whether there is any well-recognized principle whereunder
the period of limitation can be regarded as being suspended
because a party is prevented under certain circumstances
from taking action in pursuance of his rights. The
Limitation Act is a consolidating and amending statute
relating to the limitation of suits, appeals and certain
types of applications to courts and must, therefore, be
regarded as an exhaustive Code. It is a piece of adjective
or procedural law and not of substantive law. Rules of
procedure, whatever they may be, are to be applied only to
matters 'to which they are made applicable by the
legislature expressly or by necessary implication. They
cannot be extended by analogy or reference to proceedings to
which they do riot expressly apply or could be said to apply
by necessary implication. It would, therefore, not be
correct to apply any of the provisions of the Limitation Act
to matters which do not strictly fall within the purview of
those provisions. Thus, for instance, period of limitation
for various kinds of suits, appeals and applications are
prescribed in the First Schedule. A proceeding which does
not fall under any of the articles in that schedule could
not be said to be barred by time on the analogy of a matter
which is governed by a particular article, For the same
reasons the provisions of ss. 3 to 28 of Limitation Act
cannot be applied to situations which fall outside their
purview. These provisions do not adumbrate any general
principles of substantive law nor do they confer any
substantive rig, its on litigants and, therefore, cannot be
permitted to have greater application than what is explicit
or implicit in them. Suspension of limitation in
circumstances of the kind obtaining in these appeals is
neither explicit nor implicit in s. 15 upon which reliance
is placed on behalf of the appellants.
PETITIONER:
A. S. KRISHNAPPA CHETTIAR & ORS.
Vs.
RESPONDENT:
NACHIAPPA CHETTIAR & ORS.
DATE OF JUDGMENT:
07/03/1963
CITATION:
1964 AIR 227SC
ACT:
Limitation-Suspension of limitation in cases not covered by
any specific provision of the Act, general principles of--
Letter written by defendant to the trustees-If
acknowledgment of liability--Indian Limitation Act, 1908 (9
of 1908), 88. 15 (1), 19.
HEADNOTE:
The plaintiff, Ramanathan Chettiar, obtained a decree in O.
S. No. 45 of 1943 for the recovery of an amount due on
promissory note against one Venkatachalam Chettiar and
assigned the decree in favour of the appellant in C. A. 105
of 1961. The execution application filed by him proved
infructuous because the first defendant was adjudicated an
insolvent on February 27, 1945. On September 9, 1946 a
composition of the debts due from the insolvent and his son,
the second defendant, was arrived at. To the deed of
composition the second defendant was also a party though he
was not adjudicated an insolvent. Under that deed the
creditors, including the four appellants in this case,
agreed to take 40% of the dues. Under the composition
arrangement, the entire property of the defendants, both in
India and in Burma was to vest in four trustees, one of whom
was the insolvent that is, the first defendant to the suit.
Two of the trustees were the present appellant in C A. No.
104 of 1961 and the fourth trustee was an outsider. The
deed provided for the payment of the reduced amount by the
trustees to different creditors from the income of the
properties or by sale or mortgage of those properties within
tour years from April 14, 1947. Tile deed further provided
for the extension of this time limit "according to
exigencies and necessity it the discretion of the first two
trustees" i. e., the first defendant and the appellant
Chidambaram Chettiar. The composition contemplated the
realisation of the dues of the creditors front the income or
sale or mortgage of the Barma property, in the first
instance. The composition scheme was accepted by the
insolvency court and the adjudication of the first defendant
as insolvent was annulled by the court on December 19, 1946.
Out of the Burma assets very little was realised within the
period of four years prescribed in the composition deed and
the trustees did not extend the time.
242
The appellants, therefore, sought execution of their decrees
against the Indian assets. The last execution application
in O. S. No. 46 of 1943 was dismissed on September 19, 1946,
and no petition was filed thereafter till 'June 13, 1952.
Similarly in the other three appeals execution applications
were filed more than three years after the dismissal of the
previous applications. In each of the execution
applications, relief was claimed only against the second
defendant. The Subordinate Judge, before whom the execution
applications were filed, held that the adjustment precluded
each of the appellants from executing his decree for a
period of four years from April 14, 1947 and, therefore, the
execution applications were within time. The High Court
disagreed with the Subordinate Judge and holding that the
execution petitions were barred by time allowed the appeals.
