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1. This is a suit on an instrument, dated the 12th of September 1875, whereby the defendant promised to pay to the plaintiff Rs. 273-5-10 (money borrowed), with interest, at any time within six years on demand.
2. Demand was made in February 1881.
3. The plaint was filed before July 1881.
4. The question of law is whether the suit is barred by limitation. Assuming: that the instrument (which is a promissory note) was payable on demand, it was governed by the Limitation Act of 1871; and the time of limitation did not arise until demand. But the Act XV of 1877 altered the law and made the period of limitation run from the date of the note.
5. Allowing the extra time under Section 2*, Act XV of 1877, on this note, as a note on demand, time would elapse on the 12th September 1879, and in that view the suit would be barred.
6. In its terms the note is not one containing merely “a promise to pay on demand.”
7. Its terms are to pay “at any time within six years on demand.” As the law stood at the making of that note, the payee was not required to make a demand within any limited time. He might have abstained from making demand at the end of many years more than six years, but time would not run against him until he made the demand.. It seems to me that the special term of six years for demand was intended to restrain the payee from making a demand after six years, and therefore restrained his right of suit unless and until after such demand within six years.
8. This stipulation was of some advantage to the maker, because without such limitation for demand he might be liable indefinitely, at any time, to pay; whereas with this limitation he knew that, if the period of limitation was passed, he would not be liable.
9. In the sense and to the extent above mentioned the terms of the note restrained the right of suit by the payee.
10. The instrument is a special one. It is not simply a note payable on demand, to which alone I think Article 73 of Act XV of 1877 applies.
11. If this instrument was “accompanied by a writing” (Article 73, Act XV of 1877), to the effect that it was “to be paid at any time within six years on demand,” could it be said that it was not accompanied by a writing restraining the right to sue inasmuch as it does restrain that right if demand is not made within six years ?–Article 73. Although there is no separate writing accompanying the note, it contains within itself the terms restraining the suit unless demand is made within six years.
12. It seems to me that this special form of note is not provided for by Article 73, Act XV of 1877, but that it falls within Article 120. That article gives six years, from the time that the right to sue accrued, which is the date of the note, at the earliest. I think the Munsif’s decree is (as to this point of limitation) right, and that the decree of the District Judge is wrong, and should be reversed. The District Judge did not try the second issue; therefore, as he determined the case on the preliminary question of. limitation, the case must be demanded to him to try the second issue.
13. Costs will abide and follow the result.
14. In this case the promissory note was by its terms made payable on demand at any time within six years from the date of its execution. It was executed on the 12th September 1875, the demand was made in February 1881, and this suit was brought upon the note on the 10th of March 1881. The question is whether the suit is barred by the Law of Limitation. If the document had been simply a promissory note payable on. demand, then the period, within which such a suit must be brought, would have been, by Article 59 of the Limitation Act of 1877, three years from the time at which the loan was made, which however in the present case would be extended by the operation of the second section of the Act to the 1st October 1879, in which case the suit would be barred.
15. But the document in the present case is not simply a promissory note payable on demand. The parties have agreed that demand might be made at any time within six years from the date of its execution. This was an agreement, which the parties wore at liberty to enter into. It is not forbidden by the Limitation Act, nor is it opposed to any principle of law, and I see no reason why effect should not be given to it. No period of limitation has been specially provided for a suit based upon such an agreement, and therefore the case must be governed by Article 120 of the second schedule of the Limitation Act of 1877.
16. The District Judge having decided the case on the preliminary question of limitation, upon which we do not agree with him, the decree of the District Court must be reversed and the appeal must be remanded to the District Court to be decided on the merits.
* Repeal of Acts.
[Section 2: On and from that day the Acts mentioned in the first Schedule hereto annexed shall be repealed to the extent therein specified.
Reference to Act IX of 1871.
Saving of titles already acquired.
Saving of Act IX of 1872, Section 25.
But all references to the Indian Limitation Act, 1871, shall be read as if made to this Act; and nothing herein or in that Act contained shall be deemed to affect any title acquired, or to revive any right to sue barred under that Act or under any enactment thereby repealed; and nothing herein contained shall be deemed to affect the Indian Contract Act, Section 25.
Suits for which period proscribed by this Act is shorter than that proscribed by Act IX of 1871.
Notwithstanding anything herein contained, any suit mentioned in No. 146 of the second schedule hereto annexed may be brought within five years next after the said first day of October 1877, unless where the period prescribed for such suit by the said Indian Limitation Act, 1871, shall have expired before the completion of the said five years; and any other suit for which the period of limitation prescribed by this Act is shorter than the period of limitation prescribed by the said Indian Limitation Act, 1871, may be brought within two years next after the said first day of October 1877, unless where the period prescribed for such suit by the same Act shall have expired before the completion of the said two years.]