1. The plaintiff has brought this second appeal against the reversing judgment dated 10-10-1950 of Sri K.K. Bose, Subordinate Judge of Berham-pur arising out of a suit for enforcement of a mortgage transaction dated 20-6-1924. The transaction (Ex. 2) was executed by one Agadhu and his two sons Kondho & Hadu. Kondho is pre-sent defendant 2 and Agadhu and Hadu are dead. Defendant 3 is Kondho's son and defendant 4 la the son of Hadu.
Defendant 1 is a purchaser in execution of a mortgage decree on the basis of a subsequent mortgage, his purchase being of the year 1947. The mortgage transaction was in favour of Chinnari Narasaya Prusty and Kureahu Prusty.
The plaintiff's allegation is to the effect that he is the adopted son of Kureshu Prusti and on the basis of a family arrangement between them, the mortgage transaction was allotted to the share of the present plaintiS. There is no dispute that the plaintiff is the adopted son of one of the mortgagees and on the basis of an arrangement the mortgage transaction was allotted to the share of the plaintiff.
The transaction is for a principal amount of Rs. 900, the recitals being to the effect that Rs. 600 out of the principal amount is to be paid in eight years in equal annual instalments, The penal section is only to the effect that if there is a default in the payment of the above instalments the entire principal money will carry compound interest. The plaintiff in bringing the present suit on 3-7-1947 has relied upon three payments for the purpose of saving limitation. The first payment of Rs. 85 is dated 7-10-1937 (Ex. 2-a), the second payment of Rs. 35 is dated. 10-3-1938 (Ex. 2-b) and the third payment of Rs. 257- is dated 15-4-1938 (Ex. 2-c).
The payments are endorsed on the back of the document itself. It is further to be stated that the plaintiff had averred in the plaint that defendants 2 to 4 had executed two sale-deeds (Exs. A and B) intending to discharge the mortgage amount by virtue of conveying the properties covered by the said two deeds, but no effective title was conveyed, and, as such, there was no discharge of the mortgage transaction. He therefore falls back upon the mortgage transaction and lays claim at Rs. 1500.
2. The main contesting defendant is defendant 1 the purchaser in execution of a mortgage decree on the basis of a subsequent mortgage, and his main point is the point of limitation.
3. It is common ground that no instalment was paid in terms of the transaction. From the recitals it is clear that the cause of action for the suit arose on the expiry of 8 years when the mortgage money became due. This position is not disputed.
4. The trial Court found in favour of the plaintiff that the endorsements (Exs. 2-a to 2-c) are genuine endorsements showing actual payments of the amount mentioned as against each of the endorsements. The lower appellate Court however has vacated this finding and dismissed the suit on the point of limitation.
5. For the purpose of proving the first payment dated 7-10-1937, the plaintiff relies upon the evidence of two witnesses, the scribe and one of the attesting witnesses. To prove the other two endorsements he relies upon his own evidence only.
The trial Court found the evidence regarding payments to be highly discrepant, but nevertheless in view of certain other circumstance, he found the endorsements to be genuine ones, the circumstance being that the present debt arising out of the mortgage transaction was mentioned in the deed of family arrangement of the year 1940 and it also mentioned the principal to be Rs. 730 only clearly indicating, according to the trial Court, that there was some payment between 1940.
To our mind, this alone is not sufficient tobring the endorsements within the language of the provisions of Section 20, Limitation Act in order to give benefit to the plaintiff for enhanced period of limitation. Even the last word of the trial Court regarding endorsements is to the effect:
'I must frankly concede that the two arguments of Mr. B. Das which I have discussed above deserve considerable attention and the arguments create some doubt in the mind regarding the genuineness of the payments Exs. 2-a to 2-c'.
The lower appellate .Court on a thorough discussion of the oral evidence and the circumstances transpiring has rightly come to the conclusion, that the endorsements are not genuine and the payments have not been proved to save the suit from limitation. In our opinion, the finding of the lower appellate Court is not assailable in second appeal.
6. There is however another point which deserves more attention. The plaintiff may very well rely upon the provisions of Section 19, Limitation Act on the basis of the recitals in Exs. A and B that is, sale-deeds dated 29-4-1942 executed by defendants 2 to 4 in favour of the present plaintiff reciting therein that the dues outstanding on the basis of the mortgage bond dated 20-6-1924 are outstanding and that the two executants of the sale-deeds execute the deeds of conveyance for the purpose of discharging the mortgage debt.
