DOSAPATI RAMAYYA Vs. PATTAM ANJAYYA

JUDGEMENT

(1.) This civil revision petition is preferred by the defendant against a decree in a small cause suit based on a promissory note. Two questions were raised in revision, one. relating to the scaling down of the decree under Madras Act IV of 1938 and the other relating to limitation. On the first point, it seems to us clear that the two earlier payments amounting to Rs. 125 must be treated as unappropriated payments available in reduction of principal as on 1 October, 1937, so that the decree should have been one for Rs. 75 with interest at 6 1/4 per cent, from 1 October, 1937, credit being given as on 15 September, 1938, to the payment of Rs. 2.

(2.) Turning to the more difficult question relating to limitation, it is common ground that the suit filed on 11 November, 1939, would have been barred by limitation unless limitation was saved by the endorsement of Rs. 2 on 15th September, 1938. The promissory note was for a sum of Rs. 271-8-6 and the previously endorsed payments were for an amount of Rs. 125. Quite clearly therefore at the time when this payment of Rs. 2 was made a very considerable balance was due on the note. It is argued that the decision of the Privy Council in the case of Rama Shah V/s. Lal Chand (1940) 1 M.L.J. 895 : L.R. 67 I.A. 160 : I.L.R. (1940) Lah. 470 (P.C.), governs the present case. The endorsement was in the following words: Paid on 15 September, 1938, towards this promissory note Rs. 2. The original Telugu word translated as towards is kintha which literally means under . Now, the Privy Council decided in the case just referred to that where a debtor pays a sum as a part payment of an interest bearing debt, without indicating whether the payment is towards interest or principal, in order to obtain a fresh period of limitation under Section 20 of the Limitation Act, it is incumbent upon the creditor to appropriate the sum paid towards the principal before the expiration of the prescribed period of limitation. This decision is clearly authority for the view that an unappropriated payment, such as the payment of Rs. 2 in the present case, cannot avail the creditor under Section 20 of the Limitation Act as a payment towards interest as such or towards principal saving limitation and all previous decisions which took a contrary view must be deemed to have been overruled.

(3.) It is, however, contended for the respondent that though this endorsement may not save limitation under Section 20, it can be deemed to be a sufficient acknowledgment of the debt so as to save limitation under Section 19. Their Lordships of the Privy; Council in the case just quoted, though they referred to Section 19 in order to discuss its relation to Section 20, were not dealing with a case in which there was any pleading that the writing would be a sufficient acknowledgment under Section 19, even though the payment was not a payment falling under Section 20, and their Lordships do not consider whether such an alternative plea would have been open to the creditor in the case before them, had it been taken. We are therefore of opinion that the decision in Rama Shah V/s. Lal Chand (1940) 1 M.L.J. 895: L.R. 67 I.A. 160 : I.L.R. (1940) Lah. 470 (P.C.), is authority neither for nor against the view that when there is a part payment endorsed in such terms as to make it ineffective for the purpose of Section 20 of the Limitation Act, it may by implication amount to such an acknowledgment as would save limitation under Sec. 19.