Gokhul Mahton and Others vs Sheoprasad Lal Seth and Others

Wort, J.—I do not propose to add much to what I stated in the judgment under which this case was in the first instance referred to a Division Bench. The facts of the case were set out in that judgment and I do not propose to repeat them. The first question which arose was whether there had been a waiver within the meaning of the third column of Article 75, Limitation Act; the waiver alleged was the payment of Rs. 25 as a part payment of the instalment or instalments then due. I content myself by repeating the observation of Try J., as he then was, in Keene v. Biscoe (1878) 8 Ch. D 201 to this effect:

Where a right has accrued it can be waived, but to amount to waiver there must be something done which is inconsistent with the continuance of that right. Now, the right here was to immediate payment of �400 and interest, and the receipt of a portion of that sum is in no way inconsistent with that demand.

I refer to the facts of this case. The question may be asked--could the acceptance of Rs. 25 in any way prevent or be an answer to the cause of action which the creditor might have had to the other amount? There can be only one answer to that question and that answer is in the negative. From one point of view the conclusion that there was no waiver disposes of the matter; but Mr. Bose who appears on behalf of the plaintiff-respondents developed his argument before us and that argument requires consideration. His contention was, although perhaps not expressed in these words, that Article 74, Limitation Act, was an omnibus Article providing a period of limitation for promissory notes or bonds payable by instalments both in those cases in which there was a default clause, and in those in which default clause was absent, and that if the creditor chose to sue on the default clause for the full amount, then and then only Article 75 came into operation. In my judgment that is an argument which cannot be accepted and if what Mr. Bose contends were correct in my opinion Article 75 would be redundant. Mr. Bose relies for his argument upon the decision of their Lordships of the Judicial Committee of the Privy Council in AIR 1932 207 (Privy Council) . There, their Lordships were dealing with a default clause in a mortgage bond and were considering Article 132 in coming to the conclusion that the expression "when the money sued for becomes due" in col. 3 of Article 132 had reference to the period for which the money was lent and had no reference to the earlier date under the default clause. The case was relied upon by Mr. Bose for the observation of Sir George Lowndes to the effect that the default clause was put in for the benefit of the mortgagee. But it is to be observed that their Lordships of the Judicial Committee considering this matter referred to the earlier case being the decision of Lord Blanesburgh in Pacham v. Ansar Husain A.I.R (1926) . P.C. 85 in which it was observed that the default clause is both for the benefit of the mortgagee and the mortgagor. It is to be noticed that their Lordships of the Judicial Committee in Lasa Din''s caseNilmadhab Chuckerbutty v. Ramsodoy Ghose (1883) 9 Cal. 857 referred to the decision in Reeves v. Butcher (1891) 2 Q.B. 509--an authority to which reference was made in my earlier judgment--and observed that the question which there was decided, had that fallen to be decided in India, would have come under Article 132 and not under Article 75, Limitation Act, "which" say their Lordships "is in very special terms" and it is the terms of Article 75 which we have to construe in this case.

Mr. Bose also relied upon the decision of Sir Francis Maclean and another Judge in Rup Narain Bhattacharya v. Gopi Nath Mandol 11 C.W.N. 903. But the learned Chief Justice''s decision there was that

it was open to the creditor, if default were made, to sue at once for the whole amount or if he so elected to waive the benefit of the proviso.

The learned Chief Justice made this observation during the course of his judgment:

Speaking for myself, if the matter had been res integra I would have felt some doubt whether the case did not fall within Article 75 of Schedule 2, Limitation Act, rather than within Article 116.

It is to be observed therefore that he had some doubt as regards the Article but thought himself bound by decisions of the Court two of which I propose to refer to. But it will be seen that the case gives'' no assistance to Mr. Bose''s argument. As the Court in that case decided, there had been a waiver, and if there had been a waiver there can be no dispute that the plaintiff-respondent in this case would not be barred by the six years'' period provided by col. 3 of Article 75 dating from the first default. I say there can be no doubt about that, but as I have already observed, it cannot be said in this case that there was a waiver. There is one observation I should have made at the time that I dealt with that point and that is this that even assuming that Mr. Bose is right in his contention that it is a question of fact, the plaintiff could not be heard in this case to say that there had been a waiver because the circumstance which he alleged, namely that all the instalments to date had been paid was inconsistent with that plea. But I do not accept the argument that it is purely a question of fact and the observation of Pry J. to which I made reference a moment ago is sufficiently conclusive on that point.

