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G.T.S. Abdul Latiff Sahib Vs. T.V. Kuppuswami Ayyar and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1936Mad946
AppellantG.T.S. Abdul Latiff Sahib
RespondentT.V. Kuppuswami Ayyar and anr.
Cases ReferredChinnaswami v. Periathambi
Excerpt:
- - clearly the adjustments in ex. act, from obtaining a personal remedy against defendant 1. the second appeal is therefore allowed with costs and the suit decreed against defendant 1 personally, as well as against the hypothecated property......plaintiff bank appropriated a sufficient sum from other accounts to meet the interest due on these mortgage bonds and monthly subscriptions.2. in this suit on the mortgage bond, the question that arises is whether the appropriation towards interest came within the mischief of section 20, lim. act, and so saved the plaintiff's personal remedy for the mortgage amount from the bar of limitation. both the trial court and the lower appellate court have found that these adjustments did not save limitation; hence this second appeal. had defendant 1 been a mere subscriber or a mere debtor of the firm, no question could have arisen; because for the purpose of satisfying section 20, lim. act, a payment towards interest must be a conscious act: vide chinnaswami v. periathambi 1929 mad 811. but the.....
Judgment:

Horwill, J.

1. Defendant 1 was a shareholder and director of the plaintiff Bank, and in enjoyment of one of the privileges of -membership he borrowed from the Bank a sum of Rs. 3,000. Afterwards, in-order to avail himself of an amendment of the rules permitting the borrowing of money among subscribers of the shares, this sum was divided into three loans of Rs. 1,500, Rs. 1,200 and Rs. 300. According to the terms of the bond, he was to pay interest of Rs. 18-12-0 every month and to repay the principal within a year. As a member of the Society he had also to pay Rs. 30 a month towards his 30 shares. Up to May 1924, the monthly payments were regularly made; but from June onwards the plaintiff Bank appropriated a sufficient sum from other accounts to meet the interest due on these mortgage bonds and monthly subscriptions.

2. In this suit on the mortgage bond, the question that arises is whether the appropriation towards interest came within the mischief of Section 20, Lim. Act, and so saved the plaintiff's personal remedy for the mortgage amount from the bar of limitation. Both the trial Court and the lower appellate Court have found that these adjustments did not save limitation; hence this second appeal. Had defendant 1 been a mere subscriber or a mere debtor of the firm, no question could have arisen; because for the purpose of satisfying Section 20, Lim. Act, a payment towards interest must be a conscious act: vide Chinnaswami v. Periathambi 1929 Mad 811. But the question that arises here is whether defendant 1, because of his intimacy with the accounts, is placed on a different footing. As already pointed out, the interest on all the three mortgage bonds into which the original mortgage bond was split and the monthly subscriptions were met by adjustments from credits of defendant 1 in other accounts: see Ex. J.

3. At the end of 1924, the summary, Ex. 11, was drawn up, showing debts to three other accounts, including a suspense account of Mr. Singaram Ayyar and a capital account of Mr. S. Usman Khan, and credits to defendant 1 to meet the subscriptions and interest due from June onwards. Clearly the adjustments in Ex. 11 could not have been made without the knowledge of defendant 1, because it entitled the debiting of the accounts of two other gentlemen, and also because Ex. 11 contains corrections made by defendant 1 himself in which he altered the amount to which the account of Mr. S. Usman Khan was to be debited and scored out a small contingent charge. Moreover, in his capacity of auditor, ha was auditing the accounts every month, and in Ex. KK he wrote his audit notes on 6th March 1925 for December 1924, in which month was written the summary Ex. 11.

4. When defendant 1 made his monthly payments he must have had in mind the accounts of the Bank with which he was so closely associated, and intended it to be appropriated according to the terms of the bond and of the rules. With regard to the adjustments, it is not even necessary to assume that he was aware of every entry relating to his own accounts. He must have been intimately acquainted with the system of book-keeping adopted by the Bank and the methods by which it made adjustments towards the debts due; for they were made in accordance with the rules. He therefore knew, when-ever he had a credit, how it would be treated in the accounts and how in due course it would be adjusted against interest and subscriptions due. Defendant 1 admits that up to August 1924 he had a working knowledge of the accounts of the bank, but denies that he had so afterwards. Obviously he fixed August 1924 because this is the month after which any knowledge by him would be fatal to his case; but the fact that he was writing the audit notes of the 1924 accounts right up to March 1925 shows that he had at least an intimate knowledge of the accounts written up to the end of 1924.

5. It has been argued that defendant 1 is not liable because he was not aware of the adjustments on the date on which they were made; but it would be iniquitous if defendant 1, knowing in advance that adjustments would, in the ordinary course of business, be made, knowing soon afterwards that adjustments were made, and obviously authorizing the Bank to obtain funds from the accounts of others to discharge his debts, should be allowed to escape liability merely because he was not present on the actual day on which the adjustments were made. He must be considered to have ratified these adjustments towards subscription and interest. I find therefore that the lower Court was wrong in holding that the plaintiff was debarred by Section 20, Lim. Act, from obtaining a personal remedy against defendant 1. The second appeal is therefore allowed with costs and the suit decreed against defendant 1 personally, as well as against the hypothecated property. I have discussed the liability of defendant 1, but defendant 2 is also liable for his father's debts from out of the joint family property. The respondents will bear the costs of the appellant in this Court and in the lower appellate Court. (Leave to appeal granted.)


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