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Mrs. Florence Misra and ors. Vs. Daulat Ram and ors. - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtAllahabad High Court
Decided On
Case NumberFirst Appeal No. 48 of 1953
Judge
Reported inAIR1968All316
ActsLimitation Act, 1908 - Sections 19
AppellantMrs. Florence Misra and ors.
RespondentDaulat Ram and ors.
Appellant AdvocateP.S. Dwivedi, Adv.
Respondent AdvocateB.K. Dhaon and ;G.B. Lal, Advs. for Respondent No. 1
Excerpt:
.....of debt - section 19 of limitation act, 1908 - receipt may be an acknowledgment of the previous debts - receipt can be an acknowledgment within the meaning of section 19 subject to the three conditions enumerated in the provision of the act - acknowledge must have been made before the expiration of the time prescribed for suit - must be clear and unambiguous acknowledgement -must be signed by the parties. - - (8) we are of opinion that it would perhaps have been better if the bench had decided all questions of fact relating to receipt ext. the bench held that the receipt should be regarded as a good acknowledgment for the purpose of saving limitation. it, therefore, appears to us that there is no inconsistency between these decisions as regards the aspect that the receipi may (if..........7,000/- was advanced in january 1947 and that this amount was still outstanding. on 1-4-1948 the loan advanced in january 1947 could still be recovered by suit. the receipt is (we assume) a writing signed by n. c. p. misra. the mention of the word 'pro-note' clearly implies that the money acknowledged to have been received was to be repaid by the executant of the receipt. there is no evidence to indicate that the promissory note executed on 1-4-1948 was in absolute payment of the previous loan. since the previous loan was still outstanding, there was a jural relationship of creditor and debtor between the parties. there can in the circumstances be no doubt that this jural relationship was being consciously admitted.28. we, therefore, conclude that on theassumptions indicated above.....
Judgment:

Nigam, J.

1. The plaintiff Daulatram Ruchiram Chablani filed suit No. 19 of 1951 in the Court of Civil Judge, Malihabad, Lucknow on 13th February, 1951 against Nawin Chandra Paul Misra claiming a decree for Rs. 12,170. An amendment of the plaint was allowed by the trial Court on 26-10-1951.

2. The plaintiff alleges (in his amended plaint) that in the first week of January 1947 the defendant began borrowing money from the plaintiff. On 1st April, 1950 all advances were added up and after taking more cash the defendant executed a pronote and a receipt for Rs. 11,280 promising to pay the amount with interest at 9 per cent. The plaintiff gave details of the sums advanced. One item was a sum of Rs. 7,000 paid in cash in the first week of January 1947. The plaintiff further pleaded that if the pronote was not admissible in evidence, the plaintiff was entitled to a decree on the basis of the original advances which had been acknowledged four times as mentioned in the plaint, on one occasion by the receipt dated 1-4-1948. The plaintiff claimed a decree for this sum of Rs. 11,280 principal amount advanced and Rs. 890 interest accrued. The cause of action was stated to have accrued on 1-4-1950 (the advance of the loan, promise of interest and execution of receipt and pronote).

3. The plaintiff thus based his claim on a fresh contract on 1 4-1950 on which date 'more cash' had been advanced but in the alternative based his claim on the original advance of Rs 7,000 (with which alone we are concerned in this reference) acknowledged in the receipt dated 1-4-1948 (which is the only acknowledgment relied upon before us).

4. In his final written-statement dated 27th November. 195] the defendant denied the plaint case and suggested that the defendant had not taken any loan from the plaintiff.

5. The learned Civil Judge framed five issues, three on 23-7-1951 and two on 4-12-1951.

6. In his statement, the plaintiff stated that on 1-4-1948 the defendant had paid Rs. 700 as interest on the previous loan and had executed receipt for Rs. 7000 (Ext. 18)in lieu of the principal amount previouslyadvanced. P. W. 5 Soloman Benjamin Eliassays that no cash was paid in his presence whenExt. 18 was executed. The defendant deniedhaving executed Ext. 18.

