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Petitioner: UNITED BANK LTD., KARACHI VS Respondent: Begum JAMILA KHATOON
Court Name: Sindh High Court Judge(s): Nasir Aslam Zahid Title: UNITED BANK LTD., KARACHI vs Begum JAMILA KHATOON Case No.: Civil Suit No, 618 of 1978 Date of Judgment:1980-10-07 Reported As: 1981 CLC 299 Result: Petition dismissed
JUDGMENT
JUDGMENT ' NASIR A. ZAH1D, J.-The plaintiff, United Bank Ltd., have filed this suit against the defendant Mst. Jamila Khatoon for the recovery of Rs, 76,605.64. According to the plaint, in 1964, at the request of the defendant, the plaintiff had granted to her overdraft facility up to the limit of Rs, 2,50,000 repayable with interest at the agreed rate. The defendant had offered as security pledge of shares of various limited companies, defendant availed of this overdraft facility. In para. 6 of the plaint it has been averred that the defendant and/ or her authorised representative deposited various amounts in her account mentioned in that paragraph during 1966, 1967, 1968, 1970-71 and 1974-75 towards partial repayment of the plaintiff a dues and in July 1976 the plaintiff called upon the defendant to liquidate the liability but the defendant failed to repay the plaintiff's dues and a sum of Rs, 76,605,64 was due and payable by the defendant for which the suit had been filed. 2. The case was put up for final disposal as written statement had not been tiled by the defendant. Mr. M. A. Namazie has all along appeared for the defendant although no written statement was filed by her. For the reason that the parties were negotiating for an amicable settlement and for other reasons the case was adjourned from time to time. However, no settlement could be reached. 3. In support of their claim the plaintiff examined only one witness, namely, Mohsin Ali, an officer of the plaintiff-Bank working in its I. I. Chundrigar Road Branch, Karachi. 4. I have heard Mr. Sh. Inamullah Advocate for the plaintiff and Mr. M. A. Namazie Advocate for the defendant. Learned counsel for the defendant has raised the following three pleas :- (i) The suit is time-barred. (it) The accounts have not been proved.
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(iii) The plaintiffs have not proved the agreement of the defendant for the interest charged by the bank from time to time. 5. I will first take up the limitation plea and the two paragraphs of the plaint which are relevant for the purposes of the question of limitation are paras. 6 and 9 are reproduced here :- "6. That the said defendant and/or her authorised representative deposited various amounts in her said overdraft account inter alia Rs, 1,550 on 5-4-1966, Rs, 1,000 on 27-9-1967, Rs, 1,50,000 on 27-5- 1968, Rs, 15,000 on 24-9-1970 Rs, 19,475 on 1-10-1971, Rs, 3,700 on 22-6-1974, Rs, 1,850 on 27-3-1975 and Rs, 3,700 on 15-9-1975 towards partial repayment of plaintiffs dues. 9. That the cause of action for this suit arose at Karachi which is within the Jurisdiction of this Honourable Court :- (a)On 13-4-1964, when the plaintiffs at the request of the said defendant granted to her an overdraft facility up to the limit of Rs, 2,50,000 which facility the said defendant availed by operation of her overdraft Account No, 5287 maintained with plaintiff's said Branch Bank at I. I. Chundrigar Road, Karachi. (b)On 5-4-1966, on 27-9-1967, on 27-5-1968, on 24-9-1970, on 1-10-1971, on 22-6-1974, on 27-3-1975 and on 15-9-1975 when the said defendant and/or her authorised representative deposited Rs, 1,550, Rs, 1,000, Rs, 1,50,000, Rs, 15,000, Rs, 19,475, Rs, 3,700, Rs, 1,850 and Rs, 3,700 in her said overdraft Account No, 5287, towards partial adjustment of plaintiff's dues. (c) On each and every date between 13-4-1964 when the said defendant created the overdraft but failed to repay the plaintiffs dues." 6. It is also necessary in this connection to refer to the entries in the statement of accounts, Exh. 3/6, relating to the payments alleged to have been made by the defendant and/or her authorised representative in para. 6 of the plaint. The contention of Mr. Namazie for the defendant is that it has not been proved that these payments were made by the defendant and/or her authorised representative and if these payments are excluded from consideration, the suit is patently time- barred. On the other hand, Mr. Inamullah for the plaintiffs has contended that, firstly, these payments have been proved by evidence to have been made by the defendant and/or her authorised representative and secondly in view of section 20 of Limitation Act, therefore, the present suit has been filed within the period of limitation prescribed by law. 7. Before I consider the evidence and entries in the statement of accounts I would refer to the provisions of sections 19 and 20 of the Limitation Act to ascertain the conditions that are required to be fulfilled before payments made by or on behalf of a debtor can extend the period of limitation. Sections 19 and 20 read as follows :- "19.-(1) Where, before the expiration of the period prescribed for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by some person through whom he derives title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. (2) Where the writing containing the acknowledgment is undated ; oral evidence may be given of the time when it was signed ; but, subject to the provisions of the Evidence Act, 1972, oral evidence of its contents shall not be received. ' Explanation 1.-For the purpose of this section an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come, or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to a set off, or is addressed to a person other than the person entitled to the property or right. ' Explanation 11.-For the purposes of this section, 'signed' means signed either personally or by an agent duly authorized in this behalf.
