Khan Bahadur Shapoor Fredoom Mazda Vs.
Durga Prosad Chamaria & Ors [1961] INSC 72 (1 March 1961)
GAJENDRAGADKAR, P.B.
WANCHOO, K.N.
CITATION: 1961 AIR 1236
CITATOR INFO :
R 1964 SC 227 (15) F 1967 SC 935 (9,12) R
1971 SC1482 (11)
ACT:
Limitation-Computation of fresh Period of
limitation-Letter written by mortgagor to mortgagee-If acknowledgment of
liability Indian Limitation Act, 1908 (9 of 1908), s. 19.
HEADNOTE:
In a mortgage suit brought by him, the
respondent 1, the mortgagee, pleaded that limitation was saved by a letter
written to him by the mortgagor, the respondent 2, which amounted to
acknowledgment under s. 19 of the Indian Limitation Act. There was a prior
mortgage and before writing the letter in question the mortgagor had written
another letter appealing to respondent 1 to save the property from being sold
at the instance of the prior mortgagee. Thereupon the respondent No. 1 paid the
required amount and the threatened sale was averted. The property was again
advertised for sale and that was why the letter in question was written; it ran
as follows,"Chandni Bazar is again advertised for sale on Friday the 11th
instant. I am afraid it will go very cheap. I had a private offer of Rs.
2,75,000 a few days ago but as soon as they heard it was advertised by the
Registrar they withdrew.
As you are interested why do not you take up
the whole.
There is only about 70,000 due to the
mortgagee a payment of Rs. 10,000 will stop the sale".
The question was whether this letter amounted
to an acknowledgment of the respondent 1's right as mortgagee under s. 19 of
the Indian Limitation Act. The trial judge held that it did not, but the Court
of appeal took the contrary view.
The auction purchaser appealed to this Court.
Held, that it was obvious that the interest
mentioned in the letter in the context of the previous one was none other than
that of respondent 1 as a puisne mortgagee and the appeal to take up the whole
meant the entirety of the mortgagee's interest including that of the prior
mortgagee.
Since admittedly the only subsisting relation
between the parties at the date of the letter was that of mortgagee and
mortgagor and the letter acknowledged the existence of that jural relationship,
it clearly amounted to an acknowledgment under s. 19 of the Act.
Held, further, that the essential requirement
for sustaining a plea of acknowledgment under s. 19 of the Act is that the
statement on which it is sought to be founded must relate to a 141 subsisting
liability, indicate the existence of the jural relationship between the parties
and must be intended, either expressly or impliedly, to admit that jural
relationship.
The words used in a particular statement must
be construed in the light of its own tenor and according to the context and
unless the words used are identical and the interest is similar, previous
decisions interpreting somewhat similar documents are not of much help.
Green v. Humphreys,, (1884) 26 Ch. D. 474,
referred to.
Beti Maharani v. Gollector of Etawah, (1894)
L.R. 22 I.A.
3,, Sukkamoni Choudhrani v. Ishan Chunder
Roy, (1897) L.R. 25 I.A. 95, Munshi Lal v. Hira Lal, I.L.R. 1947 All. II and
Swaminatha Odayar v. Subbarama Ayyar, (1927) I.L.R. 5O Mad.
548, considered.
Dharma Vithal v. Govind Sadvalkar, (1881)
I.L.R. 8 Bom. 99, held inapplicable.
CIVIL APPELLATE, JURISDICTION: Civil Appeal
No. 77 of 1957.
Appeal from the judgment and decree dated the
August 6, 1954, of the Calcutta High Court in Appeal from Original Decree No.
73 of 1952.
M....C. Setalvad, Attorney-General for India,
W. S. Barlingay and A. 0. Ratnaparkhi, for the appellant.
A.V. Viswanatha Sastri and P. K. Chatterjee,
for respondent No. 1.
