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2001 DIGILAW 44 (MAD)

S. A. Shanmugam v. P. V. S. Balusamy Chettiar

2001-01-12

E.PADMANABHAN

body2001
Judgment :- 1. This Appeal has been preferred against the judgment and decree of the learned Subordinate Judge of Periyakulam dated 23.12.1987 made in O.S. No. 78 of 1984 by the defendant in the said suit. The defendant in the said suit being aggrieved by the decree granted in favour of the plaintiff has preferred the present appeal. For convenience, the parties to this appeal will be referred so prayed before the trial Court. 2. Heard Ms. Sindhuja for the appellant and Dr. D. Anandan learned counsel appearing for the respondent. 3. The factual matrix leading to the appeal could be summarised briefly, The Plaintiff instituted the suit for recovery of sum of Rs. 42,262.50 being the principal and interest due on a promissory note dated 26.9.1979. According to the plaintiff, the defendant executed the promissory note on 26.9.1979. promising to pay Rs. 30,000/- on demand with interest in favour of Rajendra wife of P.P.C. Dhanasekaran of Pannaikadu. The plaintiff secured assignment of the promissory note on 7.10.1981 for valid consideration and instituted the suit. 4. According to the plaintiff, the suit claim is not barred by limitation as the defendant had acknowledged the liability by letters dated 30.5.1981, 9.11.1981, 14.8.1982 and 6.1.1983 addressed to the plaintiff and hence the suit claim is not barred by limitation. The plaintiff caused a notice on 15.2.1984, which the defendant had evaded to receive. The plaint was presented on 11.4.1984. 5. The defendant pleaded that the promissory note is not supported by consideration to the extent of Rs. 15,000/- that the promissory note has been obtained for double the amount to cover the usurious rate of interest, that the defendant had not received Rs. 30,000/- as alleged that the defendant had repaid Rs. The plaint was presented on 11.4.1984. 5. The defendant pleaded that the promissory note is not supported by consideration to the extent of Rs. 15,000/- that the promissory note has been obtained for double the amount to cover the usurious rate of interest, that the defendant had not received Rs. 30,000/- as alleged that the defendant had repaid Rs. 22,500/- on various dates towards the promissory debt, that having paid the defendant had not collected the promissory note out of faith, that the defendant had written letters to the plaintiff with respect to certain money transactions due between them and not in respect of the suit promissory note, that the plaintiff is not entitled to any relief, that the suit claim is barred by limitation, that the plaintiff had not caused by any notice before instituting the suit, that the alleged acknowledgment are denied, that at any rate it is not acknowledgment of the suit promissory note much less a valid acknowledgment and that the plaintiff is not a holder in due course. 6. The defendant further pleaded that the plaintiff is not entitled to any relief. The plaintiff filed a reply statement denying the claim that the defendant is entitled to the benefit of Tamil Nadu Act 13 of 1980 and also denied the other averments which may not be necessary to be set out in detail for the purpose of this appeal. 7. The defendant filed two additional written statements claiming benefits of Tamil Nadu Act 13/1980 and also challenging the promissory note itself as not being the original and that it is a mutilated document and that no suit is maintainable on that basis. 8. Before the trial Court, the plaintiff examined the original promisee as PW1 and examined himself as PW2 while the defendant had examined himself as DW1. The plaintiff marked Exs.A1 to A8. 9. The trial Court had framed six issues. The first issue as to whether the suit promissory note is not supported by consideration to the extent of Rs. 15,000/- was answered against the defendant. On the second issue, the trial Court held that the plea of discharge to the extent of 22,500/- had not been established. On the third issue the trial Court held that the suit claim is not barred by limitation. On the 4th issue, the trial Court held that the acknowledgements relate to the suit promissory note. On the second issue, the trial Court held that the plea of discharge to the extent of 22,500/- had not been established. On the third issue the trial Court held that the suit claim is not barred by limitation. On the 4th issue, the trial Court held that the acknowledgements relate to the suit promissory note. On the 5th issue, the trial Court held that the plaintiff is a holder in due course and as a result, the trial Court granted a decree as prayed for, besides holding that the defendant is not entitled to claim relief under various debt relief enactments. In