The main contention of the appellants in this Court was that
the principle underlying s. 15 (1) of the Limitation Act
applied to the present case and at any rate the letter
written by the second defendant to the trustees operated as
an acknowledgment of liability under s. 19 of the Limitation
Act.
Held, that s. 15 (1) of the Limitation Act is restricted in
its application to a case where the execution of a decree
has been stayed by an injunction or an order. The
Limitation Act is a piece of adjective or procedural law and
not of substantive law. Rules of Procedure cannot be
extended by analogy or reference to proceedings to which
they do not expressly apply or could be said to apply by
necessary implication. Suspension of Limitation in
circumstances of the kind obtaining in these appeals is
neither explicit nor implicit in s. 15 upon which
reliance is placed by the appellants.
Govind Naik Gurunathnaik v. Basawannawa Parutappa, 1. L.R.
1941 Bom. 435, Pulin Chandra Sen v. Amin Mia Muzaffar Ahmad,
A. I.R.1933 Cal. 508, Lakhan Chunder Sen v. Madhusudan Sen,
(1907) 1. L. R. 35 Cal. 209, Nrityamoni Dassi v. Lakhan
Chandra Sen, ( 1916) 1. L. R. 43 Cal. 660, Badruddin Khan v.
Mahyar Khan, I. L. R. 1939 All. 103 and Managing Committee
Sunder Singh Malha Singh Rajput High School, Indore v.
Sunder Sigh Malha Singh Sanatan Dharma Rajput High School
Trust, I. L. R. 1945 Lah. 8, distinguished.
Held, further, that in the present appeals two different
sets of persons, the defendants and the Trustees were liable
and their respective liablities were distinct. To refer to
a liablility resting on some one else was not to acknowledge
one's own liability within the meaning of the word in s. 19.
The defendant No. 2 had not even indirectly referred to the
243
decree much less to the liability arising under any of them.
In the circumstances it must be held that the letter dated
April 19, 1949, did not extend the period of limitation.
Khan Bahadur Shapoor Freedom Mazda v. Durga Prosad Ckamaria
[1962] 1 S. C. R. 140, held inapplicable
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 104 to 107
of 1961.
Appeals from the judgment and order dated July 5, 1956, of
the Madras High Court in Appeal against order No. 480, 454,
478 and 479 of 1954 respectively.
A.V. Viswanatha Sastri and R. Gopalakrishnan, for the
appellant.
K.N. Rajagopal Sastri and M. S. Narasimhan, for respondent
No. 1.
1963. March 7. The judgment of the Court was delivered by
MUDHOLKAR J.--This appeal and civil appeals Nos. 104, 106
and 107 of 1961 arise out of execution proceedings in four
different suits but as they involve a common question they
were heard together by the High Court and by us. That ques-
tion is whether the execution applications out of which
these appeals arise are within time.
We propose to treat C. A. No. 105 of 1961 as a typical case.
