Ramakkal and others vs Chinnappa Gounder

Ramamurti, J.—This Letters Patent Appeal is preferred against the judgment of Ramakrishnan, J., in S.A. 1076 of 1959 and the main question that arises for determination is one of limitation. The brief facts of the case are: One Kuttia Goundan, the paternal grandfather of Sinnappa Goundan (the defendant in the suit) executed a Will on 11th September, 1944, under which he conveyed the properties specified in the E Schedule attached to the Will to Sinnappa Goundan. As he was then a minor his mother, Kaliammal, was appointed as the guardian to manage the properties till he attained majority. Kuttia died in 1947 and even though the Will took effect, there was considerable opposition and obstruction from the other legatees under the Will of Kuttia aforesaid in the matter of Kaliammal taking possession of the properties bequeathed to the minor, resulting in numerous criminal and civil proceedings in the lower Courts and in this Court. Kaliammal could not obtain possession of the properties and she was obliged to file the suit O.S. No. 74 of 1948 in Sub Court, Coimbatore, to establish the rights of her minor son under the Will. A Receiver was appointed in respect of the minor''s share and the Receiver deposited the rent in the Court but Kaliammal did not get into her hands any income from out of the estate. In order to meet the heavy cost of several Court proceedings and to meet the family expenses and the expenses of education of her minor son, Kaliammal was obliged to sell away her jewels and her personal stridhana properties and also borrow several sums of money for preserving the estate and obtaining possession thereof. She executed four promissory notes marked as Exs. A. 1 to A. 4 in favour of one Perichianna Gounder (the appellants herein being his legal representatives) borrowing several sums of money. In the present appeal we are only concerned with the liability under the promissory note Ex. A.3 dated 27th June, 1950. Under Ex. A.1 dated 1st March, 1949, Kaliammal borrowed from Perichianna a sum of Rs. 500 for litigation expenses. Under Ex. A-2, dated 5th July, 1949, she borrowed a further sum of Rs. 2000 for litigation expenses and education and maintenance expenses. On 27th June, 1950, she executed the promissory note in question, Ex. A. 3, for a sum of Rs. 4000, Rs. 2726, representing the amount due under the promissory notes, Exs. A.1 and A.2 and the balance representing receipt in cash. She executed another promissory note Ex. A.4 dated 5th December, 1950, borrowing a sum of Rs. 1000 for litigation and maintenance expenses. It may be mentioned here that all the promissory notes were registered.

Perichianna filed the suit O.S. No. 243 of 1953 on the file of the Sub Court, Coimbatore (O.S. No. 70 of 1956, Sub Court, Erode) on 20th July, 1953, for recovery of Rs. 5822-11-0 representing the principal amounts due under the two promissory notes, Exs. A.3 and A.4 and interest thereon. So far as the loan due under the last promissory note, Ex. A.4, was concerned, there was no question of limitation and the suit was decreed in all the Courts in respect thereof. As regards the claim under Ex. A.3, the plaintiff relied upon an acknowledgment alleged to have been made by Kaliammal on 4th September, 1950, in I.A. 1892 of 1950 in O.S. No. 74 of 1948 aforesaid. The trial Court held that the averments in the affidavit were not sufficient to constitute a valid acknowledgment in law and so dismissed the suit on the ground of limitation. On appeal the learned District Judge came to a contrary conclusion and decreed the suit. The defendant preferred S.A. No. 1076 of 1959 and Ramakrishnan, J., held that the averments in the affidavit of Kaliammal were very vague and indefinite and did not satisfy the requirements of a valid acknowledgment within the meaning of S. 19 of the Indian Limitation Act. The learned Judge took the view that the suit was governed by Art. 57 of the Limitation Act and was barred having been filed more than 3 years after the date of Ex. A-3. Learned Counsel for the appellant did not canvass the correctness of the view taken by the learned Judge on the question of the sufficiency of the acknowledgment, with the result that the question of limitation has to be determined without any intervening acknowledgment.

