Karamadai Naicken vs R. Raju Pillai and Another

Satyanarayana Rao, J.—The second defendant is the appellant. The suit was instituted for recovery of a sum of Rs. 900 due under a

mortgage, dated 9th March, 1922. The mortgage was executed by the first defendant in favour of one Mariyayi. Mariyayi died sometime in 1923

leaving behind her Chockalinga, her husband, and Kanakammal, a daughter and Ayyaswami Pillai, a son. Chockalinga died some time before

1931. The exact date of death is not known. The mortgagor intended to discharge the mortgage in 1931, and on the assumption that Ayyaswami,

the son of the mortgagee, was entitled to the amount due under the mortgage, executed a deed of assignment of a usufructuary mortgage executed

in his favour by a third party, in favour of Ayyaswami, This deed of assignment is Ex. P-2, dated 9th September, 1931. The mortgage debt due by

that date was ascertained and was found to be Rs. 609. He executed a promissory note for a sum of Rs. 200 on that date. The consideration for

the assignment by the usufructuary mortgage was taken to be Rs. 300 and a cash of Rs. 109 was paid to make up the total of Rs. 609 due under

the mortgage in favour of Mariyayi. Thus the entire mortgage debt was discharged by this arrangement with the son of the mortgagee. The first

defendant sold the property comprised in the mortgage to one Palanisami in July 1937 and from Palanisami the second defendant purchased the

property on the nth June, 1942. After all this, Kanakammal, the daughter of Mariyayi, executed in favour of the plaintiff a deed of assignment in

respect of the mortgage debt due under the mortgage executed by the first defendant on the 9th March, 1922. On the basis of this assignment the

assignee instituted the present suit to enforce the debt under the mortgage deed. The assignment by Kanakammal was on the footing that the

mortgage debt was the stridhana property of Mariyayi, and that after her death it had devolved upon her as her heir.

In the suit the first defendant was ex parte as he had no interest in the property, and the second defendant was the main contesting defendant.

The chief among the pleas raised by the defendant were that the mortgage debt was really the property of the family of Chockalinga and

Ayyaswami, that Mariyayi was merely a name-lender, and that therefore the discharge of that debt by the arrangement evidenced by Ex. P-2 was

valid; and secondly that as the mortgage was dated 9th March, 1922, and the present suit was instituted only on the 6th September, 1943, the suit

was barred by limitation. The plaintiff anticipated the plea of limitation and relied upon Ex. P-2 as containing an acknowledgment of the liability by

the first defendant.

The trial Court upheld both the contentions of the defendant and dismissed the plaintiff''s suit. On appeal the learned Subordinate Judge reversed

the decision on both the points and decreed the plaintiff''s suit.

The only question that was argued in second appeal was the question of limitation. Unless Ex. P-2 contains a valid acknowledgment within the

meaning of Section 19 of the Limitation Act, the plaintiff''s suit would be barred by limitation. Under Ex. P-2 the first defendant admitted that the

mortgage debt amounted to Rs. 609 but stated that it was discharged by the execution of the promissory note, by the assignment of the

usufructuary mortgage and by payment of cash. The question therefore that arises for consideration is whether the statement of the first defendant

in Ex. P-2 that there was a liability under a mortgage but that it was discharged amounts to an acknowledgment. In other words, is it an admission

of a subsisting liability in respect of the mortgage debt and does it contain an acknowledgment of a subsisting jural relationship of debtor and

creditor between the mortgagor and the mortgagee? When the statement of liability is coupled with a statement that it is discharged it is difficult to

see how a subsisting, liability on that date could be inferred. The learned District Munsiff held that there was no subsisting liability in view of the

clear language of the document. The learned Subordinate Judge however dissects the statement into two parts, the first part containing an

admission of liability and the second part the mode in which it was discharged. Ignoring the second part he fastens himself to the first and concludes

that there is a subsisting liability. In my opinion, this kind of dissection of the statement of the first defendant in Ex. P-2 is not permissible. The

statement must be taken as a whole and the intention of the first defendant must be gathered by reading the document as a whole and not by

confining attention to a particular portion of it. In my opinion, therefore, the process of interpreting the document adopted by the learned

Subordinate Judge is wrong.

The learned advocate for the respondents drew my attention to some of the decisions in which in circumstances somewhat different the Courts

have construed documents containing acknowledgments as acknowledgments of a subsisting liability; but the more relevant decision in my opinion

is the decision reported in Rangaswami Chetty v. Thangavelu Chetty ILR (1919) Mad. 637. In that case as in the present, the statement by the

debtor that he was under a liability was coupled with a statement that he had discharged the debt and it was held that such a statement did not

amount to an acknowledgment of any subsisting liability. This decision, so far as I am aware, was never dissented, and on the other hand was cited

with approval by this and other High Courts. The decision on which strong reliance was placed by the learned advocate for the respondents is the

decision of Varadachariar, J., in Ramasami Mestriar Vs. Velayuthan Pillai and Others, . In that case the mortgage which was put in suit was dated

