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Prosanna Kumari Mazumdar Vs. Tripura Charan Chowdhury and anr. - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtKolkata
Decided On
Reported inAIR1936Cal470,166Ind.Cas.543
AppellantProsanna Kumari Mazumdar
RespondentTripura Charan Chowdhury and anr.
Cases ReferredFirm Bishnu Chand v. Girdhari Lal
Excerpt:
- .....note is his cause of action, that is to say he states that he is entitled to sue upon an account stated, the said account being stated on the back of the promissory note.3. it is therefore necessary to consider whether his suit as framed is barred by limitation or not. if the endorsement on the back of the promissory note brings the case within article 64, lim. act, the suit is clearly within time because the suit has been instituted within three years of 3rd july 1933. in my judgment the case comes within article 64, lim. act, and in the view which i am taking i am supported by two recent decisions of the judicial committee of the privy council in siqueria v. noronha 1934 p c 144 and the case in firm bishnu chand v. girdhari lal 1934 p c 147. the first case was a case.....
Judgment:

R.C. Mitter, J.

1. This Rule has been obtained by the plaintiff in a suit to recover a sum of money. It has been dismissed by the Court of first instance on the ground of limitation. The suit was instituted on 17th July 1935. The plaintiff's case in the plaint is that the defendant borrowed money from him on 11th January 1932 on a promissory note executed on the said date. In the promissory note there is a stipulation to pay interest at the rate of 3 pies a day. Then the plaint recites that on 3rd July 1933 there was a settlement of accounts between the plaintiff and the defendant, and the dues of the plaintiff were calculated at a rate of interest which was not the rate of interest provided for in the promissory note. The rate of interest on which the calculation proceeded was at the rate of one anna per month. On that date the sum of Rs. 137-8-0 was found due from the defendant to the piaintiff. Rs. 100 on account of the principal and Rs. 37-8-0 on account of interest. Then the plaintiff says in his plaint that he is entitled to claim on the basis of this settled account and he added interest to the sum of Rs. 100 at the rate of one anna per month. He dates his cause of action to be this settlement of account and says expressly in his plaint that the cause of action arose on 3rd July 1933, the date of this settlement. For the purpose of supporting his case he put in the promissory note because on the back of it the following is the endorsement over the signature of the defendant:

Interest is calculated at the rate of 12 pies per month from the date of the pro-note to 3rd July, that is for one year five months and twenty-two days. Rs. 137-8-0 is found due, that is Rs. 37-8-0 for interest and Rs. 100 being the principal.

2. Then there is the endorsement over the signature of the defendant 'that the sum of Rs. 137-8-0 remains due (Missing text).' This endorsement on the back of the promissory note was not stamped. The learned S. C. C. Judge proceeded upon the basis as if the suit was a suit on the promissory note. Then he said that the suit was filed admittedly beyond three years from the date of the promissory note and the loan, and it would be barred unless the endorsement on the back of the promissory note could be proved as an acknowledgment of liability. He said that the endorsement on the back of the note is an acknowledgment of liability within the meaning of Article 1-A, Stamp Act, and, inasmuch as the said endorsement has not been stamped with a one anna stamp, the endorsement cannot be admitted in evidence, by virtue of the provisions of Section 35, Stamp Act. It is not necessary in this case for me to decide whether the endorsement on the back of the promissory note is an acknowledgment within the meaning of Article 1-A, Stamp Act, for in my view the Court below in deciding the question of limitation has proceeded wholly upon a misconception of the plaintiff's case as made in the plaint. The plaintiff's suit is not based on the promissory note. The plaintiff expressly states that his cause of action arose upon the settlement account as endorsed upon the back of the promissory note over the defendants' signature, and he dates his cause of action not from the date of the promissory note but from the date of the said settlement of account, and further states that the settlement account as contained on the back of the promissory note is his cause of action, that is to say he states that he is entitled to sue upon an account stated, the said account being stated on the back of the promissory note.