From the judgment it appears that the main point that was debated before the learned Judge was whether the suit would be governed by Art. 57 as contended by the defendant or by Art. 120 as contended by the plaintiffs. The learned Judge held that Art. 116 of the Limitation Act which prescribes a period of six years in the case of registered documents would not apply in the view that the suit was not based upon the registered promissory note as such, but it was to enforce his right of subrogation and the claim for reimbursement of the guardian as against the estate of the quondam minor. With great respect to the learned Judge, we are unable to concur with him as his view of the true scope and character of the suit and the nature of the reliefs prayed for therein is incorrect. If we may say so, that is partly due to the fact that Counsel on both sides readily assumed Art. 116 had no application to the suit claim and focused their attention only upon the applicability of Art. 57 or Art. 120.

To have a precise and correct idea of the true character and scope of the suit, it is necessary to advert to the findings of the Courts below. The relevant portions in the plaint are:

Para. 6 "Kuttia Goundar died on 23rd September, 1947. After his death the Will dated 11th September, 1944, became operative and Kaliammal took possession of the properties for and on behalf of the defendant and was in management. But some of the legatees especially the testator''s grandsons, Krishnaswami Goundar and Venkataraya Goundan and their mother Pottaiyammal began to interfere with the minor''s peaceful possession and enjoyment of the properties. Kaliammal resisted such interference. These actions resulted in various criminal actions before police and Magistrates. Further they created a usufructuary mortgage over all the properties covered under the Will. They trespassed into some of the items and took forceful possession.

On account of all these high-handed action of Krishnaswami Goundan and others with the help of some influential local people, Kaliammal had no option but to file a suit for the defendant''s rights and peaceful enjoyment.

Accordingly, she filed a suit in the Sub-Court, Coimbatore, in O.S. No. 74 of 1948 for declaration, injunction and for other reliefs. The properties allotted to the defendant were described in Schs. E-1 and E-2 in that said suit. She also filed interlocutory application for interim injunction and for appointment of Receiver. A Receiver was appointed for the properties in Sch. E-1 in O.S. No. 74 of 1948. Receiver took possession of the said properties, leased them, realised the rent and deposited the rent in Court. The defendants 1 to 3 in the said O.S. No. 74 of 1948 were allowed to remain in possession of the properties described in Sch. E. 2 on furnishing security for mesne profits. Thus Kaliammal was not getting anything out of the estate from Kuttia Goundar''s death.

The suits and the interlocutory applications are stoutly contested. There were other numerous collateral proceedings which were fought out in a number of Courts including the High Court. For these reasons, Kaliammal had to incur an expenditure of Rs. 20,000. As her husband, the 4th defendant in the above suit O.S. No. 74 of 1948 fell out with Kaliammal immediately after filing the suit O.S. No. 74 of 1948 he was not helping her in any manner. On the other hand he colluded with other defendants in that suit.

Kaliammal had to sell all her jewels and her own stridhana property to meet the expenses of the litigation. She had to borrow for the necessary expenses of litigation from various persons including the plaintiff......

On 20th June 1950 she received a cash of Rs. 600 and on 27th June 1950 she received a further cash (amount) of Rs. 674 from the plaintiff. Consolidating the above prior loans and also cash received as above, Kaliammal owed Rs. 4000 to plaintiff on 27th June 1950. In evidence of the same and as a collateral security she executed a registered promissory note for Rs. 4000. The said sums were borrowed for the litigation expenses as clearly......

These litigations were necessary for recovering the properties from trespassers and also for establishing the title of the defendant. But for such litigation the defendant would have lost most of the properties and would have been put to irreparable loss. The defendant was benefited by such litigations. Litigations were necessary and beneficial to defendant. Therefore, the debts borrowed by Kaliammal are binding on the defendant and his estate and the defendant is liable to pay them from out of his estate......

Besides if accounts were taken between the defendant and his mother Kaliammal, it would be found that she would be entitled to reimbursement to a very large amount than the suit claim. The plaintiff is also entitled to be subrogated to her right and recover the said amount from out of the suit amount. That Kaliammal defendant''s mother who executed the pro-notes is now dead......

Thus the suit is filed on the original cause of action and the debts.

