AI Structured Summary
Not yet generated for this judgment
Judgment
Seshagiri Ayyar, J.—The suit was found by the Subordinate Judge to be barred by limitation. The suit loans were taken on 28th December,
1903, and 20th January, 1904, but the suit was not instituted till 3rd November, 1909.
Appellant''s first contention may be briefly disposed of. His vakil argues that in accordance with a usage of the trading community to which the
parties belong, there was an automatic renewal at the end of every three months, the accrued interest being added to the principal and the total
being treated as a fresh loan. There are entries in defendants'' accounts which might be consistent with such a usage, but no evidence whatever has
been adduced to show its actual existence. No such contention appears to have been raised in the Lower Court as far as can be seen and in
paragraph 14 of his judgment the Subordinate Judge says these quarterly entries were made according to custom merely with a view to record
exactly the amount of liability. In the absence of evidence of the usage this plea must be rejected.
It is next urged that these entries in defendants'' accounts should be treated as payments of interest within the meaning of Section 20, Indian
Limitation Act. This position is equally untenable. Entries in the debtors'' account-books cannot be treated as payments: vide Ichha Dhanji v. Natha
ILR (1889) 13 Bom. 338. Appellant relies on Kariyappa v. Rachapa ILR (1900) 24 Bom. 493 but the ruling in that case is clearly against him.
There is nothing to show that similar entries were made in plaintiff''s own books; and the entries in the books of the debtor firm could in no
circumstances be a complete answer to a suit brought by the creditor for recovery of the amount due to him. The entries are not signed and so
cannot be treated as acknowledgments u/s 19, Indian Limitation Act.
The last argument of Mr. Patanjali Sastri on the question of limitation is entitled to far more weight. He argues that as the first defendant was not
in British India for six years from 1903 to 1908 the plaintiff''s cause of action was suspended during that period u/s 13 of the Limitation Act, not
only against the first defendant but also against defendants Nos. 6 and 8. Before disposing of this question of law, we must deal with a preliminary
objection raised by the respondents to its consideration. It was argued on their behalf that this exemption from limitation was not specifically
pleaded in the plaint, and that consequently the appellant is not entitled to be heard on it. We asked the learned Vakils that as the question was
considered at length by the Subordinate Judge, whether there are any grounds for holding that they were prejudiced by the procedure adopted by
the lower Court. In answer, we were told that if this point had been mentioned in the plaint and raised in the issue, the defendants could have
pleaded that under the law of Epoh the suit was barred by limitation altogether. We are unable to understand why this plea should not have been
put forward even though the exemption u/s 13 of the Indian Limitation Act was not specifically raised in the plaint. Having regard to the fact that
the plea of limitation can be disposed of upon the admissions made by the defendant himself and having also regard to the fact that the question
was considered by the lower Court, we think we should not be justified in refusing to hear the appellant on this point. Before proceeding farther we
may say that the deposition of the first defendant is clear and unambiguous that between 1903 (we shall take the end of 1903) and December
1903 he was not in British India On this evidence there can be no doubt that if the first defendant were the sole defendant, the suit would be in
time.
The question argued by the learned vakil for the appellant has two aspects: One is whether the plaintiff is entitled to claim a reduction of time as
against all the defendants by the fact that one of them was absent from British India, and the other whether the plaintiff is not entitled to deduct the
time at least as against the particular defendant who was not resident in India. These questions are not covered by any Indian authority. Mr.
