074-NLR-NLR-V-36-ANNAMALY-CHETTIAR-v.-THORNHILL.pdf
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GARVIN S.P.J.—Annamaly Chettiar v. Thornhill.
Present: Garvin S.P.J. and Maartensz J.
ANNAMALY CHETTIAR v. THORNHILL.
215—D. C. Ratnapura, 4,687.
Account stated—A settlement of accounts—No evidence of cross-accounts—Period of limitation—Ordinance No. 22 of 1871—Civil Procedure Code,s. 192.
A settlement of accounts between two parties, where in respect oftheir dealings one party always remains the debtor, and there is noevidence of cross-dealings between them, is an account stated withinthe meaning of section 8 of the Prescription Ordinance.
Section 192 of the Civil Procedure Code reserves the power of theCourt to award interest in respect of any period prior to the institutionof the action only where the right has been secured by agreement or isrecognized in law.
PPEAL from a judgment of the District Judge of Ratnapura.
H. V. Perera, for defendant, appellant.
Keuneman (with him Gratiaen), for plaintiff, respondent.
February 6, 1935. Garvin S.P.J.—
By its decree in this case the Court awarded the plaintiff judgmentfor the sum of Rs. 54,365.44, with legal interest thereon from June 2,1927, till payment in full and also his costs of action. The defendanthas appealed, but, at the hearing, the only point which was submittedto us in support of the appeal was that the plaintiff’s action was barredby lapse of time. The plaintiff claimed various sums of money. Thetwo principal heads under which his claim falls are first, one for ricesupplied between August, 1923, and June 14, 1924, and the second formoney lent and advanced during the same period. The third item is asmall sum of Rs. 10.50, which is hardly worth noticing, and the last is asubstantial-claim for interest, which the plaintiff says has accrued up tothe time when this action was brought. For an alternative cause ofaction the plaintiff pleaded that on June 24, 1924, an account was statedbetween the parties in respect of their dealings and that at that account-ing a sum of Rs. 54,365.44 was found to be due from the defendant tothe plaintiff. The plaintiff claims this sum with interest up to the dateof action. He also pleads, that in respect of both causes of action, theCourt should exercise its power and grant him interest from the date ofaction to the date of decree, and, thereafter, upon the aggregate amountin terms of section 192 of the Civil Procedure Code.
In respect of the first cause of action it is, I think, clear that theamounts claimed would clearly have been barred by lapse of time in theabsence of any written acknowledgment such as is contemplated by thePrescription Ordinance. But, it has been indicated to us in the courseof this argument that there are two letters upon which the plaintiff relied'as an acknowledgment, which tookthis debtout of the barof limitation.
It is hardlynecessary to considerwhetherthese acknowledgments are
sufficient forthe purpose since theclaim inrespect of thesecond cause
of action isclearly not barred bylapse oftime if therewas such an
GARVIN S.P.J-—Annamaly Chettiar v. Thornhill.
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account stated as is pleaded by the plaintiff. It was urged, however,by counsel for the appellant that this was not an account stated withinthe meaning of the Ordinance and that it is in any event not an accountstated which is evidenced by a writing. The second of these two sub-missions must, I think, be conceded inasmuch as there is no settlementin writing. It remains, therefore to consider whether the contention’ that this is not an account stated is well founded.
Now the argument that has been briefly outlined to us is that inaccordance with the decisions of this Court, a settlement of accountsbetween parties where, in respect of their dealings, one party remainsalways the debtor of the other and where there are no cross-dealings, isnot an account stated within the meaning of the Prescription Ordinance.There can be no question that there is a long series of judgments of thisCourt which seem to take the view that such a settlement of accountsis not an account stated and the effect of the decisions of this Courtwould seem to be that in the absence of a writing there is no accountstated within the meaning of the Prescription Ordinance unless there isevidence that there had been cross-transactions and cross-dealingsbetween the parties and that the accounts arising out of these cross-dealings have been examined and the position of the parties definitelyascertained at the accounting. In Silva v. Silva' I had occasion inview of a similar contention to review the judgments of this Court andstate the position in which we are left as a result of those judgments.This was necessitated inasmuch as in the course of the argument myattention was drawn by counsel to a recent decision of the Privy Councilin which the decision was irreconcilable with the judgments to whichI have referred. Sitting alone, I did not think that it was competent forme to do otherwise than I did in calling attention to the situation inwhich we are left, particularly in view of the fact that it was possible todispose of the case upon a somewhat different ground. .But the questionagain arises before this Bench which is differently constituted. Thedecision of the Privy Council referred to was arrived at in the case ofFirm Bishun Chand v. Seth Girdhari Lai and others There their Lord-ships of the Privy Council had before them a case in which the accountsof a certain money-lender were looked into and an account struckbetween the money-lender and his debtor. There was no suggestionthat there had been any cross-dealings such as I have referred to, buttheir Lordships, after reviewing certain of the Indian'judgments in whicha view similar to that taken by our Courts appears to have been the viewof those Courts, came to the conclusion that it could not be doubted thatthat was an account stated and settled within the meaning of theprovision of the Indian Limitation Act, which corresponds to a similarprovision in our law. That decision, it seems to me, is clearly bindingupon us, and though it may mean a departure from the view hithertoentertained there appears to me to be no alternative but to follow thejudgment of the Privy Council. In the result the contention that this isnot an account stated fails and with it the whole of the defendant’sappeal, which must, therefore, stand dismissed with costs.
3 (1933-34) Times Law Reports 465.
i 36 X. L. It. 307.
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GARVIN S.P.J.—Annamaly Chettiar v. Thornhill.
