Dosapati Ramayya vs Pattam Anjayya

Wadsworth, J.—This civil revision petition is preferred by the defendant against a decree in a small cause suit based on a promissory note.

Two questions were raised in revision, one. relating to the scaling down of the decree under Madras Act IV of 1938 and the other relating to

limitation. On the first point, it seems to us clear that the two earlier payments amounting to Rs. 125 must be treated as unappropriated payments

available in reduction of principal as on 1st October, 1937, so that the decree should have been one for Rs. 75 with interest at 6 1/4 per cent, from

1st October, 1937, credit being given as on 15th September, 1938, to the payment of Rs. 2.

Turning to the more difficult question relating to limitation, it is common ground that the suit filed on 11th November, 1939, would have been

barred by limitation unless limitation was saved by the endorsement of Rs. 2 on 15th September, 1938. The promissory note was for a sum of Rs.

271-8-6 and the previously endorsed payments were for an amount of Rs. 125. Quite clearly therefore at the time when this payment of Rs. 2 was

made a very considerable balance was due on the note. It is argued that the decision of the Privy Council in the case of Rama Shah v. Lal Chand

(1940) 1 M.L.J. 895 : L.R. 67 IndAp 160 : ILR (1940) Lah. 470 (P.C.) governs the present case. The endorsement was in the following words:

Paid on 15th September, 1938, towards this promissory note Rs. 2.

The original Telugu word translated as ''towards'' is ''kintha'' which literally means ''under''. Now, the Privy Council decided in the case just

referred to that where a debtor pays a sum as a part payment of an interest bearing debt, without indicating whether the payment is towards

interest or principal, in order to obtain a fresh period of limitation u/s 20 of the Limitation Act, it is incumbent upon the creditor to appropriate the

sum paid towards the principal before the expiration of the prescribed period of limitation. This decision is clearly authority for the view that an

unappropriated payment, such as the payment of Rs. 2 in the present case, cannot avail the creditor u/s 20 of the Limitation Act as a payment

towards interest as such or towards principal saving limitation and all previous decisions which took a contrary view must be deemed to have been

overruled.

It is, however, contended for the respondent that though this endorsement may not save limitation u/s 20, it can be deemed to be a sufficient

acknowledgment of the debt so as to save limitation u/s 19. Their Lordships of the Privy; Council in the case just quoted, though they referred to

Section 19 in order to discuss its relation to Section 20, were not dealing with a case in which there was any pleading that the writing would be a

sufficient acknowledgment u/s 19, even though the payment was not a payment falling u/s 20, and their Lordships do not consider whether such an

alternative plea would have been open to the creditor in the case before them, had it been taken. We are therefore of opinion that the decision in

Rama Shah v. Lal Chand (1940) 1 M.L.J. 895: L.R. 67 IndAp 160 : ILR (1940) Lah. 470 (P.C.) is authority neither for nor against the view that

when there is a part payment endorsed in such terms as to make it ineffective for the purpose of Section 20 of the Limitation Act, it may by

implication amount to such an acknowledgment as would save limitation u/s 19.

Now, there is a clear line of authority of this High Court for the view that when, as in the present case, there is a bond under which it can be

seen by the words and the tenor of the document and the endorsements of payment that a considerable sum is due and when the debtor makes

towards that bond a payment which is clearly less than the balance due, accompanying that payment with an endorsement to the effect that it is

towards the debt in the bond or towards the note, it is legitimate to read the words of that endorsement together with the substance of the

document upon which the endorsement was made and infer from the circumstances the fact that the writing of this endorsement is an

acknowledgment of the subsistence of the debt after the payment endorsed. No doubt, a contrary view was taken in the very, early case of

Lutchumanan Chetty v. Mutta Iburaki Marakkayer (1869) 5 M.H.C.R. 90. That decision was followed by the first Court in a case which came on

appeal before a Bench, vide Jaganadha Sahu v. Rama Sahif (1914) 17 M.L.T. 80. The learned Judges, who had to deal with a simple

endorsement that a certain sum was paid in respect of the promissory note, held, following the decision at page 78 of the same volume Visvanatha

Santhasingaro v. Ramachandra Mardraja Deo (1914) 17 M.L.T. 78 that the endorsement signed by the promisor contained a sufficient

acknowledgment of liability under the promissory note. This decision was followed by a single Judge in Ramakrishna Chetty v. Venkatasubbiah

Chetty (1914) 17 M.L.T. 139 and it has been followed more recently in Venkatakrishniah v. Subbarayudu I.L.R.(1916) Mad. 698. It is true that

in the last case there was an additional circumstance that the debtor endorsed two successive payments on the same day, the first of which must

necessarily have been made with a knowledge that a balance was due, but the learned Judges expressly approved the earlier decisions and

purported to follow the same principle. The decision in Venkatakrishniah v. Subbarayudu I.L.R.(1916) Mad. 698 has also been followed in

Bombay in Tayarali v. Garabad Sadu AIR 1939 Bom. 252. Against this line of authority, the only Madras decision to the contrary quoted before

us, besides the early case of Lutchumanan Chctty v. Mutt a Iburaki Marakkayer (1869) 5 M.H.C.R. 90 already referred to, is a very brief

judgment: in Lakshminarasitnham v. Bharata Mahanty (1910) 9 M.L.T. 216 which does not set forth the precise nature of the endorsement and

does not contain any detailed discussion of the question.

No doubt where the matter is res Integra, it might be contended that the endorsement of payment towards the promissory note on which

according to the tenor of the document much more than the amount paid was outstanding at the time of payment would not necessarily imply an

acknowledgment that the debt continued to subsist after the payment. It might be argued that the payment was made without a calculation of the

balance due or it might be argued that the document might have been otherwise discharged by unendorsed payments. But it does not seem to us, in

view of the authorities just cited, that these general arguments are now open to us. We are bound by the previous decisions and we must hold that

the suit in the present case was not barred by limitation having regard to the endorsement of 15th September, 1938, which was expressly pleaded

in the plaint as an acknowledgment saving limitation.

The result, therefore, is that the civil revision petition is allowed to the extent that the decree will be modified as already indicated. The petitioner

is entitled to half his costs in revision.