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' Explanation 111.-For the purposes of this section an application for the execution of a decree or order is an application in respect of a right. 20.-(1) Where payment on account of a debt or of interest on a legacy is made, before the expiration of the prescribed period, by the person liable to pay the debt or legacy, or by his duly authorised agent, a fresh period of limitation shall be computed from the time when the payment was made : ' Provided that, save in the case of payment of interest made before the ' 1st day of January 1928, an acknowledgment of the payment appears in the handwriting of, or in a written signed by, the person making the payment. (2) Where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be a payment for the purpose of subsection (1). ' Explanation.-Debt includes money payable under a decree or order of Court." 8. According to Mr. Namazie the following conditions are required to be fulfilled under section 20 of the Limitation Act :- (i) Payment on account of a debt or of interest must be made before the expiration of the prescribed period. (ii) The payment must be proved to have been made by the person liable to pay the debt or by his duly authorized agent. (iii) Acknowledgment of the payment must appear in the handwriting of or in a writing signed by the person making the payment. ' According to learned counsel, mere proof of payment on account of a debt by the debtor or by his duly authorised agent is not sufficient but there should also be an acknowledgment in writing by such person, that is, the debtor or his duly authorised agent. 9. In support of his contention that payment must be coupled with acknowledgment of the payment in writing by the debtor or his duly authorised agent, the counsel apart from relying on the express provision of section 23(i) of the Limitation Act, has referred to a Full Bench judgment from the Indian jurisdiction and a Division Bench judgment of the Dacca High Court. In the Full Bench judgment of the Calcutta High Court in the case of Mukhi Haji Rehmatullah v. Coverji Bhuja (1), the facts were that the plaintiffs had sued the defendant for a certain amount as the balance of brokerage due to him on account of certain dealings during 1891 and 1892. The suit was filed on 26- 8-1895. The plaintiff had relied on an entry in the cash book of.One Haji Hussain Ismail which had shown a payment of Rs, 175 to the plaintiffs on behalf of the defendant on 10-4-1893 to save his claim from being barred by limitation. There was nothing in the entry itself to show that the payment of this amount of Rs, 175 was a part payment on account of brokerage, but oral evidence had clearly shown that the plaintiffs had a claim against the defendant for brokerage and that the defendant gave this Rs, 175 to Haji Hussain Ismail to pay the same to the plaintiffs on account of his brokerage on 8-4-1893 and the plaintiffs received it accordingly. The Judge of the Small Causes Court Calcutta made a reference to the High Court stating this case for the opinion of the High Court on the question whether such an entry of payment saved the limitation under section 20 of the Limitation Act. The Full Bench answered the question in the negative holding that the terms of the proviso to section 20 of the Limitation Act were imperative. I may quote here the relevant passage from the judgment of the Full Bench dealing with this question :- "We think the question referred to the Full Bench in this case must be decided in the negative ; that is to say, that the decision of the High Court in the Small Causes Court Reference No, 2 of 1885 is, in or opinion, not correct. It appears to us that the terms of the proviso to section 20 of the Limitation Act are imperative. The new period {{FOOT NOTE}} (1) I L R 23 Cal. 546
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{{FOOT NOTE}} ' of limitation is to be computed from the time when the payment was made, provided that, in the case of part-payment of the principal of a debt. The fact of the payment appears in the handwriting of the person making the same. Words more express, we think, could not be used. They appear to us to negative the supposition that the handwriting of another person, however authorised by him, who makes the payment, could be contemplated by that proviso. As has been said in the order of reference, it appears to us that the intention of the section must be, so far as possible, to exclude oral evidence and to substitute for it the real evidence furnished by the handwriting of the person making the payment ; and that it is the handwriting of the person making the payment, which is required as an essential condition to the operation of