S. Sethuraman vs Union of India (UOI)

Ramamurti, J.—The Plaintiff who was an employee under the Southern Railway the Appellant in the Second appeal he filed the suit to recover a sum of Rs. 4,818.97 as representing the arrears of salary due to him after adjusting and giving credit for all the payments made. The trial Court decreed the suit, but on appeal, the Lower Appellate Court dismissed the suit on the ground that it was barred by limitation. Hence the second appeal by the Plaintiff. There is no dispute in any of the Courts that the amount claimed in the suit is payable except with regard to a sum of Rs. 80 towards income tax paid by the Defendant on behalf of the Plaintiff and an adjustment of Rs. 579.8 in relation to the contribution to the Provident Fund Account of the Plaintiff and the only point argued before me is the question of limitation.

The brief facts of the case are as follows: The Plaintiff who was a ticket collector in the Egmore Railway station was placed under suspension on 23rd February 1951, pending an enquiry into a charge of certain misconduct against him. On 3rd October 1954, he was dismissed from service. The Plaintiff took up the matter further by an appeal to the Chief Commercial Superintendent and a petition of mercy to the General Manager, but all without success. Then he filed a writ petition in the High Court which was allowed by order, dated 23rd March 1959, quashing the order of dismissed. In Writ Appeal No. 114 of 1959, this order setting aside the dismissal was confirmed on 6th November 1959. On 22nd March 1960, the Plaintiff reported to duty; on 1st April 1960 he was reinstated and on 3rd April 1960, this Ticket Collector was posted to Bangarupet. The present suit was instituted on 8th November 1962.

It is settled law that the word wages in Article 102 of the Limitation Act of 1908, includes salary. Till recently there was divergence of Judicial opinion as to when time would commence to run under column 3 of Article 102, when an order of dismissal of a Government servant is declared void or set aside and he is reinstated in service. One view was that time would commence to run only when the order of dismissal is finally set aside or declared void on the reasoning that during that period when the matter was pending the Government servant could not file a suit for recovery of arrears of salary. The other view was that the salary accrued due at the end of every month and the suit should he filed within three years. In a recent decision of the Supreme Court reported in Jail Chand Sawhney v. Union of India (1969) 2 S.C.W.R. 957 it has been held that time would commence to run at the end of every month and that when the order of dismissal is set aside, the effect of the declaration is to hold the order of dismissal invalid ab initio as if it never existed and the public servant concerned was unlawfully prevented from rendering service. The Supreme Court held that the Government servant concerned will be entitled to arrears of salary only for a period of three years prior to suit. The view of this Court reported in State of Madras v. A.V. Anantharaman ILR (1963) Mad. 1314 was not accepted. In view of this decision of the Supreme Court, it is no longer open to argument that limitation would commence to run only when the final order setting aside the dismissal order is declared void or set aside.

In the course of the hearing, my attention was drawn to the various decisions in which the two divergent views aforesaid were expressed. But in none of the cases, the effect of payment of subsistence allowance and the admission of the existence of a subsisting account on the part of the railway was considered and no point was made as to how far that would amount to acknowledgment of an unsettled account and a part payment towards account. In the instant case, some payments have been made during the period of suspension and after the order of dismissal was set aside, the Plaintiff was paid on 27th September 1961, a sum of Rs. 4,184.05. The Plaintiff in the plaint has relied upon this payment as an acknowledgment and part payment. The Plaintiff carried on further correspondence with the railway arid ultimately the Railway Board accepted the Plaintiff�s contention that for the entire period 4th October 1954 to 2nd April 1960, the Plaintiff should be treated as on duty. This order was passed by the Railway Board on 12th September 1961. Thereafter on 19th July 1962, the Divisional Personnel Officer issued a memorandum that the arrears of pay for the entire period should be paid to the Plaintiff after adjusting whatever payments had been made and subject to the law of limitation. The Divisional Personnel Officer also directed that the Plaintiff would be entitled to arrears for the period of three years preceding 12th September, 1961, less the period between 3rd April 1960 and 12th September 1961, when he was actually in service, i.e., for the period 12th September 1958 to 2nd April 1960. All these details are contained in exhibit A-4 the order of the Divisional Personnel Officer. As the trial Court held that the time would commence to run, only from the final order declaring the order of dismissal void and of no effect, it did not consider the effect of the admission of the existence of a subsisting account and the payment of subsistence allowance and other payments made by the railway to the Plaintiff towards account. The appellate Court has considered the effect of exhibit A-4 in paragraph 19 of its judgment but it held that it would not save the claim from the bar of limitation.