1961. March 1. The Judgment of the Court was
delivered by GAJENDRAGADKAR., J.-This appeal arises from a suit filed by
respondent 1 Durga Prosad Chamaria against respondent 2 the heirs of John
Carapiet Galstaun and others in which he sought to recover Rs. 4 p 64,213-5-3
on the mortgaes in suit. He had prayed for a preliminary mortgage decree according
to 0. XXXIV, r. 4 of the Code of Civil Procedure and had asked for the
appointment of a receiver in that behalf. 'The said mortgages were created by
delivery of documents of title to immovable properties by the mortgagor John
Carapiet Galstaun who died pending the suit. The properties mortgaged consisted
of three items all of which are situated in Calcutta. These items are 24,
Amratolla Lane, 96, Karaya Road 142 and premises 167/1 and 167/5 Dhurrumtolla
Street (Chandni Bazar). In the present appeal we are concerned with premises
167/1. Respondent 1's case was that he had advanced several amounts on seven
different occasions to the mortgagor between August 2, 1926, and November 27,
1931.
According to the terms of the transaction no
specific time for payment of the mortgage dues had been fixed, and it was
agreed that the monies advanced would become due and be repaid on demand being
actually made by the mortgagee. With this plea we are not concerned in the
present appeal. It was further pleaded by the mortgagee that the mortgagor had
acknowledged his liabilityof the mortgagee's claim by letters of March 5, 1932,
and February 17, 1943, which were signed by him. It is on the strength of these
acknowledgments that the mortgagee purported to bring his claim within time the
suit having been filed on May 18, 1944.
Pending the suit the appellant was added as a
party defendant on August 23, 1944. By his application made by respondent 1 in
that behalf it was alleged that the appellant had become the auction purchaser
of premises 167/1 at a sale held by the Sheriff of Calcutta on May 3, 1944, in
execution of a decree passed in Suit No. 2356 of 1931 by the Calcutta High
Court with notice of mortgage in favour of respondent 1. Since the said sale
had been confirmed on July 6, 1944, the appellant bad become a necessary party
to the suit. That is how the appellant became a party to the proceedings and
was interested like the mortgagor in disputing the validity of the claim made
by respondent1.
The principal issue which arose between the
parties in the suit was one of limitation. It was not seriously disputed that
the letter written by the mortgagor on February 17, 1943, amounted to an
acknowledgment and it helped to bring within time respondent 1's claim in
respect of the last advance of Rs. 2,500 made on November 27, 1931. Respondent
1's case that the earlier letter of March' 5, 1932, amounted to an
acknowledgment was, however, seriously disputed by the appellant. If this
letter is held to amount to a 143 valid acknowledgment two items of
consideration pleaded by respondent I would be within time; they are Rs. 20,000
and Rs. 35,000 advanced on the same day , September 10, 1926.
Mr. Justice Banerjee, who tried the suit on
the Original Side of the Calcutta High Court, held that the letter in question
did not amount to an acknowledgment, and so he found that only the last item of
Rs. 2,500 was in time. In the result he passed a decree for Rs. 5,000 only in
favour of respondent 1.
Then respondent 1 took the dispute before the
Court of Appeal in the Calcutta High Court. The Court of Appeal has upheld the
case made out by respondent I in regard to the acknowledgment based on the
letter of March 5, 1932, and in consequence it has been held that the principal
amounts due to respondent 1 are Rs. 55,000 and Rs. 2,500, and at the rate of
interest payable thereon at 8% simple, the total amount payable being subject
to the maximum allowable under the Money-lenders' Act. In accordance with these
findings a preliminary decree has been drawn. It is this decree which is
challenged before us by the appellant who has brought his appeal to this court
with a certificate issued by the Calcutta High Court; and the only point which
is raised for our decision is whether the letter in question amounts to a valid
acknowledgment under s. 19 of the Limitation Act. The decision of this question
would naturally depend upon the construction of the letter on which respondent
1 relies; but before reading the said letter it would be relevant to consider the
essential requirements of s. 19 which provides for the effect of acknowledgment
in writing.
Section 19(1) says, inter alia, that where
before the expiration of the period prescribed for a suit in respect of any
right, an acknowledgment of liability in respect of such right has been made in
writing signed by the party against whom such right is claimed, a fresh period
of limitation shall be computed from the time when the acknowledgment was so
signed. It would be noticed that some of the relevant essential requirements of
a valid acknowledgment are that it must be made before the relevant-period of
limitation has 144 expired, it must be in regard to the liability in respect of
the right in question and it must be made in writing and must be signed by the party
against whom such right is claimed. Section 19(2) provides that where the
writing containing the acknowledgment is undated oral evidence may be given
about the time when it was signed but it prescribes that subject to the
provisions of the Indian Evidence Act, 1872, oral evidence of its contents
shall not be received;
in other words, though oral evidence may be given
about the date oral evidence about the contents of the document is excluded.
