Patna High Court
Keshari Engineering Works vs Bank Of India on 2 January, 1990
Equivalent citations: AIR1991PAT194, AIR 1991 PATNA 194, (1991) CIVILCOURTC 824, (1992) 1 BANKLJ 267, (1992) 1 BANKCAS 59, (1992) BANKJ 61
Author: S.B. Sinha
Bench: S.B. Sinha
JUDGMENT S.B. Sinha, J.
1. This First Appeal, at the instance of the defendant Nos. 1, 3 and 6 arises out of a judgment dated 19-7-1983 passed by Shri J. Ram, Subordinate Judge, Chaibasa in Money Suit No. 24 of 1979 whereby and whereunder the said learned Court decreed the plaintiff-respondent's suit.
2. In view of the short point involved in this appeal and further in view of the fact that the learned Court below has stated the facts of the case in great details, it is not necessary to state the entire facts of the case.
Suffice it to say that the defendant No. 1 Firm, along with its partners the defendant Nos. 2 to 4 entered into various agreements with the plaintiff's Bank for taking loan on various accounts.
3. For the aforementioned purpose, three loan accounts were opened on 29-12-1975 for a sum of Rs. 1,9900/- on 3-8-1976, for a sum of Rs. 15,000/- on 3-8-1976 and of Rupees 10,500/- on the same day. Besides the aforementioned loan accounts, the defendant Nos. 1 to 4 aforementioned also obtained cash credit facilities in respect whereof another account was opened on 3-6-1976 as a result whereof the said defendants were granted a cash credit facilities up to a sum of Rs.50,000/-.
4. Admittedly, the defendant Nos. 5 and 6 were guarantors of the principal defendants aforementioned in respect of all the accounts.
5. Mr. P. K. Sinha, the learned counsel appearing on behalf of the appellants submitted that in respect of the aforementioned loan accounts, the provisions of Arts. 19 and 21 of the Limitation Act, 1963 shall apply and in that view of the matter, the judgment of the learned Court below cannot be sustained, in view of the fact that the suit having been instituted on 8-12-1989 it was barred under the law of limitation. According to Mr. Sinha, so far as the loan accounts are concerned, the various goods were pledged with the Bank and in this view of the matter, the limitation shall begin to run from the date when the loan was obtained and not from any other date.
6. The learned counsel further submitted that the learned trial Court committed an illegality in so far as it purported to hold that the limitation is saved in view of the fact that allegedly the principal defendants paid a sum of Rs. 450.69 paise on 12-7-1976 towards the loan accounts and a sum of Rs. 72/- on 8-4-1978 towards the cash credit accounts. According to the learned counsel, the aforementioned purported part payment as also the document of confirmation dated 21-7- 1976 (Ext. 7) will not save the suit from being barred under the law of limitation.
In this connection, the learned counsel has relied upon a decision reported in AIR 1964 Mad 77 (B. Sangarmal Sowcar v. V.K. MurugesaNelcke), AIR 1935 Bom213(Percy F. Fisher v. Ardeshir Hormaji Gazdar) and AIR 1942 Pat 201 (Uma Shankar Prasad v. Bank of Bihar Ltd).
7. The learned counsel further drew my attention to the fact that as the defendant No. 2 has owned up his liability up to 20-5- 1977 as would appear from Ext. A/3, the other defendants were not liable to pay the said amount up to the aforementioned date.
8. Mr. M. Y. Eqbal, the learned counsel appearing on behalf of the plaintiff-Bank, on the other hand, submitted that Ext. 7 being confirmation of debt having been executed on 21-3-1977, the same would amount to an acknowledgement of debt within the meaning of Section 18 of the Limitation Act, 1963 and thereby limitation in filing the suit will be saved. With regard to the cash credit accounts, the learned counsel submitted that the principal borrowers operated the said accounts on 1,4-2-1972 by depositing Rs. 580/-on 8-4-1978 by depositing a Sum of Rs. 72/-only. According to the learned counsel, in respect of the cash credit facilities, the limitation would begin to run from the date when the borrower refused to operate the account and in view of the fact th'at the said account was operated up to 8-4-1978, the suit being within three years from the aforementioned date, the same is not barred by limitation.