The relevant facts thereof are briefly these :
In O. S. 46 of 1943 one Ramanathan Chettiar instituted a
suit against one Venkatachalam Chettiar in the court of the
Subordinate Judge of Devakottai, for the recovery of a sum
of Rs. 10,285/- due on promisory note dated November 20,
1942 with interest thereon. He eventually obtained a decree
for the full claim. In so far as the second defendant
244
is concerned, he was made liable for the decrctal amount to
the extent of this interest in the joint family property of
himself and his father. The plaintiff assigned the decree
in favour of Chidambaram Chettiar, who is the appellant in
C. A. 105 of 1961. He filed an execution application but
the execution proceedings commenced by him proved
infructuous because the first defendant was adjudicated an
insolvent on February 27, 1945. On September 9, 1946 a
composition of the debts due from the insolvent and his son,
the second defendant. was arrived at. To the deed of
composition the second defendant was also a party though he
was not adjudicated an insolvent. Under that deed the
creditors, including the four appellants before us, agreed
to take 40% of the dues, except one creditor who was to be
paid a little more. The defendants, it may be mentioned,
bad extensive money-lending business in Burma and the bulk
of their property was situate in that country. Under the
composition arrangement the entire property of the
defendants, both in India and in Burma was to vest in four
trustees, one of whom was the insolvent, that is, the first
defendant to the suit. Two of the trustees were the present
appellants, Chidambaram Chettiar and Krishnappa Chettiar,
appellant in C. A. 104 of 1961. The fourth trustee was an
outsider. The total indebtedness of the defendants, as
ascertained on the date on which the composition was
effected, was Rs. 2,16,077/4/8/- but it was reduced under
the arrangement to Rs. 86,430-13-3. There are four
schedules to the composition deed. Schedule A sets out the
names of the creditors and the amounts due to them, Schedule
B sets out the properties of the defendants and Schedules C
and D set out the properties at Leiwo and Meola respectively
in Burma. The deed provides for the payment of the reduced
amount by the trustees to different creditors from the
income of the properties or by sale, or mortgage of those
properties within four
245
years from April 14, 1947. The deed further provides for
the extension of this time limit "according to exigencies
and necessity at the discretion of the first two trustees"
i.e., the first defendant and the appellant Chidambaram
Chettiar. The arrangement also provides for payment of
interest at 5 annas per mensem in respect of the amounts due
on the decrees and 4 annas per mensem in respect of other
outstandings as from April 14, 1947. The composition
contemplated the realisation of the dues of the creditors
from the income or sale or mortgage of the Burma property,
in the first instance. Clause to which deals with this
matter runs as follow
"In case the properties of Burma firm are not
sufficient to pay the amounts set apart as
payable to the creditors at 40 per cent the
individuals Nos. 1 and 2 Trustees shall sell
the properties in British India and set out in
the B schedule herein and from out of the sale
proceeds distribute the amount to the
creditors. Similarly, after the 40 per cent
amounts have been paid and if there should be
any amount of deficiency for the payment of
the 60 per cent amount payable to Krishnappa
Chettiar as described in para 6 supra, even
for that also, the individual Nos. 1 and 2
Trustees shall sell the aforesaid British
India properties and pay the aforesaid
Krishnappa Chettiar the entire balance
amount."
The composition deed contains various other terms out of
which it would be relevant to set out only the following two
:
"Clause 8 : Until 40 per cent of the amount
is paid to the creditors as aforesaid, the
said Trustees, shall at the time of
disbursement of the dividend, pay from the 1st
Chitirai of the year Sarvajith for the annual
expenses of the
246
family, a sum of Rs. 600 per annum to indivi-
dual No. 4 Trustees Venkatachalam Chettiar and
a sum of Rs. 300 per annum to his son
Nachiappa Chettiar for the aforesaid expenses.
Clause 16 : After the annulment of the order
of adjudication herein, the aforesaid Venkata-
chalam Chettiar shall, in respect of transfer
etc., of management of the properties
mentioned in C and D schedules, execute a
general power of attorney in the favour of
individual Nos. 1 and 2 trustees and have the
same registered."
The composition scheme was accepted by the insolvency Court
and the adjudication of the first defendant as insolvent was
annulled by the court on December 19, 1946.
Due to political changes in Burma only very little was
realised out of the Burma assets within the period of four
years prescribed in the composition deed. The trustees who
were empowered to extend the time did not extend it. The
appellants, therefore, turned to the Indian assets and
sought execution of their decrees against them. Two
contentions were raised on behalf of the defendants. One
was that the Indian assets could not be sold until the
assets in Burma were completely exhausted and the other was
that the execution applications were barred by time.
In O. S. No. 46 of 1943 the last execution application was
dismissed on September 19, 1946 (E. P. No. 109 of 1946). No
execution petition was filed thereafter till the present
petition (E. P. No. 117 of 1952). This was filed on June
13, 1952. Similarly in the remaining three appeals also
execu. tion applications with which we are concerned were
filed more than three years after the dismissal of the
previous execution applications. It may be mentioned that
originally the appellant as well as appellants in the other
appeals had sought the execution of their
247
respective decrees for the fall amount. But they amended
their petitions later on pursuant to the orders of the court
and restricted their claims to 40 per cent of the amounts
due under their decrees. The appellant Chidambaram filed an
affidavit along with the execution petition and set out the
following grounds in support of his contention that the
execution application was within time.
