FIRM OF K. C. RAMAIAH v. KUNJUNNY AND SONS — 1987 DIGILAW 139 (KAR)

BOPANNA, J. ( 1 ) THIS appeal raises an interesting question touching the plea of limitation under the provisions of Section 19 of the old Limitation Act, 1908 (hereinafter referred to as the 'act') which corresponds to Section 18 of the present Limitation Act, 1963. The suit was filed on 1-7-1963 when the old Act was in force. ( 2 ) THE plaintiff is a firm of Commision Agents and it had filed a suit against the defendants for recovery of a sum of Rs. 18,765-01 on a Promissory Note executed by defendant Nos. 2 and 3 on 23-7-1954 produced as Exhibit P-1, before the Trial Court. It also claimed a further sum of Rs. 6446-99 on the basis of the accounts settled and as evidenced by the endorsement made on 6-6-1960 by defendant No. 3, who is one of the Junior Members of the 1st defendant joint family firm. ( 3 ) IT is not in dispute that defendant-2 was the Manager of the joint family firm and he made two endorsements on the promissory note Exhibit P-1 dated 23-7-1954. The first endorsement exhibit P-13 (a) was made on 15-7-1957 by defendants 2 and 3 together. It reads thus : "paid a sum of Rs. 50/- (Rupees fifty) only this day, towards the principal and interest due as per this pronote. " Thereafter, again, on 6-6-1960, an endorsement as per Exhibit P-13 (b) was made by defendant no. 3 alone which is as follows : Paid a sum of Rs. 50/- (Rupees fifty) only this day towards the principal and interest due on this pronote. " thereafter on 10-7-1960, the second endorsement by D-2 was made as per Exhibit P-13 (c) which is as follows : "the above sum of Rs. 50/- has been paid towards the principal and interest due. " ( 4 ) THE Trial Court framed a number of issues on the pleas of the parties, as set out in paragraph 7 of the judgment. All the issues except issue Nos. 3, 7 to 9 were answered in favour of the plaintiff. Issue No. 3 does not merit serious consideration as the learned Counsel for the appellant has not seriously challenged the finding on this issue. It is not shown to us as to how that finding calls for interference in this appeal. All the issues except issue Nos. 3, 7 to 9 were answered in favour of the plaintiff. Issue No. 3 does not merit serious consideration as the learned Counsel for the appellant has not seriously challenged the finding on this issue. It is not shown to us as to how that finding calls for interference in this appeal. We are satisfied that the endorsement made by defendant-3 who was not the Kartha of the joint family was not authorised by the joint family firm, as such it did not bird the 1st defendant-firm ; so they were not liable for the suit claim of rs. 6446-99. As a result, the finding on issue No 9. also becomes unassailable. ( 5 ) THEREFORE, the only point for consideration in this appeal is, whether the findings of the Trial court on Issue Nos. 7 and 8 call for interference ? ( 6 ) ISSUE Nos. 7 and 8 are as under : "does the plaintiff prove that the defendant or defendants acknowledged the liability under the suit promissory note or account patti on 10-7-1960 ? are the suit claims in time" ( 7 ) THE findings of the Trial Court necessarily take us to the provisions of Section 19 of the old act which correspond to Section 18 of the new Act. The relevant portion of that Section reads as under : 19 (1) old Act. "where, before the expiration of the period prescribed for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by some person through whom he derives title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. " ( 8 ) A plain reading of this Section shows that an acknowledgment of liability made before the expiration of the prescribed period for a suit or application in respect of any property or right, if made in writing signed by the party against whom such property or right is claimed, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. The Trial Court held that the writing dated 10-74960 marked as Exhibit P-13 (c) did not amount to acknowledgment of liability within the meaning of Section 19 of the old Act, on the ground that it was only an acknowledgment of interest paid on 6-6-1960 and not an acknowledgment of the debt as on 10-7-1960. ( 9 ) IN view of this, it becomes necessary to consider whether the actual words of the endorsement exhibit P-13 (c) would amount to acknowledgment of liability which could be brought within the scope of Section 19 of the Act ? ( 10 ) AN acknowledgment within the meaning of Section 19 of the Act means an admission of existing liability in respect of such property or right to which the writing claimed to contain an acknowledgment relates, made by the party against whom such property or right is claimed. The admission must be unequivocal and definite. Whether a particular writing or an endorsement on a pronote amounts to an 'acknowledgment' within the meaning of Section 19 of the Act, depends upon the facts and circumstances of each case and the language used in the writing, the circumstances under which it is made and the context in which it is made. Of course, the endorsement itself must contain an acknowledgment either in express or implied terms. For construing the words used in the writing claimed as an acknowledgment' the