Whether acknowledgement of liability by mortgagor after assignment of his interest whether valid?

The decree passed by the learned Sub Judge in the suit is challenged in the appeal memorandum on various grounds, both under facts and law, and also as against the evidence tendered in the case. However, at the time of hearing, learned senior counsel for the appellants confined his challenges to the decree on a solitary ground that the suit was barred by limitation. Reply notices sent by two among the legal heirs of Joseph (2nd and 4th defendants) admitting the liability of their father after they had assigned the right over the plaint property in favour of the 6th defendant would not constitute acknowledgment of liability even assuming that a mortgage had been created by the father over the plaint property in favour of the plaintiff is the submission of the learned senior counsel. An acknowledgment made by a mortgagor after he had parted with the mortgaged property to another person will not be valid and binding on the property transferred. Any admission of liability after such transfer of the mortgaged property by him do not bind the transferee/purchaser or extend the period of limitation to sue on the mortgage, is the submission of the counsel. The decree passed by the court below holding that the reply notices sent by defendants 2 and 4 as acknowledgments of liability extended the period of limitation is assailed by counsel stating that reply notices had been sent after they had assigned the rights over the mortgaged property, it cannot constitute valid acknowledgment of liability keeping alive the mortgage. There were conflicting decisions by different High Courts as regards the right of creditor to proceed against the property by virtue of acknowledgment made by the debtor after he had parted with his interest in the property after the period of limitation from the date of the original transaction. Previously, the High Court of the Travancore - Cochin had taken a consistent view that an acknowledgment of the debtor even after the transfer of the property would bind that property and also the purchaser. A conflicting and different view that he could not bind the property and the purchaser and the admission of liability by the debtor after transfer of his interest in the property would not constitute an acknowledgment to bind the property was the view taken by some other High Courts. In Pavayi v. Palanivelu Goundou (MANU/TN/0033/1940 : AIR 1940 Mad. 470 (F.B.)), a Full Bench of the Madras High Court, after referring to several conflicting decisions on the subject by various High Courts held that the mortgagor who had lost all interest in the mortgaged property, could not, by an acknowledgment within the meaning of S. 19 or by the payment of interest or principal, within the meaning of S. 20, bind the person on whom his interest had devolved (sections 19 and 20 under the Limitation Act, 1908 corresponding to the present Sections 18 and 19 respectively of the Limitation Act, 1963). Subsequently, the same principle has been laid down by the Privy Council in Bank of Upper India Ltd. v. R.H. Skinner MANU/PR/0017/1942 : (AIR 1942 PC 67). In the above decision, after having a survey and analysis of the conflicting decisions and questions involved, it was held that admission of liability by the mortgagor after he had parted with interest of the purchaser do not bind the purchaser and it would not constitute an acknowledgment under the Limitation Act keeping alive the liability on the mortgaged property. The Travancore - Cochin High Court, following the decision of the Privy Council, in Kunchi Pillai v. Sunny Rebella MANU/KE/0098/1952 : (AIR 1953 Travancore -Cochin 196 (F.B.)), referred to above, has held that an acknowledgment of liability by the mortgagor made after the assignment of the equity of redemption will not be a valid acknowledgment so as to bind the assignee. An acknowledgment by a mortgagor after parting with the mortgaged property cannot be recognised as a valid acknowledgment was the view taken by the High Court of Mysore following the principle laid down in the Privy Council decision, referred to above, in Raghoba Santanna Naik v. Shaba Nalo Naik & Anr. (AIR 1960 Mysore 187). Same view has been taken by the Full Bench of the Madras High Court in Nallathambi Nadar Chellakannu Nadar v. Ammal Nadachi Chellathankom Nadachi & Ors. (MANU/TN/0199/1963 : AIR 1964 Mad. 169 (F.B.)), referred to above, stating that an acknowledgment of liability must involve an admission of a subsisting jural relationship between the parties and a consciousness and an intention of continuing such a relationship until it is lawfully terminated. So, in the present case, where the 2nd and 4th defendants whose reply notices are relied on as acknowledgments had already parted their interest in the plaint property, with other legal heirs of Joseph under Ext. B3 sale deed in favour of 6th defendant much earlier to the suit, reply notices sent by them cannot constitute valid acknowledgment keeping alive the mortgage liability over the plaint property. The learned Sub Judge has gone wrong in holding that the suit is not barred by limitation treating the reply notices of defendants 2 and 4 as constituting acknowledgment extending the period of limitation. Suit was clearly barred by limitation.

IN THE HIGH COURT OF KERALA

A.S. No. 513 of 1994

Decided On: 17.01.2014

Appellants: Francis
Vs.
Respondent: Antony

Hon'ble Judges/Coram:S.S. Satheesachandran, J.