"The trustees were able to realise some of the
assets of the defendants in Burma and to pay a
dividend of 10 per cent to the creditors. I
was paid a sum of Rs. 562-4-0 by way of
dividend for this decree on August 10, 1949.
As the rest of the Burma assets of the
defendant could not be realised by the
trustees on account of the civil war in Burma
and the land legislations passed there and as
there was no prospect of their being realised
in the near future myself and A. S. K.
Krishnappa Chettiar aforesaid as managing
trustees under the said composition offered to
extend the period of management by one year
provided the defendants would consent to their
Indian assets being realised and distributed
among the creditors. But the defendants were
not willing thereto and hence we thought fit
to extend the period of our management. We
have filed a petition in I. A. No. 87 of 1951
in the suit I. P. No. 1 of 1945 to have the
said composition scheme set aside and the 1st
defendant re-adjudged as insolvent. The said
petition is pending.
7. I am advised that as the said
composition arrangement has failed on account
of the assets of the defendants not being
realised and the debts discharged within the
four year period mentioned therein I am in law
and in equity entitled to recover the entire
amount due to me under this decree by
executing it.
248
8. The said composition provides for a
maintenance allowance of Rs. 600 and Rs. 30
annually being given to the 1st and 2nd
defendant respectively at the time of
distribution of the dividends. In respect
thereof a notice was issued by the 2nd
defendant on April 19, 1949 to myself and A.
S. K. Krishnappa Chettiar aforesaid wherein
there is an acknowledgment of liability in
respect of the several debts mentioned in the
said composition. Further the trustees have,
acting under the authority given to them by
the defendants under the said composition,
paid me Rs. 562-4-0 on August 10, 1949 by way
of dividend for this decree and have duly
entered the same in the accounts maintained by
them. Moreover I could not execute the decree
during the four years from April 14, 1947 or
any extended period during which the trustees
had to manage, realise and distribute the
assets of the defendants. There is therefore
no question of limitation.".
Similar grounds were set out in the affidavits filed by the
other appellants also.
It may be mentioned that in each of the excution
applications relief was claimed only against the second
defendant because in insolvency petition No. 87 of 1951
filed by some of the creditors the first defendant, was
readjudicated an insolvent by the court on August 3, 1954.
The execution application was, as already stated, opposed by
the second defendant firstly on the ground that the composi-
tion arrived at between him and his father on the one hand
and the creditors on the other was still in force, that the
arrangement was irrevocable and operated as a complete
discharge of the liability of the defendants for all time.
The second ground was that the execution application was
barred by time.
249
The precise pleas of the second defendant regarding
limitation were as follows :
(a) that the adjudication of his father as
an insolvent and the pendency of insolvency
proceedings against him would not affect
limitation in so far as he was concerned;
(b) that the receipt by the appellant and
other creditors of certain amounts as
dividends in August, 1949 would not extend the
period of limitation for execution
proceedings;
(c) that the acknowledgment relied upon is
"'wholly wrong, misconceived and untenable."
According to him there was no acknowledgement of liability
of any kind in the notice referred to in the affidavit much
less the liability of the second defendant to discharge the
decree which had in fact become extinguished and effaced by
reason of the composition arrived at on September 9, 1946.
In the course of the arguments before the executing court it
was urged on behalf of the appellants in those appeals that
the four years within which the trustees were required to
realise the Burma properties and pay off the debts of the
creditors must be regarded as a period during which the
execution of the decrees was stayed and that consequently on
the principles underlying s. 15 of the Indian Limitation
Act, 1908, that period should be deducted from computing the
period of limitation for preferring execution applications.
The Subordinate judge, before whom the execution applica-
tions were filed, upheld this contention and held that the
execution applications were within time. He also held that
the execution applications arrived at between the parties
operated as an adjustment
250
of the decree on the date on which that composition was
effected or from the date on which the adjudication was
arrived at and that though the composition could not be
certified to the executing court under 0. XXI, r. 2, C. P.
