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Report No. 89

II Joint Obligees

20.2. Joint Obligees.- A point worth some discussion arises from section 20(2). Section 20(2) provides that nothing in sections 18 and 19 (dealing with the effect of acknowledgment in writing or effect of payment on account of debt) renders, one of several execution on mortgagees chargeable by reason only of a written acknowledgment signed by, or of a payment made by or by the agent of, any other or others of them. The controversies that require discussion can be better appreciated if a look is had at the English Law on the subject and its execution.

20.3. English Acts.- In England ruling by Lord Mansfield1 that any acknowledgment or payment by one co-debtor was sufficient to take the case out of the statute of limitation, even as regards other co-debtors, raised a number of protests which resulted in curbing the ambit of the rule, as regards acknowledgments, by Lord Tenderten's Act2 and, as regards payments, by the Mercantile Law Amendment Act.3 The language of Lord Tenderten's Act was as unde.-

"No such joint contractors, executors or administrator shall lose the benefit of the said enactments (i.e., enactments as to limitation) so as to be chargeable in respect or by reason only of any written acknowledgment or promise made and signed by any other or others of them."

1. Withcomh v. Whiting, 1781 Sm L Cas (13th Edn.) 633.

2. Lord Tenderten's Act, 9 Geo. 4, C. 14, 1828.

3. Section 14 the Mercantile Law Amendment Act, 1856 (19-20 Vict., C. 97) (Now repealed); see section 24(2), Limitation Act, 1939 (English).

20.4. Developments in India.- It is interesting to note that within two years of the passing of the Mercantile Law Amendment Act, 1856 the Indian Government passed Act No. 14 of 1859, section IV of which read as unde.-

"IV. Revival of right to sue by admission in writing.- If, in respect of any legacy or debt, the person who, but for the law of limitation, would be liable to pay the same, shall have admitted that such debt or legacy or any part thereof is due, by an acknowledgment in writing signed by him, a new period of limitation according to the nature of the original liability, shall be computed from the date of such admission:

Proviso.- Provided that, if more than one person be liable, none of them shall become chargeable by reason only of a written acknowledgement signed by another of them."

20.5. This general provision was expanded in section 20 of the Limitation Act, 1871 by specifically mentioning "partners or executors" and read:

"Nothing in this section renders one of the several partners or executors chargeable by reason only of a written promise or acknowledgment signed by another of them."

20.6. Joint contractors and mortgagees were added to the list of partners and executors by section 21 of the Act of 1877.

20.7. Sections 20(2) and Explanation to sections 18 and 19.- It has been the view of the majority of High Courts that sub-section (2) of section 20 is more or less of an Explanation to sections 18 and 191-2-3

1. Kothandaramnn v. Shunmugam, AIR 1917 Mad 895.

2. Theyttimmit v. Muthukumaraswami, AIR 1929 Mad 881.

3. Gaya Prasad v. Balm Ram, AIR 1928 All 387.

20.8. Interpretation in England and the controversy in India as to joint obligees.- The expression "chargeable by reason only of" in section 20 has been borrowed from the English Acts on the subject, where it has not given rise to any difficulty. In England, the matter is left to be determined by the general law as to whether the action of one of the joint obligees should bind the other.

All that the two English statutes referred to above intended to do was to nullify the effect of a ruling of Lord Mansfield1 on the subject. Thus, when the question arose whether a payment by a partner of a firm would bind the firm, the answer was in the affirmative.2 However, in India, arguments continued to be advanced as regards the co-relation between the expression "by reason only" appearing in this sub-section and the effect of the general law of contracts and partnership.

The Allahabad High Court, dealing with the point observed as under.-

"I understand this section to mean that the mere fact that persons are partners does not make one partner liable under an acknowledgment, etc., by another partner. But in the present case, the liability arises under section 251, Contract Act, because the acknowledgment was made in the course of the partnership business."

In this context, it may be mentioned that in a going mercantile concern, such authority may be presumed.4

1. Whitcomb v. Whiting, (1781) 1 Sm L Cas (10th Edn.) 561: 2 Dougl 652.

2. Goodwin v. Parton & Page, (1880) 42 LT 568.

3. Debi Dayal v. Baldeo Prasad, AIR 1928 All 491.

4. (a) Gordhandas v. Bhulabhai, (1932) 34 Born LR 623; (b) Premji v. Dossa, 1886 ILR 10 Born 358.

20.9. No change needed.- In the result, no change is needed in the section. A recent ruling1 of Andhra Pradesh High Court deals with a case of joint contractors who have signed a promissory note. It was held that even though one of the promisors was the son of the other two promisors, that cannot make him liable for the endorsement made by the other two promisors on the promissory note.

The word "only" was again noticed in a Bombay case2 which ruled that the meaning to be given to the word 'only' in section 21(2) is that it may, also be shown that the partners signing the acknowledgment had authority, express or implied, to do so and that, in a going mercantile concern, such agency is to be presumed as an ordinary rule.

