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1998 DIGILAW 8 (HP)

PUNJAB NATIONAL BANK v. SWARAN KAUR

1998-01-09

KAMLESH SHARMA, SURINDER SARUP

body1998
JUDGMENT MS. KAMLESH SHARMA, J.—This Regular First Appeal at the instance of the Punjab National Bank is directed against the decree and judgment dated 22.9.1990 passed by the District Judge, Chamba Division at Chamba, whereby its suit filed against the original defendant Himmat Singh was dismissed on the ground of limitation, besides other grounds. Original defendant Himmat Singh had died during the pendency of the suit and the respondents were brought on record as his legal representatives. 2. The brief facts of the case, which are not in dispute, are that the parties had entered into an agreement dated 27.11.1979 under which the appellant-plaintiff Bank was to advance a loan of Rs. 35,000/- to Himmat Singh to reconstruct his building according to its specifications and thereafter to lease the building to the Bank at the monthly rent of Rs. 1,000/- and to mortgage the said building as security for repayment of the amount advanced to Himmat Singh. It is not in dispute that the Punjab National Bank did pay an amount of Rs. 27,000/- to Himmat Singh under the agreement, though not within the stipulated period of three months, but the agreement for leasing out the building seems to have been abandoned for which both the parties are blaming each other for non-completion of the building within the agreed period. 3. In this background, it is clear that the sum of Rs. 27,000/- though advanced as a loan to Himmat Singh by the Punjab National Bank was not a case of loan pure and simple, as this amount was paid in consideration of the agreement dated 27.11.1979 under which Himmat Singh was to lease out the building in favour of the Punjab National Bank after completing it within the stipulated period according to the specifications of the Bank and in the event of his failure to do so, some specific remedies were provided to the Punjab National Bank under the agreement. 4. The Punjab National Bank vide its Notice dated 15.7.1981, Ex. P-5, called upon Himmat Singh to pay back the loan as he had failed to construct the building in accordance with the terms of the agreement. In reply to the notice, dated 6.8.1981 Ex. P-7, the learned Counsel for Himmat Singh had stated as follows :— "That it was under the instance of the Bank that my client agreed to lease out his building to the Bank. In reply to the notice, dated 6.8.1981 Ex. P-7, the learned Counsel for Himmat Singh had stated as follows :— "That it was under the instance of the Bank that my client agreed to lease out his building to the Bank. This residential building was demolished and the map approved for the construction of the Bank having a provision of strong room (under ground) for the bank was passed by the Municipal Committee Chamba and Architect on the understanding that half of the expenditure shall be born by the Bank and half by my client. The expenditure by the Bank was to be considered as loan and was to be deducted after handing over the building from the rent but as the Bank did not advance money within stipulated period of,3 months. However, it gave money only to the tune of Rs. 27,000.00/- after the expiry of this period and further did not permit me to draw amounts from my own account in the said Bank to hasten with the said construction work. Till this time about Rs. 70,000/- have been spent and most of the amount on the construction of strong room (under ground) after demolishing of the residential building. Thus causing great loss to himself, so my client in case of litigation shall hold you responsible and shall also file a suit against your client to compensate him..." 5. Thereafter, another notice dated 6.4.1984, Ex. P~6? was given by the Punjab National Bank to Himmat Singh for making the payment of the loan amount which was again replied to by the learned Counsel for Himmat Singh on 24.4.1984, Ex. P-8, in the same terms as that of the reply dated 6.8.1981, Ex. P-7, However, it was added that in case the Punjab National Bank filed litigation. It will be liable for the expenses caused to Himmat Singh who may also file a suit against the Punjab National Bank to compensate him for the loss caused to him due to the wilful act of the Bank. 6. It is further not in dispute that the period of limitation is three years from the date of receipt of money under Article 24 of the Limitation Act. The last payment was made on 3.5.1980 as per the statement of Account Ex. P-3 and the first notice for the recall of the loan, Ex. 6. It is further not in dispute that the period of limitation is three years from the date of receipt of money under Article 24 of the Limitation Act. The last payment was made on 3.5.1980 as per the statement of Account Ex. P-3 and the first notice for the recall of the loan, Ex. P-5, was issued on 15.7.1981 whereas the suit was filed on 20,2.1987 which was beyond the period of limitation of three years. However, the case of the Punjab National Bank is that fresh period of limitation should be computed from 6.8.1981 and thereafter from 24.4.1984 when Himmat Singh through his Counsel had acknowledged in writing his liability to pay the loan in the replies to the notices Ex. P-7 and Ex. P-8. The District Judge has rejected the case of the Bank holding that in the replies Ex. P-7 and Ex. P-8, Himmat Singh had not admitted the subsisting jural relationship of creditor and debtor between him and the Punjab National Bank. As such, these letters could not be held as acknowledgment within the meaning of Section 18 of the Limitation Act for giving a fresh period of limitation in favour of Punjab National Bank. The learned Counsel appearing for Punjab National Bank has challenged these findings of the