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PETITIONER: MARGARET LALITA SAMUEL

       Vs.

RESPONDENT: INDO COMMERCIAL BANK LTD.

DATE OF JUDGMENT25/09/1978

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) CHANDRACHUD, Y.V. ((CJ) SARKARIA, RANJIT SINGH

CITATION:  1979 AIR  102            1979 SCR  (1) 914  1979 SCC  (2) 396  CITATOR INFO :  R          1979 SC1436  (5)

ACT:      Constitution   of    India-Arts.    136-141-Substantial justice-If erroneous  order of remand results in substantial justice whether this Court should interfere-      Limitation   Act    1908-Schedule-Articles   57,   115- Continuing guarantee-When  does limitation  run-Liability of Bank guarantee-If  claim given  up  without  specifying  any particulars whether  it  can  be  taken  into  consideration against the unproved debts.

HEADNOTE:      The respondent  plaintiff is  the Indo  Commercial Bank Ltd. now  taken over  and represented by the Punjab National Bank. In  1943 C.  B. Samuel,  the husband of the appellant- defendant with  other persons floated a company known as the Modern Hindustan  Food  Products  Ltd.  Co.  at  Poona.  The company opened  with the  plaintiff Bank  a current  account which was  later converted  into an  over-draft Account with the maximum  limit of  Rs. 10/-  lakhs. C.  B.  Samuel,  the Managing Director  of the company executed a Promissory Note for Rs. 10 lakhs and he and his wife, the defendant executed a  guarantee  bond  by  which  they  jointly  and  severally guaranteed to  the Bank,  the repayment  of all moneys which shall at  any time  be due  to the Bank from the Company, on the general balance of their account with the Bank or on any account whatever.  The guarantee  was  to  be  a  continuing guarantee to the extent of Rs. 10 lakhs at any one time. The Company ceased  business on  30th June,  1946 and thereafter the Company  entered into  an arrangement  with the  Bank by which the Bank was authorised to receive all amount due from the Director  General of  Food Supplies,  or from  any other person or  Department and  appropriate  the  sums  collected towards the  money due  to the  Bank from  the  Company.  An irrevocable power  of attorney authorising the Bank to do so was  executed  by  the  Managing  Director.  All  Bills  and documents were accordingly handed over to the plaintiff bank for realisation  of the  amount due  to  the  Company.  C.B. Samuel died on 27th April, 1951. The defendant by her letter dated  2nd   February,  1952,   acknowledged  her   personal

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guarantee to  repay to the plaintiff the sum of Rs. 2,71,531 which was stated to be balance due to the plaintiff from the Company as  on 31st  December, 1951.  To that,  a sum of Rs. 21,886/- was  to be  added by  way  of  interest.  The  Bank recovered a  sum of  Rs. 57,964 and thus the balance due was Rs. 2,35,453/-. The Bank filed the present suit in November, 1954 to enforce the guarantee bond against the defendant and to recover  a sum  of Rs.  1,50,000. It  was stated  in  the plaint that  a sum  of Rs.  85,453 was given up and the suit was filed  to recover  the sum  of Rs.  1,50,000/- only. The defence of  the defendant  was that  the suit  was barred by limitation, that  the letter  dt.  2nd  February,  1952  was obtained from  her by  fraud and  that she was, in any case, not liable  to pay amounts disputed by her in para 15 of her written statement.  She also  pleaded that the plaintiff had deliberately withheld  production of  the  accounts  between 1943-46 during  which period  most of  the transactions took place and that if these accounts were produced, she would be in a position to challenge other items as well. 915      Soon after  filing the written statement, the defendant filed an  application in  the  trial  court  to  direct  the plaintiff to  produce among  other documents,  the  accounts from 1943  onwards. The  Trials Judge  by his Order dt. 10th March, 1955  directed the plaintiff to produce the documents within two  weeks from  that date.  The  plaintiff  did  not produce the  documents. Subsequently, however, an extract of the accounts  from 1943 to 1946 was produced. On the date of the hearing  of the suit, the defendant filed an application Ext. 85,  seeking a  direction  from  the  Court,  that  the plaintiff be  allowed to  produce any  documentary  evidence which they  might possess  in support of the items mentioned in the schedules even till the time the evidence is finished and  the   defendant  be   allowed  to   deny,   under   the circumstances mentioned,  the items  mentioned  in  schedule ‘B’. Alongwith  the application,  the  defendant  filed  two schedules;  Schedule  ‘A’  showing  the  items  specifically denied  by  the  defendant  in  her  written  statement  and Schedule ‘B’  showing the  items which  were denied  by  her after the  accounts from 1943 to 1946 were produced in Court by  the  plaintiff.  The  application  was  opposed  by  the plaintiff. The  trial court dismissed the application on the ground that it was belated. The trial court observed that if the defendant  wanted to dispute any item from the accounts, she should  have got  the accounts  produced even before she filed the  written statement.  The court,  observed that the defendant had  no doubt  filed the  earlier application  but when the plaintiff failed to produce the accounts within two weeks, she did not take further action in the matter.      The trial  court found  that letter dated 2nd Feb. 1952 was not  proved to  have been  obtained by  fraud. The court found that  the defendant who was a highly educated lady had subscribed her  signature  to  Ext.  55  fully  knowing  its contents. The  trial court  however, held  that the suit was barred by  limitation. The  trial court also held that there was no proper proof of the several debit items and that they were suspicious.      The plaintiff  filed an  appeal to  the High  Court  of Bombay. The  High Court held that the suit was not barred by limitation but that on the material placed before the Court, it was  impossible  to  pass  a  decree  in  favour  of  the plaintiff,  for   any  amount  alleged  to  be  due  by  the defendant. The High Court also observed that the trial Judge was wrong  in dismissing  the application.  The High  Court, however, thought  that in  order to  do justice  between the