C. within the time permitted by law, it could be certified
even now at the instance of the decree-holder because it was
open to the decree holder to certify an adjustment at any
time he liked. According to the learned Subordinate judge,
the adjustment precluded each of the appellants from ex-
cuting his decree for a period of four years from April 14,
1947 and, therefore, the execution applications were within
time. The High Court, however, disagreed with the
Subordinate judge on both the grounds and holding that the
execution petitions were barred by time allowed the appeals.
It may be mentioned that neither of the two courts below has
considered the contention of the appellants in these appeals
that the letter dated April 19, 1949 sent by the second
defendant to two of the trustees operated as an
acknowledgment of their liability or that dividends paid to
the appellants by the trustees in August, 1949 operated to
extend the time of limitation.
Mr. Viswanatha Sastri, who appears for the appellants in
these appeals, has raised only two contentions. The first
is that the principle underlying s. 15 (1) of the Limitation
Act is applicable to a case of this kind and that,
therefore, the execution applications are within time. The
second is that at any rate the letter dated April 19, 1949,
written by the second defendant to the trustees operates as
an acknowledgment of liability under s. 19 of the Limitation
Act and, therefore, saves the limitation in respect of all
the execution applications except the one out of which C. A.
No. 104 of 1961 arises. According to Mr. Sastri the
composition of a decretal debt does not amount to an
adjustment or satisfaction of a decree until the acts
required to be
251
done thereunder have been performed. Here the composition
scheme required payment of 40 per cent of the decretal debts
by the trustees to the craditors. According to him, until
that condition was fulfilled the original decree cannot be
said to have been satisfied. Since the decrees herein
involved could not be regarded as having been satisfied they
are still alive. Then, according to Mr. Sastri, where a
composition scheme prescribes the period during which a
condition has to be performed, till the expiry of theperiod
or performance of the condition the operationof the
decrees must be deemed to have been stayed. For, during
this period it would be incompetent to the decree-holders to
execute their decrees. Such period could therefore be
deducted by applying the principles underlying s. 15 (1) of
the Limitation Act from computing the period of limitation
for filing a fresh execution application. He concedes that
here the composition scheme not having been certified to the
execution court, the defendants would not have been able to
resist an execution application if made within the period of
four years specified in the deed of composition. But the
composition being binding on the appellants, they would have
laid themselves open to suits for damages at the instance of
the defendants if they had proceeded to execute their
decrees within this period. Section 15 (1) of the
Limitation Act runs thus :
"15 (1) : In computing the period of limi-
tation prescribed for any suit or application
for the execution of a decree, the institution
or execution of which has been stayed by
injunction or order, the time of the
continuance of the injunction or order, the
day on which it was issued or made, and the
day on which it was withdrawn, shall be
excluded."
It is clear from its terms that it is restricted in its
application to a case where the execution of a decree
252
has been stayed by an injunction or an order. By no stretch
of imagination can it be said that the acceptance by the
insolvency court of the composition operated as a stay of
execution of the decrees for the period of four years
referred to in the deed or as an injunction. Further, the
second defendant was not a party to the insolvency
proceedings and could, therefore, not have been entitled to
the benefit of the order of the court accepting the scheme
of composition.
In support of his contention that the principles underlying
s. 15 (1) are applicable to a case like the present one, Mr.
Sastri has strongly relied on the decision in Govindnaik
Gurunathnaik v. Basauannawa Parutappa (1). There, Beaumont
C. J., has observed at P. 437 :
"Section 15 of the Act recognizes the princi-
ple that in computing the period of limitation
prescribed for an application for the
execution of a decree, any period during which
the execution of the decree has been stayed
must be excluded; and it would certainly seem
right to apply a similar principle to
applications in a suit which has been stayed;
in terms., however, the section does not
apply. The only authority on the point, to
which we have been referred, and which was
referred to in the lower Courts, is Pulin
Chandra Sen v. Amin Mia Muzffar Ahmad (2)."
