1. In this suit, the plaintiffs' claim against the defandants is for the balance of a current account. The defendants Amar Nath Banerjee and Hiralal Mukherjee do not contest the suit. It is admitted that the defendants carried on business in partnership under the firm name of Banerjee Mukherjee & Co., and opened an overdraft account with the plaintiff bank, which is now in liquidation and it was arranged that each partner should be eligible to sign cheques in the firm name, adding thereto his own initials, and that the bank would advance money to enable the defendants to purchase materials and on receipt of the bills given in payment for goods supplied by defendants to customers would collect these on commission and deduct the balance from the overdraft. The defendant Jatindra Nath, however, says that this partnership was dissolved in 1921, and that the plaintiffs had notice thereof. That thereupon he ceased to have any interest in the business, which was carried on by the other two defendants alone, and that he commenced a separate business on his own account. He says also, and this seems to be true, that whatever sum was due to the bank at the time of dissolution has been repaid. He has produced a deed of dissolution dated 24th June 1921, and I have no reason to think that it is other than genuine. He has also produced a carbon copy of a letter dated 27th June 1921, giving notice of the dissolution, which he says that he handed personally to Bhupendra Nath Banerji, who was the managing director of the plaintiff bank, after giving him verbal notice at or about the date of dissolution.
2. He admits, however, that he did not obtain a receipt for this notice, nor did he receive any acknowledgment from the bank nor did he give any notice to firm's dealing with Banerjee Mukherjee & Co., nor did he advertise the fact of dissolution in the Exchange Gazette, nor in any of the Vernacular Gazettes nor in any English newspaper.
3. On the contrary Bhupendra has been called and has stated emphatically that he never had any notice of the dissolution either verbally or in writing until after the institution of the suit and he has produced the bank's Letter Receipt Book which confirms his statement.
4. As between the evidence of Jatindra and Bhupendra I accept that of the latter, and I find in fact that notice of the dissolution was not given to the plaintiffs- who are not therefore affected by it : Section 264, Contract Act. It is unnecessary for me to decide whether this omission to give notice was due to forget-fulness on the part of the defendants, or because they or Jatindra failed to realize what his legal position would be with regard to the firm's creditors, or because they or Amar Nath and Hiralal feared that knowledge of Jatindra's retirement might affect the firm's credit with the bank. The defendant Jatindra has raised the further points that the arrangement for overdraft was limited to Rs. 4,000, and that moneys were to be advanced only against approved securities. This Bhupendra has denied and I accept his evidence. In any case this limit was very soon exceeded, and large sums advanced without any security, to the knowledge of Jatindra. However, the substantial point raised on his behalf is one of law, namely whether the claim is statute barred, and (assuming that the period of limitation otherwise would have expired) that depends upon whether having regard to Section 21(2), Lim. Act, there had been any acknowledgment of liability in writing under Section 19 or any part payment of the principal of the debt by the debtor or his agent duly authorized in that behalf, and the fact of which payment appears in the handwriting of the person making it as required by Section 20. Now the facts upon which the plaintiffs rely are: (1) a letter dated 11th January 1922 from defendants to plaintiffs which reads as follows:
Enclosed please find the undermentioned bill with complete voucher which is to be collected from Messrs. Andrew Yule & Co., Ltd. account the Port Engineering Works Ltd., and credited to our account on realization as arranged.
5. Bill No. 1578. The Port Engineering Works, Ltd. Rs. 2832-1-6. This Bill less commission was credited to defendants' account on 26th May 1922. (2) A letter dated 18th January 1922 in similar terms referring to Bills Nos. 1492, 1583, 1584, Bill No. 1583 being credited on 24th March 1922. This suit was instituted upon 14th January 1925.
6. I am of opinion that there has been a sufficient acknowledgment and/or payment by the defendants Amar Nath and Hira Lal to satisfy the provisions of the above sections, as against them. The part payments of the principal debt are evidenced by the handwriting of the person making them contained in the covering letters. The fact that the collection and receipt of the money and the letter containing the handwriting are not simultaneous in point of time is immaterial, as has been decided: Moreover the letters contain acknowledgments of liability, because they refer to the account and request that the bills may be credited " as arranged, " that is to say deducted, from the amount of the over-draft according to the agreement between the parties and an acknowledgment of a current account implies an acknowledgment of a right to have accounts settled and implies a promise to pay should the balance turn out to be against the person making it. Maniram Seth v. Seth Rupchand [1906] 33 Cal. 1047 The question remains whether what they did is binding upon the defendant Jatindra Nath and it is a question of implied authority.
7. Ordinarily whatever their authority had been, it would cease upon dissolution. But Section 264, Contract Act, provides in effect, that so far as the plaintiffs are concerned, there had been no dissolution and the partnership still subsisted at the time when this suit was instituted. The real question therefore is, what implied authority has one partner to bind another partner by his acts.