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parties, it  was necessary  to give  the  plaintiff-bank  an opportunity to prove the various items which were challenged by the  defendant  in  her  written  statement  and  in  her application Ext.  85, and  further to  give the defendant an opportunity to  lead evidence  in support  of her contention that the  entries were  in respect of accounts which she was not liable  to pay.  The High Court remanded the suit to the trial  court   for  fresh  disposal  in  the  light  of  the observations made  by it  after raising additional issues if necessary.      On  remand,  the  trial  court  raised  two  additional issues. The  trial court  held that the plaintiff proved two items in  dispute as  given in  the  written  statement  and Exhibit 85.  The trial  court negatived the defendant’s case that the  debit entries were in respect of the amounts which she was  not liable  to pay.  The trial  court  based  these conclusions primarily  on the  letter dt.  30th  June,  1950 passed by  the Company  in favour  of the Bank acknowledging the balance  due, at the foot of the overdraft account as on 30th June,  1950 was Rs. 4,90,523. The trial Judge held that the letter of acknowledgment was 916 binding on  the defendant. The suit was decreed for a sum of Rs. 1,50,000/-.  In an  appeal filed  by the  defendant, the High Court considered the evidence relating to each item and found that  the debit  items amounting  to Rs. 68,761/- were not proved  to be  binding on the defendant. The High Court, however, held  that since  this amount  was  less  than  Rs. 85,453/- which  had been given up by the plaintiff, the High Court affirmed  the decree  passed by  the trial  court. The High Court  gave a  finding relating to three letters signed by the  defendant herself  as Director of the Company in the year 1945.      In an appeal by special appeal, the appellant contended :      (1)  that there  was no  justification for the order of           remand passed  in the first instance by the Bombay           High Court.  On the  finding  arrived  at  by  the           Bombay High  Court, that  the plaintiff had failed           to prove  any of  the debit  items,  the  original           decree of  the trial  court  dismissing  the  suit           should have  been affirmed.  When the  application           Ext. 85  was filed by the defendant, the plaintiff           opposed it.  The appellate  Court, therefore,  was           not justified  in giving  a further opportunity to           the plaintiff to prove the debit items.      (2)  the suit  was time-barred.  Each of the debit item           constituted a  distinct loan  and gave  rise to  a           separate cause  of action,  every one of which was           barred by limitation.      The respondent contended that :      (i)  the initial order of remand made by the High Court           was justified  in the special circumstances of the           case. Even  if the  order of  remand could  not be           fully justified,  this  is  not  a  fit  case  for           interference under  Art. 136  having regard to the           justice  of   the  matter   as  disclosed  by  the           subsequent findings  of the  trial court  and  the           appellate Court.      (ii) the suit  was really  one to enforce the guarantee           bond,  that   the  guarantee   was  a   continuing           guarantee and,  therefore, the  suit could  not be           said to be barred by limitation.      Partly allowing the appeal the Court, ^

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    HELD :  The contention  of the appellant that each item of overdraft  was independent  loan and  that Art. 57 of the Schedule to  the Limitation  Act 1908 applied, is erroneous. [922G-H, 924B]      Basante Kumar Mitra v. Chota Nagpur Banking Association Ltd. A.I.R. 1948 Pat. 18; Brajendra Kishore Roy Chowdhury v. Hindustan Co-operative  Insurance Society  Ltd., ILR 44 Cal. 979; National  and Grindlays  Bank Ltd.  v. Tikam Chand Daga and Anr. A.I.R. 1964 Cal. 358; Uma Shankar Prasad v. Bank of Bihar Ltd. & Anr., A.I.R. 1942 Pat. 201 distinguished.      It is  unnecessary for  the purpose of the present case to go  into the  question of  the  nature  of  an  overdraft account. The  present suit  is in substance and truth one to enforce the  guarantee bond  executed by  the defendant. The guarantee bond itself provides that the guarantee shall be a continuing guarantee 917 and the  defendant undertook  to pay  any amount that may be due by the company at the foot of the general balance of its account or  any other  account whatever. In the case of such continuing guarantee,  so long  as the  account  is  a  live account in  the sense that it is not settled and there is no refusal on  the part  of the  guarantor  to  carry  out  the obligation, the  period  of  limitation  does  not  commence running. Limitation  would only  run from the date of breach under Art.  115 of the Schedule to the Limitation Act, 1908. [923A-B, 924A-B]      Wright and  Anr. v.  New  Zealand  Farmers  Cooperative Association of Canterbury Ltd., 1939 A.C. 439; approved.      Parr’s Banking  Co. Ltd.  v. Yates  [1898] 2  K.B.  460 found to be over-ruled.      Gradford Old Bank Ltd. v. Sutcliffe, [1918] 2 K.B. 833; referred to.      In the  present case,  the overdraft  account which was guaranteed  by   the  defendant  by  the  execution  of  the guarantee bond continued to be a live account even after the company  ceased  its  business.  A  power  of  attorney  was accepted  by   the  company   in  favour  of  the  Bank  for realisation. Certain  amounts were  received. The  defendant herself executed  letter dt. 2nd Feb. 1952 acknowledging her liability in  respect  of  the  guarantee.  Thus,  far  from repudiating the  liability  and  breaking  the  contract  of continuing guarantee,  the defendant accepted her obligation under the guarantee bond in respect of the overdraft account which continued  to be  live at  least upto  29th September, 1952. The  suit was  filed on  8th November,  1954 and  was, therefore, clearly  within time  under Article  115  of  the schedule of Limitation Act, 1908. [926A-F]      The correctness  of an  order of  demand passed  by the High Court  which could  not then be questioned by filing an appeal in  the Supreme Court against that order because such an appeal was not competent could nevertheless be challenged later in  the appeal before the Supreme Court arising out of the final judgment in the action. [927A-B]      Satyadhyan Ghoshal  and Ors.  v. Smt. Beorajin Debi and Anr. [1960]  3 S.C.R.  590; Lonankutty  v. Thomman  and Anr. [1976] Suppl.  SCR 74;  Jasraj Inder  Singh v. Hemraj Multan Chand [1977] 2 SCR 973; relied on.      It does  not, however, mean that the Supreme Court will every time  exercise its discretionary powers under Art. 136 of the  Constitution merely  because it  finds that the High Court had  wrongly passed  an order  of remand at an earlier stage of the case. If the Supreme Court is satisfied that as a result  of the order of the remand substantial justice has been done  to the  parties in the consequential proceedings,