Explanation 1 is also relevant. It provides, inter alia, that for the purpose
of s. 19 an acknowledgment may be sufficient though it omits to specify the
exact nature of the right or avers that the time for payment has not yet come,
or is accompanied by a refusal to pay, or is coupled with &.,claim to a set
off, or is addressed to a person other than the person entitled to the right.
It is thus clear that acknowledgment as prescribed
by s. 19 merely renews debt; it does not create a new right of action. It is a
mere acknowledgment of the liability in respect of the right in question; it
need not be accompanied by a promise to pay either expressly or even by
implication.
The statement on which a plea of
acknowledgment is based must relate to a present subsisting liability though
the exact nature or the specific character of the said liability may not be
indicated in words. Words used in the acknowledge judgment must, however, indicate
the existence of jural relationship between the parties such as that of debtor
and creditor, and it must appear that the statement is made with the intention
to admit such jural relationship.
Such intention can be inferred by implication
from the nature of the admission, and need not be expressed in words.
If the statement is fairly clear then the
intention to admit jural relationship may be implied from it. The admission in
question need not be express but must be made in circumstances and in words
from which the court can reasonably infer that the person making the admission
intended to refer to a subsisting liability as at the date 145 of the
statement. In construing words used in the statements made in writing on which
a plea of acknowledgment rests oral evidence has been expressly s. excluded but
surrounding circumstances can always be considered. Stated generally courts
lean in favour of a liberal construction of such statements though it does not
mean that where no admission is made one should be inferred, or where a
statement was made clearly G. without intending to admit the existence of jural
relationship such intention could' be fastened on the maker of the statement by
an involved or far-fetched process of reasoning. Broadly stated that is the
effect of the relevant provisions contained in s. 19, and there is really no
substantial difference between the parties as to the true legal position in
this matter.
It is often said that in deciding the
question as to whether any particular writing amounts to an acknowledgment as
in construing wills, for instance, it is not very useful to refer to judicial
decisions on the point. The effect of the words used in a particular document
must inevitably depend upon the context in which the words are used and would
always be conditioned by the tenor of the said document, and so unless words
used in a given document are identical with words used in a document judicially
considered it would not ,serve any useful purpose to refer to judicial
precedents in the matter. However, since decisions have been cited before us
both by the learned Attorney-General and Mr. Viswanatha Sastri we propose to
refer to them very briefly before turning to the document in question.
The question as to what is an acknowledgment
has been answered by Fry, L., J., as early as 1884 A. D. in Green v.
Humphreys (1). This answer is often quoted
with approval.
"What if; an acknowledgment", asked
Fry, L.J., and he proceeded, "in my view an acknowledgment is an admission
by the writer that there is a debt owing by him, either to the receiver of the
letter or to some other person on whose behalf the letter is received but it is
not enough that he refers to a debt (1) (1884) 26 Ch. D474, 481 146 as being
due from somebody. In order to take the case out of the statute there must upon
the fair construction of the letter, read by the light of the surrounding
circumstances, be an admission that the writer owes the debt". With
respect, it may be added, that this statement succinctly and tersely gives the
substance of the provisions contained in s. 19 of the Limitation Act.
Mr. Sastri has relied on the decision of the
Privy Council in Beti Maharani v. Collector of Etawah (1) in which the Privy
Council has recognised that it would be legitimate for the purpose of
construing a document to look at the surrounding circumstances and that oral
evidence about the intention of the maker of the statement cannot be admitted
for the purpose of construing the said statement. "Their Lordships",
observed Lord Hobhouse, who spoke for the Board, "cannot follow the
learned judges of the High Court in admitting the Collector to give oral
evidence of his intentions for the purpose of construing the notice. But they
may for that purpose properly, look at the surrounding circumstances". In
Sukhamoni Chowdhrani v. Ishan Chunder Roy (2) the statements on which reliance
was placed by the creditor was contained in the directions given by the debtor
to apply surplus income "to the payment of the ijmali debts of us three
co-owners of which a list is given below". It was held that by this
statement the defendant acknowledged a joint debt and "from that follow
the legal incidents of her position as a joint debtor with the plaintiff, one
of which is that he may sue her for contribution". In other words,
admission about a joint debt amounted to an acknowledgment though the liability
to be sued for contribution is a matter of legal inference from the said
admission and it had not been specifically included in the statement in question.
