OMPRAKASH AGARWALA v. STATE BANK OF INDIA — 1990 DIGILAW 262 (ORI)

G. B. PATTANAIK, J. ( 1 ) DEFENDANT No. 2 is the appellant against the judgment and decree of the Subordinate Judge, Titilagarh, in Money Suit No. 64 of 1976 wherein the suit filed by the State Bank of India has been decreed to the extent of Rs. 16,245. 44 paise. ( 2 ) PLAINTIFFS case in brief is the defendant No. 1 is a partnership firm of which defendants 2 to 5 are partners. The defendants approached the plaintiff for cash credit accommodation and the plaintiff granted a cash credit accommodation to the extent of Rs. 20,000/- for the purpose of business of defendant No. 1. Defendant No. 1 through its partners, Omprakash Agrawal (defendant No. 2) executed an agreement for cash credit on security of pledge of goods, produce and merchandise. It was also agreed that the advance under the agreement would not exceed Rs. 20,000/- and interest to be charged thereon would be at the rate of 2 per cent above the rate of interest that is granted by the State Bank of India. The plaintiff Bank was authorised to sell or dispose of the goods pledged in the event payment was not made to reimburse itself and if still something remained due then the defendants would pay the same together with interest at 12 per cent per annum. The plaintiff appended a statement of accounts in Schedule A to the plaint indicating the dates of payment and balance remained unpaid and ultimately filed the suit for a decree for Rs. 16,245. 44 paise. ( 3 ) THE defendant filed a written statement denying all the allegations made in the plaint. It was also stated that the suit was barred by limitation and defendants were not liable either jointly or serverally for the amount in question. ( 4 ) ON these pleadings, five issues were framed and the learned Subordinate Judge came to hold that the claim of the plaintiff was genuine. Taking into amount the factum of payment made in October, 1976 under Ext. 18, he held that the suit was not barred by limitation. On issues Nos. 1 and 2 he hold that as the defendants had not repaid the dues of the plaintiff in spite of demand notice the plaintiff had the cause of action to bring the suit. On these findings the suit was decreed. ( 5 ) MR. 18, he held that the suit was not barred by limitation. On issues Nos. 1 and 2 he hold that as the defendants had not repaid the dues of the plaintiff in spite of demand notice the plaintiff had the cause of action to bring the suit. On these findings the suit was decreed. ( 5 ) MR. P. K. Misra, the learned counsel for defendant No. 2 appellant raises two contentions in assailing the judgment and decree of the Court below:- (I) The finding of the learned Subordinate Judge that the suit is not barred by limitation is wholly contrary to law and cannot be sustained; and (II) The plaintiff having pleaded in the plaint that it is defendant No. 2 who executed the agreement on behalf on defendant No. 1, and the agreement in question not having been executed by defendant No. 2 but by defendant No. 3, the evidence led in that regard could not have at all been taken into account as being without jurisdiction and, therefore, the plaintiff having failed to establish that defendant No. 2 had executed the agreement, the suit must fail. Mr. Sinha, the learned counsel appearing for the plaintiff-respondent No. 1, on the other hand, contends that the suit cannot be held to be barred by limitation. He also further urges that true it is that in the plaint it was averred that defendant No. 2 executed the agreement, but it was a mistake and in fact defending No. 3 had executed the agreement and since both were partners, the evidence led and considered cannot be held to be without jurisdiction. ( 6 ) COMING to the question of limitation, according to Mr. Misra for the appellant it is Art. 19 of the Limitation Act that applies and the period of limitation is three years which would start from the date when the loan is made. The loan having been made in the year 1969, the suit is obviously barred by limitation. Mr. Misra for the appellant it is Art. 19 of the Limitation Act that applies and the period of limitation is three years which would start from the date when the loan is made. The loan having been made in the year 1969, the suit is obviously barred by limitation. Mr. Sinha appearing for the plaintiff-respondent No. 1, on the other hand, contends that a cash credit loan is nothing but a mutual, open and current account where there is reciprocal demand between the parties and, therefore, the period if limitation is governed by Art. 1 of the Limitation Act and the period is 3 years from the close of the year in which the last item admitted or proved is entered in the account. In this view of the matter, referring to Ext. 18, the ledger account, Mr. Sinha argues that the last payment admittedly being on 30-10-1973, even excluding the payment made on 23-3-1976, the three years period would be counted from 31st of December, 1973, and the suit having been filed on 29-10-1976, it is well within the period of three years. ( 7 ) THE moto question that arises for consideration, therefore, is whether Art. 19, as