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the Court  can decline  to exercise  its power  to interfere under Art.  136. Art.  136, is  not meant  to correct  every illegality brought to the notice of the Supreme Court nor to undo, merely  on account of such illegality, an adjudication which has  done substantial  justice to  the parties. On the other hand,  Art. 142  of the Constitution expressly confers powers upon  the  Supreme  Court  in  the  exercise  of  its jurisdiction to  pass such  decrees to make such order as is necessary for  doing complete  justice in any case or matter pending before  it. On  account of the special circumstances of the  case, the  High  Court  remanded  the  case  in  the interests of justice. Whether or not, the order of remand is capable of  being justified under the provisions of the Code of Civil  Procedure, the  interest of  justice had been done between the  parties as  a result of subsequent proceedings. In the special 918 circumstances of  this case,  the  Supreme  Court  will  not interfere with  the decree of the lower court merely because the earlier order of remand passed by the High Court may not be capable of being justified. [927B-D, 928A, C]

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2133 of 1968.      Appeal by  Special Leave  from the  Judgment and  Order dated 25-9-1967 of the Bombay High Court in First Appeal No. 247 of 1960.      B. D.  Bal, Mrs.  Jayashree Wad  and S.  B. Wad for the Appellant.      V. C.  Mahajan, S.  K. Mehta,  K. R.  Nagraja and P. N. Puri for the Respondent.      The Judgment of the Court was delivered by      CHINNAPPA REDDDY, J.-The defendant in the action is the appellant in  this appeal  by special leave. The respondent- plaintiff is  the Indo  Commercial Bank  Ltd.,  Madras,  now taken over  and represented  by the Punjab National Bank. We will hereafter  refer to  the plaintiff as the Bank. In 1943 Kawasji Karanjia  and JaI Karanjia and C. B. Samuel, husband of the  defendant, floated  a company  known as  the  Modern Hindustan Food  Products Ltd.  at Poona. Jal Karanjia, C. B. Samuel and  the defendant were Directors of the Company. The Company opened  a current account with the plaintiff bank in 1943 which  was later  converted into  an overdraft  account with the  maximum limit  of Rs.  25,000/-. By  a  subsequent arrangement  dated   19th  June,  1944,  the  limit  of  the overdraft account  was raised  to Rs. 10 lacs. C. B. Samuel, as Managing  Director of  the Company, executed a promissory note for  Rs. 10  lacs and  he and  his wife Margaret Samuel (defendant) executed  a guarantee Bond (Exhibit 57) by which they jointly  and  severally  guaranteed  to  the  bank  the repayment of all money which shall at any time be due to the Bank from  the Company  on  the  general  balance  of  their account with  the bank,  or on  any  account  whatever.  The guarantee was  to be a continuing guarantee to the extent of Rs. 10  lacs at any one time. We will have occasion to refer to the  terms of  the bond  in detail  later. The  overdraft facility was  utilised by the Company and amounts were drawn from the  Bank at various times. The Company ceased business on 30th  June 1946,  and thereafter the Company entered into an  arrangement   with  the  plaintiff  bank  by  which  the plaintiff bank  was authoroised  to receive  all amounts due from the  Director General  of Food  Supplies, Government of

