Appeal No 77 of 1957
Appeal from the judgment and decree dated the August 6 1954 of the Calcutta High Court in Appeal from Original Decree No 73 of 1952
M C Setalvad Attorney General for India W section Barlingay and A 0
Ratnaparkhi for the appellant
AV Viswanatha Sastri and P K Chatterjee for respondent No 1 1961
March 1
 J This appeal arises from a suit filed by respondent 1 Durga Prosad Chamaria against respondent 2 the heirs of John Carapiet Galstaun and others in which he sought to recover Rs 4 p 64213 5 3 on the mortgaes in suit
He had prayed for a preliminary mortgage decree according to 0
XXXIV r 4 of the Code of Civil Procedure and had asked for the appointment of a receiver in that behalf The said mortgages were created by delivery of documents of title to immovable properties by the mortgagor John Carapiet Galstaun who died pending the suit
The properties mortgaged consisted of three items all of which are situated in Calcutta
These items are 24 Amratolla Lane 96 Karaya Road 142 and premises 1671 and 1675 Dhurrumtolla Street Chandni Bazar
In the present appeal we are concerned with premises 1671
Respondent 1 s case was that he had advanced several amounts on seven different occasions to the mortgagor between August 2 1926 and November 27 1931
According to the terms of the transaction no specific time for payment of the mortgage dues had been fixed and it was agreed that the monies advanced would become due and be repaid on demand being actually made by the mortgagee
With this plea we are not concerned in the present appeal
It was further pleaded by the mortgagee that the mortgagor had acknowledged his liability of the mortgagee s claim by letters of March 5 1932 and February 17 1943 which were signed by him
It is on the strength of these acknowledgments that the mortgagee purported to bring his claim within time the suit having been filed on May 18 1944
Pending the suit the appellant was added as a party defendant on August 23 1944
By his application made by respondent 1 in that behalf it was alleged that the appellant had become the auction purchaser of premises 1671 at a sale held by the Sheriff of Calcutta on May 3 1944 in execution of a decree passed in Suit No 2356 of 1931 by the Calcutta High Court with notice of mortgage in favour of respondent 1
Since the said sale had been confirmed on July 6 1944 the appellant bad become a necessary party to the suit
That is how the appellant became a party to the proceedings and was interested like the mortgagor in disputing the validity of the claim made by respondent1
The principal issue which arose between the parties in the suit was one of limitation
It was not seriously disputed that the letter written by the mortgagor on February 17 1943 amounted to an acknowledgment and it helped to bring within time respondent 1 s claim in respect of the last advance of Rs 2500 made on November 27 1931
Respondent 1 s case that the earlier letter of March  5 1932 amounted to an acknowledgment was however seriously disputed by the appellant
If this letter is held to amount to a 143 valid acknowledgment two items of consideration pleaded by respondent I would be within time they are Rs 20000 and Rs 35000 advanced on the same day  September 10 1926
Mr Justice Banerjee who tried the suit on the Original Side of the Calcutta High Court held that the letter in question did not amount to an acknowledgment and so he found that only the last item of Rs 2500 was in time
In the result he passed a decree for Rs 5000 only in favour of respondent 1
Then respondent 1 took the dispute before the Court of Appeal in the Calcutta High Court
The Court of Appeal has upheld the case made out by respondent I in regard to the acknowledgment based on the letter of March 5 1932 and in consequence it has been held that the principal amounts due to respondent 1 are Rs 55000 and Rs 2500 and at the rate of interest payable thereon at 8 simple the total amount payable being subject to the maximum allowable under the Money lenders  Act
In accordance with these findings a preliminary decree has been drawn
It is this decree which is challenged before us by the appellant who has brought his appeal to this court with a certificate issued by the Calcutta High Court and the only point which is raised for our decision is whether the letter in question amounts to a valid acknowledgment under section 19 of the Limitation Act
The decision of this question would naturally depend upon the construction of the letter on which respondent 1 relies but before reading the said letter it would be relevant to consider the essential requirements of section 19 which provides for the effect of acknowledgment in writing
Section 191 says inter alia that where before the expiration of the period prescribed for a suit in respect of any right an acknowledgment of liability in respect of such right has been made in writing signed by the party against whom such right is claimed a fresh period of limitation shall be computed from the time when the acknowledgment was so signed
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 144 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
