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The Secretary of State for India in Council Vs. Pandit Radhika Prasad Bapuli - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1923Mad667; (1923)44MLJ685
AppellantThe Secretary of State for India in Council
RespondentPandit Radhika Prasad Bapuli
Cases ReferredKhaw Sim Tek v. Chuah Hooi Gnoh Neck
- - 1. the history of this matter is so clearly stated in the judgment of coutts trotter, j. ). the effect of that certificate is that the plaintiff is declared to have whatever rights madhu sahai would have had in that promissory note if he had been alive, and payment to him will be a good discharge to the government. this is the best that can be made out of the endorsement on the original somewhat dilapidated promissory note, and of a copy of this endorsement made by the plaintiff when it first came into his possession some 13 years ago. but the united company paid this interest to hur kissen doss in 1844 on what purports to be the direction of madhu sahai and, in the absence of evidence that it was not done by his direction, in my judgment the plaintiff has failed to establish salis schwabe, k.c., c.j.1. the history of this matter is so clearly stated in the judgment of coutts trotter, j., that it is unnecessary for me to repeat it and i have nothing to add to his statement of the facts except as to the plaintiff's title and i will deal with that first.2. the plaintiff is the assignee of one mukund lal who is the direct lineal descendant of madhu sahai who in the year 1845 had issued to him a document called a promissory note of the tanjore debt. no. 307. the plaintiff has also obtained from the district court of banares a succession certificate under the succession certificate act of 1889 in the matter of the estate of madhu sahai declaring him entitled to collect money and the interest due on the said promissory note (ex. m.). the effect of that.....

Walter Salis Schwabe, K.C., C.J.

1. The history of this matter is so clearly stated in the judgment of Coutts Trotter, J., that it is unnecessary for me to repeat it and I have nothing to add to his statement of the facts except as to the plaintiff's title and I will deal with that first.

2. The plaintiff is the assignee of one Mukund Lal who is the direct lineal descendant of Madhu Sahai who in the year 1845 had issued to him a document called a Promissory Note of the Tanjore debt. No. 307. The plaintiff has also obtained from the District Court of Banares a succession certificate under the Succession Certificate Act of 1889 in the matter of the estate of Madhu Sahai declaring him entitled to collect money and the interest due on the said promissory note (Ex. M.). The effect of that certificate is that the plaintiff is declared to have whatever rights Madhu Sahai would have had in that Promissory Note if he had been alive, and payment to him will be a good discharge to the government. The assignment to the plaintiff, Ex. J., was made in 1909 and in my judgment it assigns all the rights that the assignor had as representing Madhu Sahai. It is true that it recites that the assignor is entitled to the Promissory Note and to a specified amount of interest Rs. 2,833-15-0. That is the amount of interest accrued due from the date of the last payment, referred to hereafter, up to the time when by Ex. F. published in the Fort St. George Gazette, it was announced that, as Madhu Sahai had declared that he had not received the Promissory Note No. 307, it would be paid on September 30th, 1854 and that the notice would be held equivalent to a tender of payment on that date, from which date all interest on the said Note would cease. it has not been contended before us that that notice had any effect on the rights of Madhu Sahai but apparently the parties to the assignment thought that it had the effect of stopping the interest as from that date, and that is apparently the meaning of this recital. However the operative part of the document assigns all the interest in the Promissory Note which the assignor had. In the translation before us the words are 'right and authority'. But we have had before us the Court interpreters of Hindi and Guzarati and they agree that the words mean literally 'the rights and powers,' and convey what we understand by such words as 'all the right, title and interest' and include particularly all powers of recovering by action or otherwise the amount due on the Promissory Note. This in my judgment is wide enough to cover both principal and all interest due and to become due. It follows that the plaintiff had both by the assignment and by virtue of the succession certificate all the rights of the estate of Madhu Sahai.