It is settled law that an admission of the existence of an unadjusted and unsettled account is sufficient acknowledgement to save the entire claim from the bar of limitation. In the case of Government servants, when the interim payments are made towards subsistence allowance, the payments are entered in the accounts of the employee concerned on the understanding that they are all payments made towards account and the final liability is to be ascertained in the light of the ultimate decision about the legality of the order of dismissal. If once it is held that the salary accrues due every month there is undoubtedly an account growing month after month and towards that account payments are made and during that period if there is admission in writing (by the party liable to pay) of the existence of a subsisting account, that would save the entire claim from the bar of limitation.

It is necessary to extract exhibit A-4.

Memorandum

Subject.-Shiri S. Sethuraman, Ticket Collector, BWT--Regularization of the period of his absence from duty.

The suspension period of Shri S. Sethuraman, TC/BWT from 23rd February to 3rd October 1954 and the intervening period from the date of dismissal to the date of reinstatement i.e., from 4th October 1954, to 2nd April 1960, have been treated as duty for all purposes as directed in Railway Board�s letter No. E (D and A) 57RG6-1, dated 12th September 1961.

Sanction has been accorded by the Railway Board vide their letter quoted above for the payment of arrears subject to the following conditions:

The arrears of pay and allowances are paid abject to the law of limitation and;

The arrears of pay and allowances are reduced by the emoluments, if any earned by him during the intervening period of absence from duty, unless the emoluments earned exceed the pay and allowances admissible to him.

In accordance with the above it has been decided to pay him the arrears due to him for a period of 3 years prior to 12th September 1961, i.e., the date of Railway Board''s letter. The employee is I therefore entitled to arrears for the period of 3 years preceding 12th September 1961 less the period between 3rd April 1960 and 12th September 1961, when he was actually in service, i.e., for the period from 12th September 1958 to 2nd April 1960

Necessary arrangements are being made to pay him the arrears due for the period from 12th September 1958 to 2nd April 1960.

Divisional Personnel Officer.

Before this letter, the railway had made a payment for regularizing the entire period and it is after this account on the basis that the Plaintiff would be entitled to only subsistence allowance; the Plaintiff objected and on 20th November 1961; the Railway wrote to the Plaintiff that necessary order had been issued to the Divisional Superintendent, Royapuram for regularizing the entire period and if is after this the letter exhibit A-4 was sent to the Plaintiff on 19th July 1962, accepting the Plaintiff''s claim that the entire period should be treated as on duty for all purposes. I am of the view that the initial part-payment as well as the letters written by the Railway, in particular exhibit A-4, would have the claim from the bar of limitation both as an acknowledgement and part-payment under Sections 19 and 20 of the Limitation Act of 1908.

At this stage it is necessary to mention that in the plaint, the Plaintiff has appropriated the part-payment of Rs. 4,104.03 towards the arrears of Rs. 8,923 leaving a balance of Rs. 4,818.97 indicating thereby that the payment was received in general and appropriated & such and applying the rule of appropriation in Clayton''s case, the claim for the earlier period was wiped out and the balance of claim represents the amount due for the later period. While the Defendant raised the objection that there was no valid acknowledgement nor part-payment, it did not raise any objection to the specific adjustment and appropriation made by the Plaintiff in the plaint. In my view, the facts established, clearly show that, throughout the relevant period, the Defendant has admitted the existence of a subsistence account between the parties and hag also made a part-payment towards account, thus satisfying the provisions of Sections 19 and 20 of the Limitation Act. An admission of the existence of an unadjusted or unsettled account is a clear acknowledgement within the meaning of Section 19. It is unnecessary to refer to the wealth of case law as to the interpretation of the language employed in the particular document and as to whether it would constitute sufficient acknowledgement. It is sufficient to refer to the observations of the Supreme Court in Khan Bahadur Shapoor Fredoom Mazda Vs. Durga Prosad Chamaria and Others, of Gajendra-Gadkar J., as he then was. Courts generally lean in favour of a liberal constructor of the language employed though it does not mean that, where no admission is made one should be inferred. The effect of the words used in a particular document naturally depends upon the context in which the words are used. In Alayil Kalathil Kambil Achuthan Vs. Kunnambrath Abdu and Others, Madhavan Nair, J., has observed that it is but just and reasonable that the section should be construed so as to afford every possible support to a just and lawful claim against an unjust and unconscionable resistance to that claim. I may here extract the following portion of the head note in Bhai Siri Ram Singh Vs. S. Santokh Singh,

