https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=199722 https://www.taxtmi.com/caselaws?id=199722 Suit for the recovery - Joint liability to pay the amount due on the current and overdraft account - admission of the debt in writing - fraudulent signatures of the defendants - principles of contract - contract to indemnify - Consideration between the creditor and the principal debtor - suit barred by limitation - Scope of Art. 85 of the Limitation Act - collateral securities - HELD THAT:- In the instant case, the 1st defendant admitted the execution of the promissory notes. No dispute was raised before us that they were not executed as collateral securities regarding the current and overdraft account opened by the 1st defendant and his brother. The 1st defendant in fact led evidencing regard to his contention that he put his signature on the promissory notes at the request of his brother and Prof. Kishen Chand. It could not therefore, be validly taken by surprise when the plaintiff s suit was decreed by the Court below on the alternative claim. Nor he would be taken by surprise if we uphold the decree of the Court below on this alternative claim. The learned Advocate for the 1st defendant could not point out as to in what respect the 1st defendant, in the presence of his version relating to the promissory notes, would have further said any thing or adduced any further evidence. We do not therefore, think that any injustice would be caused to the 1st defendant if we uphold the decree passed against him on this alternative basis. The lower court, in our view was right firstly holding the 1st defendant responsible as a joint holder of the current account and alternatively although the lower Court has not stated so in so many words is liable as surety. As we are of the opinion that both the collateral securities were executed for consideration, it was either simultaneous or was executory in its character, and secondly, 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. There is no other explanation as to why the second promissory note was executed. In the face of these entries, it could not seriously be contended that the promissory note was executed for any past consideration. It has a simultaneous consideration, and in any case, the security was executed for the purpose of allowing the same day on overdraft of about Rs. 50,000. In these circumstances we do not find any difficulty in rejecting the contention of the learned Advocate for the 1st defendant that the two promissory notes executed as collateral securities were void because they were executed for past consideration. The suit, in our opinion, is within time for two reasons. Firstly because of Exhibit P-2, an acknowledgment executed by the 1st defendant and his brother on 9-9-1947. The suit was instituted on 9-9-1950. It is not disputed that if Exhibit P-2 is found to be genuine, true and valid, then no question of limitation could arise. We have already dealt with the questions relating to Exhibit P-2 raised by the 1st defendant and held that Exhibit P-2 had been executed by the 1st defendant and his brother on 9-9-1947. We also found that the 1st defendant was not justified in going back upon his admission made in reference to his document in his written statement. His contention that the last words `confirm the balance of S. S. 53341-9-6 as on 1-7-1947 were added subsequent to his signature or that they were forgery is not proved. They were there when the 1st defendant and his brother signed as is clear from the evidence of P. W. 1. On a perusal of that document we are satisfied that they are not written in different inks. They were in fact written by the same person. P. W. 1 says that the whole endorsement is in his handwriting. When once it is found, and we so hold, that Exhibit P-2 is true valid and genuine, no question of limitation can arise in this case. On examining the accounts, we are of the opinion that the account between the parties is such as to consist in reciprocity of dealings between them and that it does not consist merely of items on one side made up of debits and credits. We have no hesitation, therefore, in holding that it is a mutual, open and current account within the meaning of Art. 85 of the Limitation Act. Article 85 of the Limitation Act having been held applicable, the limitation would be three years to be reckoned from the close of the year in which the last item admitted or proved is entered in the account. Such year of course has to be computed as in the account. It is already held that the last entry under Exhibit P-2 appears on 9-9-1947. There is no dispute that the Bank Accounts run from 1st January to 31st December each year. Reckoned from that point of view, the suit would obviously be within time. Appeal dismissed. Case-Laws Indian Laws Thu, 23 Nov 1967 00:00:00 +0530