surrounding circumstances can be taken into consideration if the language used is not clear in itself. However, care must be taken to see that the meaning of the words used in the writing is not overstretched. The Supreme Court had an occasion to consider the meaning of the words 'acknowledgment of liability' under Section 19 of the old Act in Thilakram and ors. v. Natu and ors. , AIR1967 SC 935 wherein it was held thus : "7. The Section requires (i) an admission of acknowledgment (ii) that such acknowledgement must be in respect of a liability in respect of a property or right, (iii) that it must be made before the expiry of the period of limitation and (iv) that it should be in writing and signed by the party against whom such property or right is claimed. Under the explanation such an acknowledgment need not specify the exact nature of the property or the right claimed, II is manifest that the statement relied on must amount to an admission or acknowledgment and that acknowledgment must be in respect of the property or right claimed by the party relying on such a statement" it was then observed : "if the statement is fairly clear then the intention to admit the 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 of the statement. " The Court also observed that stated generally, the Courts leaned in favour of a liberal construction of such statements though that would not mean that where no admission was made one should be inferred or where a statement was made clearly without intending to admit the existence of jural relationship such an intention would be fastened on the maker of the statement by an involved or far-fetched process of 1. AIR1967 SC 935 reasoning. Similarly, while dealing with an admission of a debt, Fry L. J. in Green v. Humphreys, (1884) 26 ch. D 474 at 481 observed that "an acknowledgment would be an admission by the writer that there was a debt owing by him either to the receiver of the letter or to some other person on whose behalf the letter was received but that it was not enough that he referred to a debt as being due from somebody. In order to take the case out of the statute, there must, upon a fair construction of the letter read by the light of the surrounding circumstances, be an admission that the writer owed the debt. "again the Supreme Court considered this aspect in Lakshmirathan Cottons Mills Co. Ltd. v. The aluminium Corporation of India Ltd, AIR1971 SC 1482 , (1971 )1 scc67 , [1971 ]2 SCR623. and affirmed the view taken in Thilakram's case, AIR1967 SC 935 , and held as follows: "11. It is clear that the statement on which the plea of acknowledgment is founded must relate to a subsisting liability as the section requires that it must be made before the expiration of the period prescribed under the Act. and affirmed the view taken in Thilakram's case, AIR1967 SC 935 , and held as follows: "11. It is clear that the statement on which the plea of acknowledgment is founded must relate to a subsisting liability as the section requires that it must be made before the expiration of the period prescribed under the Act. It need not, however, amount to a promise to pay, for an acknowledgment does not create a new right of action but merely extends the period of limitation. The statement need not indicate the exact nature or the specific character of the liability. The words used in the statement in question, however, must relate to a present subsisting liability and indicate the existence of jural relationship between the parties, such as, for instance that of a debtor and a creditor, and the intention to admit such jural relationship Such an intention need not be in express terms and can be inferred by implication from the nature of the admission and the surrounding circumstances. Generally speaking, a liberal construction of the statement in question should be given. That of course does not mean that where a statement is made without intending to admit the existence of jural relationship, such intention should be fastened on the person making the statement by an involved and far-fetched reasoning. (See khan Bahadur Shapoor Freedom Mazda v. Durga Prasad Chamaria AIR1961 SC 1236 , [1962 ]1 SCR140 ) and Tilak Ram v. Nathu AIR1967 SC 935. As Fry, L. J. in Green v. Humphreys (1884) 26 Ch. D. 474 at P. 481 said "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 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 in the light of the surrounding circumstances, be an admission that the writer owes the debt. " As already stated, the person making the acknowledgment can be both the debtor himself as also a person duly authorised by him to make the admission. " As already stated, the person making the acknowledgment can be both the debtor himself as also a person duly authorised by him to make the admission. In (Khan Bahadur Shapoor Freedom Mazda's Case AIR1961 SC 1236 , [1962 ]1 SCR140 ), the Court accepted a statement in a letter by a mortgagor to a second mortgagee to save the mortgaged property from being sold away at a cheap price at the instance of the prior mortgagee by himself purchasing it is one amounting to an admission of the jural relationship of a mortgagor and mortgagee, and therefore, to an acknowledgment within