It is not cornet to say that the acknowledgments must be self-contained and that no outside help should be required in order to show that it related to the debt in suit. Surrounding circumstances are relevant and can always be taken into consideration in construing the words used us the writing which is sought to be utilised as an acknowledgment. Oral evidence of course is to be excluded but not the surrounding circumstances. The courts are generally inclined to lean in favour of a liberal construction of the statements contained in documents said to amount to acknowledgment, though of course, where no admission is made courts cannot infer one.

In English law, an acknowledgment must import a promise to pay and it is in this context that the English decisions held that the admission of the existence of a subsisting account necessarily implied a promise to pay the balance that may be found due. In Banner v. Berridge (1881) L.R. 18 Ch. 254 RAY J., stated the law in these terms at page 273:

Now I venture to say that I doubt whether that is a precisely accurate description of the decision in Prance v. Sympson (1854) 1 Kay 679 because it seems to me in Prance v. Sympson L.R. 6 Ch. 822 the Vice Chancellor found not merely an admission that the account must lie taken and that there was a right to have it taken, and it was not merely from that admission that he inferred a promise to pay, but I think he found in the letter, if I understand his language rightly, an express promise to pay in the words which required a settlement of the account and putting the matter on the square. But, be that as it may. Mitchell''s claim L.R. 6 Ch. 822 certainly shows in the plainest possible manner that it was Lord Justice Mellish''s opinion that if there was an admission that an account must be taken, and that there was a right to have it taken, it would be consistent with principle, and with the previously decided cases, that you must infer from that a promise to pay. If I may venture to express my own opinion upon the subject, that seems to me to be quite reasonable. I suppose there is no doubt at all about the law that if there be an unqualified admission of a debt, that acknowledgement implies a promise to pay; and surely it seems quite as reasonable that there is an unqualified admission that there is pending account between two parties which has to be examined, that is, pending in the sense that it is not a settled account binding upon them, but is an account which either party is at liberty to examine surely it is reasonable to say that the admission that there was such a pending account is an admission from which you may infer a promise that when the account is settled the balance shall be paid.

It is unnecessary to refer to the other decisions in England English cases have uniformly taken the view that an acknowledgement to save the claim from the bar of limitation should also import a promise to pay and this promise to pay is inferred when there is an admission of the existence of a subsisting account, vide observations of Kay, J., above referred. Note: The English Limitation Act of 1959 hem altered the law and now the acknowledgement need not import a promise to pay.

In India, the law is liberal; u/s 19, it is not necessary that the acknowledgement should import a promise to pay. Even so, all the cases have uniformly held that the admission of the existence of a subsisting account would amount to an Acknowledgement of a subsisting liability within the meaning of Section 19 of the Act. I may in this connection refer to the pronouncement of the Privy Council in the leading decision in Maniram Seth v. Seth Rupchand I.L.R.(1906) Cal. 1047. In that case an application for probate by an executor was objected to on the ground that he was indebted to the estate. While meeting this objection the executor who applied for probate stated:

For the last five years he had open and current accounts with the deceased. The alleged indebtedness does not affect his right to apply for probate.

