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K. Murugappa Chetty Vs. P. Vyapuri Chetti and anr. - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtChennai
Decided On
Reported in(1917)32MLJ536
AppellantK. Murugappa Chetty
RespondentP. Vyapuri Chetti and anr.
Cases ReferredJalin Singh v. Choonee Loll Johurry
Excerpt:
.....when his whole case is that the settlement is not binding on him. when sued on the note, ha pleaded that the note was ineffectual as it was not signed by the 2ad defendant, that he signed the note only on the understanding that the 2nd defendant also would join in its execution and stated distinctly, that there was no concluded and binding contract to pay the amount of the said promissory note, and that no obligation to pay arose there under. if this defendant is entitled to these legal defences notwithstanding the manifest dishonesty of his present plea, the suit must fail as against him. the breach may have been the failure to obtain the consent of the 2nd defendant. the reasons for the failure of the previous litigation and why the present suit against both the defendants became..........defendants. what actually happened has not been fully elicited. as a result of the negotiations, a promissory note was executed on the 12th of september 1911 (exhibit d). it purports to proceed from both the defendants but is signed only by the 1st defendant. the firm sued the 1st defendant alone on the note in c.s. no. 12 of 1912. i shall have to refer to it more in detail later on. as a result of this statement, the firm withdrew the suit with liberty to sue again. this was on the 26th of november 1912 (exhibit ii). the present suit is against both the defendants on the original cause of action, ignoring the promissory note.7. the 1st defendant's case is that the settlement evidenced by the promissory note bars the suit. the written statement spells as if he pleaded payment. however, i.....
Judgment:

Seshagiri Aiyar, J.

1. The case is by no means free from difficulty. If the parties had been allowed to adduce all the evidence, the points arising for decision would have been more easily solved, but that has not been done.

2. I accept Mr. Venkata Subba Row's statement that the learned Judge heard evidence only on the question of limitation, and that the case was stopped after that. Mr. Marthandam Pillai said that he was not in a position to contradict the statement. The nature of the questions put to the solitary witness examined in the case, the state of the records and the judgment of the learned Judge support the statement made by the learned Vakil at the bar.

3. Now as to the facts. A firm known by the name of Salamangalam Murugappa Chetty. A. Venkataperumal Chetty & Co., carrying on business in Madras, acted as commission agents for the sale of the goods consigned by the defendants between September 1909 and May 1911. The Madras firm advanced money on the goods from time to time, for which they charged interest. They were also entitled to commission. The firm became practically insolvent about the beginning of 1911. By Exhibit A, the plaintiff in this case and four others were appointed trustees to collect the outstandings of the firm and to make a distribution in favour of the creditors. One Thayaramma sued the trustees for dissolution of partnership and other reliefs : C.S. No. 292 of 1911. A Receiver was appointed in the course of the suit to manage the affairs of the firm. The Receiver put up the outstandings due to the firm to auction, and the present plaintiff with the permission, of the Court became the purchaser.

4. The sale was on the 9th of November 1912, and the conveyance by the Receiver was on the 2nd of January 1913. I have thus far traced the title of the plaintiff.

5. Before the firm made over its assets to trustees, there was an attempt at a settlement of accounts between the firm and the defendants. What actually happened has not been fully elicited. As a result of the negotiations, a promissory note was executed on the 12th of September 1911 (Exhibit D). It purports to proceed from both the defendants but is signed only by the 1st defendant. The firm sued the 1st defendant alone on the note in C.S. No. 12 of 1912. I shall have to refer to it more in detail later on. As a result of this statement, the firm withdrew the suit with liberty to sue again. This was on the 26th of November 1912 (Exhibit II). The present suit is against both the defendants on the original cause of action, ignoring the promissory note.

7. The 1st defendant's case is that the settlement evidenced by the promissory note bars the suit. The written statement spells as if he pleaded payment. However, I accept the interpretation suggested that it only refers to the adjustment and not to any payment. He also pleads the bar of limitation. The 2nd defendant says that nothing is due, that the 1st defendant is not his partner and that the claim is barred by limitation.

8. Issues relating to the competency of the plaintiff to maintain the suit, to the partnership between the defendants, to limitation and to the settlement of the amount due were raised.

9. The learned Judge's view apparently was that the original cause of action was not open to the plaintiff, because of the promissory note, and that as the suit on the note would be barred^ the plaintiff can have no remedy in this suit.

10. In this Court, in addition to arguments advanced to support the conclusions of the learned Judge, contentions were put forward on all the issues raised in the case with a view to support the Judgment.

11. I regret my inability to accept the view of the learned Judge. Considerable reliance was placed upon a note made by the learned Judge in the course of the hearing. The note is 'Plaintiff's vakil admits the settlement mentioned in the 5th issue'. The learned Vakil who conducted the case has stated explicitly before us that the admission related to the willingness of the firm to give up Rs. 4,000 and to take a promissory note for Rs. 2,500 in full satisfaction of all claims, and not to the validity or to the binding character of the settlement. This statement was not contradicted by the learned vakil for the Respondent. If the statement was construed as admitting that the original debt was extinguished by the promissory note, there was no necessity to proceed any further. As a matter of fact, even after this admission, witness was examined on the issue as to limitation. In my opinion, this statement should not be regarded as having conceded anything more than what the learned vakil says he conceded.