Saying that this decision had stood for some years and had
not been dissented from the learned Chief justice observed
"I would rather base the appellant'scase
on the ground that the right to appear for
a final decree was suspended duringthe
period in which the suit was stayed. Sucha
principle was applied by the CalcuttaHigh
Court
(1) I.L.R, 1941 Bom. 435.
(2) A.I.R. 1933 Cal. 508.
253
in Lakhan Chunder Sen v. Manhusudan Sen (1)
affirmed by the Privy Council in Nrityamoni
Dassi v. Lakhan Chandra Sen (2)."
It would thus appear that the learned Chief Justice based
his decision really on s. 14 of the Limitation Act. In both
the cases referred to by the learned Chief Justice the
provisions of s. 14 of the Limitation Act were applied.
In Pulin Chandra Sen's case(3), the facts were these: The
next friend of it minor instituted a suit upon a mortgage
but died after the preliminary decree was passed. No new
next friend was, however, appointed in his place. The minor
made an application for passing a final decree within 3
years after attaining majority, but three years after the
period of grace fixed by the preliminary decree. The High
Court, while holding that though the erstwhile minor was not
entitled to claim the benefit of s. 6 of the Limitation Act,
held that the execution application must be regarded as
within time since it had been made within three years from
the date when the right to apply accrued to him on his
attaining majority. No doubt, this is a case where in
effect the court has applied the principles underlying s. 6
though it was clearly of opinion that s. 6 in terms did not
apply. There is no discussion of the point at all and,
therefore, we do not think that this is a decision which
needs to be considered.
The next two decisions relied on are Badruddin Khan v.
Mahvar Khan (4) and Managing Committee Sundar Singh Malha
Singh Rajput High School, Indora v. Sundar Singh Malha Singh
Sanatan Dharma Rajput High School Trust (5). In both these
cases the court applied what according to it were the
general principles underlying s. 15 of the Limitation Act,
though the facts of these cases do not strictly fail within
the purview of that section. The question
(1)(1907) 1 L.R. 35 Cal. 209.
(3)A.1 R. 1933 Cal, 508.
(2) (1916) I.L R. 43 Cal. 660,
(4) I.L.R. 1939 All 103
(5) I. L. R. 1943 Lah. 8.
254
is whether there is any well-recognized principle whereunder
the period of limitation can be regarded as being suspended
because a party is prevented under certain circumstances
from taking action in pursuance of his rights. The
Limitation Act is a consolidating and amending statute
relating to the limitation of suits, appeals and certain
types of applications to courts and must, therefore, be
regarded as an exhaustive Code. It is a piece of adjective
or procedural law and not of substantive law. Rules of
procedure, whatever they may be, are to be applied only to
matters 'to which they are made applicable by the
legislature expressly or by necessary implication. They
cannot be extended by analogy or reference to proceedings to
which they do riot expressly apply or could be said to apply
by necessary implication. It would, therefore, not be
correct to apply any of the provisions of the Limitation Act
to matters which do not strictly fall within the purview of
those provisions. Thus, for instance, period of limitation
for various kinds of suits, appeals and applications are
prescribed in the First Schedule. A proceeding which does
not fall under any of the articles in that schedule could
not be said to be barred by time on the analogy of a matter
which is governed by a particular article, For the same
reasons the provisions of ss. 3 to 28 of Limitation Act
cannot be applied to situations which fall outside their
purview. These provisions do not adumbrate any general
principles of substantive law nor do they confer any
substantive rig, its on litigants and, therefore, cannot be
permitted to have greater application than what is explicit
or implicit in them. Suspension of limitation in
circumstances of the kind obtaining in these appeals is
neither explicit nor implicit in s. 15 upon which reliance
is placed on behalf of the appellants. We are, therefore,
unable to accept the first argument of Mr. Sastri.