In a suit against the executor for recovery of the balance, it was held that this statement of the executor admitting the existence of a subsisting account constituted sufficient acknowledgement. The Judicial Commissioner, Nagpur held that this statement did not constitute sufficient acknowledgement. The Privy Council while reversing that decision observed as follows:

He refers to a case of Sitayya v. Rangareddi I.L.R.(1887) Mad. 259. in which it was held that an acknowledgement of the Plaintiff''s right to have accounts taken and of the Defendant''s liability to pay any balance (if such there should be) against him was held to satisfy Section 19 of the Limitation Act. But this decision appeared to him to be either erroneous or inapplicable because it is based upon two English cases, Prance v. Sympson (1854) 1 Kay 679 and Banner v. Berride (1851) L.B. 18 Ch. D. 254 in which similar acknowledgements were held to satisfy the English law upon the subject, the acknowledgement in Prance v. Sympson (1854) 1 Kay 679 being undistinguishable from that relied upon in the present case. He goes on to give as his reason for considering that the English cases do not apply in the present case the fact that the English law requires words from which a promise to pay may be inferred, whereas the Indian Act requires words, from which an admission of liability may be interred. But in English law it is the acknowledgement of liability, which, is the ground upon which a promise to pay is inferred, so that the requirements of English law are, if anything, more, and not less, stringent than those of Indian Law, which seems to be a bad reason for holding that the English cases have no application to the present enquiry. The learned Judicial Commissioner further agrees with the Civil Judge in holding that the expression alleged indebtedness is a stumbling block in the way of the Appellant, a view upon which their Lordships have already expressed their opinion.

The principle of this decision has been followed and applied in the Indian Courts in numerous cases in varying contexts. Vide Subbaramayya v. Iragam Reddi AIR 1959 Mad. 500. Udhavji Anandji Ladha and Others Vs. Bapudas Ramdas Darbar, . and Sarangdhar v. Lakshmi Narayan AIR 1955 Pat. 329.

Exhibit A-4 in the instant case contains a clear admission of the existence of a subsisting account, The effect of the acknowledgement contained in exhibit A-4 will not be in any manner detracted by the direction which has been given to make the payments in a particular manner which is not valid in law If there is acknowledgement, in the sense, an admission of a subsisting account, that acknowledgement will save the claim from the bar of limitation. The fact that direction for payment is given only for the claim for a particular period would not affect the effectiveness of the acknowledgement of the entire claim. If a debtor admits that he is liable and at the same time gives a wrong reason for not paying the debt, either in or part or whole the acknowledgement would nevertheless keep the debt alive.

The payment that has been made towards account would keep the debt alive even though the debtor while making the payment indicates that nothing more is due and the payment is made in full quit of the claim. It is sufficient to refer to the decision of the Privy Council reported in Rama Shah v. Lal Chand (1940) I M.L.J. 895 (P.C.). In Udaypal Singh v. Lakshmi Chand I.L.R (1935) All 261 (F.B.). Sulaiman C.J. and in Appasami Pillai v. Muthirian AIR 1933 Mad. 381 Venkatasubba Rao, J., held that if a debtor makes a payment on the footing that no more was due, such payment would not (sic) the balance of the claim u/s 20 of the Limitation Act. In Municipal Committee Amritsar v. Ralia Ram I.L.R (1936) Lah. 737. the Lahore High Court took a different view holding that u/s 20, the payment will itself save the claim from the bar of limitation, whatever may be the intention of the debtor and the statement accompanying the payment. The Bench held that a payment made without prejudice would save the claim from the bar of limitation in the view that it is not necessary that the debtor while making the payment should in express language admit that something more is due preferred the view taken by the Lahore High Court observing at the same time that the view expressed by the Allahabad and the Madras High Court is not correct. Sir George Rankiii Observed as follows:

In Udayapal''s Case (1935) ILR Sulaiman, C.J., lent the weight of his authority to the view that the section must be read as proceeding upon an acknowledgment by the debtor of his liability, though the learned Chief Justice agreed that the section is not preferably based upon any such principle. Accordingly, he put the ease of a payment insufficient to discharge the debt in full but made upon the footing that no more was due, and he expressed the opinion that such a payment would not be within the section. Their Lordships cannot agree that the section is to be read as governed by any such principle as is suggested, familiar though it, he in the law of England. They can discover no sufficient reason for the assumption that the section is an expression of any single principle. In English law effect was first given to acknowledgments and payments by reason of general principles of exception applied by the Courts to the Statute of Limitation (1623) which did not contain express exceptions in these respects, and though the exceptions were in the end made statutory they retained much of their origins character. In the Indian Limitation Act, Section 19 which deals with acknowledgments is not to be read as based upon the theory of implied promise, and it is difficult to see why Section 20, which deals with payments, should be regarded as based upon a theory of acknowledgment. The Indian legislature may well have thought that a payment if made on account of the debt and evidenced by writing gave the creditor some excuse for further delay in suing, or was sufficient new proof of the original debt to make it safe to entertain an action upon it at a later date than would otherwise have been desirable. The words in Section 20 by which the matter must be incised are "where part of the principal of debt is paid". As it is not prescribed by the section that the payment should be intended by the debtor to go towards the principal debt at all the words "as such" having no place in this part of the section, it is not in their Lordships view correct to require that the payment should have been made of part as part. On this point the view takpn in Municipal Committee, Amritsar v. Raliya Ram I.L.R.(1936) Lah. 737, is to be preferred to the view taken in Appasami Pillai v. Morangam AIR 1635 Mad. 371 which applied the English decisions.

After this clear pronouncement of the Privy Council it is unnecessary to cite further decisions on the point. The fact remains that towards a general claim this payment was triage and as a part payment, It would save the entire claim from the bar of limitation. It is obvious that a calculation was made for the enter period, on some basis by the railway and the payment was made. Bat that basis now is found to be incorrect and there is still a balance due. It is a clear case in which Sections 60 and 61 of the Contract Act would apply. A perusal of exhibit A-4 shows that when Rs. 4,104.03 was paid to the Plaintiff on 27th September 1901, it was a general payment and the idea of making that payment only towards the balance of that portion of the claim which was in time, was not present in the mind of the railway at all. It is only in exhibit A-4 that this idea of some portion of the claim being barred by limitation was thought of and not earlier. Looked at from any point of view it is clear that the first payment of Rs. 4,104.03 was made only towards the claim of the Plaintiff making no distinction between one portion and the other and the Plaintiff has appropriated it u/s 60 of the Contract Act towards arrears for the earlier period. That is perfectly correct and no objection can be taken thereto. The result is that the balance claimed as arrears for the period is well within time.

In the Courts below, no other objection was raised as exhibit A-4 not satisfying the conditions of Sections 19 and 20 with regard to the requisite writing and the part payment being in writing and such other matters. No objection was raised with reference to the form and the only objection was the sufficiency and effectiveness of exhibit A-4. It is obvious that If any objection as to the form had been raised, the Plaintiff would have easily satisfied all those require meats. A perusal of exhibit A-4 shows that every order was passed and every payment was made by the officer having ''foe requisite authority, everything being in writing.

For all these reasons, the second appeal is allowed and the Plaintiff''s suit decreed with costs in all the Courts.

