Brij Bihari Prasad v. Bir Bahadur Rai — 1967 DIGILAW 44 (PAT)

Judgment G.N.Prasad, J. 1. This is an appeal by the plaintiffs who instituted a suit for recovery of Rs. 4,305.44 from the defendant under the following circumstances. On the 30th Bhado 1360 Fasli, corresponding to 23rd September, 1953, the defendant took a loan from the plaintiffs of a sum of Rs. 2601/8/-in cash. Again on the 11th Baisakh 1361 Fasli, corresponding to 29th April, 1954, the defendant took a loan from the plaintiffs of Rs. 70 in cash and grains. Thirdly, on the 18th Kuar 1362 Fasli, corresponding to 19th October, 1954, the defendant took 5 maunds of paddy from the plaintiffs valued at Rs. 50. Thereafter, on the 1st Bhado 1362 Fasli, corresponding to 4th August, 1955, there was an accounting between the parties, and as a result thereof, the amount due to the plaintiffs was found to be Rs. 3,370/6/3, that is to say, Rs. 2,721/8/- as the principal sum advanced and Rs. 648/14/3 on account of interest up to the date of the accounting. The results of the accounting were incorporated in a chitha (Ext. 4) executed by the defendant on the same day in the following terms: (TABLE) The present suit was instituted by the plaintiffs on the 28th November 1957 for the recovery of the aforesaid sum of Rs. 3370/6/3 besides Rs. 935/-/9 on account of interest from the date of the chitha (Ext. 4) to the date of the institution of the suit. 2. The defendant raised various pleas in defence. He denied having taken the loans from the plaintiffs or that there was any accounting, as alleged in the plaint He averred that he used to take loans from the plaintiffs about eight or ten years previously and his thumb impression existed on a blank page of the plaintiffs Bahi and that pace of the Bahi appeared to have been converted into the chitha (Ext 4) and made the basis of the present suit. The reason for making such a false claim against the defendant was alleged to be that he had refused to depose for one Harihar Mahto who was involved in a dacoity case and who was on friendly terms with the plaintiff No 1. 3. The reason for making such a false claim against the defendant was alleged to be that he had refused to depose for one Harihar Mahto who was involved in a dacoity case and who was on friendly terms with the plaintiff No 1. 3. The Learned Additional Subordinate Judge, who tried the suit found the plaintiffs case to be true and held that the plaintiffs were entitled to a decree for the amount claimed on the basis of the chitha (Ext. 4). In appeal, however, the learned Additional district Judge has set aside the decree and dismissed the suit. The learned Judge accepted the plaintiffs case that the chitha (Ext. 4) was duly executed by the defendant after the accounting which took place between the parties on the 4th August 1955 in respect of the three items of loan specified there in which had been taken by the defendant from the plaintiffs on the three relevant dates. But the learned Judge dismissed the suit on the ground that the chitha (Ext 4) could not form the basis of the present suit since it amounted to a mere acknowledgment of the defendants liability and not to a promise to pay on the part of the defendant as contemplated by Section 25(3) of the Contract Act. Being thus aggrieved, the plaintiffs have preferred this second appeal. 3A. At the outset, Mr. K.D. Chatterji appearing in support of the appeal put forward the contention that the learned Judge ought to have maintained the decree of the trial Court on the footing that the suit was in substance on the basis of the original loans advanced to the defendant more than three years before the institution of the suit, but the bar of limitation was saved by the acknowledgment of the defendants liability contained in the chitha (Ext. 4) which gave a fresh start of limitation under sec. 19 of the Limitation Act. 1908 Learned counsel pointed out that the acknowledgment of liability contained in the chitha (Ext 4) was made by the defendant before the expiration of the limitation period of three years computed from the dates of the original loan transactions. This argument, however, is not available to the plaintiffs having regard to the frame of the suit, which clearly shows that it is based entirely upon the chitha (Ext 4), and not upon the original loans. This argument, however, is not available to the plaintiffs having regard to the frame of the suit, which clearly shows that it is based entirely upon the chitha (Ext 4), and not upon the original loans. This is abundantly clear from the averment contained in paragraph 6 of the plaint, wherein it has been alleged that the cause of action for the suit accrued on 4-8-1955 when the chitha (Ext. 4) was acknowledged