SYED JAMSHED ALI J.---The judgment and decree dated 27-10-1994 of the learned Special Judge, Banking, Lahore dismissing the suit of the appellant have been assailed in this appeal. It arises out of the following circumstances.
2. On 26-6-1974, the Central Bank of India Ltd. the appellant herein, through the Assistant Custodian of Enemy Property, filed a suit for the recovery of Rs. 1,72,002.45. The case of the plaintiff-Bank, as disclosed in the plaint, was that on 9-4-1962 respondent No.1, the firm, opened an overdraft account with the plaintiff-Bank and the Bank agreed to make advances to the firm against irrevocable letters of credit to the tune of Rs.75,000.00 with 7% interest. To secure the said advance, the firm, through its partners, respondents 2 to 6 executed demand promissory notes and other documents including letter of continuity and deed of hypothecation, on 9-4-1962. Under the Trade Agreement between the India and Pakistan, the National Bank of Pakistan was the designated Bank and was accordingly impleaded to the suit. It was further stated that after the export of fresh fruits to India the defendants used to present the "documentary bills" to the plaintiff-Bank for collection through the designated Bank i.e. National Bank of Pakistan and the collected amount used to be credited in the account of the respondent firm. On 1-3-1965 there was a debit balance of Rs.1,898.37, on the demand of the appellant the defendants-respondents executed demand promissory note in the sum of Rs.2,00,000.00 and other documents and thus the appellant-Bank allowed a drawing limit of Rs.2,00,000.00 to the respondents. It was further averred that during September, 1965 the "documentary bills" submitted by the respondents were passed on to the designated Bank but it failed to collect the proceeds thereof due to the out-break of war between India and Pakistan and thus the debit balance in the account of the respondents could not be adjusted which was Rs.1,71,992.85 on 1-8-1966 which was not paid by the respondents despite demands. On 1-7-1971, the defendant-firm renewed the said account, executed the demand promissory note for Rs.2,00,000.00 and other documents and on the date of filing of the suit an amount of Rs.1,72,002.45 was outstanding against the respondents.
3. The suit was contested. It was asserted that the suit was barred by time. On merits the case of the respondents was that in fact, the plaintiff-appellant used to export fresh fruits to India against irrevocable letters of credit opened in India, intimation to this effect used to be sent by the appellant to the respondents on telephone and on receipt of the telephonic message the respondents used to export fresh fruits through Ganda Singh Walla, Customs Port, hand over the documents after customs clearance to the appellant-Bank and after receipt of the documents, the appellant used to pay to the defendants-respondents the amount equal to the value of the documents. It was denied that the respondents had ever retained any amount of the plaintiff-Bank towards the loan and nothing was due to the appellant from the respondents. It was asserted that the appellant failed to collect the amount due to the negligence of his own officials. The averment that on 1-7-1971 the respondents had renewed the said account and executed a number of documents was denied.
4. Necessary issues. were framed and the suit was tried. The parties led evidence in support of their respective contentions. After taking into consideration the evidence produced in the case the learned trial Court found that in accordance with the press note issued by the Government of Pakistan on 3-3-1966, claims about negotiation of documents drawn under India Banks irrevocable letters of credit were to be lodged with the Government of Pakistan before 15-3-1966.
Therefore, the suit was not maintainable and was also treated as barred by time. It was further noted that the respondents exported fruits to India but failed to get the price of the same on account of war between India and Pakistan and, therefore, the respondents could not be burdened with the amount claimed by the appellant on account of failure of the National Bank of Pakistan as the designated Bank to collect the amount although the said Bank tried its best to get the bills negotiated.
5. The learned counsel for the appellant-Bank contends that the learned trial Court, while holding the suit to be barred by time did not refer to any provision of the Limitation Act which governed the present suit. In the alternative, he pleaded an acknowledgment and contends that material evidence was ignored by the learned trial Court i.e. Exh.P.W.1/1 the pro note executed by Sh. Faiz Muhammad on behalf of the firm, Exh.P.W.1/2 the undertaking, Exh.P.W.1/3 the letter of confirmation to pay interest with monthly rests, Exh.P.W.1/4 the undertaking of the firm, Exh.P.W.1/5 letter of confirmation, Exh.P.W. 1/ 6 undertaking and Exh. P.W. 1 / 7 agreement. All these documents were statedly executed on 1-7-1971 by Faiz Muhammad the managing partner of the firm and consulted an acknowledgement and, therefore, the suit filed on 24-6-1974 was within time from 1-7-1971.
