Case: A. S. Krishnappa Chettiar &amp; Ors Vs. Nachiappa Chettiar &amp; Ors

1. This appeal and civil appeals Nos. 104, 106 and107 of 1961 arise out of execution proceedings in four different suits but as they involve a common question they were heard together by the High Court and by us. That question is whether the execution applications out of which these appeals arise are within time.2. We propose to treat C. A. No. 105 of 1961 as a typical case. The relevant facts thereof are briefly these:3. In O. S. No. 46 of 1943 one Ramanathan Chettiar instituted a suit against one Venkatachalam Chettiar in the court of the Subordinate Judge of Devakottai, for the recovery of a sum of Rs. 10,285/- due on promissory note dated November 20, 1942 with interest thereon. He eventually obtained a decree for the full claim. In so far as the second defendant is concerned, he was made liable for the decretal amount to his extent of the interest in the joint family property of himself and his father. The plaintiff assigned the decree in favour of Chidambaram Chettiar, who is the appellant in C. A. No. 105 of 1961. He filed an execution application but the execution proceedings commenced by him proved infructuous because the first defendant was adjudicated an insolvent on February 27, 1945. On September 9, 1946 a composition of the debts due from the insolvent and his son, the second defendant, was arrived at. To the deed of composition the second defendant was also a party though he was not adjudicated an insolvent. Under that deed the creditors, including the four appellants before us agreed to take 40% of the dues, except one creditors who was to be paid a little more. The defendants, it may be mentioned, had extensive money-lending business in Burman and the bulk of their property was situate in that country. Under the composition arrangement, the entire property of the defendants, both in India and in Burma was to vest in four trustees, one of whom was the insolvent, that is, the first defendant to the suit. Two of the trustees were the present appellant, Chidambaram Chettiar and Krishnappa Chettiar, appellant in C. A. No. 104 of 1961. The fourth trustee was an outsider. The total indebtedness of the defendants, as ascertained on the date on which the composition was effected was Rs. 216077-4-8 but it was reduced under the arrangement to Rs. 86430-13-3. There are four schedules to the composition deed. Schedule A sets out the names of the creditors and the amounts due to them, Schedule B sets out the properties of the defendants and Schedules C and D set out the properties at Leiwo and Meola respectively in Burma. The deed provides for the payment of the reduced amount by the trustees to different creditors from the income of the properties or by sale or mortgage of those properties within four years from April 14, 1947. The deed further provides for the extension of this time limit "according to exigencies and necessity at the discretion of the first two trustees" i.e., the first defendant and the appellant and Chidambaram Chettiar. The arrangement also provides for payment of interest at 5 annas per mensem in respect of the amounts due on the decrees and 4 anna per mensem in respect of other outstandings as from April 14, 1947. The composition contemplated the income or sale or mortgage of the Burma property, in the first instance. Clause 10 which deals with this matter runs ascase the properties of Burma firm are not sufficient to pay the amounts set apart as payable to the creditors at 40 per cent the individual Nos. 1 and 2 Trustees shall sell the properties in British India and set out in the schedule herein and from out of the sale proceeds distribute the amount to the creditors. Similarly, after the 40 per cent amounts have been paid and if there should be any amount of deficiency for the payment of the 60 per cent amount payable to Krishnappa Chettiar as described in para 6 supra, even for that also, the individual Nos. 1 and 2 Trustees shall sell the aforesaid British India properties and pay the aforesaid Krishnappa Chettiar the entire balancecomposition deed contains various other terms out of which it would be relevant to set out only the following8: Until 40 per cent of the amount is paid to the creditors as aforesaid, the said Trustees, shall be at the time of disbursement of the dividend, pay from the 1st Chitirai of the year Sarvajith for the annual expenses of the family, a sum of Rs. 600 per annum to individual No. 4 Trustees Venkatachale Chettiar and a sum of Rs. 300 per annum to his son Nachiappa Chettiar for the aforesaid expenses.Clause 16: After the annulment of the order of adjudication herein, the aforesaid Venkatachalem Chettiar, shall in respect of transfer, etc. of management of the properties mentioned in C and D schedules, execute a general power of attorney in favour of individual Nos. 1 and 2 trustees and have the same registered.The composition scheme was accepted by the Insolvency Court and the adjudication of the first defendant as insolvent was annulled by the court on December 19, 1946.5. Due to