NATIONAL BANK OF UPPER INDIA, LIMITED Vs. BANSIDHAR

JUDGEMENT

(1.) On December 22, 1917, the first respondent executed in favour of the National Bank, of Upper India, Limited, a promissory note payable on demand for Rs. 20,000, and interest, together with a formal receipt for the money. The bank is now in liquidation and the liquidators, suing in the name of the bank, claim from him the money due under the note. The second respondent, his brother, has been joined with him as a defendant to the suit, but no relief is sought as against him before this Board, and there seems to be no reason why he should have been made a party to this appeal. The suit was dismissed by both Courts in India, and the liquidators have appealed to his Majesty in Council.

(2.) The appellant bank asserted in their plaint that the Rs. 20,000 was advanced to the first respondent, and that he and his brother . made various repayments in respect of principal and interest upon which reliance was placed to save limitation, the suit having been instituted more than three years alter the date of the note. It is not now disputed, however, that the true facts are as follows:

(3.) One Bishambhar Nath, who was a director of the bank, had been allowed by the bank's manager, Ram Nath Sapru, to become indebted in a large sum to the bank, and in December, 1917, in view of the approaching half-yearly audit, it was desirable that the account should be squared in some way so as not to show the director as a debtor to the bank. The first respondent, who carried on business in Lucknow with his brother, the second respondent (who was also a director of the bank), was accordingly persuaded to execute the promissory note sued on, so as to show him as the bank's debtor for Rs. 20,000, and this amount was credited in the books of the bank to Bishambhar, thus wiping out his indebtedness. No part of the Rs. 20,000 came into the hands of the first respondent, and he apparently had nothing to gain by the transaction, the plain effect of which was to substitute him as a debtor of the bank for Rs. 20,000 in the place of Bishambhar. The first respondent has deposed that he was assured by both Bishambhar and Ram Nath that he would not be held liable on the note, and that the debt would be discharged by Bishambhar. In this he is confirmed by Bishambhar, who admits that the debt was really his, and their Lordships have no reason to doubt that this is true. Ram Nath, the only other party to the transaction, was dead at the date of the suit. The payments upon which the appellant bank relied to save limitation were none of them made by or under the instructions of the first respondent. The particular payment which has been relied upon before the Board, viz., a payment of Rs. 908-6-3 on account of interest, under date December 23, 1918, was part of a sum of Rs. 6,000 paid to the bank on that day by Bishambhar. It was apparently allocated by the bank to different accounts in which. Bishambhar was interested, and this allocation, including the credit of the Rs. 908-6-3 to interest due on the first respondent's promissory note, was accepted by Bishambhar, as is shown by the entries in his books a few days later. The Rs. 908-6-3 appears in the bank's books as paid by the first respondent personally, but no attempt has been made to support this, and their Lordships have no doubt that the entry is, to say the least of it, incorrect.