Mr. Sastri has also relied on the decision of
the Full Bench of the Allahabad High Court in Munshi Lal v. Hira Lal (3) where
it has been held that a document said to constitute an acknowledgment has to be
construed in the context in which it is given and that (1) (1894) 22 I.A. 31,
41 (2) (1897) 25 I-A95(3) I.L.R. [1947] All. 11.
147 where its language is not clear in itself
the context must be examined to see what it is to which the words referred.
The Court, however, added that its decision
She did not mean that any equivocation in an acknowledgment can be cured by
ascertaining what the probable intentionof the acknowledger was. Similarly in L
Swaminatha Odayar v. Subbarama Ayyar (1) the Madras High Court has held that an
acknowledgment for liability under s. 19 need not be express but may be implied
from facts and circumstances under which a statement in a deposition was made
but it cannot be implied as a matter of law.
On the other hand, the learned
Attorney-General has strongly relied on an earlier decision of the Bombay High
Court in Dharma Vithal v. Govind Sadvalkar (2). In that case certain statements
made in the receipt given for the delivery of the land to the officer of the
Court were relied upon as amounting to an acknowledgment. The said receipt
referred to the suit and decree and the decree to which reference was thus made
had set forth in ordinary course the then plain.
tiff's claim as resting on a mortgage. The
contention was that the reference to the decree made the decree a part of the
receipt and since the decree referred to the plaintiff's claim as resting on a
mortgage the receipt itself served as an acknowledgment of a mortgage
subsisting in 1827. This plea was rejected by the High Court. The High Court
held that all that the receipt admits by implication is that the land had been
awarded by the decree to the party who passed the receipt. "To extend
it", observed West, J., "so as to make it an admission of the
reasoning and legal grounds stated in the decree, would be to go beyond what
probably was present at all to the consciousness of the recipient when he
acknowledged having been put into possession". The learned judge then
added that "the intention of the law manifestly is to make an admission in
writing of an existing jural relation of the kind specified equivalent for the
purposes of limitation to a new contract". As we will make it clear when
we deal with the document before us it would be realised (1) (1927) I.L.R. 50
Mad. 548.
(2) (1881) I.L.R. 8 Bom. 99.
148 that this case cannot assist the
appellant. The receipt itself did not contain any admission about the jural,
relation between the parties. It merely referred to the decree which had set
out the material allegations made in the plaint. Now 5 it would be plainly unreasonable
to attribute to the party passing the receipt an intention to make the
admissions which may be inferred from the averments made in the plaint which
were incidentally recited, and so the Bombay High Court naturally rejected the
plea that the receipt amounted to a valid acknowledgment.
Incidentally we may add that when West, J.
referred to a new contract file had perhaps in mind the definition of
acknowledgment under s. 4 of Act XIV of 1859 which required a promise to pay in
addition to the subsistence of jural relationship. The element of promise was
omitted in the subsequent Act XV of 1877, and it continues to be omitted ever
since. As we have already indicated, under the present law acknowledgment
merely renews the debt and does not create a fresh cause of action.
It is now necessary to consider the document
on which the plea of acknowledgment is based. This document was written on
March 5, 1932. It, however, appears that on November 26, 1931, another letter
had been written by respondent 2 to respondent 1; and it would be relevant to
consider this letter before construing the principal document. In this letter
respondent 2 had told respondent 1 that the Chandni Bazar property was being
sold the next morning at the Rekistrar's sale on behalf of the first mortgagee
and that the matter was urgent., otherwise the property would be sacrificed. It
appears that the said property was subject to the first prior mortgage and
respondent 2 appealed to respondent 1 to save the said threatened sale at the
instance of the prior mortgagee. It is common ground that respondent 1 paid to
respondent 2 Rs. 2,500 on November 27, 1931 and the threatened sale was
avoided. This fact is relevant in construing the subsequent letter.