political changes in Burma only very little was realised out of the Burma assets within the period of four years prescribed in the composition deed. The trustees who were empowered to extend the time did not extend it. The appellants, therefore, turned to the Indian assets and sought execution of their decrees against them. Two contentions were raised on behalf of the defendants. One was that the Indian assets could not be sold until the assets in Burma were completely exhausted and the other was that the execution applications were barred by time.6. In O. S. No. 46 of 1943 the last execution application was dismissed on September 19, 1946 (E. P. No. 109 of 1946). No execution petition was field thereafter till the present petition (E. P. No. 117 of 1952). This was filed on June 13, 1952. Similarly in the remaining three appeals also execution applications with which we are concerned were filed more than three years after the dismissal of the previous execution applications. It may be mentioned that originally the appellant as well as appellants in the other appeals had sought the execution of their respective decrees for the full amount. But they amended their petitions later on pursuant to the orders of the court and restricted their claims to 40 percent of the amounts due under their decrees. The appellant Chidambaram files an affidavit along with the execution petition and set out the following grounds in support of his contention that the execution application was withintrustees were able to realise some of the assets of the defendants in Burma and to pay a dividend of 10 percent to the creditors. I was paid a sum of Rs. 562-4-0 by way of dividend for this decree on 10th August, 1949. As the rest of the Burma assets of the defendant could not be realised by the trustees on account of the Civil War in Burma and the land legislatings passed there and as there was no prospect of their being realised in the near future myself and A. S. K. Krishnappa Chettiar aforesaid as managing trustees under the said composition offered to extend the period of management by one year provided the defendants would consent to their Indian assets being realised and distributed among the creditors. But the defendants were not willing thereto and hence we thought fit not to extend the period of our management. We have filed a petition in I. A. No. 87 of 1951 in the said I. P. No. 1 of 1945 to have the said composition scheme set aside and the 1st defendant readjudged as insolvent. The said petition is pending.I am advised that as the said composition arrangement has failed on account of the assets of the defendants not being realised and the debts discharged within the four year period mentioned therein I am in law and in equity entitled to recover the entire amount due to me under this decree by executing it.8. The said composition provides for a maintenance allowance of Rs. 600 and Rs. 300 annually being given to the 1st and 2nd defendant respectively at the time of distribution of the dividends. In respect thereof a notice was issued by the 2nd defendant on 19th April, 1959 (sic) to myself and A. S. K. Krishnappa Chettiar aforesaid wherein there is an acknowledgement of liability in respect of the several debts mentioned in the said composition. Further the trustees have acting under the authority given to them by the defendants under the said composition paid me Rs. 562-4-0 on 10th August 1949 by way of dividend for this decree and have duly entered the same in the accounts maintained by them. Moreover I could not execute the decree during the four years from 14th April 1947 or any extended period during which the trustees had to manage, realise and distribute the assets of the defendants. There is therefore no question of limitation".Similar grounds were set out in the affidavits files by the other appellants also.7. It may be mentioned that in each of the execution applications relief was claimed only against the second defendant because in insolvency petition No. 87 of 1951 filed by some of the creditors the first defendant, was re-adjudicated an insolvent by the court on August 3, 1954. The execution application was, as already stated, opposed by the second defendant firstly on the ground that the composition arrived at between him and his father on the one hand and the creditors on the other was still in force, that the arrangement was irrevocable and operated as a complete discharge of the liability of the defendants for all time. The second ground was that the execution application was bared by time. The precise pleas of the second defendant regarding limitation were as follows:(a) that the adjudication of his father as an insolvent and the pendency of insolvency proceedings against him would not affect limitation in so far as he was concerned;(b) that the receipt by the appellant and other creditors of certain amounts as dividends in August, 1949 would not extend the period of limitation for execution proceedings;(c) that the acknowledgment relied upon is "wholly wrong, misconceived and untenable".8. According to him there was