The indorsement of a promissory note can entitle the indorsee to benefit from the agreement related to the note, and a payment towards the note can be considered as an acknowledgment of liability under the Limitation Act.

Shahabuddin, J.

1. The petitioner is the plaintiff in the Small Cause Suit No. 208 of 1941 on the file of the Subordinate Judge of Bezwada. That suit was based on a promissory note executed by the defendants on 23rd April, 1937, for a sum of Rs. 1, 000 in favour of the Vijavada National Bank,, Limited, Eezwada. This promissory note has been indorsed in favour of the plaintiff-petitioner for consideration. On the same date there was with reference to this promissory note an agreement between the promisors and the promisee to the effect that the promisers should pay the amount of the promissory note Rs. 1,000 in twenty-five monthly instalments of Rs. 40 each each instalment being payable by the 20th of every month and that in default of paying any of the instalments the promisee, that is, the Bank should be at liberty to recover the whole amount due from the promisors without waiting for the future instalments. The instalments due up to 19th June, 1937, were paid but the instalment due on 19th July, 1937, was not paid. There was, however, a payment of Rs. 5 towards the promissory note on 15th June, 1940. The payment of the instalments was not endorsed on the promissory note, but the payment of Rs. 5 on 15th June, 1940, was indorsed on it. Subsequent to this payment, on 19th July 1940, the Bank, that is, the promisee, indorsed the promissory note to the present petitioner in the following words

As the balance due under this promissory note, namely, Rs. 795 (in words Rupees seven hundred and ninety-five) has this day been received by us from Mogulluri Lakshmayya Garus son Veeraragha-vayya Garu, resident of Bezwada village, this document is transferred to the said Veeraraghavayya Garu. authorising him or order to recover the balance of principal and interest due under this promissory note according to the terms of the agreement under this promissory note.

2. The petitioner relies on the payment made on 15th June, 1940, as saving the suit from the bar of limitation. The suit was filed on 21st July, 1941. Various points were raised in defence but it is not necessary to refer to all of them. The only two contentions that have been accepted by the learned Subordinate Judge and which are pressed before me on behalf of the respondent are that there has been no transfer of the agreement which postpones the right to sue on the promissory note and that even if it were assumed that the petitioner could take advantage of the agreement the suit could be decreed only with regard to those instalments that were due within three years preceding the institution of the suit. The learned Subordinate Judge dismissed the suit as he took the view that the petitioner could not avail himself of the agreement entered into between the parties on the same date as the promissory note as there is no indorsement of a definite transfer of the agreement. With regard to the last clause in Ex. P-I (b) authorising the petitioner to recover the balance according to the terms of the agreement, the learned Subordinate Judge expressed a doubt whether those words could be considered as amounting to a transfer of the agreement. He therefore held that though the payment of Rs. 5 on 15th June, 1940, would amount to an acknowledgment under Section 19 of the Limitation Act it would not help the plaintiff-petitioner as it was made beyond three years from the date of the promissory note.

3. It is contended on behalf of the petitioner that the agreement and the promissory note form parts of the same transaction, that therefore the indorsement of the promissory note in favour of the petitioner by itself entitles him to take advantage of the agreement and that even if it were to be considered that a separate assignment of the agreement was necessary, the last words of the indorsement authorising the petitioner to collect the balance due in accordance with the terms of the agreement are sufficient to constitute a transfer of that agreement. In support of this contention relianc