8. Section 251, Contract Act, provides that each partner who does any act necessary for, or usually done in, carrying on the business binds his copartners, as if he were their agent duly appointed for that purpose. Section 21(2) simply means that the mere acknowledgment or payment by one or more partners is not of itself sufficient to make the other' or others chargeable, apart from the question of authority. Therefore what I have to decide is, whether, an acknowledgment or payment such as was made in this case and which has the effect of removing the bar of limitation, was authorized impliedly, by the defendant Jatindra Nath or not. That depends upon whether it was an act necessary for or usually done in carrying on the business. In my opinion, clearly it was such an act. The acknowledgment was contained in a letter, dated 18th January 1922 similar to many dozens of others written by defendants to plaintiffs, asking that certain bills should be collected and credited to the firm's account. It was written in the usual course, and was essential to the business, which could not have been carried on without the overdraft arrangement made with the plaintiffs. It was followed by a payment made on 24th March in accordance therewith upon collection of the bill. There was another payment upon which plaintiffs rely made on 20th May. These stand upon quite a different footing from the acknowledgments or payments with which we are familiar and to which the oases refer, and which are made specifically in recognition of the debt. For this reason none of the cases to which I have been referred is really applicable to the facts of the present case. Moreover, in view of the clear provisions of Sections 251 and 264, Contract Act, the law as declared in the English cases of Tucker v. Tucker [1894] 3 Ch. D. 429 and Watson v. Woodman [1875] 20 Eq. 721 seems of doubtful application to India. Of the Indian decisions, the law applicable to the facts of this case is correctly stated in Dalsukhram v. Kalidas [1901] 26 Bom. 42 where the effect of Section 264 is recognized.
9. In my opinion which article of the Indian Limitation Act applies is immaterial in this case.
10. If Arts. 57 or 59 apply, then the date when the loan was made must in my opinion be taken to be the date when the last credit was entered, namely 26th May 1922 or the last debit which was in 1925, in which cases the periods of limitation had not expired when the suit was instituted. In the case of a current account between a banker and his customer, I do not think it would be practicable, or within a correct interpretation of the Act, to regard each increase of the overdraft as a separate loan, from the date of which the period of limitation must be computed, though this seems to have been the view expressed by Sir Alfred Wills in the case of Maniram Seth v. Seth Rupchand [1906] 33 Cal. 1047 at p. 1057. However, if I am wrong on this point, there has been an acknowledgment and part-payments of those loans in the present case, which have extended each of the periods of limitation. In English law time runs from the date when the cause of action arises (Limitation Act 1623) and not from the date when the loan is made as in Arts. 57 and 59.
11. No cause of action arises as between banker and customer until demand has been made. Joachimson v. Swiss Bank Corporation [1921] 2 K.B. 110. Re British American Continental Bank : Credit General Liegeois' claim [1922] 2 Ch. 589. per P.O. Lawrence, J. at p. 593 ; Grant on Banking 7th edn. at p. 182. These are recent decisions, and their effect has been to upset views previously held by many lawyers. It has been declared, that it is an implied term of the contract of loan made between a banker and his customer that demand shall be made before any cause of action can arise. The first decision was given in a case in which the customer sued the banker. In the second case the banker sued the customer on an overdraft, and though the actual decision turned on another point, P.O. Lawrence, J. applied the principles laid down in the former case. Moreover, in my opinion, the term ought to be mutually applied, if at all. The Indian legislature, however, seems to have given effect to the decision in the first case so far as it affects the question of limitation but not to that in the second. This has been done in a curious and rather clumsy way. There have been added to Article 60, Lim. Act, which deals with money deposited payable on demand as distinguished from money lent, the words " including money of a customer in the hands of his banker so payable. " The distinction between deposit and loan seems to be that the depositee stands in a fiduciary relationship to the depositor, thus by introducing this amendment in Article 60 the legislature seems to have regarded the relationship between banker and customer as such, and not as that of borrower and lender, as is the position in English and has been hitherto in Indian law.
12. This may not have been intended and may lead to confusion and it would have been better to have dealt with the relationship of banker and customer in a separate article. However, it seems quite clear that it was not intended to extend the amendment to a banker suing his customer on an overdraft, and Article 60, as drafted, has no application to the present ease. The decisions given upon Article 85 are difficult to apply to the facts of this case, and are not very easy to follow. Thus it has been held that there must be reciprocity of dealings, items on one side only are not enough though made up of debits and credits-an account under which one party has merely received and paid moneys on account of the other is not a mutual account properly so called. Ram Pershad v. Harbans [1907] 6 C.L.J. 158. Similarly where the plaintiff a banker had made advances and received part-payments from time to time, the balance always being in plaintiff's favour. Budh Ram v. Ralli Ram [1916] 103 P.W.R. 1916, Bank of Multan Ltd. v. Kamta Prasad [1917] 39 All. 33.
13. But where plaintiff advanced money and defendant consigned goods to plaintiff for sale on commission, it was held that there were independent obligations on both sides, because there existed the relationship of creditor and debtor between plaintiff and defendant and that of principal and agent between defendant and plaintiff : Namberumal v. Kotayya [1913] 14 M.L.T. 498, Ratan Chand Jwala Das v. Asa Singh Bhoga Singh A.I.R. 1921 Lah. 369.
14. The facts of the present case are somewhat similar as the plaintiffs charged commission on collection, and on the whole I think that Article 85 applies and the close of the year 1922 is the appropriate date from which limitation begins to run. Apart from this question of commission, I do not think that Article 85 would apply. If none of these articles apply, then the case must fall under Article 120, which provides a period of six. years from the time when the right to sue accrues.
15. The result of all these considerations is that in my opinion the suit is not barred against any of the defendants and there must be judgment against them and in favour of the plaintiffs for the sum claimed, with costs on scale 1 against Amar Nath Banerjee and Hira Lal Mukherjee, and on scale two against Jatindra Nath Mauzmdar.