that part of the section which provides for the exemption from limitation. We therefore hold that in this instance the entry was not a sufficient writing within the proviso to section 20 of the Limitation Act." 10. The other case relied upon by Mr. Namazie is Nabadwip Chandra Podder v. S. D. Ahmad (1) where it was held that entries in Bank accounts regarding payments made by the debtor could not create fresh starting point of limitation under section 20 of the Limitation Act unless such payments were acknowledged by the debtor in writing. I may refer to a passage on page 537 from this judgment of the Dacca High Court in this case which is relevant in respect of the submission made by Mr. Namazie "Of the three sums alleged to have been received by the plaintiff from the defendants, the last payment of Rs, 400 was said to have been made on 4-11-53. Even if the alleged three payments including the last one are true, these could not save the limitation, because the suit was filed beyond 3 years from 4-11-1953, the date of the last payment. There is yet another reason why the alleged payments, even if true, could not save limitation. The reason is that none of the alleged payments of Rs, 100, Rs, 200 and Rs, 400 was in accordance with the provisions of section 19 or section 20 of the Limitation Act. In other words, none of the alleged payments was acknowledged in writing, as required by the said sections." 11. Mr. Inamullah could not controvert the proposition of law advanced by Mr. Namazie. In my opinion also proviso to section 20(1) of the Limitation Act requires that for giving a fresh period of limitation payment on account of a debt should be made before the expiration of the prescribed period by the debtor or by his duly authorised agent coupled with an acknowledgment of the payment in writing by the person making the payment. The two judgments cited by Mr. Namazie also support this interpretation of section 20 of the Limitation Act. 12. In the present case, the payments mentioned in para. 6 of the plaint, according to Mr. Inamullah, have been proved by the statement of accounts as well as by the evidence of P. W, 1. As for the writing required under section 20 of the Limitation Act, Mr. Inamullah has relied upon the letter of lien (Exh. 3/10) signed by the defendant on 29-9-1970 addressed to the plaintiff-Bank which empowered the plaintiff to sell the pledged shares without any notice to the plaintiff. The relevant portion of this letter of lien are reproduced here :- "In consideration of your allowing me/us Loans, Overdraft or other {{FOOT NOTE}} (1) PLD 1969 Dacca 529 {{FOOT NOTE}} ' credit or accommodation or any other form of financial assistance from time to time or at any time, 1/we hereby pledge with you as security for repayment to you on demand of all amounts due or which hereafter may become due from me/us to you as well as for all interest thereon at the rate or rates that you may become from time to time determine as payable thereon and all costs, charges and expenses, all shares and/ or stocks with transfer forms duly signed in blank and/or stocks with transfer forms duly signed in blank and/or securities duly endorsed in your favour
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which 1/we now deposit or which I/we may have already deposited with you or which may be in your possession on my/or behalf as also all shares, stocks and/or securities which I/we may hereafter deposit with you in addition to or in substitution for the shares stocks and/or securities already deposited or which may hereafter come into your possession on my/or behalf and I/we the undersigned hereby constitute and appoint you as my/or attorney for the purpose hereinafter mentioned and specially authorise and empower you and all attorneys holding powers of attorney on your behalf to fill up and complete any incomplete transfer attached to any of such shares and/or stocks and to insert your name or that of any other nominee of your bank therein as transferee of the shares and or stocks enumerated therein and to sign or as the case may be to sign, seal, execute and deliver any such transfer or other documents that may be necessary or required for the purpose of completing your title to any such shares and/or stocks and/or securities and register the same in the books of the concern to which the same relate or with the public Debt Office in case of securities and obtain fresh scrip or scrips for the shares, stocks and/or securities enumerated herein in the name of your bank or in that of any other employee or nominee of your bank without any reference to or consent of me/us and also to pledge and/or sell and absolutely dispose of all or any such shares stocks and/or securities at