As stated above the suit debts were borrowed from the plaintiff and suit pro-notes were executed at Puduvaliampalayam hamlet of Kalingayam, Gobichettipalayam and within the jurisdiction of this Court...

The cause of action for the suit arose on 1st March, 1949, 5th July 1949, 20th June 1950, 27th June 1950 and 5th July 1949 at the Puduvalliampalayam hamlet of Kalingayam village, Gobi Taluk, within the jurisdiction of this Hon''ble Court.

The value of the suit for purposes of court-fee and jurisdiction is Rs. 5823-11-0.

Particulars of valuation

Rs.

A

P.

Principal amount on the pronotes dated 27th June 1950

4000

0

0

Interest thereon at 5�% p.a. from 27th June 1950 to 20th July 1963

678

5

4

Total

4678

6

4

Court fee payable thereon is

389

15

0

Principal amount due under the debt evidenced by the pronote dated 5th December 1950

1000

0

0

Interest thereon at 5�% p.a. from 5th December 1950 to 20th July 1953

144

5

8

Total

1154

5

8

Court fee payable thereon is:

127

7

0

Total valuation is

5822

11

0

Total Court fee paid is

517

6

0"

It may be mentioned that Kaliammal was dead even at the time when the suit was filed. It is not disputed before us that the suit as framed embraces the creditor''s claim or right to reach the minor''s estate on the basis of the right of subrogation by stepping into the shoes of the guardian who will be entitled to a reimbursement from the estate in respect of moneys borrowed by her and utilised for the benefit of the estate. Even though some attempt was made in the trial Court to make out that Kaliammal will not be entitled to any claim of reimbursement from the minor''s estate either on the ground of her mismanagement or on the ground that the moneys alleged to have been borrowed by her were not utilized for the benefit of the estate, the learned trial Judge had no hesitation in holding that there was absolutely no substance in this contention, and that Kaliammal was clearly entitled to a right of reimbursement from the defendant''s estate. The trial Court found that he was taking every conceivable step for recovering possession of the property, that she conducted the litigation, that in connection with the expenses of the litigation and the maintenance and education expenses of the minor she had to sell her jewels and also her stridhana properties. The learned trial Judge also adverted to the important fact that on account of the trespass and the obstructive attitude pursued by the enemies of the family, admittedly, upto the moment of her death, she did not and could not realise any income or profits from the defendant''s estate, and that on a proper taking of accounts Kaliammal would undoubtedly be entitled to claim large sums of money by way of reimbursement. On appeal, the learned District Judge affirmed this view of the learned Subordinate Judge in view of the overwhelming documentary evidence and the admissions of the defendant himself. Indeed both before Ramakrishnan J., and before us, Sri K. Rajah Iyer, the Learned Counsel for the respondent did not canvass this finding that on a proper account taking Kaliammal would be entitled to recover large sums of money by way of reimbursement, at any rate, sufficient to cover the claim involved in the present litigation. Before we proceed further we may mention that no objection was raised that as Kaliammal was not a party to the suit, the creditor would not be entitled to work out the right of subrogation in the present suit. It is presumably due to the fact that Kaliammal was dead at the time of the suit and the defendant himself is her legal representative.

From the portions of the plaint extracted above it will be clear that the plaintiff has filed the suit to work out the right of subrogation based upon the guardian''s claim and right of reimbursement. It must be noticed that in such a suit all that the creditor has got to aver and establish is that his claim against the guardian for moneys advanced is subsisting, alive, and had not been discharged by payment or otherwise and that as between the guardian and the minor the guardian would be entitled to a claim for reimbursement. It is true that if the creditor''s claim against the guardian is either barred by limitation or for any reason unenforceable the creditor cannot work out his right of subrogation merely because the guardian may have a well-founded claim for right of reimbursement. Equally it is clear, that, even though the creditor''s claim against the guardian may be subsisting and alive the creditor cannot reach the estate if the guardian either on account of her mismanagement or wrongs committed by her is not entitled to a claim for reimbursement. In other words, the creditor must satisfy both the conditions concurrently, i.e., (a) the claim of the creditor must be subsisting and enforceable against the guardian ; (b) the guardian should be entitled to a right of reimbursement. If the true scope of the suit of the creditor in working out the right of subrogation is appreciated it will be seen that the distinction between an action on the debt or on the original cause of action and an action on the promissory note is of no significance. It is unnecessary to refer to the prior decisions dealing with the machinery and the nature of the suit for working out the right of subrogation of the guardian and as to whether the creditor can obtain relief against the minor''s estate under the doctrine of indirect recourse in the very same suit or whether he should file two separate suits. The question is now concluded by the Judgment of the Federal Court in AIR 1949 218 (Federal Court) At page 226 Fazl Ali, J., put the matter thus at page 226:

