Canara Bank vs K. Abdurahiman and Others

K.A. Abdul Gafoor, J.—The suit for recovery of money failed at the lower appellate stage as against the first defendant. Therefore, this Second Appeal by the plaintiff.

The plaintiff filed the suit on the strength of Ext.A4 promissory note dated 6.5.1976, Ext.A1 acknowledgment dated 2.1.79 by the first defendant and also Ext.A2 acknowledgment dated 23.12.1981. The suit was contested on the ground that it was liable to be dismissed on the ground of limitation as there was no proper acknowledgment within the period of limitation commencing from the date of Ext.A4 to bind the defendants. The suit was decreed rejecting the contention of the defendants. The second defendant remained ex parte at the initial stage. Therefore, the Defendant No. 1 filed an appeal. The 1st defendant is the principal debtor and the 2nd defendant is the guarantor. The lower appellate Court found Ext.A2 acknowledgment dated 23.12.1981 by the guarantor was not sufficient enough to make the principal debtor, the defendant No. 1, liable for the amount claimed in the sit. Thus, the decree of the trial Court was partly modified and the decree was confirmed as against defendant No. 2 alone. In other words defendant No. 1 was found to be not liable for the money claimed to be recovered.

The substantial question of law arising in this case is whether on the strength of the authorisation as contained in Ext.A4, Ext.A2 acknowledgment by the 2nd defendant would bind the 1st defendant or not?

It is contended by the appellant that on the strength of Explanation (b) to Section 18(2) of the Limitation Act, 1963, an agent duly authorised can also acknowledge the debt making it live and current and to save the limitation. It need not thus always be by the concerned debtor. A person duly authorised by the debtor can also acknowledge the debt. It is pointed out from Ext.A4 that there was an understanding between the plaintiff on the one hand and the defendants on the other, to the following effect:

Further in the matter of making payments towards this debt or acknowledging this debt or any part thereof as and when called upon by the bank to do so for the specific purpose of saving limitation. I/We declare that the payment of acknowledgment made or given by any one or more of us shall be binding on all of such jointly/and/or severally and that the said payment and acknowledgment so made or given by one or more of us shall shave limitation against all of us jointly and/or severally for the purpose of Law of Limitation.

Both defendants I and 2 have signed in token of accepting the aforesaid condition on the reverse side of Ext.A4. This is a condition forming part of Ext.A4 to the effect that acknowledgment by either of them will bind the other. This stipulation squarely conies within Explanation (b) to Section 18(2) of the Limitation act. An examination of Ext.A4 promissory note will show that the 2nd respondent is not a guarantor but one among the executants of the promissory note along with the 1st respondent. The accounts maintained by the plaintiff, Ext.A3, also reveals that the 2nd defendant is described as a co-obligant along with the 1st defendant. So, the basis on which the finding is rendered by the appellate Court is not in tune with the evidence on record. Accordingly, the substantial question of law as framed is answered in favour of the appellant-plaintiff. Consequently, the decree of the lower appellate Court is set aside restoring that of the trial Court.

Anyhow, there will be no order as to costs.