contended by Mr. Misra for the appellant, or Art. 1 of the Limitation Act, as contended by, Mr. Sinha for the plaintiff-respondent No. 1, is applicable in the present case. It is undisputed that the defendant had a cash credit account with the plaintiff. The plaintiff has so averred in the plaint and the portions of ledger appended to the plaint unequivocally establish the same. The defendant in his written statement also does not dispute the statement that he had a cash credit account with the State Bank of India. A cash credit account is a facility which a person obtains from the Bank in order to draw money up to the limit agreed to and makes deposit at his convenience in the account of which the balance is made, such an account has been held by a reamed Judge of the Gauhati High Court in the case of State Bank of India v. M/s. Durga and Scientific Distributors, (1990) 1 Banking Cases, 173 to be mutual, open and current account and Art. 1 the Limitation Act applies for realisation of the dues under such in account. In the case of State Bank of India v. M/s. Kashmir Art Printing Press Sirsa AIR 1981 Punjab and Haryana 188, a learned Judge of the Punjab and Haryana High Court considered a similar problem and hold that where a person who was allowed the benefit of cash credit accounts had been withdrawing and repaying amounts up to the limit of Rs. 5,000/- from time to time and on the debit balance interest was accruing, the limitation would be that provide under Art. 1 of the 1963 Limitation Act. The Supreme Court in the case of Kesharichand Jaisukhalal v. Shillong Banking Corporation Ltd. Shillong (in Liquidation), AIR 1965 Supreme Court 1711, considered the question of a combined overdraft and deposit account and held that there were mutual dealings between the parties and the account was mutual and the period of limitation was 3 years from the close of the year of the last entry, which is same as Art. 1 of the Limitation Act. These decisions undoubtedly support Mr. Sinha's contention. Mr. Misra, however, contends that to attract the provision of Art. 1 of the Limitation Act, it must be held that the account was not only current and open, but was mutual, and in that connection he refers to the decision of the Supreme Court in the case of Hindustan Forest Company v. Lal Chand, AIR 1989 SC 1349, as well as the decision of the Calcutta High Court in the case of The tea Financing Syndicate v. Chandra Kamal Bez Barua, AIR 1931 Ca1 369. According to Mr. Misra, there being no proof of mutual dealings between the parties in the present case, the cash credit account cannot be held to be a mutual, open and current account so as to attract Art. 1 of the Limitation Act. Having examined the decisions cited at the Bar and having applied my mind to the entries made in the ledger, I am persuaded to hold that a cash credit account is a mutual, open and current account and, therefore, Art. 1 of the Limitation Act would govern the case. Since the ledger itself clearly indicates that repayment was made on 30-10-1973, applying Art. 1, the period of limitation of 3 years would start from 31st of December, 1973 and, therefore, the suit having been filed on 29-10-1976, is within the period of limitation and Mr. Since the ledger itself clearly indicates that repayment was made on 30-10-1973, applying Art. 1, the period of limitation of 3 years would start from 31st of December, 1973 and, therefore, the suit having been filed on 29-10-1976, is within the period of limitation and Mr. Misra's contention that the suit is barred by limitation cannot be accepted. ( 8 ) MR. Singha then urges that S. 19 of the Limitation Act would also apply to the present case and an extended period of limitation would be available. Coming to the question whether S. 19 of the Limitation Act would save the suit from being barred by limitation, no doubt, a payment made on account of a debt or of interest on a legacy would give a fresh period of limitation for a suit for debts and legacies, but under the first part of S. 19, the "payment" must be made. A fictitious entry of payment in the handwriting of the debtor is not a payment and cannot operate to save time under the section. A credit when not authorised by the debtor cannot amount to a payment authorised by the defendant so as to give a fresh starting period of limitation. The proviso to S. 19 which is important for our purpose in this case requires that the fact of payment must appear in the handwriting of or in a writing signed by the person making the payment. Therefore, the factum of payment alleged to have been made by the defendant must appear in the handwriting of or in witting signed by the defendant. The proviso to S. 19 can be attracted if the plaintiff establishes that the defendant acknowledged in writing with regard to the payment in question. In this view of the matter, on examining the materials on record, I do not find an iota of material to prove any acknowledgment of payment in the handwriting of the defendant or in any writing signed by the defendant with regard to the alleged payment on which the plaintiff relies so as to save the period of