Now dealing with the two cases upon which Sir Francis Maclean relied, one was the decision in 6 Cal 94.16 The decision there was that the suit to recover money due on a registered bond is a suit for compensation and is governed by Article 116. Garth C.J. was there dealing with the question whether in ''ordinary legal parlance'' (to use his expression) a suit to recover money upon a bond could be properly described as a suit for compensation as indicating the view held that a suit for compensation meant a suit for unliquidated damages. Nonetheless he decided that Article 116 applied. The other case to which I propose to refer is Nilmadhab Chuckerbutty v. Ramsodoy Ghose (1883) 9 Cal. 857. Again the decision there was that the execution creditor (it was a case in execution, it is to be observed) must be considered to have waived his right to execute the decree for the whole amount. Neither the decision of Sir Francis Maolean nor the two cases to which reference was made in this judgment assist the argument of Mr. Bose. It remains to make one observation with regard to Article 75 itself:

On a promissory note or bond payable by instalments, which provides that, if default be made in payment of one or more instalments, the whole shall be due.

The period of limitation is three years and read with Article 116, six years. Col. 3 reads:

When the default is made unless where the payee or obligee waives the benefit of the provision and then when fresh default is made in respect of which there is no such waiver.

"When the default is made" can have reference only to the default referred to in Article 75. In my judgment, it is impossible to get away from the construction that if the default clause appears in the bond, apart from the question of waiver the cause of action arose at the first default. And refer, ring to these matters their Lordships of the Judicial Committee of the Privy Council in the case to which I have referred and upon which Mr. Bose places reliance, observes that Article 132 deals not with he cause of action but the date upon which the money becomes due, whereas the Imperial Statute of James I which was being considered by way of comparison dealt with the date of the cause of action.

I referred in the course of my previous judgment to the decision of Ross and Scroope JJ. in Ram Chandra Nayek v. Gharbharan Ahir (1930) 132 I.C. 112 and shall make no further observation with regard to that case other than the one I made on the previous occasion, namely that it relied up. on a previous decision reported in Ramsekhar Prasad Singh and Others Vs. Mathura Lal and Others, a case which was not under Article 75 but was a case similar to the case in AIR 1932 207 (Privy Council) , namely on a mortgage bond governed by Article 132. I need only add that Boss J. made no reference to the terms of the Article but came to the conclusion that the case was completely covered by the earlier decision to which I have referred. Now, it is perfectly clear, if I may be allowed to say so with respect to Ross J. that their Lordships of Judicial Committee of the Privy Council, whatever their decision might be, if the matter came before them, declined to consider that the provisions of Articles 132 and 75 are in any way similar. As I have already observed, the Judicial Committee have said that Article 75, Limitation Act, "is in very special terms." In my judgment on the plain reading of the Article and having regard to the fact that there was no waiver, the action of the plaintiff was barred by limitation and the appeal therefore should be allowed and the action of the plaintiff dismissed with costs throughout.

Yarma J.

I agree. The facts are very simple and in order to make my meaning dear I shall just narrate shortly as to what the suit was about. There was a registered money bond executed on 6th February 1922 under which payment was to be made by ten equal instalments of Rs. 75 and the last instalment was of Rs. 50 only. The first four instalments were paid and there is no difficulty with regard to that. The trouble sems to have begun from the fifth and sixth instalments. The fifth instalment was not paid at all, and while the term of the sixth instalment was running a sum of Rs. 25 was paid on 18th March 1928. The suit out of which this appeal arises was filed on 23rd March 1935. The whole question is whether the suit is barred by limitation and whether Article 75, Limitation Act; is applicable. The trial Court held that Article 75 read with Article 116 was applicable and that therefore the suit was barred by limitation. But the lower Appellate Court referring to the payment of Rs. 25 held that there was a case of waiver and therefore decreed the suit and allowed the appeal. Although the sum of Rs. 25 was paid on 18th March 1928 it is not clear from the document or the findings of fact as to which instalment it was paid for whether for the fifth or the sixth instalment, and the question is whether the payment of Rs. 25 and the acceptance thereof by the plaintiff amounted to a waiver by the plaintiff.

