SHEIK IDAN SADAGAR Vs. FIRM PREMSUKDAS-RAMCHANDRA

JUDGEMENT

(1.) This appeal arises out of a suit brought by the respondents to recover a sum of Rs. 739 and odd from the defendants. The suit was based upon a chitha in which there are a number of entries both on the debit and the credit sides. It appears from these entries that about 11 August 1926, the defendants borrowed a sum of Rs. 350 from the plaintiffs and executed a handnote in their favour promising to pay interest at the rate of 24 per cent, per annum. Again on 22nd September, 3 October and 1 November 1926 and 24 November 1928, the defendants purchased some cloth on credit from the plaintiffs for various sums which are noted in the chitha. The chitha also shows that payments by or on behalf of the defendants were made of various sums of money on 16 April, 20th October, 22 August, 1927, 5 September 1928 and 21 April 1929, the sum paid on the last occasion being Rs. 100. Most of these payments including the last one have been noted in the handwriting of one Riazuddin who has been found by both the Courts below to be an agent of the defendants and to have been duly authorized by them to make the payments.

(2.) The only point which is raised in this appeal on behalf of the appellants is one of limitation and it is contended that (1) each transaction must be regarded as an independent transaction for the purpose of limitation, and (2) neither Section 19 nor Section 20, Lim. Act applied to the facts of this case. It may be stated here that the trial Court applied Section 19, Lim. Act which does not seem to be applicable and the case was dealt with in a very perfunctory manner by the Appellate Court. The matter was therefore argued very elaborately in this Court and it became clear in the course of the argument that unless the facts of this case could be brought under Section 20, Lim. Act, the suit would be barred by limitation. Section 20 provides among other things that when interest on a debt is, before the expiration of the prescribed period, paid as such by the person liable to pay the debt or by his agent duly authorized in this behalf, a fresh period of limitation shall be computed from the time when the payment is made. The learned advocate for the appellants rightly contended that in order to bring the case under this provision, it must be shown that interest was paid as such. In the course of his arguments the learned advocate referred to a number of decisions, but he relied principally on Udeypal Singh V/s. Lakshmi Chand . In that case it has been pointed out that the Legislature must be deemed to have fully understood the significance of the words paid as such in Section 20, Lim. Act and therefore where money is paid by a debtor without his specifying whether his payment is towards interest or towards principal leaving it to the option of the creditor to appropriate it as he likes and the creditor appropriates it towards interest, there is neither a payment of interest as such nor a part payment of the principal within the meaning of Section 20. As the view put forward in this case is the view generally accepted in all the Courts, the only question to be considered is whether in the circumstances of the present case it can be held that the whole or any portion of the payment which was made on 21 April 1929 was made towards interest as such.

(3.) Now it appears that it was definitely stated on oath by one of the witnesses of the plaintiffs in the course of the trial that it had been agreed between the parties that "interest would be paid first of all and that anything paid by them (defendants) would go first of all towards interest". This statement was not controverted by the defendants and therefore there can be no doubt that there was such an agreement between the parties. The plaintiffs again included in their plaint an account of the transactions which shows that the payments referred to above were appropriated towards interest from time to time and a portion of the last payment was also appropriated towards interest. This account was part of the plaint and I find no specific objection in the written statement to the various items in the account which have been credited towards interest. The defendants simply denied that any payment had been made on 21 April 1929; but both the Courts below have held against them on this point. It appears to me that in these circumstances it must be held that there was a payment in this case towards interest as such and that payment was sufficient to save limitation. It has been held in Charu Chandra Bhattacharjee V/s. Karam Bux Sikdar AIR 1918 Cal 477, that in order to bring a case within Section 20, Lim. Act, it is not essential that the debtor should, on the occasion of each payment, state explicitly that the payment is made on account of interest as such; it is sufficient if circumstances exist which make the conclusion inevitable that the payment must have been made on account of interest. The correctness of this proposition has not been challenged in any of the oases which have been relied on by the learned advocate for the appellants, and in my opinion the circumstances of this, case make it dear that the disputed payment was made towards interest.