BENARES BANK, LTD Vs. MASUDAN LAL

JUDGEMENT

(1.) Defendants 1 party were merchants carrying on business in the town of Bhagalpur. The appellant Bank agreed to allow them an overdraft if a suitable surety was provided. Defendant 2nd party stood surety to the extent of Rs. 1,000. This was effected by an agreement dated 27 February 1925. The agreement was as follows: In consideration of your allowing from time to time an overdraft in current account up to a maximum of Rs. 1,000 only to Babu Jugal Kishore and Babu Nawal Kishore, proprietors of the firm of Messrs. <JGN>Agarwala</JGN> Brothers of Nayabazar, Bhagalpur, I hereby agree to hold myself, my executors and administrators responsible for the duo re- payment of the same or any unpaid portion there of together with interest at the rate of 12 per cent, per annum, and I undertake to pay you the amount which may become due to you under this guarantee upon your demand. I further undertake to pay on demand any money for which he may become liable alone or jointly with any other person or persons to you on any account what soever and for interest, commission or other Bank's charges to the extent mentioned above exclusive of interest.

(2.) In June 1926 the overdraft amounted to Rs. 1,000. The Bank continued to make advances to defendants 1 party from time to time, and in June 1929 the amount due was Rs. 1,867-4-0. For the advances in cash of over Rs. 1,000 the defendants 1 party provided a security. The suit was instituted on 24 July 1930. It is admitted that with the exception of Rs. 100, which the Bank advanced on 27 July 1927, there were no advances from the Bank to defendants 1 party within three years of the institution of the suit. On 30 January 1929, however, the Bank sent a statement of account to defendants 1 party showing the amount then due from them. Defendants 1 party signed the statement and returned it. A copy of the account was also sent to defendant 2nd party who, however, declined to sign it. On 20 January 1930, the Bank again sent a statement of the account to defendants 1 party. A copy was again sent to defendant 2nd party who again declined to sign it. On these facts the first Court, purporting to follow the decision in Brajendra Kishore V/s. Hindustan Co-operative Insurance Society, Ltd. 1918 Cal 707, held that the claim was barred against defendant 2nd party except to the extent of Rs 100. He, therefore, passed a decree against defendant 2nd party to this extent an) decreed the suit in full as against defendants 1 party. On appeal by the plaintiff this decree was modified by the Additional Subordinate Judge of Bhagalpur to this extent: that the decree for Rs. 100 which was passed against the surety was set aside.

(3.) In second appeal it has been contended that the surety is liable to the extent of Rs. 1,000 and interest on that sum. The plaintiff's claim is laid at Rs. 1,125-4-1. On behalf of the respondents reference has been made to that class of cases in which it has been held that payment of interest by a principal debtor does not extend the period of limitation as against the surety, and to the case in Salig Ram Misir V/s. Lachman Das 1928 All 48, in which it was held that when a suit for recovery of debt is barred as against the principal defendant, the creditor has no remedy against the surety. The learned Advocates who appeared for the appellant and respondents, respectively, were not agreed as to the particular Art. of the Limitation Act applicable to a suit against a surety. Reference was made to Arts. 57, 64, 73 and 115. In my opinion, however, the matter is not one which is of any consequence in the present case. On the face of the letter of guarantee itself defendant 2nd party undertook not only to guarantee the overdraft to the extent of Rs. 1,000 but by para. 2 he agreed to hold himself liable for the dues of defendants 1 party "on any account whatsoever" to the extent of Rs. 1,000 and interest thereon and commission or the Bank's charges in respect thereof. It is clear that there was an account stated as between plaintiff and defendants 1st party which implied a liability on the part of the latter to pay the plaintiff the amount ascertained to be due to him. The second part of the letter of guarantee covers this liability and the defendant 2nd party is, therefore, liable to the plaintiff to the extent of Rs. 1,000 of the sum so ascertained, together with interest and commission or the Bank's charges in respect of it. The starting point of limitation for a suit to enforce this liability is not earlier than the date on which the account was stated under Art. 64. The present suit was, therefore, in time, and the appellant is entitled to a decree for Rs 1,000, with interest from the date of the account stated. The plaintiff has laid his claim at Rs. 1,125-4-1 and is entitled to a decree for this sum against both sets of defendants. As the rate of interest agreed to be paid by defendants 1 party has not been specified, interest pendente lite and until payment will be at the rate of six per cent. Defendant 2nd party will pay the costs of this appeal and of the Court below. Dhavle, J.