and signed by the defendant. Further, as noticed by the trial Court in paragraph 12 of its judgment. It has transpired in the evidence adduced on behalf of the plaintiffs that the defendant has executed handnotes in respect of the three items of loan, and those handnotes had been returned by the plaintiffs to the defendant at the time when the accounting took place and the defendant signed on the chitha (Ext. 4). That such is the frame of the suit, is also apparent from the account appended at the foot of the plaint, where the principal amount of the loan has been mentioned as Rs. 3,370/6/3, upon which interest has been calculated as Rs. 935/0/9 from the date of the chitha (Ext. 4) to the date of the institution of the suit. Had this been a suit on the original loans then the principal amount would have been stated as Rs. 2,721/8/-, and the sum of Rs. 648/14/3 representing the interest on the said sum of Rs. 2,721/8/- would not have been included in the principal amount of Rs. 3,370/6/3, and the interest for the subsequent period between 4-8-1955 and 28-11-1957 (the date of the institution of the suit) would have been calculated on Rs 2,721/8/-, and not on Rs. 3,370/6/3. We must, accordingly, proceed upon the footing that the suit as framed is based on the chitha (Ext. 4), and that it is not open to the plaintiffs to contend that the suit is based upon the original transactions. 4. Mr. Chatterji then contended that the learned Judge was in error in holding that the present suit cannot be maintained on the basis of the chitha (Ext, 4) According to the learned counsel, the chitha (Ext. 4) was not a mere acknowledgment of the defendants liability, but it also contained an implied promise to pay the dues of the plaintiffs mentioned therein. 4) was not a mere acknowledgment of the defendants liability, but it also contained an implied promise to pay the dues of the plaintiffs mentioned therein. In support of his contention learned counsel laid stress upon the opening words of the chitha (Ext. 4) as also the words occurring in its execution portion. In my opinion, this contention of the learned counsel is well founded and must be accepted as correct. The opening words of the document which I have quoted above, show that it purported to be the account of loans due from the defendant to the plaintiff, who has been described as Mahajan Harihar Sah. and the execution portion of the document shows that the defendant put his signature and thumb impression thereon in token of the facts that he had understood the account and Rs. 3,370/6/3 had remained due from him as a result of the accounting. Reading together these two portions of Ext. 4, I am of the opinion that it was not a mere acknowledgment of the defendants liability to the plaintiffs, but there was also an implied promise on the part of the defendant to pay the same. That an unconditional acknowledgment of the kind, that we find in Ext. 4, does imply a promise to pay, is a proposition which is supported by high authority. In Maniram V/s. Seth Rupchand, (1906) 33 Ind App. 165 (P.C.), the following observations were made by the Privy Council at page 172: "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." Once it is held, as it must be held, that the chitha (Ext. 4) contained an implied promise to pay the outstanding dues of the plaintiffs, it must follow that the suit could be maintained on the basis of the chitha as it furnished a cause of action to the plaintiffs for maintaining the present suit. 4) contained an implied promise to pay the outstanding dues of the plaintiffs, it must follow that the suit could be maintained on the basis of the chitha as it furnished a cause of action to the plaintiffs for maintaining the present suit. In this view, I am supported by the decision of the Supreme Court in Hira Lal V/s. Badkulal, AIR 1953 SC 225 . At page 227 of the report, their Lordships observed: "The Judicial Commissioner took the view that an unqualified acknowledgment like the one in the suit, and the statement of the account under which the entry had been made, were sufficient to furnish a cause of action to the plaintiffs for maintaining the present suit. We are satisfied that no exception can be taken to this conclusion. It was held by the Privy Council in (1906) 33 Ind. App. 165 (PC) that an unconditional acknowledgment implies 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." 