such price and in such manner as you may think fit without any reference to or consent of me/us and I/we hereby agree at your request to sign and/or endorse or as the case may be to sign, seal, execute and deliver any transfer or other document that may be necessary or required by you for the purpose of completing your title to any such shares, stocks and/or securities or for the purpose of completing the sale thereof. Any on my/or failing to do so I/we authorise and empower you and all attorneys holding powers of attorney on your behalf to sign, seal, execute and deliver any transfer or other documents for the purpose of effecting and completing the sale in my/ or name, and 1/we further authorise you to reimburse yourself out of the proceeds of any pledge or sale all costs, charges and expenses incurred by you in transferring and selling all or any such shares, stocks and/or securities or maintaining the value thereof or otherwise in connection therewith and I/we declare that you shall not be responsible for any loss from or through any brokers or others employed in the sale of any such shares, stocks and/or securities or for any loss or depreciation in value of any such shares, stocks and/or securities arising from or through any cause whatsoever and any deficiency whatsoever and howsoever arising have agree to make good and pay on demand to,, you. And it is further agreed that you shall have a lien on all such shares, stocks and/or securities or the proceeds thereof after sale (is sold) as security for or in part payment of any other debt due or liability then incurred or likely to be incurred by me/us to you 13. According to Mr. Inamullah this document gave the Bank authority from the defendant to sell the shares pledged by the defendant with the plaintiff-Bank and deposit the proceeds in the account of the defendant towards repayment of the overdraft outstanding that account. According to learned counsel, Exh. 3/10 is in writing signed by the defendant and the payments mentioned in para. 6 of the plaint were proceeds of sale of pledged shares, which sale were made by the plaintiff-Bank as authorised agent of the defendant and the proceeds were deposited towards loan also as authorised agent by the Bank. The contention that the payments were deposited by the plaintiff-Bank is not borne out from the evidence of P. W. 1 according to whom these payments were deposited by the defendant. 14. In any case, although Exh. 3/10 is in the form of a letter, the contents of the document show that it is a part of the agreement between the parties whereby the Bank was given the authority mentioned in this letter of lien. However, Mr. Inamullah did not concede that Exh. 3/10 was an agreement. According to him it was a letter-cum-power of attorney. As observed, however, the contents of the document, Exh. 3/10, show that it was a part of the contract and that it was issued for consideration. The question of determination of the status of Exh. 3/10 is required in view of the
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provisions of section 176 of the Contract Act, which requires the pledgee to give reasonable notice to the pledgor before selling the pledged goods, in this case shares. According to Mr. Namazie, in the present case the shares purported to have been sold by the plaintiff-Bank had been sold without any notice to the defendant and as such section 176 of the Contract Act has been violated. As a result, it was contended by Mr. Namazie that the deposit of the proceeds of the sale of shares by the Bank in the account of the defendant was unauthorised. Mr. Inamullah had, however, argued that the Bank had been authorised to sell the pledged shares without prior notice in view of Exh. 3/10 and, therefore, no notice was necessary and the payments were deposited by the Bank in the account of the defendant with her express authority. Mr. Namazie's contention was that by agreement the parties could not override the provisions of section 176 of the Contract Act and in support of his contention he relied upon the judgment of a learned Single Judge in the case of Usman Malik v. Bank of Bahawalpur Ltd. (1). In that case a similar document had been executed and it was held that section 176 of the Contract Act was not one of those provisions of law which was subject to the parties' contractual freedom and it was also held that the terms of the agreement (letter of lien in that case) arrived at between the parties would not make any effect on the right of the pawnor to get a notice about the disposal of the goods as contemplated in section 176 of the Contract Act. 15. Mr. Inamullah, learned counsel for the plaintiff conceded that the letter of lien in the case of Usman Malik v. Bank