3. I propose now to consider the rights of the plaintiff apart from the Limitation Act and then whether that Act applies. The history of the matter, as far as we can ascertain it, is that in 1847 one Hur Kissen Doss received through his agent one Pattam Narayanaswami Chetti the arrears of interest up to October 30th 1846 from the date of the agreement of 1824 referred to hereafter i.e., Rs. 8,411--5--1 (Ex. 1. A.). The Promissory Note itself has a column on the back for acknowledgment of the receipt of interest, That column contains what purports to be an order by Madhu Sahai to pay to Hur Kissen Doss, and it also contains what purports to beva further order signed by Madhu Sahai to pay to one Shri Girdharji Maharaj. This is the best that can be made out of the endorsement on the original somewhat dilapidated Promissory Note, and of a copy of this endorsement made by the plaintiff when it first came into his possession some 13 years ago. It is suggested that these endorsements are forgeries, and there is some support for that theory in that in 1853 Madhu Sahai's statement that he had never received the Promissory Note is officially accepted as is shown by Ex. F. But the United Company paid this interest to Hur Kissen Doss in 1844 on what purports to be the direction of Madhu Sahai and, in the absence of evidence that it was not done by his direction, in my judgment the plaintiff has failed to establish that this amount of interest was not properly paid; and therefore in my judgment his claim to that amount fails.

4. At later dates other persons made claims under the Promissory Note, but they were all rejected, one by the High Court made by V. Munuswami Chetty, as appears from Ex. G at some date before 1864. In 1892 one Shri Jivan Lalji put in a claim which was rejected _See Ex. H. It would appear that Shri Jivan Lalji was the grandson of Shri Girdharji Maharaj, who, in Ex. E is stated to have died in 1842, and Jiwan Lalji left surviving him, a widow and two sons, one also called Girdharji Maharaj (See Ex. K). If Ex. E, which does not seem to have been proved by any one, is accurate, that Girdharji whose name appears endorsed on the Promissory Note was dead before the Promissory Note was issued in 1845 and it is not surprising that doubts were thrown in Ex. H on the honesty of any claim made through him At any rate no payment was made of principal or interest to Girdharji Maha-raj or any one claiming under him, and the plaintiff has by Ex. K taken the precaution of obtaining a release deed from the present representatives of Girdharji Maharaj, and in my judgment the supposed endorsement to him can be disregarded. It is not relied upon by the Secretary of State. Where the Promissory Note was until between 1901 and 1906, when it is stated that it came into the hands of the heirs of Madhu Sahai, we do not know. But it was originally issued to Madhu Sahai and was throughout his and his legal representatives' property, and I find no assignment of his rights thereunder, except for the interest dealt with above, until the assignment to the plaintiff. I therefore hold that the plaintiff has the full rights that Madhu Sahai would have had if he were alive now:

5. Those rights, apart from limitation, are to be paid the principal, the' requisite notice having been given in 1853 and apparently again in 1858 (See Ex. G), and interest at 4 per cent from October, 1846 until the decree herein.

6. It is contended that all rights to the principal and consequently also the interest are barred. It is argued that, under Article 120) of the Schedule to the Limitation Act of 1908, if under no other Article, the right to recover is barred 6 years after the principal debt became payable, i.e., from the date of the expiry of the 15 months' notice given in 1853 or 1858. There are two answers made to this. First that time can only begin to run from the date of demand for payment made at Madras which was not until October, 1916; and secondly that the Government, who it is admitted have succeeded to the rights and liabilities of the United Company were and are in the position of trustees and that, under Section 10 of the Limitation Act, no period of limitation can apply. The learned Judge has found the first point against the plaintiff and the second in his favour. In my judgment the plaintiff is right on both points.

7. The first point turns on the terms of the Promissory Note itself. By it the Company agrees to pay to Madhu Sahai, on the expiration of 15 months' notice of payment, on demand at the General Treasury at Fort, St. George the principal sum, and to pay interest half yearly as long as the Company was in possession of the revenues of Tanjore. The interest was to be paid at the Treasury in cash to proprietors if resident in India and in cash or by bills at 12 months at the option of the proprietors, if resident in Europe.

