Annayya Janakirama Bhagavathar and Another vs Annayya Narasimha Bhagavathar and Others

Venkataramana Rao, J.—This second appeal raises a question of limitation. The suit is one for an account of moneys due it respect of the

business which was earned on in partnership between plaintiff No. 1 and defendant No. 1. The case of the plaintiffs is that plaintiff No. 1,

defendant No. 1 and one Hanumantha Bhagavathar carried on business in partnership till 1919, that Hanumantha Bhagavathar left the business and

thereafter the business was continued by plaintiff No. 1 and defendant No. 1, that 1 he business terminated about three years before the suit was

filed on December 1, 1927, and that even if the partnership was dissolved more than three years before suit, there was an acknowledgment of

liability under Ex. A which was an agreement to have certain matters set-lied by panchayaldars executed by plaintiff No. 1 and defendant No. 1.

The plaint is not very happily worded. It recites the partnership and also the agreement under Ex. A, and the prayer in the plaint is that the Court

should direct the defendants to pay plaintiff No. 1 the amount due to him, as mentioned in para. 11 after looking into the accounts, of the suit

partnership. I understand that paragraph to mean that the plaintiff desired an account of the partnership business in accordance with the

arrangement that they entered into and was embodied in Ex. A. The District Munsif gave a decree in favour of the plaintiffs and tie learned

Subordinate Judge dismissed the suit en the ground that it was barred by limitation and that Ex. A did not operate as an acknowledgment. Exhibit

A is as follows:

Re: the account of partneiship business carried on by us: Annayya Janakirama bhagavathar and Naiayanaswami Bhagavathar of us admitted before

you to the effect that interest should be charged for the capital invested by them and for their drawings and that they should have no right to the

profits or loss of the said business Acccrdingly we have appointed you three as panchayaldars to look into the accounts of the said Janakirama

Bhagavathar and Narayanaswami Bhagavathar from the said business accounts and to settle accounts by charging interest on them and for their

drawings at he. 1 per cent, ter mensem. So, if you look into those accounts, charge interest as aforesaid and settle the accounts, we three agree to

abide by your decision; and so we have given full powers to you throe in connection therewith. Agreeing to this effect we have executed this

agreement.

The view of the lower Court is that Ex A operates only as a condition il acknowledgment and that therefore it cannot save bar of the limitation.

This view is untenable The learned Judge has not appreciated the distinction between an acknowledgment of a right to an account and an

acknowledgment of a debt. For an acknowledgment of a right to an account there need not be an acknowledgment that a debt or even a specified

amount thereof is actually due. As I understand Ex. A, what the parties in effect state is this:

There is a right to a pending account between us and each has got a claim to recover the balance which may be found due upon the taking of the

accounts and each agrees to pay the other the balance so found due.

This will amount to are unconditional admission of liability. As observed by Wood, V.O. in Prance, v. Sympson Kay (1855) 1 Kay 677 : K Jur.

929 : 101 R.R. 811-[Ed.]:

It is not necessary for the purpose of a suit for an account to have an acknowledgment that a debt is actually due; but it is enough that there is an

acknowledgment that an account is pending, and that the defendant promises to pay the balance if any due from him upon such account; because it

may be that the precise result of the account and on which side the balance will be, cannot be known beforehand.

There need not be an express statement that the balance would be paid; the words ""settle the accounts"" indicate that the parties agree to pay

whatever is found to be due on the accounts being looked into. In this case it will be seen that in Ex. A the parties state that in taking the

partnership account they give up the right to take a profit and loss account but agree that only the capital and the drawings and interest thereon

should be taken into consideration and the capital should be set off against the drawings and the balance arrived at. Having come to this agreement

they approach the mediators and request them to carry it out by looking into the accounts and determining what the figure will be as per the

agreement arrived at between them. In my opinion therefore this will be a sufficient acknowledgment within the meaning of Section 19, Limitation

Act. The cases relied on by Mr. Soma-sundaram are distinguishable. The case in Nardyanaswamy Mudali v. Gangadhara Mudali 37 M.L.J. 353 :

48 Ind. Cas. 89 : AIR 1919 Mad. 838 is a decision by a Division Bench of this Court wherein parties submitted their differences to arbitrators and

agreed to pay whatever was found due by them, and the arbitration failed. It was held that the agreement to refer to arbitration would not prevent

the plaintiffs claim from being barred by limitation. The easels, I think, explainable on the principle-that a mere reference to arbitration with an

agreement to pay whatever the arbitrators decide would only be a conditional acknowledgement. The case in Bmlapragida Ramamurthy v.

Taammana Gopayya 40 M. 701 : 35 Ind. Cas. 575 : AIR 1917 Mad. 892 : 31 M.L.J. 231 : 4 L.W. 48 : 80 M.L.T. 129 also proceeds upon the

same basis. But the document in the1 present suit is not a mere reference to arbitration the arbitrators are not asked to decide upon the conflicting

rights of the parties and it is not a mere agreement to pay whatever the arbitrators decide. What each party is to pay has already been decided

upon between the parties.

There is another basis on which I think the suit may be sustained. According to the plaint and as also found by the learned District Munsif, the

par.nership which subsisted between plaintiff No. 1 and defendant No. 1 was dissolved in or about 1924. Within a year thereafter the parties met

and agreed to have an account of partnership taken in a particular manner, namely the manner embodied in Ex. A. it will be an agreement between

the parties for consideration which can itself be enforced and the suit claim is referable to that agreement as evidenced by the prayer in para. 19 of

the plain. If the suit claim is viewed from this standpoint, there can be no question of the bar of limitation because it was admittedly brought with

two years from the date of the said agreement. In fact the barred District Munsi has given a decree to the plaintiffs only or that basis. I therefore

reverse the decree of the Subordinate Judge and restore the decree of the District Munsif with costs ill all the Courts. Leave to appeal is refused.