The said property was again advertised for
sale on March 11, 1932, and it was about this sale that the 149 letter in
question came to be written by respondent 2 to respondent 1 on March 5, 1932.
This is how the letter reads:
"My dear Durgaprosad, Chandni Bazar is
again advertised for sale on Friday the 11th instant. I am afraid it will go
very cheap. I had a private offer of Rs. 2,75,000 a few days ago but as soon as
they heard it was advertised by the Registrar they withdrew.As you are
interested why do not you take up the whole. There is only about 70,000 due to
the mortgagee a payment of 10,000 will stop the sale.
Yours sincerely, Sd. J. C. Galstaun."
Does this letter amount to an acknowledgment of respondent 1's right as a
mortgagee? That is the question which calls for our decision. The argument in
favour of respondent 1's case is-that when the document refers to respondent 1
as' being interested it refers to his interest as a puisne mortgagee and when
it asks respondent 1 to take up the whole it invites him to acquire the whole
of the mortgage interest including the interest of the prior mortgagee at whose
instance the property was put up for sale. On the other hand, the appellant's
contention is that the word "interest" is vague and indefinite and
that respondent 1 may have been interested in the property in more ways than
one. In that connection the appellant relies on the statements made by
respondent 1 in his evidence. He stated that he was interested in the property
in many ways and he clarified by adding that in the first instance he was a
mortgagee having a charge on the property so that if the mortgagor was not able
to pay him the money then he could have given him the property or the appellant
could have got the property from him. He also stated that at one time he was
thinking of buying or taking lease of the property in order to liquidate the
debt but he added that negotiations in regard to the lease had taken place in
1926 and they bad ended in failure.
According to him no such negotiations had
taken place in 150 1932. It is urged that when the letter refers to the
interest of respondent 1 in the property in question it may be interest as an
intending purchaser or as an intending lessee.
In construing this letter it would be
necessary to bear in mind the general tenor of the letter considered as a
whole.
It is obvious that respondent 2 was
requesting respondent 1 to avoid the sale as he did on an earlier occasion in
November, 1931. The previous incident shows that when the property was put to
sale by the first mortgagee the mortgagor rushed to the second mortgagee to
stop the sale, and this obviously was with a view to persuade the second
mortgagee to prevent the sale which would otherwise affect his own interest as
such mortgagee. The theory that the letter refers to the interest of respondent
1 as an intending lessee or purchaser is far-fetched, if not absolutely
fantastic. Negotiations in that behalf had been unsuccessful in 1926 and for
nearly five years thereafter nothing was heard about the said proposal. In the
context it seems to us impossible to escape the conclusion that the interest
mentioned in the letter is the interest of respondent 1 as a puisne mortgagee
and when the said letter appeals to him to take, up the whole it can mean
nothing other than the whole of the mortgagee's interest including the interest
of the prior mortgagee. An appeal to respondent 1 to stop the sale on payment
of Rs. 10,000, as he in fact had stopped a similar sale in November, 1931, is
an appeal to ensure his own interest in the security which should be kept
intact and that can be achieved only if the threatened sale is averted. We have
carefully considered the arguments urged before us by the learned AttorneyGeneral
but we see no reason to differ from the conclusion reached by the Court of Appeal
below that this letter amounts to an acknowledgment. The tenor of the letter
shows that it is addressed by respondent 2 as mortgagor to respondent 1 as
puisne mortgagee, it reminds him of his interest as such mortgagee in the
property which would be put up for sale by the first mortgagee, and appeals to
him to assist the avoidance of sale, and thus acquire the 151 whole of the
mortgagee's interest. It is common ground that no other relationship existed
between the parties at the date of this letter, and the only subsisting
relationship was that of mortgagee and mortgagor. This letter acknowledges the
existence of the. said jural relationship and amounts to a clear acknowledgment
under a. 19 of the Limitation Act. It is conceded that if this letter is held
to be an acknowledgement there can be no other challenge against the decree
under appeal.
In the result the appeal fails and is
dismissed with costs.
Appeal dismissed.
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