3. It is therefore necessary to consider whether his suit as framed is barred by limitation or not. If the endorsement on the back of the promissory note brings the case within Article 64, Lim. Act, the suit is clearly within time because the suit has been instituted within three years of 3rd July 1933. In my judgment the case comes within Article 64, Lim. Act, and in the view which I am taking I am supported by two recent decisions of the Judicial Committee of the Privy Council in Siqueria v. Noronha 1934 P C 144 and the case in Firm Bishnu Chand v. Girdhari Lal 1934 P C 147. The first case was a case instituted by the plaintiff for sums of money said to be due to him on account of his salary. The plaintiff in that case was an assistant of the defendant firm. He was employed in the year 1913 and at the time of his employment his salary was not fixed, but he withdrew moneys on his own account from time to time, during the course of 15 years, when he was in service. At the time when he ceased to be in service, Mr. Rodrigues, the managing partner of the firm, gave him a letter in which the accounts were stated, that is to say his salary was fixed and calculated and the amounts drawn by him from time to time taken into account, and it was stated in that letter that a certain amount was due to the plaintiff. This account was given to the plaintiff within three years of his suit. As has been pointed out in the latter case I have referred to, Lord Wright observed that in this case, namely the case in Siqueria v. Noronha 1934 P C 144, the figures were taken from the account books of the firm which contained entries only on one side, namely the debit side, showing different amounts drawn by the plaintiff on different occasions on his own account, but the credit side, namely that where his pay was to be included, was left blank inasmuch as his pay was not settled. In the course of his judgment Lord Atkin pointed out that there were two classes of accounts stated. The second class is a class where there are on the account book itself cross demands between the plaintiff and the defendant and the cross demands are set off against each other. That is what is usually called accounts stated and the account so stated itself furnishes a cause of action, the set off on one item against another is the consideration to pay by one party to the other the balance found on settlement of account as due from one to the other. The other class of account stated is that where there are no cross demands or set offs. At p. 816 of the report, Lord Atkin makes the following observation with regard to this class of account stated. He says this:

Their Lordships think that what has been forgotten is that there are two forms of account stated. An account stated may only take the form of a mere acknowledgment of a debt, and in those circumstances, though it is quite true it amounts to a promise and the existence of a debt may be inferred, that can be rebutted, and it may very well turn out that there is no real debt at all, and in those circumstances there would be no consideration and no binding promise.

4. Then he deals with the other form of account stated, which I have already referred to above. When at the settlement of account a balance is struck and signed by the debtor, and it only takes the form of what Lord Atkin calls an acknowledgment, it is still an account stated, because, as Lord Atkin puts it, it amounts to a promise to pay the amount found due on the account. It itself furnishes a cause of action and the only thing is that it would be open to any party to lead evidence by showing that in fact there was no debt. That is the only difference between the first and second form where there are cross demands, and cross demands are set off against each other. In the second of the Privy Council cases, namely the case in Firm Bishnu Chand v. Girdhari Lal 1934 P C 147, Lord Wright pointed out that there can be account stated within the meaning of Article 64, Lim. Act, where there are no cross demands between the plaintiff and the defendant in the strictest sense of the term. He says that where the relationship between the parties is that of a creditor and debtor and a loan is advanced by the creditor to the debtor either in one lump or on different occasions and if there is payment from time to time by the debtor and after certain intervals, the credit side and the debit side are squared up and the amount found due is calculated by addition and subtraction and the final result is stated and the debtor signs it, it would come within the meaning of Article 64, Lim. Act. At p.967 of the report there are the observations which are relevant to the present case:

Indeed, the essence of an account stated is not the character of the items on one side or the other, but the fact that there are cross items of account and that the parties mutually agree to the several amounts of each and, by treating the items so agreed on the one side as discharging the items on the other side pro tanto,go on to agree that the balance only is payable.

5. Then there is this passage which is very important:

Such a transaction is in truth bilateral, and creates a new debt and a new cause of action. There mutual promises, the one side agreeing to accept the amount of the balance of the debt as true (because there must in such cases be at least, in the end, a creditor to whom the balance is due) and to pay it, the other side agreeing the entire debt as at a certain figure and then agreeing that it has been discharged to such and such an extent, so that there will be a complete satisfaction on the payment of the agreed balance. Hence there is mutual consideration to support the promise on either side and to constitute the new cause of action.

6. Relying upon these two principles formulated by these two judgments I do hold that the plaintiff had an independent cause of action accruing in his favour on 3rd July 1933. The endorsement on the back of the promissory note must be taken as an account stated between the parties, and as the suit has been brought within three years, it is within time. I therefore overrule the decision of the lower Court on the point of limitation. Inasmuch as there has not been any trial on the merits I remand the case in order that the other points raised by the parties may be gone into. The result is that the rule is made absolute: cost one gold mohur to abide the final result.


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