1. The short question arising for consideration in the appeal is whether an acknowledgment of liability by the mortgagor after assignment of his right and ceasing to have interest in the mortgaged property will constitute an acknowledgment under S. 18 of the Limitation Act extending the period of limitation. Suit was for money by sale of the mortgaged property. Suit was decreed by the Additional Sub Judge, Kochi and the appeal is by defendants 3 and 6 in the suit.

2. The 1st respondent in the appeal was the plaintiff and he had passed away pending the appeal and his legal representatives have been impleaded as additional respondents 6 to 15, 2nd respondent/1st defendant in the suit had also passed away pending the appeal and 2nd appellant was recorded as her legal representative.

3. The case of the plaintiff was that father of defendants 1 to 5, namely, P.R. Joseph had obtained a loan of ` 27,000/- from him executing Ext. A1 promissory note on 10.12.1979. Towards security for the loan with intention to create a mortgage of the suit property (31/2 cents), he deposited his title deed over that property with the plaintiff. P.R. Joseph died on 2.3.1980 and defendants 1 to 5 are his children. Plaintiff issued advocate notice demanding the loan amount due from their father secured by the mortgage over plaint property. Except 5th defendant, the other legal heirs acknowledged the receipt of notice. The 3rd defendant, in his reply, repudiated the claim canvassed and contended that the property involved had been sold by all the legal heirs in favour of his wife - 6th defendant. 4th defendant in the reply notice claiming ignorance over the loan but disowning the liability also stated that the property had been assigned in favour of 6th defendant. The 2nd defendant admitting the liability sent a reply through advocate requesting for relieving him from liability upon payment of his 1/5th share of the liability under the loan. Replies given by the 2nd and 4th defendants, separately, constituted valid acknowledgment extending the liability under the loan transaction secured by the mortgage was the case of plaintiff to seek a decree for money by sale of the mortgaged property impleading the 6th defendant - wife of 3rd defendant - also as a party in the suit. Defendants 1, 2, 4 and 5 filed a joint written statement, in which they admitted knowledge of the loan transaction but pleaded ignorance whether any portion thereof was repaid and also was it closed. After the death of father, 3rd defendant continued in possession of the plaint property, and, therefore, he is liable to discharge the loan, if any, outstanding, was their case. Defendants 3 and 6 filed a joint written statement contending that the promissory note and also the memorandum on which deposit of title deed by their father for the alleged loan transaction are fraudulently created. Signature of P.R. Joseph had been forged in such documents, according to them. Disputing the loan transaction and also mortgage of deposit of the title deed by P.R. Joseph, these defendants contended that the title deed of the plaint property had been deposited by Joseph in a kuri company as security for a kuri auctioned by his wife and such security continued to remain in force from 14.10.1978 to 15.5.1984. After the death of Joseph, all his legal heirs together assigned the plaint property in favour of 6th defendant - wife of 3rd defendant. After receiving consideration for such assignment and executing the assignment deed in favour of 6th defendant, defendants 2 and 4 colluded with the plaintiff in creating false documents, and on the basis of such documents, the suit has been filed imputing a false case of a loan transaction by the father from the plaintiff on executing of a promissory note and depositing of title deed over the plaint property, according to these defendants. Any admission of liability of the father towards the plaintiff by any other defendants would not be binding on these defendants and even if there was any liability from Joseph to the plaintiff a claim thereof is barred by limitation was the contention of these defendants asserting that the sale deed executed over the plaint property in favour of 6th defendant by all the legal heirs of Joseph (defendants 1 to 5) is a valid document.

4. On the pleadings of parties, learned Sub Judge raised the necessary issues for trial, on which, the plaintiffs examined P.Ws. 1 and 2 and exhibited A1 to A9, and contesting defendants, D.Ws. 1 to 6 and Exts. B1 to B4. Documents summoned and produced through one of the witnesses were exhibited as X1 and X2.

5. Learned Sub Judge appreciating the pleadings and materials produced upheld the suit claim as having been proved by legal evidence. Reply notices sent by defendants 2 and 4 - two of the legal heirs of late P.R. Joseph constituted valid acknowledgments, and, thus, the suit was not barred by limitation was the finding arrived by learned Sub Judge negativing the challenge thereto by defendants 3 and 6. Suit claims of plaintiff were decreed but providing six months time to defendants for repayment of the decree amount, failing which, for realisation of the sum by sale of the plaint property, and if the proceeds thereof were insufficient, then, by personal execution against defendants 1 to 5. That decree passed in favour of plaintiff is assailed by defendants 3 and 6 in this appeal.

6. After service of notice in appeal, respondents have not entered appearance. I heard the learned senior counsel appearing for the appellants.

