Kandaswami Mudaliar vs Thevammal

Venkataramana Rao, J.—The suit is upon a promissory note dated 27th June, 1923. The question is whether it is barred by limitation. On

the 27th March, 1926, a payment of Rs. 85 towards interest was made on the back of the note and on the 23rd July, 1928, a promissory note

(Ex. B) was executed in favour of the plaintiff for Rs. 200. It is alleged by the plaintiff that the said promissory note was towards a portion of the

interest due under Ex. A. It has been found concurrently by both the lower Courts that the said promissory note was executed only towards

interest due under Ex. A and therefore the suit claim is not barred by limitation and decreed the plaintiff''s claim. In second appeal it is contended

for the defendant that the view of the lower Courts is wrong. It is urged before me by Mr. Periasami Gounder that the suit promissory note, Ex. B,

does not refer to the suit debt at all but purports to be for cash received and that it does not appear from the note that the said sum of Rs. 200 was

paid towards interest and therefore the conditions of Section 20 are not fulfilled. Payment may be made in any form and a promissory note can be

given by way of payment. Under the proviso to Section 20 before a payment by way of interest or principal can save limitation it is essential that

the acknowledgment of the payment appears in the handwriting of or in a writing signed by the person making the payment. Does the said pro-note

operate as an acknowledgment of payment of interest? Before the amendment of the present Limitation Act, so far as the payment of interest is

concerned, it need not have been evidenced by writing, but it is only in the case of part-payment of principal, the fact must appear in the

handwriting of the person making the payment. But this distinction has now been abolished. Before the amendment in the case of the part payment

of the principal, there has been a conflict of opinion in this High Court as regards the conditions necessary for the fulfilment of the proviso. In

Ankamma v. Rama ILR (1883) 6 Mad. 281 Innes and Kernan, JJ., held:

All that is required by Section 20 of the Limitation Act of 1877 is that the facts of the payment should appear in the handwriting of the person

making the same. It is not necessary that the appropriation of the payment to principal should appear in writing. That may be made to appear

otherwise.

But in Mackenzie v. Thiruvengadathan ILR (1886) 9 Mad. 271 a different view was taken. In that case Muthuswamy Aiyar and Brandt, JJ.,

observed:

There is, no doubt, some parole evidence as to the payment, but the Act requires that the fact of payment, and that such payment was a part-

payment, should appear in writing signed by the debtor or his agent authorised to make the payment.

But the decision in Ankamma v. Rama ILR (1883) 6 Mad. 281 was not noticed in this case. In Muthiah Chettiar v. Kuttayan Chetty (1917) 6

L.W. 790 the part-payment was by means of a hundi, just as it was by means of a promissory note in this case, and Abdur Rahim and Oklfield,

JJ., held that it would not satisfy the requirements of Section 20 of the Limitation Act as the hundi did not indicate that the payment made by means

of the hundi was towards part-payment of the debt. The learned Judges observed:

On this point, there is a decision of this High Court reported in Mackenzi v. Thiruvengadathan ILR (1886) 9 Mad. 271 of Muthuswamy Aiyar and

Brandt, JJ., confirming the judgment of Parker, J., to the effect that the writing must show that the payment was made towards the debt in question

and this seems to us to be the interpretation warranted by the language of the proviso, which speaks of the payment, referring apparently to part-

payment of the principal of the debt; that is to say, there must appear in the payee''s writing an endorsement that the payment was in the nature of

and intended to be part-payment of the principal.

And they prefer to follow Mackenzie v. Thiruvengadathan ILR (1886) 9 Mad. 271 in preference to in Ankamma v. Ramai, Soumia Narayana

Aiyangar v. Alagirisami Aiyangar (1912) M.W.N. 754: 11 M.L.T. 429 a payment of Rs. 700 was made towards three promissory notes, but it

does not appear whether it was made towards the principal or interest, or principal and interest of all or any, and if so which, of the pronotes sued

on. The finding returned was that Rs. 700 was paid towards the amount due under the pronotes sued on but that there was nothing to show

whether the payment was towards principal only or towards principal and interest. The learned Judges, Abdur Rahim and Sundara Aiyar, JJ., held:

The payment was towards the discharge of the debt due under the three promissory notes. It must be either that the interest was intended to be

discharged or the principal, or principal and interest both. If the payment was towards interest, no writing is necessary, and mere payment will be

sufficient to save limitation If it was towards principal, then in that case there is the entry in the handwriting of the man who made it and that satisfies

the requirements of Section 20.

This decision seems clearly to indicate that it need not appear in writing that the payment was towards part-payment. This view is in direct

conflict with the view expressed both in Mackenzie v. Thiruvengadathan ILR (1886) 9 Mad. 271 and Muthiah Chettiar v. Kuttayan Chetty (1917)

6 L.W. 790 but none of these two decisions are noticed in the above judgment though Abdur Rahim, J., was a party to Muthiah Chettiar v.