7. The learned Civil Tudge held that the payments alleged by the plaintiff were proved and decreed the plaintiffs claim. The defendant filed this appeal. When the appeal came up for hearing before a Bench of this Court, two issues were remitted to the trial Court for findings. These issues are :--

'1 (a) Assuming that the amount of seven thousand rupees was advanced as a loan in January, 1947, as alleged by the plaintiff is the plaintiff's claim in respect of this sum of seven thousand rupees within limitation in view of the allegations contained in paragraph 2 (a) of the plaint?

(b) Whether Ext. 10 the letter dated the 16th of September, 1947, Ext. 18 the receipt dated the 1st of April, 1948 and Ext. 2 the receipt dated the 1st of April, 1950 constitute a valid acknowledgment of the subsisting liability in respect of the debt of seven thousand rupees due from the defendant to the plaintiff? (8) We are of opinion that it would perhaps have been better if the Bench had decided all questions of fact relating to receipt Ext. 18 namely, whether Ext. 18 was proved to have been executed by the defendant, whether any money had been paid by either party to the other at the time Ex. 18 was executed, whether in fact any sum of rupees seven thousand had been lent by the plaintiff to defendant in January 1947 and whether the liability to repay this debt still subsisted on 1st April, 1948, rather than entered upon the question of law on assumptions, which on scrutiny may not be found to be justified.

9. In his findings, the learned Civil Judge answered the first issue remitted in the affirmative. He also held that receipt Ext. 18 alone constituted a valid acknowledgment of the subsisting liability in respect of the debt of Rupees 7,000 due from the defendant to the plaintiff. It appears that the learned Civil Tudge assumed that Rs. 7000 were advanced by the plaintiff to the defendant in January 1947, that this liability subsisted on 1st April, 1948 and that Ext. 18 had been executed bv the defendant.

10. When the appeal again came up for hearing before the Bench, the Bench without proceeding to decide the questions of fact, made this reference to a larger Bench in view of the alleged inconsistency between Govind Singh v. Bijay Bahadur : AIR1929All980 and lagan Nath v. Kunwar Girwar Singh : AIR1930All368 on the one hand and Ghulam Murtaza v. Mt. Fasiunnissa Bibi : AIR1935All129 on the other. That is how the matter is before us. The question referred to us is :--

'Assuming that the amount of Rs. 7,000 was advanced as a loan in January 1947 as alleged by the plaintiff, is the plaintiff's claim in respect of the said sum of Rs. 7,000 within limitation on the ground that Ext. 18 constitutes a valid acknowledgment of a subsisting liability in respect of the said amount of Rs. 7,000?'

11. We are not concerned with the question whether Ext. 18 operates as a novation of contract i. e., as evidence of a fresh contract between the parties. It is neither party's casa that the old debt was wiped off and a fresh. loan was advanced. It is important to bear in mind that the plaintiffs case is that on 1-4-1948, a sum of Rupees seven hundred was paid to him and Ext. 18 was executed in lieu of the principal amount originally advanced in January 1947. That aspect of the matter has not been referred to us and no doubt will be considered by the Bench when the appeal is again placed before it. The Bench may also have to determine the questions of fact mentioned by us earlier which have been assumed to exist in the issues remitted to the trial Court and in the reference made to us. In answering the question put to us, we will confine ourselves to the bara question referred to us leaving all other questions to the Bench hearing the appeal.

12. In the reference we have heard Mr. Dhaon and Mr. Dwivedi.

13. In : AIR1929All980 , the plaintiff had sued on the basis of a promissory note. The plaint case was not inconsistent with the case that the promissory note was executed in lieu of an old debt. The promissory note was inadmissible in evidence. Niamatullah J., held:

'The plaintiff-applicant is entitled to succeed as regards the principal debt at least on the strength of the acknowledgment contained in the receipt dated 6th January, 1925'. The receipt was held to be 'a clear acknowledgment of the defendant being a debtor to the plaintiff to the extent of Rs. 349 under a pro-note dated 6th January, 1925 ...... 'Niama-tulah J., was also of the opinion that a clear and unconditional acknowledgment can itself be the foundation of an action and relied on Maniram v. Seth Rup Chand, (1906) 33 Ind App 165.