There may however be cases in which the minor''s needs have to be met and in such cases, the third principle enunciated by the Privy Council can come into play, and that is to say, the manager or guardian can show that the estate ought to bear the burden which he had taken upon himself. In such cases, by the principle of subrogation, the creditor might be allowed to stand in the shoes of the guardian and invoke the latter''s right to reimbursement out of the minor''s estate. That right must usually be subject to the state of accounts between the guardian and his ward.

Mukherjea, J. has dealt with the same aspect in greater detail pointing out that there is no necessity for the creditor to file two suits and that he can obtain relief in the same suit. The matter was put thus at page 237-238 :

When the guardian himself is party to the contract in his capacity as guardian, a suit can certainly be instituted against him and a decree obtained. But simply because the defendant is sued in his capacity as guardian, the estate of the ward cannot be proceeded against in execution of the decree obtained in such suit. In order to bind the minor''s estate, the minor must also be made a party to the suit properly represented. Now on what basis can a decree be made in such, a suit making the minor''s estate liable for the money borrowed by the guardian? The minor being incapable of being a party to a contract there could be no direct contractual liability established against him or his estate. But as the guardian was personally liable under the contract, he would be entitled to reimbursement from the minor''s estate under the rule of Hindu Law if the borrowing was for necessity or benefit of the minor. The creditor in such circumstances can invoke the equitable doctrina of subrogation in his favour and claim to be placed in the position of the guardian for enforcement of the latter''s right of reimbursement against the minor''s estate. Instead of there being two suits, one by the creditor against the guardian and the other by the guardian against the miner, both the reliefs may be worked out in one and the same suit and thereby multiplicity of litigation could be avoided. This is the only proper way in which the Hindu Law rights of the guardian in the matter of contractual debt for necessity or benefit of the minor could be given effect to in perfect consonance with the well established principles of the law of contract and the ordinary rules of procedure in personal actions. The application of this rule would be just and equitable to the minor also. As the creditor stands only in the shoes of the guardian and can claim the rights of indemnity which the latter can assert against the minor''s property, It would be open to the minor to show that the guardian himself was in default and would not be entitled to any indemnity if accounts were properly taken......When the guardian is the maker of the note and he excludes his personal liability, no suit, in my opinion, could be instituted either against the guardian or the infant as explained above; whether a suit would lie on the original consideration is another matter, and if it could be brought, the same principles would apply. The position therefore is that in case of contractual debts borrowed either on simple bonds or promissory notes the creditor can have recourse to the minor''s estate indirectly on the principle of subrogation, when the guardian has the right of indemnity against the estate of the ward ; and he would have the right of direct reimbursement out of the properties of the infant, only when the debt is for necessaries supplied to the infant. In this way can effect be given to the personal law of the Hindus in respect of the liability of a minor''s estate for debts contracted by the guardian for the legal necessity without infringing in any way the basic principles of the law of contract, and in this way alone, the different pronouncements of the Judicial Committee mentioned above can be consistently explained.

We shall now take up the question of limitation. In determining the particular Article applicable to a suit, the language of the third column of the Articles should be so interpreted as to effectuate the intention of the Legislature, i.e. by dating the cause of action from a date when the remedy is available to the party. In construing the relevant Articles undue stress should not be laid on the first column and the third column should not be ignored, with the result that if in a particular case the facts come under the first column of a particular Article but the third column, i.e., the starting point of limitation under the circumstances, is inapplicable that Article should be altogether rejected. Any construction which would result in time commencing to run against a party even before the right to sue has accrued in his favour should be avoided, as such a construction would result in obvious injustice and absurdities. A proper appreciation of the basis of the legal rights on which relief is sought for will be very helpful in determining the relevant Article applicable to the suit.

