Fazl Ali, C.J.This is an appeal by the plaintiff in a mortgage suit based on a hand-note. The suit has been dismissed by both the Courts below on the ground of limitation. Hence this second appeal. The hand note was executed by respondents 2 and 3 for a sum of Rs. 535 on 2nd January 1935. The suit was brought on 2nd January 1941. Between these two dates a number of payments were made which are set out in the judgment of the lower appellate Court, but we are concerned only in this appeal with a sum of Rs. 4 which is said to have been paid by one of the defendants to the plaintiff on 26th December 1937. The plaintiffs case is that limitation is saved by reason of this payment and he relies in the first instance upon the provisions of Section 20, Limitation Act. Section 20, Clause (1) provides that where interest on a debt is before the expiration of the prescribed period paid as such by the person liable to pay the debt or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made. It seems that there was a conflict of opinion as to the construction of this section sometime ago and it was held by Harries C. J. and Manohar Lall J. in Santa Prasad Singh v. Harkishore Prasad Singh AIR 1939 Pat. 389 which is the latest decision of this Court on the subject thai where a payment is made by the debtor to his creditor within the period of limitation and the debtor does not specify whether the payment is toward interest or principal, but the creditor appropriates the payment towards interest, the payment is a payment of interest "as such" within the meaning of Section 20 (1), Limitation Act, and the words "as such" in Section 20 (1) as amended in 1927 are now redundant. In arriving at this conclusion the learned Chief Justice who delivered the judgment in the case quoted several other decisions which need not be referred to here. It may, however, be mentioned that this view was opposed to the view expressed by a Full Bench of the Allahabad High Court in B. Udeypal Singh Vs. Lakshmi Chand . That case laid down that where the money is paid by a debtor without specifying whether the payment is towards interest or towards principal, leaving it to the option of the creditor to appropriate it as he likes, and the creditor appropriates it wholly towards interest due, there is neither a payment of interest as such nor a part-payment of the principal within the meaning of Section 20, Limitation Act. It was further laid down that the words "paid as such" in para, l of Section 20 necessarily imply that the interest must have been paid professedly as interest at the time of payment, that is, the debtor must have paid the amount with the intention that it should be paid towards interest and there must be something to indicate that intention, the mere appropriation by the creditor of the payment to interest cannot take the place of such an indication. In other words mere unspecified payment of money which subsequently by the act of the creditor becomes a payment of interest, is not payment of interest "as such" within the meaning of Section 20.

2. The conflict, on the subject has however been finally settled in AIR 1940 63 (Privy Council) which lays down (1) that the provision in Section 20 Sub-section (1), Limitation Act, as amended by Act 1 of 1927 involves that the intention of the debtor must be shown to have been that the payment should go towards interest and the intention may be proved not only by statements made by him at the time of payment but in any other manner and may clearly appear from the circumstances of the case; (2) that even when the requirement in the proviso of Section 2o as to writing is satisfied, it is still insufficient to give rise to a fresh period of limitation; that the debtor has made the payment generally on account and that the creditor has appro, priated it to interest. Nor in the absence of an intention on the part of the debtor does a payment amount to,a payment of interest as such by reason of the rule that it is the right of the creditor to have payments treated in account as liquidating the interest before the principal. Then their Lordships proceed to refer to that part of Section 20 which relates to the payment of the principal and which runs as follows:

or where part of the principal of a debt is, before the expiration of the prescribed period paid by the debtor or by his agent duly authorised in this behalf.

3. Referring to this provision their Lordships observed as follows:

On the other hand, it remains true that the section when dealing with part payment of principal contains no similar stipulation as to the debtors intention. The words "as such" are not repeated and the contrast between the two classes of payments is too marked to be mistaken or overlooked.

4. Having said this their Lordships proceeded to lay down that where a debtor has made a payment on account of an interest-bearing debt without appropriating the sum paid either towards principal or interest the creditor may appropriate and if he appropriates it towards principal it becomes a part payment of principal within the meaning of Section 20, Limitation Act, and saves limitation nonetheless that it was not paid as such. It is not necessary that the character of the payment as intended to go towards interest or towards principal must appear by the writing or must be ascertainable or ascertained at the time when the payment is made and the language of Section 20 has not been satisfied, unless within the prescribed period the creditor has in the exercise of his right done something which treats the payment as made on account of principal. If therefore until after the expiry of the prescribed period the creditor has treated the sum as paid on account of interest or has not done anything to treat it as paid on account of principal, then under the amended Section 20 part payment of principal has not been established.

5. Now, in the present case what we find is that there is merely a brief endorsement on the handnote in these words: "26-12-37-Rs. 4" and this endorsement bears the thumb impression of one of the debtors. Upon this endorsement it is difficult to hold that there was any payment of interest "as such." The question still remains whether there was any approximation by the plaintiff of this sum towards principal. Even assuming that such an "intention can be implied from the account set out at the end of the plaint, it cannot help the plaintiff, because the plaint was filed more than three years after the date of the last valid payment. In my opinion therefore the decision of the Courts below that the suit is barred by limitation is correct.

6. It was contended that the payment in question amounts to an acknowledgment of the defendants liability under the handnote. A similar point seems to have been raised in Dial Singh v. Mohammad Ali A. I. R. 1944 Lah. 88, but it was negatived. It was held in that case that a mere endorsement of payment without further specification does not operate as an acknowledgment within the meaning of Section 19. The facts of the case decided by the Lahore High Court are very similar to those of the present case and in my opinion the second contention raised on behalf of the appellant must also necessarily fail and I would accordingly dismiss this appeal with costs.

Shearer, J.

6. I agree.