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India,  or   from  any   other  person   or  Department  and appropriate the  sums collected towards the money due to the bank from  the Company.  An irrevocable  power  of  attorney authorsing the bank to do so was executed by C. B. Samuel as Managing Director 919 of the  Company. All  Bills and  documents were  accordingly handed over  to the  plaintiff bank  for realisation  of the amount due  to the  Company. C. B. Samuel died on 27th April 1951. By  her letter Exhibit 55 dated 2nd February 1952, the defendant acknowledged  her personal  guarantee to  repay to the plaintiff  the sum  of Rs. 2,71,531-8-6 which was stated to be  the balance  due to the plaintiff from the Company as on 31st  December, 1951.  Adding a sum of Rs. 21,886-6 Ans-0 ps. by  way of  interest from  1st January  1952  till  30th September, 1953, and deducting a sum of Rs. 57,964-14-6 said to be  the amount recovered between those dates, the balance due on  8th November, 1954, was stated to be Rs. 2,35,453-1- 0. On  8th November, 1954 the present suit was filled by the Bank to  enforce the  guarantee bond  against the  defendant Margaret Samuel  and to recover a sum of Rs. 1,50,000/- from her. It was stated in the plaint that a sum of Rs. 85,453-1- 0 was  remitted and  the suit was laid to recover the sum of Rs. 1,50,000/-  only. Alongwith the plaint an extract of the account subsequent to 1946 was filed.      The defence  of Margaret  Samuel, to the extent that is relevant for  the purposes  of the  present appeal, was that the suit was barred by limitation, that the letter dated 2nd February, 1952  was obtained  from her by fraud and that she was, in  any case, not liable to pay amounts disputed by her in paragraph  15 of  her written statement. She also pleaded that the  plaintiff had  deliberately withheld production of the accounts  between 1943  to 1946 during which period most of the  transactions took  place and  that if those accounts were produced  she would be in a position to challenge other items as well.      Soon after  filing the  written statement the defendant filed an  application in  the  Trial  Court  to  direct  the plaintiff to  produce, among  other documents,  the accounts from 1943  onwards. The  Trial Judge by his order dated 10th March 1955  directed the  plaintiff to produce the documents within 2  weeks from the date. The plaintiff did not produce the  documents   within  the   time  allowed.  Subsequently, however, an  extract of  the accounts  from 1943 to 1946 was produced on  1st September  1955, the date of hearing of the suit. On 10th October, 1955, the defendant filed Exhibit 85, an application  seeking a direction from the Court "that the plaintiff be  allowed to  produce any  documentary  evidence which they  might possess  in support of the items mentioned in the schedules even till the time the evidence is finished and  the   defendant  be   allowed  to   deny,   under   the circumstances mentioned  all the items mentioned in Schedule ‘B’, with her 920 explanation for  the items".  Alongwith the  application the defendant filed  two schedules,  Schedule  ‘A’  showing  the items specifically  denied by  the defendant  in her written statement and  schedule ‘B’  showing the  items  which  were denied by  her after  the accounts  from 1943  to 1946  were produced in  Court by  the plaintiff.  The  application  was opposed by  the plaintiff.  The Trial  Court  dismissed  the application on  the ground  that it  was belated.  The Trial Court observed  that if  the defendant wanted to dispute any item from  the accounts  she should  have got  the  accounts produced even  before she  filed the  written statement.  No

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doubt she had filed an application soon afterwards to direct the plaintiff  to produce  the accounts  and other documents within two  weeks, but  when the plaintiff failed to produce the accounts  within two weeks, she did not take any further action in  the matter. Having failed to take steps to compel the plaintiff  to produce  the accounts  earlier, the  Court said, she  could not  seek to  dispute the  items after  the plaintiffs had closed the evidence of their side. Thereafter the Trial of the suit was concluded.      At  the  trial  the  plaintiff  relied  primarily  upon Exhibit 55  the letter of acknowledgment dated 2nd February, 1952. This letter of acknowledgment, as already mentioned by us was  alleged by  the defendant to have been obtained from her by  fraud. The learned Civil Judge found that the letter was not  proved to have been obtained by fraud. He held that the  defendant,   who  was   a  highly  educated  lady,  had subscribed her  signature to  Exhibit 55  fully knowing  its contents. He,  however, held  that the  suit was  barred  by limitation. The learned Civil Judge also held that there was no proper  proof of  the several  debit items  and that they were suspicious. The suit was, therefore, dismissed.      The plaintiff  filed an  appeal to  the High  Court  of Bombay. The  High Court held that the suit was not barred by limitation. The  High Court  observed that  on the  material placed before  the Court, it was impossible to pass a decree in favour of the plaintiff-bank for any amount alleged to be due by  the defendant. The High Court also observed that the Trial Judge was wrong in dismissing the application (Exhibit 85). The  High Court,  however, thought  that in order to do justice between  the parties  it was  necessary to  give the plaintiff bank  an opportunity  to prove  the various  items which were  challenged  by  the  defendant  in  her  written statement and in her application (Exhibit 85) and further to give the  defendant  an  opportunity  to  lead  evidence  in support of her contention that the entries were in respect 921 of amounts  which she  was not liable to pay. The High Court remanded the  suit to  the Trial Court for fresh disposal in the light  of the  observations made  by it,  after  raising additional issues if necessary.      After remand the Trial Judge amended original issue No. 9 and  added issue  No. 9-A.  He allowed the parties to lead evidence. The two issues which were tried by him were issues 9 and 9-A which were as follows :           "9. Does  plaintiff prove  the items in dispute as      given in the written statement and in Ex. 85 ?           9-A. Does  defendant prove  that the debit entries      are in  respect of  amounts which  she is not liable to      pay ?" On an  elaborate consideration  of the  evidence, the  Trial Judge answered  issue No. 9 in the affirmative and issue No. 9-A in  the negative  basing  his  conclusion  primarily  on Exhibit 99  a letter  dated 30th  June 1950,  passed by  the Company in favour of the bank acknowledging that the balance due at  the foot  of the over-draft account as on 30th June, 1950 was  Rs. 4,90,523-5-7.  The Trial  Judge held  that the letter of  acknowledgement was binding on the defendant. The suit was  decreed for  a sum  of Rs. 1,50,000/- with further interest and costs.      The defendant  preferred an appeal to the High Court of Bombay. The  High Court  considered the evidence relating to each item  of debit  in great  detail and  found that  debit items amounting  to Rs.  68,761-7-0 were  not provide  to be binding on  the defendant.  As this amount with interest was less than  the amount of Rs. 85,453-1-0 which had been given