In this connection, the learned counsel has strongly relied upon a decision of the Supreme Court reported in AIR 1979 SC 102 (Mrs. Margaret Lalita Samuel v. Indo Commercial Bank Ltd.) and a decision of this Court reported in AIR 1963 Pat 254 (Hindustan Construction Company, Muzaf-farpur v. The State of Bihar).
9. In view of the aforementioned rival contentions, the following questions arises for consideration in this appeal:
(a) Whether the suit was barred by limitation and was not saved in terms of Sections 18 and 19 of the Limitation Act, 1963, in view of the part payments and acknowledgements of the liabilities as made by the principal borrower.
(b) Whether in view of Ext. A/3, the defendants other than the principal defendants who are liable for making any payment of the debts up to 20-5-1977.
10. As noticed hereinbefore, the basic facts are not in dispute.
11. The principal defendants have not disputed that they executed the document of confirmation on 21-3-1977 which was marked as Ext. 7. They have further not disputed that in respect of the cash credit facilities, they deposited a sum of Rs. 72/- on 1-8-1978 vide Ext. 6.
12. In the instant case, it is not in dispute that the aforementioned loans were advanced by reason of various transactions including by pleading goods, execution of the promissory notes, and other documents.
13. In this view of the matter, there is absolutely no doubt that the suit will be governed under Arts. 19 and/or 21 of the Schedule appended to the Limitation Act, 1963.
14. From a perusal of Ext. 7, it appears that on 21-3-1977 the plaintiff Bank informed the defendant No. 1 that a sum of Rs. 2,76,112.37 paise was lying in balance in respect of all the three loan accounts, as on the aforementioned date. In paragraphs of the said letter, the defendant No. 1 was requested to return the said letter after signing the same by each account holders on a crossed revenue stamp and with the concurrence of the guarantor who was also to sign on a crossed revenue stamp. Pursuant to the aforementioned request, the panics of the defendant No. 1 firm as also the guarntors signed on crossed revenue stamps as a result whereof, the principal borrowers acknowledged and accepted their liabilities on 21-3-1977 to the extent of the aforementioned Rs. 2,76,112.37 paise and the guarantors also Were acknowledged the aforementioned sums and further declared that the letter of guarantee signed by them is in full force and effect and therefore they were also liable to the Bank in accordance with the terras thereof.
15. Section 18 of the Limitation Act reads as follows :--
" 18. Effect of acknowledgement in writing :
(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an ac-knowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or rights is claimed, or by any person through whom derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed.
' (2) Where the writing containing the acknowledgement is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received".
16. In view of the fact that by reason of the aforementioned Ext. 7, the borrowers as also the guarantors acknowledged their indebtedness in respect of all the three loans accounts for the aforementioned sum within the period of limitation; there cannot be any doubt, whatsoever that the same amounts to an acknowledgement within the meaning of Section 18 of the said Act.
17. The decisions cited by Shri Sinha are not applicable to the facts and circumstances of this case.
18. In B. Sangarmal Sowcar v. V. K. Murugesa Nalcke reported in AIR 1964 Mad 77, the learned Judge of the Madras High Court has held that when a suit for recovery of loan from the debtor in respect whereof mpyable property were pledged after sale of the pledged property, the same is governed by Article 57 of the old Limitation Act and as such limitation begins to run from the date of advancement, of loan.
19. It is not disputed that a suit for recovery of money rent would be governed by Article 57(old) despite the fact that the said loan was secured. However acknowledgement and/is part payment would save the limitation as provided for under Sections 18 and 19 of the Limitation Act, 1963.
20. Similarly, the Bombay High Court in Vershi Kanji v. Kaku Kanji reported in AIR 1935 Bom 211 merely held that neither payment of interest after the period of limitation nor the pledge extends the period Of limitation as regards personal claim in a Shit for recovery of amount advanced on a pledge.
21. In the case of Umashanker Prasad v. Bank of Bihar Limited reported in AIR 1942 Pat 201, a Division Bench of this Hon'ble Court has laid down what is meant by a mutual account, so as to attract the provisions of Art, 85 of the old Limitation Act.
22. In the instant case, as noticed hereinbefore, there cannot be any doubt that Articles 19 and/or 21 of the Limitation Act, 1963 shall apply but the same is subject to the exceptions provided for under Sections 18 and 19 of the Limitation Act, 1963.