Coming to the second argument of Mr. Sastri it would be
useful to reproduce the relevant portion
255
of the letter dated April 1.9, 1949, on which reliance is
placed :
"The properties of our client's family and his
father, Venkatachalam Chettiar's share of
properties have vested in you in the capacity
of Trustees as per the composition scheme of
arrangement effected on September 9, 1946 and
you are managing the same, and you have to pay
Rs. 300 per annum to our client from 1st
Chitrai of Sarvajit year (April 14, 1947) for
his family expenses as provided in the scheme
of composition and you have paid Rs. 300 and
for the year Sarvajit and have obtained a
receipt therefor from my client. You have not
paid the sum of Rs. 300 due for the year
Sarwadhari to our client though he demanded
you many times. As it is learnt that
individual No. 2 out of you, are raising non-
maintainable objections and the sum of Rs. 300
due for the year Virodhi, still remains to be
paid, I have been given instructions to demand
the total amount of Rs. 600 payable for the
aforesaid years. So you should pay the amount
to my client and obtain a receipt therefore
within one week after the receipt of this
notice. Further you have till now collected
Rs. 17,500 as per the scheme of arrangement
and though you have received the amount long
time ago, you have not paid to the creditors
their dividend amounts, you are bound by law
and equity to pay interest to the aforesaid
amounts You are hereby informed that as you
have not paid to the creditors the dividend
amounts my client is put to a heavy loss and
that you are
bound to bear all the losses that may be
caused thereby and make good the losses ; you
should immediately pay off the creditors the
dividends and in default my client will have
to launch
256
proceedings against you and seek reliefs
through Court."
This letter was written by the, vakil of the second
defendant to the Trustees demanding payment of the
maintenance allowance due to the second defendant. The
second object of this letter was to require the trustees to
pay out of the funds in their hands dividends due to the
various creditors under the composition scheme. Mr. Sastri
contends that this letter contains a definite admission of
the jural relationship between the defendant on the one hand
and the creditors on the other i. e., the relationship of
creditor and debtor and, therefore, this is an admission of
liability under the decrees. Relying upon the decision of
this Court in Khan Bahadur Shapoor Freedom Mazda v. Durga
Prosad Chamria (1), he says that the essential requirement
for sustaining a plea of acknowledgment under s. 19 of the
Limitation Act is that the statement on which it is sought
to be founded must relate to a subsisting liability,
indicate the existence of jural relationship and must be
intended, either expressly or implied, to admit that jural
relationship. Where such jural relationship is admitted
expressly or impliedly, he contends, that the mere fact that
the precise nature of the liability is not mentioned would
not prevent the acknowledgment from falling within s. 19.
That was a case in which the mortgagor had written to his
creditor a letter to the following effect
"My dear Durgaprosad.
Chandni Bazar is again advertised for sale on
Friday the 11th inst. I am afraid it will go
very cheap. I had a private offer of Rs.
2,75,000 a few days ago but as soon as they
heard it was advertised by the Registrar they
withdrew. As you are interested why do you
not take up the whole. There is only
(1) (1962] 1 S.C.R. 140.
257
about 70,000 due to the mortgagee-a payment of
10,000 will stop the sale.
Yours sincerely,
Sd/- J. C. Galstaun."
The q qestion to be considered was whether this amounted to
an acknowledgment of the mortgagee's right. This Court held
that it did amount to an acknowledgment and observed 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 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 a
subsisting liability as at the date of the
statement. In construing words used in the
statements made in
258
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 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 s. 19, and there is really no
substantial difference between the parties as
to the true legal position in this matter.'
In our opinion, this case is not of assistance co the
appellants. In the appeals before us though there was a
personal liability on the defendants under the various
decrees, their liability which was created by the
composition deed was only on properties in which they had,
consequent on the creation of a trust under the composition
deed, only a beneficial interest. This new liability had to
be discharged by the trustees in whom the legal title to the
property vested Thus there were two different sets of
persons who were liable, the defendants and the Trustees and
their respective liabilities were distinct. What the
defendant No. 2 has referred to is the libility of the
Trustees arising under the terms of the deed of composition
and could be enforced only against them. To refer to a
liability resting on someone else is not to acknowledge
one's own liability within the meaning of the word in s. 19.
The defendant No. 2 has not even indirectly referred to the
decree much less to the liability arising under any of them.
In the circumstances we must hold that this letter does not
extend the period of limitation. For these reasons
259
we uphold the decision of the High Court and dismiss each of
these appeals with costs. There will, however, be only one
hearing fee.
Appeals dismissed.
259
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