system of accounts maintained by the respondent which is on cash basis such omission is not decisive. We therefore agree with the learned Judge in the Court below that the case of the appellant that there was an agreement not to collect interest for the suit promissory note is not true.

4. The next point is equally devoid of merit. The contention that there was an oral agreement contemporaneous with the execution of the suit promissory note for collection of outstandings due to the K.S.R. and Co., by the respondent is not made out by any satisfactory evidence except the interested testimony of the parties themselves. There is no independent evidence touching this matter, nor was a power of attorney executed in favour of the respondent authorising him to collect the outstanaings.

Indeed, as pointed out by the learned Judge in me Court below every voucher evidencing deposit of money with the respondent from out of the collections of the outstandings of the K.S.R. and Co. has been signed either by one of the partners of the firm or by a clerk of that firm. The learned Judge has also pointed out instances where promissory notes or renewal documents have been obtained by the partners after 1951 from debtors of the K.S.R. and Co. Such documents have been taken in the names of the partners themselves and not in the name of the respondent. All these circumstances are referred to in great detail in the judgment of the lower Court and we do not propose to set out that material over again in our judgment.

One decisive circumstance in regard to this part of the case is that technically the liability under the suit promissory note was that of the appellant, the father the third defendant. On the date when the suit promissory note was executed the appellant was not a partner of K.S.R. and Co., though he was a partner two years earlier. Unless the partners of the firm agree to adjustment of the amounts deposited with the respondent from out of the collections of the outstandings of K.S.R. and Co., against the suit promissory note, the respondent would have no authority to make such adjustments suo motu. Indeed the adjustment of Rs. 15750 made in 1954 is authorised by a voucher signed by the third defendant. We see no ground therefore to accept the contention of the counsel for the appellant that there was an agreement for adjusting the collections against the suit promissory note.

5. The last point regarding limitation turns upon the validity of the endorsement dated 19-3-1954 made by the appellant. On this date Rs. 50 was endorsed on the suit promissory note as paid towards the principal. The date ot the suit promissory note is 14-3-1951. Ordinarily the suit should have been instituted before 14-3-1954. Ordinance V of 1953 came into force on 5-12-1953. It was followed by Madras Act V of 1954 which came into force on 5-2-1954. The effect of both these legislations was to bar institution of suits against agriculturists for recovery of debts for a period of one year. Act V of 1954 was followed by Act I of 1955, which also prohibited the filing of suits against agriculturists, till 1st July, 1955. Thus a total period of 26 months and six days was added to the period of limitation as the effect of these three enactments. Since the endorsement was made during the currency of the period of 26 months covered by these pieces of legislation, the question arises whether an endorsement made after the expiry of the three years period provided by the Limitation Act but within the extended period covered by the three enactments in question would save limitation.

A subsidiary question under this point is whether the executant of the promissory note was an agriculturist entitled to the benefits of Act V of 1954 and Act 1 of 1955. The contention raised was that the appellant was an income-tax assessee during the relevant period 1951-52 and therefore the Acts would not apply to a suit laid against him. The document produced in support of this contention Ex. A-24 does not show that the agreement covered the period 1951-52. We gave an opportunity to Mr. Gopalaswami Aiyangar, counsel for the appellant, to produce the relevant assessment order for the period 1951-52, in support of his contention. The learned counsel was not able to produce that order and we therefore agree with the learned Judge in the Court below that there is no satisfactory proof that the first defendant was assessed to income-tax during 1951-52. Consequently he being an agriculturist, Act V of 1954 and Act I of 1955 would apply to any suit laid against him for recovery of debts.

6. The other question, namely, the validity of the endorsement made during the extended period of limitation is covered by authority of this Court. A Bench of this Court consisting of Pandrang Row and Venkataramana Rao JJ. had to consider a similar question in Sambayya v. Pedda Subbayya : AIR1938Mad19 , with reference to Section 78(2) of the Provincial Insolvency Act. That provision in Clause 2 enabled the period from the date of the order of adjudication of the debtor as insolvent to the date of annulment of adjudication to be excluded in computing the period of limitation for bringing suits against the insolvent whenever the order r of adjudication had been annulled. The effect of an acknowledgement of debt made during the period when the period of exclusion enacted by Section 78(2) of the Provincial Insolvency Act was effective was considered and the view taken by the Bench was that such acknowledgement would he effective to save the suit from the bar of limitation.