Section 192 provides that where the writing containing the acknowledgment is undated oral evidence may be given about the time when it was signed but it prescribes that subject to the provisions of the  oral evidence of its contents shall not be received in other words though oral evidence may be given about the date oral evidence about the contents of the document is excluded
Explanation 1 is also relevant
It provides inter alia that for the purpose of section 19 an acknowledgment may be sufficient though it omits to specify the exact nature of the right or avers that the time for payment has not yet come or is accompanied by a refusal to pay or is coupled with claim to a set off or is addressed to a person other than the person entitled to the right
It is thus clear that acknowledgment as prescribed by section 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 acknowledge judgment 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 145 of the statement
In construing words used in the statements made in writing on which a plea of acknowledgment rests oral evidence has been expressly section 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 G 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 section 19 and there is really no substantial difference between the parties as to the true legal position in this matter
It is often said that in deciding the question as to whether any particular writing amounts to an acknowledgment as in construing wills for instance it is not very useful to refer to judicial decisions on the point
The effect of the words used in a particular document must inevitably depend upon the context in which the words are used and would always be conditioned by the tenor of the said document and so unless words used in a given document are identical with words used in a document judicially considered it would not serve any useful purpose to refer to judicial precedents in the matter
However since decisions have been cited before us both by the learned Attorney General and Mr Viswanatha Sastri we propose to refer to them very briefly before turning to the document in question
The question as to what is an acknowledgment has been answered by Fry L J as early as 1884 A D in Green vs Humphreys 1
This answer is often quoted with approval
What if an acknowledgment asked Fry LJ and he proceeded in my view an acknowledgment is an admission by the writer that there is a debt owing by him either to the receiver of the letter or to some other person on whose behalf the letter is received but it is not enough that he refers to a debt 1 1884 26 Ch
D 474 481 146 as being due from somebody
In order to take the case out of the statute there must upon the fair construction of the letter read by the light of the surrounding circumstances be an admission that the writer owes the debt
With respect it may be added that this statement succinctly and tersely gives the substance of the provisions contained in section 19 of the Limitation Act
Mr Sastri has relied on the decision of the Privy Council in Beti Maharani vs Collector of Etawah 1 in which the Privy Council has recognised that it would be legitimate for the purpose of construing a document to look at the surrounding circumstances and that oral evidence about the intention of the maker of the statement cannot be admitted for the purpose of construing the said statement
Their Lordships observed Lord Hobhouse who spoke for the Board cannot follow the learned judges of the High Court in admitting the Collector to give oral evidence of his intentions for the purpose of construing the notice
But they may for that purpose properly look at the surrounding circumstances
In Sukhamoni Chowdhrani vs Ishan Chunder Roy 2 the statements on which reliance was placed by the creditor was contained in the directions given by the debtor to apply surplus income to the payment of the ijmali debts of us three co owners of which a list is given below
It was held that by this statement the defendant acknowledged a joint debt and from that follow the legal incidents of her position as a joint debtor with the plaintiff one of which is that he may sue her for contribution
In other words admission about a joint debt amounted to an acknowledgment though the liability to be sued for contribution is a matter of legal inference from the said admission and it had not been specifically included in the statement in question
Mr Sastri has also relied on the decision of the Full Bench of the Allahabad High Court in Munshi Lal vs Hira Lal 3 where it has been held that a document said to constitute an acknowledgment has to be construed in the context in which it is given and that 1 1894 22 IA 31 41 2 1897 25 I A 95 3 ILR 1947 All 11 147 where its language is not clear in itself the context must be examined to see what it is to which the words referred
The Court however added that its decision She did not mean that any equivocation in an acknowledgment can be cured by ascertaining what the probable intention of the acknowledger was
Similarly in L Swaminatha Odayar vs Subbarama Ayyar 1 the Madras High Court has held that an acknowledgment for liability under section 19 need not be express but may be implied from facts and circumstances under which a statement in a deposition was made but it cannot be implied as a matter of law
On the other hand the learned Attorney General has strongly relied on an earlier decision of the Bombay High Court in Dharma Vithal vs Govind Sadvalkar 2