Now, it is dear on the authority of Keene v. Biscoe (1878) 8 Ch. D 201 that a part payment of this nature does not amount to a waiver. I shall deal specially with one aspect of Mr. Bose''s argument advanced on behalf of the respondents, an argument evidently based upon the dissentient judgment in Jawahar Lal Vs. Mathura Prasad and Another . The contention of Mr. Bose seems to be (if I have understood him rightly) that unless the suit is based on a default clause Article 75 does not apply, and, as this suit was filed after all the instalments fell due, it was not a suit based on a default clause and therefore Article 75 would not apply. This argument does not commend itself to me, because it presupposes that non-filing of a suit in the case of an instalment bond amounts to a waiver. But there are clear authorities on the point that non-filing of a suit does not amount to a waiver, for instance, I would refer to the decision in Kanhai Vs. Amrit, and the authorities cited thereunder. In Mohesh Chandra Banerji v. Prosanna Lal Singh (1904) 31 Cal. 83 Rampini and Pargiter JJ. held that where an instalment bond gives the creditor the right to sue for the whole amount due under the bond on default of payment of a single in. stalment, there is no waiver of that right by acceptance of part of an overdue instalment, or by receipt of interest. As a matter of fact it is doubtful whether this question of waiver could be raised by the plaintiff in this suit in view of the statements made by him in the plaint. The plaint said that all the instalments for which the plaintiff was suing had already been paid.

The next point to be considered is whether the decision in Ram Chandra Nayek v. Gharbharan Ahir (1930) 132 I.C. 112 expresses the correct view of the law on this point. That decision refers, as has been pointed out by my learned brother in his previous judgment, to an earlier decision in Ramsekhar Prasad Singh and Others Vs. Mathura Lal and Others, . In the ease reported in Ram Chandra Nayek v. Gharbharan Ahir (1930) 132 I.C. 112 it has been simply held that the case was covered entirely by the previous decision reported in the same volume at p. 835. The decision ignores the basic difference between the two suits that this Court was dealing with; in the latter decision the learned Judges were dealing with a money instalment bond while in the previous one they were (as will appear from the judgment) dealing with a mortgage bond. There was essential difference between these two cases one was governed by Article 132 and the other by Article 75, Limitation Act. The nature of the difference has been fully explained by the Privy Council in AIR 1932 207 (Privy Council) . The difference in the language employed in col. 3 of Articles 74 and 75, Limitation Act, has been pointed out in many cases. Col. 3 of Article 74 provides:

The expiration of the first term of payment as to the part then payable; and for the other parts, the expiration of the respective terms of payment;

whereas that of Article 75 lays down:

When the default is made, unless where the payee or obligee waives the benefit of the provision, and then when fresh default is made in respect of which there is no such waiver.

In conclusion I agree with the previous judgment of my learned brother that this appeal should be allowed with costs.

Manohar Lall J.

The question in this case is whether the claim of the plaintiffs to recover some only of the instalments provided by a registered instalment bond after two defaults had occurred is hit by the provisions of Article 75, Limitation Act. A large number of cases have been cited before us, some of which are difficult to reconcile. The confusion has arisen by applying the considerations, which are correctly applicable to mortgage instalment bonds, to ordinary instalment bonds also. In view of the recent decision of the Privy Council in AIR 1932 207 (Privy Council) it is now authoritatively established that where a mortgage bond provides for a due date of payment of the principal and also for the payment of principal and interest in certain instalments with a default clause the Article which applies is Article 132 and limitation would run not from the date of each default but from the due date, that is, when the principal amount is stipulated to be repaid although the plaintiff has an option to bring his suit earlier if he so chooses.

If this, is kept in view a good deal of the apparent contradiction in the decided cases: can be dissolved. Again, it must be kept in view that there is a well-defined distinction between Articles 74 and 75, Limitation Act. Article 74 applies to an instalment bond which does not contain any default clause and therefore in such cases the plaintiff is entitled, by the very terms of his bond, to sue only for such instalment as remains unpaid. No question of waiver of default can ever arise in such a case. But where the document provides that in the case of a default (which may be due to non-payment of one instalment or more than one instalment as provided in the bond) the obligee has the right to sue for the whole of the sum then remaining due, it is obvious that the promisor has a right eo instanti to pay the full amount and the obligee a corresponding right to receive and recover it. Article 75 provides in col. 3 how the starting point of limitation should be calculated in such a case; the starting point of limitation is in the first instance the date of the default but this starting point can be carried forward, only if the default is waived. Now waiver must obviously be a mixed question of law and fact in each case and therefore the Article of the Limitation Act under consideration cannot be looked into to decide when the default has been waived as was sought to be argued.

The weighty observations of Lord Denman and Pry J., quoted in the Order of Reference correctly indicate how this question should be determined. It is there laid, down that mere failure to sue or inaction by the creditor is not a waiver of the default, something else must be established to show that the promisee has waived his rights. For instance his acceptance of an overdue instalment or his communicating to the promisor for a consideration that he will not insist upon his rights which have already accrued to him on the default which has taken place, or, it may be that the promisor himself approaches the promisee or writes to him to stay his hands and not to proceed to demand the full amount and if the promisee agrees to such request, these will ordinarily amount to a waiver. In such cases it is clear that some overt act has been established from which the Court of fact can draw the conclusion that the obligee has waived the default.

