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TMI Blog1917 (1) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... defendant No. 2 and at his request, paid to the plaintiff Corporation Rs. 200 on account of interest on the said note. Defendant No. 1 has not appeared, but defendant No. 2 denies the allegation and submits that the suit is barred by the Statute of Limitations. 3. The plaintiffs have proved payment of Rs. 200 as interest by the defendant No. 1 on the 13th November 1911. They have further proved that the defendant No. 2 knew about such payment. It appears that the Medical Secretary and Treasurer of the plaintiff Corporation was under the impression that defendant No. 1 had not paid any part of the principal and interest on the loan, and complained about it to defendant No. 2, saying that the Society could not wait but must sue. Defendant No. 2 thereupon told him, about the middle of December 1911, 'wait a little'. I know defendant No. 1 has paid interest on this loan.' The books were sent for and entry of a payment of Rs. 200 as interest, dated the 13th November 1911, was found, but it appeared against another loan, which had been taken by defendant No. 1. Defendant No. 2 thereupon said that he distinctly remembered being told by defendant No. 1 that he had paid Rs. 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act, but argued that his liability did not arise until default was made by the principal debtor. 7. Having regard to the wording of the appellants' undertaking and Section 126 of the Contract Act, in my judgment this is the correct interpretation, and the next question, therefore, to be considered is, when did default by the principal debtor occur. 8. The learned Counsel for the respondent argued that, though it was not possible to specify the exact date of the principal debtor's default, the evidence in the case showed that it could not have been before the middle of December 1911, when the incident referred to in the learned Judge's statement of facts occurred. 9. In my judgment this contention should not be adopted. 10. The promissory note being payable on demand, there was a present debt, which was payable without any demand. 11. In Norton v. Ellam (1837) 2 M. & W. 461 ; 1 M. & H. 69 ; 1 Jur 433 ; 6 L.J. Ex. 121 ; 46 R.R. 646 ; 150 E.R. 339 the note was one payable with interest on demand, and the question was from what time the Statute of Limitations began to run, and at page 464 Baron Parke says: "I entertain no doubt at all on this point. It is the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s obligation, without being entitled to notice, and the reason of the rule is, that it is the surety's duty to see that the principal pays his debt. 17. The next question is, what Article of the Limitation Act applies to the case of the surety. In my judgment it must be either Article 65 or Article 115 and, for the purpose of this case, I do not think it matters which, is applied. If 65 is applied, the period would run from the happening of the specified contingency, viz., the default of the principal debtor, or, if 115 applies, the period would run from the time when the contract of guarantee was broken, viz., the failure to re-pay the money on the default of the principal debtor. 18. In my judgment, therefore, unless the Statute of Limitations is prevented from running in the case of the surety by the payment made by the principal debtor on the 13th November 1911, the suit, which was brought on the 12th November 1914, is barred in the case of the defendant No. 2. 19. The next question, therefore, is, whether by reason of such payment a fresh period of limitation is to be computed, as far as the surety is concerned, from the time when the payment was made. 20. This depends ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment was made, the new period of limitation cannot take effect as against him. There is nothing in the language of the section to support that view, and there is nothing to warrant us in introducing words into the section which would authorise that view. The words of the section are general and plain. When the Legislature intends that a fresh period of limitation is to operate as against certain persons only, it says so in distinct terms: see Section 18 of the Act. There is nothing in the section to indicate that the extension is only to operate against the person making the payment." 