A cross-appeal has been entered by the plaintiff whose complaintis that the learned District Judge has not awarded him interest on theamount ascertained at the settlement from the date of the settlementup to the date of action. A second ground of appeal is that in the decreewhile granting him interest from the date of action up to the date ofjudgment he has failed to direct that from that date onwards interestshould be payable upon the aggregate amount of principal and interestas ascertained up to the date of judgment. The second of these twopoints can be briefly disposed of. Presumably the real explanation isthat this was due to an oversight. Section 192 clearly enables a Judgewhen awarding interest from the date of action to the date of decree todirect also that the successful party should be entitled to further interest-at the rate prescribed on the aggregate sum so adjudged from the dateof the decree to the date of payment. The decree clearly must in anyevent be modified to that extent.
It remains to consider the first of the two grounds of appeal taken bythe plaintiff. It is urged that the plaintiff is entitled to interest on twogrounds, first, that there are circumstances here from which a Courtmay presume that there was an agreement between the parties thatinterest should be paid on the amount ascertained as due from thedefendant to the plaintiff when the account was settled, and secondly,that apart from such an agreement the Court had the power to directthe payment of interest by the defendant at the rate of 9 per cent.The only circumstance from which we have been invited to infer anagreement to pay interest is the circumstance that in their dealingsup to the time of the settlement of the account between them thedefendant had paid the plaintiff interest in respect of the money due forthe purchase of rice and also in respect of the loans obtained by himfrom time to time from the plaintiff. A careful examination of therecord has failed to disclose any other circumstance of any kind. Whenan account is stated between parties, as in this case, the law implies apromise to pay the amount ascertained at the accounting to be duefrom the one party to the other, but I am aware of no rule of law whichjustifies a Court in implying that there was a promise to pay that sumwith interest. There are undoubtedly cases in which such an agreementmight be inferred. Had the parties continued their dealings after theamount due from the one party to the other had been ascertained at theaccounting, that amount being treated as a balance which was carriedforward in the accounts relating to their subsequent dealings, coupledwith evidence that interest had been charged thereon and either paid oracquiesced in, there would clearly be material which would justify theinference that there was an agreement to pay interest and possiblyevidence that that interest was to be paid at the agreed rate. But thereis no such evidence here. In point of fact the dealings between theparties terminated before and certainly after the account had beenstated, and I do not think that it is possible in these circumstances todraw any further inference than that the defendant who was found to bethe debtor promised to pay to the plaintiff the amount found to bedue from him.
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It was next urged on the authority of a case from the South AfricanCourts (West Rand Estates Ltd. v. New Zealand Insurance Co. Ltd.l)that the Court had the power under the common law to award interestwherever the defendant was “ in mora ”. The judgment indicates that,the Courts of South Africa had apparently departed from, if they had at.any time adopted, the rule of the Roman-Dutch law,- under whichinterest in the absence erf agreement was only recoverable on the groundof mora from the. stage of litis contestatio. Now, whatever theposition may have been in South Africa there is nothing to indicate thatour Courts have ever departed from the rule of the Roman-Dutch lawexcept in so far as by the enactment of section 192 of the Civil ProcedureCode it has now been definitely laid down that the Courts may awardinterest not from the stage of litis contestatio but from the date on whichthe action was filed. No judgment has been cited before us in whichthere has been the slightest departure from what appears to be theuniform rule that in the absence of agreement or of any positive rule oflaw interest is not recoverable in respect of the period prior to the dateof action. The section of the Civil Procedure Code referred to, section192, appears to me to state quite clearly that the power vested in theCourt is to award interest in all cases from the date of the institution ofthe action. Where a rate has been agreed upon the interest will be atagreed rate. Where no rate has been agreed upon the interest whichthe Court may award will be at the rate of 9 per cent. The section thengoes on to state that the award of interest so made shall be “ in additionto any interest adjudged on such principal sum for any period prior tothe institution of the action”. It has been urged by counsel for theplaintiff-appellant that these words indicate the intention of the legisla-ture to vest these Courts with power to grant interest in respect of aperiod prior to the institution of the action in addition to the interestwhich it is expressly authorized to award under the earlier part of thesection, that is, interest after action brought. It might be possible tosupport the contention had it been clear that the words referred toshould be read as part and parcel of a special clause commencing “ in theabsence of any such agreement”. But there is nothing in the sectionwhich marks it out as a separate clause dealing with a separate anddistinct matter. These words appear to me to have been inserted forthe express purpose of making it clear that the interest which the Courtis empowered to grant from the date of action to the date of decree isnot to affect the right of the Court to award interest in respect of anyperiod prior thereto where under the general law a right to interest inrespect of such prior period exists. Clearly such a right might have beenreserved to the claimant by agreement; it might have been secured tohim by a positive enactment of law. For my own part I am unable tosee in the terms of the section read as a whole any indication of theintention of the legislature to depart from the rule of the common lawas it obtains in Ceylon, as has been done in South Africa, or to adoptwhat appears to be the rule of the English law in the matter. Thisquestion must, therefore, be determined with reference to the law as ithas hitherto been understood. In that view the appeal of the plaintiff
1 (1926) s. A. L. B. App. Div. 173.
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MACDONELL C.J.—Kandar v. Sinnachipillai.
also fails, except, of course, in so far as he has clearly made out a rightto relief by the modification of the decree in the manner hereinbeforeindicated and directed. We make no order in regard to the costs of theplaintiff’s appeal.
Our attention has been drawn by counsel for the plaintiff to thecircumstance that there is a motion paper filed with these proceedingssigned by the proctor for the defendant-appellant in which he seeks adismissal of the plaintiff’s action on various grounds set out therein.It is certainly a most unusual motion, but it is hardly necessary to sayanything more upon the point as counsel does not support it. It isaccordingly dismissed.
Maartensz J.—I agree.
Appeal dismissed.