PETITIONER: KHAN BAHADUR SHAPOOR FREDOOM MAZDA Vs. RESPONDENT: DURGA PROSAD CHAMARIA AND OTHERS DATE OF JUDGMENT: 01/03/1961 BENCH: GAJENDRAGADKAR, P.B. BENCH: 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 mortagee-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 acknow- ledgment 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. JUDGMENT:
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
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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 liability- of 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
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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
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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
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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. D- 474, 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-A- 95-
(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 intention- of 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 Attorney-
General 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.