District Judge and has urged that the expression "The expenditure by the Bank was to be considered as loan and was to be deducted after handing over the building on rent..." used in Ex. P-7 and Ex. P-8 was acknowledgment as provided under Section 18 of the Limitation Act. 7. After hearing the learned Counsel for the parties and going through the record, we does not find any force in the submissions made by the learned Counsel for the Punjab National Bank. The interpretation given by the learned District Judge to the replies Ex. P-7 and Ex. P-8 is correct that admission of the receipt of an amount, by itself, is no admission in respect of the liability to repay it, to constitute an acknowledgment which may be relied upon by the Punjab National Bank for seeking a fresh period of limitation. Himmat Singh ought to have admitted, may be impliedly or indirectly, an existing obligation on his part to repay the debt. A perusal of the replies Ex. P-7 and Ex. P-8 shows that Himmat Singh had only admitted receipt of a sum of Rs. Himmat Singh ought to have admitted, may be impliedly or indirectly, an existing obligation on his part to repay the debt. A perusal of the replies Ex. P-7 and Ex. P-8 shows that Himmat Singh had only admitted receipt of a sum of Rs. 27,000/- from the Punjab National Bank but he had not even remotely admitted that he was liable to pay this amount to Punjab National Bank as a loan. On the contrary, Himmat Singh had clearly averred that the amount was paid as half of the cost of the construction of the building as per the agreement between him and the Punjab National Bank and since it had failed to pay the requisite amount to him as agreed, the construction could not be completed and the building could not be handed over after completing the construction, Therefore, in order to explain the terms of the agreement dated 27.11.1979, it was stated that The expenditure by the Bank was to be considered as loan and was to be deducted after handing over the building on rent..." which cannot be used as an admission of a subsisting jurai relationship of creditor and debtor between Punjab National Bank and Himmat Singh. 8. For taking this view, we have relied upon a number of judgment of the Supreme Court in which the word acknowledgment used in Section 18 of the Limitation Act has been interpreted. 9. In Shapoor Freedom Mazda v. Durga Prasad Chamaria and others, AIR 1961 SC 1236, the learned Judges have held as under:— (6) It is thus clear that acknowledgment as prescribed by Section 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 acknowledgment 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. Words used in the acknowledgment 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 subsisting liability as at the date 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 excluded but surrounding circumstances can always be considered. Slated 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 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 Section 19, and there is really no substantial difference between the parties as to the true legal! Position in the matter." 9. In a later judgment in Tilak Ram and others v Nathu and others, AIR 1967 SC 935, following the judgment in Shapoor Freedom Mazda v. Durga Prosad Chamaria and others (supra), the learned Judges have explained that mere statement expressing jural relationship between the parties does not constitute acknowledgment The statement to fail within acknowledgment must show that it was made with the intention to admit such jural relationship subsisting at the time when it was made. 10. 10. In another judgment of the Supreme Court in Lakshminarain Cotton Mills Company Ltd. v. The Aluminlum Corporation of India Ltd,, AIR 1971 SC 1482, reiterating the earlier judgments in Shapoor Freedom Mazda v. Durga Prosad Chamaria and others and Tilak Ram and others v Nathu and others (supra), the learned Judges of the Supreme Court have held in para 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.” 11. In another judgment of the Supreme Court in Valiama Champaka Pillai v. Sivathanu Pillai and others, AIR 1979 SC 1937, the learned Judges while interpreting acknowledgment1 as given in Section f8 of the Limitation Act, have held that one of the essential requirements for a valid acknowledgment is that the writing concerned must contain an admission of subsisting liability. A mere admission of a past liability is not sufficient to constitute such an acknowledgment. A mere admission of a past liability is not sufficient to constitute such an acknowledgment. Referring to the release deeds in the case before them, which were executed by the original mortgagees, it was observed that the statement in the release deeds that the mortgages had been extinguished by payment of mortgage debts in entirety by the redeeming co-mortgagor, does not amount to acknowledgment of a subsisting liability which could give a fresh starting point of limitation. 12. The judgment in Reet Mohinder Singh Sekhon v. Mohinder Prakash and others, AIR 1989 SC 1775, cited by the learned Counsel for the appellant-Bank does not help him as in that case applying the law laid down in Tilak Ram and others v. Nathu and others (supra), the learned Judges of the Supreme Court examined the Sale deeds before them and came to the conclusion that recitals therein spelt out a clear intention that the moneys due under the mortgage still remained unpaid and also that mortgagor had a subsisting right of redemption which he could enforce against the mortgagee. Therefore, those deeds constituted an acknowledgment of liability for redemption within the meaning of Section 19 of the Limitation Act. 13. In the result, the appeal filed by the Punjab National Bank fails and is dismissed. There is no order as to costs. Appeal dismissed.