This decision has been followed by Ramachandra Iyer J. (as he then was) in Savaria Gounder v. Veerappa Gounder, : AIR1959Mad278 . A contrary view has however been taken with reference to the effect of an acknowledgment of a debt (falling under Section 19 of the Limitation Act) made during the vacation of the Court in which the suit for recovery of the debt should be brought, in a decision of the Privy Council which was followed by King J. This contrary view has not been noticed by Ramachandra lyer J. and it was pressed upon us that that view should be accepted. In Maqbul Ahmad v. Onkar Pratap Narain Singh , the Privy Council was concerned with exclusion of time provided under Section 14 of the Limitation Act and also the effect of Section 4 of that Act. With regard to Section 4 the Privy Council said thus:

'What the section provides is that, where the period prescribed expires on a day when this Court is closed, notwithstanding that fact, the application may be made on the day that the Court reopens; so that there is nothing in the section which alters the length of the prescribed period.'

In effect the Privy Council ruled that an acknowledgment made during the vacation period of the Court alter the expiry of the prescribed period of limitation would not be a valid acknowledgment. King J. followed this in Chidambaram Chettiar v. Venkatasubba Naik : AIR1937Mad367 . In our view there is a distinction between Section 4 and the provision made in Section 19 of the Limitation Act. Section 4 does not speak of excluding any period in the computation of the period presences under the Limitation Act. But Section 19 and other similar provisions in the Limitation Act speak of a fresh period of limitation for a suit or other proceedings becoming available from the date of acknowledgment. This is achieved in Section 19 by providing that a fresh period of limitation shall be computed from the time when the acknowledgment was signed. This it is argued should stand on a slightly different footing from exclusion of time in computing the period indicated in Section 14. The effect however in froth these cases appears to us to be the same.

7. Sri Gopalaswami Aiyangar argued that the crucial question for our consideration is the interpretation of the phrase 'period prescribed under the Act.' He brought to our notice Clause 2 of Section 29 of the Limitation Act which reads:

'where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed therefor by the first schedule, the provisions of Section 3 shall apply, as if such period were prescribed therefor in that schedule, and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law- (a) the provisions contained in Section 4, Sections 3 to 18 ana Section 22 shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law; and (b) the remaining provisions of tins Act shall not apply.'

Counsel's argument was that by virtue of this provision, Section 19 of the Limitation Act would not apply in computing the period of limitation for the present suit if Madras Acts V of 1954 and I of 1955 applied to this case, mat would depend upon the question whether these enactments (Acts V of 1954 and 1 of 1955) prescribed period of limitation for a suit under a promissory note executed by an agriculturist as defined in these enactments different from the period prescribed by the first Schedule to the Limitation Act. The true effect, in our opinion, of Act V of 1954 and Act 1 of 1955 is merely to exclude from the computation of the period prescribed for a suit under the Limitation Act a certain period as indicated in them. This, in our opinion, would not amount to prescribing a different period of limitation for such suit.

It was also argued that if the question is looked at from the point of view of the result, we would hold that the effect of the two enactments was to prescribe a different period of limitation. We do not agree. The two enactments in question merely barred the filing of the suit on a debt due by an agriculturist for a limited period.

8. They did not purport to prescribe a special period of limitation for such suits different from the period prescribed under the Indian Limitation Act. That is the result of the mode adopted for achieving the desired object, viz. the bar of such suits. To say that 8 statute which temporarily bars the filing of a suit against an agriculturist for a certain period prescribed in effect a different period of limitation for that suit would involve the notion that the statute was not providing for a temporary emergency which is not the case with reference to the two Acts in question.

We are, therefore, satisfied that the two enactments did not purport to effect any change in the period of limitation prescribed under the Indian Limitation Act byprescribing a special or different period of limitation. Thereis no justification at all to construe the provisions of theseenactments in that manner. The principle of the Benchdecision in : AIR1938Mad19 isapplicable here and we therefore hold that the suit inthis case was not barred by limitation, because the acknowledgment relied on was effective to save limitation.The appeal therefore fails and is dismissed with costs.


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