8. According to the law of England when money is payable on demand and nothing further is said, it is payable at once and without demand and time under the Statute of Limitations begins to run at once. The most common instances of the application of that principle are of money lent repayable on demand or at request, and promissory notes payable on demand. Norton v. Ellam I.L.R.(1892) Cal 8. It is worth noticing that this principle of the English Common Law. has been held not to apply to cases in the mofussil. Tarinee Parshad Ghose v. Pran Kishen Banerji 14 Sutterlaus'S Wwekly Reporter 224 . However the principle is in terms applied by ArticleS 59 and 73 of the Limitation Act to cases of money lent and bills of exchange and promissory notes payable on demand. But it is not extended to any other case. Article 73 does not apply to this case as the so called Promissory Note is not a promissory note within the definition of the Limitation Act. Further in England the question in such cases is stated clearly by Scrutton, L.J. in Bradford Old Bank, Ltd. v. Sutcliffe (1918) 2 K.B. 833 , and by and Akin, L. JJ. in Joachin-son v. Swiss Bank Corporation (1918. 2 K.B. 833), where, it was established that the principle did not apply to cases between customers and bankers. The question to be considered is whether the words, ' on demand ' are mere words, or whether, looking at the whole document, it is really intended that the demand should be made before the liability to pay arises. Now in this connection, I attach very great importance to the fact that the payment is to be made at a named place by the person liable which place is the address of the debtor and not of the creditor. In the case of Rowe v. Young 2 Bligh N.S. 391 it was held that the presentment for payment of a Bill of Exchange payable at a named place was a condition precedent to the right to sue on the bill. It is true as pointed out by Coutts Trotter, J. that that particular rule has since been altered by Statute, but the principle of the decision is, in my judgment, in no way thereby affected, and I consider it directly in point. Further it is worth observing that there has been no similar statutory alteration of the law in India. Looking at the whole document in my judgment, it was the intention of the Company to insist on a demand at the place named for I cannot think that it was intended that the Company should be under a duty to seek out the creditors and pay them, especially as the payment under the promissory note was to be to the payees or their order and the Company would not know who they would be at the expiration of 15 months notice to be given at some future date. Further as to the interest the Company would require to know if the proprietor for the time being was in India, in which case it was to be paid in cash at the General Treasury, or in Europe, in which case he had an option, the exercise of which he would have to communicate. In my judgment the Company came under no liability to pay either the principal or interest until the demand was made for payment at a particular place and in some cases in a particular manner; and if the Company had been sued without a demand it would in my judgment have been a good defence to the action that no demand has been made. It follows in my judgment that the rights under the promissory note looked upon as a simple contract debt are not barred.

9. Secondly, are the Government trustees within the meaning of Section 10? Following the words of that section Is the Government a person in whom property has been vested in trust for any specific purpose and is the action for the purpose of following the trust property? A specific purpose is a purpose that is either actually and specifically dinned in the terms in which the trust is created, or a purpose which from the specified terms can be certainly affirmed. Khaw Sim Tek v. Chuah Hooi Gnoh Neck (1921) L.R. 49 IndAp 37 . In this case the terms are to be found in the articles of agreement of 1824 (Ex. C of which, I think, if this case goes further, ArticleS 15 and 16 should be printed). It was an agreement between the Company and amongst others, Madhu Sahai's predecessor-in-title. In my judgment, by that agreement the United Company undertook to set aside a sufficient part of the Tanjore Revenue to be received by it, to provide for the payment to the creditors of Amar Singh, who had signed the agreement, of their debts. Those creditors were to receive transferable bonds or certificates, and sufficient revenue was to be set aside and applied to paying the interest on those bonds, and also to creating and accumulating a sinking fund for the redemption in due course of the principal. In pursuance of this agreement a transferable bond, called a promissory note, was issued as the Note states, in conformity with and in pursuance of the articles of agreement of 1824, and is now held by the plaintiff. It is true that by the terms of the document the Company agrees to pay in the events that have happened, the interest and principal due on the bond to Madhu Sahai or his order. He or his assignees could have sued on the promissory note itself and the Company undertook a liability to pay interest so long as they received the Tanjore Revenue and principal after 15 months' notice given by them, and it would have been no defence that the Company had not received sufficient revenue or that, after giving the notice had not got sufficient sinking fund in its hands; but, this does not in my judgment prevent the Company from being trustees of the fund that it did get. into its hands, that is, of that part of the Revenue required for the purpose of meeting the principal and interest on these bonds. 1 agree with the Judgment of Coutts Trotter, J., that a trust was created by the articles of agreement and in my judgment, the Company and the Government and its successors are trustees of the funds in their hands for the purpose specifically defined in the articles of agreement, namely, the payment of interest and of principal of the transferable bonds to be issued under that agreement, of which the bond in suit is one. 1 therefore hold that Section 10 of the Indian Limitation Act applies.

