Subramania Aiyar v. Gopala Aiyar And Ors.

1. The suit was instituted by the plaintiff as trustee of a temple for recovery of a certain sum of money which represented the rents due to the temple uncollected by the father of the defendants Nos. 1, 2 and 3, who was the preceding trustee.

2. The father having died in August-September 1901, the sons were impleaded as liable as well as the representatives of certain sureties for the proper management of the temple affairs by the father. The suit has been dismissed as barred by limitation. As regards the sons, Article 98 of the Indian Limitation Act XV of 1877 is sought to be made applicable. It runs as follows:

To make good out of the general estate of a deceased trustee the loss occasioned by a breach of trust.

3. The property that is sought to be made liable being the joint family property of the father and sons, which passes by survivorship to the sons on the death of the father, we do not think it forms "the general estate" of the deceased trustee within the meaning of the article. The sons are sued on the ground of the peculiar liability of the sons under the Hindu Law to pay the father's debts. It is unnecessary to determine which article applies in the case of a suit to enforce the liability of the sons to pay the debts of the father. [See however, Periaswami Mudaliar v. Seetharama Chettiar 27 M. 243 at p. 252 : 14 M.L.J. 85]. For, the sons are clearly not liable to pay a debt of the father which was barred against him. The suit is based on the ground that the rents Were lost to the temple because the father had allowed them to be barred ; otherwise there would be no liability at all of the father, or his sons. The suit against the father being barred under Article 36 of the Indian Limitation Act XV of 1877 [See Srinivasa Ayyangar v. Municipal Council of Karur 22 M. 342] no suit can lie against the sons.

4. The next question is--are the sureties liable ? The determination of this question depends upon the construction of Section 134 and Section 137 of the Indian Contract Act IX of 1872. Section 134 says : 'The surety is discharged by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor." Does the omission of the creditor to sue the principal debtor within the statutory period discharge the surety? We think not. Says Lindley, L.J. in Carter v. White (1883) 25 Ch. D 666 at p. 672 : 54 L.J. Ch. 138 : 50 L.T. 670 : 32 W.R. 092: "Is it the law that a creditor who neglects to sue his debtor till the statute has run Will thereby discharge his surety ? There is no decision to that effect. On the contrary the true principle is that mere omission to sue does not discharge the surety, because the surety can himself set the law in operation against the debtor." Cotton L.J., expressed himself to the same effect, and Fry, L.J. concurred. This statement of the law has been accepted without question. See Chifty on Contracts, page 465, 14th Edition, and Darby and Bosanquet on Limitation, 2nd Edition, page 17. Does the Law in India make any difference on this question ? Does the running of the statutory period of time extinguish the debt as well as bar the remedy ? Mr. Mitra in his Tagore Law Lectures on Limitation, 4th Edition, says, at page 14: "As to rights in personam it has been held that a right to receive payment of a debt does subsist even after the remedy by action has been barred." The decisions in Mohesh Lal v. Busunt Kumaree 6 O. 310 : 7 C L.R. 121 and Anando Kishore Dass Bakshi v. Anando Kishore Dass 14 C. 50 are clear authority in favour of this view. See also the learned discussion of the question by Mr. Justice Holloway in Valia Tamburatti v. Vira Rayan 1 M. 228.

5. There is hardly any room for doubt in the face of the express language of Section 28 of the Indian Limitation Act XV of 1877 which merely extinguishes the right to property when the period is determined for suits for recovery of such property. Whenever personal actions are barred, the rights themselves are not extinguished. That the principal debtor is not discharged by lapse of time may also be gathered from Section 25, Clause 3, and Section 6O of the Indian Contract Act IX of 1872. A barred debt is a good foundation for a written promise to pay signed by the party liable to be charged therewith. It is impossible to regard a debt as discharged by limitation when Section 60 of the Indian Contract Act speaks of a barred debt as a lawful debt, actually due and payable to the creditor. Unless a law of limitation operates as well as a law of extinction, prescriptive omission to sue cannot discharge the debtor Limitation which merely bars the remedy is never spoken of in works on Jurisprudence as a mode of discharging an obligation. Holland, enumerating the modes of termination of rights in personal, does not refer to limitation as one of them; See Holland's Jurisprudence, 10th Edition pages 306 to 311. Anson in his work on Contracts treating of the "discharge" of contracts says : "At common law lapse of time does not affect contractual rights ; such rights are of a permanent and indestructible character unless, either from the nature of the contract or from its terms, it be limited in point of duration. But though the rights possess this permanent character, the remedies arising From their violations are, by various statutory provisions, withdrawn after a certain lapse of time. The remedies are barred, though the rights are not extinguished." See Anson's Law of Contracts, 11th Edition page 343. It would, therefore, seem to follow that in mere omission to sue does not discharge the principal debtor, the surety is not discharged under Section 184 of the Indian Contract Act. It has been argued that the surety will be discharged if he is liable to be sued when he cannot have any remedies against the debtor after a suit against him has become barred. The answer is he is himself to blame. He can easily avoid the risk and clothe himself with all the creditor's rights by payment or performance as soon as the debtor becomes liable--Section 140 of the Indian Contract Act.

6. To make the position clear, Section 137 of the Indian Contract Act expressly says that mere forbearance to sue does not discharge the surety. We may add, whatever the length of the period of forbearance, the fact that the illustration to the section mentions one year as the period of forbearance cannot involve the implication that if the period is three years the surety will then be discharged. We are unable, therefore, to agree with the decision in Ranjit Singh v. Naubat 24 A. 504. The ground of the decision in Hazarimal v. Krishnarav 5 B. 647, followed in Sankana Kalana v. Virupakshapa Gauashapa 7 B. 146 and Krista Kishori Choudrain v. Radha Momun Munshi 12 C. 330 commends itself to us. The decision in Jambu Ramaswami Bagharathar v. Sundararaja Chetti 26 M. 239 at p. 242 proceeds on a different ground, namely, that a suit against the drawer maintainable at the date of institution does not cease to be so because it is barred as against the acceptor where he is subsequently added as a party defendant. We must, therefore, dismiss the appeal as against the defendants Nos. 1 to 3, but as regards the other defendants the decrees of the Courts below must be reversed and the suit remanded to the Court of first instance for disposal according to law. There is no question of personal liability. The liability of the property given as security has alone to be determined with reference to the issues raised. The appellants will pay the costs of the defendants Nos. 1 to 3 throughout. The costs of the other parties will be provided for in the revised decree.