In that case certain statements made in the receipt given for the delivery of the land to the officer of the Court were relied upon as amounting to an acknowledgment
The said receipt referred to the suit and decree and the decree to which reference was thus made had set forth in ordinary course the then plain
tiff s claim as resting on a mortgage
The contention was that the reference to the decree made the decree a part of the receipt and since the decree referred to the plaintiff s claim as resting on a mortgage the receipt itself served as an acknowledgment of a mortgage subsisting in 1827
This plea was rejected by the High Court
The High Court held that all that the receipt admits by implication is that the land had been awarded by the decree to the party who passed the receipt To extend it observed West J so as to make it an admission of the reasoning and legal grounds stated in the decree would be to go beyond what probably was present at all to the consciousness of the recipient when he acknowledged having been put into possession
The learned judge then added that the intention of the law manifestly is to make an admission in writing of an existing jural relation of the kind specified equivalent for the purposes of limitation to a new contract
As we will make it clear when we deal with the document before us it would be realised 1 Mad
2 Bom
99 148 that this case cannot assist the appellant
The receipt itself did not contain any admission about the jural relation between the parties
It merely referred to the decree which had set out the material allegations made in the plaint
Now 5 it would be plainly unreasonable to attribute to the party passing the receipt an intention to make the admissions which may be inferred from the averments made in the plaint which were incidentally recited and so the Bombay High Court naturally rejected the plea that the receipt amounted to a valid acknowledgment
Incidentally we may add that when West J referred to a new contract file had perhaps in mind the definition of acknowledgment under section 4 of Act XIV of 1859 which required a promise to pay in addition to the subsistence of jural relationship
The element of promise was omitted in the subsequent Act XV of 1877 and it continues to be omitted ever since
As we have already indicated under the present law acknowledgment merely renews the debt and does not create a fresh cause of action
It is now necessary to consider the document on which the plea of acknowledgment is based
This document was written on March 5 1932
It however appears that on November 26 1931 another letter had been written by respondent 2 to respondent 1 and it would be relevant to consider this letter before construing the principal document
In this letter respondent 2 had told respondent 1 that the Chandni Bazar property was being sold the next morning at the Rekistrar s sale on behalf of the first mortgagee and that the matter was urgent
 otherwise the property would be sacrificed
It appears that the said property was subject to the first prior mortgage and respondent 2 appealed to respondent 1 to save the said threatened sale at the instance of the prior mortgagee
It is common ground that respondent 1 paid to respondent 2 Rs 2500 on November 27 1931 and the threatened sale was avoided
This fact is relevant in construing the subsequent letter
The said property was again advertised for sale on March 11 1932 and it was about this sale that the 149 letter in question came to be written by respondent 2 to respondent 1 on March 5 1932
This is how the letter reads My dear Durgaprosad Chandni Bazar is again advertised for sale on Friday the 11th instant
I am afraid it will go very cheap
I had a private offer of Rs 275000 a few days ago but as soon as they heard it was advertised by the Registrar they withdrew
As you are interested why do not you take up the whole
There is only about 70000 due to the mortgagee a payment of 10000 will stop the sale
Yours sincerely Sd
J C Galstaun
 Does this letter amount to an acknowledgment of respondent 1 s right as a mortgagee That is the question which calls for our decision
The argument in favour of respondent 1 s case is that when the document refers to respondent 1 as  being interested it refers to his interest as a puisne mortgagee and when it asks respondent 1 to take up the whole it invites him to acquire the whole of the mortgage interest including the interest of the prior mortgagee at whose instance the property was put up for sale
On the other hand the appellant s contention is that the word interest is vague and indefinite and that respondent 1 may have been interested in the property in more ways than one
In that connection the appellant relies on the statements made by respondent 1 in his evidence
He stated that he was interested in the property in many ways and he clarified by adding that in the first instance he was a mortgagee having a charge on the property so that if the mortgagor was not able to pay him the money then he could have given him the property or the appellant could have got the property from him
He also stated that at one time he was thinking of buying or taking lease of the property in order to liquidate the debt but he added that negotiations in regard to the lease had taken place in 1926 and they bad ended in failure
