Case: Shapoor Fredoom Mazda Vs. Durga Prosad Chamaria &amp; Others

1. 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. 4,64,213-5-3 on the mortgages in suit. He had prayed for a preliminary mortgage decree according to O.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 Galstanu who died pending the suit. The properties motgaged consisted of three items all of which are situated in Calcutta. These items are 24, Amratolla Lane, 96, Karaya Road and premises 167/1 and 167/5 Dhurrumtoall Street (Chandni Bazar). In the present appeal we are concerned with premises 167/1. Respondent 1s 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 acknowledgment his liability of the mortgagees claim by letters of March 5, 1902, and February 17, 1943, which were signed by him. It is on strength of these acknowledgments that the mortgagee purported to bring his claim within time the suit having been filed on May 18, 1944.2. Pending the suit the appellant was added as a party defendant on August 23, 1944. By this application made by respondent 1 in that behalf it was alleged that the appellant had become the auction purchaser of premises 165/1 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 had became 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 respondent 1.3. 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 1s claim in respect of the last advance of Rs. 2,500/- made on November 27, 1931. Respondent 1s case that the earlier letter of march 5, 1932 amounted to a acknowledgment was, however, seriously disputed by the appellant. If this letter is held to amount to a valid acknowledgment two items of consideration pleaded by respondent 1 would be within time; they are Rs. 20,000/- and Rs. 35,000/- 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. 2,500/- was in time. In the result he passed a decree for Rs. 5,000/- only in favour of respondent 1.4. Then respondent 1 took the dispute before the Court of Appeal in the Calcutta High Court. The Court of Appeal had upheld the case made out by respondent 1 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. 55,000/- and Rs. 2,500/-, 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;

Court's reasoning:
6. 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 bystated 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 thiswe will make it clear which we deal with the document before us it would be realised 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, 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 he had perhaps in mind the definition of acknowledgment under S. 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 ofhowever, 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 registrars 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. 2,500/- on November 27, 1931, and the threatened sale was avoided.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-fatched, 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 mortgagees interest including the interest of the prior mortgagee. An appeal to respondent I to stop the sale on payment of Rs. 10,000/-, 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 argument 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 whole of he mortgagees 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 the mortgagee and mortgagor. This letter acknowledges the existence of the said jural relationship and amounts to a clear acknowledgment under S. 19 of the Limitation Act. It is conceded that if this letter is held to be an acknowledgment there can be no other challenge against the decree under appeal.