no acknowledgment of liability of any kind in the notice referred to in the affidavit much less the liability of the second defendant to discharge the decree which had in fact become extinguished and effaced by reason of the composition arrived at on September 9, 1946.9. In the course of the arguments before the executing court it was urged on behalf of the appellants in these appeals that the four years within which the trustees were required to realise the Burma properties and pay off the debts of the creditors must be regarded as a period during which the execution of the decrees was stayed and that consequently on the principles underlying S. 15 of the Indian Limitation Act, 1908, that period should be deducted from computing the period of limitation for preferring execution applications. The Subordinate Judge before whom the execution applications were filed upheld this contention and held that the execution applications were within time. He also held that the composition arrived at between the parties operated as an adjustment of the decree on the date on which that composition was effected or from the date on which the adjudication was arrived at and that though the composition could not be certified to the executing court under O. XXI, R. 2 C. P. C. within the time permitted by law, it could be certified even now at the instance of the decree-holder because it was open to the decree-holder to certify an adjustment at any time he liked. According to the learned Subordinate Judge, the adjustment precluded each of the appellants from executing his decree for a period of four years from April 14, 1947 and, therefore, the execution applications were within time. The High Court, however, disagreed with the Subordinate Judge on both the grounds and holding that the execution petitions were barred by time allowed the appeals. It may be mentioned that neither of the two courts below has considered the contention of the appellants in these appeals that the letter dated April 19, 1949 sent by the second defendant to two of the trustees operated as an acknowledgment of their liability or that dividends paid to the appellants by the trustees in August, 1949 operated to extend the time of limitation.

Court's reasoning:
The Limitation Act is a consolidating and amending statute relating to the limitation of suits, appeals and certain types of applications to courts and must, therefore, be regarded as an exhaustive Code. It is a piece of adjective or procedural law and not of substantive law. Rules of procedure, whatever they may be, are to be applied only to matters to which they are made applicable by the legislature expressly or by necessary implication. They cannot be extended by necessary implication. They cannot be extended by analogy or reference to proceedings of which they do not expressly apply or could be said to apply by necessary implication. It would, therefore, not be correct to apply any of the provisions of the Limitation Act to matters which do not strictly fall within the purview of those provisions. Thus for instance, period of limitation for various kinds of suits, appeals and applications are prescribed in the First Schedule. A proceeding which does not fall under any of the articles in that schedule could not be said to be barred by time on the analogy of a matter which is governed by a particular article. For the same reasons the provisions of Sections 3 to 28 of the Limitation Act cannot be applied to situations which fall outside theirprovisions do not adumbrate any general principles of substantive law nor do they confer any substantive rights on litigants and, therefore, cannot be permitted to have greater application than what is explicit or implicit in them. Suspension of limitation in circumstances of the kind obtaining in these appeals is neither explicit nor implicit in S. 15 upon which reliance is placed on behalf of the appellants. We are, therefore, unable to accept the first argument of Mr.our opinion, this case is not of assistance to the appellants. In the appeals before us though there was a personal liability on the defendants under the various decrees, their liability which was created by the composition deed was only on properties in which they had, consequent on the creation of a trust under the composition deed, only a beneficial interest. This new liability had to be discharged by the trustees in whom the legal title to the property vested. Thus there were two different sets of persons who were liable, the defendants and the Trustees and their respective liabilities were distinct. What the defendant No. 2 has referred to is the liability of the Trustees arising under the terms of the deed of composition and could be enforced only against them. To refer to a liability resting on someone else is not to acknowledge ones own liability within the meaning of the word in S. 19. The defendant No. 2 has not even indirectly referred to the decree much less to the liability arising under any of them. In the circumstances we must hold that this letter does not extend the period of limitation.