Section 19. Also, an, agreement of reference to arbitration containing an unqualified admission that whoever on account should be proved to be the debtor would pay to the other has been held to amount to an acknowledgment. Such an admission is not subject to the condition that before the agreement should operate as an acknowledgment, the liability must be ascertained by the arbitrator, The acknowledgment operates whether the arbitrator acts or not. " ( 11 ) IF the endorsement dated 10-7-1960 marked as Exhibit P-13 (c) made on the pronote Exhibit p-1 is considered in the light of the aforesaid principles and in the context in which it is made, there is no difficulty whatsoever in holding that it contains an unqualified and definite admission of the existing liability under the pronote and it was made with an intention to acknowledge the liability under the pronote. The earlier valid endorsement containing the acknowledgment was made on the pronote by defendants 2 and 3 together as per Exhibit P-13 (a) on 15-7-1957. No doubt in between 15-7-1957 and 10-7-1960, there is another endorsement as per Exhibit P-13 (b) made by defendant-3 alone who was a junior member of the joint family-firm and as such he was not entitled to acknowledge on behalf of the Joint Family unless there was specific authority in this regard. No such authority is established in this case. Therefore, it became necessary to obtain another endorsement made by defendant-2 who was the manager and kartha of the joint-family firm and as such he had full authority to acknowledge on behalf of the joint family firm, the existing liability under the pronote. No such authority is established in this case. Therefore, it became necessary to obtain another endorsement made by defendant-2 who was the manager and kartha of the joint-family firm and as such he had full authority to acknowledge on behalf of the joint family firm, the existing liability under the pronote. ( 12 ) SRI G. S. Visweswara, the Learned Counsel for the appellant-plaintiff urges that though the endorsement Exhibit P-1 (c) indicates that payment of Rs. 50/- was made on 6-6-1960, it nevertheless further establishes that as on 10-7-1960 defendant No. 2 as manager of the joint family firm acknowledged the principal amount and interest due to the plaintiff under the pronote. It the wording of the acknowledgment is taken literally, it can be said that it only indicates the payment of Rs. 50/- on 6-6-1960 But if that wording is taken in the context of the earlier endorsements made viz. , Exhibit P-13 (a) and P-13 (b), it does indicate that defendant No. 2 had acknowledged the principal and interest due to the plaintiff firm on 10-7-1960. The necessity of making the endorsement Exhibit P-13 (c) is obvious from the fact that the payment of interest on 6-6-1960 was made by a junior member of the joint family firm - defendant No 3, and that is the reason why, within a month thereafter, plaintiff advisedly obtained the acknowledgment from defendant No. 2 on 10-7-1960. Therefore, when defendant No. 2 made this endorsement Exhibit P-13 (c)on 10-7-1960 though the amount was paid on 6-6-1960, that endorsement was made with a view to acknowledge the liability to the plaintiff-firm on 10-7-1960 for and on behalf of the joint family firm as a kartha of the joint family. Even if the words "above sum of Rs. 50/-has been paid towards "are not taken into consideration, the words "the principal and interest due" are sufficient to amount to acknowledgment of the liability as contemplated under Section 19 of the Act. A similar point arose for consideration before the division Bench of the Madras High Court in Dosapathi Ramayya v. Pattam Anjayya, AIR 1942 madras 146 That was also a suit on promissory note and the endorsement which came up for consideration before the Division Bench read thus : "paid on 15-9-1938 towards this promissory note Rs. 2/. A similar point arose for consideration before the division Bench of the Madras High Court in Dosapathi Ramayya v. Pattam Anjayya, AIR 1942 madras 146 That was also a suit on promissory note and the endorsement which came up for consideration before the Division Bench read thus : "paid on 15-9-1938 towards this promissory note Rs. 2/. " the Madras High Court after considering its earlier decisions held that the endorsement though not valid under Section 20 of the old Limitation Act, but nevertheless saved the limitation under section 19 and as such, the endorsement could be construed as an implied acknowledgment of liability which could be brought within the scope of Section 19 of the old Act. In our view, the endorsement in the instant case should be construed as an implied acknowledgment of the liability under Section 19 of the Act. If that be so, the suit was within time and the plaintiff was entitled to the decree for the amount due under the promissory note. ( 13 ) IN the result, this appeal is partly allowed. In reversal of the decree of the trial Court, there shall be a decree against the defendants for a sum of Rs. 18,765-01 Ps. with interest at 6% per annum on the principal sum of Rs. 9382-13 from the date of suit upto the date of realisation. Plaintiffs are also entitled to proportionate costs in the trial Court.