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up by  the plaintiff  in the plaint, the High Court affirmed the decree  passed by  the Trial  Court. The  finding of the High Court in regard to the various debit items were greatly influenced by  a group  of three  letters Exhibit 104, dated 30th June,  1945, Exhibit  105 dated 27th November, 1945 and Exhibit 106 dated 6th December, 1945 signed by the defendant herself as  Director of  the Company.  On the basis of these three  letters   the  High   Court  took   the  view   that, substantially, all  the entries  of debit  made prior to 1st December, 1945 must be held to have been proved.      In this appeal by special leave Shri B. D. Bal, learned Counsel for the defendant-appellant argued that there was no justification for  the order  of remand  passed in the first instance by  the Bombay High Court. He submitted that on the finding arrived  at  by  the  Bombay  High  Court  that  the plaintiff had  failed to  prove any  of the debit items, the original decree  of the  Trial  Court  dismissing  the  suit should have 922 been affirmed. He said that when the defendant filed Exhibit 85,  proposing   that  the  plaintiff  should  be  given  an opportunity to adduce evidence to prove the debit items, the plaintiff opposed  the application. The Appellate Court was, therefore, unjustified  in giving  a further  opportunity to the plaintiff  to prove  the debit  items. Shri  Bal further urged that the suit was barred by limitation. His contention was that each of the debit items constituted a distinct loan and gave  rise to  a separate  cause of  action, everyone of which was  barred by  limitation. In regard to Exhibits 104, 105 and  106 Shri  Bal urged  that the  defendant had merely signed the  letters which  were put  up for  her  signature, without  personally   verifying  the   correctness  of   the statements made in the letters. His argument was that it was most unlikely  that  the  defendant  would  have  personally verified  the  accounts  and  satisfied  herself  about  the correctness of  the several  debit items, before signing the letters put  up before her. Shri Bal also argued that in any case a  sum of  Rs. 50,000/-  which was  in deposit with the Government and  which the Bank was entitled to receive under the tripartite  arrangement made  between the  Company,  the Bank and  the Government  should have been deducted from the amount of  decree. He  also urged  that two  items of  debit which related  to the  transfer of  funds  to  the  personal account of C.B. Samuel should also be excluded.      Shri Vikram  Mahajan, learned Counsel for the plaintiff argued that  the initial  order of remand made by the Bombay High Court was justified in the special circumstances of the case. He  further argued  that even  if the  order of remand could not  be fully  justified, it  was not  a fit  case for interference under  Article 136  of the Constitution, having regard to  the justice  of the  matter as  disclosed by  the subsequent findings  of the  Trial Court  and the  Appellate Court. On  the question  of limitation he submitted that the suit was  really one to enforce the guarantee bond, that the guarantee was a continuing guarantee and therefore, the suit could not  be said to be barred by limitation. He urged that the defendant was an educated person well versed in business affairs and the High Court was right in attaching importance to the three letters Exhibit 104, 105 and 106.      We may  first consider  the question  of limitation. As already mentioned by us, the submission of Shri Bal was that every item  of an overdraft account was an independent loan, limitation for  the recovery  of  which  was  determined  by Article 57  of the  schedule to  the Limitation  Act,  1908. Limitation, according to the learned Counsel, started to run

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from the date of each loan. He relied on Basante Kumar Mitra v. Chota Nagpur Banking Association Ltd,.(1) Brajendra 923 Kishore Ray  Chowdhury v.  Hindustan  Cooperative  Insurance Society Ltd. National and Grindlays Bank Ltd. v. Tikam Chand Daga &  Anr., and Uma Shankar Prasad v. Bank of Bihar Ltd. & Anr. In  our view  it is unnecessary for the purposes of the present case  to go  into the  question of  the nature of an overdraft account.  The present  suit is  in  substance  and truth one  to enforce  the guarantee  bond executed  by  the defendant. In order to ascertain the nature of the liability of the  defendant it  is necessary  to refer  to the precise terms of  the guarantee  bond rather  than  embark  into  an enquiry as to the nature of an overdraft account. Exhibit 57 is the  guarantee bond  executed by  the defendant  and  her husband on  23rd October, 1944. It is addressed to the Indo- Commercial Bank Ltd., Madras, and is in the following terms:      "Dear Sirs,           In consideration  of your  having agreed  to allow      overdraft accommodation  upto Rs.  10,00,000/-  (Rupees      Ten Lakhs  only) to  the Modern Hindustan Food Products      Ltd., Poona,  we, C.  B. Samuel  and M.  L. Samuel, the      undersigned do  hereby jointly  and severally guarantee      to you,  the Indo-Commercial Bank Limited the repayment      of all  money, which  shall at  any time  be due to you      from the  said Modern  Hindustan Food Products Ltd., on      the general  balance of  their accounts  with you or on      any account  whatever (such  balances  to  include  all      interest, charges,  commission and other expenses which      you may  charge as bankers) and also the due payment at      maturity of  any promissory  note or  other  negotiable      instrument on  the security  or in respect of which any      credit or advance shall be made.           And we hereby declare that this guarantee shall be      a continuing  guarantee to  the extent  at any one time      for Rs.  10,00,000/- (Rupees  Ten Lakhs only) and shall      not be  considered wholly or partially satisfied by the      payment at  any one  time or  at different times of any      sums of  money due  on such  general balance of account      but shall  extend and cover and be a security for every      and all  further sums  at any  time due to you thereon.      And we further declare that you may grant to the Modern      Hindustan Food  Products Ltd.,  any indulgence  without      discharging our liability." 924 The guarantee  is seen  to be a continuing guarantee and the undertaking by  the defendant  is to pay any amount that may be due  by the company at the foot of the general balance of its account  or any  other account  whatever. In the case of such a  continuing guarantee,  so long  as the  account is a live account  in the  sense that it is not settled and there is no  refusal on the part of the guarantor to carry out the obligation, we do not see how the period of limitation could be said to have commenced running. Limitation would only run from the  date of  breach, under Article 115 of the schedule to the  Limitation Act,  1908. When  the Bombay  High  Court considered the  matter in  the first  instance and held that the suit  was not  barred by  limitation, J.  C.  Shah,  J., speaking for the Court said:           "On the plain words of the letters of guarantee it      is clear that the defendant undertook to pay any amount      which may  be due  by the  Company at  the foot  of the      general balance  of its  account or  any other  account      whatever .....  We are  not concerned in this case with      the period  of limitation  for the  amount repayable by