the result, the trial Court decreed the suit as prayed for. 10. In this appeal, the counsel for the appellant raised number of contentions, but the main contention being plea of limitation. According to the counsel for the appellant, the suit claim is barred by limitation and that alleged acknowledgements relied upon by the plaintiff do not relate to the suit promissory note and that in any event, the same cannot be construed as a valid acknowledgment of the liability in respect of the suit promissory note. 11. It was also contended by the counsel for the appellant that even assuming that the acknowledgment relates to the suit promissory notes by such acknowledgment a debt which is already barred by limitation cannot be revived and that the judgment and decree of the trial Court is liable to be set aside. In this respect the learned counsel for appellant relied upon a judgment of this Court in Kulandaisami and another v. Lourdusami ( 1999 (1) CTC 329 ). 12. Per contra, Mr. D. Anandan, learned counsel appearing for the plaintiff/respondent vehemently contended that no interference is called for besides pointing out that the acknowledgements relate to the suit transaction and they are valid and will extend the limitation. 13. In this appeal, the following points arise for consideration: 1. Whether the suit claim is barred by limitation? 2. Whether Exs.A3, A4, A5 and A6 constitute valid acknowledgment of liability of the suit promissory note? 3. Whether Exs.A3, A4 and A5 and A6 relate to suit promissory note? 14. All the three points could be taken up for consideration together as they are inter-connected. The suit promissory note Ex.A1 is dated 26.9.1979. The executions of the promissory note has been admitted by the defendant. 3. Whether Exs.A3, A4 and A5 and A6 relate to suit promissory note? 14. All the three points could be taken up for consideration together as they are inter-connected. The suit promissory note Ex.A1 is dated 26.9.1979. The executions of the promissory note has been admitted by the defendant. The defendant is the promisor and one Rajendra wife of P.P.C. Dhanasekaran is the promisee. While considering the above points, it is not necessary to go into the question whether the suit promissory note is supported by consideration or not? The said promisee Rajendra who had been examined as PW1 had assigned the suit promissory note in favour of the plaintiff on 7.10.1981 as seen from the endorsement Ex.A.3. The assignee/plaintiff is the father of the said Rajendra. 15. Under Ex.A7 it is claimed that the plaintiff had caused a legal notice on 15.2.1984 through his Advocate demanding repayment of the amount due under Ex.A1 promissory note. Ex.A8 is the postal endorsement, which would show that the said Ex. A7 letter had been returned back to the plaintiffs advocate. After the assignment under Ex.A2 on 7.10.1981, for the first time, if at all only on 15.2.1984, the plaintiff had caused a notice regarding the assignment and demanding payment. Before Ex.15.2.1984 excepting oral testimony of PW2 the plaintiff, there is no written notice intimating the assignment by PW1 in favour of PW2. The evidence of PW2 in this respect as rightly pointed out by the counsel for the appellant/defendant cannot be believed at all as there is inconsistency. This inconsistency has been rightly highlighted by the counsel for the appellant. 16. Ex.A3 is an alleged acknowledgment letter dated 30.5.1981. The said Ex.A3 is a truncated letter, as only the first page of the letter has been filed and the second page which contains the signature had not been filed. Further Ex.A3 is addressed to the plaintiff and not to the promisee Rajendra. Being a truncated document, Ex.A3 cannot be relied upon nor it could be given credence. Further Ex.A3 is long prior even to assignment under Ex.A2 Ex.A4, A5 and A6 are respectively dated 9.11.1981, 14.8.1982 and 9.1.1983. Exs.A4 to A6 are letters written by the defendant addressed to the plaintiff. Being a truncated document, Ex.A3 cannot be relied upon nor it could be given credence. Further Ex.A3 is long prior even to assignment under Ex.A2 Ex.A4, A5 and A6 are respectively dated 9.11.1981, 14.8.1982 and 9.1.1983. Exs.A4 to A6 are letters written by the defendant addressed to the plaintiff. It is admitted by the plaintiff as PW2 as well as the defendant as DW1 that they had financial transactions between them and that the defendant had borrowed certain sums from the plaintiff and the plaintiff had given certain financial accommodation. In respect of those financial accommodations, the defendant had written those letters addressed to the plaintiff. Nowhere in Exs.A4 to A5, A6 there is any reference to the suit promissory note debt nor those letters had been addressed to the original promisee. The plaintiff having