15th November, 1913. By a later sale deed of 11 th November, 1921, the debtor made an arrangement for discharging the mortgage by sale of

certain properties. Subsequently as there was a sub-mortgage on the property the sale deed became inoperative, and the debt could not be

discharged in the manner contemplated by the parties. The mortgagee relied upon the recitals in the sale deed as constituting acknowledgment,

when he was obliged to fall back on the mortgage and to enforce his rights under it. The learned Judge having regard to the nature of the document

and having regard to the fact that the mode of discharge contemplated by the parties became ineffective held that there was a valid

acknowledgment of a subsisting liability in the sale deed. The learned Judge cited by way of illustration cases where a mortgage debt was intended

to be discharged by the parties by execution of a sale deed, which however remained at the stage of contract without a sale deed in writing and

registered and the contract for some reason or other became unenforceable. In such a case where the contract was merely executory the learned

Judge asks:

Can there be any doubt that the statement in the document will be available as an acknowledgment of liability? I do not see why the position should

be different when the contemplated discharge proved ineffective because the mortgagee to whom the conveyance was made had by that time

become incompetent in law to give a discharge by reason of the anterior sub-mortgage.

The situation therefore which the learned Judge was dealing was one where the parties substituted one arrangement for another, and for some

reason or other the later arrangement became frustrated, and the parties were relegated to the old arrangement; and in such circumstances when

the old arrangement was sought to be enforced it was possible to rely upon the statements in the later arrangement evidenced by a document as

establishing a valid acknowledgment of a subsisting liability. 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 a 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 Ayyasami would not bind him.

In such a case the principle of the decision in Ramasami Mestriar Vs. Velayuthan Pillai and Others, has no application.

In Vakkalanka Kondamma Vs. Kasaneedi Venkatarayadu and Others, Madhavan Nair J. had to deal with a case where a promissory note was

renewed, and at the time of the renewal an endorsement was made on the earlier note to the effect that a fresh promissory note was executed on

that day for the amount due under the previous note and that therefore the earlier note became void. Later by reason of some defect in the stamp

the later promissory note became unenforceable. The payee under the note was obliged therefore to fall back on the earlier note and rely upon the

endorsement on it as constituting a valid acknowledgment. The question here also in my opinion is somewhat analogous to the position considered

by Varadachariar, J., in Ramasami Mestriar Vs. Velayuthan Pillai and Others, . The second promissory note does not stand on the same footing as

a payment or a complete transfer of property in discharge of a debt. It was merely a conditional payment. If that payment becomes ineffective it is

open to the parties to fall back upon the earlier document, and the statement in the endorsement in the circumstances amounts to an

acknowledgment of a subsisting liability or the existence of a jural relationship of debtor and creditor. The decision of Venkataramana Rao, J., in

Kuppuswami Aiyar and Others Vs. Sabapathy Pathan and Others, does not help the respondents. In that case there was merely a direction by the

mortgagors to a third person in whose favour they had executed a usufructuary mortgage, to pay the mortgage debt, and this arrangement was

repeated by the mortgagors in their reply notice to a demand made by the mortgagee for payment of the debt. It is obviously a case where there

was a clear acknowledgment of a subsisting liability.

I do not think it is necessary to refer to the other decisions on the point, but two decisions which have been referred to in the judgment of

Varadachariar, J., in Ramasami Mestriar Vs. Velayuthan Pillai and Others, throw some light on the question now at issue. In Dajji Mehar v.

Mahadeo Kumbi 79 IND.CAS. 66 the Nagpur Judicial Commissioners'' Court considered the decision in Rangaswami Chetty v. Thangavelu

Chetty ILR (1919) Mad. 637 and it was distinguished on the ground that the document referred to therein recited that the judgment-debtor owed

a debt, and that he had discharged it. Such a statement taken as a whole does not amount to an acknowledgment of a liability which is subsisting.

There the admission of liability was coupled with an assertion that it was discharged. Of course if the admission was an unqualified one and not

coupled with any further conditions or any other indications leading to the inference that the debt was discharged the position would be different.

The other decision is that of the Patna High Court in Chhaterdhari Mehto v. Nasip Singh 78 IND.CAS. 919. It was there held that a statement that

there was a debt but that it had been discharged would not amount to an acknowledgment. Rangaswami Chetty v. Thangavelu Ccetty ILR (1919)

Mad. 637 was referred to and cited with approval. These cases, in my opinion, bring out the distinction between cases where there was a mere

statement that a debt was due and a statement that it was due but with the qualification added that it was discharged.

In these circumstances, in my opinion, the judgment of the learned Subordinate Judge holding that Ex. P-2 contained a valid acknowledgment of

a subsisting liability and that the suit was not barred by limitation is erroneous.

The second appeal is therefore allowed, the decision of the learned Subordinate Judge is set aside and that of the learned District Munsiff

restored with costs here and in the Courts below. No leave.