1. Tayaramma v. Ramanjaneya Mercantile Co., AIR 1977 AP 205.

2. Gordhandas v. Bhulabhai, AIR 1932 Born 316.

20.10. Similar is the approach adopted when the question arises as to the effect of an acknowledgment by the principal1 on the obligation of the surety and the repercussions of the acknowledgment by the surety2 upon the principal. Most of the High Courts are agreed that the liability of a surety cannot be equated to that of a co-debtor or joint-contractor within the meaning of section 20(2) of the Act3 and that the debt of the surety is distinguished from the debt of the principal debtor.4

The Bombay High Court in one case5 observed:

"The payment of interest by the debtor within limitation does not give fresh starting point for limitation against the surety under section 20 of the Limitation Act (XV of 1877) even in the absence of a prohibition by surety against the payment of interest by the debtor on his account. Let us apply the words of section 20 to the case: the principal is not the person liable to pay the debt of the surety, so that even if the payment of interest could be regarded as a payment of interest on the debt of the surety, still it was not made by a person liable to pay the surety's debt.

Can it then be said that there was a payment of interest on the surety's debt by an agent duly authorised in this behalf? Apart from the difficulty of treating the interest as due on the surety's debt, we think this must be answered in the negative, the question propounded in the reference excludes an express authority, and (in our opinion) the relation of principal and surety does not give rise to any implied authority."

In this context it may be proper to emphasis that in a going mercantile concern a partner has an implied authority to bind the other partners by an acknowledgment of liability.6-7

1. (a) Federal Bank v. Bom Den, AIR 1956 Punj 21 (34), para. 12; (b) Divalu Mal v. Mandu, AIR 1931 Lah 691 (694).

2. (a) Hamra Singh v. Bakshish, AIR 1962 Punj 495 (496); (b) Ranjit Kumar v. Kishori Mohan, AIR 1940 Cal 401 (402).

3. W.I. Chits v. Mathew, 1979 KLT 566 (569).

4. Sam Nigh Rapt v. Rainamurthy, AIR 1957 Ori 106 (109), para. 8.

5. Gopal Daji Sathe v. Gopal Bin Sonu Bait, 1904 ILR 28 Born 248.

6. Premji v. Dossa, 1886 ILR 10 Born 358.

7. Gordhandas v. Bhulabhai, (1932) 34 Born LR 623: AIR 1932 Born 315.

20.11. No change as to partners needed.- We have given anxious thought to the question whether an Explanation should be added to section 20(2) to make it clear that nothing in sub-section (2) shall prejudice the effect of any acknowledgment as binding any other partner under the general law of partnership or contracts. The object was to make it explicit that the Limitation Act, 1963, though later in point of time to the partnership Act and the Contract Act, does not purport to over-ride, in any manner, the relevant provisions of these earlier statutes.

But the exposition of this sub-section by the Courts (aS discussed above) shows that the Courts are examining the facts and circumstances of each case and ascertaining whether, an agency (express or implied) is made out therefrom. In this position, we do not propose any amendment in this regard.

20.12. Personal l.-No change needed.- As regards joint contractors and mortgagees, certain questions arise when Mohammedan co-heirs succeed to the estate of the deceased in severalty. The part-payment by one of the Mohammedan co-heirs cannot avail to save limitation against the other heirs.1 This also is a matter of the personal law of succession and falls outside the scope of the present enquiry.

Different considerations apply to the case of an acknowledgment of the liability by a Hindu father2 but, as a general rule, it can be stated that where a part-payment by one of the joint debtors is made, the mere presence of the other debtors at the place of payment will not save limitation, unless it is proved that they also made the payment or that the person who actually paid it did so, being authorised by the others.3 Consequently, we do not recommend any change in the text of section 29(2) on this count.

1. Pathumma Boovi v. Rajakrishna Menon, AIR 1975 Ker 91.

2. Deen Narain v. Bhagauti Din, AIR 1952 All 116.

3. Annoda Charm' v. Matti Charm?, AIR 1935 Cal 648.

20.13. No change needed in section 20(2).- We have given anxious thought to the question whether we should recommend deletion of the words 'joint contractors, partners, executors or mortgagees' and bring the language of sub¬section (2) back to the stage it was in section 4 of the Limitation Act, 1859, thereby doing away with the embellishments and illustrations added to the section in the course of time. However, we do not think that this would amount to a practical improvement and are not inclined to recommend any such change.

20.14. Substantive law.- The position is that in applying section 20 the court will have to bear in mind not merely the Limitation Act, but also the general law relating to the particular field, such as agency, joint promises, suretyship, guarantee, partnership and succession. Such an inquiry cannot be avoided. Courts have taken a commonsense view of the matter.

20.15. No change needed.- In the result, no change is needed in section 20.



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