Shyam Ballav Nandi vs Dologobind Sahu and Another

Harries, C.J.—This is an application for revision of a Small Cause Court decree passed in favour of the plaintiffs by the learned Small Cause Court Judge of Cuttack. On 11th April 1921, the defendant petitioner executed a promissory note for Rs. 250 in favour of the opposite party. Prom time to time payments were made towards the dues on this promissory note. On 25th May 1921, Rs. 5 was paid, and there is an endorsement snowing the payment and showing the balance due after such payment. On 10th July 1921, Rs. 5 was paid, and on 8th December 1921, a further Rs. 10. No endorsement acknowledging payment was made by the defendant until 14th April 1921, when such an endorsement was made on the back of the note. On 27th October 1924, Rs. 10 was paid towards the dues on the note, and an endorsement to that effect was made on 2nd November 1924. On 21st October 1927, Rs. 5 was paid, and an endorsement to that effect was made on 30th October 1927. This payment is expressly stated to have been made towards interest. On 27th October 1930, Rs. 10 was paid towards interest, and an endorsement made on that date. On 20th October 1933, Rs. 3 was paid towards interest, and on 17th October 1936, a further Rs. 3 was paid towards interest. Endorsements of both these payments were made on the days on which payments were made. On 16th November 1939, the present suit was brought, and it would appear to have been out of time, as the last payment was made more than three years before the suit was brought. The explanation of this appears to be that the vacation intervened. However, no point was taken that the suit was out of time by reason of the fact that the suit was brought more than three years after the date of last payment. It was, however, urged before the Small Cause Court Judge that the suit was out of time by reason of the fact that the payment made towards interest of Rs. 10 on 27th October 1930, was made more than three years after the payment of Rs. 5 towards interest on 21st October 1927. As I have stated, an endorsement of this latter payment was made on 30th October 1927, and if the date of the acknowledgment of payment was to be taken as the fresh starting point of limitation, then the next payment on 27th October 1930, would be in time. Such payment would, however, be out of time if the starting point of limitation was the actual payment on the earlier date, namely 21st October 1927.

The section of the Limitation Act dealing with payments is Section 20, and this section provides that the fresh period of limitation must be computed from the time when the payment a made. There can be no doubt that the materiale is the date of payment and not the date upon which this payment was endorsed. That is the view taken by their Lordships of the Privy Council in AIR 1940 63 (Privy Council) . In fact, it does not seem to have been contended in that case that time could be said to run not from the date of payment but from the date of acknowledgment. If time runs from the date of payment and not from the date of acknowledgment, then limitation in this case cannot possibly be saved by Section 20, because, as I have said, more than three years had elapsed between the payment of Rs. 5 on 21st October 1927, and the payment of Rs. 10 on 27th October 1930.

It has been urged, however, that if Section 20, Limitation Act, does not save limitation Section 19 of the same Act would. It has been urged that the endorsement made of the payment of Rs. 5 and the endorsement of the payment of Rs. 10 were within three years of each other, and that being so, limitation would be saved by Section 19, Limitation Act. Section 19 provides:

Where before the expiration of the period prescribed for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by some person through whom he derives title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed....

The question arises whether the endorsement of payment of Rs. 5 on 30th October 1927 towards interest can be regarded as acknowledgment of liability. If it can, then Section 19 would prevent the suit being barred. Mr. Dhal who has appeared on behalf of the opposite party has contended that an endorsement of payment on a note is an acknowledgment of liability, but with that view I am unable to agree. The matter came up for decision in a Full Bench of the Allahabad High Court in B. Udeypal Singh Vs. Lakshmi Chand . In that case the question arose whether a payment which had been made generally to the creditor was a payment of interest as such or payment of principal. This payment was endorsed on the back of the bond, the endorsements stating that Rs. 50 had been paid on that day. A majority of the Bench of five Judges held that though the payment had been appropriated by the creditor towards interest it was not a payment of interest as such to prevent time running by reason of Section 20, Limitation Act. Neither was it a payment towards principal. That being so, the payment of Rs. 50 did not prevent time running, and they further held that the endorsement of this payment on the bond did not amount to an acknowledgment which would prevent limitation. This case in terms shows that a mere acknowledgment of a payment is not in itself an acknowledgment of liability within the meaning of Section 19, Limitation Act.

