Janardan Shaha Poddar v. Radha Bullab Shaha

The Judgment of the Court was as follows:—

This appeal arises out of a suit for accounts.

The Plaintiffs and the Defendant No. 1 carried on a partnership business from the year 1311. It was closed at the end of 1313 corresponding to April 1907.

The suit was brought on the 8th March 1912, that is, more than three years after the dissolution of the partnership. Primâ facie, the suit was barred by limitation. But the Plaintiff relies upon a document called an abichalnama as containing an acknowledgment which saves the claim from being barred.

The learned District Judge was of opinion that there was an acknowledgment of liability contained in the document and accordingly held that the suit was not barred. The Defendant No. 1 has appealed to this Court.

Now, this abichalnama states that the parties (the Plaintiff and the Defendant) carried on an ejmali business from 1311 up to 1313 B.S and that it had been closed since then. Then it goes on to say “At present it has become necessary to make an adjustment of accounts and determine the dues and liabilities of each party after examining the accounts of the said business. As it is thought that it would be very unnecessarily expensive to have the adjustment of account effected through Court, we have agreed to have our disputes decided through arbitration and in that view I Radha Ballav Shaha and I Jonardan Shaha appointed you Shib Chandra Das Poddar and Iswar Chandra Poddar and Nitai Chand Poddar as arbitrators to settle our disputes and determine our respective dues and liabilities after taking evidence and going through the papers ……… If you after examining our said ejmali karbar and taking all other evidence decide either unanimously or by a majority that any sums are due to or from either of us, we will accept the same to be our respective dues or liabilities. Neither of us shall take any objections to the decision arrived at by you unanimously or by a majority and if we do any, the same will be rejected by Court according to law. You shall be competent to pay out of the four hundred rupees deposited with you by each of us, the amount that will be found by you to be due from either of us upon the adjustment of accounts. If upon making up accounts the arbitrators determine that the sum due from either of us exceeds rupees four hundred deposited by him then the person to be found so liable should deposit the additional sum with the arbitrators either at the time of making up accounts or within a time to be fixed by the arbitrators. If the arbitrators cannot arrive at any decision about our dues and liabilities from the papers of the karbar, they will either unanimously or by a majority determine what is fairly due from: either of us and pay the same to the other from the amount deposited by the debtor. ….

The arbitrators will decide the matters referred to them and adjust the accounts within three months from the date of registration of this abichalnama……”

We think that the document contained an acknowledgment that accounts remained unadjusted which the arbitrators were to adjust. It further appears that each party distinctly agreed that he would have to pay such amount as might be found due from him on adjustment of accounts. There can be no doubt about this, as each party actually deposited a sum of Rs. 400 with the arbitrators, which was to be applied in payment of the debt which the arbitrators might find to be due from one party to the other.

In the case of Maniram Seth v. Seth Rupchand (1) the Judicial Committee observed as follows: “For the last five year the Respondent had open and current account with the decease…. There is therefore a clear admission that there were open and current accounts with the parties at the death of Motiram. The legal consequence would be that at the date either of them had a right as against the other to an account. It follows equally that whoever on the account should be shown to be the debtor to the other was bound to pay his debt to the other and it appears to their Lordships that the inevitable deduction from this admission is that the Respondent acknowledged his liability to pay his debt to Motiram or his representative if the balance should be ascertained to be against him.”… …..” We have therefore the bare question of whether an acknowledgment of liability, if the balance on investigation should turn out to be against the person making the acknowledgment, is sufficient… …..

“Their Lordships can see no reason for drawing any distinction in this respect between the English and the Indian law. The question is whether a given state of circumstances falls within the natural meaning of a word which is not a word of art but an ordinary word of the English language and this question is clear of any I extraneous complications imposed by the statute law either of England or India.”

Their Lordships referred to a decision of Lord Justice Mellish in the case of In re Rivers Steam Company; Mitchell's Claim (2) where that learned Judge laid it down that “an acknowledgment to take; the case out of the statute of limitation must be either one from which an absolute promise to pay can be inferred, or secondly, an unconditional promise to pay the specific debt, or thirdly, there must be a conditional promise to pay the debt and evidence that the condition has been performed, and observed.

“An unconditional acknowledgment has always been held to imply a promise to pay because that is the natural inference, if nothing is said to the contrary. It is what every honest man would mean to do. There can be no reason for giving a different meaning to an acknowledgment that there is a right to have the accounts settled and no qualification of the natural inference that whoever is the creditor shall be paid when the condition is performed by the ascertainment of a balance in favour of the claimant” …. The Indian Limitation Act, sec. 19, however, says nothing about a promise to pay and required only a definite admission of liability as to which there can be no reason for departing from the English principle that an unqualified admission and an admission which is qualified by a condition which is fulfilled stand upon precisely the same footing.”

In the case of Prance v. Sympson (3) and Banner v. Berridge (4) which were referred to in the judgment of their Lordships, similar acknowledgments were held to satisfy the English law on the subject. In the first case, it was held that it is not necessary to have an acknowledgment that a debt is actually due, but it is sufficient that there should be an acknowledgment that the account is pending, and a promise to pay the balance if it should be found to be against the accounting party. In the second case, it was held that an unqualified admission that there is a pending account between the parties which has to be examined, is an admission from which a promise may be inferred that when the account is settled the balance’ shall be paid and that such an admission saved limitation.

In the case of Sitayya v. Ranga Reddi (5) (the decision in which was based upon the two English cases cited above) an acknowledgment of the Plaintiff's right to have accounts taken and of the Defendant's liability to pay any balance (if such there should be) against him, was held to satisfy the requirements of sec. 19 of the Limitation Act.

It was pointed out in the case of Manirom Seth v. Seth Rupchand that “the requirements of English law are, if anything, more, and not less, stringent than those of Indian law..”

On behalf of the Respondents we have been referred to Halsbury's Laws of England, Vol. 19, p. 66, where it is stated that a reference to arbitration does not amount to an acknowledgment of the debt. That is so; but on the very same page, it is stated that where there is an acknowledgment that accounts are still pending and have not yet been adjusted, it constitutes an acknowledgment of liability.

The learned Pleader for the Opposite Party also relied upon the cases of Jogeshwar Roy v. Raj Narain Mitra (6), Bollapragada Ramamurthi v. Thammana Gopayya (7) and Andiappa Chetty v. Alasinga Naidu (8). But all these cases are distinguishable as in none of them was there a clear and unqualified acknowledgment (such as there is in the present case) that there were unadjusted accounts and that one party would pay to the other any amount which might be found due from him on adjustment of accounts. Each case must turn upon the particular terms of the document upon which reliance is placed as constituting the acknowledgment.

In the present case there was a clear statement that the accounts had to be settled and further that each party would pay to the other any amount which might be found due from him on such adjustment of accounts and for this purpose each party deposited the sum of Rs. 400 with the arbitrators for payment to the other side.

It is to be observed that under sec. 19 of the Indian Limitation Act, it is not necessary that the acknowledgment should be addressed to any particular person and it is a sufficient acknowledgment even if it be accompanied by a refusal to pay. Here the document satisfied all the conditions of sec. 19 and we are of opinion that it constitutes an acknowledgment within the meaning of sec. 19 of the Limitation Act.

That being so, the appeal must be dismissed with costs, one gold mohur.

N.G

Appeal dismissed.