Before parting with this case, I think it only proper that I should advert to this highly unjust and lamentable attitude which the railway has manifested in this case. The Plaintiff who was a ticket collector drawing a meagre salary of about Rs. 128 was suspended in February 1954 and it has taken him 16 long years to get redress and satisfaction of has just claim. Inch by inch he had to fight the railway and at every stage of this protracted proceeding he succeeded. The railway was not prepared to accept the decision of a single judge of this Court declaring the dismissal as void and illegal. It look up the matter in writ appeal. The writ appeal was dismissed on the 6th of November, 1959, and the Plaintiff''s claim for arrears of salary was not settled. There was protracted correspondence; after considerable delay of 2 years, the railway paid in September 1961, only half of what the Plaintiff wag entitled to. Even after the Court had declared the order is illegal Mid void and, therefore, never existed at all, the railway would not pay the Plaintiff his full salary but only some allowance on the ground that he was not on actual duty. The Plaintiff was obliged to correspond with the railway and after a further delay off 1-1/2 years the railway passed the order exhibit A-4, dated 17th September 1962, that the Plaintiff would be entitled to the salary for the full period as on full duty. While fully acknowledging that the Plaintiff was entitled to his full salary for the entire period, the railway issued the direction that it is only for the period which is in time that payment, however, should be made. In the suit, for purposes of limitation, the railway contends that its order of dismissal is null and void, honest and it never existed at all, so that, the Plaintiff should be deemed to be in full duty and the salary accrued due month after month. This is the contention in the suit. But in the correspondence when salary was claimed by the Plaintiff, the railway''s attitude is totally inconsistent, i.e., the Plaintiff cannot be treated as on duty during that period and the Plaintiff was entitled only to some allowance. In the nonage of the suit, the contention of the railway is that the Plaintiff should file a suit for recovery of arrears of salary every three years in which the question for decision would be whether the order of dismissal of the Plaintiff is legal and correct. It passes my comprehension how the railway can with any grace urge this contention when this very question whether the order of the dismissal is legal and valid, is the subject matter of enquiry in the highest Court of be State. The poor railway employee who has been wrongfully dismissed, who is starving, and not receiving any allowance whatsoever after October 1954, is expected to plunge into further litigation in the civil Court while at the same time he is being harassed and vexed with proceedings in the High Court. No subordinate Court will take up the suit for trial when the identical crucial point is pending disposal in the writ proceedings in the High Court; I am wholly unable to understand for what purpose and for what advantage, the railway expects the poor ticket collector to institute suits in the civil Court every three years. If the railway persists in this ''attitude in other litigations, the railway employees would be filing suits one after another and when they succeed in the civil Court, the railway will be raying and throwing away large sums of money as costs to the successful litigants resulting in huge financial loss. It is for the railway to ponder over whether they can avoid this, by settling the claim soon without resorting to unconscionable pleas. If a suit like this is to be governed by Industrial Disputes Act or any other Labour Law, no employer would be permitted to seek to his aid the plea of limitation to defeat, the claim for payment of back wages consequent upon the illegal order of dismissal being declared void and set aside by a Court of law. The minimum which a railway employee is entitled to is an expeditious settlement of his claim and payment of the salary for the entire period. That is bare justice. I have disposed of this case within the United principles enunciated by the Supreme Court in Jail Chand Sawdhney v. Union of India (1989) 2 S.C.W.R. 957 regarding scope of Article 102 of the Limitation Act taken along with the acknowledgment and part payment. I am not expressing any opinion on the question whether a separate independent cause of action would arise to enforce the obligation of the railway to pay the full salary for the entire period under the relevant provisions of the Railway Establishment Code time commencing to run from the final decision declaring the order of dismissal void and a nullity. The Supreme Court had not to deal with this question of a fresh right accruing in favour of the Plaintiff based upon the provisions of the Railway Establishment Code, 2044. The Supreme Court did not approve of the view taken by the Madras High Court in State of Madras v. A.V. Anantharaman ILR (1963) Mad. 1014 that the order of dismissal is an obstacle in the way of the railway employee to file a suit for such salary and that till it was set a side he had no right to claim the arrears. The Supreme Court did not agree with this view but held that it is an order which is void and a nullity and it need not be set aside at all. The question whether or not a fresh cause of action would accrue as a result of claim and disputes between the Plaintiff and the railway and petitions to the Railway Board which ultimately decided the disputes by honing that the railway servant should be treated as on duty for the entire period and, therefore, reefed to full salary is a matter which did not come up for investigation before the Supreme Court. If the matter is strictly governed by Railway Establishment Code 2044, where the order of dismissal is set aside not by the civil Court but by the departmental authorities, there is much to be said in favour of the view that a fresh cause of action would undoubtedly accrue when the Railway Board finally passes the order under Railway Establishment Code 2044 that the railway servant is entitled to full salary. I do not see why different principle should be applied (though the role 2044 as such is not applicable) in a case where an order of dismissal is set aside or declared as illegal and) a nullity by the Civil Courts. As I have held that the Plaintiff�s claim is well within time for other reasons, I am not expressing any opinion about thus perspective of approach.

No leave.