According to him no such negotiations had taken place in 150 1932
It is urged that when the letter refers to the interest of respondent 1 in the property in question it may be interest as an intending purchaser or as an intending lessee
In construing this letter it would be necessary to bear in mind the general tenor of the letter considered as a whole
It is obvious that respondent 2 was requesting respondent 1 to avoid the sale as he did on an earlier occasion in November 1931
The previous incident shows that when the property was put to sale by the first mortgagee the mortgagor rushed to the second mortgagee to stop the sale and this obviously was with a view to persuade the second mortgagee to prevent the sale which would otherwise affect his own interest as such mortgagee
The theory that the letter refers to the interest of respondent 1 as an intending lessee or purchaser is far fetched if not absolutely fantastic
Negotiations in that behalf had been unsuccessful in 1926 and for nearly five years thereafter nothing was heard about the said proposal
In the context it seems to us impossible to escape the conclusion that the interest mentioned in the letter is the interest of respondent 1 as a puisne mortgagee and when the said letter appeals to him to take up the whole it can mean nothing other than the whole of the mortgagee s interest including the interest of the prior mortgagee
An appeal to respondent 1 to stop the sale on payment of Rs 10000 as he in fact had stopped a similar sale in November 1931 is an appeal to ensure his own interest in the security which should be kept intact and that can be achieved only if the threatened sale is averted
We have carefully considered the arguments urged before us by the learned Attorney General but we see no reason to differ from the conclusion reached by the Court of Appeal below that this letter amounts to an acknowledgment
The tenor of the letter shows that it is addressed by respondent 2 as mortgagor to respondent 1 as puisne mortgagee it reminds him of his interest as such mortgagee in the property which would be put up for sale by the first mortgagee and appeals to him to assist the avoidance of sale and thus acquire the 151 whole of the mortgagee s interest
It is common ground that no other relationship existed between the parties at the date of this letter and the only subsisting relationship was that of mortgagee and mortgagor
This letter acknowledges the existence of the
said jural relationship and amounts to a clear acknowledgment under a 19 of the Limitation Act
It is conceded that if this letter is held to be an acknowledgement there can be no other challenge against the decree under appeal
In the result the appeal fails and is dismissed with costs
Appeal dismissed


Summary:
The Income tax Officer found that the respondents  books of accounts were unreliable and after assessing income for Fasli year 1357 corresponding to the year 1946 47 issued notice to the respondents on December 22 1949 under section 40 of the Hyderabad Income tax Act to show cause why penalty should not be levied in addition to the tax and by an order dated October 31 1951 directed payment of the said penalty
The State of Hyderabad merged with the Indian Union during the pendency of the proceedings before the Income tax Officer and by section 13 of the Finance Act 1950 the Hyderabad Income tax Act ceased to have effect from April 1 1950 but the operation of that Act in respect of levy assessment and collection of income tax and super tax in respect of periods prior thereto for which liability to income tax could not be imposed under the Indian Income tax Act was saved
The question was whether a the Income tax Officer had power on October 31 1951 to impose a penalty under section 401 of the Hyderabad Income tax Act and b whether the assessee had a right to appeal against the order of the Income tax Officer imposing penalty and whether the Appellate Assistant Commissioner had jurisdiction to hear appeals or whether his order was a nullity
Held that the power of the Income tax Officer to impose a penalty under section 401 of the Hyderabad Income tax Act in respect of the year preceding the date of the repeal of the Hyderabad Income tax Act was not lost because by section 13 of the Finance Act 1950for the operation by the Hyderabad Income tax Act in respect of levy assessment and collection of income tax and super tax in respect of periods prior to April 1951 for which liability to income tax could not be imposed under the Indian Income tax Act was saved and so the proceedings for imposing the penalty could be continued after the enactment of section 131 of the Indian Finance Act 1950
Held that the appeal against the order of the Income tax Officer on the ground that he was not competent to pass the order did lie to the Appellate Assistant Commissioner whose jurisdiction was not made conditional upon the competence of the 924 Income tax Officer to pass the
orders made appealable as a court of appeal he had jurisdiction to determine the soundness of the conclusions of the Income tax Officer both on the question of fact and law and even as to his jurisdiction to pass the order appealed from and his order was not a nullity