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    the Company  to the  bank. We  are concerned  with  the      period of limitation for enforcing the liability of the      defendant under  the surety  bond ........ We hold that      the suit  to enforce  the liability is governed by Art.      115 and the cause of action arises when the contract of      continuing guarantee is broken, and in the present case      we are of the view that so long as the account remained      a live account, and there was no refusal on the part of      defendant to  carry out  her obligation,  the period of      limitation did not commence to run." We agree  with the  view expressed by Shah, J. The intention and effect  of a  continuing guarantee  such as the one with which we  are concerned  in this  case was considered by the Judicial Committee  of the  Privy Council in Wright and Anr. v. New Zealand Farmers Cooperative Association of Canterbury Ltd. The  second clause  of the  guarantee bond in that case was in the following terms:           "This guarantee  shall be  a continuing  guarantee      and shall  apply to  the balance  that is now or may at      any time  hereafter be  owing to  you  by  the  William      Nosworthy and Robert Nosworthy on their current account      with you for goods supplied and advances made by you as      aforesaid and interest and other charges as aforesaid." A contention  was raised  in that case that the liability of the guarantor  was barred in respect of each advance made to the Nosworthys on 925 the expiration  of six  years from  the date of advance. The Judicial  Committee  of  the  Privy  Council  expressed  the opinion that  the matter  had to  be determined  by the true construction of  the guarantee.  Proceeding to  do  so,  the Judicial Committee observed (at p. 449):           "It is  no doubt  a guarantee that the Association      will be  repaid by  the Nosworthys advanced made and to      be made  to  them  by  the  Association  together  with      interest and  charges; but  it specifies  in col. 2 how      that guarantee  will operate-namely, that it will apply      to (i.e.  the guarantor  guarantees repayment  of)  the      balance which  at any  time thereafter  is owing by the      Nosworthys to  the Association.  It is difficult to see      how effect  can be  given to  this provision  except by      holding that  the repayment  of every  debit balance is      guaranteed as  it is  constituted from  time  to  time,      during the  continuance of the guarantee, by the excess      of the  total debits over the total credits. If that be      true construction  of this document, as their Lordships      think it  is, the  number of  years which  have expired      since any  individual debit was incurred is immaterial.      The question  of limitation  could only arise in regard      to  the  time  which  had  elapsed  since  the  balance      guaranteed and used for had been constituted". Later it was again observed (at p. 450):           "That  document,   in   their   opinion,   clearly      guarantees the  repayment  of  each  debit  balance  as      constituted from  time to  time, during the continuance      of the  guarantee, by  the surplus  of the total debits      over the  total credits, and accordingly at the date of      the counterclaim  the Association’s  claim against  the      plaintiff for  payment of  the unpaid  balance due from      the Nosworthys, with interest, was not statute-barred."      This was  precisely  the  view  which  J.C.  Shah,  J., expressed in the passage already extracted by us, with which we expressed our agreement. We may add here that in Wright’s case the  Privy Council  appeared  not  to  approve  of  the decision in  Parr’s Banking  Company Ltd. v. Yates(1), where