In some cases it will be easy to decide this question by looking at the frame of the suit and to find from the plaint the manner in which the allegations have been made. When the plaintiff alleges, for in. stance, that all the previous instalments have been paid he proceeds on the footing that there has been no default and no waiver, and if his allegations are, in the course of the trial, found to be false, in my opinion, it is not open to the promisee to turn round and ask the Court to infer any waiver. Some High Courts have held that a mere acceptance of an overdue instalment cannot be treated as waiver of the default in the view that the promisee is merely taking what was due to him. But the Calcutta High Court has consistently held that an acceptance of an overdue instalment amounts in law to a waiver of the default. As this High Court has adopted the view that where there is a cursus curiae of the Calcutta High Court they will ordinarily adopt the same as a rule of law binding upon this Court. I am inclined to agree with the view that where the promisee has accepted an overdue instalment it must be held that he has waived his rights which accrued to him on that default and that the starting point of limitation would be from the next default, if not waived.

The same cases of the Calcutta High Court also lay down, in agreement with the decision of the English Courts, that an acceptance of a portion of the instalment which was overdue or the acceptance of the interest only on the overdue instalment cannot be held to be a waiver of the default. To the same effect are the observations of this Court in Mukhdeo Singh and Another Vs. Harakh Narayan Singh and Others, where Pazl Ali J. observed as follows:

Now there is a good deal of conflict in the decisions of the various High Courts in this country as to what would constitute a waiver and what would not. It has been held in several cases that mere abstaining from bringing a suit does not amount to a waiver and some of these oases were relied on by the learned advocate for the appellant. All those oases however were decided under Article 75, Limitation Act, and it is clear that if it is held in cases falling under that Article that mere abstention from suing amounts to a waiver that would nullify the main provision in that Article which is to the effect that the time would ordinarily begin to run from the date of the first default.

Now if these considerations are kept in view the whole scheme of the Act becomes quite clear and plain and Article 75 retains its place as a workable Article and is not rendered nugatory as has been held by some of the learned Judges of the Allahabad High Court; otherwise every instalment bond with or without a default clause would ''be covered by Article 74. Indeed it was so argued strenuously by Mr. Bose, the learned advocate for the respondent, but I do not agree with his contention.

I now turn to some of the cases of this Court cited before us, viz. Ramsekhar Prasad Singh and Others Vs. Mathura Lal and Others, and Ram Chandra Nayek v. Gharbharan Ahir (1930) 132 I.C. 112 . The latter case at p. 866 professes to follow the earlier case reported at p. 835 but does not give any reason in law of its own and therefore is no authority for deciding the question before us. The earlier case related to a set of circumstances in which the question was whether the mortgage bond payable-by instalments could be enforced only from the date of the default clause or from the due date as well and the learned Judges decided the case on the same lines as has now been decided by the Privy Council in AIR 1932 207 (Privy Council) .

The case however is no authority for the proposition that in cases where Article 75 is applicable the date of default unwaived should not determine the starting point of limitation. The cases relied upon by the learned Judges in this case at page 835, namely Ramsekhar Prasad Singh and Others Vs. Mathura Lal and Others, Narna v. Ammani Amma A.I.R (1917) . Mad. 951 and Ganga Bishun Marwari and Others Vs. Lala Raghunath Prasad, were noticed by the Privy Council in AIR 1932 207 (Privy Council) , but their Lordships of the Judicial Committee deliberately refused to pronounce any decision on that matter for the simple reason that the question as to the applicability of Article 75 did not arise before them. But Sir George Lowndes threw out an observation, which is very apposite, wherein he pointed out that Article 75 deals with special terms of its own and therefore the considerations which prevail in that Article should not be allowed to be used in construing Article 132 in order to find the starting point of limitation in suits to enforce mortgages. The exhaustive judgment of Sulaiman C.J. in Jawahar Lal Vs. Mathura Prasad and Another supports me in my view. In that case a very large number of cases have been reviewed. The learned Chief Justice took great pains to point out the distinction between Article 75 and Article 132.

It is true that the question of waiver was not specifically decided by the learned Chief Justice in that case, but he decided that very question specifically in Sukh Lal Vs. Bhoora, .