10. The judgment must be reduced by Rs. 8,411-5-1 referred to above. That is however a minor part of the case, but the appellant's case partially succeeded and I think that the justice of the case will be met by awarding to the plaintiff three-fourths of the taxed costs of this appeal.

11. Time for payment three months from to day.

Wallace, J.

12. The plaintiff is suing to recover money due on a bond Ex. A dated the 28th July, 1845 under which the Governor in Council promised on behalf of the East India Company to pay certain principal and interest to one Madhu Sahai and his successors-in-title. The said Madhu Sahai represented a creditor of the deposed Raja of Tanjore Amarsingh, whose debts so far as they had been proved to the satisfaction of the Company under a commission appointed for the purpose, the Company took over, and for the due payment of which they made themselves responsible. The manner in which this was done is set out in Ex. C dated the nth February, 1824, articles of agreement between the Company and those claiming to be the crditors of Amar Singh.

13. A great deal of discussion has. centred round this document. On the best consideration that I can give it, the important provisions in it appear to me to mean this. The creditors who put their hands to it agreed to abide by the decision of the Commission appointed to determine the extent of their debts. The Company who were then in possession of the revenues of Tanjore formerly in the possession of Amar Singh, on their part agreed to take over these debts so determined with simple interest on the balance found due at 4 p.c. from the date of the debt to the 30th April, 1823 to consolidate that sum as the principal of bonds to be issued by them to the creditors in full satisfaction of such debts due by Amar Singh, the bonds to carry simple interest at 4 per cent. per annum to be paid half yearly from the 30th April, 1823; such interest was payable only so long as the Company retained the Tanjore revenues, while the payment of principal was not so conditioned. Such payment to be made only after 15 months' notice by the Company. In order to provide means for the redemption of these bonds, the total principal of which amounted, we are told, to nearly nine lakhs of rupees, a reserve fund sufficient to pay the interest was to be set apart by the Company put of the Tanjore revenues plus a sum equal to 5 per cent, of the principal annually out of the same revenues, as a sinking fund to meet the principal; and on this sinking fund, the Company would pay four per cent per annum to be paid from. general revenues. This latter stipulation is important as showing that the Company regarded the sinking fund as a separate fund with them belonging to and for the benefit of others. The sinking fund was to remain in existence and be a charge on the Tanjore revenues until all the bonds were discharged. Article 15 of the deed further stipulates that the deed shall not operate to make the Company's property apart from the Tanjore revenues, liable for these debts or any other debts owing to these creditors of Amar Singh, or to make even the Tanjore revenues liable unless these are received by the Company at Madras. The effect of this agreement clearly is, I think, that the Company, who had come into possession of the Tanjore revenues and recognised the justness of the claims of Amar Singh's creditors on these revenues, took on themselves the obligation to pay these debts and constituted themselves trustees, so far as they were and remained in possession of the Tanjore revenues, for the payment of these bonds so issued, and undertook to set apart a sufficient portion of these revenues as a trust fund to be used for the payment of interest on, and the ultimate redemption of, these bonds until all of them were discharged.

14. In pursuance of this agreement, bonds, as contemplated, were issued, and Ex. A the bond under which the plaintiff sues, is one ofthem. It is not denied that it is undischarged as regards the principal and most of the interest.