secured an assignment under Ex.A2 on 7.10.1981 curiously kept silent till 15.2.1984 on which date the plaintiff caused a legal notice. Exs.A4, A5 and A6 refer to the financial transactions between the plaintiff and the defendant alone and nowhere it refers to the suit promissory note either by date or by name of the promisee or by the quantum of sum assured. Hence the learned counsel for the appellant is well justified in contending that Exs.A4, A5 and A6 are neither acknowledgments nor they could be relied upon to save the limitation nor they relate to the suit Ex.A1 promissory note. Those letters namely Ex.A4, A5 and A6 admittedly written by the defendant addressed to the plaintiff refer to certain financial transactions between them and not to the suit promissory note even by implication or to the amount borrowed by the defendant from Rajendra, the original promisee of Ex.A1 promissory note. 17. It is not the case of the plaintiff that the plaintiff had advanced the amount in the name of his daughter Rajendra. It is the specific case of the plaintiff that the amount had been advanced by his daughter Rajendra on 26.9.1979 at Pannaikadu. He had subsequently secured assignment after full payment of the amount due on the date of assignment. Hence the acknowledgment of Ex.A1 promissory note debt, if at all should have been by the defendant specifically or impliedly acknowledging the liability in respect of Ex.A1 promissory note. He had subsequently secured assignment after full payment of the amount due on the date of assignment. Hence the acknowledgment of Ex.A1 promissory note debt, if at all should have been by the defendant specifically or impliedly acknowledging the liability in respect of Ex.A1 promissory note. The contents of the letters namely Ex.A4, A5, and A6 do not refer to the suit Ex.1 promissory note and the contents of those letters are not capable of being read as one written with reference to Ex.A1 promissory note. Acknowledgments of liability must be a conscious acknowledgment and the debt must be indemnified by the acknowledgment. In the present case, nowhere Ex.A4, A5 and A6 refer to Ex.A1 promissory note debt or to the promissory note or to the amount advanced by PW1 Rejendra even by implication. There is nothing in those letters even by implication to connect the suit promissory note. 18. It is true that in law an acknowledgment of liability may be made to a third person, but such acknowledgment should refer to the suit promissory note Ex.A1. It is obligatory on the part of the plaintiff not only to prove the acknowledgment but also should establish the acknowledgments or unequivocal. The suit promissory note is dated 26.9.79 and the three year period expires on 25.9.82. An acknowledgment to be effective must be made before the suit claim is barred by limitation and on acknowledgment made after the expiry of the three years cannot keep the debt alive as has been held in Kulandaisamy and another v. Lourdusamy reported in 1999 (I) CTC. 329 . The alleged letters Exs. A4, A5 and A6 as already point out do not refer to the suit promissory note or to the alleged debt advanced by Rajendra nor it refers to the alleged Exs.A2 assignment and the surrounding circumstances do not lend credence to the plaintiffs case to hold that Exs.A4, A5 and A6 are acknowledgments of the suit promissory note. 19. To constitute valid acknowledgment, there must be a definite admission of liability and it should have been made in writing admitting the jural relationship of debtor and creditor. Such acknowledgment should be made before the expiry of prescribed period for instituting the suit. It may be that the admission may be in any form yet it should be expressed and at times, it may be implied as well. 20. Such acknowledgment should be made before the expiry of prescribed period for instituting the suit. It may be that the admission may be in any form yet it should be expressed and at times, it may be implied as well. 20. It is well settled that to constitute a valid acknowledgment of subsisting liability, the words used in the alleged letters must indicate the existence of jural relationship between the parties such as debtors and creditors and the intentions is to admit such jural relationship, even though a promise to pay is not necessary. 