Sulaiman J., (as he then was) expressed his views thus:--

'I also think that a receipt is ordinarily an acknowledgment of the receipt of consideration, and unless its contents suggest otherwise it does not imply a promise to pay or even an acknowledgment of an existing liability to pay.... But the recitals in the receipt may suggest that that payment of money was oy way of loan and that circumstance would necessarily imply a promise to repay it. In such cases the receipt alone with other oral evidence may be sufficient proof of a debt which is recoverable by suit'.

The reference to a contemporaneous promissory note in the receipt indicated that the payment was by way of loan. Finally Sulaiman J., concluded that the previous debt had either been acknowledged or substituted by a new contract including a fresh promise to pay.

14. In : AIR1930All368 , Niamatullah, J., delivered the judgment of the Bench. The argument that as the receipt did not acknowledge the earlier debt it could not be construed as an acknowledgment under Section 19 of the Limitation Act was rejected. The judgment states:--

'The receipt does not state whether the stun of Rs. 1,680 acknowledged thereunder wasadvanced in cash on its date or was due under the earlier loan transaction. It is consistent with either of the two alternatives'.

The defendant's contention that the receipt evidenced money due under the earlier loan transaction was accepted. The Bench held that the receipt should be regarded as a good acknowledgment for the purpose of saving limitation.

15. Sulaiman C. J., was a party to : AIR1935All129 . Referring to : AIR1929All980 , the learned Chief Justice stated:

'In that case Niamatullah, J., certainly was inclined to take the view that an acknowledgment, clear and unconditional can itself be the foundation of an action. I concurred in the order on the ground that the recitals in the receipt along with the circumstances indicated that there was a renewal of previous debt, so that either the previous debt had been acknowledged afresh or had been substituted by a new contract including a fresh promise to pay.... The previous debt had not become barred by time and the Bench in that case came to the conclusion that there had been a novation of the contract'.

Referring to the Full Bench case of Nazir Khan v. Ram Mohan Lal : AIR1931All183 , the learned Chief Justice stated:--

'The result of this pronouncement is that where the debt is separable from the promissory note, the transaction being truly independent of it..... the debt can be proved althoughthe promissory note was not admissible in evidence .....'

16. After considering two other decisions, Abdul Rafiq v. Bhajan : AIR1932All199 and Bal Krishna v. Deb Singh AIR 1984 All 76, the learned Chief Justice summed up thus:

'It seems to me that there is no inconsistency in any of these decisions except that the view that an unconditional acknowledgment cannot itself be the basis of a suit and furnish a new cause of action has been too broadly stated. ...'

17. We respectfully agree with the view and are of opinion that the decisions in : AIR1929All980 , : AIR1930All368 and : AIR1935All129 , do not decide to the contrary so far as the receipt being an acknowledgment of the previous debt within the meaning of Section 19 of the Limitation Act, 1908 is concerned. In the case before us we are not concerned with the question whether the receipt Ext. 18 furnishes a fresh cause of action. That aspect of the matter has been authoritatively pronounced upon in Hira Lal v. Badku Lal, : [1953]4SCR758 . In paragraph 12 of the judgment it was laid down that the decision in : AIR1935All129 , so far as it held that even if an acknowledgment implies a promise to pay it cannot be made the basis of suit and treated as giving rise to a fresh cause of action, did not lay down the correct law. It, therefore, appears to us that there is no inconsistency between these decisions as regards the aspect that the receipi may (if necessary conditions are satisfied) be an acknowledgment of the previous debt and be an acknowledgment within the meaning ofSection 19 of the Limitation Act, 1908. These conditions were listed by Sulaiman C. J., at page 131 in the case of : AIR1935All129 the acknowledgment must have been made before the expiration of the period prescribed for the suit (2) it must be a clear and unambiguous acknowledgment specifically admitting liability in respect of the debt sued upon and (3) it must be signed by the party or his authorised agent.