15. The plaintiff's contention is twofold: firstly he sues on Ex. A on the ground that he is entitled to be paid on it from the trust fund maintained ad hoc by the Government and therefore his claim cannot be barred, since the Government plead limitation against a trust obligation, and secondly, that, apart from any question of trust, and even if there is no trust fund, the payment is not barred by limitation. The Government claims that the trust, if created, (and its creation is not strenuously disputed) came to an end when Ex. A was issued, and that Ex. A is only an ordinary contractual bond between debtor and creditor, whereon payment is barred by limitation. Ex. A itself states that it was issued in pursuance of the agreement Ex. C detailed above, and the whole tenor of it shows that this was so. The Advocate-General's chief contention is that, in Ex. C, it was kid down that the amount of principal and interest found by the Commission to be due to any particular creditor of Amar Singh was to be satisfied by the bond to be. issued and that that implied that on the issue of the bond, the trust ultimately ceased. That view I cannot accept. The debt of Amar Singh was indeed to be satisfied once and for all by the bond, but the agreement went on to make distinct provision for the ultimate satisfaction of the bond itself, by announcing a promise of a sinking fund to be maintained until the bonds were fully discharged. It is not denied that the sinking fund was maintained and the Government Notifications of the 24th June, 1853 Ex. F. and the 18th December, 1858 (filed in this Court) indicate that it was so being maintained, and of course Government was bound under Ex. C so to maintain it until all the bonds were discharged. Government has been, since, the date of Ex. C, in possession of the Tanjore revenues, and I must presume that it has carried out the promise contained in that document.

16. So then we have the position that part passu with the issue of and running of the bonds, the sinking fund to pay them off was being accumulated, until, by 1858, all except four bonds, of which Ex. A was one, had been paid off, and that in 1858, Government had sufficient sinking fund to clear these also. It is plain then that Government had been all along holding in trust for the bond holders the amounts necessary to pay off each bond. The trust had in fact not ceased by the issue of the bonds, but continued and was to continue according to the agreement, so long as any obligation to pay remained on any bond, and the trust fund could be dissolved only when every bond was discharged. Ex. A has not been discharged. The trustee must therefore meet it from the trust fund so far as that fund is sufficient to meet it, and he cannot be heard to plead that he is not bound to do so or that the payment is barred by time, and thus in effect appropriate to himself the trust fund. To this part of the case no de-ience can be put forward against payment other than one of two pleas (1) that such a loss in the Tanjore revenues has taken place that the trust fund was exhausted so that the bonds cannot be redeemed from it, or (2) that all the bonds have been discharged. Neither plea has been here advanced.

17. Another argument to show that the trust came to an end with the issue of the bonds is based on the wording of Ex. A itself. Ex. A no doubt does not mention any sinking fund or reproduce article 15 of Ex. C, which makes only the Tanjore revenues liable for the debt. So far as its wording goes, the Governor in Council is prepared to meet the obligation to pay the principal and interest from general revenues. Interest no doubt would not be payable if the company had wholly lost the Tanjore revenues, but apparently the obligation to pay four general revenues would continue even if the Tanjore revenues while not wholly lost, nevertheless proved insufficient to meet the bond. Incidentally, this shows that Ex. A was something more than a mere warrant or declaration of intention to carry out Ex. C, or a mere label to indicate to the holder of the Ex. A what his share in the trust fund was.