limitation. Consequently, rejecting Mr. Sinha's contention, I hold that the plaintiff has utterly failed to establish to bring the case within S. 19 of the Limitation Act so as to get a fresh period of limitation. ( 9 ) MR. Consequently, rejecting Mr. Sinha's contention, I hold that the plaintiff has utterly failed to establish to bring the case within S. 19 of the Limitation Act so as to get a fresh period of limitation. ( 9 ) MR. Sinha in course in his arguments has vehemently argued that since the allegations made in paragraph 13 of the plaint have not been denied, it must be taken to have been admitted under Order 8, Rule 5 of the Code of Civil Procedure and, therefore, the payments shown in Schedule A must be taken to have been accepted by the defendant. But on examining the written statement filed by the defendants, I find no substance in the said contention of Mr. Sinha inasmuch as with regard to the averment made in paragraph 13 of the plaint, the defendants have stated that these averments are denied in toto and, therefore, in view of such denial, it cannot be said that defendants have admitted the facts stated in paragraph 13 of the plaint. ( 10 ) MR. Singha, the learned counsel appearing for the plaintiff Bank, then urges that S. 25 (3) of the Indian Contract Act would save the period of limitation, inasmuch as under Ext. 15 dated 21-5-1974, defendant No. 4 who is also one of the partners had made in unconditional promise to pay the amount in question, Ext. 15 purports to be a writing of defendant No. 1 who had stated that he was willing to liquidate the loan and to be a placed facts for consideration of the Bank. He wanted to sell the Gandul-Gum which had been pledged with the Bank and required permission to allow him to sell the goods and for liquidation of the loan he proposed to pay it by instalment and he was agreeable to execute an agreement. The document read as a whole cannot be construed to be an unconditional promise to pay the debt. After going through the document Ext. 15, I am unable to hold that there was an express promise by defendant No. 4 to pay a barred debt. Therefore, the condition precedent for applying sub-sec. (3) of S. 25 of the Indian Contract Act has not been satisfied by virtue of Ext. 15. That apart, such a case had not at all been pleaded in the plaint. In that view the matter, I am unable to accept Mr. Therefore, the condition precedent for applying sub-sec. (3) of S. 25 of the Indian Contract Act has not been satisfied by virtue of Ext. 15. That apart, such a case had not at all been pleaded in the plaint. In that view the matter, I am unable to accept Mr. Sinha's contention and hold that S. 25 (3) of the Indian Contract Act does not come into play. ( 11 ) MR. Misra for the appellant had advanced also the argument that Ext. 3 had not been executed by defendant No. 2 as averred in the plaint and it was not permissible for the plaintiff to lead evidence contrary to what was pleaded and the finding of the trial Court that it was executed by defendant No. 3 was without jurisdiction. I think it appropriate to consider the said argument also and I find sufficient force in the same. The plaintiff in the plaint had made a categorical assertion that for the purpose of business of the partnership firm (defendant No. 1), defendant No. 2 executed an agreement for cash credit on security of pledge of goods, produce and merchandise dated 28th of November, 1969, and in paragraph 17 of the plaint, it was also averred that the cause of action for the suit arose on 28th of November, 1969, when defedant No. 1 through its partner defendant No. 2, executed the agreement for cash credit. The defendants filed a joint written statement and in paragraph 5 of the written statement denied to the effect that defendant no. 2 had not signed only document and also the agreement as alleged in paragraph 5 of the plaint. But in course of evidence, the plaintiff tried to establish the fact that the agreement was signed not by defendant No. 2, but by defendant No. 3 and in fact the Court found that the agreement in question had been signed by defendant No. 3. Certainly evidence had been permitted to be led contrary to the pleadings and such evidence must be held to be beyond the pleadings and the Court has no jurisdiction to permit evidence to be led contrary to the pleadings. Therefore, the finding that defendant No. 3 executed the agreement (Ext. 3) is certainly without jurisdiction. That apart, even the document (Ext. 3) has also not been legally proved by the plaintiff. Therefore, the finding that defendant No. 3 executed the agreement (Ext. 3) is certainly without jurisdiction. That apart, even the document (Ext. 3) has also not been legally proved by the plaintiff. Consequently it must be held that the plaintiff has failed to establish its case as pleaded in the plaint that defendant No. 2 executed the agreement (Ext. 3) on behalf of the firm-defendant No. 1 and on this ground the suit is bound to fail. ( 12 ) IN the net result, wherefore, the judgment and decree of the Court below are set aside and the plaintiff's suit is dismissed. The first appeal is allowed with costs. Appeal allowed.