Patanjali Sastri drew our attention to some English cases bearing upon the statute of Queen Anne. The language of that statute is not very different
from the one we have to construe. In Fannin v. Anderson (1845) 7 Q.B. 811 Lord Denman, Chief Justice, held that if one of the defendants was
absent in a foreign country, the plaintiff was entitled to have the period of absence deducted in his favour as against the particular defendant and his
co-promisors. This was followed by Jervis, C.J., in Towns v. Mead (1855) 16 C.B. 123. The other learned Judges who sat with him expressed
no opinion on the question. These two cases were quoted with approval in Roddam v. Morley (1857) 1 De G. & J. 1. Prima facie therefore the
extreme contention of the learned vakil for the appellant would seem to derive support from these decisions; that on examining them, we are of
opinion that the plaintiff is not entitled to deduct the time of absence of the first defendant as against the other defendants. Mr. Shephard in his
commentary on the Indian Limitation Act points out that under the English law if a co-obligor who is within the jurisdiction is sued, it is open to him
to demur to the trial of the action on the ground that the other co-obligors should also be proceeded with at the same trial. Reference may be made
in this connexion to the well-known case of King v. Hoare (1844) 13 M. & W. 494. Having regard to Section 43 of the Indian Contract Act
which declares that co-promisors are jointly and severally liable such a plea will not be available in India. Secondly, it is stated in Fannin v.
Anderson (1845) 7 Q.B. 811:
The plaintiff cannot bring the absent defendants into Court by any act of his; and, therefore, if he be compelled to sue those who are within six
years, without joining those who are absent, be may possibly recover against insolvent persons, and lose his remedy against the solvent ones who
are absent.
That again is not the rule of law which obtains in this country. See Mohammad Askari v. Radha Ram Singh I.L.R.(1900) All. 307 and Mool
Chand v. Alwar Chetty ILR (1916) Mad. 548. It is doubtful whether the principle mentioned by Lord Denman, Chief Justice, is good law now
even in England. See Bullen and Leake''s Precedents of Pleadings note (a) at page 614 and Leake on Contracts, page 684 (6th edition). In this
treatise, the law is stated in these terms: judgment recovered against one of joint obligors of a bond merges the joint liability on the bond, and is a
bar to an action against the others; but if the obligors are bound jointly and severally the judgment against one, without satisfaction, is no bar to an
action against another upon his several liability, whilst any part of the debt remains due.
A third ground upon which the English decisions proceed is pointed out in Darby and Bosanquet on Limitation and that is that the principle of
the cases decided under the Statute of James which applies to one of several plaintiffs residing abroad should govern the construction of the Statute
of Queen Anne as well. None of the above special grounds are applicable to India. Moreover the language of Section 13 of the Limitation Act
does not lend itself to the extreme contention of the appellant. Although the singular ''defendant'' would include the plural ''defendants,'' the
contention would necessitate our reading into the section some words like these, namely, ""if there are more defendants than one and any one of
them happens to be out of British India."" We see no reason for adopting such a construction. We must therefore hold that the absence of the first
defendant would not entitle the plaintiff to count the period of his absence in his favour as against defendants Nos. 6 and 8.
On the other hand we think that the alternative contention of the learned vakil for the appellant is well-founded. As we have stated already u/s
43 of the Indian Contract Act the liability of co-promisors is joint and several. Section 249 of the Contract Act enunciates the same principle as
regards partners. Consequently the plaintiff could sue for the whole of the amount the first defendant alone; and he would be entitled u/s 13 of the
Limitation Act to deduct the time during which the latter was absent from British India. The fact that in the suit thus brought, the plaintiff has
impleaded defendants Nos. 6 and 8 is no ground for rejecting the claim as against the first defendant also. No violence will be done to the language
of Section 13 of the Limitation Act by holding that as against the absentee--defendant alone the plaintiff is entitled to the deduction of time during
which he was away from British India. The fact that he could have sued his co-obligors who were within British India is not a ground for holding
that the claim against the first defendant is barred by limitation: see Abdulkhadir v. Ahammad Shaiwa Ravuthar I.L.R.(1915) Mad. 419. We must
therefore hold that the appeal, so far as defendants Nos. 6 and 8 are concerned, fails and must be dismissed; the appeal also fails as against
defendants Nos. 3, 4, 5, 7, 9 and 10 who are members of a joint family with defendants Nos. 6 and 8. We must now proceed to hear the appeal
against the defendants Nos. 1 and 2 on the merits.