The case in B. Udeypal Singh Vs. Lakshmi Chand was considered at length by their Lordships of the Privy Council in AIR 1940 63 (Privy Council) and the majority view of the Allahabad Court was expressly approved of. Mr. Dhal has urged that it was not argued before their Lordships that Section 19 might have applied to the facts of that case and that their Lordships'' decision proceeds entirely upon a consideration of Section 20. In that case their Lordships had to consider the effect of a payment which had not been appropriated towards either interest or principal by the debtor. The payment was in fact acknowledged on the promissory note in these words: "Paid Rs. 100 today in this pro-note (signed by the debtor)." In that case their Lordships considered that the only section applicable was Section 20, and they dealt with the construction of that section at length. Nowhere do they suggest that the endorsement would amount to an acknowledgment of liability which would prevent time running u/s 19, Limitation Act. It would have been unnecessary to consider Section 20 at length if the argument of the opposite party in this case be sound. The short answer in the Privy Council case would have been that the endorsement afforded an acknowledgment made within three years of the date of that particular note. It is to be observed that the actual note was signed on 4th February 1913, and the endorsement of payment was made on 24th January 1933. The suit was brought on 24th January 1936. Had their Lordships considered the endorsement to be an acknowledgment of liability, the suit could have been disposed of without any consideration whatsoever of Section 20.

Counsel for the opposite party has relied upon the case in Prasanna Kumar Ray Vs. Niranjan Ray and Others, but that case is not of any real assistance to the opposite party. All that that case held was that whether a particular endorsement does or does not constitute an acknowledgment of the right claimed by the plaintiff within the meaning of Section 19, Limitation Act, depends upon its terms. Clearly if the endorsement acknowledged a liability to pay the debt, then it would be within Section 19, but a mere endorsement that Rs. 5 has been paid merely acknowledges the fact of payment and not a liability for any debt.

Counsel also referred to the case in Venkatakrishniah v. Subbarayudu AIR 1917 Mad. 805, In that case a payment made by a mortgagor who was able to write, was recorded on the back of the mortgage bond by a servant of the creditor and signed by the debtor. The endorsement ran as follows: "Rs. 378 paid towards this document (signed by the debtor.)" Nearly Rs. 1500 was due on the date of payment, and it did not appear whether the payment was made towards principal or towards interest. It was held that the endorsement amounted to an acknowledgment of liability within the meaning of Section 19 though the payment was not good as a part payment within the meaning of Section 20 of the Act. It is to be observed that in the endorsement relied upon it was expressly stated that the sum was to be paid towards this document, and that is a point of distinction between this Madras case and the present case. In the present case in the material endorsement all that is said is that Rs. 5 had been paid towards interest. This Madras case is to some extent at variance with the Allahabad Full Bench case, and in my view must be regarded as a case decided upon its very special and particular facts.

Another case relied upon by counsel for the opposite party was Ganesh Narhar Joshi Vs. Dattatraya Pandurang Joshi, in which it was held that an endorsement of three payments showing the total sum paid amounted to an acknowledgment of liability u/s 19, Limitation Act. Again the facts are somewhat different from the facts in this ease, and it appears to me that the Allahabad Full Bench case, approved as it is by their Lordships of the Privy Council, must govern the case now before me.

There is also another objection to the suit, and that is that the payments made on 10th June 1921, cannot operate to prevent limitation running. During this period Section 20, Limitation Act, had not been amended, but the relevant portion of the section was the same as it is now after amendment. These three payments were payments on account, and it is not clear whether the creditor ever appropriated them specifically towards either principal or interest. It is, however, clear that they were neverpaid towards principal and were never paid towards interest as such. That being so, the Allahabad Full Bench case to which I have referred and the Privy Council decision in the Lahore case make it clear that such payments do not prevent time running against the creditor. That being so, the payment of Rs. 5 on 21st October 1927, was a payment made over six years after the last effective payment which was made on 25th May 1921. It was however, contended that even if these payments did not prevent time running the endorsements would operate as acknowledgments and the endorsements are within three years of each other. I have already stated that mere endorsements as all these were, would not amount to acknowledgments within Section 19, Limitation Act, and, therefore, would not prevent time running.

For the reasons which I have given, I am satisfied that the suit on this promissory note was barred when it was instituted and it should have been dismissed. In the result, therefore, I would allow this application, set aside the decree of the learned Judge of the Small Cause Court and dismiss the plaintiff''s suit. The petitioner is entitled to his costs in this Court, but each party should pay its own costs in the Court below. I would assess the hearing fee for both hearings at two gold mohurs.

Manohar Lall, J.

I agree.