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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

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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 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  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

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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

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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

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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

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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.

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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

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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.