This appeal as against respondents Nos. 1 and 2 again coming on for hearing the following judgment of the Court was delivered by:
Seshagiri Ayyar, J.
On the second question argued by Mr. A. Krishnaswami Ayyar, the facts are these: The father of the plaintiff was a partner with defendants
Nos. 3, 6 and 8, in the Epoh firm, which we shall denominate as the creditor-firm. Defendants Nos. 3, 6 and 8 were also partners with the first
defendant in the Singapore firm, which we shall call the debtor-firm. The plaintiff''s father died in 1903. During the course of the winding up of the
creditor-firm defendants Nos. 3, 6 and 8 lent to the debtor-firm a certain sum of money. The present Suit is to recover the plaintiff''s share of that
loan. The question whether the plaintiff can maintain the suit against a firm which consists of some of his own partners need not be decided as we
agree with the lower Court upon another point.
By Exhibit I, the debtor-firm entered into a deed of composition with the outside creditors of that firm. The main provisions of that document
are that the first defendant should pay a certain sum of money to pay off these outside creditors and that he should be released from liability to his
partners for any moneys advanced by them. The arrangement come to appears to us to have been bona fide and reflects credit on the partners in
that they agreed to forego their own rights with a view to pay off those who had lent monies to the firm. We are unable to agree with Mr. A.
Krishnaswami Ayyar that by such an understanding defendants Nos. 3, 6 and 8 secured any personal advantage to themselves. We agree that
moral turpitude need not be brought home to them, see Norton v. Lord Ashburton (1914) A.C 932, but we think that the arrangement was a
business like one and was entered into for the purpose of securing the best interests of the debtor-firm. The question, under these circumstances, is
whether the release of the first defendant is impeachable by the plaintiff. That one partner can release a partnership liability is well established--see
Lindley, page 180. That after dissolution by the death of one of the partners the surviving partners still have the right of releasing a claim is clear
from Section 263 of the Contract Act: vide also Motilal Bechardass v. Chellabhai Hariram ILR (1893) 17 Bom. 6.
Mr. A. Krishnaswami Ayyar put forward the ingenious argument that after the death of one of the partners, his legal representative continues to
be a partner for the purpose of winding up. We are unable to accede to this proposition. u/s 241, the legal representative of a deceased partner
will become a lender in respect of any business that might have been carried on by the surviving partners. If no business is carried on then the legal
representative will be a tenant in common with the surviving partners in respect of the assets of the business--vide Story on Partnership, Section
That the principle of Section 45 of the Contract Act is applicable to partners was decided in Motilal Bechardass v. Chellabhai Hariram ILR
(1893) 17 Bom. 6 and we agree with this proposition. The argument that by Section 263 of the Contract Act, the legal representative of a
deceased partner is by implication a partner is opposed to the language of the section. Clause (2) of Section 29 of the English Partnership Act was
relied on. That only shows that if during the winding up the partner makes a secret profit, he is accountable to the legal representatives of the
deceased partner for it. That section is no authority for the position contended for by the learned vakil. Piercy v. Fynney (1871) L.R 12 Eq. 69,
Veerasawmy Naicker v. Ibramsa Rowther (1909) 19 M.L.J. 221 and Baikunt Nath Chakrabarti v. Haree Lal Pal Chowdhury (1911) 13 C.L.J.
234 lay down that if a release by one of the parties is fraudulent, the other partners can avoid it and seek to recover their share of the released
debt. The legal representative is not entitled to such a right which is personal to the partners. We are therefore of opinion that the release of the first
defendant is binding on the plaintiff. If he had been damnified by the conduct of defendants Nos. 3, 6 and 8, his remedy is to sue them for
damages. As we have held that the claim against defendants Nos. 3, 6 and 8 is barred by limitation, this matter need not be pursued any further.
The decision of the Court below is right and we dismiss the appeal with the costs of defendants Nos. 1 and 2.