Kuttayan Chetty (1917) 6 L.W. 790 Kumaraswamy Sastri, J., has followed the decision in Soumia Narayana Aiyangar v. Alagirisami Aiyangar

(1912) M.W.N. 754: 11 M.L.T. 429 in Sankaram Aiyar v. Thiraviya Nadan (1919) 51 I.C. 240. I find also that the decision in Soumia Narayana

Aiyangar v. Alagirisami Aiyangar (1912) M.W.N. 754: 11 M.L.T. 429 was cited with approval by Varada-chariar and Burn, JJ., in Lakshmi

Naidu v. Gunnamma (1934) 68 M.L.J. 470: ILR 58 M. 418 where the earned Judges observed:

Where the payment is evidenced by a writing which is signed by the person making the payment, it makes no difference whether the payment is

held to be for interest or for principal or for both.

In Ambrose Summers, an Insolvent, In re ILR (1896) 23 Cal. 592 the decision in Ankamma v. Rama ILR (1883) 6 Mad. 281 was followed by

Sale, J. The ground on which he rested his decision was that there is a difference in the language in regard to payment of interest and principal in

the section, that the payment of interest must be ''as such'' whereas the part-payment of principal need not be 5as such''. In Kedar Nath Mitra v.

Dinabandhu Saha ILR (1915) 42 Cal. 1043 Jenkins, C.J., seems to be inclined to the view expressed in Ankamma v. Rama ILR (1883) 6 Mad.

281 and held if a cheque be delivered and received as such by the payee it would satisfy the provisions of Section 20 as the fact of payment is

evidenced by the writing of the debtor Hem Chandra Biswas v. Puma Chandra Mukherji ILR (1916) 44 Cal. 567 has taken a similar view. The

decision in Sakharam Manchand v. Keval Padamsi ILR (1919) 44 Bom. 392 follows the decision in Ankamma v. Rama ILR (1883) 6 Mad. 281

and emphasises the absence of the words ''as such'' in the section in relation to the part-payment of principal. Shah, J., observes:

All that is necessary, in my opinion, for the creditor to prove in such a; case is that the fact of the payment appears in the handwriting of the person

making the same and further that the payment is really in part satisfaction of the principal of a debt. If these two facts are established, the creditor is

entitled to have the benefit of the saving provisions of Section 20 on the question of limitation.

The decision in M.B. Singh & Co. v. Sircar & Co. ILR (1929) 52 All. 459 also dissents from the view taken in Mackenzie v. Thiruvengadathan

ILR (1886) 9 Mad. 271 but that decision like the one in Ambrose Summers, an Insolvent, In re ILR (1896) 23 Cal. 592 lays stress on the

absence of the words ''as such'' in the proviso with reference to part-payment of the principal. No doubt all these decisions relate to the

construction of the proviso with reference to part-payment of principal before the Limitation Act was amended but the amendment now makes no

distinction between the payment towards interest or payment towards principal except the change in the language by substituting

''acknowledgment'' in the place of ''the fact'' and the acknowledgment need not necessarily be in the handwriting of the person making the payment.

It is enough if it appears over his signature. There is a recent decision of the Lahore High Court in Jagtu Mai v. Chafanji Lal ILR (1933) 14 Lah.

580 wherein Jai Lal, J., considers the question, agree with the view expressed in Kedar Nath Mitra v. Dinabandhu Sana ILR (1915) 42 Cal. 1043

and M.B. Singh & Co. v. Sircar & Co ILR (1929) 52 All. 459 and dissents from the view taken in Mackenzie v. Thiruvengadathan ILR (1886) 9

Mad. 271 and in regard to the amendment he makes the following observation at page 583:

In my opinion the amendment of the proviso has been made in favour of the creditor who is now able to prove the writing of the debtor not only

relating to the actual fact of the payment but also to the acknowledgment of the fact of payment"".

The question now is, does the proviso require that the writing itself must indicate that the payment was made towards interest or principal ?

According to the plain language of the proviso what is required is acknowledgment of ''payment''. Whether the said payment is payment towards

interest as such or principal can be proved by other evidence. So far as part-payment of principal is concerned, as I have already shown before

the amendment the preponderance of judicial opinion has been towards the view that the writing need not show that payment was towards

principal and this in my opinion is the sounder view. The amendment has not made any alteration in the law. The question is if the payment was

made towards interest, should the writing show that the payment was made towards interest. I do not think the legislature intended to make any

differentiation regarding interest. No doubt evidence will have to be given according to one view, which expresses again the preponderance of

judicial opinion in this respect, that the payment was made towards interest as such though according to another view a payment on general

account might be treated as payment of interest as such. But any way the payment must be towards interest as such according to the plain language

of Section 20(1). If the scheme of the Act is taken into consideration, it does not appear to be the intention of the legislature that the writing

evidencing the payment should also indicate that the payment is towards interest or principal. Section 19 deals with an acknowledgment of liability

as such in respect of any property or right or debt. Section 20 is intended to provide by way of statutory declaration that from the fact of payment

of interest or part-payment of principal of a debt you can imply acknowledgment of liability in respect of the debt. If it was intended that the writing

also should specify that the payment was towards interest or principal of a debt, Section 20 is superfluous as the writing will operate as an

acknowledgment u/s 19 of the Limitation Act. I am therefore of opinion that the writing need not specify that the payment was made towards

interest or principal. That any payment was made towards a particular debt evidence can always be given. Both the courts have concurrently found

in this case that the promissory note (Ex. B) was executed towards interest as such on the suit note (Ex. A). Therefore the suit claim is not barred

by limitation. In the result the second appeal fails and is dismissed with costs. Leave granted.