Lakshumanan Chetty and Others vs R.M.K.S. Sadayappa Chetty and Others

The first defendant was a minor. There was a suit for dissolution of the firm, and in that suit a Receiver was appointed under order of the

Rangoon Court in these terms,--"" It is ordered that M.A.R.A.R. Ramanathan Chetty be, and he is hereby appointed Receiver to take charge of the

property of the Chetty firms of M.L.R.M.A. and A.L.A.S.R.M. pending the decision of this suit for dissolution of partnership with power to collect

outstandings and do all things necessary for the realization and preservation of the assets of the said firms."" The question we have got to decide in

the appeal is whether an acknowledgment of a debt due by the firm under dissolution made by the Receiver was valid.

It is contended that Section 19 of the Limitation Act is limited, so far as the signing of an acknowledgment by agents is concerned, to agents

appointed by an act of the debtor himself, or in other words, by a contractual act. Explanation II does not cover the case of an agent who is

otherwise appointed. Explanation II says, '''' For the purposes of this section ''signed'' means signed either personally or by an agent duly

authorized in this behalf."" Reference is made to Section 21 which deals with the case of a person under disability, and lays down that the

expression ''agent duly authorized in this behalf in Section 19 shall include ''his lawful guardian, committee or manager, or an agent duly authorized

by such guardian, committee or manager to sign the acknowledgment.'' Section 21 is a new section which has been introduced, as is well-known,

in view of conflicting decisions as to whether Section 19 covers the case of an acknowledgment made by a guardian. The argument advanced by

Mr. K. Srinivasa Aiyangar is to the effect that although Explanation II does not say by an agent duly authorized by him, that is, by the person

sought to be bound by the acknowledgment, yet it must be taken to mean that in as much as all other cases are dealt with by Section 21. Section

21 however only says that, in the case of a person under disability, ''agent'' shall include his lawful guardian, etc. It does not lay down that there can

be no other agent duly authorized to make acknowledgment in the case of persons under disability. The words ''by an agent duly authorized in tills

behalf in Explanation II in Section 19 was in force before the enactment of Section 21, and we cannot accept the contention that by Section 21 the

legislature intended in any way to narrow the scope of Section 19. It is unnecessary for us to say whether Section 21 has widened its scope or not,

or it has merely explained what was contained in Section 19 itself.

The authorities seem to be uniform against the appellants'' contention. The matter is fully dealt with by a Full Bench of the Bombay High Court

consisting of the Chief Justice, Sir Lawrence Jenkins, and other learned Judges in Annapagauda v. Sangadiyyapa ILR (1901) Bom. 221, where it

is laid down that the agent in Explanation II, Section 19 need not derive his authority from any contract. That was the case of a guardian and it was

ruled that the guardian appointed under the Guardian and Wards Act was an agent within the meaning of Explanation II, if the terms of his

appointment gave him authority to make acknowledgments. English cases are then noticed and the statement of law on the subject as given by

Lord Westbury in Chinnery v. Evans (1864) 11 Hou Lord cas 115, is cited to show that the law in England is also to the same effect. In Beti

Maharani v. The Collector of Etawah ILR (1894) All. 198 their Lordships of the Privy Council upheld an acknowledgment made by the Court of

Wards as being operative u/s 19 and that decision must be taken to be based on the principle that the agent mentioned therein may be one

appointed under a statute and need not be appointed under contract. There are similar decisions of this Court in Kondamodalu Linga Reddi v.

Alluri Sarvarayudu ILR (1910) Mad. 221, of the Calcutta High Court in Rashbehary Lal Mandar v. Anand Ram ILR (1915) Cal. 211 and of the

Allahabad High Court in Ram Charan Das v. Gayd Prasad ILR (1908) All. 422. We may mention that in the Calcutta case the question raised

with reference to an acknowledgment made after the new Limitation Act had come into force. The learned Judges however proceeded not on the

words of Section 21, but of Section 19. We may also mention that there is audictum of Kumaras wami Sastri, J. of this Court, in Venkataramiah

Pantulu v. Subramaniam Filial (1915) 16 M.L.T. 489 supporting the same view, and there is a very recent decision of the Bombay High Court

reported in Abdulalli v. Banchadlal (1916) 19 Bom. L. Rap. 89 which proceeds on the same view of the law.

Some reliance was placed on behalf of the appellant da Whitly v. Lowe (1858) 25 Beavan, 421 but that case is distinguishable inasmuch as

there the Receiver was only authorized to get in the assets of the partnership and to pay the assets realized into Court.

We hold on the authority of the cases referred to that a receiver may be an agent authorized to make an acknowledgment within the meaning of

Section 19, Explanation II. The language is general enough to include an agent appointed either by statute or by Court, if he is authorised under the

law to make acknowledgments.

The next question in this connection is whether the Receiver appointed in this case had, in fact authority to make an acknowledgment. If he had

such authority, it must have been under the power ''to do all things necessary for the preservation of the assets of the said firm.'' It is strongly urged

on behalf of the appellant that making an acknowledgment cannot be for the preservation of the assets of the firm. We cannot however accept this

contention. We can well imagine cases in which an acknowledgment of a debt may be a necessary act to save the estate from loss. This is

recognized in one of the cases already referred to--Kondamdalu Linga Reddi v. Atturi Sarvarayudu ILR (1910) Mad. 221 and in support of the

interpretation of the order, Exhibit I, we may point to the fact that the Receiver was appointed not of a firm which had already been dissolved but

of a going concern. We have no hesitation in holding that the act of the Receiver in this case, if it was necessary for the preservation of the assets of

the firm, would be within the scope of Explanation II of Section 19.

The Subordinate Judge says that ""in the course of such management when the creditors pressed for payment or threatened to sue, he averted

the evil by acknowledging receipts and making part-payments."" It does not appear however where he got this from, for none of the parties before

us have been able to point to any evidence which bears this out. The point does not seem to have been properly understood in the lower Court.

We think it therefore necessary that we must have a finding whether at the time the acknowledgments were made by the Receiver, such

acknowledgments were acts necessary for the preservation of the Estate, that is to say, the plaintiffs ought to satisfy the Court that the Receiver in

making the acknowledgments was in the circumstances of the time acting bona fide for the preservation of the assets of the firm.

The Subordinate Judge will return the finding within three months. Fresh evidence may be adduced. Ten days will be allowed for filing

objections.

We make no order for costs at present.

[In compliance with the order contained in the above judgment, the Temporary Subordinate Judge of Ramnad at Madura submitted that the

acknowledgments by the receiver were acts necessary for the preservation of the estate, that is for the preservation of the estate.]

In Appeals Nos. 92 and 93 of 1915.

We accept the finding and dismiss the appeals with costs.

In the memorandum of Objections in Appeal No. 93 of 1915.

With reference to the Memorandum of Objections, the decree of the Temporary Subordinate Judge will be modified by allowing interest at six

per cent. per annum on the amount decreed from the date of the plaint to the date of payment.