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Andhra Pradesh High Court
Judges : A.GOPAL RAO, A.SAMBASIVA RAO
Mir Niyamath Ali Khan - Appellant
Versus
Commercial and Industrial Bank Ltd - Respondent
Decided On : 11-23-67
CONTRACT - SURETYSHIP - CONSIDERATION - PAST BENEFIT TO PRINCIPAL DEBTOR - WHETHER VALID CONSIDERATION FOR CONTRACT OF GUARANTEE - LIMITATION - MUTUAL, OPEN AND CURRENT ACCOUNT - ARTICLE 85 OF THE LIMITATION ACT, 1908 - APPLICABILITY.
Fact of the Case:
The plaintiff-Bank sued the 1st defendant and the legal representatives of his brother for the recovery of Rs. 61,853-3-10 (O. S.) alleging that the 1st defendant and his brother opened a current account with the plaintiff-Bank and obtained Rs. 1615-6-2 O. S. on 9-9-1947 under the said account. The 1st defendant and his brother had agreed to pay Re. 1 per month per Rs. 100 as interest, on the amount overdrawn by them. The 1st defendant and his brother executed two promissory notes as collateral securities for the overdraft account. The 1st defendant contended that he had no connection whatsoever with the transactions of his brother and that the suit was time barred. The 3rd and 4th defendants, the legal representatives of the 1st defendant's brother, showed ignorance about the transactions which their father had with the Bank.
Finding of the Court:
The Court held that the 1st defendant and his brother jointly opened the current and overdraft account with the plaintiff-Bank and they were jointly and severally liable for payment of the balance of the same. The Court also held that the 1st defendant was liable on the ground that he had executed the two collateral securities in the form of promissory notes in favour of the Bank. The Court further held that the suit was not barred by limitation as the last entry under Exhibit P-2 appears on 9-9-1947 and the suit was instituted on 9-9-1950.
Issues: 1. Whether the 1st defendant and his brother jointly opened a current account with the plaintiff and received amounts to the extent Rs. 53,341-9-6 and Rs. 1615-6-2 till 9/09/1947 and did they admit in writing the dues against them as alleged? 2. Was there any contract of interest at the rate of one per cent per mensem. 3. Did the defendant No. 3 admit the debt in his writing dated 4/01/1949 Exhibit No. 1? 4. Is the writing regarding the confirmation of the balance added without knowledge of the defendants after his signature, if so what its effect? 5. Is the suit barred by limitation? 6. Is the suit not maintainable against the defendant No. 1 as he is a Military servant? 7. To what relief is the plaintiff entitled/
Ratio Decidendi: 1. The Court held that the 1st defendant and his brother jointly opened the current and overdraft account with the plaintiff-Bank and they were jointly and severally liable for payment of the balance of the same. The Court relied on the evidence of the Manager of the Bank and the joint execution of Exhibits P-2, P-4, and P-5 by both the brothers. 2. The Court held that the 1st defendant was liable on the ground that he had executed the two collateral securities in the form of promissory notes in favour of the Bank. The Court held that the promissory notes were executed for consideration, either simultaneous or executory in its character, and since the Bank was not willing to advance any more money by way of overdraft to the brother of the 1st defendant unless the collateral securities were given, the securities were supported by consideration. 3. The Court held that the suit was not barred by limitation as the last entry under Exhibit P-2 appears on 9-9-1947 and the suit was instituted on 9-9-1950. The Court held that Article 85 of the Limitation Act, 1908 applies to the account in question as it is mutual, open and current.
Final Decision: The Court dismissed the appeal with costs.
( 1 ) THIS is an appeal from the Judgment and decree of the Second Judge, City Civil Court, Hyderabad given on 12-3-1957. The facts relevant for the purpose of appreciating the contentions raised before us may briefly be stated.
( 2 ) THE respondent-plaintiff instituted the suit for the recovery of R. 61, 853-3-10 (O. S.) against the 1st dependent and the legal representatives of Mir Iftikhar Ali Baquri, who are defendants 2 to 4, alleging inter alia that the 1st defendant and the ancestor of defendants 2 to 4, who was the brother of the 1st defendant, opened a current account on 6/02/1945 with the plaintiff-Bank. Under the said account, the 1st defendant and his brother used to deposit and draw by way of overdraft as per the rules of the Bank as and when it was necessary. The 1st defendant and his brother obtained Rs. 1615-6-2 O. S. on 9-9- 1947 under the said account. The 1st defendant and his brother had agreed to pay Re. 1 per month per Rs. 100 as interest, on the amount overdrawn by them. On taking accounts from the date of the opening, that is to say from 6-2-1945 to 31-12-1948 it was found that a sum of Rs. 61,883-10 O. S. was due. The 1st defendant and his brother while drawing the mount of Rs. 1615-6-2 on 9-9-1947 confirmed the balance which was due to the Bank from them. The 1st defendants brother died in June 1948. Defendants 2 to 4 are his legal representatives, being his wife and two sons. Dependent No. 3 on 4-1-1949 also admitted the debt and promised to repay the same. It was further stated that though the last day of payment 3-1-1947, yet in view of the acknowledgments made on 9-9-1947 and 4-1-1949 the suit was within time. It was, therefore, prayed that a decree for a sum of Rupees 61,883-3-10 be passed in favour of the plaintiff against the 1st defendant and against the assets of his brother in the hands of defendants 2 to 4.
( 3 ) THE 1st defendant in his written statement denied to have opened any joint current account with the plaintiff-Bank and contended that he had no connection whatsoever with the transactions of his brother. He however, admitted that on 9-9-1947 his brother had obtained Rs. 1615-6-2 from the plaintiff-Bank. He, however, stated that he did not receive any amount. His further contention was that the confirmation of the balance of the balance in the letter was inserted later on. Defendant No. 1 signed the receipt dated 9-9-1947 at the instance of his brother. He contended that the suit was time barred. He denied his liability to pay the amount due on the current and overdraft account.
( 4 ) DEFENDANTS 3 and 4 in their written statement showed ignorance about the transactions which their father had with the Bank. They stated that whatever is written in the letter of 4-1-1949 was false. Neither the 3rd defendant spoke to the Manager of the Bank nor has he given any writing. They also contended that the suit was time barred.
( 5 ) UPON these pleadings the trial Court framed the following issues:- 1. Did the defendant No. 1 and his brother Mir Iftikhar Ali Khan jointly open a current account with the plaintiff and receive amounts to the extent Rs. 53,341-9-6 and Rs. 1615-6-2 till 9/09/1947 and did they admit in writing the dues against them as alleged? 2. Was there any contract of interest at the rate of one per cent per mensem. 3. Did the defendant No. 3 admit the debt in his writing dated 4/01/1949 Exhibit No. 1? 4. Is the writing regarding the confirmation of the balance added without knowledge of the defendants after his signature, if so what its effect? 5. Is the suit barred by limitation? 6. Is the suit not maintainable against the defendant No. 1 as he is a Military servant? 7. To what relief is the plaintiff entitled/
( 6 ) THE plaintiff produced the Manager of the Bank (P. W. 1) and marked several documents. The 1st defendant came in the witness box and produced two witnesses, one of whom is the Commissioner who, at the request of the 1st defendant, had examined the Banks a
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