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it had been observed that the statutory limitation would run from the  date of each advance. As noticed in Paget’s Law of Banking (8th Edition) at pp. 82-83, the 926 authority of  Parr’s case  has been  overruled so far as the guarantor is  concerned by  the judgment  of  the  Court  of Appeal in Bradford old Bank Ltd. v. Sutcliffe(1).      Now, the  overdraft account which was guaranteed by the defendant by  the execution of the guarantee bond dated 23rd October, 1944,  continued to  be a ‘live’ account even after the Company  ceased its business on 30th June, 1946. A power of Attorney  was executed  by the  Company in  favour of the plaintiff bank and amounts due to the Bank were realised and credited in the overdraft account. A sum of Rs. 2,19,784-4-0 was received  from the  Director General of Food Supplies on 27th June,  1950. On 6th September, 1950, another sum of Rs. 1,15,229-15-0 was received from the Director General of Food Supplies and  credited to  the account or the Company. Again on 27th  January, 1951, 14th March, 1951 and 29th September, 1952, several  amounts received  by way of refund of Income- tax were  credited to the Company in its account. The amount credited on  29th September,  1952 was  Rs. 24,022-0-10. The overdraft account was thus a live account at least till 29th September, 1952.  The Company  executed  various  promissory notes and  letters of acknowledgement. The defendant herself as guarantor  executed, on  2nd February,  1952, Exhibit 55, acknowledging her  liability in  respect  of  the  guarantee given by her. Paragraph (a) of the letter is as follows:           "In respect of the personal guarantee which myself      and my  husband have  given to the bank, the amount due      to the  bank as on 31st December, 1951 is Rs. 2,71,531-      8,6." Thus far  from repudiating  her liability  and breaking  the contract of continuing guarantee, the defendant accepted her obligation under  the  guarantee  bond  in  respect  of  the overdraft account  which continued  to be live at least upto 29th September,  1952. The  suit  which  was  filed  on  8th November, 1954,  was therefore,  clearly within  time  under Article 115 of the schedule to the Limitation Act, 1908.      We may  mention here that it was the contention of Shri Bal that  the letter  dated 2nd February, 1952, was obtained from the  defendant by  fraud. Both  the Trial Court and the High Court  have found  that there was no fraud and that the letter was  written by  the defendant  voluntarily and  with full knowledge of its contents. We accept the finding of the Trial Court  and the  High Court  that the  letter  was  not obtained by any fraud practiced upon the defendant.      The  next  question  is  about  the  legality  and  the consequences of  the illegality,  if any,  of  the  original order of remand. It cannot be 927 disputed, and  indeed it was not disputed before us, by Shri Mahajan, that  the correctness  of an order of remand passed by the  High Court  which could  not then  be questioned  by filing an  appeal in  the Supreme  Court against  that order because such  an appeal  was not competent could nonetheless be challenged  later in  the appeal before the Supreme Court arising out  of the  final judgment pronounced in the action vide Satyadhyan  Ghoshal &  Ors  v.  Smt.  Beorajin  Debi  & Anr.(1); Lonankutty v. Thomman & Anr.(2); Jasraj Inder Singh v. Hem  Raj Multan Chand(3). It does not, however, mean that the  Supreme   Court  will,   every   time,   exercise   its discretionary power  under Article  136 of  the Constitution merely because  it finds  that the  High Court  had  wrongly passed an  order of  remand at an earlier stage of the case.

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If the  Supreme Court  is satisfied  that as a result of the order of  remand substantial  justice has  been done  to the parties in  the consequential proceedings, the Supreme Court may  decline   to  exercise   its  discretionary   power  to interfere. The  jurisdiction under  Article 136 is not meant to correct  every illegality  brought to  the notice  of the Supreme Court,  nor to  undo,  merely  on  account  of  such illegality,  an  adjudication  which  has  done  substantial justice to  the parties.  On the  other hand, Article 142 of the Constitution  expressly confers  powers upon the Supreme Court, in  the exercise  of its  jurisdiction, to  pass such decree or make such order as is necessary for doing complete justice in any case or matter pending before it. In the case before us,  the Bombay High Court no doubt found that on the material placed before it there was no option except to non- suit the plaintiff. The High Court, however, appears to have felt that  the plaintiff  bank which  had rested its case in the Trial Court almost entirely on the acknowledgement dated 2nd February,  1952,  was,  perhaps  misled  into  doing  so because of  the order  passed by  the  Trial  Judge  on  the application Exhibit 85, filed by the defendant. In the order dated 11th  October, 1955, passed on the application Exhibit 85, the  Trial Judge  had observed that the defendant should have taken proper steps earlier if she wanted to dispute the debit items  and that having failed to take proper steps she had to pay the penalty for her laches. That order might have made the,  plaintiff believe  that  it  was  unnecessary  to adduce any  more evidence.  Though the  High Court  did  not expressly state  that the  plaintiff was misled by the order of the Trial Judge, it is clear from a perusal of the remand order of  the High  Court that  the High Court felt that the order made  on the  application Exhibit  85, was responsible for the 928 failure of  both  the  plaintiff  and  defendant  to  adduce appropriate evidence  in regard  to the several debit items. It was  in those  circumstances that  the High Court, in the interests of  justice, remanded  the suit to the Trial Court in order to enable both parties to adduce necessary evidence regarding the  items of  debit. Whether  or not the order of remand is capable of being justified under the provisions of the Code  of Civil  Procedure, we  are of  the view that the interests of justice have not suffered but on the other hand substantial justice  has been  done between the parties as a result of  the subsequent  proceedings. The  Trial Court and the  High   Court  have   in  their   judgments  fully   and exhaustively discussed  the liability  of the  defendant  in regard  to   each  of   the  debit  items.  In  the  special circumstances of  this case  we do not think that we will be justified in  interfering with  the  decrees  of  the  Lower Courts merely  because the earlier order of remand passed by the High Court may not be capable of being justified.      As mentioned  by us earlier the High Court placed great reliance on  the three  letters dated  30th June, 1945, 27th November, 1945 and 6th December, 1945, and it was because of those letters  the High  Court upheld all the items of debit made prior  to 1st  December, 1945.  We think  that the High Court was  right in  doing so.  The  first  of  the  letters Exhibit 104,  is a  letter addressed  by  the  Bank  to  the Company informing  the latter  that the  balance due  at the foot of the account as on 30th June, 1945, was Rs. 6,81,242- 9-5. The  letter contains an endorsement by the defendant as a Director  of the Company confirming the correctness of the statement. The  second  letter  dated  27th  November,  1945 (Exhibit 105)  is a  letter addressed  by the Company to the