of Bahawalpur Ltd. And in this suit contained more or less similar terms, but placed reliance on the following passage of the Division Bench judgment in the case of Sh. Azizur Rehman v. Bahawalnagar Cooperative Commission Shop Ltd. (2) :- "It would be futile on these premises to argue, as has been done, that the sale was without notice, as contemplated by section 176 of the Contract Act. We are unable to accede to that contention. The defendants had never withdrawn the authority which the letter of the 24th of August, 1952, conferred, and if the letter was still operative the sale by the plaintiff, was with the authority of the defendants and {{FOOT NOTE}} (1) PLD 1959 Kar. 725 (2) PLD 1962 B J 20 {{FOOT NOTE}} ' could not be construed as without notice to them. In fact, the stage for notice had long passed. The demands for the discharge of the liability by the plaintiff have been too pronounced to be missed and, as already observed by us, actually led to the letter of authority written by Sheikh Abdur Rehman. The sale of the goods being with authority no question arises of the failure of the pawnee to produce the goods when the pawnor was willing to discharge his liability. The plea, therefore, fails and is repelled." ' The facts of that case were that the respondent had advanced certain amounts to the appellants on the security of some stock of cotton seed belonging to the appellants and lying in stock with a third party. The appellants defaulted in the repayment of the advances which led to notice of demand being given by the respondent to the appellant. On receipt of such notice of demand, appellant Abdul Rehman, partner of the appellant firm, by a writing dated 24-8-1952 authorized the delivery of the pledged goods lying with the stockists to the respondent the respondent was authorised to sell them and to account for the price towards the discharge of the liability of the appellant towards the respondent. On the basis of this letter delivery of the pledged goods were taken by the respondent from the stockists and then the same were sold. It is on these facts that the Division Bench observed that reference to section 176 of the Contract Act was futile. The facts of that case are clearly distinguishable from the instant case. In the Baghdad-ul-Jadid case there was a demand for repayment and it is in response, to the demand that letter dated 24-8-1952 was given by the pawnor to the pawnee. This letter was a specific authority given to the pawnee to sell
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the pledged goods and adjust the proceeds against the liability on demand being made by the pawnee for liquidation of the loan and the pawnor not being in a position to adjust the same. In this context the Division Bench observed that it was futile to argue that notice under section 176 of the Contract Act was not given. The letter dated 24-8-1952 more over was not a part of the contract between the parties. The Division Bench judgment in PLD 1962 B J 20, in my view, does not overrule the proposition of law enunciated in the case of Usman Malik v. Bank of Bahawalpur Ltd.,. As contended by counsel for the plaintiff. 16. Section 176 of the Contract Act prescribes two conditions to be fulfilled before sale of pledged goods can be executed by the pledgee. First there must be a default in the payment of loan or advance and secondly reasonable notice must be given before the sale takes place. In the present case till July, 1976 there is neither any notice of demand nor any letter of plaintiff informing the defendant that she had committed default in the repayment of advances. The first such notice is given on 16-7-1976 (Exh. 3/14). Sale of pledged shares prior to issuance of Exh. 3/14 on 16-7-1976, therefore, is in contravention of section 176 of the Contract Act. Secondly I am of the view, relying upon the judgment reproduced in PLD 1959 Kar. 725, that by agreement the parties cannot override section 176 of the Contract Act and Exh. 3/10 being a part of the contract between the parties could not give the authority to the plaintiff to bypass the condition of prior reasonable notice to be given to the defendant. The part payments after 1-10-1971 till July 1976, if deposited by the plaintiff-Bank being sale proceeds of pledged shares, cannot be accepted as having been made by the authorised agent of the defendant. 17. Both Mr. Inamullah as well as Mr. M. A. Namazie agreed that Article 57 of the First Schedule to the Limitation Act, 1908 is applicable to the claim of the plaintiff in this suit and according to Mr. Inamullah period of limitation stood extended from time to time on account of part payments made by the…
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