The genuineness of these transactions is not disputed in the case. It is not however disputed that In fact these two sale-deeds did not discharge the mortgage transaction and did not in fact convey title in favour of the present plain, tiff. This being the position, to our mind, it is clear that the case directly comes within the language of the provisions of Section 19, Limitation Act that the debtors (defendants 2 to 4) had acknowledged liability of the previous mortgage transaction in suit within the period of limitation, and the acknowledgment appears in writing and signed by the debtors themselves.
7. A further point was raised to negative this position intended to be taken advantage of by the plaintiff to the effect that when by virtue of the selfsame document where the acknowledgment of liability is made the debt also is discharged or at least intended to be discharged It cannot be taken to be a case of acknowledgment of liability within the meaning of Section 19, Limitation Act.
A reference to Explanation I makes it clear that even if the acknowledgment of liability is accompanied by a refusal to pay or even after a set-off is claimed at the time of acknowledgment of liability still it is to be deemed to be a case of acknowledgment of liability within the meaning of Section 19.
8. Reliance is placed on behalf of the respondents on the case of -- 'Badri Das v. Manohar Das', 20 Ind Cas 10(2) (All) (A). To our mind, the case before their Lordships of the Allahabad High Court is markedly distinguishable from the present case inasmuch as In that case in reply to the demand made by the creditor the debtor wrote a letter to the effect,
'we owe nothing to the shop styled 'Moti Ram Bhojraj', because we have paid the amount of a hundi for Rs. 1.200 on account of Ghanashyam Das, proprietor of the shop aforesaid. Nothing is now due by us'.
It is a clear case of repudiation of the existing liability of the debtor. In the case before their Lordships of the Allahabad High Court there was manifestly no acknowledgment of anysubsisting liability. We are aware of series of decisions where their Lordships have held that the acknowledgment is not to be one within the meaning of Section 19 as contemporaneously there is a statement that the liability was long discharged.
Their Lordships in those cases have drawn a distinction between acknowledgment of past liability and acknowledgment of subsisting liability. It is only the acknowledgment of the latter class, that is of the subsisting liability, which is brought within the meaning of Section 19, Limitation Act. A subsequent decision of their Lordships of the Allahabad High Court reported in -- 'Salig Ram v. Radhay Shiam', AIR 1931 All 560 (B) makes the distinction clear and distinguishes the earlier case reported in 20 Ind Cas 10 (All) (A) on the ground as we have stated above.
9. A decision exactly to the point is that of Vavadachariar J. (as he then was) in the case of -- 'Ramaswami v. Velayuthan', AIR 1938 Mad 496 (C). It was laid down in that case
'Where a mortgagor executing a sale deed in favour of the mortgagee, states therein that a certain sum is due from him to the mortgagee on settlement of accounts and that he is attempting to discharge that debt by sale of certain property under the sale deed, and that for the balance he is making provision for its discharge by execution of other document, such a statement amounts to an admission of subsisting liability on the date of the sale deed as required by law so as to constitute an acknowledgment'.
In that case, as we find, effect was not given, to the sale deed executed exactly as is the fact before us. Following with respect the principle laid down in the case of AIR 1938 Mad 496 (C) we are definitely of the view that the acknowledgment of liability of the debt contained in Exs. A and B can be taken advantage of by the plaintiff for the purpose of a fresh start of the period of limitation under Section 19, Limitation Act.
10. A decision of Satyanarayana Rao J. in the case of -- 'Karamadai Natcken v. R. Raju Pillar, AIR 1949 Mad 401 (D) is relied upon by the learned advocate appearing on behalf of the respondents. But the case is clearly distinguishable as it appears from this passage in the Judgment. While discussing the decision of Varadachariar J. his Lordship observed:
'The position in the present case is entirely different. The arrangement evidenced by Ex. P. 2 did not become ineffective between the parties to the transaction. The plaintiff who is ft stranger to the arrangement wants to repudiate the arrangement as not binding on him, as he became the true owner of the mortgage debt and any discharge given by Ayyaswami (the daughter of the mortgagee) would not bind him.'
Without expressing any opinion as to whether we agree or not with the view taken by Satyanarayana Rao J., it will be sufficient for our purpose to observe that the facts in that case are not similar to the present case which is fully covered by the decision of Varadachariar J. reported in AIR 1938 Mad 496 (C).
11. In conclusion, therefore, the appeal is allowed and the plaintiff's suit is decreed; but in the circumstances of the case that this point was not taken before the Courts below, each party is to bear and pay his own costs throughout.
12. I agree.