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Bank. It  is signed  by  the  defendant  on  behalf  of  the Company. By  this letter  the Company  complained about  the dishonour of  two cheques  for Rs. 20,000/- each despite the fact that  the Company had not exceeded the overdraft limit. In the  letter it  was pointed  out that while the overdraft balance was  Rs. 10,14,380-7-6,  a bill for Rs. 89,789/- had been sent by the Company to the Bank on 22nd November, 1945. The  letter   while  taking   the  plaintiff   to  task  for dishonouring  the  cheque  requested  the  bank  to  send  a statement of  account as on 30th November, 1945. This letter is of  great importance  since it shows that the Company was aware of  the  correct  balance  of  the  overdraft  account without reference  to the  bank. It  is  apparent  from  the letter that  the Company  had kept  an account of the debits and that any statement of account sent by the Bank was being verified by the Company with reference to the 929 Company’s books.  It may  be noticed  here that  by  another letter dated  19th December,  1945, the  bank  informed  the Company that  the balance  due upto 30th November, 1945, was Rs. 10,60,913-8-11  and this  was confirmed on behalf of the Company by C. B. Samuel himself. The third letter is Exhibit 106 dated  6th December,  1945. This  letter refers  to  the Bank’s statement of account for the month of November, 1945, and draws  the bank’s attention to the fact that the balance of Rs.  9,29,339-15-1 as  on 12th  November, 1945,  had been shown as carried over as Rs. 9,29,540-5-4, on 14th November, 1945. There was a difference of Rs. 200-6-3. This letter was also signed  by the  defendant on behalf of the Company. The letter indicates  that any statement sent by the bank to the Company was  being carefully  examined by  the  Company.  In regard to  these letters  the case of the defendant was that she had  merely signed  the letters which were put up to her by the  office and that she had no personal knowledge of the statements made  in the  letters. We  agree with  the  Trial Court and  the High  Court that  this case  of the defendant cannot be  accepted. A  review of  her  deposition  and  the several transactions  into which  she has entered before and after her  husband’s death  clearly indicate  that she is an educated lady, an intelligent woman and ‘a man of the world’ if a woman may be so described. We do not have the slightest doubt that the defendant could not have signed those letters without satisfying  herself about  the correctness  of their contents.  Having   regard  to  the  circumstance  that  the defendant herself  had signed the three letters Exhibit 104, 105 and  106 and  having regard  to the further circumstance that two  of these  letters contained  positive  indications that the  statements of  account submitted  by the  Bank had been verified  with reference  to the  Company’s books,  the High Court took the view that debit items upto 1st December, 1945, could  be safely held to have been proved by the bank. We see no reason to take a view different from that taken by the High Court.      Shri Bal  urged that  under the  tripartite arrangement between the  bank, the  Company and  the Govt., the Bank was entitled to  receive the amount of Security lying in deposit with the  Government and therefore, the item of debit of Rs. 50,000/- made on 17th July, 1944, in the loan account of the Company should  be deducted  from the  total  of  the  debit items. We  are unable  to agree  with the submission of Shri Bal. In  the first place no dispute concerning this item was raised either  in the written statement of the Company or in Exhibit 85.  In the 2nd place. this is also one of the items of debit  made prior  to 1st December, 1945 and it must have been duly verified

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930 before the  letters Exhibit  104, 105  and 106 were written. Shri Bal  also objected  to two  items of  debit dated  30th September, 1944  and 30th  June 1945,  representing  amounts transferred from  the  Company’s  account  to  the  personal account of C.B. Samuel. Both these debits were made prior to 1st December,  1945, and, therefore, we do not think we will be justified in excluding them.      As a  result of  the foregoing discussion we agree with the High Court that the plaintiff bank failed to prove items of debit  totalling Rs.  68,761-7-0. Allowing  interest from the various dates of debit, the total amount which has to be deducted from the claim of the plaintiff bank is Rs. 80,894- 8-4. The  question now  is whether  this has  to be deducted from  the  sum  of  Rs.  2,35,453-1-0  which  the  plaintiff mentioned in  paragraph 8 of the plaint as the amount due to the bank out of which the plaintiff was giving up the sum of Rs. 85,453-1-0  or from  the sum  of Rs.  1,50,000/- for the recovery of  which alone this suit was filed. The High Court thought that since the plaintiff had given up the sum of Rs. 85,453-1-0 as  the plaintiff was doubtful about the recovery of the  amount  from  the  defendant,  the  Court  would  be justified in  deducting the  sum of Rs. 80,894-8-4, from the sum of  Rs. 2,35,453-1-0  instead of  from the  sum  of  Rs. 1,50,000/. We  do not  think there  is any justification for the course  adopted by the High Court. The plaintiff did not choose to  mention in  the plaint  the particular  items  of debit which he was giving up. There is, therefore, no reason why the  amount given  up by the plaintiff should be treated as attributable  to the  items of  debit which have now been found to  be not proved. We are, therefore, of the view that the total of the unproved debit items together with interest i.e. the  sum of  Rs. 80,894-8-4 should be deducted from the sum of  Rs. 1,50,000/-  for which  amount only the plaintiff filed the  suit. The  plaintiff is, therefore, entitled to a decree for  Rs. 69,105-7-8 with interest at 4% from the date of suit  till realisation.  The appeal  is  allowed  to  the extent indicated.  Having regard to the circumstances of the case, the parties will bear their own costs throughout. P.H.P.                               Appeal allowed in part. 931