5. Mr. J.C. Sinha for the defendant respondent, however, contended that the observations of the Privy Council and the Supreme Court in the above decisions cannot be applied to the present case since unlike the reported case, the present case is not of mutual dealings and accounts stated within the meaning of Article 64 of the limitation Act. In my opinion there is no force in this contention. It will be noticed that the Allahabad High Court had held in Ghulam Murtaza V/s. Mt. Fasiunnissa Bibi, AIR 1935 All 129 that even if an unconditional acknowledgment implies a promise to pay, it cannot be made the basis of a suit or treated as giving rise to a fresh cause of action. But in Hiralals case, AIR 1953 SC 225 , the Supreme Court held that the Allahabad decision does not lay down good law. Fasiunnissa Bibi, AIR 1935 All 129 that even if an unconditional acknowledgment implies a promise to pay, it cannot be made the basis of a suit or treated as giving rise to a fresh cause of action. But in Hiralals case, AIR 1953 SC 225 , the Supreme Court held that the Allahabad decision does not lay down good law. The Allahabad decision was not one of mutual dealings as contemplated by Article 64 of the Limitation Act, and the fact that the Allahabad decision was overruled by the Supreme Court in Hiralals case, AIR 1953 SC 225 must necessarily lead to the conclusion that even in a case like the present, an unconditional acknowledgment which implies a promise to pay, can furnish a cause of action to the plaintiffs for maintaining the suit for recovery of the outstanding dues from the defendant. 6. Mr. J.C. Sinha contended that there are several decisions of this Court where it has been laid down that an acknowledgment of liability in a chitha can only ensure to the benefit of the creditor for the purpose of saying the limitation if it is made before the original debt has become time barred. But such an acknowledgment cannot in itself be the foundation of the suit. In support of his contention. Mr. Sinha relied upon a Bench decision of this Court in Deoraj Tewari V/s. Indrasan Tewari, ILR 8 Pat 706 : (AIR 1929 Pat 258 (2)), where an earlier Bench decision of this Court in Suraj Prasad Pandey V/s. Mr. W. W. Boucke, 1 Pat LT 130 :(AIR 1920 Pat 161) was referred to and it was observed as follows:- - "The effect of the endorsement is that all the items mentioned in the chithas are acknowledged to have been borrowed on the dates mentioned against each of them. Now, at the time when the acknowledgment was made if such of the items as happened to be not within three years of the date when the chithas were executed were acknowledged, the acknowledgment would not have the effect of reviving those debts. Now, at the time when the acknowledgment was made if such of the items as happened to be not within three years of the date when the chithas were executed were acknowledged, the acknowledgment would not have the effect of reviving those debts. It only gives a fresh period of limitation from the date of acknowledgment in respect of such items only as were not already barred at the time when the acknowledgment was made." At page 713 (of ILR Pat)=(at p. 261 of AIR) of the report, it was pointed out that there is a distinction between an acknowledgment under Sec.19 of the Limitation Act and a promise under Sec.25 of the Contract Act, and while an acknowledgment Implies a promise to pay, Sec.25 of the Contract enjoins that the promise must be distinctly expressed and a mere acknowledgment is insufficient to create a new contract as is contemplated under Sec.25 to revive a barred liability. It will, however, be observed that in Deoraj Tewaris case, ILR 8 Pat 700=(AIR 1929 Pat 258 (2)), the acknowledgment was made at a time when the original debt had already become time barred. It was for this reason that their Lordships held that the acknowledgment cannot form the basis of the suit, haying regard to the provisions of Sec.25 of the Contract Act, Sub-section (3) of which enjoins that a promise to pay a time barred debt must be expressed and not merely implied. In the instant case, the original loans were not barred at the time when the chitha (Ext. 4) was executed by the defendant. Therefore, Deoraj Tewaris case, ILR 8 Pat 706=(AIR 1929 Pat 258(2)) is distinguishable from the facts and circumstances of the present case and the principle laid down therein cannot apply to a case like the present, where the unconditional acknowledgment of liability has been made before the original loans had become time barred, and if such an acknowledgment can be construed as containing an implied promise to pay, then Sec.25(3) of the Contract Act is not attracted, and a suit can be maintained on the basis of such an implied promise to pay. 7. Mr. Sinha also drew our attention to an unreported decision of this Court in Baidyanath Prasad Sah V/s. Jamuna Prasad Sah, (First Appeal No. 542 of 1963) disposed of on the 3rd March 1967 (Pat). 