18. Applying the law to the facts of the case before him, Sulaiman, C. J., stated;--

'But these receipts merely refer to the promissory notes which were executed on the same dates and which are inadmissible in evidence ..... The receipts do not purport toacknowledge liability for an earlier debt but merely state that the money had been taken under promissory notes of even dates by the executant They therefore refer to the debts created by the promissory notes themselves and not to pay earlier debt.... the receipts cannotamount to an acknowledgment of any earlier debts''.

The above quoted observations cannot, in our opinion, be taken, as is contended by the learn-ed counsel for the appellant, to lay down a general proposition that a receipt with similar language can in no circumstances be taken to amount to an acknowledgment of an earlier loan. To maintain such a position would run counter to the provisions of Section 95 of the Evidence Act which says:

'When language used in a document is plain in itself, but is unmeaning in reference to existing facts, evidence may be given to show that it was used in a peculiar sense'.

It is thus obvious that there may be circumstances in a particular case in which even though the receipt employs language similar to that used in the receipt with which Sulaiman, C. J., was concerned in the case cited above, it may, on evidence appear that the language employed in it was used in a peculiai sense, since its plain language is unmeaning in reference to existing facts, and may amount to an acknowledgment of an earlier loan.

19. In this connection we may refer to the Division Bench case of Ram Chaube v. Sheo Harakh Tewari, AIR 1933 Oudh 80. At page 81 of the report it is observed :--

'We are of opinion that the receipt of 10th June, 1930, Ex. 2, is a sufficient acknowledgment of the defendant's liability to repay the loan of 3rd July 1927. It clearly recites the receipt of Rs. 531 by the defendant and it is agreed that on the date of Ex. 2 that is 10th June 1930, nothing was paid by the plaintiff to the defendant. Therefore the language of the receipt is on the face of it unmeaning in reference to existing facts. In these circumstances extrinsic evidence is permissible to show the true meaning of the language used in the receipt under the provisions of Section 95, Evidence Act, 1872'.

Though a number of this Court's decisions have been cited before us, we are of opinion that a reference to only two other Allahabad cases is necessary: Sheo Nath Prasad v. Sarjoo Nonia, : AIR1943All220 and Munshi Lal v. Hira Lal, AIR 1947 All 74 (FB).

20. The case of Sheo Nath Prasad : AIR1943All220 , was heard by a Full Bench of Five Judges. The leading judgments were delivered by Dar, J. and Mathi.tr, J., and at page 224 Column 2 of the report Dar, J., held :--

'If in relation to a pre-existing loan or liability a promissory note is given by the debtor to the creditor the promissory note can operate in one of three ways, either as an absolute payment or as a conditional payment or as given by way of collateral security, and whether it operates in one way or the other is a question of fact which falls to be determined on evidence in each case. . . . .'

21. At page 227 Column 2 the same learned Judge summed up as follows: --

'In my opinion, the law on the subject may thus be stated. When a promissory note was given in consideration of a sum of money it is a question of fact in each case whether the sum of money was given as a loan or not as a loan; in the absence of all evidence the presumption is that it was given by way of a loan; and there is a further presumption that the promissory note was given in conditional payment of the loan. If by reason of the defect of stamp the promissory note is held inadmissible in evidence, it is open to the plaintiff to prove the loan..... by giving other evidenceincluding that furnished by a contemporaneous receipt, if there be any'

22. In the light of this exposition of the law, the question whether the transaction on 1st April, 1948 was a fresh contract will have to be gone into by the Bench and our answer to the question posed will be based on the assumption that there was no fresh contract on the 1st of April, 1948.

23. In AIR 1947 All 74 (FB), Braund, J., spoke for the Court. In paragraph 22 of the judgment the learned Judge held:

'Now it is clear that a document said to constitute an acknowledgment has to be construed in the context in which it is given and that, where its language is not clear in itself, the context may be examined to see what it is to which the words refer. That is not to say that any equivocation in an acknowledgment can be cured by ascertaining what the probable intention of the acknowledger was'.

This view has not been questioned before us.