23. As noticed hereinbefore, the principal defendants as also the guarantors categorically admitted and acknowledged their liability on 23-3-1977 i.e. within the period of limitation in respect of all the three loan accounts and as such in terms thereof the limitation must be counted from the aforementioned date i.e. from 23-3-1977.
24. So far as the cash credit accounts which was opened on 30-6-1976 is concerned, from a perusal of Ext. 6 it becomes evident that the principal borrowers operated such accounts from time to time and lastly operated the said account on 8-4-1978.
In Mrs. Margret Lalita Samuel v. Indo Commercial Bank Ltd. reported in AIR 1979 SC 102, the Hon'ble Supreme Court held that in a case of this nature Article 115 of the Schedule of the Limitation Act, 1908 shall apply as the over draft account was alive up to 29-5-1952 and thus the suit which was filed on 8-11-1954 was not barred under law of Limitation. In that case, the Supreme Court further laid down the law with regards to the liability of the guarantor where the guarantee is a continuing one. In this case, a claim was made by the Bank dated 18-7-1989 (Ext. I) and in this view of the matter, it cannot be said that the suit was barred under the law of limitation.
Requestion No. (ii) : The question as to whether a particular borrower has acknowledged his liability up to a particular date is of no consequence. So far as the plaintiff Bank is concerned, as noticed hereinbefore, the loan was advanced by it in respect of all the three loan, accounts as also the cash credit account, to the defendant No. 1 in respect where of the promessory notes and other documents have been signed by the defendants Nos. 2 to 4 i.e. all the partners on behalf of defendant No. 1 firm.
25. Thus all the principal defendants namely defendant Nos. 1 to 4 were liable to the Bank to repay the amount advanced to themjointly and severally. In the instant case, the guarantee bonds executed by the guarantors being a continuing one, their liability is also co-extensive with the principal borrowers.
26. From a perusal of Ext. A/3, it appears that the defendant No. 2 has addressed a letter to one Kamta Prasad Verma whereby he purported to have admitted the liabilities of the firm allegedly on the ground that he is solely liable to the Bank as he alleged operated the Bank Account.
27. The plaintiff Bank is not bound by the aforementioned declaration as much as stated hereinbefore, the loan was advanced to the defendant No. 1 and all its partners i.e. defendant Nos. 2 to 4 and thus the privity of contract exists between the plaintiff and the defendants.
28. Recently in Debi Prasad Kedia v. Bharat Refineries Limited in Civil Revision No. 635 of 1989(R) disposed of 23-11-1989, this Court has held as follows :--
"Para 29 : In terms of the provisions of the Partnership Act, the partners while dissolving the partnership firm, may evolve a scheme which may be composite in nature whereby and whereunder the assets and liabilities of the firm may be properly distributed amongst themselves. But in view of Sections 46 and 48 of the Partnership Act, whatever method of distribution is adopted by the partners, there can be only a pro rata Division of the residue, in any, left after taking into account the liabilities of the firm.
It evidently means that the firm and consequently the partners are not absolved from payment of debt of the third parties.
Para 30 : In Narayanappa v. Bhaskara Krishnappa, reported in AIR 1966 SC 1300 at page 1303, it has been held as follows :--
"From a perusal of these provisions it would be abundantly clear that whatever may be the character of the property which is brought in by the partners when the partnership is formed or which may be acquired in the course of the business of the partnership it becomes the property of the firm and what a partner is entitled to is his share of profits, if any, accuring to the partnership from the realisation of this property and upon dissolution of the partnership to a share in the money representing the value of the property.....
What is meant by the share of a partner is his proportion of the partnership assets after they have been all realised and converted into money, and all the partnership debts and liabilities have been paid and discharged. This it is, and this only which on the death of a partner passes to his representatives, or to a legatee of his share..... and which on his bankruptcy passes to his trustees".
Para 31 : It is, therefore, clear and as has been held by the Allahabad High Court in Narendra Bahadur Singh v. Chief Inpector of Stamps, U.P. reported in AIR 1972 All 1, that the liabilities of the partners to pay the debt of a third parties irrespective of the dissolution of the firm, remain".
29. In my opinion, and in view of discussions made hereinbefore, there is no merit in this appeal which is dismissed with costs.