R SUBBARAYA GOUNDER Vs. K R ESWARAMOORTHY GOUNDER

JUDGEMENT

(1.) THIS appeal is preferred by the first defendant in O. S. No. 54 of 1958 on the file of the Court of the Subordinate Judge, Coimbatore. That suit was brought by the respondent for recovery of Rs. 21794-8-0 due on a promissory note executed by the appellant. The admitted facts are these.

(2.) THE appellant and the father of the respondent were carrying on business in partnership at Tirupur under the name and style of K. S. R. and Co. This firm became indebted to the Central Bank, Tirupur, in a large sum. In order to pay off this debt the two partners of K. S. R. and Co. borrowed Rs. 50000 by executing two promissory notes; the notes sued upon in this litigation was one ana the other was the note executed by the father of the respondent in favour of one Saraswathi amnial, a niece of the respondent. Both notes were executed on 14-3-1351. Sometime before the execution of the promissory notes K. S. R. and Co. stopped doing business. Even while they were doing business the respondent was acting as a Banker for them receiving their monies as deposits and lending monies to them. After giving credit to the sum of Rs. 15750 towards the suit promissory note as on 29-3-1954 and other sums one of which was endorsed on the suit note as paid for principal, the balance was claimed in the plaint as due. Various defences were raised to the action but it is enough for the present appeal to mention three defences pressed before me. The first is that despite the terms of the promissory note in suit there was no agreement to pay interest on the loan. The second is that there was an agreement between the parties that as and when collection was made of the outstandings due to K. S. R. and Co. by the respondent, such amounts should be given credit to towards the suit promissory note. It is said that if this agreement had been acted upon by the respondent a sum of Rs. 15/50 actually given credit to on 29-3-1954 should have been credited even in september 1951 when it is said a sum of more than Rs. 30000 was available as deposits with the respondent representing the collections of outstandings due to the K. S. R. and Co. The third defence which was pressed before us related to the question of limitation. We will take up the points in that order.

(3.) POINTS 1 and 2 are inter-related because it is said that in the account books of the respondent no counter interest has been allowed for the collections deposited by the K. S. R. and Co. That circumstance is relied on as an indication in proof of the agreement not to collect interest on the suit promissory note. Not onlyp the suit promissory note but also the voucher executed for the amount covered by the note Ex. A-3, mentions the term as to payment of interest. It is true that Ex. A-3 was executed a few days after the execution of the promissory note Ex. A-1. It is also true that it is signed by defendant 3. These circumstances, in our opinion, do not make a difference. The third defendant was the partner of the K. S. R. and Co. on the date of the suit borrowing. His father, the executant of the promissory note Ex. A-1, had ceased to be a partner of this firm sometime earlier than 1951 as a result of a partition in his family. By the arrangement come to between the members of the family of the appellant, in the place of the father the third defendant was taken as a partner. In the face of the recitals in Exs. A-1, and A-3 we would require clinching evidence to show that there was an agreement between the lender and borrower not to charge interest for the suit promissory note. The respondent who was examined as a witness in the case admitted his liability to pay interest on the deposits made from out of the collections of the outstandings due to the K. S. R. and Co. It is true the account book maintained by the respondent does not show that interest has been calculated on the deposits till now. But in the system of accounts maintained by the respondent which is on cash basis such omission is not decisive. We therefore agree with the learned Judge in the Court below that the case of the appellant that there was an agreement not to collect interest for the suit promissory note is not true.