24. Only one decision of the Supreme Court need be referred to. In paragraph 5 of Shapoor Fredoom Mazda v. Durga Prosad Chamaria : [1962]1SCR140 , it is laid down :

'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 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.... Oral evidence may be given about the time when it was signed but . .. .oral evidence of its contents shall not be received'.

25. In paragraph 6 it was clarified that an acknowledgment merely renews the debt; it does not create a new right of action and that '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 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. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words.. .. In construing words used in the statements made in writing.... oral evidence has been expressly excluded but surrounding circumstances can always be considered. Stated generally the Courts lean in favour of a liberal construction. . .' This view has been reiterated by the Supreme Court in Tilak Ram v. Nathu : AIR1967SC935 .

26. On a consideration of the decisions and the arguments before us, we are of opinion that, as indicated earlier, there is no real inconsistency between, : AIR1929All980 , : AIR1930All368 and : AIR1935All129 in respect of the position that a receipt may serve, other conditions being satisfied, as an acknowledgment of the earlier debt and extend limitation for a suit based on the earlier debt.

27. We find that the facts of the case in hand are analogous to that of the Oudh case cited above After reciting the fact of execution of a pronote of even date, the receipt dated 1-4-1948, Ext. 18, says :--... .mubling 7000/- rupya jiske nisf3500 hote hain mahajan saheb mausoof se wasul paiya aur mavza pronote wasool paya lehaza raseed likh dee ki sanad rahe'. A reference to pleadings would show that the positive case of the plaintiff-respondent is that no amount was advanced by the creditor in cash on 1-4-1948 and that the said pronote was executed in lieu of an earlier loan of Rs. 7000 advanced in January 1947. As against that, the case put forth in the appellant's written-state-ment is that no advance was ever made by the plaintiff-respondent. It is thus nobody's case that any cash was advanced on 1-4-1948 as consideration of Ext. 18 and, as such, the plain language of the receipt, Ext. 18, which purports to indicate an advance of the sum named in it on the date of its execution necessarily becomes unmeaning. Hence it becomes permissible, in view of the provision contained in Section 95 o the Evidence Act, to construe the language of the receipt, Ext. 18, in the back-ground of the circumstances of the case not in controversy. It may be in controversy that no advance was made even in January 1947. But we are not concerned with that controversy because the reference which has been made to as assumes that an advance of Rs. 7000 was made in January 1947 as is claimed by the plaintiff respondent. We have to bear in mind certain assumptions made in the question posed to us, namely :--

1. That a loan of Rs. 7000 was made by the plaintiff to N. C. P. Misra in January 1947;

2. That this amount was still outstanding on 1-4-1948;

3. That receipt Ext. 18 was executed by N. C. P. Misra;

4. That there was no novation of the contract either on 1-4-1948 or 1-4-1950 which had the effect of completely discharging the previous debt.

The receipt, Ext. 18, refers to a 'pronote' probably of even date but we have assumed that there was no novation of the contract on 1-4-1948. The receipt does not state that any amount was advanced on the date it was executed. The language is equally consistent with money having been advanced on the date or being due on account of an earlier loan transaction. In the circumstances discussed above it must be taken to have been executed in lieu of an earlier debt. The question posed assumes that a loan of Rs. 7,000/- was advanced in January 1947 and that this amount was still outstanding. On 1-4-1948 the loan advanced in January 1947 could still be recovered by suit. The receipt is (we assume) a writing signed by N. C. P. Misra. The mention of the word 'pro-note' clearly implies that the money acknowledged to have Been received was to be repaid by the executant of the receipt. There is no evidence to indicate that the promissory note executed on 1-4-1948 was in absolute payment of the previous loan. Since the previous loan was still outstanding, there was a jural relationship of creditor and debtor between the parties. There can in the circumstances be no doubt that this jural relationship was being consciously admitted.

28. We, therefore, conclude that on theassumptions indicated above being established,receipt Ext. 18 amounts to a valid acknowledgment within the meaning of Section 19 of theLimitation Act, 1908. We answer the questionput to us in the affirmative.


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