21. The question whether Ex.A4 to A6 constitute acknowledgments of liability depends purely on the contends of the said letters and the construction placed by the Court in Shapoor Fredoom Mazada . v. Durga Prasad Chamaria and others ( AIR 1961 SC 1236 to 1238, their lordships of the Supreme Court hold thus: “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 use d in the acknowledgment must, however, indicate the existence of jural relationship between the party 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 of the statement. In construing words used in the statement made in writing on which a plea of acknowledgment rests oral evidence has been expressly excluded but surrounding circumstances can always be considered. In construing words used in the statement made in writing on which a plea of acknowledgment rests oral evidence has been expressly excluded but surrounding circumstances can always be considered. Stated generally courts lean in favour of a liberal construction of such attitude 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 S. 19 and there is really no substantial difference between parties as to the true legal position in this matter.” 22. In Tilak Ram and others v. Nathu and others ( AIR 1967 SC 935 ) it has been held thus: — “9. It is not however, necessary to go into the details of these decisions or to decide which of the views is correct as this Court in Shapur Fredoom Mazda v. Durga Prasad (1962) 1 SCR 140 : ( AIR 1961 SC 1236 ) has examined the contents and the scope of S. 19. After first stating the ingredients of the section, this Court stated that on acknowledgment may be sufficient by reason of Explanation 1 even if it omits to specify the exact nature of the right. Nevertheless, the statement on which a plea of acknowledgment is based must relate to a subsisting liability. The word used in the acknowledgment must indicate the jural relationship between the parties and it must appear that such a statement is made with the intention of admitting that jural relationship. Such an intention, no doubt, can be inferred by implication from the nature of the admission and need not be in express words. 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 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 the 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 as intention would be fastened on the maker of the statement by an involved or a far-fetched process of reasoning. Similarly, while dealing with an admission of a debt, Fry L.J. Green v. Humphreys (1984) 26 Ch. D 474 at page 481 observed that on acknowledgment would be an admission by the writer that there was a debt owing by him either to be 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 owned the debt. 10. The right of redemption, no doubt, is of the essence of and inherent in a transaction of mortgage. But the statement in question must relate to the subsisting liability or the right claimed. Where the statement is relied on as expressing jural relationship, it must show that it was made with the intention of admitting such jural relationship subsisting at the time when it was made. It follows that where a statement setting out jural relationship is made clearly without intending to admit its existence an intention to admit cannot be imposed on its maker by an involved or a far-fetched process of reasoning.” 23. It follows that where a statement setting out jural relationship is made clearly without intending to admit its existence an intention to admit cannot be imposed on its maker by an involved or a far-fetched process of reasoning.” 23. In the light of the said pronouncement of the Apex Court and on a reading of the said Exhibits, this Court is of the considered view that there is no acknowledgment much less a valid acknowledgment of the liability by the defendant and more so when the defendant had not been put on notice of the assignment by the assignee in his favour and only on 15.2.84 under Ex. A7 notice of assignment or negotiation was caused. On facts, it is clear that there is no acknowledgment much less a valid acknowledgment of the liability. Hence consequently, the suit claim is barred by limitation and the plaintiff has to fail. As the suit claim is barred by limitation, it is not necessary to consider the other pleas. 24. On the plea of limitation, the suit fails and the conclusion of the learned trial Judge that the Exhibits A3 to A6 constitute valid acknowledgments cannot be sustained at all and it is a factual mis-conception as well as mis-reading of the contention. The acknowledgment should relate to the suit promissory note debts or the contents by implication should refer to the suit promissory note debt. This is absent in those letters. Thus, in any view of the matter, all the three points are to be answered against the plaintiff and in favour of the defendant. 25. In the circumstances, the appeal is allowed. Judgment and decree of the learned trial Judge is set aside and consequently, the suit stands dismissed in its entirety. Both parties shall bear their respective costs throughout. Any amount deposited or paid towards the decree by the defendant to the plaintiff or deposited to the credit of the suit including the cost pending the appeal shall be restituted or paid back or paid out to the applicant.