When questioned, he stated that since the parties were maintaining an open, mutual and current account the suit was governed by Article 85 of the Limitation Act. On merits his contention is that the appellant acted as an agent of the respondents to collect money on their behalf through designated Bank i.e. the National Bank and, therefore, on account of the failure of the designated Bank to collect the amount of the bills for the month of September, 1965, the respondents had to suffer and not the appellant. He further contended that the amount of disputed bills, which were dishonoured. had already been drawn by the respondents. He referred to paras.5 and 6 of the written statement. According to his reading of the aforesaid paragraphs the defendants had admitted their liability and the question requiring resolution by this Court was whether the respondents were liable to pay the amount drawn by them as overdraft which could not be collected on account of the circumstances beyond the control of the appellant-Bank.
6. He further contended that denial of the documents including the Demand Promissory Note executed by the firm through Faiz Muhammad in the written statement was malicious. Faiz Muhammad, never appeared in the witness-box to deny those documents while Iftikhar Ahmad Butt, an official of the Bank had appeared to prove the said documents. He submitted that D.W.3, Mushtaq Hussain, (father of Ishtiaq Hassan respondent No.5) whose statement was recorded on 5-10-1991, asserted that Faiz Muhammad had died three years back but no death certificate was produced. It may be noted that the evidence of the plaintiff was concluded on 5-11-1990 and according to D.W.3, Faiz Muhammad was already dead somewhere in 1988. The learned counsel also referred to the better statement of Mushtaq Hussain recorded on 21-6-1977 according to which Haji Faiz Muhammad was alive. According to him, the best witness to negate the documents Exh.P.W.1/1 to Exh.P.W.1/7 was Faiz Muhammad himself who was not produced. He further contends that no official of the Bank had any personal interest in the matter to forge the said documents.
7. On the other hand, the learned counsel for the respondents submits that the suit was clearly barred by time and execution of the documents Exh.P.W.1/1 to Exh.P.W.1/7 having been denied were required to be duly proved. According to him, P.W.1, claimed that these documents were executed in his presence by Faiz Muhammad but he did not even assert that Faiz Muhammad was personally known to him. He invited our attention to Exh.D.W.3/1, letter dated 15-7-1971, addressed by the firm in reply to the letter dated 17-3-1971 of the appellant-Bank according to which the firm had denied any liability for any payment as alleged by the appellant-Bank in their letter dated 17-3- 1971. He contends that if on 1-7-1971 the respondents had admitted their liability and executed documents letter dated 15-7-1971 would not have been addressed to the appellant-Bank.
According to him in any case, an acknowledgement to be valid must be made before the expiration of the period prescribed for the suit as provided in section 19 of the Limitation Act.
Undisputedly, as a result of outbreak of war between India and Pakistan the respondents did not transact any business since 6-9-1965. He invited our attention to the statement of accounts Exh.P.W.1/20 which shows that the last transaction was made on 4-9-1965 and all entries thereafter only show debit of interest. He relied on Exh.D.10, letter dated 4-11-1965 of the National Bank of Pakistan according to which the documents submitted by the Central Bank of India for clearance were returned to the Central Bank of India with the remarks that the Exchange Control Authorities in India had issued instructions placing an embargo on all transactions between India and Pakistan and submits that since the respondents had exported fresh fruits to India, the failure of the designated Bank to collect the amount of bills could not the liability of the respondents. He also referred to the letter dated 10-2-1966 of the Central Bank of India (Exli.D.6), addressed to the Manager, National Bank of Pakistan, Lahore in which the said Bank was advised to approach the Custodian of the Enemy Property.
8. We have considered the submissions made by the learned counsel for the parties and have perused the record. Since the parties were maintaining a mutual, open and current account the suit was governed by Article 85 of the Limitation Act and the prescribed period of limitation was three years commencing the close of the year in which the last item admitted or proved is entered in the account. According to the statement of accounts the last transaction between the parties was made on 4-9-1965 and, thus, limitation for the suit commenced on 1-1-1966. Therefore, the suit filed on 26-6-1974 was patently barred by time. Even if the documents Exh.P.W.1/1 to Exh.P.W.1/7, the execution of which was doubtful in view of the letter of the firm dated 15-7-1971 were taken on their face value, these could not possibly constitute an acknowledgement so as to extend the period of limitation because it had already expired on 1-1-1969. According to the plain reading of section 19 of the Limitation Act an acknowledgment to be valid having the effect of extending limitation must be made before expiration of the period prescribed for the suit. We are of the considered view that the finding of the learned trial Court that the suit was barred by limitation is not open to any exception. We, therefore, do not consider it necessary to examine the contentions of the learned counsel for the parties with regards to the merits of the controversy. Accordingly, this appeal is dismissed. The parties are left to bear their own costs.