7. Mr. Sinha also drew our attention to an unreported decision of this Court in Baidyanath Prasad Sah V/s. Jamuna Prasad Sah, (First Appeal No. 542 of 1963) disposed of on the 3rd March 1967 (Pat). In that decision, to which one of us was a party, it was held that the chitha was a mere acknowledgment of liability and could not form the basis of the suit. It will, however, appear upon an examination of the judgment in the unreported case that there the suit was not based merely on the chitha because in paragraph 10 of the judgment, it was observed as follows:- - "Though in paragraph 8 of the plaint, the cause of action is alleged to have arisen on the 1st June, 1967 when the chitha (Ext. 6) was executed, from paragraph 3 of the plaint it is abundantly clear that the suit is based on the loans advanced on various dates. . . . . . . Reading the statements made in the above paragraph, with the adjustment of accounts evidenced by Exts. G, G/1, G/2 and 6, no room for doubt is left that the suit is based on the loans advanced. That being the position, the suit cannot be thrown out on the ground that it could not be based on the chitha (Ext. 6), which, as already held, is a mere acknowledgment of liability." It follows that the unreported case is no authority for the proposition that a chitha containing a mere acknowledgment of liability cannot form the basis of a suit, particularly when the attention of their Lordships was not drawn to the decision of the Privy Council in Manirams case 33 Ind App 165 (PC) or to the decision of the Supreme Court in Hiralals case, AIR 1953 SC 225 , to which I have already referred. 8 Mr. Sinha then relied upon Ramdayal V/s. Maji Devdiji, AIR 1956 Raj 12 , where the view was taken that the decision of the Supreme Court in Hiralals case, AIR 1953 SC 225 cannot be said "clearly to overrule the view that a mere acknowledgment, as distinguished from an acknowledgment in which there are words from which an implied promise to pay may be inferred, can- not be the basis of a suit". According to the Rajasthan High Court, the Supreme Court in Hiralals case, AIR 1953 SC 225 had disapproved the Allahabad decision in Ghulam Murtazas ease. AIR 1935 All 129 only to a limited extent, that is to say, in so far as the Allahabad Judges had expressed the view that whether the receipt was a mere acknowledgment or more than an acknowledgment and contained words indicating an implied promise to pay, it could not in either view be made the basis of a suit. With great respect to their Lordships of the Rajasthan High Court, I am unable to read the Supreme Court decision in Hiralals case AIR 1953 S.C. 225 with such qualification. In my opinion, the Supreme Court has disapproved the proposition that even where an acknowledgment implies 8 promise to pay, it cannot be made the basis of a suit or treated as giving rise to a fresh cause of action. 9. Upon a consideration of the various authorities noticed above, I have come to the conclusion that the chitha (Ext 4) was not a mere acknowledgment of the defendants liability, but it also contained an implied promise of the defendant to pay the outstanding dues which on the date of the Chitha amounted to Rs. 3,370/6/3, and that the present suit on the basis of the chitha (Ext. 4) is maintainable. In my opinion, the view taken by the lower appellate court to the contrary cannot be upheld. 10. Upon the terms of the Chitha (Ext 4), however, the plaintiffs are not entitled to recover any interest from the defendant upon the sum of Rs. 3,370/6/3 which was due to the plaintiffs from the defendant on the date of the accounting. The reason is that no contract for payment of interest can be spelled out from the terms if the chitha (Ext. 4) and upon the frame of the present suit, the plaintiffs cannot fall back upon the original transactions which were incorporated in the chitha (Ext. 4). Thus, the plain-tiffs cannot recover more than Rs. 3,370/6/2 from the defendant in the present suit. 11. The result, therefore, is that this appeal succeeds in part. The decision of the lower appellate court is set aside and the claim of the plaintiffs is decreed to the extent of Rs 3,370/6/3. 4). Thus, the plain-tiffs cannot recover more than Rs. 3,370/6/2 from the defendant in the present suit. 11. The result, therefore, is that this appeal succeeds in part. The decision of the lower appellate court is set aside and the claim of the plaintiffs is decreed to the extent of Rs 3,370/6/3. The defendant if allowed three months time to pay this amount to the plaintiffs, failing which the plaintiffs will be entitled to recover the said amount of Rs. 3,370/6/3 from the defendant together with interest thereon at the rate of 6 per cent per annum until realisation. The plaintiffs will be entitled to proportionate costs throughout. R.K.Choudhary, J. 12 I agree.