7. The decree passed by the learned Sub Judge in the suit is challenged in the appeal memorandum on various grounds, both under facts and law, and also as against the evidence tendered in the case. However, at the time of hearing, learned senior counsel for the appellants confined his challenges to the decree on a solitary ground that the suit was barred by limitation. Reply notices sent by two among the legal heirs of Joseph (2nd and 4th defendants) admitting the liability of their father after they had assigned the right over the plaint property in favour of the 6th defendant would not constitute acknowledgment of liability even assuming that a mortgage had been created by the father over the plaint property in favour of the plaintiff is the submission of the learned senior counsel. An acknowledgment made by a mortgagor after he had parted with the mortgaged property to another person will not be valid and binding on the property transferred. Any admission of liability after such transfer of the mortgaged property by him do not bind the transferee/purchaser or extend the period of limitation to sue on the mortgage, is the submission of the counsel. The decree passed by the court below holding that the reply notices sent by defendants 2 and 4 as acknowledgments of liability extended the period of limitation is assailed by counsel stating that reply notices had been sent after they had assigned the rights over the mortgaged property, it cannot constitute valid acknowledgment of liability keeping alive the mortgage. There were conflicting decisions by different High Courts as regards the right of creditor to proceed against the property by virtue of acknowledgment made by the debtor after he had parted with his interest in the property after the period of limitation from the date of the original transaction. Previously, the High Court of the Travancore - Cochin had taken a consistent view that an acknowledgment of the debtor even after the transfer of the property would bind that property and also the purchaser. A conflicting and different view that he could not bind the property and the purchaser and the admission of liability by the debtor after transfer of his interest in the property would not constitute an acknowledgment to bind the property was the view taken by some other High Courts. In Pavayi v. Palanivelu Goundou (MANU/TN/0033/1940 : AIR 1940 Mad. 470 (F.B.)), a Full Bench of the Madras High Court, after referring to several conflicting decisions on the subject by various High Courts held that the mortgagor who had lost all interest in the mortgaged property, could not, by an acknowledgment within the meaning of S. 19 or by the payment of interest or principal, within the meaning of S. 20, bind the person on whom his interest had devolved (sections 19 and 20 under the Limitation Act, 1908 corresponding to the present Sections 18 and 19 respectively of the Limitation Act, 1963). Subsequently, the same principle has been laid down by the Privy Council in Bank of Upper India Ltd. v. R.H. Skinner MANU/PR/0017/1942 : (AIR 1942 PC 67). In the above decision, after having a survey and analysis of the conflicting decisions and questions involved, it was held that admission of liability by the mortgagor after he had parted with interest of the purchaser do not bind the purchaser and it would not constitute an acknowledgment under the Limitation Act keeping alive the liability on the mortgaged property. The Travancore - Cochin High Court, following the decision of the Privy Council, in Kunchi Pillai v. Sunny Rebella MANU/KE/0098/1952 : (AIR 1953 Travancore -Cochin 196 (F.B.)), referred to above, has held that an acknowledgment of liability by the mortgagor made after the assignment of the equity of redemption will not be a valid acknowledgment so as to bind the assignee. An acknowledgment by a mortgagor after parting with the mortgaged property cannot be recognised as a valid acknowledgment was the view taken by the High Court of Mysore following the principle laid down in the Privy Council decision, referred to above, in Raghoba Santanna Naik v. Shaba Nalo Naik & Anr. (AIR 1960 Mysore 187). Same view has been taken by the Full Bench of the Madras High Court in Nallathambi Nadar Chellakannu Nadar v. Ammal Nadachi Chellathankom Nadachi & Ors. (MANU/TN/0199/1963 : AIR 1964 Mad. 169 (F.B.)), referred to above, stating that an acknowledgment of liability must involve an admission of a subsisting jural relationship between the parties and a consciousness and an intention of continuing such a relationship until it is lawfully terminated. So, in the present case, where the 2nd and 4th defendants whose reply notices are relied on as acknowledgments had already parted their interest in the plaint property, with other legal heirs of Joseph under Ext. B3 sale deed in favour of 6th defendant much earlier to the suit, reply notices sent by them cannot constitute valid acknowledgment keeping alive the mortgage liability over the plaint property. The learned Sub Judge has gone wrong in holding that the suit is not barred by limitation treating the reply notices of defendants 2 and 4 as constituting acknowledgment extending the period of limitation. Suit was clearly barred by limitation, and decree granted to the plaintiff upholding plaint claim cannot be sustained.

Decree and judgment passed by the learned Sub Judge are set aside, and the suit shall stand dismissed. Appeal is allowed directing both sides to suffer their costs.

Print Page