We shall now take up the question as to how for Art. 57 would be applicable to a creditor''s suit against the estate. If the creditor elects to file two suits one against the guardian in the first instance for obtaining a decree against the guardian and also a declaration that he is entitled to be subrogated to the rights of reimbursement of the guardian and later on files the second suit to obtain satisfaction against the estate represented by the minor based upon such a declaration, it is obvious that Art. 57 cannot apply to the second suit. The creditor''s cause of action in working out the right of subrogation is a separate cause of action springing from and resting upon the declaration passed in the earlier suit. To such a situation it is impossible to apply column 3 of Art. 57. When the creditor works out the right of subrogation in the second suit, the suit may be regarded as in substance for the relief of money payable for money lent, governed by column 1 of Art. 57. But as observed earlier column 3 cannot possibly apply as the right to sue itself accrued to the creditor not on the date of the loan but only on the date when his right of subrogation was declared. To such a claim Art. 120 alone will apply, there being no other specific Article.

The question next arises regarding a suit in which the creditor combines both the reliefs, the claim against the guardian as well as the relief of subrogation against the minor''s estate like the instant case. In our opinion the matter does not admit of any doubt whatsoever and the only Article applicable will be the Article which would apply to a suit against the guardian. There cannot be two periods of limitation for that suit merely because the creditor has combined both the reliefs in the same suit. A creditor cannot invoke the larger period of limitation under Art. 120 because he has also claimed the right of subrogation. It must be borne in mind that this right can be worked out only if the creditor''s claim against the guardian is in time. Even though the matter was not considered from this perspective before Ramakrishnan, J., Mr. Rajah Aiyar, Learned Counsel, accepted before us that this is the correct legal position. But he however contended that when a creditor takes a registered promissory note from the guardian it is open to him either to file a suit on the registered promissory, note within a period of six years under Art. 116, or file a suit on the original cause of action on the loan within 3 years under Art. 57. He urged that in this case the creditor has elected to follow the latter course of suing on the debt so as to be governed by Art. 57. We are unable to accept this contention. We are clearly of the opinion, on a reading of the plaint, that the creditor is enforcing his claim under the registered promissory note and has not elected to sue upon the alternative cause of action, i.e., the debt. Paragraph 12 of the plaint contains specific reference to the promissory note. Para 14 states that the debts borrowed by the guardian are binding upon the defendant. Para 16 again contains reference to the promissory note. Para 19 refers to the execution of the promissory notes in the village of Puduvalliampalayam for the purpose of jurisdiction of the Sub-Court, Coimbatore. Para 22 dealing with the cause of action refers to the date of the registered promissory note. Above all, Para. 23 containing the particulars of valuation specifically refers to the promissory note and leaves no room for any doubt in the matter.

Learned Counsel, Mr. Rajah Aiyar, relied upon Para. 18 where it is stated that the suit is filed on the original cause of action and the debt. But this paragraph should be read in the light of the other portions of the plaint referred to above which clearly show that the creditor is seeking relief with particular reference to his claim under the promissory note executed by the guardian. The averment in Para. 18 is made only to emphasise that the creditor is working his right of subrogation. There is no conceivable reason as to why a creditor should give up his right under the registered promissory note when he has got a larger period of limitation and contend to sue on the debt which would be barred by limitation. Reading the plaint as a whole we see no basis whatsoever for holding that the creditor has elected to abandon his rights under the registered promissory note.

For all the above reasons we hold that the suit is governed by Art. 116 and is well within time. The appeal is allowed and the suit decreed with costs in all the Courts. Even though we are awarding relief to the plaintiff on an aspect not presented before the learned Judge, we think that this is a case in which the defendant should be directed to pay the costs of the appellants in all the Courts as he has raised all kinds of false and dishonest pleas besides exhibiting gross ingratitude for all the timely financial help rendered by the plaintiff at critical times.