The learned advocate for the respondent relied strongly on the dissentient judgment of Mukherji J. at p. 129 but with great respect I am unable to agree with the reasoning which commended itself to that learned Judge. At p. 133 the learned Judge takes the view that the description in Article 75 "is not merely of the bond on ''which the suit is based but is also a description of the nature of the relief which is sought in the suit" and proceeds to fortify his conclusion by some examples. But the answer is that the wishes of the obligee under the bond with a default clause or the manner in which he frames his plaint are superseded by the fiat of the Legislature which ''has unmistakably laid it down that if you wish to recover money due or payable under an instalment bond with a default clause you must come within a prescribed period starting from the date of the first default unwaived. With the wisdom of this enactment this Court is in no way concerned. Again at p. 135 the learned Judge appears to lay down that it was open to the plaintiff to enforce or refuse to enforce the penalty clause provided for in the bond upon which he sues and therefore he could always get rid of the difficulty set up by Article 75. If this view of the learned Judge were correct there would be no distinction between Article 74 and Article 75, Limitation Act. I venture to answer that the creditor may well show the indulgence, which he wants to show to his debtor, by giving up his claim for the full amount due, for example he can limit his claim to a, smaller sum out of the remaining total then due but he must institute his suit within a stated period starting from the date when the default has occurred and not waived. I do not see any hardship to any body in this view. It is always open to a creditor to show unmistakably that he has in law and fact waived the default of his debtor.

The real question in all these cases is to find out from the document sued upon and the attendant circumstance as to when the default has taken place giving rise to a right to sue for the whole unpaid balance and once that is determined the suit must be instituted within the period fixed by Article 75 (see Section 3). In cases governed by Article 74, i.e. bonds without any default clause the bond itself provides for the payment of each instalment and therefore col. 3 provides that where each instalment has remained unpaid the period of limitation shall be three years--or, six years if the bond is registered-from the date when each instalment is unpaid. When we come to bonds with a default clause, the bond itself provides that where a default has happened the whole amount has become due. Therefore it is no longer in the option of the creditor, unless he waives the default, to stop the period of limitation under Article 75 from running.

Now, keeping these principles in view, the solution of the question in the present case is free from difficulty. The plaintiff framed his plaint upon the allegations that all the previous instalments were paid to him in full and that the overdue instalments were received by him along with damages at Rs. 13-8-0 and he alleged that the default took place by non-payment of the instalment which was due in March 1929 and therefore the suit instituted in March 1935 was within time. But these allegations have been found to be false. It has been established in the case that the fourth instalment was paid, though beyond time; but the fifth instalment was never paid. Now, in view of the decisions of the Calcutta High Court, which I have accepted as correct, although, the default occurred when the fourth instalment was not paid in time but the default was waived by the acceptance of that overdue instalment on 16th March 1926, and therefore the period of limitation for the suit did not begin in March 1926. Inasmuch as the fifth instalment was not paid at all the default took place in March 1927 and the present suit having been instituted beyond six years of that default the suit is beyond time.

But it was argued that as the plaintiff accepted the sum of Rs. 25 against the sixth instalment in March 1928 he must be held to have waived the previous default of the fifth instalment as well as the default of the sixth instalment. I have already held that the acceptance of a portion of an overdue instalment cannot amount in law to a waiver of the default and therefore the acceptance of Rs. 25 against the fifth or the sixth instalment (there is no evidence as to which overdue instalment was being paid in part) cannot be taken to have established that the default which had already occurred in 1927 and which again occurred in 1928 was ever waived. Whichever view is taken as to this payment of Rs. 25 the plaintiff gets no help. If this payment is attributed to the fifth instalment the fifth instalment still remains unpaid in full and the sixth instalment has never been attempted to be paid; this makes the suit beyond six years of the due date even of the sixth instalment. If, on the other hand, the payment of Rs. 25 is attributed to the sixth instalment the fifth instalment has never been paid and the payment itself keeps the sixth instalment still unpaid in full. The result is ''that the suit is still more beyond the period of limitation.

I therefore conclude (1) that in the circumstances of the present case it is not open to the plaintiff to ask the Court to decide that he has waived the default when his case has been all along that no default ever took place, (2) that if this question is open to be decided by us I am coerced to hold that the defaults committed in March 1927 and March 1928 have never been waived and (3) that the case in Ramsekhar Prasad Singh v. Mathura Lal A.I.R (1925) . Pat. 557 is correctly decided, but the decision is of no assistance in deciding the present case, (4) that the observations at page 129 of Mukhdeo Singh and Another Vs. Harakh Narayan Singh and Others, are absolutely correct, but the case in Ram Chandra Nayek v. Gharbharan Ahir (1930) 132 I.C. 112 has been incorrectly decided. For these reasons I agree that this appeal should be allowed and the suit of the plaintiff dismissed with costs throughout.