Jiban-Ram Ramchander vs Sagarmal Khemka

Wort, J.—This is the plaintiffs appeal in an action in which they claimed a sum of Rs. 7,144-11, as the balance of an account. The learned Subordinate Judge coming to the conclusion that the greater part of this account was barred by limitation gave judgment to the plaintiffs for a sum of Rs. 33-14-6.

The facts are these. Up to the year 1977, Sambat the defendant in this action was a member of a firm with his brother, but in that year separated from him. In that year a balance of the account was struck as between the plaintiffs and the two brothers and a sum of Rs. 4,100, being the principal and interest, was found to be due, and the defendant signed a roka for the amount taking upon himself alone the liability. Thereafter the defendant himself had a number of transactions with the plaintiffs which resulted, according to the plaintiffs'' case, in the sum which I have stated to be due on the balance of accounts.

Before the learned Subordinate Judge a number of questions were raised by the defendant. He denied the roka, he denied that the sum on the roka was due. This question has been decided by the learned Subordinate Judge against the defendant and no question thereon arises before us. The other substantial point raised by the defendant in the action was that the greater part of the claim was barred by limitation.

The plaintiffs met that by contending first that there had been an acknowledgment within the meaning of Section 19 of the Limitation Act, and secondly by alleging that there had been an appropriation in such circumstances as to save limitation. The first matter was decided against the plaintiffs as was the second.

The only question which comes up for our determination is whether there has been an appropriation by the plaintiffs saving limitation. The law in this respect is clear and is provided by Section 60 of the Contract Act. As between a creditor and debtor, the debtor in making payments may appropriate the payment in what manner he likes and failing such appropriation the creditor may appropriate. It is important to note that in addition he may appropriate payments towards debts which would otherwise be barred by limitation.

The learned Subordinate Judge in coming to a conclusion against the plaintiffs has arrived at his decision partly on the evidence before him and partly upon his judgment on what the accounts themselves showed after an analysis of those accounts as they were produced before him. (After discussing the evidence the judgment proceeded). It is clear law, and there is abundant authority in support of the proposition, that a creditor may appropriate even to the last moment. Now assuming for the moment that the balance has been struck as between the advances made and the sums paid on account of those advances subsequent to the year 1977 Sambat, there was nothing in law to prevent the plaintiffs, before they brought the suit or even at a later date, to alter those books in order to make the appropriation against the earlier debt. Further in this connexion, as I have indicated, one of the contentions of Mr. Kurshed Husnain was that the roka of Rs. 4,100 constituted as separate debt and a separate transaction. From the books as they appear, it is clear that what has happened is this. In the year 1977 Sambat the plaintiffs taking the sums owing to them by the defendant struck the balance at Rs. 3,743-3-0 which adding the interest, made a total of Rs. 4,100.

There has been a mistake in the books by not including the sum of Rs. 356-13-0 as the amount of interest but in the books themselves this correction was subsequently made. Now without the interest the balance of Rs. 3,743-3-0 was carried forward to the year 1978 Sambat. In that year advances amounting to Rs. 1,030 were made. There was also a payment of a like amount by the defendant. The balance of those amounts together with interest left a debit balance against the defendant of Rs. 4,672-3-0 and that again was carried forward to the year 1979 and a similar procedure adopted in making up the account for that year. What is clear from that is that the plaintiffs had treated this as a running account. In those circumstances there is no question of appropriation.

It is assumed as a matter of law that the payments would go towards the earlier items in the account. But assuming for the moment as is contended by Mr. Khurshed Husnain that this did not constitute a running account, the method of accounting adopted by the plaintiffs quite clearly amounts to an appropriation in law and as they have appropriated as is clearly seen from the accounts, the debt which would otherwise be barred by limitation has been saved from limitation and the plaintiffs are entitled to recover the balance.

The only question that remains is the question of interest. The learned Subordinate Judge has come to the conclusion that by agreement interest was payable at the rate of 9 annas per cent per month, he has also decided that compound interest was payable. As regards the latter Mr. Sushil Madhab Mullick on behalf of the plaintiffs gives up his claim.

In the result therefore the plaintiffs are entitled to the balance of their account as regards the principal amounting to Rupees 4,133-14-6 together with simple interest at the rate of 9 annas per cent per month up to the date of the plaint and at the rate of 6 per cent per annum thereafter up to the date of realization.

The appeal must therefore be allowed with costs throughout. The cross appeal is not pressed and it is dismissed.

Fazl Ali, J.

I agree.