12. I shall deal first with the question of limitation. I fail to see how the 2nd defendant can plead the bar. He was not sued on the note as he did not sign it. The cause of action against him is on the original dealings. His case is that the 1st defendant is not his partner and that he is not bound by any settlement to which the 1st defendant was a party. The statement in the plaint that the defendants had dealings as a firm is put in to make them jointly and severally liable. If the 2nd defendant is not a partner and if the accounts, as alleged by him, do not show any liability, the suit must fail as against him. That is on the merits. I fail to sea how it is open to him to plead the bar of limitation on the ground that there was a settlement, when his whole case is that the settlement is not binding on him.

13. The learned vakil for the respondent contended Article 85 of the Indian Limitation Act was inapplicable in as much as there was a settlement in fact, whatever may have been its legal consequences. The so-called settlement is only a striking of the balances due on that date. It is not signed by either of the defendants. It is clear that this entry in the books will not furnish a cause of action as on an account stated under Article 64 of the Limitation Act. The mere fact that the balances were struck will not close the accounts. The decision in Lakshmayya v. Jagannadham I.L.R. (1887) M. 199 proceeds on this view. The decision in Marimuthu v. Swaminatha Pillai I.L.R. (1897) M. 366 to which our attention was drawn only lays down that mutual open and current account can be settled so as to give rise for a suit for money due. The question of limitation was not decided in this case. Aiyasami Chetty v. Chinniah Nainar (1916) 3 L.W. 388 is to the same effect. I may cite another case, Jalim Singh v. Choonee Loll Johury (1911) 15 C.W.N. 882, which decides in effect, that a settlement of a mutual, open and current account need not be such as to invite Article 64 of the Limitation Act. This is clear. There can be a settlement without there being a stated account. The fact that on the date of the suit, there was no running account does not affect Article 85. See Ganesh Lal v. Sheo Gulam Singh (1879) 5 C.L.R. 211, Laljee Sahoo v. Roghoonundun Lall Sahoo and I.L.R. (1880) C 447 Lakshmayya v. Jagannadham I.L.R. (1887) M. 199. It was conceded that if article 85 applied, the suit would be in time. I am, therefore of opinion that there must be a trial in this case as regards the 2nd defendant.

14. The case of the 1st defendant is somewhat different. He. was who settled the amount due. He signed the promissory note. When sued on the note, ha pleaded that the note was ineffectual as it was not signed by the 2ad defendant, that he signed the note only on the understanding that the 2nd defendant also would join in its execution and stated distinctly, 'that there was no concluded and binding contract to pay the amount of the said promissory note, and that no obligation to pay arose there under.' His present plea h that the promissory note is a bar to the suit and that there is also the bar of limitation. If this defendant is entitled to these legal defences notwithstanding the manifest dishonesty of his present plea, the suit must fail as against him. But I am unable, as at present advised, to conclude that the records in this case compel us to exonerate him. What he may be able to establish at the trial, I need not speculate upon. His vakil stated that he having been a party to the settlement, the suit against him must be based on that contract and on nothing else. But the question has to be found whether there was a contract or whether there was simply an inchoate attempt at a settlement. Further, supposing that there was a settlement which furnished the ground of claim against him, and that Article 115 would apply to his case, as held in Jalin Singh v. Choonee Loll Johurry (1911) 15 C.W.N. 882, the further question would arise as to when the breach arose. The breach may have been the failure to obtain the consent of the 2nd defendant. It may have been later on. Tue applicability of Article 115 was not suggested or argued in the Court below and therefore no evidence was directed to it. As at present advised, I am not prepared to hold that tae claim against the 1st defendant is on the face of it barred by limitation.

15. I ought to have noticed earlier another point pressed before UH by the learned Vakil for the Respondent, His argument was that under Exhibit C., the conveyance from the Receiver, the plaintiff purchased only the right to sue on the contract which was the basis of the claim in C.S. No. 12 of 1912 and that it is not open to him to fall back upon the original cause of action. I see no force in this contention. The sale of the outstandings was on the 9th of November 1912. The suit was withdrawn on the 26th of November 1912. The conveyance was actually executed on the 2nd of January 1913. Clause 1 of the conveyance begins with the statement 'All the outstandings due to the business carried on under the name and style of Salamangalam Murugappa Chetty, Apala Venkataperumal Chetty & Co., at No. 139, Anna Pillai Street, Georgetown, Madras, including the outstandings in respect of which suits were pending on the 9th November 1912'. Then the clause enumerates the suits and opens with the words 'including the outstandings etc.'. I am unable to regard tae enumeration as exhausting the preamble. Clauses (a) to (c) were apparently put in ex majori cautela. They were intended to enable the purchaser to prosecute the suits, if he chose, not to preclude him from relying upon the original cause of action, if he found the suit defective. In fact, the suit was withdrawn when the conveyance was executed. I am, therefore, unable to hold, that the plaintiff should not fall back on the original cause of action.

16. I must point out that the pleadings in this case ought to have been fuller. We often come across very prolific statements in the plaints. The present case errs the other way. The reasons for the failure of the previous litigation and why the present suit against both the defendants became necessary ought to have been stated in some detail.

17. On the whole I have come to the conclusion that the judgment of the learned Judge should be reversed and that the suit should be remanded for disposal on the merits. Costs to abide the result.

The Offg. Chief Justice

18. I agree.


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