18. But apart from that, the present question is was the original trust obligation charged on Tanjore revenues thus converted when Ex. A was issued, into an ordinary contractual obligation to pay from general revenues so that the trust obligation had come to an end? I can find no ground for such a conclusion. The wording of Ex. A so far from indicating any novation from the agreement Ex. C, directly purports to be in pursuance of Ex. C. The probable explanation of the use of language Ex. A loose enough to make the Company's general revenues liable for the bond, is that the risk of the company losing the Tanjore revenues, which was a real risk in 1824, had by 1845 become negligible, and it became a matter of indifference to the company whether the bond was redeemed from the trust fund fed by Tanjore revenues, or from general revenues, while beyond that Government always had the safeguard that interest was not payable, if the Tanjore revenues are lost, while principal was not payable until Government chose to give notice. Had there been any risk at the time of the issue of the bond in 1845, it is obvious that the full terms of the agreement in Ex. C would have been strictly set out in Ex. A, and that a bond professedly issued in pursuance of that agreement would have, if it had been at all necessary, limited the liability of the Company to a charge on the Tanjore revenues as set out in Ex. C. There is nothing in the wording of Ex. A, then, to indicate that Ex. C was not being carried out, that the trust fund was not in being, or that there was any fresh agreement at the time of Ex. A which put an end to the trust. In fact its wording implies that the trust set out in Ex. Chad been accepted and was being carried out thereby.

19. My conclusion on this part of the case then is this: there is and ought to be a trust fund in existence for the payment of the amount due under this bond. Government cannot be heard to say, nor is it in fact pleaded, that they have broken that trust or have not maintained the fund. The plaintiff, assuming that he is the real beneficiary under the bond, is entitled to enforce his claim under Ex. A as if he were, as he is, one of the beneficiaries under this trust, and if there is sufficient money in the fund to discharge what is due on this bond, the money due under it must be paid, and payment of it cannot be barred by limitation, since a trustee cannot be allowed to vouch a statute of limitation against a breach of trust, and the present suit is clearly one for the purpose of following i.e. for recovering for the cestique trust, in the hands of Government trust property vested in it for a purpose specific and specified in this case by the author of the trust. So far then as the trust fund will discharge Ex. A it must do so, but if and in so far as, the trust fund is insufficient to discharge Ex. A and therefore the obligation to discharge it falls on the ordinary revenues, Ex. A is enforceable against these general revenues only as an ordinary contract between a debtor and a creditor. It might in certain circumstances therefore have been necessary to enquire how far the trust fund will suffice to meet Ex. A but, fortunately, in the present case it is not necessary, for two reasons: first, Government has not pleaded that the trust fund is insufficient to meet Ex. A; and secondly, I hold, in agreement with the learned Chief Justice that even as an ordinary contract, Ex. A is enforceable in plaintiff's favour.

20. Turning to this second part of the case, viz., whether, apart from any trust, payment under the bond is barred by limitation, I agree with and have very little to add to, what the learned Chief Justice has said. As to the question of the meaning of the phrase ' on demand ' at a particular place, I would note the significance of the general notification of 1858 filed in this Court, which, after giving the necessary 15 months' notice announced that 'on presentation of the notes to the Accountant General at Fort St. George,' a certificate for payment both of principal and interest would be issued. It is clear then that before Government became liable to pay on the notes, whether principal or interest, that is, before any of the debt became due, there was to be a specific demand accompanied by presentation of the note at the Accountant General's office at Fort St. George.

21. I have nothing to add to what the learned Chief Justice has said regarding what plaintiff has acquired under the assignment deed, Ex. J., except that I do not think it necessary to consider the scope of Ex. M or to decide whether it is co-extensive with Ex. J., or not. Personally I think it is limited to the sums named in it, but it is not a point of importance at present.

22. As to the disallowance of Rs. 8,411-5-1 the plaintiff clearly has no right to that sum. The assignor believing no doubt that under the Notification of 1853 Ex. F, interest ceased from 30th September 1854, calculated the interest due to him up to that date from 30th October 1846, the date up to which, according to the endorsement of the note Ex. A, interest had been paid by Government to Harikishendoss described on Ex.A as the general attorney of Madhu Sahai, the original holder, and Rs. 2,833-15-0 represents that sum. The plaintiff has shown no reason for us to suppose that that sum was not. paid to the holder's attorney and the Government books Ex. I (a) show that it was so paid. The plaintiff's assignor claiming from Madhu Sahai and therefore the plaintiff himself could have no right to have this sum paid over again; and the plaintiff's assignor evidently was quite aware of this, and therefore refrained from assigning that sum over to the plaintiff.

23. I therefore agree with the order proposed by the learned Chief Justice.

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