Report No. 89
Section 19: Part Payment
19.1. Section.-Effect of payment (on account of debt or of interest on legacy) and its rationale.- Analogous to the acknowledgment of liability, dealt with in section 18 is payment of a part of the amount due, made by the person liable. Such payment may be regarded as an implied acknowledgment, or at least analogous thereto. In any case it preserves evidence, and the demand is no longer a 'stale' one. The subject is dealt with in the next secti.-section 19.
The main paragraph of the section provides for computing a fresh period of limitation when the person liable to pay a debt or legacy (or his agent) makes, on account of the debt or of interest on the legacy, payment before the expiry of the prescribed period. The proviso to the section enacts that (save in the case of a payment of interest made before the 1st day of January 1928), an "acknowledgment of the payment must appear in the handwriting of the person making payment, or in a writing signed by that person."
The Explanation to the section consists of two clauses defining in certain respects the ambit of "payment" the ambit of "debt". In clause (a), it provides that where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be "payment". Under clause (b) of the Explanation, "debt" does not include money payable under a decree or order of a court.
19.2. Suits for redemption.- In the past, the section (as occurring in the Act of 1908) gave rise to some debate as to its application to a suit for redemption.1 It is now well settled2 that the section applies only to suits for the recovery of a debt (and not to a suit for the recovery of property). To put the matter beyond doubt, we recommend that the section 19 should be amended so as to indicate expressly that the section is meant for a suit of recovery of a debt or legacy.3
1. Mohammad Akbar Khan v. Motai, AIR 1948 PC 36 (38).
2. Mohammad Akbar Khan v. Motai, AIR 1948 PC 36 (39).
3. See para. 19.12, infra, for a draft of the revised section.
19.3. Co-relation of the proviso to the Explanation.- The Explanation to section 19 provides that receipt by the mortgagee of rent or produce of the land mortgaged "shall be deemed to be a payment" However; the Explanation does not link itself up with the proviso preceding it, which requires that the "payment" should appear in the handwriting of, or in a writing by, the person making the payment. The non-mention of this requirement in the Explanation to section 19 has been interpreted to mean that the proviso does not apply to cases covered by the Explanation.1
This construction can be said to be supportable on the fact that the physical possession of the property being with the mortgagee, it is not possible for the mortgagor to make the "payment" of produce which the mortgagee might appropriate to the debt. To put the matter beyond doubt, we had contemplated the addition of a clause somewhat as under:
"Notwithstanding anything contained in the proviso to this section, it shall not be necessary to have the acknowledgment required by the proviso in respect of such payment", at the end of clause (a) of the Explanation. But the judicial interpretation being in conformity with the philosophy of the section, we are refraining from making any suggestion in this regard.
It is apparent that in the case of land in the possession of the mortgagee, an acknowledgment of the payment would not appear in the handwriting of, or in the writing signed by, the person making the payment for the simple reason that the payer and the payee are one and the same person. As stated above, we are not recommending any clarification in this behalf to the proviso.
1. India v. Vanad, AIR 1966 Guj 59 (60).
19.4. Section 19, Explanation (.-Conflict as "land".- One specific point requires attention in connection with section 19, Explanation (a). Where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land is deemed to be a payment for the purposes of that section, thus enabling the computation of a fresh period of limitation from the time the payment is made. Now, the expression "land" has been differently interpreted.
The Madras High Court,1 construing the word 'rent' as ejusdem generis with 'produce', holds that the word 'land' in the section refers only "to cultivable land and would not include a hou.-or even the site on which a house might have been built.
1. Gudur Ramakrishna Reddi v. Mumratnammal, AIR 1954 Mad 890 (893): ILR 1954 Mad 1226: (1954) 1 MO 546.
19.5. Conflict.- On the contrary, the Madhya Pradesh High Court,1 dissenting from the Madras view,2 and relying on the meaning as given in judicial dictionaries, holds that there is no warrant for reading the word 'rent' as ejusdem generis with 'produce'. According to it, the section applies not only to the rent received from the cultivable land, but also to the rent received from a house or house-site.
To the same effect are rulings of the High Courts of Bombay3, and Gujarat4.
1. Radha Krishna v. Anaop Chand, AIR 1973 MP 248 (251).
2. Para. 19.4, supra.
3. Manik Chand v. Rachappa, AIR 1952 Born 266.
4. Dadia Bhadal v. Vannad Maganlal, AIR 1966 Guj 59 (60, 61).
19.6. Need for clarification.- In our opinion, there is no rationale in limiting the provisions of the section to cultivable land, simply because the section uses the word 'produce'. In theory, one could enlarge the applicability of the principle to cases involving moveable property, because it is conceivable that a person may hand over his property to a creditor who in his turn, can appropriate the income derived from the use thereof towards payment of the debt (e.g. a taxi driver taking a loan from a bank and hypothecating his taxi to the bank).
However, to avoid any further controversy on the question whether the word 'land' includes house property or not, we recommend that the Explanation to section 19 should be suitably amended by using the expression 'immovable property' for the word 'land'.1
1. See para. 19.12, infra, for a draft.