This is defendants appeal under Section 96 of the Code of Civil Procedure. The appeal is against the judgment and decree dated 28-11-1991 passed by the District Judge (Bank cases) Jammu whereby suit for recovery of Rs. 2,26,922.97 has been decreed. The plaintiff sought recovery of the amount which was advanced to M/s. Guru Nanak Rice Mill, Arnia, a partnership firm of which appellants and respondents No. 2 to 8 were partners. As the amount of loan was not paid the Punjab National Bank respondent herein filed the suit which has been decreed.

2. While the appellants pleaded limitation as bar to the suit the respondents No. 2 to 8 denied their liability on the ground that partnership stood dissolved with effect from 21-8-1980 and therefore, they were not liable.

On the pleadings of the parties the following issues were framed :-

"1. Whether the plaintiff is entitled to recover an amount of Rs. 2,26,922.97 with interest @ 12% p.a. with quarterly rests till realisation from all the defendants? OPP

2. Whether the documents referred to in para No. 10 have been duly executed by the defendants? OPP

3. Relief."

3. The learned trial Court found both the issues in favour of the plaintiff-bank and decreed the suit. The contention of Mr. Raghu Mehta, learned counsel for the appellants are two fold (i) that the claim is barred by limitation because the acknowledgment of debt by executing the balance confirmation letters after the debt had become barred by time does not save the limitation and (ii) that the interest could not be charged on the interest compounded from time to time and included in the principal. Mr. Chopra argued that defendants had acknowledged the liability to pay the amount claimed in the suit well within the period of limitation and, therefore, the suit was rightly decreed. His further submission is that the interest had been rightly calculated in terms of the agreement and the same is permissible.

4. It is a fact that appellants pleaded that suit was barred by time, but no issue has been framed and rightly so because the cause of action was founded on the letters of balance confirmation dated 4-9-1980, 5-2-1981, 19-8-1982,4-2-1985, 1l-ll-1986and 3-12-1987 in which the appellant Sardari Lal had acknowledged the liability on behalf of all the partners as he was holding power of attorney on behalf of the partners. The appellants did not specifically deny the execution of their balance confirmation. They simply denied the averments. Moreover, the respondents Nos. 2 to 8 neither pleaded limitation as a bar to the suit nor denied the acknowledgment of debt by their attorney holder. They only pleaded that partnership having been dissolved they were not liable. Since the allegations of fact made in the plaint regarding acknowledgment of debt were not specifically denied by the appellants and other defendants, these were taken as admitted by the learned trial Court under O. 8, R. 5, C.P.C. So the trial Court found that parties were not at variance on the question of limitation and therefore, no issue in this behalf was framed. The appellants also did not press for framing of the issue. Whether the trial Courts action in not framing the issue is in accord with O. 8. R. 5 may now be noticed. Rule 5(1) of O. VIII reads as under: -

"5. Specific denial. - (1) Every allegation of fact in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading of the defendant, shall be taken to be admitted except as against a person under disability;

Provided that the Court may in its discretion require any fact so admitted to be proved otherwise than by such admission."

Obviously the Court had the discretion to frame the issue and ask the parties to lead evidence to prove the fact which is deemed to have been admitted. But the Court decided otherwise and this was not objected. Moreover, the appellants have nowhere pleaded how the suit was barred by time. The only plea raised in the written statement is

Click Here to Read the rest of this document