25. The facts of that case differed materially from those existing in the present case and the judgment must be read having regard to the facts of the case, and being so read that case in my judgment does not cover the present case: In Domi Lal Sahu v. Roshan Dobay 33 C. 1278pc ; 11 C.W.N. 107 there was only one debt in question, viz., the mortgage debt, and inasmuch as the mortgagor had made payments to the mortgagee, it was held that such payments affected not only the mortgagor, but the respondent who was the purchaser of the equity of redemption and who of course claimed through the mortgag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of interest then due. The sum was at first credited by mistake to another transaction, but the error was rectified on the 14th December 1911. On the 12th November 1914 the plaintiff instituted the present suit against the principal debtor and the surety for recovery of principal and balance of interest due on the promissory note. The first defendant did not enter appearance. The second defendant pleaded the bar of limitation. Mr. Justice Chaudhuri has overruled this contention and has decreed the suit against both the defendants. On the present appeal by the surety, the objection has been reiterated that the claim against him is barred by limitation. 35. To determine the question in controversy, we have to ascertain which Article of the First Schedule to the Indian Limitation Act governs this case. The only Articles which have any possible application are those numbered 65 and 115. Article 65 provides that a suit for compensation for breach of a promise to do anything at a specified time or upon the happening of a specified contingency must be instituted within three years from the date when the time specified arrives or the contingency happens. Article 115 provides that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 : 1 Jur 433 ; 6 L.J. Ex. 121 ; 46 R.R. 646 ; 150 E.R. 339 Baron Parke observed that the debt which constitutes the cause of action arises instantly on the loan, so that the contract on the note is in a state of being broken perpetually if the party does not pay it. Baron Alderson added that the cases which have decided that the bringing the action is a demand, show that there has been a previous breach. It follows that on a note payable with interest on demand, the Statute of Limitations begins to run from the date of the note. To the same effect is the observation of Bayley, J., in Rowe v. Young (1820) 2 Brod. & B 165 ; 2 Bligh 391 ; 129 E.R. 921 ; 22 R.R. 662: If a man make a note payable on demand, it is settled by law that a special demand need not be stated in the declaration not proved upon the trial." In Maltby v. Murrells (1860) 5 H. & N. 813 at p. 823 ; 29 L.J. Ex. 377; 2 L.T. 302 : 120 R.R. 83 ; 157 E.R 1405 Baron Channel emphasised this by the observation : "No demand is necessary before bringing an action upon such a note--its payment is a duty which attaches the moment the note is made." See also George In re, Fraicis v. Bruce (1890) 44 Ch. D. 627 ; 59 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lature allows the running of the period as against one person to be affected by the acts of another person, and the case of principal debtor and surety is not expressly or impliedly included in the section [see the observations of Westrop, C.J., in Hajarimal v. Krishnarav 5 B. 647 at p. 652 ; 6 Ind. Jur. 139 ; 8 Ind. Dec. (N.S.) 426 ]. The plaintiff seeks to avail himself of the benefit of Section 20 by proof that, in this case, the principal debtor did, on the 13th November 1911, before the expiration of the prescribed period for the institution of a suit by the creditor to recover the money, pay interest thereon with the result that the creditor became thereupon entitled to a fresh period of limitation from the date of the payment. Stress has been laid upon the generality of the expression fresh period of limitation shall be computed' as used in Section 20(1), and reference has been made in this connection to the observations of Maclean, C.J., in Domi Lal Sahu v. Boshan Dobay 33 C. 1278pc ; 11 C.W.N. 107 [see also Coope v. Gresswell (1866) 2 Eq. 106 at p. 118 ; 35 L.J. Ch. 496 ; 14 L.T. 262 ; 14 W.R. 568 ]. The argument of the plaintiff in substance is that the fresh period r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the liability, and has no reference to the extinction of liability by operation of the Statute of Limitations. It is plain that the view we take of the true effect of Section 20 accords with the well-known principle which underlies the rule that the period of limitation is extended by part payment of principal or payment of interest. The true foundation of this doctrine is that any such payment is an acknowledgment of the existence of the debt, and from it the law raises an implication of a promise to pay the residue or the principal, as the case may be: Morgan v. Rowlands (1872) 7 Q.B. 493 ; 41 L.J.Q.B. 187 ; 26 L.T. 855 ; 20 W.R. 726, Green v. Humphreys (1884) 26 Ch. D. 474 ; 53 L.J. Ch. 625 ; 61 L.J. 42, Boswell In re Merritt v. Boswell (1906) 2 Ch. 369 at p. 866 ; 76 L.J. Ch. 234 94 L.T. 243 ; 22 T.L.R. 247. Consequently, it is fairly obvious that a payment by one person cannot keep alive the remedy against another [ Astbury v. Astbury (1898) 2 Ch. 111 at p. 118 ; 67 L.J. Ch. 471 ; 78 L.T. 494 ; 46 W.R. 636 ], unless the circumstances are such that payment by the one may be regarded as a payment for the other. There is nothing in the relation of principal and surety itself whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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